Koios Beverage Corp (CNSX:KBEV) Signs National Retail Deal with GNC Holdings Inc (NYSE:GNC)
Koios Beverage Corp (CNSX:KBEV) (OTCMKTS:KBEVF) (FRA:7521) is a consumer packaged goods company that develops nutritional products with the goal of helping people lead healthier lives. CEO Chris Miller notes the company is excited to launch CBD-infused beverages and believes such beverages will have a larger market share than the THC variety. Koios just signed a national retail deal with GNC Holdings Inc (NYSE:GNC) (FRA:IGN), an internationally recognized health and wellness retail chain. In 2019, Koios is focused on its retail rollout and fulfilling the GNC deal. Miller suggests that Koios is a potential takeout target for a large beverage company and indicates large companies are enamoured with the value functional beverage producers add to traditional offerings.
James West: Now, another guy who’s possibly going to make a lot of people a lot of money is here: Chris Miller, the CEO of Koios Beverage Corp. is joining me in studio. Chris, welcome.
Chris Miller: Thank you for the warm welcome in Toronto. It’s balmy here.
James West: That’s all you get here, that’s warm.
Chris Miller: Yeah.
James West: Warm welcomes and warm weather.
Chris Miller: Negative 40 degrees.
James West: 40 degrees – well, that’s kind of warm compared to where it was last night.
Chris Miller: Yeah.
James West: Chris, Koios Beverages, based in Denver Colorado?
Chris Miller: Denver, Colorado: the Mile High City, yeah. Where it’s 50 degrees today.
James West: 15?
Chris Miller: 50.
James West: 50! 50 Fahrenheit, right. I have to do some math on that, right.
Chris Miller: Yeah, right. Conversion.
James West: It is about 15 degrees Centigrade. What does Koios Beverages do, how do you make money?
Chris Miller: We are one of the fastest and – you know I always hesitate to say the best, but I’ll say it: the best beverage companies in the US.
James West: Okay.
Chris Miller: We make nutritional beverages that enhance brain function, body function, we have a new product coming out this year called Fit Soda which we’re incredibly excited about. But yeah, that’s what we do. We try to make – our mission is to make a billion people live healthier lives. Or at least encourage them; we can’t make them, that would be awkward.
James West: Right.
Chris Miller: We can strongly encourage it.
James West: Ten sit ups! Right. So I assume there’s a cannabis component to this?
Chris Miller: There is. I wouldn’t call it cannabis; I’d call it CBD. Our focus is more on CBD and infusing it into our beverages. I definitely think the CBD market will be bigger than the cannabis-infused market, and I always joke with folks that my mom will take CBDs but she won’t take cannabis. And so we’re incredibly excited in the US about infusing beverages, and especially our primary flagship beverage, which is a mental cognition product that creates natural focus. And so to be able to combine CBDs for, you know, anxiety, to do both at the same time is kind of a home run. If I can stay focused and be calm all at once, that’s what we’re shooting for, and so…
James West: You bet. So you guys don’t grow cannabis or produce CBDs yourselves?
Chris Miller: No.
James West: And you focus on the beverage industry. What’s the history of Koios that would give an investor a high degree of confidence that you are the guys to actually take this through to the end zone?
Chris Miller: Yeah, I mean, we just signed a national retail deal with GNC.
James West: Okay.
Chris Miller: We have the infrastructure in place right now that, for your investors who aren’t familiar with beverage, if you look up Celsius, they’re on the NASDAQ, they went from $0.34 to $5.00 in two years. I think right now, Koios has the infrastructure in place to hit those targets.
James West: Right.
Chris Miller: In fact, I think we’re even further ahead of than where Celsius was at the time.
James West: So when you say a deal with GNC, GNC has stores in pretty much every mall in America and Canada.
Chris Miller: They are worldwide. We are pushing hard. I know it exists the camera. We’re pushing hard to get into Canada as quickly as possible; GNC being one of our retail partners, well, you’ll be able to find that product.
James West: There’s still running your B-roll [laughter] It’s all good. So are you in a position where you can produce sufficient product to supply a GNC?
Chris Miller: Yeah, no, that’s always an issue; I mean, anytime you’re a CPG company like us, production is hard, and you know, it’s been fun to watch, I don’t know, the rumour mill, the talk, in the drink space about putting out CBD beverages. I think a lot of companies are going to struggle with production. One of the things that makes Koios Beverage Corp. unique is that we have our own production lines in Denver, that allow us to not only small-batch but innovate.
So a lot of guys have tried to come out with CBD products, they’re going to run into some issues in terms of how it’s made, shelf life, taste, that sort of thing. We have our own lines that can do up to 8,000 cases a day, and we have two of them. And so we’re fairly unique that way; it allows us to stay incredibly nimble. Instead of co-packing, you know, spending $2 million at a time to make product.
James West: Right.
Chris Miller: We don’t have to do that.
James West: Okay. So is it conceivable that this might be a future takeout for like a Pepsi or a –
Chris Miller: 100 percent.
James West: And is that what you’re kind of thinking, of building a lifestyle branded beverage line CBD-driven that would be of interest to a larger –
Chris Miller: Yeah, no, we, one of our Board of Directors members is the global Director of Molson Coors.
James West: Oh, okay.
Chris Miller: And so, it’s interesting: I meet with him once a week, I think it’s more therapy than anything.
James West: Okay.
Chris Miller: It’s more of a – yeah, because he’s in that space, and he understands it. But it’s interesting to know those guys that know how much beer is even struggling. Some of your listeners who know cannabis probably know that too –
James West: Yeah.
Chris Miller: But even they’re pushing hard for the non-alcoholic side even, and non-psychoactive, that there are sweeping trends from Europe coming across the pond that are, some people don’t even want to get high; they just want to relax, or be more calm.
James West: Idiots! Sorry. [laughter]
Chris Miller: I gotta go. Are we done?
James West: Don’t want to get high?!
Chris Miller: I think one of the things two years ago that I noticed was not only Coca-Cola, Pepsi, some of these Dr. Pepper, Constellations of the world, but the big ones: Molson Coors, Budweiser, they’re looking for takeouts in the functional beverage space, too. In fact, Budweiser bought Highball Energy in the States in a huge buyout, which kind of shows you where that trend is headed.
James West: You bet. For 2019, what are your big catalysts going to be that your investors that your investors are going to get all excited about?
Chris Miller: GNC, and we’re working on huge retail infrastructure right now. So in 2019, I would anticipate, and this is just, obviously we just put some of this out in our financials, but 2019 we’re anticipating over 5,000 locations and 2020 we’re expecting, you know, close to 10,000. So if you do the rough math on that, it adds up quick.
James West: So you’re going to build bottling and distribution plants around the country? How do you service such a large footprint?
Chris Miller: Yeah, yeah, so our canning lines, again, in Denver, can do 8,000 cases a week. So if you run the numbers on that, it’s fairly large. Once we get to those bigger numbers, we’ll use co-packing facilities around the US and Canada to fulfill that need.
What’s unique about us is that most beverage companies jump to that second spot: they go to big co-packers first, spend a lot of money on product and inventory, and don’t have a lot of extra cash for marketing, promotion.
James West: They gotta sell it.
Chris Miller: Right.
James West: That little cart before horse, there.
Chris Miller: Right. I spent five years in the beverage business building this before we went public, and I’m pretty sure I have PTSD as a result.
James West: [laughter] Okay.
Chris Miller: Because of making those mistakes, I have a lot of scar tissue from doing it the other way. So we built out our own facilities that are GMP-certified to be able to be more flexible, to produce our own product, to kind of do whatever we want. If one flavour is not working, we can immediately shelve it, put out another one.
James West: Okay, interesting. Chris, we’re going to have to leave it there because we’re running out of time, but it’s a really interesting story and I am super intrigued with the beverage space and I’m wondering who’s going to be the industry leader. But thanks for joining me – we’ll follow the story closely and have you back soon.
Chris Miller: Absolutely, yeah, good to be here. Thank you.
James West: You bet.
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