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Wednesday, September 20, 2017 12:08:40 AM
Not splitting hairs.
You wrote this: "And then the math on 10,000 stores in the U.S. alone is $10M for the year, "worst case." Add in 7-Elevens in other countries."
And you said that, in response to this comment: "That's $2.73 per day in sales, or one unit per day."
I'm not gonna explain the difference between OEM, wholesale and retail pricing again or why one shouldn't use 10,000 stores as the multiplier; but there are minimum thresholds to maintain authorization on shelves. It's not explicitly stated but let's all agree to guess it's a $1,000, mmmkay.
No CEO is going to guide to failure. "We expect this new product launch NOT to move. $250 per store per year average and it'll be defunct within 12 months."
So what I think we've been given is the minimum threshold to maintain authorization per store ($1,000) and our multiplier is the "largest division" in 7-11. I'm estimating that at 4,500 stores because that's the number I think Celsius got into when they landed 7-11.
If the launch is successful, worst case, is $1,000 * 4,500 stores = $4.5M. Are you feeling the business model now gaucho?
A high percentage of beverage products (90%+) never eclipse $3M a year, in any year of their existence, let alone their first year. A true "worst case scenario" is far south of my $4.5M projection and like Patagonia south compared to your implication of $10M.
The reasons we can justifiably expect a successful launch is we've already displaced Guayaki within one distribution network in SoCal. That means our product is going into the same doors, in front of the same eye balls, that already actively seek out Guayaki Yerba Mate. Those doors belong to 7-11. Odds are, 7-11 probably already have a pretty good idea what those eyeballs will buy.
As discussed previously, we differentiate based on brand: Marley > Guayaki. We (probably) have less Yerba but we also have less sugar. If the brand difference is enough to win an initial trial, the superior taste should bring a significant percentage of repeat business.
Superior brand and taste plus less sugar = win, win, win.
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