In this episode of The Capital Compass, Ricki Lee sits down with Cizzle Brands: CBOE:CZZL, OTC:CZZLF) following a major strategic milestone: the acquisition of a beverage manufacturing facility in Aurora, Ontario. The transaction brings production in-house at a time when manufacturing capacity — particularly for Tetra Pak beverages — is increasingly constrained across North America.
Chairman and CEO John Celenza explains the rationale behind the deal, drawing on his experience scaling beverage brands in a tight manufacturing environment. With guaranteed contracts totalling C$154 million and customers that include fast-growing and well-capitalised brands, the facility operates as a profitable standalone asset while also supporting Cizzle’s flagship hydration brand, Cwench.
The conversation also digs into the financial impact of the acquisition, including how it was financed, expected EBITDA contributions, and what the move means for Cizzle’s path to profitability. With management guiding toward positive EBITDA in the coming quarters and increased control over margins and growth, the episode outlines how vertical integration could reshape the company’s long-term outlook. Watch the full video here, or read the full transcript below.
Consumer packaged goods company acquires beverage manufacturing facility
Ricki: So, John. To start us off, for viewers who may be new to Cizzle Brands, can you give a quick overview of the company, your product lineup and the markets you’re focused on today?
John: Yes, for sure. So Cizzle Brands’ flagship product being Cwench Hydration, that’s our sports drink product that comes in the Tetra Pack, which is the facility that we just purchased that we’re going to be talking about today. And we also have a supplement line Spoken and a healthy snack line called HappiEats as well.
So predominantly sold in Canada right now, we’re starting to reach into the Northeastern US. We have a couple of things going on in the south that I can’t speak to yet, but that’s the majority of where the traffic’s coming from right now.
Ricki: Okay, great. And so, the headline move here is the acquisition you mentioned there of the Flow Water manufacturing facility. So what was the strategic rationale behind this transaction and why was now the right time to bring manufacturing in-house?
John: Ricki, I’ve been in this industry now for 16 years and I’ve wanted to purchase the Flow manufacturing facility for about 10. I always thought it was a hidden gem in our industry.
As consumers continue to trend towards the Tetra packaging and away from plastic, it was a complete gem in our industry. My previous brand that I co-founded was a company called BioSteel. We got to the point where we were running out of line time and post selling that company had to acquire Flows facility in Virginia.
So, my team became incredibly schooled in how to run one of these facilities and we saw what it could do for the brand side of the business as well. So, when the facility in Aurora, Ontario came up for sale, it was an asset that we were incredibly familiar with.
It’s actually down the street from my house. It’s where we were producing already and with our tremendous growth rate, we were already worried about capacity issues and as a standalone it’s a profitable entity.
So, it comes with $154 million in guaranteed take or pay contracts, the largest customer being BeatBox, which is in the midst of being acquired by Anheuser-Busch. So we have an alcohol license there as well.
So, as a standalone, as an asset that we’re very familiar with running it was a great fit and from a strategic standpoint for Cwench it was a great fit and how it allows us to strategize with the different retailers was a huge win for our business.
Ricki: So how was the acquisition financed and what does this transaction do to Cizzle’s balance sheet in terms of leverage, flexibility and financial stability moving forward?
John: The majority of the acquisition was financed through debt. So, our debt payments will come to about $7.6 million Canadian a year. And the EBITDA in the plan is $18 million.
Ricki: So, we’re hearing more about capacity constraints across the beverage space. How important is vertical integration in this environment and how does owning manufacturing capacity change Cizzle’s competitive positioning?
John: It’s huge Ricki. At the end of the day, if you’re going to scale any of these beverage brands, especially in Tetra, you need that flexibility.
So, if you look at 500 milliliter Tetra packs right now, the entire North American landscape, if you’re looking for co-manufacturing, so you don’t own your manufacturer, there’s very little line time available.
So, you have our plant in Aurora, Ontario, there’s a line in Michigan, a place called American Soy that has very limited availability, Valle Redondo in Mexico is at complete capacity and Belticos in Mexico has room for 20 million units.
So, it is definitely a fight for line time to say the least, to build one of these facilities you’re looking at a ton of money and two years.
So, if you’re scaling a beverage business to be able to be integrated, to control your own destiny, to be able to speak to the retailers and have that flexibility, you know, you want a tall pack, an 18 pack, multi-pack and be able to turn it around that quickly, it’s a massive advantage as well.
And we’ve owned the facility for less than a month and we’re already having those types of conversations.
Ricki: So beyond supporting your own brands then kind of what you’re alluding to there, the facility also comes with other guaranteed customers. So how does that built in demand help de-risk the business and support more predictable revenue as you scale
John: Way more predictable than your typical CPG company, right. When you’re starting out a beverage company, it’s what are those pipe fill orders going to look like, what’s our best estimate on what the velocity will be like on those retailers?
This is take or pay agreements. We’ve signed up for 60 million, not we as in Cwench, but one of our clients. We’ve signed up for 60 million units this year. If we don’t make that, we owe you the equivalent in cash. And all of our clients are top in class.
You look at BeatBox, one of the fastest growing beverages in all of North America, in the midst of being acquired by Anheuser-Busch, Flow Water, which has a great brand and got taken over by the senior secured debt holder, Cliff Rucker, who has an unbelievable track record.
You have ourselves in there as well and different brands that make up that mix. Vita Coco being one. So, when you have clients like that and they’re on those take or pay agreements, it’s guaranteed revenue. I mean, the worst thing that could happen is literally some type of act of God, but that’s what you have business interruption insurance for.
So, it’s definitely revenue that you can count on. It’s different for me in the sense that we were always worried about how many drinks are we going to sell this month and what have you. But on the plant side, it’s very much not set it and forget it, but set it and grow it, if you know what I mean.
Ricki: So, stepping back to the financials for a second, then. How should investors think about revenue growth margins and the path toward profitability now that this complete?
John: So, our fiscal is July 30th. By Q3 of our fiscal, it’ll be our first positive EBITDA quarter. On a consolidated basis the fiscal will come in at $44 million in net revenue. And for our third year, I always project it to our investors. Year three is when things will really start to turn for the business.
We’re going to be EBITDA positive, cashflow positive, and then the sky’s really the limit from there, especially with the vertical integration and being in control of our own destiny when it comes to a manufacturing standpoint.
Ricki: Well, John, thank you so much for joining us and walking us through the Cizzle Brand story.
John: Thanks for having me, Ricki, really appreciate you taking the time.
So once again, that is John Celenza, CEO of Cizzle Brands. For more information, visit cizzlebrands.com. I’m Ricki Lee, and this has been the Capital Compass. Thanks for watching and I’ll see you again next time.
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