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Emergency Fund Raise

Due diligence

Sector:

Beverages

Markets Covered:

Canada, Egypt, Ireland, Israel, Netherlands, Poland, Saudi Arabia, Spain, Switzerland, UAE

Summary:

Commercial due diligence of a soft drinks producer on behalf of investors considering extending emergency funding

Details

An investor in a relatively new soft drinks brand asked us to review the business to help them decide whether to invest more cash. They had initially invested 25% of the cash and this had been used to develop the product range and establish the initial distribution in a large number of markets. The CEO was looking for a further injection of cash – a similar amount to that invested previously (€10m). We were given access to the management team and the distributors in ten of their key markets. We were able to a) interview 10 distributors to understand how the brand was performing, including most recent launches b) review the digital marketing in each of these countries to test for engagement in the brand as well as competitors, c) understand the sales and distribution pipeline by country and d) review the headquarter costs. On the basis of this information we advised the investor not to put more money in. Key issues were the lack of traction in early markets, an overweight head office, a difficulty in placing the product in the store and differentiating it from similar types of drinks, partly due to its packaging format and an underlying proposition which was not backed up with solid scientific research.