04.08.2008 16:30:00

Drinks Americas Announces Fiscal Fourth Quarter and Year-End 2008 Financial Results

Drinks Americas Holdings, Ltd. (OTC BB: DKAM) (the "Company”), a leading owner, developer and marketer of premium beverages, today announced financial results for its year ended April 30, 2008. In fiscal 2008, the Company achieved net sales of wine and spirits of $3.8 million on 39,635 cases and net sales of non-alcoholic beverages of $0.7 million on 75,141 cases, for aggregate net sales of $4.5 million. The Company has grown $2.9 million in revenue since 2006. That increase is 181% in the aggregate or 68% on an annual basis. This growth has been driven by the higher margin component of the Company’s sales of wine and spirits which have increased over $2.7 million in revenue from 2006. This increase is 250% in the aggregate, or 88% growth on an annual basis. The Company’s growth increase is due predominantly to the launch of Trump Super Premium Vodka in October 2006 and Trump Vodka Flavors in February 2008, these products continuing the Company’s strategy, beginning with Willie Nelson’s Old Whiskey River Bourbon and Paul Newman’s Newman’s Own Sparkling Fruit Drinks, of creating branded beverages in partnership with iconic figures. The Company’s other brands and its fine wine business has also contributed to its annual growth. Sales of Newman’s Own All Natural Lightly Sparkling Fruit Drinks and Waters have increased $0.2 million from fiscal 2006 (33% aggregate or 15% annual growth). The Company has expanded distribution of Newman’s Own across the country, and volume is increasing. The Newman’s business continues to provide an expansion platform for the Company’s planned addition of non-alcoholic beverage brands to be distributed nationally. The Company has completed the development, formulation, packaging and branding for the first spirits products arising out of its joint venture with Universal’s Interscope Geffen A&M Records. It is anticipated that the first of these products, a premium cognac through the Company’s venture with music icon Dr. Dre and his Aftermath Beverage Company, will be introduced to the market within the next sixty days. With respect to the production and supply of the Aftermath Cognac, the Company has entered into a letter of intent for the production, supply and European distribution of the cognac with Abecassis Cognac, a producer of premium cognacs. Completion of this agreement will not only give the Company access to a superior and necessary inventory of fine cognac, but calls for the Aftermath Beverage Company brands to be distributed by Abecassis in the European countries in which it is now doing business. Following the introduction of the Aftermath Cognac, the Company’s joint venture with Interscope/Dre/Aftermath will introduce a unique new line of 80-proof flavored and unflavored sparkling vodkas. The Company, having completed any necessary formulations, bottle and label design, marketing plans, and regulatory approvals, expects that this new line of products will begin to be shipped to distributors within the next sixty days. These products are to be introduced in coordination with the launch of Dr. Dre’s long-awaited "Detox” album, and will be supported by a fully integrated marketing program with the performer and his record company. The Company has taken note of apparent customer anticipation for the Company’s Aftermath line of alcoholic beverages as evidenced by over one million "Google” mentions in advance of any actual product availability in the marketplace. The Company continues to focus substantial efforts to expand the distribution of its iconic beverages on an international basis. Distribution and marketing ventures are currently being negotiated with significant distributors in China, India and Europe. J. Patrick Kenny, CEO of the Company, stated, "Drinks Americas has continued to deliver consistent organic growth, creating valuable iconic trademarks with sales volume up 108% on a quarterly basis. Our marketing resources are more robust with our current and imminent product offerings and sales, and our continued reductions in costs. Our management team has continued to streamline costs while maintaining margins. Our strategy of creating premium branded beverages in partnership with icons continues to prove its foresight and long term viability, with great brand value creation enhanced by reduced capital requirements and favorable production and supply contracts. We have demonstrated that we can place quality brands in the market quicker and more cost effectively, with instant brand recognition, on a domestic and international basis, leading to accelerated sales. This, in conjunction with great product and beautiful packaging, will assure our future.” Comparison of Year Ended April 30, 2008 to April 30, 2007 Net sales for the fourth quarter fiscal 2008 aggregated $1.2 million compared to $0.8 million for the fourth quarter of fiscal 2007, an increase of over 40%, and an increase of 108 % over our third quarter ending January 31, 2008 . Net sales were $4.5 million for the fiscal year ended April 30, 2008 compared to net sales of $6.1 million for the year ended April 30, 2007. The launch of Trump Flavored Vodka and Trump Vodka international sales, both in February 2008, enhanced our growth in the fourth quarter. The launch and national pipeline fill-in of Trump Super Premium Vodka in October 2006 accounted for the accentuation of sales of the product in the prior year. Net sales of Trump Vodka for the fourth quarter fiscal ‘08 rose 244% versus the prior quarter fiscal 08, and 101% versus the fourth quarter of the prior year fiscal ‘07. Sales of Trump Vodka were $2.7 million for this year. The prior year volume was influenced by the sell in, launch and pipeline fill of distributor inventory of Trump Vodka. Net Dollar sales for the fiscal year ended April 30, 2008 were comprised 59 percent from Trump Vodka sales (including sales of Trump Flavored Vodkas), 10 percent from Old Whiskey River Bourbon, 3 percent from Aquila Tequila, 4 percent from Damiana Liqueur, 9 percent from our international wines, and 15 percent from Newman’s Own Sparkling Fruit Drinks and Sparkling Waters. Net sales for the fiscal year ended April 30, 2007 were comprised 76 percent from Trump Vodka, 6 percent from Old Whiskey River, 3 percent from Damiana Liqueur, 6 percent from international wines, and 9 percent from Newman’s Own products. For the year ended April 30, 2008, net sales of Old Whiskey River increased 32 percent over the prior year ($452,000 compared to $342,000); net sales of our international wines increased 5 percent ($392,000 compared to $373,000); net sales of our Damiana Liqueur increased 12 percent ($197,000 compared to $175,000); Aguila Tequila increased 520 percent ($133,000 compared to $21,000); and Newman’s Own products increased 33 percent ($667,000 compared to $500,000). Gross margin for our wine and spirits business remained within our target of 40.7 percent for this fiscal year compared to 42.6 percent for the prior year. Gross margin for our non-alcoholic business was 21.8 percent for this fiscal year compared to 24.0 percent for the prior fiscal year. The Company successfully mitigated the impact of (i) the weakness of the dollar versus the Euro, (ii) the increase in glass cost of goods, (iii) and the occurrence of rising fuel costs, by (a) its aggressive moves in transferring spirits product glass production to China, (b) modifying bottle formats on our Newman’s business, and (c) executing strategic price increases and reducing price supports. These factors, combined with volume discounts and further manufacturing and sourcing improvements, will enable the Company to achieve continuously improving profit margins for all its brands. Selling, General and Administrative Expenses totals declined 20% to $8.0 million for the year ended April 30, 2008 compared to $10.0 million for the year ended April 30, 2007. Costs are expected to continue to decrease further in fiscal 2009 as we reach "normalized” selling and marketing spending levels. The marketing leverage the Company has with Dr. Dre and Universal/Interscope and its additional favorable strategic production partners will further drive costs per case downward. Interest expenses were reduced $604,000 versus last year. Interest expense was $164,000 for fiscal 2008 compared to $771,000 for last fiscal year. Net loss for the fiscal year was $6.3 million, or $0.08 per share, compared to a net loss of $9.4 million, or $0.14 per share, for last fiscal year. Mr. Kenny concluded, "Utilizing our iconic branding strategy, Drinks Americas continues to create valuable global trademarks in the beverage category with far more efficient and targeted investment than would normally be required. This, coupled with the right strategic partners, prudent domestic and international expansion, and continued improvement of our financial performance, makes us a unique and exciting industry player.” More information on the Company's annual results can be found in its 10-KSB filing with the SEC. About Drinks Americas Drinks Americas develops, owns, markets, and nationally distributes alcoholic and non-alcoholic premium beverages associated with renowned icon celebrities. Drinks Americas' portfolio of premium alcoholic beverages includes Trump Super Premium Vodka and Willie Nelson's Old Whiskey River Bourbon. The Company’s non-alcoholic brands include the distribution of Paul Newman's Own Lightly Sparkling Fruit Juice Drinks and Flavored Waters. The company also has a venture with Universal Music’s Interscope, Geffen, A&M Records to jointly develop Iconic beverage products for the market. Other products owned and distributed by Drinks Americas include award-winning Damiana Liqueur and Aguila Tequila from Mexico and Cohete Rum Guarana from Panama. Damiana, Old Whiskey River, Aguila Tequila and Cohete Rum are Gold and Silver Medal award winners respectively from the International Beverage Tasting Institute and the San Francisco International Wine and Spirits Competition. For further information, please visit our website at www.drinksamericas.com Drinks Americas was founded in 2004 by J. Patrick Kenny, a leading expert in beverage sales and marketing. Mr. Kenny developed his industry expertise in a variety of management positions at the world's leading beverage companies, including Joseph E. Seagram and Sons and The Coca-Cola Company. He has also acted as advisor to several Fortune 500 beverage marketing companies, and has participated in several beverage industry transactions. Safe Harbor Except for the historical information contained herein, the matters set forth in this press release, including the description of the company and its product offerings, are forward-looking statements within the meaning of the "safe harbor" provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the historical volatility and low trading volume of our stock, the risk and uncertainties inherent in the early stages of growth companies, the company's need to raise substantial additional capital to proceed with its business, risks associated with competitors, and other risks detailed from time to time in the company's most recent filings with the Securities and Exchange Commission. These forward-looking statements speak only as of the date hereof. The company disclaims any intent or obligation to update these forward-looking statements.
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