MYT - Shifting Attitudes Towards Health Usher in a New Era in the Beverage Industry
FinancialBuzz.com News Commentary
New York, NY (9/24/2020) – Over the past decade, the global beverage industry has undergone significant changes. Due to rising societal awareness toward various health problems, the industry is now reshaping itself by changing emphasis from carbonated soft drinks (CSD) to non-nutritive, low-calorie beverages. According to a new report by Grand View Research, Inc., various studies have shown that obesity is linked to higher consumption of CSDs. In fact, childhood obesity rates for age groups of 2-5 and 12-19 have doubled in past 30 years in the U.S. This has led to the development of calorie-free or low-calorie drinks, such as functional beverages, bottled water, and fruit beverages. The government is also trying to reduce the sales and consumption of drinks made from nutritive sweeteners by imposing sugar taxes. And the global non-alcoholic beverage market size is expected to reach USD 1.60 Trillion by 2025 while expanding at a CAGR of 5.8%, according to the report. Urban Tea, Inc. (NASDAQ: MYT), PepsiCo, Inc. (NASDAQ: PEP), Monster Beverage Corporation (NASDAQ: MNST), NewAge, Inc. (NASDAQ: NBEV), National Beverage Corp. (NASDAQ: FIZZ)
Now, as the pandemic has upended a lot of traditional consumption practices, online sales have spiked. FoodNavigator-USA reported data provided by Packaged Facts according to which “Internet food sales are growing rapidly, but still represent a very small share of sales. E-commerce’s impact varies by category, ranging from less than 1% to 3% of sales. Coffee and tea sell the best, while dairy beverages and juices underperform.” Retailers, such as natural and specialty stores including grocers such as Whole Foods and Trader Joe’s, are significant outlets, yet, like club stores, generate lower sales than traditional supermarkets and supercenters. Generally, natural and specialty stores tend to focus on better-for-you brands and avoid carrying many of the large national brands sold in traditional outlets.
Urban Tea, Inc. (NASDAQ: MYT) announced breaking news yesterday that, “it has entered into a share purchase agreement (the “Agreement”), pursuant to which the Company agreed to pay $400,000 in cash to acquire 80% of the equity interest in Guokui Management Inc. (“Guokui”). Guokui is incorporated under the laws of New York State and has been operating CROP CIRCLE, a casual street food restaurant in New York City, since August 2020. The Agreement also includes details of how the two parties may collaborate in the future.
Upon closing of the transaction contemplated by the Agreement, MYT will own the registered trademark of “CROP CIRCLE” in the United States and operate the Crop Circle restaurant, which features guokui, an oval shaped baked flatbread with various filling selections, a popular street snack originating from northern China’s Shaanxi Province. CROP CIRCLE also provides other meals combining classic and modern styles. MYT currently owns the trademark “MENO” and operates MENO, a modern tea and coffee shop with a small curated food menu. The ownership of these two restaurants marks the implementation of MYT’s initial brand strategy in the United States. Going forward, the Company plans to deepen its roots in the US market based on the restaurants’ operating performances.
Ms. Kan Lu, CFO of Urban Tea, commented: ‘The signing of the Agreement enables the Company to better navigate the casual food and drink market in NYC. Through building brand awareness and launching new restaurants, the partnership with Guokui shareholders will take our expansion plan on an exciting journey. We remain committed to our common core values of providing culturally inspired food that is loved by customers in America. With Guokui’s management team, we look forward to opening more restaurants and bringing traditional Chinese cuisine to more guests across the U.S.’
About Urban Tea, Inc. “Urban Tea, Inc. is an emerging specialty tea product distributer and retailer headquartered in Changsha City, Hunan Province, China. Through its wholly owned subsidiary, Mingyuntang (Shanghai) Tea Limited which controls Hunan Ming Yun Tang Brand Management Co., Ltd. and Hunan 39 Pu Tea Co., Ltd., the Company currently market a wide range of trendy tea drinks, light meals, and pastries targeting China’s new urban generation in Hunan province. Our products are focused on not only their taste but also their aesthetic presentation and health benefits. Our products are currently being offered via our own stores. For more information, please visit: http://ir.h-n-myt.com/investor.”
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PepsiCo, Inc. (NASDAQ: PEP) and Red Lobster announced earlier this month plans to team up. “Red Lobster is thrilled to work with PepsiCo, not only because it has a great portfolio of brands, but specifically because of the food and beverage innovation possibilities,” said Nelson Griffin, Senior Vice President and Chief Supply Chain Officer at Red Lobster. “The DEW Garita is the first delicious taste of the types of inspired menu items to come.” “Red Lobster and PepsiCo both understand how much food and beverages enhance memorable moments, from casual gatherings with friends to milestone celebrations,” said Hugh Roth, Chief Customer Officer, PepsiCo Global Foodservice. “With both of our brands on deck to wow guests, we can’t wait to dream up more phenomenal flavor pairings together to bring some very special offerings and experiences to the table.”
Monster Beverage Corporation (NASDAQ: MNST) announced back in August financial results for the three- and six-months ended June 30th, 2020, including an update on the impact of the COVID-19 pandemic. The Company’s second quarter net and gross sales were adversely impacted by the COVID-19 pandemic, in part due to certain of the Company’s bottlers/distributors reducing their inventory levels. However, the Company experienced a sequential improvement in sales in the latter half of the quarter as certain countries and states began to gradually re-open.
NewAge, Inc. (NASDAQ: NBEV) reported in July that t has entered into a definitive agreement to acquire ARIIX, together with four additional companies in the e-commerce and direct selling channels. The combination will create a global firm with estimated pro forma revenues in excess of $500 million across more than 75 countries worldwide. NewAge and ARIIX have agreed to create a leading health and wellness firm, with a unique omni-channel route to market, depth in the e-commerce and direct selling channels, a team of more than 400,000 independent representatives, and a portfolio of healthy products unrivaled in the industry. “NewAge – One of the fastest-growing beverage companies worldwide with penetration in over 60 countries and a unique omni-channel route to market.”
National Beverage Corp. (NASDAQ: FIZZ) reported earlier this month results for its first quarter ended August 1, 2020. “Our balance sheet continued to strengthen with quarter-end cash plus shareholders’ equity of USD 509 Million both reaching all-time highs. With cash now representing 50% of assets and total liabilities less than half of equity, our financial strength will allow us to invest in future brand innovations and capacity expansion while maintaining capital deployment flexibility,” the company indicated. National Beverage results were driven by a 16% volume increase in Power+ brands, the result of strong consumer commitment to health, trust and authenticity. The LaCroix brand led growth and outpaced the category in tracked channels throughout the quarter with market share reflecting sequential growth. Our new LaCroix offerings, LimonCello, Pastèque and Hi-Biscus, bring consumers iconic innovation with extraordinary tastes and unique essences, establishing record volume movement.
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