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Sunday, 07/29/2018 6:57:23 PM

Sunday, July 29, 2018 6:57:23 PM

Post# of 186029
RBIZ Competitive Due Diligence

Moderators: please make sticky.

This is not investment advice and I am not a registered investment advisor.

On a recent trip to the GCC region (1st week or July), I was curious to see if I could find some Verus Foods products already on the shelves, although it was a bit too early. I was very curious about this Shin C product and the RBIZ claims about the popularity of "vitamin drinks" in the region. I did not find any Shin C or other Verus products, but I did get some insights into this product category and the competition and I thought it might be helpful to some of you to share those learnings here.

The Competition
I stayed in the Dubai Marina District and I didn't venture out to markets in other areas, but in 3 for 3 convenience stores and markets I went into in the Marina area they sold what is clearly the vitamin drink for Shin C to beat: Vitaene and Vitaene Extra. I'm an American consumer and to me the Shin C packaging seemed a bit weird when Verus released pictures of it, but now I see what they are trying to do—It's what the market recognizes shape-wise in this product category. I have mixed feelings about identical bottle dress for our Shin C line of products, but this is done sometimes—tetra packs with simply different labeling, as an example. This packaging would also help communicate to a would-be purchaser what they should generally expect if they purchase it.

One thing that I thought about this product category from the Verus press releases was that it was meant to be a vitamin "health" category type of drink. On my trip I learned a bit more about this particular product. It's in the energy category with crossover to health and wellness, not just a "healthy" drink. Of course, I had to try the competition's drink... It tastes similar to Red Bull, but smoother, and with a great subtle fruitiness. I really was pleasantly surprised by this drink and I would prefer it far more than Red Bull, which I also buy occasionally.

I asked the store person if he sells many of these. He gave me a look like "oh yeah we do" and said especially on weekends at night. That's when I learned that it's also an energy drink—people sometimes drink these for long nights out.

Challenges
Fighting for shelf space is always a challenge, but this Vitaene brand is entrenched, at least on a hyper-local level in Dubai. I even saw this brand for sale in a small Dubai Airport kiosk, so it's really well-established locally. Perhaps familiarity will be an aid to increased channel product throughput—for merchants and buyers to at least give the product a chance—but if they can overcome the challenge of getting some shelf space, they could be on to a very interesting breakout category and ride a wave of category growth over the next couple of years. We shall see.

In short, for Shin C in particular, I think the biggest challenge for Verus is going to be elbowing its way into the market and fighting for shelf space alongside this ubiquitous competitor product.

However, if Shin C is as good or better than Vitaene, this could be very, very interesting and I'll tell you why I think so. I like it and I'm picky. I've spent time going out in clubs, et cetera, and I see a lot of those kind of sales driving adoption like Red Bull did in the early years—the clubs in Europe largely drove brand awareness and adoption as Red Bull sales skyrocketed. If they figure out what kind of spirit to get bartenders to start mixing with it, that can be a big driver of brand awareness. I'n not sure that they've considered this in their go-to-market, however.

On my next trip I expect to see Shin C and other items on shelves and I'll report back in a quarter or so whenever I've done more diligence in the region.

Below are a couple of links to photos I shot of this competitor product on shelves in Dubai. The green bottle is a sugar-free version.

https://ibb.co/gtyrTo

https://ibb.co/gkYQoo