Flow Water is continuing to expand operations at its Aurora, Ontario, production facility while simultaneously seeking its divestiture, announcing today a five-year manufacturing partnership with alcoholic RTD party punch maker BeatBox Beverages set to kick off next summer.
The deal, due to commence sometime between May and July 2024, marks Flow’s first move into beverage-alcohol manufacturing, a commitment that will require the installation of a fourth TetraPak production line at the Aurora facility, along with securing the relevant government permits and permissions.
BeatBox has committed to purchase minimum annual volume (MAV) equal to $115 million in revenue over the life of the contract, which also includes a take-or-pay provision; should the actual volume purchased differ from the MAV over a 12-month period, BeatBox is on the hook for 85% of the value of the difference.
The deal aligns fast-rising BeatBox – which sells its punch (11.1% ABV) in 16.9 oz/500 ml TetraPak cartons in over 83,000 stores in North America – with Flow, which has made the sale of the Aurora facility a priority.
Upon announcing its co-packing partnership with Joyburst in October, Flow founder and CEO Nicholas Reichenbach told BevNET, “The stronger our co-packing business, the better the expected outcome on the sale of Aurora.”
Reichenbach reinforced that point in a LinkedIn post announcing the BeatBox deal, writing “We believe that this agreement also directly supports the valuation of our Aurora production facility as we continue to consider options for its divestiture.”
In a statement, Aimy Steadman, BeatBox co-founder and COO, echoed the two companies’ alignment on issues beyond the bottom line.
“BeatBox is experiencing rapid growth as a leading alcohol brand utilizing Tetra Pak’s 500ml packaging. We are pleased to announce our strategic partnership with Flow, which will bolster our production capacity throughout 2024 and beyond.”
BeatBox Eyes $500 Million in Sales by 2028
Steadman, CEO Justin Fenchel and CMO Brad Schultz co-founded BeatBox in 2011, and gained traction from a 2014 appearance on SharkTank, during which billionaire investor Mark Cuban invested $1 million in the company. At the time, BeatBox’s product mix consisted of large-format, bag-in-boxes, Fenchel said during a presentation Monday at Beer Marketer’s Insights’ fall seminar.
Two decisions in the last decade helped ignite BeatBox’s meteoric rise: a shift to single-serve TetraPaks in January 2017, and the move from wine and spirits distributors to beer distributors, who can better service convenience stores, in February 2018.
“We decided we needed a single-serve trial size at a better price point,” Fenchel said. “We launched the single-serve TetraPack in January 2017, and then quickly realized that the wine and spirits network was great in a lot of things, but this thing was flying in convenience stores and it wasn’t really getting merchandised or restocked.”
Georgia was the first state where BeatBox launched with beer distributors.
“We did more cases in the first two months in just the state of Georgia than we did in the entire 30 states for the previous year,” Fenchel said.
BeatBox started 2023 with 32,000 retail accounts ordering product monthly. That number has increased to 67,000, with account-level sales increasing +30%, Fenchel said. The company is on pace to finish 2023 with sales just shy of 140,000 barrels.
“Next year is going to be a monster,” he said.
The company is preparing to launch a packaging refresh for its core punch flavors: Juicy Mango, Blue Razzberry, Fruit Punch, Tropical Punch, Peach Punch, Fresh Watermelon and Cranberry Dreams.
“These are just nostalgic, classic flavors that you instantly recognize,” Fenchel said. “We’re not trying to recreate a margarita or a mojito.”
BeatBox drinkers skew female (57%). Nearly 40% of the brand’s drinkers are Millennials (aged 27-41), but 52% of BeatBox drinkers are 42 or older – 34% are Gen X (aged 42-58) and 17% are Boomers (age 59+). BeatBox over-indexes with legal-drinking-age (LDA) Gen Z consumers, with 11% of BeatBox drinkers aged 21-26, compared to 6% of the overall population of LDA shoppers, according to data Fenchel shared.
“We think BeatBox could be a $500 million brand just in the U.S. in the next five years, so we’re going to continue to scale BeatBox,” he said. “We still have one of the lowest CWDs [category weighted distribution] of any product out there – we’re 30%, so there’s a lot of runway. We’re not in Walmart, we’re not in Kroger, we’re not in Target, we’re not in Costco. These are all coming, and they’re cranking when we do get tests, so lots of excitement there.”