New thread...I couldn't follow the last one anymore
Blue...I've always said that the partnership with Cott was a positive development for SODA so I'm not debating whether it's good for their margins or not. I'm certain that it is.
Again, I'm not sure what we're debating. You seem to be saying that SODA should not manufacture in the US because of labor and regulatory costs. I agree that those costs are higher in the US than anywhere in the world. My point was that if SODA's US flavors are being manufactured in the US by Cott then SODA is already paying those costs because Cott has factored them into the price they're charging SODA to produce their products.
I agee that it makes no sense to build a US plant at this time. They only thing we seem to be disagreeing on is if somewhere down the road it might make sense to eliminate the upcharge that Cott is charging by building a plant . I feel that SODA is already paying the US labor and regulatory charges via having them baked into the price Cott is charging so the only added expense is the captial expense of building a plant. I understand it's a gigantic cost and it may not be justified for a long time but if SODA's US volume and market penetration continues to expand it might be worth the investment.
Guys your debate was fun to watch from the sidelines, but the reality is that a new plant will be Based on economics alone. If Soda can get to the 1-2.5% market of the Cola/Bev. market, you will get a plant built here in the US. Its just not debatable. This plant here will be more automated in its nature than there current plants outside the US due to labor cost. My Guess is within a year that announcement will be made which will end the debate. Bought back my Srpt today in the mid-33's (back to a full position). Best guess location?
If it is already paying that upcharge, which I agree on, that is baked into the gross margin equation, so why then, ever, assume the total liability and taxation of your own facility in the US. There would be a much greater gross margin contraction if they did this in my opinion which I think is shared by SODA's management team. It is less than a 2% margin depreciation by the way YOY. If you use the major beverage producers gross margins as an example of where SODA would be with a plant in the US that they soley own, you see it would be in the high teens that margin difference if my calculations are correct.