Panache Beverage has a Unique Business Model - Analyst Blog

Panache Beverage has a Unique Business Model

Ken Nagy, CFA

Panache Beverage Inc. (WDKA) is an alcoholic beverage company that specializes in the development, global sales, and marketing of spirits brand. The Company follows a “build and exit” business model in which its brands are “built” or developed into attractive acquisition candidates for large global alcoholic beverage companies. As these brands mature, Panache aims to sell these brands individually while continuing to develop its portfolio of brands.
Panache was formed in 2004 as an import company for the premium vodka 42 Below NZ. The brand was known worldwide yet lacked traction in the U.S. After a year the brand was in 19 states and began to outperform bigger names. Noticing the threat to its Grey Goose line, Bicardi added it to its list of threats and was later approached for acquisition. At the time Panache was responsible for more than 50% of the total annual cases sold. In December 2006, Bacardi purchased 42 BELOW for $91 million (representing a gain on sale of $71 million). Shortly thereafter, Panache shifted its focus from importer to a 360 degree spirits development, sales and marketing company focusing on developing brands that fill voids in the current spirits market — brands with unique brand/product attributes and category positions.
Currently, the Company has a portfolio of three brands that compete in the $970 billion global alcoholic beverage market.

Panache’s Wodka Vodka brand is a premium vodka product that costs about one-third of the price of its competitors and exploits the “quality to value” spirit brand category.

The Company is attempting to improve details of its Wodka business by investing in the areas with the most significant growth potential. This strategy includes investing behind key states (New York, California and Florida), off-premise chains (nationally and regionally) and international markets.

Panache’s Alchemia Vodka brand is an ultra-premium, triple-distilled, polish rye grain vodka that is created from infusing (which is done in oak barrels) cocoa, wild cherries or ginger and is geared toward the growing epicurean consumer craze.

The Alchemia vodka brand is available in three varieties including Czekoladowa (Chocolate), Imbirowa (Ginger) and Wi??nowa (Wild Cherry).The Company is focusing its Alchemia growth strategy behind states that enable Panache to maximize its infrastructure and best capitalize on the investment its Wodka Vodka import partner has made in these markets.

As whiskey accounts for the largest part or 26.5 percent of the global alcoholic market’s total value, Panache developed Alibi American Whiskey, a premium whiskey, distilled from rye and aged four years in new American oak barrels.