NEXE Innovations Inc (TSX-V:NEXE, OTC:NEXNF) (TSX-V:NEXE, OTC:NEXNF) said it is leading with its own brands and is also currently in discussions to offer capacity to top coffee roasters in North America.
The Vancouver-based company is shaking things up in the coffee industry by executing well on the high demand for its patented, fully compostable, plant-based, single-serve coffee pods for use in Keurig and Nespresso coffee machines.
In an update to shareholders, NEXE provided a sweeping view of operational highlights since its go-public transaction on December 18, 2020, including the close of a C$34.5 million bought-deal financing.
READ: NEXE rounds out year ended May 31, 2021, with ample cash to execute on high demand for its environmentally friendly coffee pods
In a product update, NEXE noted that its popular Xoma Superfoods product line launched in April this year and now offers four SKUs. The product sold in NEXE's compostable pods, is compatible with Keurig Brewing Systems single-serve machines and received “positive feedback.
“There are additional SKUs planned to launch this quarter to expand the superfoods line,” said the company.
Meanwhile, NEXE's espresso pods for Nespresso OriginalLine machines launched in July and have catapulted the firm into “a strong position to gain greater market share” in the high-growth single-serve coffee space.
"Our promotion and brand awareness strategy will be similar to what other large single-serve conglomerates have successfully done to drive sales," Ash Guglani President and co-founder of NEXE said in a statement.
"We are leading with our own proprietary brands, and are currently in discussions to strategically offer capacity to select well-known coffee roasters in North America. We are in a strong position to serve this market with our ability to provide compostable pods that can be used in both Keurig Brewing Systems as well as Nespresso OriginalLine machines, the two most popular single-serve machines in the world."
NEXE said it is focused on complementing its success with its online store and growing its direct-to-consumer sales through popular e-commerce platforms. The company also has plans to offer its NEXE Coffee through Grocery retail/e-retail across North America.
NEXE is heavily focused on building a strong marketing foundation prior to launching NEXE Coffee in Keurig-style pods in the US and Canada.
"We are in discussions with top-tier marketing firms and aligning this with our in-house expertise to develop an integrated digital media strategy to drive new product trials, brand awareness and brand loyalty," added Ash Guglani. "A key component of this messaging will be educating consumers on the environmental realities of single-serve coffee pods, and the benefit of how a product like NEXE can solve these issues."
Significantly, the company said it has allocated funds “to bring its equipment needs in-house” with the objective of providing it with “full control over the design, manufacture, timelines, and operational functions of NEXE's growing pod product lineup.” These moves will accelerate ongoing R&D initiatives and reduce operational costs such as shipping, while eliminating bottlenecks related to delivery time.
"We are working toward receiving the first of two customized and automated filter forming, dosing, and sealing lines for the Keurig capsules. Nexe Coffee will launch its new coffee in the Nexe Pod that enables the highest grammage and extraction,” said NEXE co-founder and CEO Darren Footz.
“Not only are our capsules fully compostable but the proprietary filter assembly will showcase our ground-breaking innovation. This line will open up opportunities to significantly scale our business not just with our own proprietary brands but to launch new brand partnerships," he added.
Each scaled manufacturing line will be designed to add a capacity of around 50 million pods per year. NEXE said that it is in “active discussions with some of its partners to order multiple production lines for both the Keurig and Nespresso OriginalLine formats.”
In terms of financial highlights, NEXE has raised more than C$50 million of capital since its initial public offering. It has received support from the federal and provincial governments in the form of grants and awards including C$1 million from Innovative Solutions Canada and C$300,000 from Innovate BC.
NEXE has doubled its R&D and manufacturing facility in Surrey, British Columbia to 20,000 square foot and increased space for labs, the factory floor, and offices.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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