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National Beverage Corp. Is Just Falling Flat

Jesse Cash profile picture
Jesse Cash


  • The stock is priced near its 52-week high despite changing business factors.
  • The company is 74% owned and controlled by the CEO and Chairman, who is resistant to change.
  • The flagship La Croix brand is losing market share.
  • National Beverage's stock price is very likely to fall in coming months and years as major competition takes aim at the sparkling water market.

National Beverage Corporation (NASDAQ:FIZZ) is a collection of brands you've never heard of, one you've probably forgotten about, and La Croix. At one time, the company was on the front edge of the sparkling water revolution, and this lifted the company's revenues, earnings, and market cap for years. However, National Beverage faces several headwinds that make it very unlikely they can continue to trade near their 52-week high for much longer. This stock is extremely likely to lose its value as the company's chief product (La Croix) loses its market share.

A Random Collection of Brands

National Beverage's website extols a wide variety of brands and their 2019 Annual Report praises their small, vertically integrated structure that allows them to craft unique formulas to meet customers changing tastes.

"We craft a substantial portion of our flavors and concentrates. By controlling our own formulas throughout our bottling network, we are able to produce beverages in accordance with uniform quality standards while innovating flavors to meet changing consumer preferences. We believe the combination of a Company-owned bottling network, together with uniform standards for packaging, formulations and customer service, provides us with a strategic advantage in servicing national retailers and mass-merchandisers."

However, the retail reality does not match the claims made in the annual report. The reality is that, with the exception of La Croix, National Beverage is a collection of largely unknown brands that can't possibly add much to the bottom line.

Below is a list of their brands. I looked for them at Vons and Kroeger websites, and then I looked on Amazon. Most were not sold, or were not particularly popular.

Brands Vons Kroeger Amazon Amazon Rank and Category
Rip It Energy Drink N N Y 2508 Ranked Energy Drink
Shasta Soda N N Y 1379 Ranked Soft

This article was written by

Jesse Cash profile picture
I am an investor with more than 20 years of experience, in good an bad markets. I believe smart, strategy driven investing can lead to financial freedom. I use a combination of fundamental and technical analysis, and use a combination of strategies including:long, short, dividend, options (by and selling) and combinations of the above. I tend to look at the world differently than most, and this has been a source of success for me. Disclosure: I'm not a financial adviser. All articles are my opinion - they are not suggestions to buy or sell any securities. Perform your own due diligence and consult a financial professional before trading.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (19)

22thoroughbred profile picture
FYI, For the last ~10 yrs every time they report, very good it bad the stock drops, I bought some $65 puts just in case,
Nat Stewart profile picture
Rereading the article, I noticed this comment:

"They deliver product to the regional warehouses for the grocery stores, or retail stores, and those companies move the product from there to the on-shelf displays. National only carries out distribution to retail for limited stores and "convenience locations"

It is interesting you picked up on this. At the last annual meeting we learned that National has developed what are effectively "special forces" marketing teams that travel and help grocery stores set up and maintain in-store LaCroix displays.

Their data suggests that these efforts can radically impact local sales, and they were just (at the time of the meeting) rolling out the program on a National basis.

On a different note, at ~3B in sales, imagine if FIZZ had direct access to Nestle USA's direct delivery system - or even controlled it? Call me crazy (and I could well be dead wrong) but I do think the FIZZ cash build (firepower) suggests something big could be in the works.

From the Nestle Press release:


Key part:
Vevey, June 11, 2020

Nestlé sharpens water focus on international, premium mineral and functional brands while exploring *strategic options for parts of North American* business

Nestlé S.A.'s Board of Directors today approved a new strategic direction for its Waters business. The company will sharpen its focus on its iconic international brands, its leading premium mineral water brands, and invest in differentiated healthy hydration, such as functional water products. The Board also confirmed its intent to explore strategic acquisitions to grow in this category, while pledging to make its entire global water portfolio carbon neutral and replenish associated watersheds by 2025.

At the same time, the Board concluded that its regional spring water brands, purified water business and beverage delivery service at its Nestlé Waters North America unit lie outside this focus. As a result, the company has decided to explore strategic options, including a potential sale, for the majority of the Nestlé Waters business in North America (U.S. and Canada), excluding its International brands. This review is expected to be completed by early-2021.
Jesse Cash profile picture
I am very glad they are making the move. That seems to be critical. Maybe the cash hoard is in prep to purchase a brand from someone or a strategic partnership. Both could be game changers. But I would wait to see the turn.
Brian Heimowitz profile picture
While this article points to the sales decline and the cockroach scandal, the author fails to link the two together. With the scandal behind them the company should resume its prior growth trajectory.
22thoroughbred profile picture
To say you’ve never heard of or seen their products isn’t true, Faygo is a very regional soda (pop) brand sold mostly in urban cities in the Midwest & East and when economy is bad the product sells faster and more profitable than all but dine private label stuff, same with Shasta, BTW, how many beverage or food products can u name that are well over 40 years old? Regionality is true for most products they have ex LaCroix
Jesse Cash profile picture
I have never seen Faygo. Maybe I just haven't noticed it. But I used to travel 26 plus weeks a year and have never noticed anyone drinking Faygo. I'm perfectly content to say I could be wrong. However, the fact that they are almost entirely dependent on La Croix is valid
22thoroughbred profile picture
Jesse, you'll find Faygo in most low(er) income areas, it's a very sweet soda, liked by the same folks who drink Kool-Aid
Jesse Cash profile picture
Then it probably does have a real base of customers.
22thoroughbred profile picture
Looks like the massive army of trolls need to better coordinate their stories, see 1 today then maybe another on Wed. with a strong sell rating by Maxim Monday, a week before earnings when Fizz is in a quiet period snd can’t respond then several negative posts indicating they “ know” thru channel checks sales are actually worse than they thought, and finally 1 more share price reduction to oh maybe $32. We’ve seen this movie ~2-3+ years ago and unfortunately it was partially successful but there is a new addition in previous qtr that will be a major addition to sales & profit.

Funny, I made my first foray back into FIZZ last week, exciting
Jesse Cash profile picture
The idea that I am coordinating negative articles is charming. I just expressed my opinion. If you disagree that is fine. I am not coordinating with anyone. That is an amusing theory though.
22thoroughbred profile picture
Not at all amusing, if you're aware of the history on the shares taken down by shorts and bogus lawsuits that were all co-ordinated you'd understand, you have to agree 2 negative articles posted within 9 minutes of eachother after virtually no articles in awhile may seem like a coincidence, but I don't believe in coincidences
22thoroughbred profile picture
jesse, and today another coincidence, NOT: seekingalpha.com/...
Nat Stewart profile picture
I don't see a big reason to be bearish right now. Rehashing an ancient tabloid-type Bloomberg article doesn't add much to the conversation, IMO.

Clearly, competition from heavily-subsidized Bubly has not been a good thing for FIZZ, as it appears Pepsi has had a vendetta to steal shelf space in many markets.

Yet, Bubly has not been good for Pepsi either. It is a vanity project - something they can point to when people question their monstrous record on public health - nothing more.

Just look at Pepsi's North American Beverage profitability.

Sales up 7%, margins are way down, profits are DOWN 24%.. Fact is, the Bullshit they are pulling in Sparking Water is harming Pepsi's profitability.

Did I expect they would take "pump priming" to this length? NO, but had they not it would have been better for the Pepsi corporation. Few understand this.. Bubly has NOT been good for Pepsi. It is a distraction from their *real* business and profit drivers.

If and when shareholders get tired of it, Bubly's "successful growth" will hit a brick wall.

*Back to the topic of FIZZ*

By coincidence a friend asked my opinion on LaCroix/FIZZ just last week. Here is how I responded (slightly edited):

"I think FIZZ looks very strong right now and that the analyst's estimates are too low. I have seen evidence that the new flavor LimonChello is a smash hit and since launch not long ago has become the #1 or #2 flavor for LaCroix. Have also heard that Faygo is doing extremely well.

So far as I see KO's "AHA!" is not doing that well and is not getting traction. Pepsi is still enormously subsidizing Bubly, but I believe it has contributed to their shrinking margins/reduced profitability in USA beverage so this activity might not be sustainable as it is making the CEO look like an idiot to anyone who can read between the lines on conference calls.

Nestle is making some fairly large changes to their North American water group:


Could be some opportunities for FIZZ somewhere in this, not sure if u are on twitter but my comment can be found here:


Still curious why we never recieved our special dividend - can't help but think Nick has a "trick up his sleeve" - should have +$300M cash at end of Q4!!

best wishes,"
Jesse Cash profile picture
I just see major problems. If the majority shareholder / CEO is unwilling to adjust business tactics and price point, they stand to lose. While you may be right, PEP may be attempting takeover that ends up being more of a Pyrrhic victory, they still have the firepower to cripple the only strong product that Fizz has. While the end result may be hurtful to both.

It just seems to me that Fizz is built entirely on one product's success. As that product falls (if it continues) so will Fizz.
Disclosure: Long FIZZ

Would be awesome to see that cash hoard used for a massive buyback. $300+MM in cash versus a 9mm share float
Jesse Cash profile picture
Since the company is overwhelmingly owned by the founder, and his wealth has fallen dramatically in the last year, it is possible. I actually think they would be wise to spend some of that cash promoting and building a customer base for some of their other products, to reduce their dependency on La Croix. They have other products that probably could really do well. They should market those and build a base of customers and profit.
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