AMDP FINAL

TO: Clark Hansen, CEO, AMDP

FROM: Mason Estes, R&D Analyst, AMDP

DATE: March 2, 2022

SUBJECT: Investment Proposal: JuneShine

As a member of AMDP's Research and Development Department, I am responsible for identifying investment opportunities that align with AMDP's standards and bringing them to the attention of AMDP investors. In this week's search, I have found an exciting potential investment opportunity in the form of the hard kombucha and premium cocktail brewing company, JuneShine. This relatively new brewery operates in a socially responsible, environmentally sustainable, and profitable manner. I highly recommend investing in JuneShine and will explain my reasons for doing so in this memo by:

• Reviewing AMDP's Investment Standards
• Explaining how the company started and what they offer to customers
• Summarizing the hard kombucha industry and market, and JuneShine's reputation and financials
• Outlining their commitment to sustainability
• Showing two industry opinions of the company
• Providing and explaining my recommendation 

AMPD Investment Standards

AMPD is only interested in investment opportunities that adhere to their standards. The information below shows the criteria necessary for a company to be considered as an adequate investment under AMDP expectations. 

Triple Bottom Line: "A business concept that posits firms should commit to measuring their social and environmental impact—in addition to their financial performance—rather than solely focusing on generating profit" (Miller). Companies aligned with this concept do so by establishing their dedication to corporate social responsibility, social enterprise, and carbon footprint. Businesses commonly break down the Triple Bottom Line using the "three P's": people, profit, and planet. 

• Profit: Firms should maximize profit for their stakeholders while reducing costs and mitigating risk (Miller). 
• People: Firms recognize that their business has a societal impact and should create value for all stakeholders impacted by business decisions, including customers, employees, and community members (Miller). 
• Planet: Firms recognize that their business holds the keys to driving positive climate change and should make adjustments to limit or negate their carbon footprint (Miller).

Corporate Social Responsibility: To put it simply, corporate social responsibility describes the commitment companies exhibit towards the environment and people. The directive of this concept is to minimize the negative effects of the business on the environment and humanity (Miller). 

Social Enterprise: "A social enterprise is a cause-driven business improving social objectives and serving the common good" (Velez). Though social enterprises prioritize serving social objectives over maximizing profit, their business still needs to be profitable in order to reinvest into their company, furthering their ability to serve social causes. 

Carbon Footprint: "The carbon footprint of a company is the total amount of greenhouse gases emitted directly or indirectly through its activities" and is measured in parts per million by volume (Collins). Carbon dioxide, methane, and nitrous oxide are the most commonly emitted greenhouse gasses from business activities and are extremely aversive to the health of our planet (Kaper). Businesses dedicated to a positive impact on the climate should work to limit or negate their carbon footprint as greenhouse gases will eventually warm our atmosphere to a point where Earth will no longer be inhabitable. 

How JuneShine Started and What They Offer:

JuneShine: JuneShine is a brewing company that specializes in creating premium spirits and alcoholic kombucha (most often referred to as "hard kombucha"). If you're not familiar with Kombucha, it is a bubbly, "fermented drink made with tea, sugar, bacteria, and yeast" (Bauer). The drink's rising popularity can be attributed to its unique taste and health benefits such as "promoting a healthy immune system and preventing constipation" (Bauer). 

The Founders: Founders of JuneShine and Forbes "30 under 30" 2020 members, Greg Serrao and Forrest Dein, felt dissatisfied with the artificial sweeteners, syrups, added sugars, and artificial flavors in cocktails. They "wanted to create an alcohol [they] felt better about drinking" (JuneShine). So in 2018, Serrao and Dein decided to establish a brand that offers handcrafted alcoholic beverages with organic and sustainable ingredients in the form of premium cocktails and hard kombucha. 

Hard Kombucha: The company's website offers four products: Hard Kombucha, Spirits, Samplers, and Soft Goods. Their primer product, hard kombucha, comes in eight tasteful flavors: P.O.G, Prickly Pear Margarita, Grapefruit Paloma, Blood Orange Mint, Hopical Citrus, Acai Berry, Midnight Painkiller, and Honey Ginger Lemon. All hard kombucha flavors produced by JuneShine are sustainably brewed naturally with gluten-free, organic ingredients and probiotics and range from 6-8% alcohol by volume.

Cocktails and More: Their cocktails, ranging from 8-10% alcohol by volume, come in three flavors: Tequila Margarita, Vodka Soda, and Rum Mai Tai. These spirits are "crafted with [roughly] two shots per can of premium, award-winning spirits, real juice, sparkling water, and no added sugar" (JuneShine). They also offer samplers of their beverages so that customers can try their array of unique flavors. Lastly, the company offers 50 "soft goods" consisting of subtle yet trendy, clothing items and accessories with the word "JuneShine" as the focal point. 

Industry and Market, Reputation and Financials:

Industry and Market: The first hard kombucha to hit the market was brewed by the company, Boochcraft, which took its product to market in 2016. Being only six years old, it is safe to say that the hard kombucha market is practically brand new and ripe for opportunity. 

• Though the market for hard kombucha is relatively small, "it has been growing more than 50 percent year over year" (Freedman). 
• In addition, the IWSR reports hard kombucha volume in the US has grown +237.1% CAGR between 2016 and 2020, and sales of hard kombucha have grown from $1.7 million in 2017 to more than $12 million in 2019 (Dingwall). 
• This market and consumer growth show that hard kombucha brewing companies such as JuneShine, though only founded six years ago, illustrate tremendous potential. 

Reputation and Financials: Two years after Boochcraft hit the market, JuneShine established itself on the scene in 2018. Headquartered in San Diego, the company hit the ground running. 

• Described by The San Diego Union-Times as "a leader in the better-for-you hard kombucha craft beverage category," JuneShine has sold over 10 million cans and, according to founder Greg Serrao, reports a 40 percent market share (Freedman).
• In addition, in August of 2020, the brand "closed $10 million of new funding, bringing the company's Series B total raised to $35 million" (Freedman). Their grade-A-backing is in part due to their clever, celebrity-led series A funding, consisting of superstar EDM artist, Diplo, comedian, Whitney Cummings, and others. 
• Aside from their marketing and funding abilities, JuneShine "shines" (pun intended) in their reports of revenue. Though it was difficult to find reports of their profit, growth, and loss, "the company tripled in revenue from 2019 to 2020 and is on pace to double revenue again in 2021" (Cision).

Commitment to Sustainability:

As a carbon-neutral company, JuneShine leaves no carbon footprint. Additionally, they "donate one percent of all sales annually to 1% For The Planet, a collection of environmental nonprofits working to fight climate change" (JuneShine). Being that they are carbon neutral and donate a considerable amount of money to fighting climate change, you could argue that they are actually a carbon-positive company (meaning that they go beyond carbon neutral by leading efforts that reduce carbon emissions) (Junaid). 

Another way the brewery commits to bettering the environment is by partnering with EcoChart, a company that helps businesses "offset emissions from manufacturing [their] products and shipping them" (Junaid). Customers purchasing JuneShine products from their website can choose to make their order climate positive by paying a small amount of money at checkout (usually less than one dollar). 

Though they are not a social enterprise, JuneShine shows a high level of corporate responsibility. They ensure that the products they are offering are of the highest quality. Including only organic ingredients free of pesticides, processed corn or rice syrups, artificial coloring and flavoring, and added sugar, drinkers of the brewery's cocktails and hard kombucha are not exposed to many of the adverse health effects that come with other alcoholic drinks.  

Industry Opinions:

Being a relatively new brand, collecting two industry opinions about the company's practices was difficult. So, in this section of the memo, opinion #1 will provide an industry opinion about the company's practices while opinion #2 will show a consumer opinion on the product. 

Opinion #1: An article by Ian Anderson of the San Diego Reader praises the brand's ability to adapt in response to the onset of the COIVD pandemic. In May 2020, they had planned on launching a new product called, "JuneShine 100", a hard kombucha beverage with under 100 calories and only one gram of sugar. But with the onset of COIVD just a month before the product's scheduled release date, the company "faced potentially debilitating losses, and layoffs" (Anderson). 

• Despite having to cancel their field marketing campaign and losing a third of their revenue to bar and club closures, two months later, they were operating at maximum brewing capacity and reported no layoffs. 
• The company accomplished this by establishing "a speedy turnaround for delivery orders, enlisting order and delivery services such as Shopify, and reassigning its bartenders to packaging and fulfillment" (Anderson).
• "Within fours days, the brand had re-purposed its website and set up the logistics to deliver cans of hard kombucha in San Diego and L.A" (Anderson). Additionally, two-hour delivery was launched in San Francisco, Nevada, and New York.

JuneShine's response to the pandemic showed that its practices around responding to adversity and committing to its employees are second to none. Lastly, in typical JuneShine fashion, the brand decided to go above and beyond by "donating a dollar from every online sale to support the U.S Bartender's Guild's emergency assistance program" (Anderson).

Opinion #2: In her article titled, “Juneshine Review: We Taste Test This Hard Kombucha”, Maggie Gibson reports that JuneShine produces exactly the product that it markets. Delivering "nature's most flavorful liberations in a way that is refreshing and tasty", Gibson had lots of praise with little criticism for the company (Gibson). In the cons section of her review, Gibson explained how the hard kombucha must stay refrigerated at all times or the beverage continues to ferment, degrading the quality of the taste. Though that is true, it should not be held against the brand as it applies to all kombucha brewing companies

Recommendation:

With the growth of the hard kombucha market, the company's increasing revenue and market share, and their history of environmental responsibility, I recommend that AMDP invest in JuneShine. Led by two men listed in Forbes "30 under 30" coupled with a clever marketing team capable of selling their product and generating substantial funding, I believe that JuneShine's potential is sky-high. 

Additionally, they set themselves apart from competitors and appeal to a wider array of customers by offering premium cocktails in addition to their hard kombucha. In their six years, JuneShine has shown that they know what they're doing and can most certainly do it well. I highly recommend that AMDP invests in JuneShine because their dedication to environmentalism, sustainability, transparency, their employees, and their profits mesh perfectly with AMDP's desire to invest in socially responsible, yet profitable, businesses.

Sources Cited

Anderson, Ian. “Juneshine's Outlook Remains Healthy.” San Diego Reader, https://www.sandiegoreader.com/news/2020/may/14/drinks-juneshines-outlook-remains-healthy/.

Brent A. Bauer, M.D. “A Mug of Kombucha for Your Health?” Mayo Clinic, Mayo Foundation for Medical Education and Research, 10 July 2020, https://www.mayoclinic.org/healthy-lifestyle/consumer-health/expert-answers/kombucha-tea/faq-20058126.

Cision. “Juneshine Accelerates Nationwide Growth with Series A Led by Celebrity Investors Diplo & Whitney Cummings.” JuneShine Accelerates Nationwide Growth With Series A Led By Celebrity Investors Diplo & Whitney Cummings, 8 June 2021, https://www.prnewswire.com/news-releases/juneshine-accelerates-nationwide-growth-with-series-a-led-by-celebrity-investors-diplo--whitney-cummings-301307899.html#:~:text=Since%20launching%20in%20June%202018,double%20that%20volume%20in%202021.

Collins, Paul. “Business Carbon Footprint: Calculate, Reduce and Report.” Selectra, 18 Jan. 2022, https://climate.selectra.com/en/business/carbon-footprint#:~:text=The%20carbon%20footprint%20of%20a,or%20indirectly%20through%20its%20activities.

Dingwall, Kate. “Juneshine Hard Kombucha Wraps Celebrity-Led Series A Funding.” Forbes, Forbes Magazine, 10 June 2021, https://www.forbes.com/sites/katedingwall/2021/06/08/juneshine-hard-kombucha-wraps-celebrity-led-series-a-funding/?sh=71178e236d9d.

Freeman, Mike. “San Diego's Juneshine Pulls in $24m to Drive Hard Kombucha Better-for-You Alcoholic Beverages.” Tribune, San Diego Union-Tribune, 15 Nov. 2021, https://www.sandiegouniontribune.com/entertainment/beer/story/2021-11-15/san-diegos-juneshine-pulls-in-24-million-to-drive-the-emerging-hard-kombucha-craft-beverage-category.

Gibson, Maggie. “Juneshine Review: We Taste Test This Hard Kombucha.” JuneShine Review - Hard Kombucha Taste Test | The Fascination, The Fascination, 1 Feb. 2022, https://thefascination.com/blogs/the-edit/juneshine-review.

Junaid, Zeeshan. “Hard Kombucha Brand Juneshine Goes Climate Positive with Ecocart.” Ecocart.io, https://ecocart.io/posts/hard-kombucha-brand-juneshine-goes-carbon-positive-with-ecocart.

JuneShine. “Juneshine Hard Kombucha and Spirits -- a Lighter, Brighter Buzz.” JuneShine, https://juneshine.com/?utm_source=google&utm_medium=paid&utm_campaign=12061183128&utm_content=116260656197&utm_term=juneshine&gadid=556153959752&gclid=Cj0KCQiAybaRBhDtARIsAIEG3kkJhekzxBfwlJoNGGj78rfXGSEIr8MlZ0ZzGk6gTlrWLRqt6A151GAaApYVEALw_wcB.

Kaper, Hans. Mathematics of Planet Earth, http://mpe.dimacs.rutgers.edu/2013/05/21/measuring-carbon-footprints/#:~:text=The%20standard%20unit%20for%20measuring,the%20same%20amount%20of%20warming.

Miller, Kelsey. “The Triple Bottom Line: What It Is & Why It's Important.” Business Insights Blog, 8 Dec. 2020, https://online.hbs.edu/blog/post/what-is-the-triple-bottom-line#:~:text=The%20triple%20bottom%20line%20is,%3A%20profit%2C%20people%2C%20and%20the.

Velez, Henah. “What Is a Social Enterprise?” The Good Trade, The Good Trade, 16 Feb. 2022, https://www.thegoodtrade.com/features/what-is-a-social-enterprise.