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By Kyle Anthony, Benzinga
A cocktail is not only for refreshment; it can also be an experiential offering for many individuals who want to entice and excite their taste palate with different flavor profiles. Innovation Beverage Group’s (NASDAQ: IBG) business model has been built on beverage brands tailored for various lifestyle occasions, allowing individuals to have a refreshing drink selection suitable for their distinct and everyday moments. IBG is a developer, manufacturer and marketer of a growing beverage portfolio of 60 formulations across 13 alcoholic and non-alcoholic brands.
Developments Occurring Within The Beverage Landscape
As reported by Tastewise, the global beverage industry is experiencing double-digit growth, with projected revenue expected to reach $235.70 billion in 2024 – with a projected compound annual growth rate (CAGR) of 10.05% from 2024 to 2029. Among the rising trends in the beverage market, flavored mixes and cocktails with low or no alcohol have risen in launches by 26%, as reported by Innova Market Insight. Ready-to-drink cocktails are also emerging, with an 18% increase in limited-edition products in the subcategory.
Gen Z is helping drive interest in new, exciting experiences and novel flavors with their beverage consumption, underscoring demand for innovation in the industry. Brands are increasingly promoting their beverages via limited-edition products and unique collaborations with expected and unexpected companies. These factors are driving the emergence of D2C platforms catering to the specific needs of customers.
IBG’s Distinct Value Proposition Within The Beverage Landscape
Established in 2018, IBG is an Australia-based company with a global focus. The firm’s distillery/ innovation and manufacturing facility is in Sydney, Australia, while its U.S. sales office is in New Jersey. Focused on premium and super-premium brands and market categories that can disrupt age-old brands, IBG's brands include Australian Bitters, Bitter Tales, Drummerboy Spirits, Twisted Shaker and more. IBG's most successful brand to date is Australian Bitters, which the company reports disrupted a 200-year-old market leader, giving the company a market-dominating position in several territories, including a partnership in Australia with Coca-Cola Europacific Partners.
As detailed in IBG’s latest investor presentation, the global bitters markets represented wholesale sales of around $4 billion in 2020. The value of the total bitters market is forecasted to grow by over $800 million, exhibiting a CAGR of 3.7% over 2020-2025. Cocktail bitters experienced a 13.5% CAGR between 2015 and 2019 and the segment is expected to grow at over 9.3% annually between 2020 and 2025. Accounting for 40% of the global bitters market by volume, the U.S. is the most valuable bitters market in the world, with Australia being second, representing 13% of the global market by volume. Australian Bitters has an approximate 20% market share in Australia from a starting base of 0% in 2018.
IBG’s Competitive Strengths And Capabilities
As referenced previously, IBG has a deep and versatile beverage portfolio designed to appeal to a broad consumer base. Australian Bitters and BitterTales have been recognized and awarded by the LA Spirits Award, a prestigious competition that evaluates and recognizes excellence in the spirits industry. Winners of the LA Spirits Awards receive recognition for quality and craftsmanship. In the non-alcoholic category, IBG offers Drummerboy Spirits, a beverage developed with a focus on taste that appeals to a growing lifestyle market of non-alcoholic drinkers. Finally, Twisted Shakers are pre-mixed cocktails, crafted to be well-balanced, with just the right amount of sweetness, appealing to individuals that have a ‘go to’ favorite beverage.
From a technology and logistical perspective, IBG has multiple-owned proprietary direct-to-consumer channels allowing scale and back-end integration of its owned brands. Bevmart Australia and Bevmart USA are platforms that enable consumers to purchase their desired beverage products and explore new offerings. Wired For Wine is an online, premium wine store acquired by IBG in November 2021, and based in the U.S. IBG reports that it brings vertical integration, exclusive brand strategy and broader offerings not previously offered on Wired for Wine. In 2023, the business structure was modified from selling value wines to premium and collectible wines with price points over $200 per bottle, now offering over 500 highly-rated and sought-after wines at, the company says, the best prices.
Recently, IBG signed a distribution agreement with Sysco, a global leader in foodservice distribution. As part of this deal, IBG’s Australian Bitters, the first bitters to be sold by Sysco, will become available through Sysco.com, SyscoMarketplace.com and SuppliesontheFly.com. Sysco operates 340 distribution facilities worldwide and serves approximately 730,000 customer locations. As such, the deal also broadens IBG’s sales reach in the U.S.
IBG Becomes A Public Company And Grows Leadership
IBG became a publicly traded company this year, debuting on the Nasdaq, garnering $5.4 million on its issuance of 1,350,000 ordinary shares at a public offering price of $4.00 per share. With the company positioning itself for growth, particularly in the U.S., going public offered it an avenue to raise capital and tell its story to the investing public, building resonance and interest in its long-term development.
The firm’s initial public offering was also a precursor to growth in the executive suite, as it was announced that former Angostura Holdings CEO, Genevieve Jodhan, would be joining IBG as chief sales officer. Angostura Bitters is the largest cocktail bitters brand with established distribution globally, and it is reported to be the world's most widely distributed beverage alcohol brand. Genevieve Jodhan's joining IBG indicates the firm’s goal of growing its market share within the industry.
Jodhan's professional accolades are known, with the leader most notably having directed the commercial team that re-engineered the distribution model for Europe, the Middle East, Africa, Asia and Australia for Angostura and having marketed the company’s international brands, including Angostura Aromatic Bitters.
She joins the executive leadership team at IBG. CEO Dean Huge has over 35 years of experience in various executive leadership roles and has demonstrated success in growing profitable operations and executing turnarounds. Sahil Beri, chairperson and COO, has a master's in pharmacy and over 10 years of operational experience in the beverage industry. Finally, Eric Yu, chief financial officer, has over 15 years of experience in accounting firms, management consulting and commercial corporations in the food and beverage industry.
A Distinctive Company With An Eye On The Future
IBG wants to disrupt the beverage landscape by making quality a table stakes attribute across its versatile product offerings. As IBG makes its way into the U.S. market, leveraging proprietary technology and vertical integration to disrupt the traditional path from distillery to customer and forging strategic partnerships with entities such as Sysco, the company is hoping to establish a footprint to distinguish itself from its peers and make its name as a global operator.
Featured photo by Aleksandar Andreev on Unsplash.
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