Corp? Here's the article. Let me know if you need any help getting her on board. The $2.95 I saved you? By me a Bad Ass! lol
Drinks Americas Banks on Icons
Friday, 08 May 2009
Wilton, Conn.-based Drinks Americas Inc. is facing a sobering environment in which to sell its iconic-branded alcoholic beverages as the world deals with its hangover from the last era of excess.
Born in 2004, the company has a stable of beverages it markets, including Donald Trump's Trump Super Premium Vodka and Willie Nelson's Old Whiskey River Bourbon. It also has some non-alcoholic brands, including Paul Newman's Own Sparkling Fruit Juice Drinks.
Neatly put, the company is an infant facing serious economic challenges and consumers who are watching their money closely.
J. Patrick Kenny, president and chief executive officer, said his company has passed a major hurdle in this economy by securing a new line of credit.
He said Drinks Americas lost a line of credit it had with one bank, which hampered its ability to move product. But the company has secured a new line of credit and is able to return to shipping its beverages.
Many companies have told similar stories in this economy of having credit lines yanked out from under them and only recently have they been able to find new lines. Some have not made it, but Drinks Americas is striving to move forward.
Along with obtaining the credit line, Drinks Americas also completed the acquisition of Olifant USA in January. The Dutch-made Vodka immediately added about $1.5 million in revenues to Drinks Americas' balance sheet.
Although there is concern over celebrity-branded items floundering in this economy, Kenny said Drinks Americas doesn't partner with celebrities, it partners with icons.
"We view an icon as one that's transgenerational, who doesn't need an introduction anywhere in the world," he said. The company plans to roll out Kid Rock Bad Ass Beer this year. Kenny said there have been 8 million web hits on the brew and it's not yet on store shelves.
Willie Nelson's bourbon continues to be a strong seller and the Trump vodka has remained in the market when many others have failed, he said.
"We have three, if not four, viable brands," he said.
Although Kenny, a 22-year veteran at Joseph E. Seagram & Sons, said his brands aren't tied to your garden-variety celebrities, an investment broker said she believes the same risks still apply.
"As long as you can guarantee the person carrying the brand for you is squeaky clean, you're OK," said Carolyn Frzop, vice president of investment at Janney Montgomery Scott's Fairfield, Conn. office. But if the celebrity makes a mistake and falls out of favor with the public, it could harm the brand. Public fickleness could also damage sales, she said.
Drinks Americas is not alone in hitching some of its fortunes to stardom, other retailers have done the same thing with mixed results. The Wilton company's major competitors, which include Diageo PLC, the No. 1 alcohol beverage company, which bases its U.S. spirits operation in Norwalk, Conn., also have embraced some celebrity branding.
Frzop said it's not only the celebrity issue, Drinks Americas is facing a difficult marketplace.
People are paying more attention to how much they are spending and what they are spending their money on, she said. That was less of a concern a couple of years ago, she said.
Even if the company navigates these troubled waters, its stock still is stumbling; "It hasn't exactly taken off," Frzop said.
DKAM, the stock symbol for Drinks Americas, has been trading in pennies for more than 52 weeks and its financial reports show net losses. The company reported a net loss of income of $6.3 million for the fiscal year that ended April 30, 2008. In 2006, during the same period, the company reported a net loss of $5.8 million.
The company is gaining in sales, up more than 180 percent in the three years. It's not uncommon for a young company to experience several years of losses while in the building stages.
No analysts are listed as following the stock and other investment advisers declined to comment because Drinks Americas is a penny stock.
Drinks also has been fighting several lawsuits, including one that the company settled by agreeing to pay a vendor $27,100 over three months.
In one case, Drinks Americas settled a dispute over its acquisition of the Rheingold beer brand to the benefit of the company, according to Kenny, who said the company wound up with a $5 million brand for about $600,000.
As for its future, Kenny said, the launch of Kid Rock beer will be big this year and Willie Nelson's bourbon continues to sell at barbecue venues and on the NASCAR circuit. Kenny also said acquisitions look promising for the company, but he wouldn't provide any targets.
Ultimately, Kenny said his company will come out of this economy stronger because it is going to survive, while others don't. He said he's been trying to communicate to investors is that his iconic brands are underappreciated and not valued as assets on the balance sheet. That makes Drinks Americas' 84 million shares of stock "highly undervalued," he said.
Copyright (c) 2009, Connecticut Post, Bridgeport
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