Investors Should Drink Up Flow Water – A Pure ESG Play – CorpGov
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Investors Should Drink Up Flow Water – A Pure ESG Play
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Investors Should Drink Up Flow Water – A Pure ESG Play

  • Flow Water Inc. going public on TSE by merging with RG One Corp., potential U.S. listing could follow
  • Flow Alkaline Spring Water is a premium water wellness brand, sold throughout North America
  • New CEO Maurizio Patarnello previously ran Nestle’s global water business
  • Flow is B-Corp certified and available at 20,000 retailers including Whole Foods, Walmart, CVS, Safeway
  • Loved by celebrities including Kim Kardashian, Pharrell Williams, Justin Bieber, Post Malone and Shawn Mendes
  • Fastest growing enhanced water brand for past three years, with 17 million customers

By Jarrett Banks and John Jannarone

Back in the 1970s, PET bottles were patented and it became the height of sophistication for Americans to drink bottled water shipped from France. These days, environmentally conscious consumers know better, and savvy investors should too.

Meet Flow Water Inc., which is going public through a merger with RG One Corp., a blank check company, on Canada’s Toronto Stock Exchange. A potential U.S. listing on Nasdaq could follow next year. Flow boasts an impressive seven-year track record and has over 17 million customers, with 15 million of them in the U.S. The company appeals to younger consumers with eco-friendly packaging and a fresh take on mineral water beverages.

Flow’s newly-installed CEO Maurizio Patarnello was formerly in charge of Nestle S.A.’s global water business, overseeing brands including Perrier, San Pellegrino, Poland Spring and Arrowhead. Patarnello has said the position became more attractive as more emerging brands go public via special-purpose acquisition companies, or SPACs.

Flow CEO Maurizio Patarnello & Founder Nicholas Reichenbach

In 2017, bottled water became the most-consumed beverage in the US, surpassing carbonated soft drinks like soda, according to Beverage Marketing Corp. Sales in 2019 rose 5.2 percent to $34.6 billion.

Flow sells at just under 20,000 locations in the US and Canada, including Whole Foods Market, Walmart, Sprouts Farmers Market, CVS, Safeway and Duane Reade. It also plans to add 5,000 more and expand to new retailers, including Target, over the course of this year. In order to list in the U.S., Flow aims to increase its annual revenue run rate after achieving about CAD $30 million ($24 million) last year.

The core consumer is the wellness woman—skipping from hot yoga to pick the kids up from soccer practice. She believes Alkaline water lessens inflammation and no one else can live up to her standards. Out of all sales, she buys 85 percent, and yearly revenue per consumer is $500. Also, 45 percent of sales are subscription based—meaning they’re sticky. Flow is also seeing tailwinds in e-commerce, which makes up 15 percent of top line growth.

Founder Nicholas Reichenbach came up with the idea for Flow while attending the Burning Man festival. He saw mountains of plastic piled up in the desert and decided to do something about it.

He got rid of the plastic bottle and replaced it with the environmentally friendly Tetrapak. Multiple studies have shown that microplastics inside bottles affect human health. Reichenbach also took all necessary steps to offset emissions and recycle. The result: Flow is the only water company in the world in world to get B Corp certification, which you can’t get with plastic bottles.

Flow also burnishes its ESG credentials by sourcing its water in North America. Upper tier mineral water has been dominated by foreign brands like Evian, Perrier and Fiji, with no North American label reaching widespread distribution. Flow sources and bottles its water with 80 employees from a natural Canadian spring in Bruce County, Ontario. It has a U.S. location at a heritage spring in Shenandoah, Va. with another 80 workers, bringing jobs to an economically depressed area.

Celebrity fans include Kim Kardashian, Pharrell Williams, Justin Bieber, Post Malone and Shawn Mendes, just to name a few. Flow now has a heavy focus on influencers that promote the brand and is now seeing partnerships in music and the NBA.

While accusations that drinking Alkaline water isn’t scientifically proven to be beneficial do exist, Flow counters by saying drinking essential minerals is good for your health and that most water is mineral deficient. In addition to different flavors, Flow infuses its water with ingredients like collagen.

A good comparison to Flow might be Beyond Meat, which went public in May 2019. It demonstrated that IPOs were possible for fast-growing food brands, especially those with an environmental bent. The IPO also attracted ESG investors with looking to hold a stake for a decade or more instead of just a few years.

Flow is taking on some huge competitors that have been around for decades. Nestle recently agreed to sell some of its spring water brands, narrowing its focus to high-end waters like Perrier, the French brand often credited with introducing US consumers to the idea of high-end mineral water in the 1970s.

With Flow, investors have an opportunity to seize a sustainable, up-and-coming water player in North America before much of the market has taken notice. Now that’s being mindful.

 

IPO Edge Contact:

Jarrett Banks, Editor-at-Large

www.IPO-Edge.com

Editor@IPO-Edge.com

Twitter: @IPOEdge

Instagram: @IPOEdge

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