Greetings, and welcome to The Alkaline Water Company fiscal 2021 third quarter results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host and director of investor relations, Sajid Daudi.
Good afternoon, everybody, and thank you for joining us for The Alkaline Water Company's third quarter fiscal 2021 earnings call. Shortly, you will hear from Ricky Wright, our President and CEO, and David Guarino, our Chief Financial Officer. During the call, we'll be making forward-looking statements within the meaning of safe harbor provisions of U.S. securities laws, and we may make additional forward-looking statements during the question and answer session. Forward-looking statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied inside the statements.
For additional information about factors that may cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements, please consult the company's Form 10-Q, which is filed today, and its other reports filed with the Securities and Exchange Commission on EDGAR, and Canadian security regulators in SEDAR. Such forward-looking statements and any projections as to the company's future performance represents management estimates as of today, February 16th, 2021. The company does not undertake to update any forward-looking statements or projections, except as required by applicable laws, including the United States and Canada securities laws.
Actual results could differ materially from those contemplated by any forward-looking statements as a result of certain factors, including, but not limited to, general economic and business conditions, competitive factors, changes in business strategy or development plans, the ability to attract and retain qualified professionals, as well as changes in legal and regulatory requirements. The company issued a press release announcing its financial results and filed the Form 10-Q with the SEC. Participants on this call who may not have already done so may wish to look at those documents as the company will provide a summary of the results discussed on today's call.
I will now turn the call over to our CEO, Ricky Wright, who will give an overview of the company's third quarter fiscal 2021 financial results. Following Ricky's comments, David Guarino, our chief financial officer, will provide an overview of the company's operating results. Ricky will follow David to provide closing remarks. We will then open up the call for question and answer. Now, I'd like to turn the call over to Ricky.
Thank you, Sajid. Hello, everyone, and welcome to The Alkaline Water Company's third quarter fiscal 2021 conference call. The momentum we saw over the summer and into our second quarter continued right through the third quarter. Fiscal 2021 has been a challenging yet very rewarding year for the company. We believe our core business is stronger than ever. Alkaline88 is once again the fastest growing top 10 value-added water brand in the country. As the fiscal 2022 approaches and the economy normalizes, we are well-positioned in our lifestyle products, A88CBD, Alkaline88 Flavor Infused, and other products to excel at growth going into our fiscal 2022.
Our strategic priorities focus on achieving broader distribution of all SKUs in the grocery, supermarket, and drugstore trades, growing the convenience store channel through strategic direct store distributions, and expanding our hospitality and food service presence, opening up international markets, and accelerating our growth in our direct-to-consumer e-commerce sites, alkaline88.com and A88CBD.com. Our teams are pursuing clearly defined strategies for each of these growth areas, which I will be highlighting shortly. During our third fiscal quarter, revenue grew approximately 20% year-over-year to a record $10.2 million.
The 52, 26, 13, and four-week scan Nielsen data shows that we exceeded the value-added water category growth both on a dollar volume and unit basis. In fact, in calendar 2020, Alkaline88 was the fastest growing non-flavored top 10 brand in the category. For the first nine months of fiscal year, revenue grew approximately 21% to $35.2 million.
Our teams have done a great job of executing against our plans and driving growth across all trade channels throughout the fiscal year. Our brand momentum continues to grow with our lifestyle products now available in over 75,000 retail locations nationwide. We expect to add another 9,000 stores by the end of the current quarter. The company is very well positioned for future growth in the value-added water category. This is supported by the latest Nielsen data January 23rd, 2021, which shows that in the first four weeks of the new year, our brand has continued to outperform the category in both volume and in unit growth by a factor of 2% and 5%, respectively. We have also risen to the eighth largest company in the value-added water category.
Per a recent Beverage Marketing Corporation's report, the bottled water category continues to gain over the carbonated soft drinks, driven by consumers' preference for healthier options. Per the same report, alkaline essence water continues to be the growth leaders. Overall, we are pleased with the substantial progress we have made during the first nine months of our fiscal year. With the health and wellness consumer in mind, we have strategically introduced key lifestyle products for our beverage and CBD portfolios over the past two years.
Today, we offer a robust portfolio of lifestyle brands and have expanded our beverage offerings to 14 SKUs and our CBD portfolio to 24 natural topicals and ingestible products. Our lifestyle brands are currently available in over 75,000 retail locations. We see strong demand for our products in specialty discount retailers as well, and recently added the 99 Cents Only Stores to our growing base of customers.
We'll soon be launching another leading retailer in this category. They will carry our 700 mL and our Alkaline88 flavor-infused waters. Beginning next quarter, our 1 gal, 1.5 L, and our 500 mL eco-friendly aluminum bottles will be on the shelves of a premier Midwest top 15 retail banner. I'm also pleased to announce that an existing customer in the drugstore channel will be adding our 1 gal in addition to the 3 L that they already carry nationwide. We'll also be offering our 1 L in their open air cooler section across a number of stores nationwide. We continue to see a strong pull-through of small formats. We expect to reach 90,000 to 110,000 stores by the end of our fiscal 2022. We will provide further details on these large wins in the coming months.
As we prepare for this strong demand and our strategic objectives of penetrating the C-store channel, we believe based on our dominance in the grocery channel, the timing is ideal for expanding our direct store delivery, DSD strategy. We are pleased to announce that we have entered into agreement with a premier distributor in the Southwest. This partner is one of the largest and most respected family-owned beverage distributors in the nation. Its customer base includes 9,000 retail locations. This partner will carry the full line of our smooth-tasting Alkaline88 water portfolio and our Alkaline88 flavor-infused waters under this agreement. This will be the first time in a major metropolitan market that the company has adopted a DSD model for its entire Alkaline88 line.
According to Euromonitor, an advisory and intelligence research firm, convenience stores are emerging as a key distribution channel for premium bottled water brands and account for over 60% of the distribution network in North America. We have added three regional DSDs in the Southwest, Mid-Atlantic, and East Coast regions, which provide us access to an additional 12,000 customers. In our fiscal 2022, we look to add additional premier beverage distributors in other key U.S. markets. We believe this will accelerate sales for our single-serve offering and our A88CBD products. Management believes that by adopting a direct store distribution model in a number of key markets, we will increase our sales significantly into the C-store channels. We have also made significant progress on expanding our distribution partners for A88CBD lifestyle brands during our third fiscal quarter.
We expanded our relationship with KeHE, who will now carry our topical lines, giving us reach into 12,000 customers and access to 30,000 stores. We've also added Betterment RS, a CBD-focused DSD, to drive C-store and grocery store CBD sales growth. We are seeing strong interest from these engagements and recently added incrementally 150 stores for our A88CBD portfolio of products. Innovation remains a core focus for our entire A88CBD portfolio. During the quarter, we introduced vegan gummies and sour gummies and gluten-free powder packs in four exciting flavors. We believe our A88CBD product line is one of the best in the industry, and like all our products, superior distribution, multiple sales channels, and trusted products will allow us to continue to gain market share.
Based on the changing habits of consumers, we have allocated additional resources to our e-commerce and digital marketing strategies, both in the water and the CBD categories. We have tested and will expand on programs that have shown extraordinary ROIs in our test markets. To that end, e-commerce sales for our A88CBD portfolio and water continue to grow. Since the launch of a88cbd.com in February of 2020, we have already nearly a quarter million unique visitors and seeing customer retention rates in the 20% range. Some of the best-selling products on A88CBD sites have been Muscle Salve, Deep Relief Cream, and Hand & Foot Cream. Our ingestible portfolio, which launched later in the calendar year, has been gaining momentum both on the e-commerce sites and the brick-and-mortar sites.
We have also entered into an agreement with C.A. Fortune to accelerate our growth in the e-commerce water area, specifically helping us work on our Amazon and Amazon distribution. Since inception, The Alkaline Water Company has focused on having the smallest carbon footprint per liter of any major water brand. In the past 52 weeks, we have taken major steps in reducing our carbon footprint. We've already begun to include 25% recycled PET in our box sizes. We continue to focus on sustainability throughout our new initiatives, as demonstrated by being the first national water company with an aluminum bottle.
We are the clean beverage company and care about not only what goes into our products, but what we can do to minimize our impact on the environment. I'd like to provide a brief update on our international efforts as well.
Last quarter, I shared with you that we received FDA approval for exports to key international markets from three of our strategically located co-packers. It now appears that our first foray into the international markets will be Mexico. We are currently negotiating with a key partner in the region and expect an exporting agreement to materialize soon. As two of the FDA co-packing facilities are on the southern border of the U.S., our logistics to Mexico are less complicated, and it is well known that Mexico has one of the largest consumption of bottled water per capita in the world.
The rebounding hospitality industry should contribute to significant revenue growth during fiscal 2022. In addition to our wins with Dot Foods and IBA Foodservice, we are negotiating with one of the largest food service companies in the world that will further cement our presence in the on-premise beverage business.
We hope to be able to make that announcement soon. From an operational standpoint, as we prepare for increased demand over the coming fiscal year, we have taken the following steps. We are expanding our co-packing facilities and plan to add two new plants. Additionally, we are increasing our process of domestic capacity for raw materials and finished goods. We will be announcing new plants and new raw material providers that should increase our overall capacity and positively impact our gross margins. Our current providers of bottles and handles are doubling up on capacity by opening up East Coast plants.
In addition to increasing our gross margins and capacities, they will significantly decrease our carbon footprint as their new plants will be closer to our East Coast co-packers. We are targeting to open two additional co-packers in the next six months.
Our target is to add a Midwest facility by the beginning of fiscal quarter one 2022, and a West Coast plant by fiscal quarter Q2. This will add additional incremental wholesale capacity of $12 million to $15 million and effectively position us for strong growth expected in fiscal 2022 and beyond. Lastly, another key area of f ocus has been working with a national agency to develop our brand messaging for the coming year and to help us identify an A-list celebrity that shares our brand values. With our growing base of loyal customers who are typically health-conscious and pursue a healthful lifestyle, we believe an ideal celebrity brand partner would be a home run for our family of brands. Overall, I'm pleased with the progress we are making against our strategic objectives and expect substantial returns from the investments we are making.
We expect a solid fiscal fourth quarter and a very strong fiscal 2022 for our lifestyle brands. It's a great time for The Alkaline Water Company, which has emerged from a single bulk brand west of the Mississippi to a trusted national and soon-to-be global brand with multiple in-demand lifestyle consumer packaged goods and products. With that, I would now like to turn the call over to David Guarino, our chief financial officer, who will take you through the third quarter fiscal 2021 financial results. David?
Thank you, Ricky. Before I begin, I'd like to encourage industry listeners to review the Form 10-Q that we filed with the SEC earlier today for a more detailed explanation on some of the quarter results I will be highlighting. For the three months ended December 31, 2020, we reported revenue of approximately $10.2 million, which increased approximately 20% year-over-year. For the first nine months of our fiscal year, we delivered growth of 21% compared to the same period last year. Increase in sales is due to continued strength with our existing customers and expanded distribution of our product to additional retailers throughout the country. Our gross profit from sales in the third quarter ended December 31st, 2020, was $4.2 million versus gross profit of $3.4 million in the quarter ended December 31st, 2019.
Our gross margin percentage of 41.2% increase compared to the prior year quarter, primarily due to a positive change in sales mix and lower cost of goods sold. Total operating expenses for the three months ended December 31st, 2020, was approximately $8.4 million compared to the approximately $6.1 million in the prior year. Specifically for the three months ended December 31st, 2020, sales and marketing expenses was approximately $4.7 million compared to the approximately $4.1 million in the prior year quarter. The increase in sales and marketing expenses resulted from higher freight and promotional expenses due to the increased sales.
During the same period, general and administrative expenses were approximately $3.5 million, compared to the approximately $1.8 million in the prior year quarter. G&A expense of approximately $3.5 million this fiscal quarter ended December 31st, 2020, consisted primarily of three items.
Approximately $2 million of professional media and legal fees, approximately $800,000 of wages and wage-related expense, and approximately $400,000 in non-cash stock option compensation expense. Net loss per share in the quarter ended December 31st, 2020, was approximately $0.06 per share, improving approximately 14% from the quarter ended December 31st, 2019. The net loss per share was negatively impacted by roughly $700,000 in net non-cash items, which resulted in a negative $0.01 impact on our bottom line. Cash used by operations during the nine months ended December 31st, 2020, was approximately $9.6 million as compared to the approximately $8.9 million in the prior year period. The increase was primarily due to increase in inventory, specifically related to our A88CBD line.
Importantly, our cash position as of December 31st was approximately $1.7 million. Specifically, we believe that between the cash on hand as of December 31st, 2020, our expected conversion of our outstanding warrants, and our credit line, we will have sufficient cash to sustain our operations at least through December 31st, 2021. With that, I'll turn it back to Ricky. Thank you.
Thanks, David. Once again, I would like to thank you for participating in our call today. In closing, I would like to say this past year has been an incredible nine months for us. With the global pandemic in early 2020 that disrupted global economies, we have managed to maintain the company's revenue growth and added exceptional talent. We are coming out of it stronger than our competitors. Our efforts resulted in increased brand awareness with our flagship brand, Alkaline88, emerging as the fastest growing brand in our product category this past year. As of 1/23/2021's Nielsen report, we continue to be the only top 10 value-added company in the country that has grown double digits to both sales and units every month since December 2019.
We have innovated based on consumer demand with new and unique products, gained market share, expanded our omni-channel presence, and quickly adjusted to the changing market dynamics. This is a testament to our team, our partners, and our resilient business model. I couldn't be more proud of our brand's journey through today and genuinely believe that the best is still ahead of us. I would also like to thank you, our shareholders, and our board for their contribution and continued support. We're making great strides in making Alkaline88, Alkaline88 Flavor Infused, and A88CBD the most trusted lifestyle brand in America.
At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question is from David Bain with ROTH Capital. Please state your question.
Great. Thanks, nice quarter. My first question would be on the hospitality rebound. I guess what I'm trying to get a sense of is the timing of meaningful revenue generation from the segment. I guess maybe put differently, when can we see a run rate toward, say, 100,000 cases? Is there anything different with the new potential hospitality partner in terms of revenue cadence now that hospitality is coming out of COVID? If the new partnerships will be structured differently than the first. Any kind of color around that would be great.
Hey, David. Thanks for attending today. Yeah, the hospitality industry is recovering. We are in some, believe it or not, golf courses. We're doing a test with one of the largest golf course groups in the country. Universities are opening up to us as well. We're still a little slow in the restaurant and hotel segment of it. Our new partner is extremely strong in both of those, our new potential partner, and it's just going to be a great add for us. I was looking at the segment reporting requirements just before the call. I think we're at least a couple of quarters out, David, before we have to do some segment reporting.
Okay. That's helpful, actually. Okay, great. International expansion. I know you, Ricky, have a ton of experience there. First, for Mexico, is there any kind of TAM we can think about? I guess we should do our own homework, but if you have something to spoon feed us, that'd be great. If you could touch on strategy there. The new partnership you spoke to, is that a distributor or are there other strategic dynamics for penetration you can help us with? I don't know if we go into acquisitions or what we're going to be doing to sort of make a big splash in Mexico.
Yeah, David, we've actually explored a number of different opportunities into Mexico. I've gotten some help from some of my board members along those lines. Excuse me. Let's drink some smooth Alkaline88 water. This particular deal, we're in the final throes of negotiations. We're candidly just getting down to final pricing. We should be able to announce in a week or two. I believe it'll be that quick. It is through a very large group. It's a little different in that we'll actually be selling into a direct group that has distribution within their current locations.
Oh, okay.
The details on that, it will be a substantial account, though, which is the nice thing. It's kind of equivalent to, if I was to look at the U.S. market, one of our mid-range groups that we already deal with. Probably not as big as a Publix, but certainly as big as some of the chains we have with 200 or 300 stores. It'll be a very nice add for us, and it'll be FOB U.S., which is also a very nice thing for us.
Lastly, just as a follow-up on that, if you don't mind. In terms of pricing and margins, like per unit pricing and then just margins overall, is there anything we should think about as you enter that market?
I don't think there'll be much contraction because of the FOB shipping and our ability to make sure that we were priced competitively with our other retailers.
Okay. All right, great. Thanks so much.
Our next question is from Luke Hannan with Canaccord Genuity.
Hey, good afternoon, guys. I wanted to follow up on that point as well, actually, on the margins. You talked about on the call, Ricky, that you expect to see some sort of margin expansion from these new plants and new raw material providers that you guys are going to be adding. Can you quantify at all what we should be thinking as far as what the margin profile increase would be there and maybe rough timing on when you expect to achieve that?
Just looked at the Excel spreadsheet a couple of days ago, Luke. Internally, some of it's going to be predicated on if we put any working capital towards these arrangements or not from CapEx. We have not to date, but we are considering that as a company to potentially directly invest in some of ours and become a little bit more vertically integrated. We wouldn't run it, but we'd be able to get a little better pricing.
The big savings initially, though, will become frankly from the freight cost. We are going to pick up on the freight bound end, significant dollars right away. Whether that's one or two points, I don't know for sure. David might be able to better answer that, but it's definitely significant and we've done our ROIs on any potential investment as well. David, anything on what you think it might be?
Yeah, it's still too early to tell from a percentage point of view, but from a timing point of view, we won't see anything till Q1 fiscal 2022.
Okay. Thanks. That's helpful. One of the things that you also talked about is that you're allocating more resources towards those areas where you're seeing really high ROIs in your test markets. Can you elaborate, I guess, on what exactly those sort of ROIs are? Are you referring to just an average customer basket relative to the customer acquisition cost? Can you give maybe a little bit more color on what exactly you're seeing there?
Yeah, I can. We started out with some 700% or 800%. We've run them now in, I think five markets, David?
Yes.
Five different markets. Very small tests, $5,000, $10,000 a pop, but we're seeing tremendous return on those investments. I'm going to guess, David, you might have a better I think last time we talked, it was close to 300% ROI on the investment. Is that still about?
Yeah, a little less, but about that.
Okay. That's why when we look at those, Luke, it makes all the sense in the world to continue to pursue that until it continues to adjust downward. It won't make any sense. Right now, that's mainly digital, and it's not so much acquisition. A lot of these are being done, excuse me, I'll step back for two seconds. A lot of those returns and that sort of return have been in the food channel or grocery channel. We've done digital with Kroger now, H-E-B, a number of other big companies that we've worked on in the last year, Food Lion, et cetera. Those have all shown tremendous returns for us on the digital side. On the cost per acquisition on the e-commerce sites, we have run a bunch of things on the app.
We know what doesn't work, and we'll begin to push some additional dollars to bring that cost of acquisition down below where it is today.
Got it. On the CBD front, Ricky, are you noticing, how does the Alkaline brand, how do you sort of differentiate yourselves in what's admittedly a pretty crowded field? Have you noticed anything in the metrics that you're seeing or feedback that you're hearing from customers that your product is actually standing out and sort of differentiating itself?
Luke, the one big thing that I do know. I get it from my sales guys all the time, is that we're about a taste profile. There's nothing that we've made that people just don't think is absolutely outstanding on the ingestibles. Obviously, shea butter and some of the higher cost ingredients on the topicals as well. Finally, what really is carrying the day, at least on the brick-and-mortar side, is that people love Alkaline88. It just opens those doors. I was shocked to see some meetings taking place this coming quarter that's strictly only a result of us being Alkaline88. It just opened the door for the 88 CBD sales team. Hopefully, some of those come in. I love this time of year for us because we've had some big wins in the last couple of weeks.
We don't usually announce until the PO comes, so that's why you see the kind of obfuscated answers or discussion within our actual release. Those are clear, but they're not in the stores yet. We haven't gotten the firm POs, but we're in line for the planogram, et cetera. You'll see some of that coming in the CBD arena very quickly as well. This time of year, everybody's making their decisions. The buyers are, both on the CBD side and the water side, and we're getting a lot of Ws. Over the next two weeks here, three weeks, a lot of those Ws will come to fruition.
Got it. Last one from me, if I may, and then I'll pass the line. With the new administration that's in place now, have you noticed anything in your dealings with potential customers where you're noticing a more positive tone, a more positive outlook on the prospects for some of your CBD ingestible products? Have you heard anything from the regulators that suggest any incremental positives there?
It's not so much regulators. Obviously, I read the legislative updates almost every day. There was a bill that went in Congress. Well, the same as last year's bill, but obviously with the administrative change, we do believe there'll be some additional guidance. The good news is that whether we believe it or not, some of the retailers believe it. There was a marked change after November 6t h in the fact that retailers were much more likely to talk to us about ingestibles. I would've said before November 6th, we were pretty much, 90/10 ingestible or topicals to ingestibles, and now we're no worse than 50/50.
Got it. That's great color. Thanks a lot.
Thank you.
Our next question is from Kevin Dede with HCW.
Hey, Ricky. Kevin Dede.
Hey, Kevin. How are you?
Can you hear me? I'm good. I was really happy to see your numbers. Congratulations.
Thank you, sir.
I think the big question for me, Ricky, and I defer to my esteemed colleagues who probably already picked up on it, but last year, you were at $8.5 million. Now you're at $10.2 million. Can you just help us take it apart a little bit? I apologize, but it all seems kind of all lumped in together. It's hard to see what was CBD. It's hard to see what's flavor-infused. It's hard to see what was online, what's in the stores. What should we do to try to take a look at some of the parts?
I'm not sure I can I've been pretty firm on this, Kevin, that we're not providing segmented guidance. That's kind of why I went on today to see if the real answer was there, when we're gonna push over that line. What I will tell you is, to give you some guidance, that January was our best January ever, okay. The first two weeks of February were our best two weeks of February ever. There's not even close second. The momentum continues to grow with the brand, and it's across all parts of the brand. I just did a survey two weeks ago. Actually, my sales group did a survey for me, and one of the things that, again, on a color basis, you can look at where we penetrated the various 60,000 stores under strictly the grocery channels.
You can see that, for instance, 40% penetration are 1 L, and another some 20% on the 1.5 L, 20% on our infused. Those are the kind of things that we move metrics against. On the winds coming up, because it is that time of year, we have 11,000 new SKUs scheduled, 11,000 stores willing and ready to take a new SKU on the upcoming fiscal year. I think we said it in the releases, we pick up about 9,000 new stores that will be coming in in the fiscal year. A lot of the SKU, I did do that today. The one I was focusing on more than anything, Kevin, to be frank again, was I wanted to see how the 2 L was being accepted, because I love that package for us.
There's a little over 1,000 stores that the 2 L is scheduled to go into. If you look at 2 L, our single serves and our flavored infused aluminum, well over 3,000 stores that are picking those up going after the fiscal year.
Okay. That's impressive, Ricky. It's impressive. It's just a little, I guess, to use your verbiage, a little obfuscated at least from my perspective. I'm sure the other guys have a better handle on it. It's just hard to run numbers without sort of seeing a little more detail. I guess, the other thing maybe you can help me with is understanding what's where. I know the DSD is sort of a new strategic effort for The Alkaline Water Company, and I guess what I'm hoping you can share with us is what you think their focus is, in terms of storefronts, and what products are they helping you move?
A good question, Kevin, because it is a new focus for the business. I want to add a little bit of color because I only had 17 minutes of my prepared speech, as if we gave myself a little more time on the Q&A session.
Yeah. No, I appreciate you moving it along, Ricky. Thanks.
One of the things that you have to understand is that most people pull the trigger on direct store distribution way early. They have a new idea. They have a new concept. They think the way to get in there is to hire DSD, and that sits on the shelf. We kind of did it the opposite. We're looking only at strategic markets, big markets, to take in a DSD network, and we have an excellent reputation in the grocery channel.
I looked today at the Nielsen reports that came out on 1/23 of this year, and we have a 3% market share in grocery on the enhanced water space, which just shocked the heck out of me, Kevin, because if you look down the list, you'll see a lot of big names that are substantially less than ours that you would think would have that much share.
Little old Alkaline88 has that amount of share. The name recognition is out there. That will allow us to go into, really the strategy is convenience stores and up and down the street. That's what the DSD is really set up to do. We've done an excellent job. Frank Chessman and his team has done an outstanding job of penetrating the grocery channels and some of the major boxes, and now it's time to have a strategy.
We hired a guy last year from Essentia. We just had an additional hire in the Northeast. We haven't announced it yet, but he's a DSD guy that actually left, I think, Voss to come to us. We're serious about the effort, and we think that the ability to penetrate the C- stores is essential to growing the brand here in the U.S. and accelerating our growth.
I don't like to use comparatives, but if you look back two years ago, really about 18 months ago, Celsius took their second bite at the apple on DSD. They fell flat on their face, and they did it 15 years ago when they didn't have any name recognition. They took that bite at the apple 18 months ago. I think the Big Geyser was their first one out in New York, and they've continued to roll and done very well. That's a little bit of how we view it, but we think we've just done it smarter. We think we waited till we had the name recognition and then went and had guys that literally two years ago wouldn't talk to us, negotiating with us where we think we have very good DSD agreements.
The other big question is what other SKUs can you pull through once you've established your. Yeah. I'm just kind of trying to get my arms around the opportunity. It's all tantalizing, don't get me wrong. It's just hard to see what's where and what you plan on going.
Well, I think, Kevin, in most cases, the 1 L is a no-brainer for these guys. Okay? Our sports cap is a differentiation. So is our aluminum. They're all carrying the Flavored Infuse as well. We do have two or three differentiations in terms of product. I would like to see the 2 L get on some shelves. I think that's, again, another differentiation that we have. It's a handier size pack, both for the refrigerator and the gym.
Okay.
It's just this four-pack. I see that as a big differentiation as well. It wouldn't surprise me that at some point in time, we have all three, the gallon, the 3 L , and the 2 L in some of our grocery channels. I see in the convenience store channel, I do see the aluminum being a big item for us because it is a cold pack item. As I said several calls ago, if you drink our aluminum bottle cold, you'll never have a beer again. It's just that good.
Well, you're talking to the wrong guy about that, Ricky. I'm wondering, though, can't you pull CBD through some of these retail channels as they build?
Yeah, we actually hired, I don't know if you caught the nuance, we hired BettermentRS.
Right. I did hear that. Uh-huh.
They're doing a great job for us. Not a good job, a great job. That's some of the announcements, that you'll hear some of the wins that we've recently had that will come out over the next week or two. Again, I don't like to make announcements for flash. I like to be able to go out and take a picture someplace, post it social media so that they can go into their local CVS or Walmart or wherever it is, and grab the product. It doesn't help sales to have a big news flash and not have anything sitting there.
All right, last one for me, Ricky. I'm sure you just breathed a big sigh of relief. How many co-packs do you have now, and can you just review your rollout strategy going forward, just so I make sure I have it correct, please? I know you gave it to us on the call.
Yeah. I think we have eight total right now. I don't have the list in front of me, but easy one again, Kevin, we are very close to opening one in the East, Midwest. Just the Midwest.
Okay.
We're very close to having that open. That will open first quarter.
Oh, okay.
I've got the actual open dates in front of me. Let me see what I think it's scheduled for the end of March. Okay? Beginning of April.
Yep.
That one's coming on. The raw material guys, both those plants, I think, they went up last week. I don't know how much they're producing yet, but they're still in their test-
Yeah, they're still in the test phase, so again-
QC-ing them.
you won't see that economically until the Q1.
We're still QC-ing them, that's probably another 30 days before they're really operational, and can save some of that cost of goods sold we talked about, that David mentioned will be available first quarter. The West Coast plant, we've identified, we visited, we've qualified, but it is a new build. They're out another four and a half months, probably, Kevin, before that happens.
Okay. Thank you so much, Ricky. I appreciate your patience and your indulgence, as always. Congrats again.
All right. Stay safe, everyone. I want to thank everybody for taking the time with us today. I appreciate it. Again, I know I try to say this every quarter, but I do see rainbows and unicorns ahead for this company. We're as strong as we've ever been on almost every level. We did add a bunch of people this year that have all been A players, and it's just nothing but strength in our bench, and we get better every day. I appreciate your faith in the company.
As a reminder, if you'd like to ask any further questions, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handsets before pressing the star key. One moment as we poll for further questions.
No questions. Nobody else is on.
The next question is from David Bain with Roth Capital.
Oh, gosh, all right. We're back on. Sorry. I did have one follow-up, and I didn't mean to go over again there. If you can indulge me now, just one last one on the international again, because I think that's kind of a big initiative. Can you give us a kind of a capsulation? I looked up the TAM in Mexico, and it looks fantastic. The growth looks great for bottled water. I don't see anything on value add, and I'm wondering how prevalent that is in Mexico relative to the U.S. and just putting it in, the flag in to the market, is that enough of a brand-building kind of initiative, or is there going to be a CapEx requirement to kind of proliferate the Alkaline88 brand?
Well, you ask all good questions. We've explored both. We think that our first trip into Mexico and that market will actually be a much easier trip than most people experience. We've got a unique situation, David, that I think will allow us to actually get immediate sales and immediate return on investment, just because of the way we're negotiating and the company we're working with. The second one will take us a little longer. We have had some discussions with different people in Mexico that obviously, how do you build that brand? We think, based on their business model, that we would do a co-type of arrangement, that maybe they'd help us, and we'd help them in the States. That's really where we're thinking about right now.
Got it. Okay, it'll be pretty CapEx-light then, correct? Is that
Yes, it'll be very CapEx-light. Absolutely.
All right. Phenomenal. Thanks so much. Oh, sorry.
All right. Thank you, guys. Thanks, everyone. Blessings.
This concludes tonight's conference. You may disconnect your lines at this time. Thank you for your participation, and have a great evening.