New Age Beverages Corporation (NASDAQ:NBEV) Special Business Update Conference Call January 16, 2019 8:30 AM ET
Cody Slach – Director, IR, Liolios Group
Greg Gould – CFO & Administrative Officer
Brent Willis – CEO & Director
Jay Barrow – Head of Brands
Conference Call Participants
Mike Grondahl – Northland Securities
Anthony Vendetti – Maxim Group
Kevin Barrett – Bank of England
John Harrell – Harrell & Associates
Greetings, and welcome to the New Age Beverages Corporation Business Update. At this time, all participants are in a listen only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded.
I would now like to turn the conference over to your host Cody Slach, Head of Investor Relations. Please go ahead, Cody.
Thank you and good afternoon. Thanks for joining New Age Beverages Corporation’s investor conference call to provide a business update on the company and in particular discuss the partnership between Docklight Brands New Age. I’m Cody Slach with Liolios Group, the Investor Relations counsel for New Age. I’d like to welcome you all to the call today and thank you for joining.
On today’s call, we will have Brent Willis, Chief Executive Officer of New Age Beverages; Jay Barrow, Head of Brands at New Age; and Greg Gould, Chief Financial Officer.
I’d like to remind everyone this call may contain certain forward-looking statements reflecting management’s current expectations regarding future results of operations, economic performance, financial condition and achievements of the company. Forward-looking statements, specifically those concerning future performance, are subject to certain risks and uncertainties. The transcript of today’s call will be available on the company’s website within the Investors section at newagebev.com.
I’d now like to turn the call over to Brent.
Thanks, Cody. We’re excited about the relationship with Docklight and the potential it represents to the shareholders of both companies, this is big. And we’re just bottling the feeling of, don’t worry be happy. And we believe that the combination of Bob Marley in cannabis infused beverages is just a match made in heaven. Just three weeks ago on the 21st of December New Age closed its merger with Morinda. With it, New Age equipped $300 million in annualized revenue and gained penetration in 60 countries with over 200,000 dedicated distributors and gained an e-commerce business as part of that system of over $150 million in monthly subscriber-based auto shipments. But today we’re not going to talk about Morinda or the remainder of our core business on the call, frankly, because we do not want to dilute the importance of this new relationship between New Age and one of the global leaders in the cannabis sector.
We will say briefly though that on our core business our national distribution expansion plans are materializing and are expected to be transformative for that division and on Morinda we are also optimistic about a breakout year. The quality of that people or the quality people at that company worldwide is impressive, the quality of the distribution partners worldwide is impressive and the execution capabilities of the company worldwide are well impressive. The global launch of our Noni+Collagen beverage is right on consumer trend. It is performing well above the expectations and we are just getting started with what we can do with the New Age portfolio through this incredibly strong and robust system. I look forward to being with the top 150 distributors again in the later part of this week as we rollout our 2019 execution plans, including what we plan to do with the New Age core portfolio, our Health Sciences division portfolio, and our CBD-infused beverage portfolio through this network.
But it is encouraging as the progress, as we have on the company overall, I do not want it to overshadow the importance of this new venture, and what it means financially for retailer and distributor partners, what it means for consumers, and importantly, what it means for the New Age shareholders. So we’re going to be singularly focused on this call today about a major new agreement that we believe will have a material impact on the financial results of New Age in 2019.
With this agreement with Docklight Brands to develop and distribute the Marley branded cannabis-infused beverages, New Age gains the expertise, gain the credibility in frankly years of research and insights in the cannabis sector, and gain valuable legal and regulatory and further scientific insight and can bring all of that to bear — all of it to bear with all of the equity over the Marley brand now driven through New Age’s increasingly strengthening distribution system and consumer reach. Of all the things that New Age has done over the past 2.5 years since inception, we believe this initiative has the potential to be the biggest impacting of all.
So on today’s call we’d like to answer three questions that you might have, and discuss or answer any questions you might have and discuss three main points. Number one, what is the agreement intent with Docklight and why did we do it? Number two, what can we expect and when? And number, three what does it mean for New Age strategically? So first off, why did we do the agreement with Docklight? Well, as you know, we have been re-architecting the Marley brand in ready-to-drink beverages over the past year. In that period, we have developed and launched organic Marley Mate, Marley Cold Brew, in addition to creating like a whole new vibe behind the brand which support not just in social and digital, but all the way through the consumer purchase decision process to the point of sale. As a result, the brand overall is experiencing tremendous organic growth.
Our sales per points of distribution has increased by more than 40% to lead their respective segments in terms of segment growth. And these two new products within the Marley franchise have more than doubled the previous level of distribution. We believe, we will have some important significant news to share in further national distribution in the very near future that will also be material for both the brand and New Age overall.
But as the consequence is kind of strengthening and building that Marley platform that we’ve established, we believe we are well-positioned to take the brand to the next level.
I believe as most of the investors know our license rights that we’ve purchased in late 2017 were for the Marley brand for ready-to-drink non-alcoholic beverages. Privateer Holdings own the rights to the Marley branded All Thing is Cannabis. So we just thought it would be the natural thing to do to work together strategically align, co-develop a plan, leverage each other’s strengths and just go crush it bigger time together. So that’s why we did this relationship with Docklight.
Well, look Docklight is in authority on the entire regulatory landscape in cannabis and has more expertise in product ingredient, strains, impacts, efficacy, you name it, than virtually anyone in the industry. New Age complementarily has demonstrated an ability, I think to envision, formulate, commercialize, ready-to-drink beverages in a highly disruptive manner versus traditional legacy industry leaders and that’s why now the company is the 40th largest non-alcoholic beverage company in the world, one of the largest healthy beverage companies in the world and the fastest growing.
So it was a natural combination of complementary abilities and skill sets. And we both shared the relationship with the Marley family and believe that we just pulled our resources and gained first mover advantage in this sector with a globally relevant brand that the return for our respective shareholders could be outstanding. So that’s why we did this. And who is going to be doing what is part of the expansion.
Financially after covering the cost we are producing and commercializing the brand ingredients, et cetera. We are sharing in the profits 50-50 and we believe that both parties will do their share of the heavy lifting to make the brand a success in the emerging cannabis-infused beverage segment. Our interests both strategically and financially short and long-term are 100% aligned.
So let’s talk about point two. What can we expect and when? And to address this point I would like to ask Jay Barrow, New Age’s head of brands to review the commercial expectations, sales and marketing plans. Jay?
Thanks Brent. In the two years I have been with New Age, we’ve purchased and integrated five companies, completely re-architected our entire brand portfolio, developing and launching new products, doubled retail distribution, gained new national accounts, uplifted under the NASDAQ, started to build the New Age corporate brands and increased the scale of the company around 150 times.
All that, all of that tell the comparisons potentially seen with New Age’s cannabis-infused beverage portfolio and what we see in particular for the Marley brand and the partnership with Docklight. We initially said we introduced our portfolio in time for Christmas and we did. We did smaller initial sample runs on our CBD teas and CBD sparkling waters and we accelerated our manufacturing learning curve process. These initial samples for retailers and distributors and the early feedback already gained since the national background in October have now paved the way, over the launch of our Marley brand and the CBD-infused beverages. We gave you the initial Marley CBD-infused beverage lineup over the past few days with the Winter Fancy Food Show in San Francisco. We are the only major beverage company there, we are the only beverage company prepared and we took advantage of it and we took orders. For three days straight we had line up of both people wide in 50s and thereafter.
It was our most successful tradeshow in history. Remind you we are the second most popular booth in thousands of CBD competitors in NACS a much bigger show just three months ago. We believe our Marley CBD-infused portfolio is just an absolute homerun. We will gain first mover advantage nationally and internationally with the retail and consumer response so far and any indication of impending success we will add very significantly to the scale of New Age. As Brent mentioned already we recently closed $300 million even before this launch of Marley branded CBD beverages.
Marley lineup consists of three cannabis infused relaxation drinks packaged in 15.5 ounce cans in lemon raspberry, herbal honey and peach raspberry flavors, all with iconic Marley branding in a very current mat black finish and we will have more news to come and more exciting Marley CBD-infused products to add to the portfolio.
The progress in light of broad-spectrum pharmaceutical grade CBD full on has effect and includes 25 milligrams per serving. The Marley products also contain chamomile flower flowers, valerian root and passion flower and lemon balm extract to create an optimum relaxation drink together with CBD. Number one, unlike any other CBD product out there even in vision and number two in the segment of relaxation drink that the Marley brand really originated and still lead today. All our products to third-party testing for consistency, quality, efficacy, dosage and stability, consistent with the same protocols we used in our health science division and all products comply with the less than 23% THC threshold. Primes have showed stable at 18 months of shelf life and are in compliance with all known regulations in the geographies…
So when we receive the products on the shelf is where we see them. The answer is in time for the major screening resets for key regional retail in the states that allows sales which already happened in March and April. The regulatory landscape is changing so fast than more markets in these initial four or five will open up by then. The point I want to emphasize is that we’ll be in a position to act on these first. We’ve built the supply chain and execution system. We can work with the retailers in these new market to build what you believe is going to be the most consumer relevant brand in this sector. Look the FDA has been clear in their guidelines and we applaud their productivity to help bring discipline to some of the smaller competitors that want to make all these outlandish claims. We tend to work with them, the CBD Industry Association and only select retailers that are willing to be responsible in their communication and approach in the emerging category.
This is too big of an opportunity not to be methodical and disciplined in everything we do to ensure we not just stay in compliance but importantly operate as a leader in the space as we believe it is our responsibility to do it. We’re here for the long game, this is why we’re being measured and methodical both in communication and our rollout approach. Our markets will open throughout the United States for inter and intrastate commerce and when they do and immediately as they do New Age will be a position to capitalize on the opportunity and has all the production, supply chain, organizational capabilities, strategic partners with the expertise like Docklight, the best, safest and most efficacious CBD-infused beverage products and we believe the best brand in the sector in Marley.
Thanks Jay, can you just give us a little bit insight or tell us on some of the outcomes of the Winter Fancy Food Show and what kind of revenue impacts do you and the sales guys expect us to see?
Sure so as I mentioned we had out our best show in the history of anything we’ve ever done and frankly Winter Fancy Food is not actually none particularly shows, although we have of course done our investment based on the orders and densure that we’re going to be able to meet the demand, look the way I see it we’re going to need a bigger boat. We think it’s going to increase soon. We sure don’t want to signal competitors to the size or the price here so we’re not going to share revenue estimation for the year, just two weeks into the New Year in a brand new category. As mentioned, we’re going to be measured and methodical.
I’ll say however that every single grocery retailer that we met with at the show placed an order, every single one, 100% which is unprecedented and the demand is not just that traditional retail. The approaches from major pervasive QSR operators were huge with a number of commitments and preorders as the markets open up there. And the demand is not just in the US, we’ve previously mentioned that we believe the opportunity for CBD infused beverages in Asia could be 100x that of North America. While as the order from Family line Japan that has 15,000 outlets and was indifferent on price is any indication that may play out to be true and faster than we initially envisioned.
Thanks very much Jay. I’m glad to see all the progress coming together, both on the brand and sales execution front. So the third and final point we want to discuss before we open up to questions is, what does it mean for New Age strategically and I’d like to ask Greg Gould, our Chief Financial Officer to provide a few comments on the implications at least strategically financially for the implications for the company?
Thanks Brent. When I look at this opportunity the bigger question that I see on the financial side is will the Marley and the other CBD-infused beverage portfolio launches have a material impact on our financials in 2019. The answer to this is yes, and mind you on our scale is now 300 million plus so our materiality threshold is much more significant. How big and important will this be this year? Well we honestly don’t know, and we are not going to predict or at least communicate or forecast as of today where or how we will do with this product in 2019. We don’t believe it will be prudent and because of the regulatory landscape there are still a number of moving parts and further upsides and frankly likely some obstacles along the way.
That’s why as Brent and Jay said we are being measured and methodical, we are being first but still very direct and diligent in our approach. But all indications from customers is this is a very big opportunity and we are perfectly positioned to take advantage of it in 2019. Around $40 a case in wholesale revenue, which translates to great margins for retailers and suggested retail price of $5 and $6 margin wise the product is very accretive to the overall New Age portfolio, the Marley CBD-infused portfolio will be one of our highest margin products in our portfolio and therefore will positively impact the overall gross margin mix of the firm.
So strategically this should be material and it should be margin enhancing to our mix. It will be an upside to our 2019 plan and we will gain more information and begin shipments later in this quarter. And as the markets begin to open we will release more news and have more insight on the financials going forward.
Brent with that, I will hand the call back to you.
Thanks Greg, one last point beyond the strategic financial implications Greg just mentioned is I do want to impart that our entire approach to this segment has been strategic. It is not opportunistic at all and it has been strategic since we started the company a little over two years ago. We defined at that time that we would be doing this, redefining healthy functional beverages as a way to gain competitive advantage at this juncture at this point in time, it’s right in our roadmap. It’s widely made all the moves we have made here for to prepare ourselves and organize for this launch at this moment with this brand in this way.
We also said that we would be forming strategic alliances and partnerships to be able to better and faster execute against 2015, so the announcement of the venture with Docklight and all the expertise that they bring should be no surprise, but it also builds on everything that we’ve been doing in terms of our distribution breath, our customer relationships and everything that we’ve been building over the past two years. It has been the part of whole plan and now this on top of what we build is timely and strategic. The expanded global distribution and market penetration reach that we just gained with the Morinda merger was not opportunistic. As I hope all our shareholders can see that now because now we have even more ammunition to put through that system to enable us and execute against the CBD-infused beverage opportunity globally.
Look, in this sector Coke, Pepsi, Nestlé and others and other legacy leaders that have dominated this trillion dollar non-alcoholic beverage category of the past 20 — sorry 100 years don’t have a 100 year head start and they don’t have any more capabilities or expertise or advantages than we do and they don’t have the Marley brand. We believe in the Marley brand. We believe in the Marley brand in beverages and we really believe in the Marley brand in the Cannabis-infused sector. We believe in the team behind in driving this initiative, including our partners that are creative arts agencies that have been extremely value-added. The Marley family that let me tell you are very involved and very engaged and their new relationship with world-class industry segment leaders at Docklight.
Whether this all happens nationally tomorrow is not the point at all, it won’t and we were explicit that distribution would not be linear following the far ago passage and not to expect it. We’re explicit not to put it into your financial models and that we were treating at New Age financially internally as a binary upside to our 2018 plan versus anything baked in. That being said we may have been a little conservative in our expectations.
With that, I’d like to open up it with questions operator.
[Operator Instructions] Thank you. The first question today is from the line of Mike Grondahl with Northland Securities. Please proceed with your question.
My first question is just, it was mentioned that every grocer that they met at the Winter Fancy Food Show placed an order, roughly how many is that and is that for like March and April delivery?
I thought it to don’t want to say Mike, so I’m going to make Jay answer the question — to see there together with the marketing and sales team, Jay what would you say in terms of total scope that I do think it’s premature for us to communicate any kind of revenue number. So and the retailers, even though they placed orders some of them are in New York, some of them are in Indiana, some of them are all across the country that we want to be very methodical and compliant in terms of how we approach the delivery to those customers and we’re not going to even get any near and any kind of granular, but Jay what would you say is kind of total scope of all the grocery retailers, not everyone were there, but they were a lot there especially in the food service side. Jay?
Yes, absolutely. So it’s tough to put a number on it before a lot of conversation is being had, in the realm of 75 or 100 definitely and we’re talking to top buyers here across multiple regions. So that’s the number one there just sort of rough estimate. But as far as timing yes most of them basically the position they’re taking as they want it now and there weren’t certain regulatory factors they would take it tomorrow, but everyone is sort of understanding that look we have to make sure were pragmatic in the methodical here. So essentially where everyone’s targeting for that March, April reset time and it’s not often that here in retailers say they would even kind of manipulate their planogram to fit a new product like this, and which is huge as well but we’re really targeting their March and April reset timeframe, and then to Brent’s point as the markets come onboard really rolling out throughout the year.
Yes, there is a retailer Mike in New York, that said hey look on Monday we just green lighted it for all CBD-infused beverages and products in our entire retail and this is a big retailer operation, so it’s New York. So there’s that’s not part of our initial rollout but we want to work with the appropriate authorities in the appropriate way to be able to do at the right time meet their needs. So when those things are happening, real time like on Monday with that major New York area based retailer, we want to be respond — or we want to be responsive. But the FDA doesn’t have the impact on us internationally. So you take the FamilyMart, we have communicated that. If you are you doing any modeling, one simple way to do the modeling is we do $250 per store per year on average per SKU, and we communicated that FamilyMart represents 15,000 outlets in Japan, so that will take time to get out there, but that’s one impact that you can already start to model, and they’ve asked for products to be shifted to them in first quarter, but all sorts of customs and other things that you’re going to have to do even though it’s legal over there in Japan to be able to effectuate that. So that’s why you were treating this as a financial upside to the plan.
And how great was that FamilyMart order and what type of capacity do you have to meet demand?
Well, that’s one of the things that we made sure that we were buttoned-up on not just on the production capacity but all of the ingredient capacity that we needed and all of the — I would say quality control capacity to deliver against this initiative. So we’ve structured the supply chain. So as markets open-up both US and abroad we’re going to be in a position to be first, and meet all of needs of those customers because this is too significant about our opportunity and you to have your supply chain organized and structured ahead of time, we do. So the minute the market opens up or a country opens up or a state opens up we will be in a position to be first with what we believe is going to be the best brand in the category.
And FamilyMart in Japan, how big was that or have you set kind of a range?
It’s only 15,000 outlets.
But their order, their CBD order?
A – Brent Willis
We are not in a position to communicate it yet.
And then just lastly Brent you talked a little bit about national accounts and progress. Should the takeaway be there that you feel good and you are continuing to have discussions with national accounts?
On the couple of — key national accounts that we had been really close with, we are just in execution mode. So again, I don’t want to do the — this what we think is incredible news here, and an opportunity here but you got to hit the singles along the way in addition to this kind of homerun. So those things with those national accounts I would say are at least triples and probably homeruns on the core business and that is all materializing. So our expectation is that all of that all over that will be new news that we can share here coming here in early.
The next question is from the line of Anthony Vendetti with Maxim Group. Please proceed with your question.
Just on Docklight, Brent what will Docklight be doing versus what New Age will be doing in terms of the production and distribution? And then, why specifically the four states, is that because you’re producing there and there’s some interstate laws that you’re concerned about?
Well, you are exactly right Anthony. So I’ll separate your question first. The reason for those four states is those are the four states where rec is legal today, Washington, Oregon, Colorado, Michigan. And so there are less regulatory barriers, hurdles and obstacles in those four states. So — and we had prepared for that upfront, including aligning our distribution relationships and the key retailer relationships in those geographies. So that’s why we chose those places first.
And then in terms of what New Age is doing we are taking the lead in terms of the sales and marketing and commercialization of the product. We are taking the lead in terms of production through our production network, they are collaborating on all of those aspects but they are really taking the lead in terms of ingredient supply and they are taking the lead in terms of regulatory, legal, scientific, and all of that landscape, which is frankly, we have expertise in that area but our expertise pales in comparison to Privateer overall and Docklight in particular.
And then just in terms of the ingredients. What’s the — I mean I guess, what’s the right amount to get effect and can comply with FDA guidelines?
So there are different schools of thoughts, but we have tested this right. We have tested 5 milligrams, 10 milligrams, 15, 20, 25, 30 in over the past year in Colorado. So we already have that consumer insight. And we have also tested the difference between full spectrum CBD and isolated CBD. Full spectrum in other words for that it’s maybe broad-spectrum or distillate. So we are using full spectrum CBD or broad spectrum CBD that creates an entourage’ effect or really that we believe more benefits and the relaxation benefit that consumers are really looking for from this product and that’s why we said we are bottling don’t worry, be happy in a can and we are doing that. It sounds a little fun in that respect, but look this is Bob Marley and cannabis-infused beverage we want to have a little bit of fun with this. But we are using 25 milligrams because it’s our insight that that is the dosage that consumers need to get to feel the relaxation effect from the brand. And remind you we get this unique formula because we get chamomile flower, passion flower, valerian, we have these kinds of things, we already have this relaxation drink formula, so this is just like a turbocharger on that mellow mood forming we already had, so it’s pretty unique product versus somebody else that may be putting CBD in their product. So that’s the kind of CBD we’re using, the amount we’re using but it’s not just CBD, it works we think particularly well with the other ingredients in our relaxation drink formula.
So lastly Brent are you going to be able to make any of those claims as it stands right now on the bottles or the cans or you have to wait for the FDA guidance on what you’re allowed to say?
I will be abundantly clear on this point, and that is we will never make claims on CBD ever. We don’t believe we need to, we haven’t done the human trials or the other kinds of things that would be required to meet an FDA muster in terms of making claims. And we think it’s irresponsible for everybody and anybody to make claims. This is why we think the FDA was so clear in their guidance to clean up a lot of these other small competitors for making these kinds of outlandish claims. We will never ever do it. All the things that we’ll say is, this is what’s in the product. This is the dosage. This is the efficacy but we’re never going to make any claims in terms of need states or does this or does that for you and we will run from anybody that does. And we’re going to force our retailers to be in compliance with that responsible level of communication.
The next question is from the line of Kevin Barrett with Bank of England, please go ahead with your question.
Hey Brent congrats on the deal to you and Jay and Greg. I think it’s awesome, I think it’s a lot bigger than people realize and I just had a quick question. Regarding the Tilray connect I think there was a big misconception and people out there incorrectly thinking that there was a Tilray connection with the news. Can you elaborate just a little bit more on exactly who Docklight is in relation to the Privateer and Tilray and kind of dispel any of those notions why Tilray isn’t involved?
I’ll try, Kevin great question, Tilray is the Canadian grow operation that is in large part owned by Privateer. That’s my understanding of what Tilray is, they’re in the news a lot as a public company but that’s what Tilray is. Docklight our understanding is the commercialization arm of Privateer Holding so frankly we think that this is much bigger relationship than any little thing that we might do with an individual subsidiary because we access to like Leafly.com that’s got all of the research, all of the database, all of the consumer insights, all of this consumer analytics in both Privateer, Docklight overall. And New Age a very metric driven analytic companies is one of the things culturally that aligns us and we can access all of that.
So, actually, when you think Tilray is in the news, but it’s a little bit of a misnomer. We think that this is much bigger with Docklight because we can access all of the capabilities of our new partners and these guys are good, they’re smart, they’re methodical, they think and operate in a very metric long-term driven way like we do. And that’s why we’re relaxed about the timing of when the FDA opens up markets or when markets will open up in the United States because we’re be together over the next 10 years.
Awesome, I know you touched on this a little bit already, but since I’m on the line I’ll ask it. From a regulatory perspective do you have any kind of lead or wait times that you need to abide by to go into the Asia Pacific area with these products?
There’s certain different rules in different geographies whether it’s Korea, China, Japan, Taipei, Hong Kong or some of the other markets. In China for example, we’d have to be, it’s not like the US which is 0.3% THC, in China it’s training and 0.000 percent THC. So there’s no messing around there and we believe that you have to be producing the CBD in China if you’re going to be using it in China. So there is individual regulations in these states but you know I have been going around the world since in the past three weeks since we did the merger with Morinda, Japan is like wide open. We — sometimes you make your luck if you will, but being in the right position, so the thing with FamilyMart was just, I can’t tell you, how happy and excited I am about that because it’s just a starting point early when it’s rights of the system and the new merger with Morinda and now we’ve got the whole infrastructure. We got 300-400 people in infrastructure supply chain, customs, finance, AR, AT in Japan to be able to manage business there and we didn’t have that a month ago.
So we just probably think it’s awesome, so the rules are different in each one of those places. So just as we’re taking a very methodical long-term winning approach here and a very measured approach we will do the same thing as it relate to each one of these international geographies but so far so good in early signs even just this week are just fantastic. But I’ll be with our Japanese associates on Friday. I will find out more.
Got it, thanks again. Lastly is the CBD market for you guys limited to just drink and we’re on going with that as Morinda has got all kind of products, has there been with discussions about combining that with any of the existing Morinda products, lotions and et cetera.
I really don’t want to tip my hand Kevin but our goal is to be world’s leading healthy beverage company, I think it’s too premature to become the world’s or way we’re work at to be the world’s leading healthy products company or lifestyle company, it’s too early even try on Morinda. Of course because you got that execution system in CBD is relevant and a lot more things than just beverages, those things into your mind but people and companies that fail to focus, they fail, so we will focus and make some Marley brand of CBD-infused beverages, connect with consumers and consumers don’t just buy products of CBD and they buy products because of an emotional connection as much as they do for any kind of functional kind of benefits. So when we sort for jokingly say we’re bottling, don’t worry, be happy and it’s all going to be alright or everything is going to be alright, I mean we mean it because that’s what really connects with consumers and mind you, this isn’t just CBD and can, this is our relaxation drink formula that consumers are ready to really resonate around. So we got an unique product and an unique advantage here, yes there is more to do. Let’s just let’s take a big bite of the apple here first and digest and stronger that while we think can get excited about the other things that we can do in the future.
Maybe we have maybe time for one more question and then we will close it off.
Sure the next question will be coming from the line of John Harrell with Harrell & Associates.
Good morning and congratulations guys on the partnership. I’m just wondering if you are preliminarily anticipating greater traction from the CBD shots or mellow mood CBD beverages and is it your intention to place the CBD shots near checkout counters sort of like five hour energy?
The way you worded that question, John, it’s very leading and I don’t want to play our hands from a competitive standpoint but we have said explicitly that this is the initial part of the portfolio. And so that word initial with these three flavors, lemon raspberry, peach raspberry and herbal honey, we said that this is the initial part of the launch. Look that shaft segment is right and fertile what would I say, a target-rich environment and the infrastructure from a display and consumer impact standpoint and what would I’d call the red zone, which is anywhere near the checkout or in traditional grocery within 10 feet of the checkout in the fast line merchandising aisles or at the counter in convenience that, that infrastructure for displays of those little 2 ounce product is already built-in. So we think that there’s a real opportunity to execute against that, and if you ask any of the retailers or any of the people in our systems, do they believe there’s a shot or a Marley shot, would be big, big business not just in e-commerce but also — or not just in convenience but also in e-commerce and other channels, they’d say absolutely yes, but what I can communicate today with what we have done and on what we took orders was the Marley in the 15.5 ounce can, but we did explicitly say this was the initial portfolio.
Thanks, John. And thank you everybody for the call. Appreciate your allegiance and support. We are excited about what we have in front of us. We believe that this is potentially the biggest thing that we have done and we’re excited to be about working with the Docklight, with CAA, the Marley family to lead in this space. We can lead and we can get first mover advantage and we appreciate all the support from all our valued investors. With that we will close the call. Thank you.
Thank you. This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.