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Non-Tech : Cable Car Beverage (DRNK)
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To: Steve Patterson who wrote (30)2/28/1997 12:57:00 AM
From: Steve Patterson   of 284
 
Here are some answers. I spoke with Amy in Investor Relations:

-Their license to bottle and can Stewart's sodas (95% of revenue), and to sell fountain syrup in Western states, is in perpetuity. This is good.
-Float is about $5-6 million. Management owns about 20% of total shares outstanding. Therefore the illiquidity is not surprising.
-Success of new orange cream (and diet) was much of the reason for the large sales increase last year. No new products planned for intro this year; they will concentrate on getting better distribution and sales for their current brands, including Java Cola and the Aspen non-carbonated line, which I haven't tried. Root beer is still the biggest seller.
-Much of their sales are through specialty outlets (sandwich shops, etc.) Evidently $1 for a soda when eating out is easier for many people than $3.50 for a four-pack to take home.
-The reason you don't see Cable Car in many major supermarkets is because manufacturers must pay for shelf space and they don't have huge amounts of cash. Speculation: with continued good cash flow they may be able to change this.
-Business still varies seasonally, but less so as time passes.

So: do you believe Stewart's will continue to grow in popularity? If so, how fast? Based on this guess you can make a sound investment decision, as it seems unlikely for anything bizarre to happen to the company any time soon.

Earnings in about a week.

Steve
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