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LQR House Is Utilizing 21-st Century Digital Technology To Distill Value From Spirits Beverages Sector ($LQR)
After its successful IPO last week, LQR House (NasdaqGM: LQR) is positioned financially and operationally to exploit potentially enormous value from an alcohol beverage sector in shuffle mode. Call it a case of being in the right industry at the right time. As importantly, with the right assets. Checking all three boxes does more. With continued market disruption from an ongoing Anheuser Busch (NYSE: BUD) debacle, LQR is timely to an industry reshuffling of the beverage brand deck.
But not everyone will find a better place. In addition to having excellent products, the companies that will emerge stronger will also need a strategy. LQR has both. And their expectations are as bullish as investors: get bigger faster by leveraging its mastery of digital technology to gain competitive advantages in a space where a single percentage point of share can be worth millions. Combining that ambition with an O/S count of about 10 million and a trading float smaller than that, announcements by LQR supporting its bullish thesis could be a value driver of significant proportion.
That's not an overly ambitious assessment, either. Hundreds, thousands, and even potentially millions of success stories are attributed to the company-specific integration of digital technology and processes. LQR is now on that list. And that doesn't mean they have only a website presence and social media accounts. The most significant contribution of digital integration to the LQR business mission is that it allows them to earn money through every step of the brand and marketing process. It's a result-driven approach to business that maximizes efficiencies in supply, sales, and distribution channels, where results can accrue quickly.
Utilizing Digital Power To Drive Revenues Higher
That includes revenues falling fast toward its bottom line, which will be no coincidence. It's a fortuitous expectation from implementing ways to change the spirits sector's face. Still, products alone don't drive success; there needs to be a method supporting the initiatives. LQR also checks that box, implementing "digital" in the right way to capitalize on near-term opportunities that have as much to do with efficiencies as they do products. The excellent news from an investor's perspective is that LQR has both. And better positioned than ever to maximize its value, LQR has noted its ability to envision its path toward profitability.
That's not unwarranted optimism on their part. LQR already generates stable sales, is recession-proof for all intents and purposes, and generally benefits from a sector with consistent sales throughout the year. That's an excellent market to play in, and for companies like LQR House, who are disruptive instead of one of the herd, it is fuel to its mission to deliver shareholder value by changing parts of the spirits sector landscape. Specifically, by creating and exposing the value of a better business model, digital, that is doing more than providing a pathway to profits for LQR, it's also revolutionizing how innovative brands operate and, essential to the value proposition, how consumers discover them.
Brands need all of that to survive. LQR understood that when designing its strategy, appreciating that when competing against behemoths like Molson (NYSE: TAP) and Constellation Brands (NYSE: STZ), finding a competitive edge can be the difference between success and failure. Understanding is one part of the equation. Taking action to establish a position is another. LQR is doing the latter faster than many have expected, completing groundwork that disrupts traditional sales and marketing models. It's also reshaping the conventional approaches through a reimagined strategy to market and distribute products through an expanding network and strengthened infrastructure that leans into partnerships, maximizes novel ways to engage consumers, and takes advantage of efficient pathways to build client count and market share. That's not all.
LQR is maximizing digital channels to generate and increase brand exposure through distinctive methodology, enabling LQR to introduce its spirits and wines more quickly by leveraging the combined strengths of its vast influencer network that connects brands to its sales platform. That connection ensures and maintains product visibility and adds to the potential to achieve substantial product and category growth.
LQR House Is Seizing Its Opportunities
There are more opportunities than ever, resulting from a spirits industry that has exploded in size. Much of that growth comes from the surge in smaller "micro" brands that produce high-quality, attractively packaged products that reach targeted demographics. Still, distinctive products and attractive packaging are just part of what's contributing to the resurgence of younger generations drinking distilled spirits. A more significant contributor to sector growth is that companies have learned how to get their new products into consumers' hands. LQR House included.
In fact, LQR has become a self-described one-stop shop for everything related to the booming spirits sector. That includes actively creating value by acquiring, building, marketing, and distributing premium brands through its exclusive online networks. So, don't be misled by its smallcap price. Combining its intrinsics with the potential from its compelling assets and business relationships, LQR is growing quickly. Inherent to its growth, LQR could then leverage its position to disrupt the status quo and become a sector powerhouse by leveraging e-commerce and digital ambitions that are more than differences; they are advantages.
LQR won't be the market leader in 2023 but don't underestimate its potential. Just six months ago, no person would have argued that Modelo Especial would dethrone Bud Light as the top-selling beer in the United States. It happened. Thus, playing its cards correctly, LQR could also earn appreciable near-term growth from a suite of products, services, and connections that target massive demand from consumers whose purchasing behaviors have changed. Remember, earning a small percentage of market share can lead to exponential revenue growth. Don't rule against that potential. LQR already has two compelling assets, Soleil Vino and SWOL Tequila, which epitomize its non-commodity-styled approach of providing premium products that pay attention to consumer demands. Relationships add to the LQR value proposition.
Bringing Millions Of Eyes To The LQR House Portfolio
They have a tremendous one with Cwspirits.com. It provides LQR exclusive marketing rights, including marketing on the CWS platform, selling marketing placements to other brands, and establishing a network of social media influencers to further drive revenue. This relationship should not be under-appreciated or undervalued. The CWS platform is one of the largest online liquor retailers in the United States, curating an assortment of the most popular SKUs and earning over 2.5 million unique monthly views. That's more than a value driver. The revenue-generating potential from its Cwspirits relationship could justify analysts modeling a share price higher than its $5 IPO. After all, analysts factor forward-looking proforma calculations to generate six to twelve-month price targets.
Furthermore, LQR accrues value from its direct sales and B2B business segments. Both are growing, but B2B in 2023 can outperform, an expectation from LQR providing volume discounts, vast selection, corporate client reach, and leveraging its relationships to earn additional introductions to top industry manufacturers and distributors. LQR makes money in other ways as well.
Brands pay LQR to design comprehensive marketing campaigns to increase brand awareness and online sales through exclusive marketing channels. Those include premium placements and services related to E-commerce, brick-and-mortar, importing, direct-to-consumer, and business-to-business. Its brick-and-mortar placements span seven locations across San Diego, and its Country Wine & Spirits revenue is currently generating millions in revenues. Similar results are expected through its import channels, noting its strong working relationship with a producer in Jalisco, Mexico, which produces its exclusive SWOL Tequila blends. That's more to appreciate.
Harnessing Value From Its E-commerce And Influencer Assets
E-commerce interests are another value driver. That segment is doing incredibly well through its partner website and online ads, leading to thousands of unique weekly sales. That performance has led LQR to earn an ROI of 6X from its e-commerce segment. While impressive, LQR expects its revenue-generating trajectory to steepen, resulting from LQR leveraging decades of experience in spirits, finance, technology, marketing, and distribution.
Indeed, the LQR mission is ambitious, but its goals are reachable from LQR staying committed to and focused on revolutionizing specific areas of the alcohol industry. When its parts work in sync, LQR House believes it will have the operational strength to become a prominent full-service digital marketing and brand development face of the alcoholic beverage space. They are making strides in that direction.
In fact, LQR boasts its assets already include the development of premium, limited batch spirit brands, establishing an exclusive wine club, and marketing internal and external brands through its agreement with CWSpirits. There's something else driving value- a vast influencer network.
Cumulative Influencer Marketing
That network will be a critical value driver in the coming weeks and quarters. It's an expectation derived again from being different. Better explained, while many companies use influencers, a differentiating part of LQR's strategy is adding a multiplier that expands the reach of a single influencer into one that can reach millions. It's like a power-up in a game setting. Only in LQR's case creating a combined network of influencers can deliver an exponential impact on marketing reach.
For example, from its report in March, LQR currently benefited from 255 influencers. That's a solid number. However, LQR acknowledges the combined value effect, noting that those 255 people present a "combined" influencer network following over 38.4 million strong. It gets better. From a collective "like" perspective, LQR said it benefits from over 559 million generated. That reach is extraordinary by any measure. It's not voodoo accounting, either. These connections are real. They are productive. And they can lead to significant growth through less capital expense.
In other words, the business stars may be perfectly aligned for LQR in 2023. That sentiment is supported by LQR generating impressive revenues, having seasoned management, vast social channels presence, accretive business partnerships, and plenty of capital after its August IPO. Combining those parts, the sum total may do more than expose a disconnect between assets, potential, and share price. It supports the case that current LQR share prices may be a springboard, not a pedestal.
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