By Ken Nagy, CFA
Panache Beverage Inc. (Other OTC:WDKA) is an alcoholic beverage company that specializes in the development, global sales, and marketing of spirits brands. The Company follows a “build and exit” business model in which its brands are “built” or developed into attractive acquisition candidates for large global alcoholic beverage companies. As these brands mature, Panache aims to sell these brands individually while continuing to develop its portfolio of brands.
Panache was formed in 2004 as an import company for the premium vodka 42 Below NZ. The brand was known worldwide yet lacked traction in the U.S. After a year the brand was in 19 states and began to outperform bigger names. Noticing the threat to its Grey Goose line, Bicardi added it to its list of threats and was later approached for acquisition. At the time Panache was responsible for more than 50% of the total annual cases sold. In December 2006, Bacardi purchased 42 BELOW for $91 million (representing a gain on sale of $71 million). Shortly thereafter, Panache shifted its focus from importer to a 360 degree spirits development, sales and marketing company focusing on developing brands that fill voids in the current spirits market — brands with unique brand/product attributes and category positions.
WÓDKA is triple distilled and charcoal filtered, earning it a 90 point rating by the Beverage Testing Institute – a first for any brand available for under $10.This represents year two for the WÓDKA brand. Panache is focused on tightening and improving fundamentals of the WÓDKA business while investing behind the areas with the most significant growth potential including key states (NY, CA and FL), off-premise chains (nationally and regionally) and international markets. Panache will continue to push its import partner to expand the brand's national footprint and invest in all other areas. Panache will continue to drive the brand's positioning through quirky creative, PR and social media. Panache has positioned WÓDKA in the category as fun, quirky, aloof – all attributes which have been embraced by trade and consumers making WÓDKA a true “brand” very quickly. The company projects the following case sales for the WÓDKA brand over the next several years.
Projected Case Sales
Alchemia is a traditional Polish vodka that is naturally infused with select raw ingredients and made in the spiritusvini, or “spirit of wine.” The vodka itself is a 3 time distilled premium grain. Alchemia’s distillation process infuses flavors, NOT simply adds flavor (flavored vodka merely adds extracts during the distillation process.) This way the ingredients become part of the vodka rather than just ‘added to.’ The spirit is available in three varieties: Czekoladowa (Chocolate), Imbirowa (Ginger) and Wiśnowa (Wild Cherry) and is best enjoyed straight up, on the rocks or in a classic cocktail. Alchemia was developed in response to the exploding flavored vodka category saturated by brands relying on mass produced flavorants and candy-aisle flavor profiles designed to lure the younger consumers. Panache hopes Alchemia defies its own category as a premium infused, gourmet vodka for foodies, gastronomic, wine and brown spirits enthusiasts.
Panache will focus on investing behind that position and developing steady, organic growth of the brand in 4 key states including: NY, NJ, FL and CA. The four states are the same for all brands, which will enable Panache to maximize its infrastructure and best capitalize on the investment its Wodka Vodka import partner has made in these markets. The plan for marketing for Alchemia will focus on driving awareness of the brand and its epicurean positioning using a blend of print media and aggressive, yet targeted event marketing; these approaches will be supported by PR and social media. Sales efforts will be focused on driving placement at the right restaurants.
Projected Case Sales
In November of 2012 Panache launched Alibi. Alibi is an American Whiskey and the goal will be on establishing the brand including its position amongst consumers in the increasingly competitive brown spirits category. Panache will employ a disciplined approach to the Alibi roll out bringing the brand to four states: NY, NJ, FL and CA. The Required Capital for 12 Months is approximately $1,065,000. Panache plans to maximize its existing sales infrastructure and relationships and draft off the spend of its Wodka Vodka importer while sharing costs with Alchemia.
The firm projects selling 48,400 cases in year one and 83,000 cases in year two. Rolling it out with another brand enables sharing costs with Alchemia. The Alibi marketing campaign will be a combination of grassroots, bottom up alternative cultural immersion and a bottom down PR/celebrity approach all connected through social media.
Projected Case Sales
Alibi was developed to exploit a gap in the exploding brown spirits category – the need for an edgy, cool, premium Whiskey that appeals to the younger generation of LDA drinkers. Whiskey and Bourbon brands today are largely positioning themselves alongside “tradition” and “heritage”, creating brands that look, feel and are marketing against the classic cocktail era.
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- 2013- 197,400
- 2014- 264,000
- 2015- 328,000
- 2013- 6,592
- 2014- 14,100
- 2015- 21,300
- 2013- 48,400
- 2014- 83,000
- 2015- 135,300