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Is Cavitation Technologies Inc. (CVAT) the Next Household Name in Wine and Spirits?

The company's new technology can disrupt how people consume alcohol.

Shares of do-it-yourself flavored water company SodaStream (SODA) had the ire of Wall Street from mid-2013 to early 2016, but a sharp rebound in demand for the company’s countertop products led to a reversal that saw shares score gains in the area of 400% from the February 2016 low at $11.66 to current values around $57. The popularity of homemade and single-serve coffee is evidenced by an investor group led by JAB Holding in 2015 taking Keurig Green Mountain, whose largest investor was Coca Cola (KO), private for $92 a share, or $13.9 billion in cash.

Flourishing beverage companies certainly provide motivation for upstart Cavitation Technologies Inc. (CVAT)—which currently has a market cap of around $8 million—to complete the process of transitioning their alcohol-beverage enhancing device from prototype to retail. As the name implies, the Chatsworth, CA-based company specializes in hydrodynamic cavitation, a phenomenon involving the formation of vapor cavities in a flowing liquid through rapid changes in local pressure.

The company’s founders have discovered multiple uses for the process, including upgrading petroleum and refining edible oil, for which they are generating sales now. In fact, Desmet Ballestra Group, the company’s long-time strategic partner and licensee of the vegetable oil refining technology, recently placed an order for the company’s Nano Reactor® system to be installed in a soybean oil refinery in Thailand. The order will generate about $325,000 in revenue for Cavitation Technologies Inc.

Perhaps the most intriguing application, though, is that of wine and spirit aging and enhancement. In a matter of moments, the company can replicate and improve upon what currently takes multiple distillation processes, extensive filtration, and years of barrel aging to accomplish.

In their first foray into the consumer market, the company recently made good on a promise to Don Baillargeon, bringing in a working prototype of their innovative new countertop machine for demonstration on Baillargeon’s show MoneyTV. Cavitation Technologies Inc.’s Global Technology Manager and founder, Roman Gordon, showed it only takes about two minutes to refine and improve the taste of spirits and wines.

On the show, Gordon cracked open a new bottle of what Baillargeon described as a “middle-shelf” cognac, pouring about half of it into what looks like a high-end coffee machine and setting the remainder aside as a comparator. As the machine ran, Gordon gave a high-level rundown of the process, explaining that the cavitation reactor inside the device changes the drink, whether white or red wine, whiskey, brandy, vodka, or tequila. The result is a cleaner, aged, and overall smoother beverage that is more pleasant to drink.

The patent pending technology and process work by transforming harsh-tasting acids into pleasant-tasting esters. This process combines taste improvement with reduction of certain harmful impurities that can be attributed to hangover-related symptoms. Upon sampling the refined cognac and the original, Baillargeon said the difference was “night and day between the two,” noting “a definite difference in the nose” and nodding his head with raised eyebrows with respect to the “bite” accompanying a sip of the non-refined cognac.

Cavitation Technologies Inc.’s COO/CFO Neil Voloshin, replied, “Exactly” when Baillargeon asked if the future plans, included making it into a retailer like Bed, Bath and Beyond (BBBY), indicating the company is clearly set on commercialization of the innovative home appliance. According to Allied Market Research global sales of home kitchen appliances is forecasted to reach $253 billion US dollars by 2020. With these things in mind, a novel product like the one Cavitation Technologies Inc. (CVAT) is developing now could be an absolute home run for the company and create an incredible market buzz – without the hangover.

*Editor’s note: This article was updated on March 20, 2018.

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