Update From Pulse Beverage: 2 Million Case Sales Forecast for 2013—10X from 200,000 2012
Pulse Beverage (PLSB) posted a very detailed shareholder note from CEO Bob Yates on progress at Pulse Beverage today.
The BIG Points:
1) By March 2013, sales of Cabana™ will reach 1,000,000 cases on an annualized basis
2) 2013 sales are estimated to be over 2,000,000 cases, in total, based on what we know today
3) PULSE® brand of functional beverages distribution starts December 2012 and through United Natural Food International and Nature's Best, the two largest natural food distributors.
Bottom-line—with a brand worth >$100,000,000 in Cabana 100% Natural Lemonade…and a $17M market cap today…PLSB remains our #1 emerging consumer brand stock pick.
Here is Mr. Yates note to shareholders…
Dear PLSB Shareholder,
It's a very busy and exciting time at Pulse. Since my last update to you in August, 2012, Pulse has made great strides in many areas. I would like to highlight just a few of the key accomplishments and building blocks we have set in place during the first ten months of 2012:
· We have cost efficiently and methodically built a beverage company from the ground up and have overcome difficulties associated with start-up beverage companies relating to financing and product development and acceptance;
· We completed contracts with co-packers in three strategic locations: Oregon, Virginia and Texas; which allows us to produce and distribute our products nationwide cost efficiently;
· We have built a nationwide distribution system with 83 distributors servicing 43 US states, Canada, Panama, Bermuda and Mexico. Once this "critical mass" of distributors was established and operating well we could then approach and secure listings for Cabana™ with large grocery and convenience store chains resulting in approved listings to date totaling over 6,500 outlets. While we are starting to deliver Cabana™ to some of these outlets we are ramping up production to deliver Cabana™ to all of these outlets starting in Q1 2013. We expect to add at least another 7,000 listings during the remainder of this year and into next year based on discussions we have underway. Centralized purchasing for large grocery and convenience stores has resulted in their moving of shelf settings and product placements to the fourth quarter of 2012 with full implementation taking place in Q1 of 2013;
· Our distribution infrastructure has been developed without large capital outlays yet we have gained rapid market acceptance for our Cabana™ 100% Natural Lemonade brand where taste, calories, and all natural ingredients, rather than price, are the major rationale for a consumer purchase;
· We completed the re-design and flavor profiles of our flagship PULSE® brand of functional beverages. The results from our product and flavor testing was that our nutritional claims held up and packaging (see Page 2) and flavors are exceptional;
· Now that we have established a substantial portion of our distribution system, we will readily be able to start to "Red-Carpet" our PULSE® brand of functional beverages into our existing distribution system by December 2012 and through United Natural Food International and Nature's Best, the two largest natural food distributors. Distributors have been made aware of health benefits of PULSE® and are eagerly awaiting the initial launch in December.
As we have indicated in the past, the key to a successful beverage company is its ability to develop a critical mass nationwide distribution system. In that regard, we have spent the first ten months of 2012 focused on the establishment of a high quality extensive distribution system using our Cabana™ 100% Natural Lemonade as our introductory product which acceptance by distributors, retailers and consumers has exceeded our expectations. Our distribution network includes over 80% Class "A" distributors such as Anheuser Busch, Miller Coors, Pepsi, Coca-Cola and RC/7-Up.
For the nine months ended September 30, 2012, we sold approximately 200,000 cases of Cabana™ 100% Natural Lemonade into our distribution system with total net sales of $2,058,000 achieving a 35% gross profit margin. This was accomplished during what is considered the initial beverage company start-up and product roll-out phases which indicates strong consumer acceptance.
We estimate, based on large grocery and convenience store chain listings approved to date and probable listings from discussions in progress, by March 2013, sales of Cabana™ will reach 1,000,000 cases on an annualized basis and 2013 sales are estimated to be over 2,000,000 cases, in total, based on what we know today.
Reaching 1,000,000 cases is "proof of concept" for major beverage companies seeking out the next big beverage product. Based on beverage industry prior sales of major beverage brands the beverage industry would place a minimum value of approximately $100 million for our Cabana™ 100% Natural Lemonade brand. Most emerging brands do not achieve 1,000,000 cases until four or five years after launch, if ever. As support for beverage brand values, Honest Tea, after attaining sales of 1.4 million cases, was sold to Coca-Cola for a reported $400 million approximately ten months ago; the sales price was a large premium to standard beverage brand valuations.
As we have stated, our mission is to be one of the market leaders in the development and marketing of functional beverage products that provide REAL (not perceived) health benefits to beverage consumers.
Since March, 2011 our development team has perfected and completed the re-design, testing and flavor profiles of our PULSE® brand of functional beverages in three health platforms: Men's Health Formula™, Women's Health Formula™, and Heart Health Formula™.
We have scheduled the end of November for our first full-scale commercial production of PULSE® at our Marion, Virginia co-packer. Product will be released to our distributors in December, 2012. We feel that exceptional packaging and flavor profiles will place PULSE® as clear leaders in the functional beverage product category.
Over the next few months, we will be focused on: completion of a financing to sustain our growth, increasing listings for our products in large grocery and convenience store chains, launching our flagship PULSE® brand of functional beverages, expanding our distribution system in the US, and establishing foreign distribution and production in China and Europe. We are in the process of obtaining the financing necessary through an equity offering so that we can sustain our growth and accomplish our goals.
We sincerely appreciate your interest and continued support. Feel free to contact myself at 720-382-5476 or Bev Jedynak, our shareholder relations liaison, at 877-302-6404.
Thank you and best wishes for a prosperous and healthy 2013.
Sincerely,
Robert E. Yates, President and CEO
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