Following third quarter financials released late last week by Tinley Beverage Co (CSE: TNY), The Deep Dive conducted a review of why the figures posted are strongly indicative of where the alcohol-inspired cannabis infused beverage manufacturer is headed within the Californian market. Tinley, as a result of a long time focus on product quality and formulation, is coming upon an inflection point that largely appears to have been ignored by the market.
The inflection point is this: after years of slugging it out, the beverage manufacturer and distributor has hit a critical point in its business strategy. Organic growth has continued at a steady pace in recent quarters, and the firm is positioned well for the quarters to come. The firm now has three separate avenues of potentially significant revenue generation, and should one of them hit, Tinley will be a success story. Should two of these opportunities really take off, then Tinley Beverage will simply be something special. Here’s the opportunity that Tinley has infront of itself.
First, is the most visible opportunity that investors know best: cannabis infused beverages. Viewed widely as the main avenue for opportunity, infused beverages is the core of Tinley Beverage Co. The operator has begun to see success in this market, with over 50 dispensaries now stocking Tinley’s product, and their two flagship product lines – Tinley ’27 Collection and Tinley Tonics – are available for statewide home delivery as of this week. This is a strong showing given the early inning of product distribution Tinley is currently in. Over 92% of the Californian population is able to receive next day delivery of Tinley’s products, while 60% is eligible for same day via the Driven platform.
Further, Tinley’s alcohol-inspired cannabis beverages are beginning to be accepted into local cannabis cafe’s, such as Lowell’s, and the firm recently signed a rapid delivery arrangement with several Palm Springs, CA hotels.
Revenues have started to build, with Tinley posting revenues of over $21,000 in the second quarter attributable to this line of business, which was the first quarter of full production. With Tinley only recognizing revenue when paid, the inventory line also provides a glimmer into what we can expect sales to be in the oncoming quarter as payments continue to come in. The cannabis beverage sector is viewed as a growth segment, and Tinley is poised to capitalize on this heavily.
Second, is the co-packing opportunity. We’ve discussed this opportunity in the past, however it seems to largely be missed within market commentary on Tinley. Co-packing presents itself as a significant opportunity for Tinley, and it’s operators have a track record of success within this sub sector of the beverage industry. With many executives hailing from the likes of Cott’s Corporation, which at one time was the third largest beverage manufacturer in North America, the experience in the co-packing segment is well rounded at the issuer.
For those that are unaware, Cott is the manufacturer of numerous household name brand beverages, which is performed under contract with trademark owners. Such examples of products include the likes of Keurig and Starbucks Coffee, and previously names such as Walmart’s Great Value product line. Such opportunity exists for Tinley given its expertise in the beverage sector. The firm intends to provide formulation, manufacturing, bottling, and distribution functions for cannabis-infused varieties of household brand names, which will provide a further source of revenue for the issuer.
It should be noted here that when the major beverage companies like Constellation, MolsonCoors and Anheuser-Busch InBev came knocking in Canada, not a single one of them built their own facility or pursued their own license. Rather, they partnered with licensed producers that were already licensed to get product to market. Thus, it is likely that if any major beverage manufacturer wishes to enter California, it will be conducted in a similar method.
Tinley has revealed previously it is in discussions with numerous third parties interested in co-packing, with the firm recently announcing that it may be installing a canning line in the near term to suit the desire of product formats for potential clients. As a result, an announcement on co-packing partners is expected soon.
The third and final opportunity in front of Tinley, is that of its alcohol-inspired, cannabis-free beverage line known as Beckett’s. This line, while just announced a couple short months ago, has seen wild success in terms of distribution. The product line was launched as a means of tackling the sober curious movement – a recent movement among young adults whom elect to stay sober while out with friends. With Tinley’s experience in alcohol-inspired formulations, Beckett’s was a natural fit in that the beverages taste like alcohol-infused variants, while being significantly healthier and containing no intoxicants.
Beckett’s has been wildly successful right out of the gate – it’s announcement was coincided with the announcement that the product will see placement in over 150 BevMo! stores across the West Coast as the alcohol distributor looks to capitalize on the growing sober segment. This week, Tinley also announced two major distribution lines for Beckett’s via national retailers. The first, is that of a grocery chain with over 2,000 stores across the US. Beckett’s will see placement in select Californian stores as a trial run of its products, and upon sales success will see an expanded opportunity.
The second national retailer to sign on is a club/warehouse-format grocer whom will provide product samples and high visibility product placement for the Beckett’s line in an initial SoCal location before expanding distribution upon sales success. This news is significant given that the product has been publicly known for under two months, having been just announced in late October.
Finally, Tinley has arrived at this inflection point with little to no debt – the only liability, outside of $123,000 in accounts payable, relates to lease liabilities – something inherent when operating a manufacturing and distribution facility. This is impressive, given that the issuer has not diluted shareholders through M&A transactions, and that its share structure remains below 110 million outstanding shares on a fully diluted basis. Whats’ more, is that insiders continue to buy shares on the open market as a means of showing solidarity with shareholders.
Tinley Beverage Co closed yesterdays session at $0.33 on the CSE.
FULL DISCLOSURE: Tinley Beverage is a client of Canacom Group, the parent company of The Deep Dive. The author has been compensated to cover Tinley Beverage on The Deep Dive, with The Deep Dive having full editorial control. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.