Toronto-based Flow, which launched its first products in 2015, is planning a reverse merger, with the stock expected to be listed on the Toronto Stock Exchange in the first half of 2021. As part of the transaction, Flow is looking to raise a minimum of CAD$65m (US$52m), of which CAD $30m has been committed from existing shareholders as part of a non-brokered financing. The rest has been raised through a brokered private placement of subscription receipts.
“We’ve got 17.5m customers in North America today,” said Reichenbach. “But 192m people are buying premium water, so there is a huge opportunity to expand and take this all the way, to build Flow into America’s #1 domestically-sourced and responsibly packaged beverage company.”
If you’re in the business of selling water – something that already comes out of the faucet in every home, albeit without the same taste profile – you’d also better be pretty good at marketing, something that Flow Water appears to be rather adept at if the number of celebrities that line their fridges with it is anything to go by.
Not the usual playbook
Historically, the playbook for a successful venture-backed beverage brand has been to “get to north of $100m and then a big guy would come along and buy you,” says Reichenbach, who had an epiphany at the Burning Man festival in Nevada in 2013 that got his entrepreneurial juices flowing (“When I left I just remember seeing this huge mountain of plastic bottles, and I thought there has to be a better way…”).
But the Beyond Meat IPO changed the game, claimed Reichenbach, who launched his first products in Tetra Paks in 2015 and is now selling Flow in 25,000 stores from Whole Foods to CVS, Walmart, and Vitamin Shoppe, with celebrity fans from Kim Kardashian to Gwyneth Paltrow re-hydrating with the brand (pH 8.1), which now includes flavored, collagen-infused, and vitamin-infused variants.
“It made the capital markets and the market at large aware that you could take a mid- to long-term growth view on a high growth emerging category leader and finance it through the public markets. So we saw a window open up for similar companies to build scale.”
Meanwhile, raising money in this way doesn’t mean an acquisition is off the table down the line, he noted, “People buy public companies all the time.”
As to whether a beverage brand with a relatively modest $25m (USD) in sales in 2020 (+44% on 2019) has the game-changing potential of Beyond Meat, that’s a matter of opinion.
However, Flow’s business model is very different to your average beverage startup in that it has north of $100m in assets; it owns the artesian springs where it sources its water plus two sizeable aseptic filling facilities run by Planet A Co-packing in Virginia, USA; and Ontario, Canada; which also works with beverage…