Intro
The Bottler of the Year Award is an esteemed recognition given by The Coca-Cola Company to its bottling partners for outstanding performance in key areas such as sales growth, operational excellence, and adherence to company values. Winning this award is no small feat, especially when you consider the level of competition in the beverage industry.
Imagine a two-time consecutive "Bottler of the Year" award winner who built a $160 million run rate for Coca-Cola in Uzbekistan back in 1995 right after the dissolution of the Soviet Union, it was a market with little to no existing culture of the brand, all from scratch in just four years. Now, he is the CEO and owner of 50% of a $12 million market cap coconut beverage company, rapidly growing, with $1 million in sales in Q3 for the first time, resulting in a non-GAAP profits, no long-term debt, and operating with just two employees. Intrigued? That’s the story of MOJO.
This one really hits me in the feels. The first time I learned about the company was back in June 2023 from
at GeoInvesting, (which I definitely recommend subscribing to it’s where I get most of my investment ideas). At that time, the stock was trading around $0.17 and valued at 1.5 times sales. Then, by October, it skyrocketed to $0.70, and I thought I had totally missed the boat. Even with that big jump, I decided to hold off on buying because I wanted to see some profits first, especially considering how tricky this industry can be.Then, the price dropped back down to $0.30 this year, and I still didn’t make a move. But now, the company is finally showing profitability, so I started buying in around $0.60 and I’m still adding more. They've proven they can generate $1 million in profit per quarter, so I think it is a good stating point to mark the break even point. So, after seeing the price jump by 300%, I just wanted to share why I think this company is still a great opportunity!
This is a true growth company, and here’s what I look for in a promising growth company:
Continuous annual sales growth above 20% ✔️
A product or service in a B2C business model ✔️
A large Total Addressable Market (TAM) ✔️
Skin in the game ✔️
Profitable (ish) ~
The ability to generate operating leverage (not yet - ill explain it below) ~
MOJO fits all of these check points
While entering a competitive arena like this can be overwhelming, the potential rewards are substantial if executed well. We’ll analyze how to succeed in this challenging landscape by studying companies that have thrived and those that have not, helping us to map out the potential path MOJO could take moving forward.
In summary, MOJO is not just another name in the coconut beverage market; it’s a captivating growth journey led by experienced leadership poised for continued success in an expansive market.
History of the Company
Equator Beverage Company, formerly known as MOJO Organics, has a fascinating journey that highlights its evolution from online retail to a prominent player in the natural beverage market. The company was originally incorporated as MOJO Shopping, Inc. in Delaware in 2007, aiming to establish an online retail space for young professionals.
In 2011, a significant shift occurred when the company rebranded to MOJO Ventures, Inc. and merged with Specialty Beverage and Supplement, Inc. This merger allowed MOJO to enter the beverage industry, focusing on products such as energy drinks and wellness beverages. Later that year, in October, the creation of a subsidiary, MOJO Organics Operating Company, marked a dedicated shift towards natural and organic beverages. By December 2011, the company officially changed its name to MOJO Organics to reflect this new direction.
The following year, in 2012, MOJO entered a licensing agreement with Chiquita Brands, which enabled the use of Chiquita’s branding for select fruit juice products, enhancing its market presence particularly in the northeastern United States. However, the company launched its flagship product, MOJO Naturals Pure Coconut Water, in December 2015, shortly before the licensing agreement with Chiquita ended on September 27 of that year, prompting a reevaluation of its brand strategy.
Starting in 2016, MOJO began producing its own branded products and expanded its offerings, including Sparkling Coconut Water and innovative juice blends, demonstrating a commitment to growing its market share. The introduction of eco-friendly packaging in 2019 aligned with increasing consumer demand for sustainable products. By 2020, the company further diversified its product line to include pH7 water and energy beverages, tapping into significant sectors within the beverage industry.
On June 8, 2022, after years of strategic evolution, the company rebranded as Equator Beverage Company. This new name reflects its commitment to natural and organic products while signifying a broader vision reaching a more health-conscious customer base.
Today, Equator Beverage Company is focused on serving women and individuals who are conscious about their beverage choices and health. Furthermore, Mr. Glenn Simpson plays a crucial role in this transformation; his ownership stake has grown from 5% to 50%, a remarkable achievement made without diluting the existing share base. This increase illustrates his strong belief in the company’s potential and future growth trajectory.
Overall, Equator Beverage Company stands as a successful turnaround story, aligning its mission with the values of modern consumers who prioritize wellness and sustainability in their consumption choices.
2. Key Thesis Points
MOJO is moving towards profitability, indicating strong positive growth potential.
Coconut water and energy drink markets are rapidly growing, with coconut water projected at USD 26.1 billion (CAGR of 17.1%) and energy drinks at USD 125.1 billion (CAGR of 7.8%) until 2030
With Glenn Simpson’s expertise, MOJO is well-positioned to capture a share of these lucrative markets.
A potential new partnership with a major company like Coca-Cola or Pepsi could further enhance market opportunities.
The product quality is highly regarded, contributing to its competitive advantage.
3. Business Model
MOJO employs an “asset-light” strategy by outsourcing its manufacturing, which reduces overhead costs and minimizes financial risks. This approach enables the company to maintain flexibility in a competitive market. In addition to their successful coconut water line, MOJO is innovating with energy drinks targeting the female demographic and exploring the alkaline water trend, showcasing a commitment to product diversification.
Being a two-person operation allows for swift decision-making, enabling rapid pivots in response to market trends—an advantage larger companies often lack.
Distribution is a key hurdle for beverage companies aiming for success, and it will be a core focus of this thesis as we track MOJO’s efforts in the future. MOJO distributes its products through supermarkets, convenience stores, and online platforms, ensuring broad consumer access.
As we will explore later in this write-up, there often comes an inflection point where sales begin to soar by pulling the right triggers, such as effective marketing strategies, strategic partnerships, and product innovation. We believe that MOJO is very close to reaching this pivotal moment. By effectively leveraging their distribution channels and adapting to consumer demands, MOJO has the potential to significantly boost its sales and establish a stronger market presence.
4. Products
MOJO Sparkling Energy: A natural energy drink with 136 mg of caffeine from green coffee beans, designed for both hydration and energy.
MOJO Coconut Water & MOJO Sparkling Coconut Water: Packed with electrolytes and vitamins, this drink is ideal for active lifestyles and replenishment.
Cubano Sparkling: A ready-to-drink tequila beverage that combines organic coconut water with refreshing flavors.
Alkaline Water: Designed to provide optimal hydration with a focus on balanced pH levels.
I’ve been checking out all the reviews, and I saw that the product has a solid rating of 4.3 stars out of five, which is pretty impressive with around 1,500 reviews. That speaks volumes because, honestly, it’s tough for a product like this to win everyone over. Take Coca-Cola, for example—I know my wife can’t stand the taste! So, in a big market like this, it’s clear that not everyone will love it.
I also came across some one-star comments, including one about how it’s supposedly really bad for people with diabetes. The reviewer mentioned that her sister ended up in the hospital after drinking coconut water, which is tragic. But really, it’s like if you had a broken leg—you probably shouldn’t go out for a run.
At the end of the day, it’s all about personal taste. If you don’t like something, you’re not going to keep buying it. I personally love the taste of this drink! I’ve also tried Celsius, and I really liked it, but honestly, it just tasted like sparkling water with a very light hint of kiwi and strawberry—that’s the flavor I tried. Still, it was way better than Prime, that’s for sure! So, it’s usually pretty clear when something is good or not. Here is an article, about all the advantages of coconut water and the health benefits, and thats why there is a trend that keeps on growing, I just know that it is great for recovery and hangovers!!
5. Market Share and industry peers.
MOJO is definitely a small player in the massive, competitive beverage landscape. But as we've discussed, there’s a huge market out there with plenty of room for growth. The company has been doing big steps in expanding its distribution, and that trend looks promising for the future. That's actually the main focus of this write-up.
Now, let’s talk about competitors for a bit. I believe the market is so vast that there’s no need to dive too deep into explaining how big it is and where the opportunity lies. I’ve already hit some key points on this in previous sections (key thesis points) there is a lot of information about the size of the beverage industry.
There’s also a great essay about Monster Energy I read about the energy drink industry by an investor I follow on Substack, named GalicianInvestor, He discusses how Monster’s success really took off thanks to its partnership with Coca-Cola, which bought a 16% stake in the company. This partnership helped them build a strong distribution network.
This industry is super competitive; in fact, I once spoke with Mr. Glenn, and he mentioned that almost 3,000 new beverage brands pop up every year. But by the second year, only about 15 to 20 are still around, and by year five, you’re lucky if three or four survive. I believe that a lot of this churn happens because of the influx of influencers and YouTubers launching their own energy drinks, thinking they can sell anything they promote just because they’re pushing it. While that's definitely an asset, it often leads to hype without substance. Almost every influencer nowadays seems to have their own energy drink. I think it's partly because creating one isn’t that hard—you can outsource the production and just slap your brand on it.
It reminds me of the restaurant business, in which I am involved and where a lot of people mistakenly think that just because they know how to cook, they can run a successful restaurant. They overlook all the essential factors—like timing, location, and operational costs—before opening up. That’s why so many restaurants fail. The same thing is happening in the beverage industry right now. It’s relatively easy to create a drink because you can find manufacturers to handle the production, but the real challenge is understanding the business and making it profitable.
I don’t want to call out specific brands, but I’ve definitely seen some that blow huge amounts of cash on TV spots with celebrities, and it’s tough to really measure the return on that investment. The real opportunity for MOJO lies in building a solid distribution partnership with a major player like Coca-Cola or Pepsi. I had a chat with Mr. Glenn, and he pointed out that it really doesn’t make sense to try and manage all the processes in your company when you’re bringing in less than $20 million in revenue.
A lot of these new beverage brands come out of the gate with big teams, fancy offices, and a push to handle their own distribution just because they’ve raised tons of money thanks to their celebrity endorsements. But that can easily backfire. Instead, being a lean company with a small team making quick decisions can make it more agile. As the company grows, we might then see some in-house processes that can help improve margins by incorporating more fixed costs to create operating leverage. We can dive deeper into that in the valuation section.
So, in this part, rather than just highlighting what MOJO is doing well, I’m drawing on the success of companies like Monster, which really made a difference by partnering with big brands like Coca-Cola. It’s also a chance to point out what not to do if you want to succeed in the beverage business.
6. Management
Have you ever read "The Little Book That Builds Wealth" by Pat Dorsey? There’s this great chapter called "The Big Boss," where he talks about betting on the horse and not the jockey. The idea is that while having a strong CEO is important, it’s not necessarily a competitive advantage or a moat. However, I think there might be an exception in this case. When you have a CEO like Glenn Simpson, who really knows the business inside and out, it can definitely make a difference in guiding a company’s success.
Glenn Simpson is an experienced beverage industry professional who served as Vice President and CFO of Coca-Cola Bottlers, Inc. in Tashkent, Uzbekistan, from 1995 to 2000, where he significantly increased annual revenues from $5 million to over $160 million and earned the company two "Bottler of the Year" awards. He later held leadership roles at Even Technologies Inc. and IVIDEO Corporation, focusing on HD video delivery, and worked as a consultant on beverage projects in Russia and Afghanistan. Glenn is also a Certified Public Accountant and holds an MBA from Columbia University School of Business.
Now, everything I’ve shared in this last paragraph about him you can find it all online. But what truly stands out to me about Glenn is that he really knows the business inside and out. Sure, there are other brands out there that have seen rapid sales increases, like Prime or Super Coffee, often thanks to celebrity partnerships like Logan Paul or J-Lo and Alex Rodriguez. That definitely boosts sales, but it doesn’t always translate to running a business effectively.
When it comes to managing a business, you want someone with real experience—kind of like when you go to a doctor. You’d want an experienced doctor who’s been around for a while and has seen a lot of cases, rather than someone fresh out of medical school who’s just got theoretical knowledge. You want that seasoned pro who knows the ins and outs of the industry. That’s what I appreciate about Glenn as the CEO; he brings years of expertise that can guide the company in the right direction and for me thats the savvy leadership you want in a company.
I was reading some comments about MOJO, and a lot of people are talking about Mr. Glenn's age—he’s around 71 or 72—and wondering who will replace him when he retires. That concern crossed my mind at first too, but I have a different perspective now. If Mr. Glenn is still running the company at his age, it’s because he genuinely loves what he does. I mean, he must have a good amount of money to retire comfortably, so his commitment to this business shows how passionate he is about it.
Off-Topic: I have a friend named José Luis who’s 75 and still working as a doctor. He’s incredibly knowledgeable, and chatting with him is always a fascinating experience. When he was younger, he was a fantastic squash player and still plays really well today. In fact, he keeps beating me whenever we play! His age and experience give him an edge. The first time we played, I was running all over the court—super energetic and jumping around—while he just stood there, sizing up the game. He knows how to position himself perfectly, and it's clear he uses all that wisdom from years of playing.
It reminded me of how we should always be ready to learn from people with that kind of experience. It’s like, what if Warren Buffett invited you to partner with him? Would you say no just because he’s 94? I doubt it! You’d probably jump at the chance, knowing you’d be in great hands when he chooses someone to take over.
So, Mr. Glenn, if you ever read this, I hope you don’t mind me mentioning your age! It's just an interesting topic, and I wanted to share how having people with knowledge and experience is a huge advantage in business—as in squash!
BTW - here is a picture of Jose Luis, drinking MOJO, he really liked it.
7. Growth Drivers
1. Distribution Efficiency: Teaming up with a major brand could be a big win for MOJO, especially when it comes to managing distribution. For example, companies like Coca-Cola often carry products they don’t own if those products show promise for high volume. It’s a smart way for them to expand their offerings while charging a fee for the service, which could definitely create exciting opportunities for MOJO!
2. Market Expansion: Expanding into new geographical markets is another fantastic way to increase customer reach. With their online sales game, they’re already reaching into markets like Mexico and Canada—both of which are huge and full of potential. While we’re not sure about delivery to Europe just yet, these three countries represent a significant market for MOJO to tap into!
3. Product Innovation: MOJO can keep moving forward by developing new flavors and formulations that resonate with changing consumer tastes. They’ve already taken steps to target women and health-conscious consumers who really care about natural ingredients, which is awesome!
4. Health Trends: The growing demand for health-focused beverages among younger consumers is a key opportunity for MOJO. As more people look for healthier options, they’re in a great position to satisfy that need.
5. Effective Marketing: Utilizing social media and influencer partnerships is a savvy way to boost brand visibility and engagement. I know I’ve had some critiques about influencers, but they definitely play a significant role in marketing today! While MOJO has been gaining traction without big celebrity endorsements thus far, there’s a lot of potential for future collaborations. Just think about Monster have sponsored extreme athletes like Lewis Hamilton and Tiger Woods. Perhaps MOJO could find its niche by teaming up with a popular YouTuber or another influencer that aligns with its mission.
8. Financials
From a financial perspective, the company boasts a healthy balance sheet as of the nine months ended in September 2024. They reported total assets of $838,000 and liabilities of $442,000, resulting in a net working capital of $415,000.
In terms of assets, the largest components are inventory and accounts receivable. During an interview, the CEO mentioned that they prefer to hold inventory rather than cash, allowing them to respond quickly to large orders when they come in. Therefore, having inventory represent almost 50% of total assets as of Q3 isn’t a concern for me.
Accounts receivable account for around 35% of the assets, and there are no doubtful accounts on their books, which is another positive sign. The average time taken to collect payment from clients is about 30 days after a sale, indicating a solid receivables management process.
On the liabilities side, the company has a revolving loan of $300,000 with a 6% annual interest rate, funded by Mr. Glenn. I appreciate this alignment with shareholders, as it demonstrates his commitment to the company’s success and its investors.
9. Valuation
I tried to do a valuation using KPIs, but it was quite challenging because the company doesn’t disclose detailed KPIs. I looked into their sales on Amazon to estimate how many cans they might be selling, but it seems that figuring out a precise number with that method will be tough.
As of today, November 19, the company has a market cap of $11 million with sales around $4 million, based on a Q3 run rate. We could make slight adjustments, but right now, it’s trading at about 3.5x sales.
Most of their costs are variable, with 70% attributed to cost of goods sold (COGS) and the remaining 30% falling under selling, general, and administrative expenses (SG&A), which includes shipping and handling costs. I want to take a moment to point out that in the future, the company might consider handling some of these shipping and other processes internally. This could lead to margin expansion due to operating leverage if sales continue to grow. As the company grows and reaches a certain revenue level, it will become more comfortable bringing some processes in-house. They are wisely starting with a minimum viable product (MVP) approach by outsourcing everything, which allows them to validate product taste and marketing strategies. Once they hit around $20 to $30 million in revenue, it will make sense to integrate some in-house processes, resulting in operational efficiencies and enhanced margins.
For some context, Vitaminwater was acquired by Coca-Cola for $4.1 billion, at 12x sales, and BodyArmor was sold for $6 billion at 20x sales. I don’t want to sound overly optimistic by comparing this company to such big names, but even in the private sector, valuations often start around 7 to 8 times sales, as seen in Super Coffee's early funding rounds. I realize we’re in a different environment than in 2021, but if the company executes well without diluting shares too much and keeps growing revenues and profits, there could be a solid opportunity here. Also, Celsius Holdings had annual revenues of $2.6 million in 2008 and has now reached a $1.3 billion run rate. So, it’s definitely possible for a small publicly traded beverage company to thrive. Unlike CELH in its early days, MOJO is already operating profitably at its current revenue level.
10. Conclusion
In the beverage industry, numerous factors must align for a company to succeed. However, as seen with other successful businesses in this sector, a key inflection point often arises when they establish an effective distribution plan while maintaining an asset-light model. This combination can lead to rapid growth. We’ll be keenly observing MOJO’s evolution in the distribution space, especially with Mr. Glenn’s extensive knowledge, expertise, and connections to drive this forward.
While I don't want to draw direct comparisons between MOJO and giants like Monster, Red Bull, or Celsius—each company has its unique story—I think it’s impossible not to look for patterns in the industry. I know we all want to find the next big hit in the beverage world because of past successes, but we should also exercise caution. It’s easy to blame or point fingers when things go south rather than doing the hard work of analyzing market trends or recognizing a lack of competition. For me, there are elements of MOJO's journey that resonate with those of other success stories, which is why I'm particularly interested in this one. I know it’s not for everyone, but if you’ve read this far, I hope you’ve enjoyed learning about the story behind the brand.
If we consider that the company has minimal debt, continues to grow, secures a significant contract with a major distributor, and avoids diluting shares, there’s real potential here. Additionally, while there have been some supply chain issues, those are starting to resolve, which should further improve margins. Currently, the company has faced some growth challenges due to a 10% shareholder who has been selling off stock, putting pressure on the stock price and preventing it from climbing.
So, if we factor in that other businesses are valued at 3.5 to 4 times sales, it might seem pricey, but that’s actually reasonable for this sector. We believe MOJO is fairly valued at this point. With the right actions and a bit of patience, we could witness some exciting developments that could lead to substantial success.
Disclaimer: I own shares of MOJO, and this write-up reflects my personal opinions and observations about the company. It is not intended as financial advice or a recommendation to buy or sell any securities. This analysis is for my own informational purposes, and I encourage everyone to do their own research and consult with a financial advisor before making any investment decisions.