Here's a quick summary for any newcomers searching for info on TCBG. Undoubtedly many will be browsing since it's price and volume is taking off setting off alerts on investor's scan criteria parameters.
The Children's Beverage Group, TCBG, is going after the $1B+ juice beverage market with their patent pending, innovative "rip it sip it" straw built into the pouch packaging.
A one of a kind machine, the Volpak, can manufacture and fill up to 120 aseptic juice drinking pouches with a unique straw built in ready to pop up under a laser scored line. No more spilling for children trying to insert the straw. Graphics are colorful and intense as shown in the Sept. issue of Packaging Digest where TCBG won an award for innovative design. I'll copy a portion of the article at the end of post.
These machines cost $500K and take 45 days to manufacture. TCBG has first rights to purchase them as fast as they come off the assembly line.
TCBG currently has 3 operating at the top two private juice label manufacturing plants
(Sweet Ripe and Cliffstar). These companies produce private label juice to the top 10 retailers in the US and Canada. Another 3 machines are in route (Spain) and the CEO states we should have 10 by 1Q99.
The price of the stock has started to move because the long awaited PR has been released indicating the deal with WalMart to produce their "Great Value Brand" to be sold in their supercenters. The artwork is to be graphic and colorful with messages stating for instance, "You should wear your helmet when riding your bike".
Also a deal with Winn Dixie to include in their children's pak-a-lunch.
SI post #2133 has some of the latest PR's.
AS for the numbers:
Each machine is capable of $5-6M annual revs. According to investor relations there will be a profit margin of about 15%. This may be very possible because TCBG has only 6 employees. The machines are run by the manufacturing plants so little overhead costs.
In the July PR, the CEO stated 1999 revs to significantly exceed the orginally projected $34M. (More machines are coming). And evidently more deals with retailers.
Shares outstanding is the unknown. Last count was 22,000,000. A few months ago I believe some kind of offering or loan was performed to raise another $2M or so. This is a BB stock so financials are not available although company has chosen an auditor and want to report soon and try to get to the Nasdaq.
Many PR's were released in late summer to try and get the stock price up (My opinion) for this offering. In the July PR, CEO said TCBG will invest $1.5M for the acquisition of 7 more machines using financing. No details on this agreement. Maybe no money was raised, don't know.
The WalMart deal is utilizing 2 of the available machines. We are to have 10 running by 1Q99. I can't help but think what kind of deals are in the making with other private labels. Also I must add TCBG will have their own line of 10% juice, 100% juice and flavored spring water called Brain Forest with cool kids graphics. Also Brain Slush a semi frozen drink (slush) that will not completely freeze in the freezer. Investor relations pegged profit margins at 20% on those products.
In Aug. a wild PR was put out that TCBG was making an offer to buy Nestle's Juicy Juice line. It was felt by someone here on the thread that TCBG may have used the Juicy Juice purchase PR for publicity purposes in hopes of attracting attention to the juice industry. It may have been TCBG's way of telling all private juice brands that we have the proprietary, straw in a pouch packaging.
Here is a portion of the Packaging Digest article. This was not a paid advertisement from the company.
A tidy and transparent pouch, complete with its own drinking straw inside, has all the markings of a hit for Brain Forest flavored pure spring water for kids from The Children's Beverage Group. But the Northbrook, Illinois based company is brainstorming more ways to snowball the impact of the AmeriStar award-winning standup pouch by extending its product line to include 10% juice drinks in assorted flavors.
The Children's Beverage Group plans to move into national distribution in a big way with a new juice drink pouch, paving the way for private label brands, several stockkeeping units and additional product launches. Distribution of the new 10% juices will initially start in the Northeast corridor and down to the Midwest, says company CEO John Darmstadter, though he tells PD he's confident the new package and products will quickly establish themselves nationally, not only for the Brain Forest brand, but for other brands.
Rollout of the products is in general merchandise, drug and superstore chains. Customers include such large chains as Wal-mart and Winn-Dixie. Darmstadter indicates the goal is to maintain an everyday price range roughly 25% below that of a major juice drink competitor.
Also equipped with inner straw, the new juice drink pouch comes in a slightly smaller 200ml 6 3/4oz. size which is completely opaque and tapered at the top.
Under development for about a year, the new pouch is also produced on the Volpak S-240 DF intermittent motion, horizontal form/fill/seal system that inserts the straw in-line.
The market speaks loudly, notes J.P. Perreault, vp of manufacturing. We have to meet demand for a competitor to a major pouched juice drink brand. Our film/foil package has all the characteristics to make our juice drink products winners.
Additional products, including 100% juice, are also in the works, Perreault notes.
Measuring 4 5/8 in. at its widest point and standing 6 1/4 in. tall, the unique juice pouch tapers toward the top seal which, like the water pouch, gets a clean directional tear, or Children's patent-pending rip it sip it feature, via a laser cut score line just above the seal area. A machine applied tear nick also facilitates opening. The drinking straw is enclosed within a 1/2 inch wide double sealed area at one corner of the pouch, which keeps the straw securely in position during filling. Once the tear notch is accessed, a clean strip of film tears away across the top of the pouch, courtesy of the laser cut, and the straw pops up while the rest of the pouch remains sealed. Shelf life of the various hot- and cold-filled products is a minimum of one year, Perreault indicates.
Efficiency, speed and most importantly, accuracy were underscored by Children's to produce both water and juice drink pouches, especially in light of the product line expansion. Company projections indicate a sales spurt of the new line of juices that Children's expects will continue through the rest of the 90's and beyond.
The technology to insert a straw and package the product at high speeds is what most impressed the packaging team at Children's, says Perreault, adding that the company appreciates the benefits of forming its own packages. Its a question of economics and speed he says. Having our pouches made inline gives us great control over the production process. The equipment is modular. Its also the best horizontal form/fill/seal liquid handling system out there for this type of application. There really wasn't another machine that could actually insert a straw inside a pouch and do it so reliably.
Generally, the pouches are produced on one of six Volpak S-240 DF hf/f/s systems thus far situated at three production sites of contract packagers including Cliffstar in Joplin MO. and Sweet Ripe in Toronto. Ultimately, we hope to add more machines, Perreault explains. We plan to have more running by the end of the year, and are looking at even further additions, so we're hoping to output quite a lot more product.
Perreault pegs actual operating speeds of the machines running the Brain Forest pouches at about 110 per minute. The machines can also make one large pouch twice the size of the regular one.
Darmstadter says he's most pleased with the equipment suppliers and their dedication and commitment to creating a cutting edge product that sets a standard for all liquid pouched products, with the unique rip it sip it patent pending straw in the pouch feature he says, we have clearly created a better package and product profile.
Hope this helps.
Steve |
