Mexcor has agreed to manage the production, importing and distribution of Drinks Americas portfolio of brands nationally. Brands include Olifant Vodka, Old Whiskey River Bourbon, Trump Vodka. Drinks Americas will continue to focus its efforts on its core business of building a portfolio of brands as well as marketing and promotional strategies.
Under the terms of the agreement, the parties have agreed to a 15-year term. Drinks Americas will issue Mexcor up to 12 million shares of Drinks Americas Holdings common stock, and Mexcor will receive up to a 5% ownership interest in Drinks Americas portfolio brands, provided the parties deliver and attain certain minimum performance requirements. Mexcor has agreed to deliver five or more additional new brands to Drinks portfolio, which the companies plan to jointly acquire, develop and market.
Patrick Kenny, President and CEO of Drinks said: "Mexcor has available resources to support the production of Drinks brands which has been the primary barrier to Drinks' expansion. Our portfolio, added to their national sales platform, will be greatly strengthened. Drinks can now focus on what it has a key track record of success with, which is developing and launching icon brands. We are very excited about the resources, skills and instant impact Eduardo Morales and Mexcor bring to our future. We have already started filling substantial open orders. The agreement provides Drinks the resources to produce as much product as we can sell, as well as a national sales platform. Our sales team will be joining and become part of Mexcor. We are thrilled that this joint venture removes the impediments to Drinks' rapid expansion and growth in financial strength."
Eduardo Morales, president of Mexcor, said: "Drinks Americas' portfolio of brands and access to marketing of those brands is a great addition to our portfolio, as are the sales team and network of distributors that have built their brands. We look forward to rapidly expanding brands like Olifant Vodka, Old Whiskey River Bourbon, Trump Vodka and the balance of their portfolio, and working with Drinks Americas. The economics and strategic fit for this venture is favorable and impactful to both companies."
Patrick Kenny added, "Our overhead will shrink from more than $4 million historically to approximately $1.2 million annually. We are aggressively adjusting our business model to fit the economic realities of today with a model and partnership that will support rapid sales growth. In this new business model, we are assured a per case payment that will be paid on every case sold. Drinks retains ownership of the brands. Rather than having to face raising substantial equity in this market to grow both infrastructure and brands, we can focus our resources on generating brand volume with a consistent return. This is a complete revision of the Drinks business model that recognizes the challenges of today's financial and lending markets for small cap companies, and gives Drinks a clear path to resuming revenue growth and brand value creation. The orders that we are already fulfilling support this new business model. Drinks will move rapidly to profitability executing this plan."