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What do you look for in a product line when you're considering the beverage company's investment potential?
Opportunities that meet the needs of consumers are where we began and end. We look at how consumers' tastes and trends evolve, but in particular what we're focused on is what consumers are focused on: health and wellness, convenience and value. The ability for new product development is important, too. That's what is driving the market these days. You can't meet the current needs of consumers with legacy products.
How about the company itself?
We're not venture capitalists in the sense of investing in startups. We only invest in mature companies that are established and have substantial scale. What we're really trying to do is take established businesses, make them bigger, and have them capitalize on these opportunities that we see.
Once you invest, in what ways do you like to see your capital used?
Our goals are twofold. First, we want to see that capital green-light some opportunities, whether it be expanding our core business into new geographies, or adding capacity within our existing geography to meet demand. With Advanced, we'd like it be used to capitalize on some of these new opportunities for bringing greater functionality to bottled water. Second, we look at companies to acquire and consolidate. We've had a lot of success in our firm's history, particularly in the food and beverage industry, in consolidating businesses. In this case, one plus one really equals three because you can do a much better job of serving your customers if you have a national footprint and you pick up other product line capabilities that you can now serve to your audience. We see a lot of opportunities that can come through acquisition so that's going to be a core strategy of ours with Advanced.
You've said Advanced made such a good investment because the bottled water market is entering a transformative stage. How so?
One of the things that we've been very focused on in the past several years is the growth in private label products. As it relates to bottled water, what we've seen is the tremendous growth of this industry segment. There's a supply and demand imbalance right now for private labeled water. You can't get private label bottled water at every retailer because there's just not enough supply. As the industry gets larger, you're going to start seeing some consolidation. Right now it's a lot of independents, of which we are one. As market segments mature, those mom-n-pop companies start to rationalize how they can best serve the retailer and the end consumer. If I as a company can consolidate and have a national footprint, I can serve you out of multiple locations, I can serve you in multiple product categories. That ability to serve consistently is how you best win in the food and beverage industry.