*****MUST READ*****backs up post 2539
From: fortysomething4 (120)
Reply To: None
Stock Symbol: DKAM.OB Date: Tue January 02, 2007 09:00:50 AM
Message #: of 1040066
I now completely believe this company will be bought out. There is a 14 page independent research report that was put out back in October on limited release. Since it is not widely available there is alot of information in this report that says this company is ripe for an LBO. In fact any company in this sector would be foolish not to make a play for them. Here's my in depth rationale:
1)Company brands the Trump name to enter the Super Premium Vodka market. Initial sales score more revenues in less than 1 month than the company booked in the preeding 18 months.
2) Sales of Trump Vodka in less than 1 month leads to a 330% increase in the previous year's revenues.
3) Sector analysis study shows that a consolidation of the beverage giants is underway. Grey Goose was sold to Bacardi for $2.3 billion. Absolut is about to announce a buyout offer from a suitor approaching $4 billion. Anheuser Busch is looking to enter the spirits market. AB just bought Rolling Rock for $82 mil from InBev.
4) Excerpts from the analysis report:
a. Trump Vodka is being positioned in the Premium vodka segment with Grey Goose, which sells more than two million cases annually.
b. National rollout of Newman’s Own beverages. Drinks Americas already markets its line of Newman’s Own Lightly Sparkling Fruit Juices to more than 1,800 accounts in metro New York and recently expanded distribution to Pennsylvania, Chicago, Washington DC, and California, where an initial order for 40,000 cases has already been secured. The company plans to roll out the product line nationally and targets sales of between $5 million and $7 million over the next twelve months.
c. Drinks Americas acquired Rheingold Beer, a popular, regional New York brand in 2005, and plans to introduce a reformulated and repackaged version of the product this Fall. The company is positioning Rheingold Beer within the fast-growing regional beer segment and estimates a potential upside for this product of between $25 million and $170 million.
d. $11+ million financing supports launch of new products. Last year, insufficient working capital
prevented Drinks Americas from fully implementing its business plan. The company has addressed this issue by securing a $10 million revolving credit facility and
a $1.5 million purchase order financing facility to fund the launch of its new product lines.
e. A new Drinks Americas subsidiary formed in 2006 imports premium wines from around the world, with a particular focus on wines from France, Italy, Spain, Australia and New Zealand.
f. Drinks Americas, Inc. signs a celebtiry branding agreement with specific Willie Nelson promotions. In addition, the product is a featured item at the 30+ store Specs chain in Texas and recently secured ABC Liquors, a 220+ store chain and Florida’s #1 liquor store, as a customer. Strong branding has helped support double-digit volume growth for Old Whisky River Bourbon, with growth exceeding fifty percent in Texas, North Carolina, and South Carolina. Drinks Americas believes market penetration rates for the product could eventually reach
levels comparable with Maker’s Mark, which has annual sales exceeding 500,000 cases.
g. Drinks Americas plans to extend its distribution capabilities to all fifty states and expand internationally in early 2007.
h. Wynn Starr Flavors, a leading flavors supplier and shareholder in the company, provides Drinks Americas with product research and development services. Wynn Starr Flavors helped the company develop the Old Whisky River Bourbon Cream product flavor and formulation, and assists Drinks Americas in creating product formulas that appeal to specific demographic markets. Wynn Starr Flavor also helps Drinks Americas evaluate the product quality of brands BEING CONSIDERED FOR ACQUISITION.
4. The distilled spirits market is dominated by five large
competitors: Diageo, Allied Domecq, Pernod Richard, Brown-Foreman and Bacardi. Because these companies rarely create new brands, Drinks Americas is able to capitalize on opportunities to develop new, premium brands which become potentially ATTRACTIVE ACQUISITIONS for the larger companies.
5. The market for alcoholic beverages consists of three segments: beer, wine and distilled spirits. More than 159 million cases of distilled spirits were consumed in 2003. The United States market for premium quality distilled spirits, the niche where Drinks Americas competes, is estimated at approximately $21 billion. Distilled spirits include white goods (vodka, rum, gin and tequila) – the largest category accounting for fifty percent of sales. Vodka is the largest single product and represents twenty-six percent of United States distilled spirit sales. The aging of the baby boomers is fueling growth as their tastes shift from beer to mixed drinks.
6. Vodka is the fastest-growing distilled spirits beverage with annual sales of 45 million cases and substantial growth anticipated over the next five years. Sales of premium vodkas such as Grey Goose are expanding more than fifteen percent annually. Whisky is the second largest category, with annual sales of 44 million cases, and rum represents a significant growth opportunity at approximately twelve percent of United States distilled spirit sales.
7. Drinks Americas’ non-alcoholic beverages are categorized as New Age or Alternative Beverages. Compared to traditional soft drinks, New Age Beverages tend to have less sugar, less carbonation and natural ingredients. According to Beverage World Magazine, New Age Beverages represent $11.6 billion in annual sales and are growing at double-digit annual rates.
8. Drinks Americas is led by a management team of beverage industry veterans. Executives of the company have held senior manager positions with Seagram, Brown- Foreman and Coca Cola, among others.
a. J Patrick Kenny is President and CEO. Mr. Kenny is a former Senior Vice President and General Manager of Joseph E. Seagram & Sons, where he held a variety of senior executive positions over a twenty-two year period. From 1992 through 2000, he managed Seagram’s worldwide soft drink operations. Mr. Kenny has also acted as an advisor to Fortune 500 beverage marketing companies and participated in SEVERAL BEVERAGE INDUSTRY SALES TRANSACTIONS.
b. Bruce Klein is Chairman of the Board. Mr. Klein is a Managing Partner of Victory Partners, a company created to fund private businesses in their early stages. In the last five years, he has funded six technology companies, three of which have made public stock offerings. Prior to that, Mr. Klein was a registered representative for the Equitable Companies, serving as an investment advisor and estate planner to high net worth clients.
c. Jason Lazo is COO. Prior to joining Drinks Americas, Mr. Lazo served as Director of Finance for Joseph E. Seagram & Sons. Before that, he was Manager of Business Analysis for Kraft Foods, responsible for the Capri Sun, Kool-Aid Koolburst, Country Time and Crystal
Lite brands.
d. Fabio Berkowicz is CFO. Mr. Berkowicz has thirty-five years experience in public accounting, and formerly served as a Senior Partner of Edward Isaacs and its successor, McGladrey & Pullen certified public accounting firms.
e. Marvin Traub is a Director. Mr. Traub is the former Chairman and CEO of Bloomingdales and now runs his own marketing and consulting business.
f. Thomas Schwalm is a Director. Mr. Schwalm is a twenty-five-year veteran of the beverage industry. He co-founded South Beach Beverage Company which was ACQUIRED by PepsiCo
in 2001. He has held managerial positions with Joseph Schlitz Brewing Company, Stroh Brewing Company and Dribeck Importers, the United States importer of Becks Beer. Mr. Schwalm was formerly President of Barton Beers, which imported and marketed Corona, Negro Modelo, Tsingtao, St Pauli Girl, and Double Diamond beer.
g. Frederick Schulman is a Director. Mr. Schulman has twenty-five years experience in corporate and commercial finance, venture capital, leveraged buyouts and investment banking. He is President and Director of East Coast Venture Capital, Inc. in New York and is also Chairman of Skyline Multimedia Entertainment. He was formerly President of Morgan Kent Group, a venture capital firm.
This current collection of insiders now owns more than 50% of the outstanding shares of the company.
9. Drinks Americas’ near-term growth will be fueled by the launch of Trump Vodka, the national roll-out of Newman’s Own beverages, and the re-launch of Rheingold Beer. Drinks Americas signed a marketing agreement with the Trump organization in 2005 and began developing its Trump-branded premium vodka. Phoenix Beverages, which also distributes Heineken and several other premium imported beers, will distribute Trump Vodka in the New York market. Trump Vodka will be its sole vodka product. Kendall Jackson, a multi-billion dollar winery, will distribute Trump Vodka in eleven states, including California. Trump Vodka will be the only spirit brand it markets.
10. Drinks Americas plans to position Trump Vodka in the Super Premium Vodka segment alongside Grey Goose. Introduced in 1997, Grey Goose sold 17,000 cases during its first year. Since then, sales volume has grown exponentially to 250,000 cases in 2000, 1.3 million cases in 2003, and more than 2 million cases on 2006. Grey Goose sold 17000 cases in its first year as noted. Drinks Americas sold 17000 cases of Trump Vodka in its first three weeks of operation in just 4 states.
Drinks Americas targets Trump Vodka sales exceeding 150,000 cases in the first year and look for a sales ramp-up comparable to what Grey Goose has achieved.
11. Drinks Americas developed Newman’s Own Lightly Sparkling Fruit Juices in association with Paul Newman Foods and introduced the product in the metro New York market in 2005. So far in 2006, the company has expanded
product distribution to 1,800 accounts, developed a second product, Newman’s Own Sparkling Flavored Water, and received approval to develop and launch a third product, Newman’s Own Fruit Flavored Tea. Newman’s Own beverages are currently distributed in the New York, New Jersey, Connecticut, and Florida markets. Many of New York’s major grocery chains (Key Foods, ShopRite, Gristedes and Shaws) carry the product as do numerous independent chains. Drinks Americas believes the product line is on-track to generate revenues ranging between
$5 million and $7 million over the next twelve months. Distribution into the Pennsylvania, Washington DC, and Chicago markets is currently underway and marketing efforts have begun in California, where an opening order of 40,000 cases has been secured. The company has formed a joint venture with Beyer Farms, the New York area’s largest dairy distributor, to distribute Newman’s Own products in the New York market. Beyer Farms
reaches over 12,000 accounts. The Miller Red Bull network will distribute Newman’s Own beverages in the West. Drinks Americas plans to begin distributing the products nationally in 2007 and targets sales eventually growing to exceed $24 million annually.
12. Drinks Americas acquired ownership of Rheingold Beer, a popular, regional New York brand, in October 2005. Rheingold has been marketed as “New York’s beer” since 1883 and enjoys instant consumer recognition. Drinks Americas has reformulated and repackaged the product.
The reformulated product will ship in amber bottles with labels that emphasize its New York heritage. Rheingold Beer will be sold in 6, 12 and 24 pack bottles and cans.
Sales of regional beers are expanding faster than national brands, making the Rheingold brand AN ATTRACTIVE ACQUISITION. Drinks Americas is positioning Rheingold Beer as a New York regional brand alongside Brooklyn Beer ($25 million in annual sales) and Pittsburgh’s Yuengling Beer ($170 million in sales). The company estimates a potential upside for Rheingold Beer ranging between $25 million and $170 million.
13. Drinks Americas’ management team indicate in their current investor presentation that the company targets first-year sales for Trump Vodka of approximately 150,000 cases and EXPONENTIAL GROWTH IN THE FOLLOWING YEAR. The company believes the national rollout of Newman’s Own beverages next year could quickly drive revenues for this product line above $24 million.
No matter how you slice it, this in no way is representative of the average OTC stock this forum has ever seen. This stock just oozes buyout from every angle. With the anticipated buyout of Absolut and the Trump brand recognition commanding at least a $billion price tag, I could easily see this stock going north of $30 with no problem whatsoever. With 200 Super Premium names and the dominance of Grey Goose, it is natural to assume based on the introduction statistics of Trump Vodka, and the Trump name, that sales of Trump Vodka will grow to eclipse that of Grey Goose in far less time. The good thing for shareholders is that who ever buys the company also buys the license to the Trump name for future spirits introductions. That alone should incite a bidding war in the not too distant future.
