Flow Beverage Corp. has entered into a manufacturing agreement with BeatBox Beverages whereby Flow will manufacture and package BeatBox’s line of Party Punch alcoholic beverages. The Agreement has a term of five years, with commitments for BeatBox to purchase certain minimum annual volumes which, in the aggregate, equate to approximately $115 million in revenue over the life of the agreement.
Additionally, the agreement has a take-or-pay provision requiring that BeatBox pay Flow the equivalent of 85 per cent of the value of the difference between the applicable minimum annual volume and the actual volume purchased during the relevant 12-month period.
The production is expected to commence between May and July 2024 and is subject to Flow achieving certain pre-production requirements, including Flow making modifications to and retrofitting its Aurora, Ont. production facility, while also obtaining the necessary governmental permits and authorizations.
Flow will be installing a new TetraPak production line dedicated to alcohol production at its Aurora production facility. Under the terms of the Agreement, BeatBox will be responsible for compliance with all legal and regulatory obligations in connection with the marketing, distribution and commercialization of the alcohol-based products.
Nicholas Reichenbach, Founder and Chief Executive Officer of Flow, states: “We are highly aligned with the team at BeatBox with our shared commitment to sustainable operations and we look forward to a long-term partnership. This is a significant agreement for Flow as we are meaningfully increasing our co-packaging operations, expanding the capacity of our Aurora production facility and diversifying our co-packing services to include alcoholic beverages. We believe that this agreement also directly supports the valuation of our Aurora production facility as we continue to consider options for its divestiture.”
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