Rogue One, Inc. (OTCMKTS:ROAG) Speculative Play In Booming Tequilla Market

If you were in Charles Dickens’ classic novel ‘Tale of Two Cities’, and wanted to find the best investment possible, alcohol would be the answer.  It is one industry that performs during “the best of times” and “the worst of times.”  In fact, during the global pandemic, it was one of the few industries that thrived.

One segment of the alcohol industry that has been particularly popular is the Tequila market.  

According to Forbes Business Insights, the Tequila Market hit $9.41 billion in 2020, and is forecasted to grow 46% to $14.70 billion by 2028 representing a 5.8% CAGR. 

Why Tequila?

According to Statista, tequila sales in the US have shown continuous growth since 2004, reaching an all-time high of over 22 million 9-liter cases sold in 2020.  One sign that this growth will continue is that 45.6% of alcohol consumers ages 18 to 29 say they drink the liquor.  Tequila is most popular among this youthful consumer segment, which will gain more market dollars in the near future and will spend many of those dollars on tequila.

This growth is being caused by a growing preference for premium tequila as well as the market’s new experimental flavors.  However, the biggest reason for the growth may be tequila’s health benefits.

Health Benefits of Tequila

With this country becoming more health-conscious, tequila is naturally a preferred choice.  The agave made spirit is said to be:

-Good for bones: agave improves absorption of calcium and magnesium
-Aid digestion: high levels of insulin induce better digestion
-Promote weight loss: helps people feel fuller so they eat less
-Aid sleep- calms nerves and relaxes the body
-Probiotic- fructans help boost the immune system
-Numb pain- dilates the blood vessels and helps transport blood to all of our body parts, lessening body pain.
-No hangover- high-quality tequila made with 100% agave won’t give you a hangover

*These benefits are based on a responsible amount of tequila intake. 

Best Tequila Stocks

There are several ways to invest in the Tequila industry.  One stock tequila investors may not know but should learn about immediately is Rogue One, Inc. (OTCMKTS:ROAG).

ROAG is a spirit and hospitality holding company focused on the tequila industry.  Its most recent acquisition, Human Brands International, Inc. ‘HBI’, a premium tequila and liquor producer,  has generated an average of 302% revenue growth annually since 2015 and has increased its asset holding by 2000%.   

The part investors should pay attention to here is ROAG has yet to release their Q3 10-Q which will be the first filing reflecting the acquisition’s revenues and assets on their balance sheet.

How ROAG Stacks Up to Its Competition

Large Cap Tequila Plays:

One of the first stocks you’ll find on most Tequila stock lists is Constellation Brands (NYSE:STZ).  While STZ is certainly a fantastic company and a worthwhile investment consideration, it only has two tequila brands which is a very small part of its portfolio.  If you are looking for a pure tequila play STZ may not be the best option.  

Diageo plc (NYSE:DEO) is a great tequila play. In 2020, their Casamigos became a million-case-selling brand.  Launched by George Clooney in 2013, DEO is a British liquor conglomerate.  DEO is a pure liquor play, however, much like STZ it is not a pure tequila play.  Also, headquartered in London, it is not a pure US market play.

Brown-Forman Corporation (NYSE:BF.B) is another large-cap option in the tequila market with three tequila brands.  Much like the aforementioned companies, as a beverage company it is not a pure tequila play.

Small Cap Tequila Plays:

Eastside Distilling, Inc. (NYSE:EAST) is billed as “the country’s first and only publicly traded craft distillery.”  Based in Portland, Oregon, the company offers Azuñia Reposado Tequila, Azuñia Añejo Tequila, Azuñia Black Tequila, and Azuñia Blanco Tequila.  Again, like most tequila plays, EAST is not a pure tequila play and the company’s Q3 has been priced in unlike ROAG.

Becle, SAB (OTCPK:BCCLF) is the distiller of Jose Cuervo, Bushmills, and several other liquors. The Mexican drinks company is one of the few publicly traded liquor companies in the world. Becle distills Jose Cuervo, Bushmills, Three Olives, Hanger 1, 1800, Pendelton, and Kraken.  Again, not a pure tequila play, however, it is up over the past 5 years.  

ROAG Investment Highlights

Not to take anything away from the tequila investments mentioned above, but my research indicates ROAG may be the best opportunity on the tequila market.

Here’s why:

According to Statista, the top 3 tequila consumption markets by state are: California, Texas, and Florida.  ROAG’s main distribution channel is Texas, Florida, California, New York (Tristate ) which account for roughly 33% of the US population according to the latest US census data.

ROAG’s subsidiary HBI currently owns and manage over 400k+ agave plants, the main ingredient in Tequila.

ROAG operates several premium tequila brands such as Armero Tequila.  Remember, premium tequila is the kind that causes no hangover.

ROAG’s core foundation is built upon its bulk tequila production and agave operations, and currently has supply contracts with well-known tequila brands, distilleries, celebrities, athletes and restaurant groups; making it the closest to a pure tequila play I could find.  In fact, 90% of its revenue is created through bulk tequila production operations.

Finally, I want to reiterate perhaps the most important highlight: the timing.  

ROAG has yet to release a 10-Q reflecting HBI’s revenue and assets.  Based on HBI’s reported revenue and asset growth since 2014, these numbers could be impressive.

Make sure ROAG is on your watchlist.