Tropical Beverage Inc. has signed a co-packing agreement with Palomar Mountain Spring Water. The manufacturer and distributor of value-added water-based beverages made the announcement today.

The agreement calls for Tropical to produce 720,000 cases of spring water in the first 12 month period which will generate revenues for the company between US$500,000 and $800,000.

In a statement, CFO Chris Lotito said: "Tropical continues to grow its business through co-packing arrangements with leading beverage companies looking to either produce their existing product line or add new products and possibly new package sizes to their present portfolio. This is just one of many co-packing agreements for Tropical which will increase our overall plant capacity and allow us more flexibility when it comes to new co-packing business and new product launches."

The spring water will be bottled with co-packing fees averaging around $1.00 per case during the first year, said Lotito. Tropical estimates the first shipment will be produced and delivered next month.

In October last year, Tropical acquired Arctic Springs, a Los Angeles-based bottled spring water brand.