RCI Hospitality Holdings, Inc. Subsidiary Buys Control of Robust Energy® Drink Distribution
Plan: Expand Sales through On Premises Bar Market as Better Tasting, Higher Margin Alternative
HOUSTON—November 3, 2014—RCI Hospitality Holdings, Inc. (NasdaqGM: RICK) today announced the formation of a new subsidiary with exclusive distribution rights to Robust brand energy drinks in North America.
Robust is a fast growing brand targeting the on premises bar and mixer market in eight states. RCI believes that through its existing relationships with beer and liquor distributors, the new subsidiary will be able to significantly expand distribution.
The new subsidiary, of which RCI owns 51%, acquired certain assets and liabilities of Robust Energy LLC of Dallas. RCI paid $200,000 in cash and issued 200,000 shares of common stock to Robust Energy’s two founders, David King and Steve Clohessy; RCI has infused $750,000 of cash into the subsidiary; and Mr. King has signed an employment contract to serve as President of the new subsidiary’s energy drink business.
The new subsidiary’s exclusive rights are for 10 years, with rights to renew, with Sun Mark Limited of the UK, which has been manufacturing and distributing the drink under the Bullet brand there since 2008.
Robust Energy LLC was founded in Dallas in 2012, focusing sales and marketing on the on premises bar and mixer market, taking advantage of the fact that Robust sells for $24 a case, a 30-40% discount to the leading competitor, and has no after taste. In markets where Robust has established a high penetration, distribution also has been successfully expanded to convenience stores.
Robust comes in standard 8.4 ounce energy drink cans and in four flavors: regular, sugar free, cranberry and lemon mint, which mixes particularly well with whiskey and tequila. Consumers like Robust; the customer retention rate is more than 90%.
Eric Langan, President and CEO of RCI, commented, “Our subsidiaries have sold Robust, where it is available, in their adult clubs and sports bars/restaurants since June 2013. Customers have been very satisfied with the product compared to the leading competitor, and we have been very satisfied with the increased margin.”
“By focusing on the on premises bar and mixer market, Robust Energy has developed a highly efficient marketing and distribution platform. We believe our relationships with beer and liquor distributors will help to significantly expand sales throughout the country as well as Canada and Mexico, too.”
David King, the founder of Robust Energy, commented, “The secret of our Robust success has been very simple. It is rare to sell something that is not only a better product, but costs less, too.”
“Ilook forward to working with RCI. The latest studies predict the energy drink market is expected to grow close to 90% over the next four years. Those are big numbers and we need a big partner at our side to help us capture it.”
About RCI Hospitality Holdings, Inc. (NasdaqGM: RICK)
With 45 units, RCI Hospitality Holdings, Inc. (formerly Rick’s Cabaret International, Inc.), through its subsidiaries, is the country’s leading company in adult gentlemen clubs and sports bars/restaurants. Adult clubs in New York City, Miami, Philadelphia, Charlotte, Dallas/Ft. Worth, Houston, Minneapolis, Indianapolis and other cities operate under brand names, such as “Rick's Cabaret,” “XTC,” “Club Onyx,” “Vivid Cabaret,” “Jaguars” and “Tootsie’s Cabaret.” Sports bars/restaurants operate under the brand name “Bombshells.” Please visit http://www.rcihospitality.com/
This press release may contain forward-looking statements that involve a number of risks and uncertainties that could cause the company’s actual results to differ materially from those indicated in this press release, including the risks and uncertainties associated with operating and managing an adult business, the business climates in cities where it operates, the success or lack thereof in launching and building the company’s businesses, risks and uncertainties related to the operational and financial results of our Web sites, conditions relevant to real estate transactions, and numerous other factors such as laws governing the operation of adult entertainment businesses, competition and dependence on key personnel. The company has no obligation to update or revise the forward-looking statements to reflect the occurrence of future events or circumstances.
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