Eastside Distilling Inc., Portland, Ore., is asking shareholders to approve doubling its share outstanding as part of a three-year strategic brand that involves transforming its craft canning and bottling business and using the resulting cash flow to expand distribution and accelerate growth of the company’s four spirits brands, Portland Potato Vodka, Burnside, Eastside and Azuñia.
To build its craft canning and bottling business, Eastside plan to expand its mobile capability and add capability in can printing, pasteurization and a high-speed fixed canning location.
In a powerpoint presentation for investors, the company noted it had increased its debt to more than $25 million in a series of acquisitions including Big Bottom Distilling, and Motherload in 2017, the Redneck Riviera license agreement in 2019, and its craft canning and bottling business and Azunia Tequila in 2019.
Eastside said its new management team has divested the Redneck Riviera brand, a move that enabled Eastside to reduce debt, its need for working capital and its cash burn rate. The new strategic plan calls for discontinuing deep discounts for Azunia, launching a new Eastside brand to deplete barrel inventory build a high-margin opportunity, reinventing its craft canning and bottling business.
Most importantly, perhaps, Eastside said it will change its focus from a “high-cost national chain strategy to cost-effective micro strategy of dominating markets we choose to serve.”
The plan is already seeing results, Eastside said, with earnings before tax moving toward $1 million this year, a sharp reversal from a $15 million loss in 2019. Also, the company forecasts EBITDA to be positive this year, a sharp reversal from a $6.5 million EBITDA lost in 2019. And it expects to have more than $1 million cash on hand at year-end, vs. cash last year-end being below $1 million.
The company’s new vision is to “be the one premium, preferred and ‘scaled’ craft spirits and canning company in the Western United States, dominating the markets and segments we choose to serve.”
Eastside plans to triple its revenue, to $69 million in 2024 from $$23 million in 2022. It projects its craft spirits wholesale business growing at a 33.7% CAGR from 2019 to 2025, and its contract canning business growing at a 10% CAGR/