Deal to Watch: Healthy, Feel-Good Sparkling Water

Key Stats:

Summary

Mountjoy Sparkling has been selected as a “Deal To Watch” by KingsCrowd. This distinction is reserved for deals selected into the ​top 10% of our deal diligence funnel​. If you have questions regarding our deal diligence and selection methodology, please reach out to ​hello@kingscrowd.com​.

Problem

As societal tastes adapt over time, sugary beverages are falling out of favor. Consumers are increasingly conscious about diet and overall wellness, and are beginning to turn away from a full-sugar soda when they feel thirsty. Per capita consumption of soft drinks has declined steadily over the last 20 years, from 54 gallons per capita in 1998 to only 40 gallons per capita in 2015. 

Carbonated water has become a hot category as an alternative to traditional sugary drinks; sales of sparkling water have doubled in the past decade, and big market players like Coca-Cola and Pepsi are eying new product lines and strategic acquisitions to include bubbly waters in their more diversified beverage portfolio. 

Healthier beverage alternatives are also entering the alcohol industry; new spiked carbonated water brands like Truly and White Claw are Instagram hits and huge sellers, and Anheuser-Busch is investing in hard seltzer to overcome declining beer sales. But beyond selecting more health-conscious alcohol, some consumers are choosing not to drink at all. In fact, sobriety is becoming trendy: a growing number of adults are choosing to forgo alcoholic beverages to feel healthier, think more clearly, and avoid addiction. 

Where do these trends converge? On the need for a healthy, sugar-free beverage that delivers the same mood-enhancing effects as hard seltzer without the alcohol. Mountjoy Sparkling is capitalizing on that demand.

Solution

Mountjoy Sparkling is a cannabis-infused sparkling water brand with five flavors of CBD-enhanced seltzers selling in seven states. Mountjoy seeks to win consumers who are conscious about health and prefer no-calorie beverages, but are also seeking to replace alcohol with a similarly mood-enhancing social drink. 

CBD-infused beverages were made possible with passage of the 2018 U.S. Farm Bill, which legalized the growth of hemp in all 50 states. CBD, and the cannabis market broadly, are exploding with increased legalization; the adult-use market is expected to reach $16.6 billion in the U.S. by 2025, up from only $400 million in 2014. Cannabis-infused beverages are a growing subset of the CBD market; drink sales topped $86 million in 2018, and are expected to grow to over $1.4 billion by 2023. 

Mountjoy Sparkling joins a growing lineup of CBD beverage brands, but leverages a proprietary “NanoTonic” full-spectrum derivation process designed to maximize the effectiveness and impact of the 10 mg of hemp-derived CBD present in a bottle of water. 

Mountjoy partners with beverage distributors to sell alongside beer, energy drinks, and bottled waters in grocery and convenience stores, gas stations, and bars in seven states. Packs of water are also available direct-to-consumer via the Mountjoy website, starting at $30 for a six-pack. Mountjoy Sparkling has generated over $820,000 in revenue since its founding in 2017, and is currently operating at a loss with roughly $140,000 of negative net income in Q3 2019.

The Team

Mountjoy Sparkling was founded by Alex Montjoy, a serial entrepreneur with 25 years of experience in product design, innovation, manufacturing, sales, and factory engineering. Previously a software and hardware engineer, Montjoy graduated with a Bachelor of Arts in Physics from Tufts University. 

Growth Plan

Montjoy Sparkling has raised $585,000 since 2017, and is seeking to raise an additional $25,000-$100,000 via equity crowdfunding to power product expansion and revenue growth. 

In the near future, Montjoy plans to develop additional packaging options beyond its current plastic bottles, expanding into glass bottles and aluminum cans. In addition, Montjoy hopes to expand relationships with distributors to serve 22 states in 2020 (up from current seven-state distribution), and forge additional partnerships with major grocery brands. Lastly, Montjoy plans to devote roughly a third of capital raised toward general marketing, seeking to build a sticker consumer brand through various channels. 

Why We Like it

• Decline of sugary beverage sales and increase in demand for alcohol alternatives: The health-conscious movement continues to develop, and extends to consumer preferences for beverages. Sales of sparkling waters continue to spike dramatically, and separately, a growing anti-alcohol sobriety movement is forming. Montjoy Sparkling is fueled by both trends, positioning it as a competitive player in the continued evolution of the beverage landscape.

• Growth of the legalized cannabis industry: Widespread and growing legalization of cannabis has opened a wealth of new opportunities in CBD derivative products. While CBD-infused beverages currently make up only 2-3% of the total cannabis market, attention from venture capitalists and legacy beverage brands indicates that beverages will soon grow their foothold as one option for consuming CBD. Mountjoy Sparkling joins a space live with new deals and acquisitions, indicating growing belief in the staying power of CBD beverages.
  
• Acquisition potential: Corporations like Anheuser-Busch, Coca-Cola, Pepsi, and more have indicated their interest in the CBD beverage space, and Mountjoy Sparkling is intentionally positioning itself for acquisition. The company prides itself on its proprietary full-spectrum production process, and will point to its intellectual property in manufacturing as a differentiator for brands seeking to acquire a successful CBD beverage brand. 
  

The Rating: Deal To Watch

Mountjoy Sparkling capitalizes on a number of market and consumer trends, including a push for healthy beverages, interest in alcohol alternatives, and the boom of legalized cannabis. Venture capital activity in cannabis has never been more intense, and legacy brands are publicly interested in expanding into cannabis and CBD. 

With sophisticated manufacturing facilities and a proprietary derivation process (NanoTonic), Mountjoy Sparkling is positioning itself not only as a trendy CBD beverage brand, but as a robust product development and distribution powerhouse attractive for acquisition by any number of industry players. While the space is still gearing up for a major acquisition, those deals are only months or years away as increased clarity about cannabis regulations convinces more and more brands to join the movement. 

Mountjoy Sparkling has market-proven traction, proprietary manufacturing processes, and a product that speaks directly to consumer desires and latest trends. Therefore, the company is an attractive target for acquisition, and a Deal to Watch for equity crowdfunding investors.