Remedy Drinks is rapidly expanding. Here’s how it unlocks the cash it needs to grow

Now, 90% of all products are made, packed, and shipped from one large fermentary in Dandenong South in Victoria. Nick Marshall, Remedy Drinks’ Chief Financial Officer, says as the world wants healthier, fermented drinks with less sugar, orders are increasing. As a result, Remedy Drinks’ supply chain and footprint are expanding.

Lifting cash conversion in surging export markets

Nick explains that Remedy Drinks procures raw materials from over 50 across Africa, Asia, Europe, the UK and Australia.

Downstream, Remedy Drinks has over 8,000 customers in Australia and New Zealand alone. In the local market, Marshall says the business services all channels and caters for most occasions through their portfolio of kombucha, no sugar soft drinks, energy drinks and shots.

“We’re targeting consistent growth locally where we have higher penetration, but our export volumes are growing exponentially,” Marshall says. “We’ve only been exporting for four years and are capitalising on that momentum.”

Marshall says having flexible access to working capital is crucial to keeping pace with demand and increasing capacity. He notes that payment terms in Australia and New Zealand are typically 30 days, but they can be far more in export markets.

“We tend to hold raw materials for 50 days, produce finished goods in a day and ship to customers. In the international market, terms of trade can be 45 to 60 days higher, so you have a shortfall between ordering and receiving payment,” Marshall says.

“That can cause delays in our cash conversion, but our CommBank Working Capital Facility lets us draw down on stock already sold, so we have the liquidity to fund our broader expansion.”

The Working Capital Facility is a loan that helps navigate cash flow fluctuations for businesses that are growing quickly, managing global supply chains or cyclical trading periods. Cash can be tied up in unpaid invoices or unsold inventory, which constrains liquidity. However, businesses can borrow against these assets to unlock the working capital they need.

Striving for flexible and efficient working capital solutions and partnerships

Marshall says that when Remedy Drinks sought a working capital solution, pricing was an undeniable factor. However, he adds that the decision on who to partner with ultimately relied on the flexibility of the solution and the potential for a long-term partnership.

“We shortlisted three parties when we put our working capital needs to tender. CommBank was sharp on pricing, transparent and understood the business. But we were really attracted to the flexibility of when we can draw down on the facility,” Marshall says.

“For example, managing the seasonality of the demand cycle is important. Over summer, when order volumes are higher, we need access to working capital to build stock,” he says.

“Our Relationship Manager intimately understands how the industry and our operations work and is responsive to any issue 24/7. Close collaboration is a big reason why the partnership is so strong.”

Back-end efficiency gains are another drawcard, according to Marshall. He says that CommBank’s system requires one monthly update on all invoices to trigger a drawdown, which can take as little as half an hour.

“We used to spend three or four days a month uploading invoices to satisfy a previous debtor working capital provider, so a lot of administration was involved. Now it’s a hugely efficient process, and the team loves it,” Marshall says.

Supporting broader growth aspirations

Marshall says that CommBank is more broadly supportive of Remedy Drinks’ growth aspirations outside of working capital requirements. He points to the recent co-packaging deal and partnership with Fever Tree to produce its products in the Asia-Pacific region. 

“As we enter this new segment with huge growth potential, we’ll need to outlay more capital expenditure to build a new manufacturing line. CommBank understands our vision and that it might take 12-18 months to generate a return,” Marshall says.   

“That’s just one example of their appreciation for the dynamics of our business and industry as we enter our next growth chapter, Marshall concludes.