TIME Magazine

Monday, 16 January 2012

Higher Spirits

By Bill Saporito

An hour of investigative drinking made the pattern clear to me. At T-Bar, a semiswank eatery on Manhattan's Upper East Side, the bartender was serving a steady stream of pricey vodkas like Grey Goose and Ketel One, scotches like Glenlivet, and wine. Only once did a solitary Budweiser get the call.

Perhaps the drinks selection was a geographic anomaly--I was in a martini ZIP code. To investigate further, I hailed a subway downtown to my friend Ronan Downs' joint, a proper watering hole called Beckett's. Downs, who's been in this business for decades, confirmed my hunch. "It's a very interesting dynamic," he observed. "The Budweisers and Coors are losing out to vodka, Irish whiskey, tequila, bourbon." And craft beers. Downs also co-owns a craft-beer place called Taproom No. 307, where he doesn't offer Bud or Coors or Heineken. At his next place, he's hiring a full-time mixologist to cater to the under-30 set.

It's not just New York. Demography, economics and the cocktail culture have combined to help make spirits and wine the preferred alcoholic beverages across the U.S. at the expense of the brand-name premium beers. Throw in superior marketing by the liquor companies and the rise of craft beers and you can distill the reasons the major beer brands are in decline. By the end of 2010, total beer sales slid below 50% of the beverage-alcohol market. Sales by volume declined an additional 1.7% in the 52-week period ending Nov. 12, according to Nielsen, while spirits sales increased 4.3%.

This isn't small you-know-what. In the $60 billion alcoholic-beverage industry, each market-share point is worth about $600 million at wholesale. Anemic growth potential is one reason Anheuser-Busch, a 150-year-old U.S. institution, was taken over by Belgium's InBev (now called ABInBev) in 2008. Hundreds of jobs were lost in AB's home of St. Louis in the vicious cost cutting that followed.

You'd think economics would favor beer, since it's relatively cheaper than liquor. But the recession was a gut punch to big brewers, whose drinkers have lower incomes and took more of the downturn's brunt. You'd also think demographics would favor beer, since the LDA--that is, legal drinking age--population has grown by a million young people to 22 million.

But it's the composition of that crowd that matters. And among millennials in general and women in particular, a trendlet trio known as premiumization, individualization and feminization has hurt premium beer.

Premiumization is a return to fewer but better. "You are seeing more and more consumers who prefer two bottles of Fat Tire ale over four bottles of domestic premiums," says craft-beer-industry financier Bill Anderson, CEO of First Beverage Group. That's why craft-beer sales, 10% of the total market, are rising by double digits. It also explains the success of superpremium and flavored vodkas and a slew of artisanal bourbons, ryes and gins being ginned up in small batches and sold at high prices. Downs estimates that he carries 30% more varieties than he did five years ago.

Individualization is all about millennials, who are far more attracted to what marketers call authentic brands and to personalizing their drinks. Wayne Hartunian, U.S. vice president of whiskeys and cognac for major French distiller Pernod Ricard, says, "Millennials overindex with spirits consumption vs. the rest of the population." That's marketing-speak for "They prefer liquor to beer in a big way." Pernod has made Jameson Irish whiskey a huge success. Sales increased 25% in 2011, according to Nielsen, through clever advertising of a 230-year-old brand and by cultivating a corps of bartenders across the country to promote the product.

Women have also changed their drinking patterns: they're now as likely to drink shots as cosmos, says Downs. The liquor companies have focused attention on them, from Absolut's faceted, feminine Glimmer bottle to Beam's creation of 22 products aimed at women, among them the cocktail brand Skinnygirl.

Meanwhile, the big beer brands are flailing with their frat-jock advertising--all coarse jokes and party-hearty pitches. Coors Light touts a label with stripes that change color when cold and then "supercold," apparently believing young men need help comprehending the thermodynamic properties of beer. It isn't working anymore. Even the kids are drinking like grownups.

Beverage Business INSIGHTS

Monday, 16 January 2012

With Help from First Beverage, Purity Organic Revamps Packs

Tho it came in as investor just last summer (BBI, Jul 6), First Beverage team already has helped rev things into higher gear at organic juice marketer Purity Organic. SF co is readying sweeping packaging revamp, launching coconut water and stepping up geographic expansion.

Encountered at Fancy Food, co's youthful vp sales and marketing, Dave Minnick, said he's been working closely with First Bev advisor and Nantucket Nectars founder Tom First and Brooklyn-based designer to rethink brand's look and messaging. Now it's about to move from 16-oz bottle to proprietary, panelless 16.9-oz pack with larger label to support new look that dials up size of fruit depicted in brand's trademark grid and Purity brand name, while also better segmenting line by flavor and other attributes. While fruit images retain general grid look, fruits are now slightly offset to offer subtle energy to look. Name endings like "ade," "nectar" and "plus" get boldfaced to further ease IDing of subline at shelf.

Entering packaging mix is 12-oz PET bottle that will host co's first foray into orange juice, with 100% organic liquid, as well as well-regarded Pressed Apple sku and Cranberry that will be moved exclusively to small pack. Should be perfect for schools and foodservice as well as general retail, Dave figures. And co is broadening into healthy snacks by doing baked apple chip in 1-oz packs, at request for big customer. If it works, it will be expanded.

Also new in product mix is coconut water, in 17-oz aseptic pack with striking silhouette image of coconut harvester climbing tree trunk. Entry seeks to stand out as rare certified-organic line; recall that among major players, ONE had hoped to have organic juice in place last year but that never materialized.

Co finally is ready to add East Coast copacker, Castle, outside Pittsburgh. And it's broadening distribution, adding such Northeast markets as Boston (via Great State) and RI (via Bayside) as well as Hawaii (Kahuna) and markets in Midwest.

Recall that Purity Organic is unit of largest marketer of organic tree fruit, founded by Greg Holzman. His partners/advisors in effort include 2 other ex-New Yorkers who'd launched Amoeba Records chain and Escape from New York pizza chain, respectively. First Bev tie brings range of hands-on expertise, with First and Josh Groff, a former Miller Brewing and Jones Soda exec, taking hands-on role. "First Beverage brought a lot to the table beyond capital," Minnick noted. Joked Purity Organic partner Mike Boyden, the Amoeba Records founder: "We talk to Tom First, Dave second."  

Craft Business Daily

Wednesday, 11 January 2012

Craft Distribution in 2012

The year already feels different, doesn't it? Deals have gone down on the supplier side, and you can bet the wheels are turning in the second tier. We polled some sources for their top-line concerns in the craft distribution space in the coming months. These are the issues that will define the year:

ALIGNMENT. NBWA's Paul Pisano has flagged the Western Beverage situation as a particular point of interest. Will this newly A-B owned WOD in Oregon drop its current craft portfolio in the segment's Northwest stronghold? If that A-B house were compelled to get "aligned" and nix Ninkasi, you can bet that would change the craft distribution landscape real quick.

Some aren't convinced that will happen. "Ninkasi, craft is 30% of that wholesaler volume, and 45% of its profits," one consultant estimates. "A-B is overpaying for that house if they eliminate that." But the fear endures. "This Western Beverage issue is huge. If they're going to have a branch that's non-exclusive, [that might look like] hypocrisy," points out another industry leader (you can guess that many want to stay anonymous on the sensitive issue).  For his part, Ninkasi founder Jamie Floyd says they're not looking to leave the wholesaler that they just switched to last year. "I have had some real sky-is-falling type emails from people all over the place," he says. He doesn't seem overly concerned. "Make and sell beer is what we do other than create beer culture and support our community. That is what we want for 2012. We hope all our distributor partners will join us in this extraordinary vision."

Of course, it's not just an issue for non-branch A-B distributors, or craft suppliers whose access to market lies in the balance. "Anytime the big share market player gets bigger, it affects the rest of us," says Gary Thompson of Powers Distributing in Michigan, a MillerCoors house. "A-B alignment, spending on a national basis will have a direct impact on all of us. They're tough competitors; we have to compete hard and knowledgeably to stay with 'em."

THE ROLE OF INDY, CRAFT-ONLY HOUSES. First Beverage's Bill Anderson said in a conference late last year that indy, craft-only houses would be important in the craft distribution landscape going forward. "Even if there's not pressure from St. Louis and Chicago on distributors, there's just not going to be enough space without emerging, craft-only distributors in major markets," he says.

Some disagree, citing the indy houses' higher costs of business as a major roadblock to their growth and efficiency. In  a market the size of, say, Charlotte, a craft-only distributor's total operating expenses per case would rise by at least 50%, says Ippolito Christon & Co.'s Andrew Christon, pulling an example from his files. "This assumes significantly fewer routes and far less call frequency for the craft-only distributor than is currently provided by an established distributor." In this situation, the craft-only distributor likely "would be forced to operate on razor thin EBITDA profit margins, probably 2-3% of net sales, or less than 50 cents a case. Typically, that is not sufficient profitability to compensate a distributor for the risk of investing time and capital in a non-diversified distribution business."

But remember Click Wholesale, which is independent and upscale-focused, if not craft beer-only - and yes, profitable. The majority of their portfolio is specialty beer and they dominate the chain business, uncommon for an independent house.

And craft-only distributors are getting craftier logistically, making alliances with other indy and even Big 2-affiliated houses in adjacent geographic areas to provide brewers a larger footprint with more efficiency. One example is Southern California's Attenuator Group, comprised of Ace Beverage Co., Hangar 24 Craft Distribution, Heimark Distributing, Mission Beverage Co., R & S Beverage Co. and Triangle Distributing. So clearly there are many models to be vetted.

FINDING BRANDS THAT ARE "REAL." A simple but enduring point: Just as bigger craft brewers fret about all the sexy newcomers, distributors are perplexed about which ones to snatch up. "What is real?" is the way Jay Martin at Florida's J.J. Taylor poses the question. "What new breweries should we represent with so many opening?"

SHARPER PLANNING. It's the "thing that all of us wholesalers have to get better at," says Powers' Gary Thompson, 2011's NBWA/BA Craft Beer Distributor of the Year. "Planning and marketing at the wholesaler level have got to go up a lot. It prevents winification because you're building brands, and doing a better job of assisting our retailers and setting our shelves."

He cites Indiana's Monarch as a best-practices example. "They've taken their own internal marketing division, and are doing a better job of understanding demographics, and how their marketing division can help with velocity, putting the right products in the right places."

Brewbound News

Monday, 12 December 2011

Industry Members Meet at Brewbound

Last Monday, Brewbound.com hosted a half-day conference discussing the craft beer space in conjunction with the bi-annual BevNET Live conference.

First Beverage Founder and CEO William Anderson discussed the key headwinds facing craft brewers as many startups look to secure financing and already established brands look to expand.

Anderson gave the audience a look at what the craft industry 'was,' and it 'is now.' He highlighted many key differences in consumer values that have helped to cultivate a renewed interest in craft beer. Chief among them was the shift from a brand image to a brand story and the attention to community and responsibility.

But Anderson also listed seven key headwinds the craft industry faces:

• Rampant consumer promiscuity
• High expansion capacity costs
• Private label crafts on the rise
• Duopoly pressures to sell crafts
• Distributor limitations
• Management skillset gaps
• Generational transfers

Beer Business Daily

Friday, 9 December 2011

In Craft, $20 Billion Could Be at Play

Bill Anderson delivered interesting news on the craft industry's investment outlook at Monday's Brewbound conference.

LOTS OF CASH CHASING A UNIQUE CULTURE. Bill explained how there is "no shortage of investors who want into the craft arena."  His group has met recently with three large family offices in New York that want into the space, and an international company that wants to make a large craft investment. The draw is "fun, iconic" brands affecting not just beer or the beverage space, but also culture and consumerism  in general.

"But they're also doing the math, saying, 'If craft is 5% of volume and 7% of dollars of a $95 billion U.S. beer market, and people are saying it could be ... 10% or 20%, or [as Steve Hindy recently said of full-flavored, high margin beer's potential] 30%, you're talking about $15 to $20 or more billion worth of money at play. That's what's attracting private equity." He estimates that First Beverage hears from private equity firms "once or twice a week" asking for introductions to the craft space. 

"Usually we don't say yes. I think there's a huge culture question of private equity coming into the craft beer space," says Bill. And he has other concerns.

MISMATCHED EXPECTATIONS AND CULTURES. Investors may see craft's rosy picture and growth numbers, and the way craft's influence extends. And they may be crunching those aforementioned potentials. And hoping to fund the next New Belgium.

In reality, the cultures have potential to clash. Bill isn't confident, for example, that some outfits understand the "costs of iconic, socially responsible brand resonance" that is craft's bottled lightening. Moreover, he doesn't know if they have the patience it takes to get brands "lifted," citing the phenomenon of Blue Moon's 15-year "overnight success."

Investors also don't like high capital expenditures. "Private equity doesn't like to see a lot of money going into brewing facilities," Bill says. But Schlafly's Dan Kopman and Saint Arnold head and former banker Brock Wagner estimate it will take some $1.5 billion to build the capacity needed to take craft to 10 share.

Finally, they'd have to come to alignment on exit strategies, over which the segment itself is struggling. It's also struggling on whether it wants to take private equity money to begin with.

Beernews.org

Monday, 5 December 2011

The Future of Craft Beer Through the Eyes of Industry Pros

Earlier this afternoon, Brewbound held a small gathering of beer industry professionals in Southern California to discuss, what else, craft beer. Here are some notes from the talks (excerpt):

First Beverage Group CEO, Bill Anderson:

• Read recently that it will take $1.5 billion in capital investment (read: expansion of brewing capacity) to grow craft segment from 5% market share to 10% market share so get ready to see more players getting into the game

• Says there is no shortage in investors that want a piece of the craft beer pie. Hears from private equity firms once or twice a week about wanting introductions (doesn't think they're a great culture fit in craft industry so usually says no). Recently heard from large international company (they're coming) and three "large family offices" in New York that want in on craft. Why so interested? They see huge growth potential in high-end and the allure of large iconic brands that are culture-impacting like New Belgium.

Beer Business Daily

Thursday, 1 December 2011

Shireman on Beer

JB Shireman has been in the beer business at some level for over 20 years. First, as a tavern owner and then with over twelve years at New Belgium Brewing Company, opening 26 states. Currently, he is a Vice President at Bill Anderson's First Beverage Group, a financial services firm focused exclusively on beverages.  He is also the owner of the Bar Double S, a 60 plus year old tavern in his hometown of Laporte, CO.

Harry:  So what are you up to these days?

JB: Spending time with my wife and boys and really enjoying the diversity of work we have at First Beverage right now.  We have a very strong and cohesive team, and we are active in all segments of the beverage industry in investment banking and strategic consulting, as well as, directly investing in emerging brands.  It's been fun to talk as part of a broad team about the trends we see affecting the industry and to be able to take that intelligence to help our clients grow their businesses.   My focus lately has been on consulting to craft brewers and distributors, as well as advising our investment banking team.

H: What do you think of all the new entrants to craft.  Will they all make it?

JB: First off, I think it's great. The consumer is clearly excited about them and supporting them and that alone is a bit of a bright spot considering the past few years for beer generally.  Second--even though I'm about as bullish as they come on craft--I don't think they will all make it.  Unlike the first shake-out of craft that I feel was largely quality driven, with some price erosion help from larger players in the industry, I feel this next shake-out will be driven largely by three things: 1) an under-estimation of the cost to compete effectively; 2) a lack of long -term strategic planning skills both operationally and with sales, marketing and branding; and 3) uncertainties on how to appoint and effectively manage their chosen distributor networks.

H: What do you think of the latest messaging from A-B?

JB:  I worry about the long-term implications of this position, as it appears that their approach is really out of sync with the needs of their distributors, retailers and consumers.  Having said all that, they are very smart and they don't seem to do anything without good reason. I recently had a conversation with a long-time industry sage who asked and answered some key questions around this. Will this message be disruptive to crafts?  Yes.  Will this message garner ABI more focus in the short term as wholesalers jockey to be the anchor wholesaler in their region? He believes so. Will this message be a catalyst for more consolidation, thus allowing ABI to have more control of the middle tier? Most likely. This looks to be AB's long anticipated move to make major changes in their system and with this week's release of their new consolidation strategy, it appears they are willing and able to play a much more active role than they have in the past.  In short, their message was a smart one to serve their needs.

H: You were quick to point out that this will be disruptive for crafts. Can you elaborate?

JB: Clearly, this announcement is going to cause a lot of people to think, both distributors and suppliers. I think most of the ABI distributors will see that this is good for ABI, but out of touch with market realities and customers.  Most will likely move forward promoting ABI and non-ABI brands and will continue try to acquire other crafts. For the craft brewers themselves, they have to be more prepared than ever to manage these wholesalers once they are inside because there will be a lot of pressure to not focus on their brands. It forces the craft guys to raise their game significantly in order to do well at a time when I personally feel most of them are already behind a bit in wholesaler management.

H: How about on the other side of the aisle? What are your thoughts on Tenth and Blake?

JB: Clearly they have a winner in Blue Moon and brand extensions within that family appear to be going well. The success with Leine's shows the power of the "push" they can exert within their system.  Their Apollo Program has a lot of craft people uneasy and understandably so. They still have work to do with  understanding how to brand, promote and sell within the many sub-categories of craft that are growing now and in communicating this to their network.

H: What do you think this means for the "all other" distributors in the market?

JB: I think they will continue to grow and become more relevant, particularly in the all-important, trend setting on-premise accounts. A few of the important questions any craft needs to ask itself when looking at a new wholesaler choice are: What do I want to be when I grow up? What are my long-term aspirations for this market? What will success look like for me one year from now, five years from now, etc.? There will be trade-offs as there always are. In an all-other house, they will be high-spotted to a certain degree, but they will be in the "right" accounts.  As we have seen, aspirations and goals change over time. Many crafts didn't know or think they were going be as successful as they have been. With this success often comes the need to address a move to a new network. A small brewer carve-out from franchise laws, for fair market value, makes sense.  No one deserves to have the long-term strategic direction of their company dictated to them by another party.

H: Is the long talked-about consolidation of craft coming?

JB: Well, clearly we've seen some already with IBU/NAB and a smattering of minor plays. Consolidation, taken in its broadest sense, is definitely coming.  Everybody building their own breweries does not seem like a tenable long-term solution.  I think you will see more breweries collaborating in a more serious way and larger crafts looking at buying all or part of smaller crafts before we see a number of big craft brewers selling out to large private equity firms.  Having said that, the big brewers and importers have deep pockets, and a lot of craft breweries don't have solid succession plans, so to some of them the money may matter more.  But to a lot of them, it doesn't. It's more about their legacy and continuing to do things their way in spite of capital needs and that's where people like us at First Beverage can really help. We know the industry, we know the people, we understand the collective needs, we can find the right "fit" for these crafts, and we have access to patient, long-term capital.

H: Can you describe the dynamic that exists between smaller growing craft brewers and the larger, what I would call Legendary Craft Brewers?  It seems there has recently been some animosity...

JB: Regardless of the spats that take place from time to time over definitions or taxable barrels, the craft community is still a pretty tight-knit bunch.  All the new entrants owe a great deal of gratitude to people like Jim Koch and Ken Grossman who helped pave the way for all of us. When Jeff Lebesch and Kim Jordan started New Belgium there weren't even categories at GABF to enter almost half their beers in. Today, breweries hang their hats on points of differentiation like being exclusive with only 100% organic, Belgian-style ales. That's a lot of change. Ken told me when I interviewed him for his 30th anniversary that he felt like the days of building a portfolio based around a flagship with national appeal was much harder these days, particularly for small, independent guys and gals. The newer entrants have to be deeply relevant in their backyard and build a solid business plan around that.  In turn, the Legendary Brewers need the small local folks to continue to drive innovation and excitement into the deepest pockets of the U.S. to help spread the buzz.  That's how we grow our collective share.

H: Are we over-SKUing?

JB: No.  At least not at retail.

H: Why is that?

JB: Ask any retailer how many of their customers come in and say, "Jeez, you have too many crafts. I can't find the domestic premium I'm looking for." It's funny to me that the same people that are telling the retailers that crafts are over-spaced are the same ones who insist on placing upwards of a half-dozen pack sizes of a declining brand in the cold box.  All of this is about the consumer, and the consumer wants new and exciting beers to complement their go-to staples.

From an on-premise standpoint, very few places can turn 100+ handles and keep the product fresh. This, to me, is where SKU proliferation can backfire on us as an industry.

The biggest challenge with the increasing number of SKUs (on or off premise), in my opinion, is with distributors being able to effectively (and profitably) manage them and in turn the crafts being able to supply them with quantities that will satisfy market demand. There are lots of supply chain challenges with this but the bottom line is the consumer wants these beers and that's who we should think about first.

H: Any closing thoughts?

JB: I love this industry. I feel fortunate to work with a super talented team at First Beverage and enjoy being a part of such a dynamic industry. I feel like we can and will continue to help a lot of people grow their business and create solutions to some of the largest challenges facing us today.  That's hard work and it's exciting. One thing's for sure...it's never boring.

Beverage Business INSIGHTS

Tuesday, 22 November 2011

Activate Debuts Outdoor, Radio Effort Featuring QBs Rivers, Freeman

Activate has bolstered its paid-media effort behind cap-activated functional drink, harnessing NFL quarterbacks Phil Rivers in Southern Calif and Josh Freeman in Tampa/Orlando, Fla, in campaign that melds outdoor ads, radio, promos, POS and personal appearances. Rivers campaign launched in San Diego, Orange County and LA a coupla weeks ago, using billboards, wrapped buses, branded bus shelters, digital ads, POS and radio. One billboard shows Rivers in frontal shot with left side of torso attired in football jersey and right side in business suit. "100% Playmaker," says copy at left. "100% Shot Caller," says copy at right, adding: "True potent vitamins with a twist." Another ad goes with "100% Field General . . . 100% Backyard Warrior." Fewer details yet on Freeman campaign, launching this week in Fla, but Activate will give away VIP experiences with both Rivers and Freeman via Facebook app.

As reported (BBI, Oct 4), Activate marketing chief Jesse Merrill this fall has been developing first orchestrated marketing effort to explain premise of vitamin line, which uses cap activation at time of consumption to avoid degradation of ingredients sitting in water. Initial phase of campaign last mo used cheeky ads in Southern Calif with slogans like: "Want fresh vitamins? We twist the cap, not the truth." Endorsers like Rivers and Freeman were selected because they hold local appeal and go beyond sheer celeb appeal in emboding "notion of living life at 100%," as Jesse has explained it in past . . . Separately, co has added Greg Moran to national account team headed by Pat Sanderlin. He takes over Southeast region after 13 years working brands like Sweet Leaf Tea, AriZona and Jones Soda.   

Craft Brew News

Friday, 21 October 2011

"Brewprint Solutions"; Thoughts from Bump and JB

"Brewprint Solutions"; Thoughts from Bump and JB Lively interactive session put on by First Bev folks, including consultants Bump Williams and JB Shireman, gave lotsa advice on a range of critical issues for craft brewers with lotsa audience participation from distribs. More craft brewers will look in "a real serious way" at "mergers, partnerships, capacity sharing, funding from private equity," said JB. Craft brewers will "get away from 'I build my brewery. You build your brewery,'" he added. There is "not a lot of sound, solid business acumen," among 56 craft brewers working with Bump Williams Consulting, Bump noted, adding that "discipline and planning are lacking" and sorely needed. "If there is a 2d shakeout," said JB, "it won't be about quality" but rather because of "lack of business acumen, planning and understanding the cost of being able to compete."

Yet both Bump and JB expect continued strong growth in 2012, even with the necessity of price increases to pay for raw material cost increases. Craft will get double digit volume increase again next yr, predicted JB. For most who drink craft, it remains "an extremely affordable luxury," added JB. Even with price hikes, craft "still in for a strong year," said Bump. Most of the country "still very underdeveloped."

But Bump is "worried about infighting" among craft brewers, such as recent dirty laundry aired on free goods. "It's indicative of how competitive the landscape has become and how challenging it's going to be," said JB. One distrib chimed in that "peace, love and understanding world of last decade is pretty much over."

Another concern for Bump: private label craft beer, noting that Kirkland is the #1 craft in Costco. Private label at lower price, "erodes pricing threshold" and there is concern about "quality," said Bump. Plus it gives retailer what it wants which is more control of margin, and it's also a "threat to 3-tier" as they "want to cut out the middleman." Hoping that craft doesn't fall into that trap, Bump later said "price and quantity are not sustainable selling strategies." One distrib noted that craft brewers have to get a better handle on their brand story. Recently asked one "What is your brand story?" The brewer had no idea what he was talking about. "This is not a fully-baked proposition," said distrib.

Beverage Business INSIGHTS

Friday, 21 October 2011

NBWA: This Time, Wholesalers Really Were in Hunt for NA Brands at Vegas Beer Confab

Exhibitors on National Beer Wholesalers Assn's expo floor reported ample # of tirekickers among beer wholesalers anxious to diversify mix further beyond premium beers and their weakening long-term trends. Tho few NA brands enjoyed continuous throngs viewed at craft brewers pavilion, most reported solid base of interest. "Busiest booth I have ever worked" declared Dan Holland, ceo of cap-activated functional line Activate. "We were so busy, if it did not deviate from our launch strategy I think we could have opened the country." He cited great interest from still-unassigned regions of Midwest and Northeast, adding: "Based on the turnout I think we will solidify the Southeast by the end of this year, depending on how fast we can launch." Dan cited even split in interest between once-skeptical Bud houses and MillerCoors houses.

Beverage Business INSIGHTS

Tuesday, 4 October 2011

Activate Starts Moving Aggressively to Add Final Piece to Puzzle: Marketing

Activate is putting in place last piece of puzzle for cap-activated brand that has done careful job of raising capital, refining package and establishing distribution: its first marketing campaign. Under marketing chief Jesse Merrill, former Honest Tea exec behind catchy gimmicks like "Honest Cities" program, Activate has set Oct program that includes outdoor, radio, digital and other media. It's just launched 20 billboards in hi-visibility spots around Southern Calif with messages that tread middle ground between sober recitation of Activate bennies and cheekiness of Vitaminwater: "Sugar is not a vitamin." "Want fresh vitamins? We twist the cap, not the truth." "Our cap is full of vitamins. Other caps are just full of cap."

Message is also being disseminated in wild postings, health club panels (that include bounceback coupon steering consumers to Ralphs chain) and the double-decker buses plying Hollywood. Radio spots on Clear Channel and CBS networks are divided between 30-second branded messages and promo spots keyed to specific chains that add displays. Messages have been crafted to offer "charm and humor, but not the cheekiness of Vitaminwater," in synch with more serious brand proposition and target of 18-to-34's, Merrill said. Subsequent phase of campaign will start incorporating locally compelling endorsers such as San Diego Chargers' Philip Rivers and Tampa Bay QB Josh Freeman, not so much for their sheer celeb appeal but for their ability to "embody the notion of living life at 100%," Jesse explained.

Exec behind media buzzworthy promos like Honest Cities, in which hidden cameras tracked honesty of consumers invited to purchase bottle of Honest Tea at unattended racks in public areas, is lookin' to generate similar buzz behind Activate. To do that co will employ such gimmicks as human-powered vending machine, in which consumers pedal bike to obtain freebie bottle, with price donated by Activate to Nourish America cause. First outing drew 1,000 consumers and 80+ media mentions. Ideas like this will be road-tested thru Q4 and refined in prep for 2012 rollout, Jesse said.

Co isn't overlooking blocking-and-tackling aspects of building new brands, hiring 3 full-time field marketing mgrs for core Southern Calif territory (San Diego, LA, Orange County and Inland Empire) and others for NorCal, Ariz and South Fla.

Beverage Business INSIGHTS

Friday, 23 September 2011

Augmenting Push into High End, Big Red Snags Kemper Soda

Big Red Ltd, which made unsuccessful run at Jones Soda a year ago, has bagged a high-end entry in the soda biz after all: Thomas Kemper Soda, which had been seeking a partner or buyer. In sale orchestrated by Kemper investor First Beverage Group, Austin-based marketer of Big Red and Big Blue sodas, All Sport isotonics and other mass-oriented lines will take ownership of Portland, Ore-based boutique soda, which was spun off from Pyramid Brewing about 5 years ago. Expectation is that Big Red ceo Gary Smith will keep on Kemper ceo Bill Germano in primarily sales role, while putting brand in hands of Scott Miller, Twelve bev vet who'd recently joined Big Red to run direct-sales biz. Expected to help sort thru brand's various marketing quandaries will be Pepsi and Genesis Today vet Thomas Oh, who'd come aboard as Big Red's vp biz development. Short-term moves? Gary expressed reservations about Kemper's previously cited plans to drop its squat bottle in favor of conventional longneck, move partly driven by exit from Pyramid copacking agreement; after all, Gary packs NuGrape in same bottle. It's also not clear whether expensive switch from HFCS to cane sugar has done much to garner additional traction for brand; perhaps that will be rethought. And Gary and team also have to sort out which of 2 rival stevia-sweetened, zero-calorie natural entries to keep: Kemper's Naturally Diet or Big Red's Sans entry, both recently released. With First Beverage having flipped most of Activate stake to Tata, its remaining bev investment apparently is recently taken stake in Purity Organic juices tho with broad mgmt team now assembled it's likely to step up hunt for investments. It had hung out shingle for partners or acquirers of Kemper several mos ago. More next week.   

BevNET.com

Friday, 19 August 2011

Tata Beverage Invests, Hires

International beverage conglomerate Tata Global Beverages made a pair of major moves in the past week, first revealing that in the last quarter it had increased its stake in The Rising Beverages Co., the maker of Activate drinks, to 43.1 percent. Tata also announced that it had hired Ajoy Misra to the position of deputy CEO of Tata Global Beverages.

The decision to increase Tata Global's investment in Rising Beverage follows a $21 million investment in the functional water company in October 2010 as well as the acquisition of a majority of First Beverage Group's shares in Rising Beverage two months later.

"The incremental investment has been made based on achievement of certain milestones set while making the earlier investment," said Percy Siganporia, acting CEO, Tata Global Beverages Ltd.

While Tata Global remains a minority owner in Rising Beverage, the company retained an option to further increase its stake in the future, according to Siganporia.

The move puts Tata Global in position to become an even stronger player in the growing functional water segment and comes at a time when the company is in the midst of a new global focus on investments in 'good for you' beverage categories, typified by the formation of a joint venture with Pepsi in 2010 to develop and market hydration beverages for the India market.

Taking Tata Global into the next decade will be the task charged to Ajoy Misra, who was recently hired as deputy CEO. Misra had previously been a marketing executive with Indian Hotels for nearly 30 years and is believed likely to take the overall helm from Siganporia, who is nearing retirement. Following the footsteps of its current CFO, Krishna Kumar, Misra is the second executive from Indian Hotels to move to Tata Global Beverages.

Beverage Business INSIGHTS

Friday, 22 July 2011

First Beverage Makes 'Significant' Investment in Purity Organic Juices

First Beverage Group, which flipped most of Activate stake to Tata for healthy profit and also has more modest investment in Thomas Kemper Soda, has settled on next bev play: Purity Organic juices. Nantucket Nectars founder Tom First, since Apr serving as co-managing dir at First Beverage, confirmed investment in SF-based organic juice spinoff from Pacific Organic Produce, largest marketer of organic tree fruit in US. He would only describe investment as "significant," without indicating whether it confers majority or minority stake, and said he'd be taking active role in short term helping plot course for brand that mainly plays via DSD in Calif and NY markets. As part of transaction, juice unit is being separated from fruit unit, with juice unit maintaining rights to use of trademark in all segments besides the fruit itself. It's produced by Sunsweet, which had also been viewed as potential strategic partner, role that First said is not in works but can't be ruled out down road. He said he'll first focus on better supporting brand in its 3 key markets of Northern Calif, Southern Calif and NY, then help plan next 3-4 DSD markets. He'll also focus on new-product opportunities for brand that sports distinctive grid-like pattern of fruit on label. It's recently ventured into related segments like half-and-half and tea, and is believed to do upwards of $3 mil in volume, tho this couldn't be confirmed.

Brand was created by Greg Holzman with sales handled by Dave Minnick, youthful bev exec who after first bev job at Hansen Natural several years ago moved to Purity Organic after considering chance to work with First at his O Water project, which Tom has since sold to partner Polar Beverage. Greg and Dave will both maintain active roles. First Beverage, founded by beer distribution vet Bill Anderson, has been object of considerable interest in NA realm for its willingness to consider even very-early-stage brands and for its quick success with Activate. Earlier this week it decided to seek outside partners for Kemper in hope of boosting co's chances of success with natural-soda push (BBI, Jul 19).    

BevNET.com

Friday, 22 July 2011

Back on the Juice: First Beverage Group Purchases Stake in Purity Organic Juices

First Beverage Group announced yesterday that it has purchased a stake in San Francisco-based Purity Organic Juices. While details regarding the exact size and amount of the investment have not been disclosed, Tom First, a co-managing director at First Beverage Group, described the deal as being a "significant investment for a significant part of the company."

Purity Organic Juices was founded in 2006 as an offshoot of Purity Organic Produce, the largest supplier of tree picked fruit in the world. Through its investment in the company, First Beverage will look to continue and expand upon the growth of Purity, which, according to First, has achieved a 30 percent growth in revenues in each of the last three years.

As a key figure in the decision to invest in Purity, First saw several similarities in the development of the company as compared to Nantucket Nectars, a company he co-founded nearly 20 years ago, noting that Purity has benefited from steady growth, wise investments, and good support of the product by its management.

"Like Nantucket Nectars, Purity has proven traction in the marketplace, a basic foundation for a great brand, opportunity for capital investment, and a product that can fit into the portfolio of distributors, retailers and consumers. Additionally, Purity's quality is second to none. The company has the opportunity to redefine what quality juice is in the same the way that Nantucket Nectars did back in the 1990s."

First will play a strategic role in shaping the next stages of development for Purity and said that the company will continue to focus on growth in the existing core markets of Northern and Southern California and New York, and based on the availability of distribution and retail partners, look to enter three to four new markets in the coming year. While First was not specific about exactly which markets, he did note that, "There's a lot of opportunity on the East Coast, and we'll certainly be looking at DSD distribution."

As part of First Beverage's investment, Purity's juice and produce units will become two separate entities, though the juice unit will retain the ability to use the Purity trademark for its current and future offerings. In doing so, First noted the strength of brand name to potentially develop new product lines and stated that, "With a name like Purity Organic, the field is pretty wide open for other things that we can do in organic beverages, and we'll certainly consider them."

Beverage Business INSIGHTS

Tuesday, 19 July 2011

Kemper Soda Seeks Strategic Partner

Concluding that they need more horsepower to pull off reinvention of venerable boutique soda brand, Thomas Kemper Soda Co and minority investor First Beverage Group have launched search for strategic alternatives, possibly including recapitalization, sale of shares, merger or joint venture, or sale of co. Announcement comes as Kemper continues to push ahead with rollout of Purely Natural and stevia-sweetened Naturally Diet Kemper lines, devised as more contemporary complement to core soda line. "It's a difficult category to launch new products in and we need some extra partners to do it with," prexy Bill Germano told BBI today. "We're still a small company with just a handful of resources."

Beverage Business INSIGHTS

Wednesday, 25 May 2011

Golazo Energy Looks to Capitalize on Soccer, Latino Culture and Natural Food; Starbucks' Schultz Is Investor; First Beverage Group Advising

Looking to capitalize on growing enthusiasm for soccer in US, trio of Seattle-based entrepreneurs has been testing all-natural energy drink in 12-oz cans called Golazo and recruited likes of Starbucks ceo Howard Schultz as investors. Richard Tait, former Microsoft exec who went on to create and run Cranium game before selling out to Hasbro in 07, said effort is first to emerge from incubator he's set up called BoomBoom Brands. Golazo, whose name is Spanish-language announcers' call for spectacular goal, looks to capitalize on 3 pillars: soccer's growing popularity, particularly in Pacific Northwest, where recently inaugurated Major League Soccer franchises have been regular sellouts; increasing Latino influence on US culture, and interest in all-natural food items. Lightly carbonated line in 12-oz cans blends yerba mate and guarana and is reinforced with electrolytes, giving it some similarity to Rockstar Recovery and Monster Rehab. But it's all natural and low in calories, with regular line containing 90 calories per can and Sugar Free just 10 calories via erythritol/stevia sweetener blend.

BoomBoom's co-founders with Tait are Alex Rosenast, former mgr of grunge icons Pearl Jam and Rock Candy club, and Josh Taft, TV ad vet who's shot brands like Nike and bands like Soundgarden and Pearl Jam. All 3 are soccer nuts, operating out of former BMW dealership in Seattle's Capitol Hill that's been outfitted with 3v3 soccer pitch, soccer videogaming systems and other paraphernalia that have already drawn 1,000+ soccer geeks to site, Scottish-born Richard noted. (Efforts have built Facebook fan base to 15,000 in barely a month.) Starbucks' Schultz had been investor in Cranium. Other prominent investors include Moretti brewing family (owners of Inter Milan club in Italy) and key investor in Spain's Real Madrid team. Brand has brought aboard First Beverage Group's Portland-based partner, Joth Ricci, as consultant on distribution and other issues.

Brand launched last Oct at typically sold-out Seattle Sounders home game and edged into just 25 retail accounts - from c-stores to taco trucks - to gauge brand reception, then added Amazon Fresh, where it became #2-selling bev in 14 zip codes where brand was available, Richard noted. Since then it's added 75 QFC groceries and partnered with Coke bottler Dolsen in eastern part of Wash State, where it's now in 300 accounts. It just launched in Whole Foods, which, like QFC, is serviced by wholesaler JC Wright, and is on campus at Reed and 5 other colleges. Brand recently edged into Portland market and later this year or in 2012 will "inch" its way into Calif, Tait said. Brand info at golazoenergy.com.    

Beverage Business INSIGHTS

Friday, 20 May 2011

BEER INSIGHTS CONFERENCE: Where Capital/Consulting Shop First Beverage Group Sees Things Heading

Tho its actual investments to date only number 2 and it hasn't shared many details about magnitude of its consulting biz, First Beverage Group still has managed to generate lotta buzz in recent months. It flipped most of Activate stake to India's Tata Group for 51% gain in only 16 months, buttressed core capital operation with incubator targeting smaller firms at beginning of year, and has brought on some familiar names including former New Belgium exec JB Shireman and Nantucket Nectars and O Water creator Tom First. So audience at Beer Insights Spring Conference in Chicago on Mon wasn't going anywhere as chmn/ceo Bill Anderson and coo Joth Ricci outlined their ambitions and observations.

So far, co has reviewed 300+ biz plans, but only chosen to invest in 2 (Activate, Thomas Kemper Soda). "Tough to find brands we really feel good about," was Bill's explanation for low hit rate. FBG is able to draw funding from group of 25 current and former distribs and various hi-net-worth individuals. As for Activate, FBG raised $6 mil from internal holders, then brought in additional $21 mil, incl $18 mil from Tata to be dispersed in tranches starting with initial $3 mil check. In Dec FBG flipped its stake for 51% gain, 42% internal rate of return. (Other holding, in Kemper, is very small, co has previously said.)

Bill likes several aspects of smaller bevcos. They have good margins (which doesn't always mean they operate at a profit). They have organic go-to-market strategy that can see brand like Zico Coconut Water patiently seed influencer channel like NY yoga studios. Social media seems more effective for intriguing smaller brands. And in contrast to corporate-owned brands, many are aligned with contemporary consumer values like local, authentic, artisanal. On other side of ledger he cited familiar risks: crowded, competitive markets, entrepreneurs' lack of bev-specific experience, significant funding gaps (between $300-500K from family/friends and first institutional round), limited distribution choices. Of course, that's where FBG can help.

What does it look for in prospective investment? Focused, frugal, flexible management. Capital structure in which investors add value; otherwise it's just a hassle dealing with them. Highly differentiated product, right branding/marketing.

Sale multiples at exit? "Huge disparity," said Bill. Often not based on ebitda but topline. Glaceau (Vitaminwater) commanded 13x topline from Coke but more recent deals have been in 3x realm. Even that 3-5x range that he expects to see "is still pretty rich." On craft beer side, Anheuser-Busch takeout of Goose Island brought 1.5x revenues. And buyouts to distributors? Traditionally been in range of $1 per case for trailing 12 months, "but it's all what you negotiate," advised Joth. "A lot just depends on the size of the brand."

Just-Drinks.com

Thursday, 12 May 2011

US: First Beverage Group hires managing partner

INSIGHTS Express

Monday, 9 May 2011

First Bev Hiring Spree Continues; Adds Sr Investment Banker; Deals

First Bev Group has made a series of interesting hires this spring including former New Belgium exec JB Shireman, Nantucket Nectars founder Tom First and now investment banker Townsend Ziebold, who joins as managing partner.  Townsend, with over 25 yrs in investment banking, many of those with the late legendary Bruce Wasserstein, "has completed over $40 billion in mergers and acquisitions advisory assignments, and as a principal investor over 30 private equity investments."  Townsend also served as non-exec chairman of Imax.   First Bev obviously gearing up for some deal-making in bevs and/or beer, so will be very interesting to watch its development.

Modern Brewery Age

Thursday, 28 April 2011

J.B. Shireman Joins First Beverage Group

First Beverage Group of Los Angeles, CA, has announced that JB Shireman has joined the company as Vice President of The Beverage Intelligence Group.

Mr. Shireman, who is widely known in the beer industry from his time with the New Belgium Brewing Co., is considered an expert on the operations and culture of craft beer companies.

"A key strength of our business is our ability to attract and retain the industry's best talent," said Joth Ricci, Chief Operating Officer of First Beverage Group. "Bill Anderson and I have worked with JB in various capacities over the last 10 years, so it seemed a natural fit to ask him to join our team. JB's expertise in craft beer brings yet another dimension of value to our current and potential clients, whether they seek to launch a new craft brand, grow market share, or develop new business in that category. We are very happy to welcome him on board."

Shireman's experience in the beer industry spans 24 years. He is the former Executive Vice President of Sales and Marketing for New Belgium Brewing, the makers of Fat Tire Ale. He is also the founder and owner of the Bar Double S Tavern in LaPorte, Colorado, and of Craftcentric Consulting, which provides full-service consultation to beverage distributors and suppliers.

"I have worked with Bill Anderson since my early days at New Belgium and I have been continually impressed over the years by the depth of experience and diversity of the team he has assembled at First Beverage," said Mr. Shireman. "I am honored to have been asked to be a part of this company."

First Beverage said Mr. Shireman will be based in Ft. Collins, Colorado.

BevNET.com

Tuesday, 26 April 2011

BevNET: JB Shireman Joins First Beverage Group

First Beverage Group today announced that JB Shireman has joined the company as Vice President of The Beverage Intelligence Group. Shireman, who is widely known in the beverage industry as a leading expert in the operations and culture of craft beer companies, brings his specialized knowledge to the growing team of experts at First Beverage.

"A key strength of our business is our ability to attract and retain the industry's best talent," said Joth Ricci, Chief Operating Officer of First Beverage Group. "Bill Anderson and I have worked with JB in various capacities over the last 10 years, so it seemed a natural fit to ask him to join our team. JB's expertise in craft beer brings yet another dimension of value to our current and potential clients, whether they seek to launch a new craft brand, grow market share, or develop new business in that category. We are very happy to welcome him on board."

Shireman's experience in the beer industry spans 24 years. He is the former Executive Vice President of Sales and Marketing for New Belgium Brewing, the makers of Fat Tire Ale. He is also the founder and owner of the Bar Double S Tavern in LaPorte, Colorado, and of Craftcentric Consulting, which provides full-service consultation to beverage distributors and suppliers. He attended Colorado State University, where he majored in zoology and minored in geology. Shireman is also a freelance writer for The Drake and Fish & Fly magazines and is a regular Contributor to Craft Brew News and Beer Business Daily.

"I have worked with Bill Anderson since my early days at New Belgium and I have been continually impressed over the years by the depth of experience and diversity of the team he has assembled at First Beverage," said Shireman. "I am honored to have been asked to be a part of it."

Shireman will be based in Ft. Collins, CO and can be reached at jb@firstbev.com.

Craft Business Daily

Monday, 25 April 2011

JB Shireman Has Joined First Beverage Group

JB Shireman has joined First Beverage Group as Veep of The Beverage Intelligence Group, according to a company announcement. Shireman was formerly the EVP of sales and marketing for New Belgium. 

Beverage Business INSIGHTS

Wednesday, 20 April 2011

With O Water Stabilized, Founder First Joins First Beverage Group

Tom First, who says his O Water is now cash-flow-positive after being folded into investor/distributor Polar Beverage (BBI, Apr 12), has moved on to role as co-managing dir of First Beverage Group, where he will be involved in both Beverage Intelligence Group consulting arm and First Beverage Ventures vc arm seeking investments in early-stage bevcos. Tom, whose first entrepreneurial fling involved co-creating Nantucket Nectars fresh out of school, takes role among brain trust that includes First Beverage founder Bill Anderson and distribution vet Joth Ricci. At O Water, sales vp Chris Kinch will succeed First in running O Water.

BEVNet.com

Monday, 18 April 2011

First and First: Nantucket Nectars Co-Founder Joins First Beverage Group

Despite the common names, there hasn't been any relationship between the employer and its newest employee until now; but in a move that adds a seasoned beverage company CEO to a growing beverage consulting and financing group, owater CEO Tom First has joined First Beverage Group as a co-managing director.

First, who is best known for starting - and eventually selling - new age beverage company Nantucket Nectars with friend Tom Scott after the pair graduated from Brown University, last year completed a deal to partner his latest beverage venture, owater, with Polar Beverages.  First, who currently sits on the boards of beverage companies Sweet Leaf Tea and Code Blue, will work with the Los Angeles-based First Beverage Group from an office in his hometown of Concord, Mass. - right underneath the former owater offices.

"I'm excited to do something different," First said. "Throughout all of my years at owater, I've been involved in so many food and beverage businesses, locally here and nationally, and what I most enjoy is the challenge of building the brands so much from the ground up. It's the most intoxicating part of the whole business, seeing something come to life and go into the market."

Longtime First associate Chris Kinch, the VP of Sales at owater, will become the president of owater. First will remain as the brand's Chairman of the Board and be involved in major decisions, he said. Since acquiring an undisclosed stake in owater, Polar, already the brand's largest distributor, has taken over much of the production for the company while allowing the owater team to focus on sales and marketing. First started owater in 2004, weathering a weak economy and a functional water category that was left in disarray following the sale of glaceau, to find stability with the bottler last year. It's an experience First said will help him in his new role.

"It's been a ride, an up-and-down ride through a lot of different things in the industy," First said of his experience as a CEO. "Whether you have a huge success, as we did with Nantucket Nectars… or a very moderate success during a difficult course of events, as we have had with owater, you learn an immense amount. Sometimes the more difficult experience allows you to learn a lot more - when you have such a successful exit, it sometimes hides a lot of the mistakes or challenges of a business."

Many of the challenges that early entrepreneurial brands face - access to distribution and production facilities, funding and finding good advice - are the kinds of issues that First Beverage Group will seek to solve via infusions of cash or consulting services. Founded by beverage investor and former distributor Bill Anderson, First Beverage was originally focused on real estate transactions. But the company has been much more active on the brand side of the business for the past two years, adding former Jones Soda CEO Joth Ricci and, more recently, talent like First and former Starbucks executive Josh Groff and investing in companies like Activate Drinks and Thomas Kemper Soda.

"Tom First is the consummate beverage entrepreneur who knows how to grow great brands from the ground up," said Anderson, First Beverage's Chairman & CEO, in a press release. "Tom's passion for the industry and knowledge of authentic brand development and distribution strategy will provide an unparalleled pipeline of ideas and innovation to our clients. I could not be more pleased to have him as a partner."

That pipeline is something that First pointed to as part of his mission with the new investment group, he said, adding that he already has informal and formal ties to food and beverage companies on both the local and national level. He said much of the good that his new organization can provide may come with helping entrepreneurs avoid the kinds of mistakes with their brands early on that can hamstring them as they try to grow.

"One of the things you want to do is avoid making the big mistakes early on that put you in a position of having to fix things, rather than build your brand in a certain way," he said. "I've spent my whole career working with entrepreneurs and brand builders, I've sat on boards and invested in them, and I feel like it's going to be exciting to do it in a formal role."

INSIGHTS Express

Monday, 4 April 2011

Join Us at the 2011 Beer Insights Spring Conference May 15-16 in Chicago

The 2011 Beer Insights Spring Conference will be jampacked with unique presentations and relevant content that will give you insights about how to make the most of the resurgence in hi-end beer and bevs.  You won't want to miss this unique 1-day program May 15-16 at the Ritz Carlton in Chicago.   The program includes Crown president Bill Hackett, Tenth and Blake president Tom Cardella, Monster Energy president Mark Hall, Goose Island founder John Hall, Dogfish Head founder Sam Calagione, consultant Bump Williams and much more.  Bump will moderate a panel of craft brewers and a key retailer delving into that hot segment.  We've also got a panel exploring in-depth what's happening in the critical on-premise channel.  And we've just added First Beverage Group's Bill Anderson and Joth Ricci who will talk about beer and beverage incubation strategies, including their successful investment in Activate and its sale to Tata. 

Beverage Business INSIGHTS

Monday, 7 March 2011

First Beverage Adds Starbucks and Jones Vet Groff

Josh now is back on same team as Joth. Joth Ricci, coo of First Beverage Group's recently formed Beverage Intelligence Group consulting unit, has recruited his former Jones Soda colleague, Josh Groff, to serve as an associate. During Ricci's stint as Jones Soda ceo, Groff had served as brand mgr, where he rebranded core soda line and aided during retrenching period of sku rationalization, reporting directly to Ricci. He'd moved from there to product mgr job at Starbucks, where he launched Via instant-coffee line into food, drug, mass and club channels. Earlier in career he worked at Miller Brewing and Burton Snowboards. Bev Intelligence Group is part of broader enterprise founded by Bill Anderson that's invested in the brands Activate and Thomas Kemper Sodas and also recently hatched bev incubator fund

Beer Business Daily

Wednesday, 23 February 2011

Advisor On Recent Big Distributor Valuations: Can It Happen to You? Depends

That's what First Beverage Financial managing director John O'Connor said about two recent southeast distributor deals in Florida and North Carolina (likely talking about the Reyes purchase of Schenck in the blue-silver system, and R.A. Jeffrey's purchase of Harris in the red system).   "Chatter on the street was that the prices were extraordinarily high relative to what the market has seen in the past," writes John.  In fact we've heard north of $250 million for Schenck's 13 million cases or +$19.20 a case, although prices weren't disclosed.   John notes that these rumors don't "help the often discussed 'price gap' between buyers and sellers that has helped stall consolidation in the beer distribution network."  Indeed, now everybody wants that price.   

But John points out that these deals were extraordinary for several reasons.  "You have two well-capitalized buyers seemingly stepped up and met the seller's price" due to "synergistic benefits from implementing a different, likely more profitable, operating model" plus "significant strategic benefits for owning that particular territory. Maybe they wanted to plant a flag that would lead to greater growth opportunities down the road," ie Reyes establishing a beachhead in Florida.

Regardless of the sky high prices paid, John points out that the one thing we do know is that "they didn't buy the past performance of the business; they bought the cash flows they think they will extract going forward. Figuring in these benefits to the buyers, you might have a different perspective of those big numbers. By the way, to the sellers, I say CONGRATS, your stars were seemingly aligned."

But for the rest of distributors out there, the " knight in shining armor" may or may not be out there for you, says John.   "Don't get me wrong, there is in almost every circumstance an optimal buyer. You have to bear in mind, however, that you may not be in the sexiest of locations. As such, the strategic premium might not be available to you." 

So how do you find that premium buyer?  "You may need to cast a wider net and you may want assistance in this process," says John, making the plug.  Bottom line:  "Find out what your business is really worth and more importantly, figure out how much your business is worth to someone else," and "do your homework."  (Ed. Note:  First Beverage's Bill Anderson will be speaking at our Beer Summit in two short weeks in Miami. See ya there).

Beer Business Daily

Monday, 31 January 2011

First Beverage Group Fronts New Divisions

The top dogs of First Beverage Group shared some new concretes about their two new divisions: an incubator fund and Beverage Intelligence Group consulting arm that are slated to ramp up in 2011.  

BILL TALKS INVESTMENT TARGETS. Bill Anderson said the team has looked at over 300 brands in non-alcoholic and beverage categories in the last year and a half for its new mid-level incubator fund to provide capital to beverage cos. Some of the things they're looking for include a hard-working team with a lean, well-thought-out business and distribution plan (FBG's forte) that is highly differentiated in its segment. "We're obviously very concerned with brands that talk about being in all 50 states overnight," he said. They're still developing a team that can provide financial management services. The plan is to launch more officially in mid-to-late February. 

There will be plenty of cross-over between the new Beverage Intelligence Group consulting services and the investing arm. But brands that want to tap BIG from the outside will be offered  distribution network strategies, distribution agreement drafting, introduction to other industry resources and marketing and social media expertise.  Joth Ricci was just promoted to COO and head of the two newer divisions.

INTEL. Joth and Bill offered some interesting insights into the business. "People are aware there's going to be a tremendous growth in industry," Bill said. "If craft can continue to grab 8 - 10 more points of total market share over the next 10 to 15 years, we're talking about a lot of dollars at stake. So I think you'll see a tremendous amount of investors continuing to circle and trying to engage in craft beer founders."  What he doesn't believe will happen are a ton of distributor consolidations. "Even if the suppliers want it, there is a shortage of new capital available to make these larger size transactions; and these families don't want to get outta the business," he said.

Joth agrees about this year's potential for growth, especially in craft. But he offers some caveats informed from his time with distributor Columbia, which experienced a 30% share of craft beer in some of its Northwest markets. "This is a sell that's about having it in the right accounts in the right place, and that's a big challenge: it takes SKU and category management. [Distributors] also need to put some investment into training their people how to do it and manage the different priorities they have," he said

Beverage Business INSIGHTS

Tuesday, 25 January 2011

Activate Heads into Coast Brands Network to Boost C-Store Coverage; Possible 'Anchor' Brand?

Activate and its early investors at First Beverage Group present themselves as savvy operators long familiar with nuts and bolts of building distribution. That makes brand's move into Coast Brands Group network significant endorsement of intriguing idea, which weaves together established distributors into net that promises in-depth retail coverage throughout West Coast states and beyond. Both Activate and First Beverage confirmed move, initially for convenience-and-gas and indie stores on West Coast, with discussions proceeding about subsequent move into Southwest and Southeast regions being assembled by Coast. "Great brand with a great future," Coast founder Bob Groux said of newest client. "It proves we're even a value for them, even though they've got their own people" and count Southern Calif as core territory. To date Coast's clients either have been publicly traded brands Celsius and New Leaf, with pressure to boost topline quickly in order to bring in new resources, or smaller plays like Oh Yeah and Her. By contrast, Activate isn't lacking for resources on heels of big investment by India's Tata and has been adhering to deliberate growth strategy. Recall that First Beverage was launched by beer-distribution vet Bill Anderson, abetted operationally by former Columbia Distributing gm Joth Ricci, and its Activate unit is run by distribution vet Dan Holland as prexy. "I believe Bob has a good foundation of people and a real good go-to-market model," Dan told BBI. "I believe Activate can be a huge 'anchor' brand for Coast and a possible further relationship with Coast is a strong possibility."

Beverage Business INSIGHTS

Friday, 21 January 2011

Ricci Takes Greater Hands-On Role at First Beverage

First Beverage Group has broadened responsibilities of Joth Ricci, naming him to post of coo with greater day-to-day involvement in overseeing its portfolio cos Activate and Thomas Kemper and building its newly launched bev-incubator fund and Beverage Intelligence Group consulting unit. Joth, who came in as managing dir of operations following departure from prexy/ceo post at Jones Soda, also brings hands-on distribution experience from earlier tenure at Columbia Distributing, for "unique understanding of the importance of distribution strategies, retail execution and brand development," said First Beverage founder/ceo Bill Anderson in announcing move.

Beer Business Daily

Friday, 21 January 2011

RICCI HEADING NEW PROJECTS AT FIRST BEVERAGE

First Beverage Group has named Columbia Distributing Company veteran Joth Ricci its new COO. Joth, who was Jones Soda chief before joining First Beverage last April, was most recently managing director of operations for FBG. Recently the company has steered itself toward more strategic action, investing in Thomas Kemper Soda Co. last fall (whose distribution subsequently aligned with Bud houses in California) and getting into the beverage consulting business in December. Joth's new gig will focus on this new venture, called Beverage Intelligence Group, as well as its emerging brands incubator fund. 

Drinks Business Review

Tuesday, 4 January 2011

Thomas Kemper unveils new stevia-sweetened zero-calorie natural soda

Thomas Kemper Soda, a maker of premium craft brewed soda in Oregon, has introduced new Naturally Diet Soda, which is sweetened with stevia and boasts zero calories, zero sugar and zero net carbs.

The company claims that Naturally Diet Soda contains no artificial sweeteners or colors, and is also low in sodium and gluten free.

Thomas Kemper Naturally Diet Soda comes in three flavors - TK Cola; Citrus Bliss - a combination of grapefruit, lemon, and lime with subtle spice notes; and Berry Passionate - a blend of berries and passion fruit.

Launching in January, Thomas Kemper Naturally Diet Soda will initially be available in retail grocers and natural foods stores in the western US as well as most Whole Foods Markets nationally. Plans are to expand to mid west and east coast markets by the end of 2011.

Thomas Kemper Soda Co is a privately-owned company that produces different varieties of craft-brewed soda.

The company's products are available at grocery stores, natural foods markets, finer retailers, and restaurants throughout the Western US. There are plans to increase product availability across the rest of the US and Canada.

Beverage Business INSIGHTS

Thursday, 30 December 2010

BEV DROPLETS: Tata Comes Through with More Capital for Activate

First Beverage Group said that India's Tata Group has acquired a majority of First Beverage's shares in functional water player Activate. No specific $$ amount was given. Move had been expected after Tata committed to $21 mil in growth capital for LA-based co, run by newly elevated ceo Dan Holland. News came as reports from India, citing slowing growth in global tea demand and rising prices, have been speculating that Tata will accelerate its diversification into other food/bev plays. Speaking of Activate investment, Tata Global Beverages ceo Peter Unsworth said, "We have ambitious growth plans and a vision to become the leader in the 'good for you' beverage sector. This investment is a further step on our strategic journey to bring brands and products to consumers that meet their health and wellness, convenience and sustainability needs"

Beverage Business INSIGHTS

Thursday, 16 December 2010

DISTRIBUTION: KEMPER SODAS CONSOLIDATES NETWORK IN LA, NORTHERN CALIF

Thomas Kemper Sodas continues to refine its distribution map, now consolidating its LA territory with Haralambos Beverage while aligning primarily with Anheuser-Busch houses in Northern Calif. Haralambos gets brand that had been served by now-defunct Prestige and by Energized. In NorCal, brand will exit DBI on Jan 1 in favor of Bud houses like Matagrano in SF and ME Fox in San Jose, as well as non-Bud house Saccani in Sacramento. As reported, brand earlier exited giant Columbia Distributing in Wash/Ore, in belief it was important to get brand into smaller shops that might place more focus on key non-grocery accounts (BBI, Oct 5). It's realigning network as it preps push behind new stevia-sweetened canned line, too (BBI, Dec 14).

Beverage Business INSIGHTS

Thursday, 16 December 2010

BEVNET LIVE: SLOW BUILD AND CAPITAL EFFICIENCY ARE BYWORDS IN TODAY'S CONSTRAINED ENVIRONMENT

Recently concluded BevNet Live conference, in focusing on entrepreneurial end of bev biz, is naturally ebullient setting. But even the cockeyed optimists these days seem to be reciting go-slow mantra, arguing it's important to grow region by region, channel by channel, rather than undertaking capital-burning landgrabs in financial environment still marked by austerity. "No shortcuts," warned former Coke exec Udaiyan Jatar, now running Atlanta-based consultancy Blue Earth Network, in typical remark from podium. "Those who take a slow, organic route often are greater successes."

Certainly, those representing capital side were emphatic on that point. There's more money than ever before out there, assured Partnership Capital Growth Advisors' Brent Knudsen, "but people have gotten really smart and profitability really does matter," regardless of economic environment. First Beverage Capital's Bill Anderson offered 2 key lessons. First, "you can't spend your way to prosperity." Don't fall for ruse that ebidta doesn't matter, that it's all about growth. Second, Bill wants to see "comprehensive, well-thought-out distribution plan." That seldom means national landgrab - more likely "own your (core) market and go deep. We're not a big fan of going thin and wide." First Beverage's key bev investment, Activate, tho well funded, has adopted region-by-region approach that only has brand in western states so far. Go-slow approach didn't stop India's Tata from making significant commitment a few weeks ago.

Beverage Business INSIGHTS

Thursday, 9 December 2010

FIRST BEVERAGE GROUP SETS UP INCUBATOR FUND, MOVES INTO CONSULTING

First Beverage Capital, whose profile just rose dramatically when core investment Activate drew substantial commitment from Tata Group, is ready to think small, too: it's hanging out shingle of bev-incubation fund that will make investments from $250K to $1.5 mil in promising bev concepts, providing bridge between angel level and private-equity shops that typically want to deploy $3 mil or more. And to better capitalize on distribution-centric focus - issue cited by nearly every BevNet speaker as new-brand bottleneck - co also is venturing into consulting with The Beverage Intelligence Group, with beer wholesalers looking to move into NAs among prospective clients. Here are details offered to BevNet Live crowd by First Beverage chmn/ceo Bill Anderson:

First Beverage Incubation Launches in Jan Unit will move into operation in Jan - don't send plans quite yet, Bill pleaded to audience filled with capital-starved early-stage entrepreneurs. It aims to fill problematic gap between friends/family and angel investors, at small end, and institutional investors who typically need to deploy capital in multimillion-dollar chunks. Fund is starting with $10 mil raised from current and former distributors and will be seeking 10-15 targets to receive equity checks in $250K to $1.5 mil range. Fund aims to address situation of founders who may have started with $300K from parents but find themselves unable to land institutional round on favorable terms, just as they're seeing encouraging proof of concept. It also will seek to employ its industry expertise to help startups operate more efficiently, say by encouraging them to share back-office functions.

Consulting Unit Will Emphasize Distribution as Strategic Issue Beverage Intelligence Group launched 3 mos ago and currently numbers 5 unidentified clients. Unit also draws on recently announced alliance with Bump Williams Consulting, and has distribution-centric focus, addressing key strategic issue that, as Bill described it, too often gets short shrift from early-stage entrepreneurs. In acceding to request to carry brand by 1 distrib, for instance, they may not realize that it carries implications for markets across country - say, if same family operates houses elsewhere.

First Beverage Capital Background Tho First Beverage Capital is still relatively unproven in segment, over 16 mos of its existence so far it's perused 200+ biz plans and held face-to-face meetings with 60 entrepreneurs, giving it broad insight into bev sector. Its first investment was cap-activated Activate line, new twist (literally) on enhanced waters that's drawn lotta interest. Co recently helped with $6 mil round that included $3 mil from Indian tea giant Tata, which made follow-on commitment of $15 mil more. It also has taken stake in Thomas Kemper Sodas. It's also active in alc sector. Why so few investments so far? "A number of not-so-great business plans" out there, replied Anderson. He likes to see sound management team, differentiated product and well-thought-out distribution plan, often based on nailing core region before expanding. "We're not a big fan of going thin and wide," Bill observed. Certainly, Activate has followed region-by-region plan, starting in LA.

In contrast to other PE shops working space, which may have broad consumer packaged goods focus, or at least segments like food/bev, pharma and services that can be grouped as "healthy lifestyle" subset, First Beverage only looks at bevs, with special emphasis on distribution issues. Brain trust includes execs who formerly had substantial distribution responsibility at Coors and Anheuser-Busch; tho it's lighter on NA vets, operations expert Joth Ricci was gm at multisector powerhouse Columbia Distributing and for a spell ran Jones Soda. Related operations within LA-based group include First Beverage Realty Partners and First Beverage Financial, which recently orchestrated sale of Southeastern wine/spirits distributor to McLane, potentially ushering in new chapter in convergence of NAs and alc bevs.

Beverage Business INSIGHTS

Tuesday, 26 October 2010

DONE DEAL: TATA LEADS GROUP PUTTIN' PLANNED $21 MIL INTO ACTIVATE BRAND; SIGNALS COMMITMENT OF INDIAN CONGLOMERATE TO RTD SECTOR IN NORTH AMERICA

Especially after its brief involvement in Glaceau, India's Tata Group has been on everyone's short list of likely strategic investors in cutting-edge RTD brands. But the investments haven't come, and at various times Tata execs have pointed to other markets, like Russia, as key overseas focus. Now shoe has finally dropped in US: Tata Global Beverages Ltd is leading group that's puttin' $6 mil into cap-activated Activate enhanced-water brand, with equity commitments for $15 mil more down the line, per announcement this morning that confirmed recent rumor of Tata's interest (BBI, Oct 15). Investment supports Tata's interest inN Amer while lending further credibility to rollout of brand that's been coveted by lotsa distributors. In fact, about 20% of newest money is coming from distrib side, sure sign they see potential in latest generation of enhanced water.

In announcement, LA-based Activate said Tata-led financing also includes vet bev investor James Berkeley, Citigroup exec who was investor in Glaceau, several distributors and such existing investors as Tornante Co and its founders Eisner family. Activate plans to use new money to continue methodical buildout of brand, which launched in LA via Haralambos Bev and to date is in just 7 western states via 28 distributors. Prexy Dan Holland, former wholesaler exec himself, said plan is to have western US covered by end of year, with next region for expansion still be to determined. Recall that earlier capital raise in Mar led by First Beverage Group, Tornante and other investors brought in $6 mil in Mar (BBI, May 6). Activate line was created by Anders Eisner, son of former Disney chief Michael Eisner, principal in Tornante, and Burke Eiteljorg. Besides eponymous flagship line it has added deionized water that vies in Smartwater space.

Dan told BBI that talks started about 2 mos ago as Tata looked for appropriate vehicle for strategic push into US. Co liked brand and what it had accomplished in 14 mos, as well as management team and First Beverage people. It had had dealings with Michael Eisner in past, and Dan was familiar figure to them from his earlier role on Glaceau distributor council, at time Tata held big stake. "It was relationship-driven and they enjoy our model," he said.

Tata made biggest splash on RTD side with investment in Glaceau, which it announced as long-term deal but quickly flipped to Coca-Cola when soft drink giant offered $4 bil for co. Tho Tata Global Beverages operates such familiar bev brands as Tetley Tea and Eight O'Clock Coffee, it has since stayed on sidelines on RTD side, with execs in India offering varying statements to Indian media over past year on where N Amer market ranks as priority. Activate deal suggests Tata is in fact determined to be significant player here.

In statement, Peter Unsworth, group ceo of Tata Global Beverages, said: "We have ambitious growth plans and a vision to become the leader in the 'good for you' beverage segment. This investment is the latest piece in our strategic journey to reach consumers in different ways and to help deliver sustainable hydration across the world." Bevs unit claims to be #2 tea supplier and has annual sales of roughly $1.5 bil.

Wine & Spirits Daily

Tuesday, 26 October 2010

BUFFETT STRIKES DEAL WITH HORIZON WINE & SPIRITS

WSD has learned that Warren Buffett's McLane Company (parent company is Berkshire Hathaway) has entered into an agreement to acquire Horizon Wine and Spirits in Tennessee, according to sources that asked to remain anonymous. It has operations in Nashville and Chattanooga, and is led by president and ceo Tommy Bernard. Sources tell us that Bill Anderson's First Beverage Group advised Horizon on the deal.

Calls and emails to Horizon were not immediately returned, but we understand that Horizon is in the process of notifying suppliers today. We have written about McLane a lot over the past week upon learning that the company has applied for a license in three states: Virginia, Florida andWashington. Sources have told us that McLane has applied for a license in every state where it has a warehouse, but we have not yet been able to confirm that.

So this makes Horizon the second company Buffett's McLane has acquired and the third state it has entered since March. Recall Buffett made history when he acquired Kahn Ventures, parent company of Empire Distributors in Georgia and North Carolina, in March.

So what is Buffett's long term goal? It seems plausible that he would like to set up a network of wine and spirits distributors across the country, and compete with the big boys. Right now he is in the southeast with Tennessee, Georgia and North Carolina, and we know he has a temporary distributor license in Florida. We have not been able to confirm if he has a license in South Carolina and Alabama, which are the other surrounding states. Are other southeast states next? And is he looking to expand nationwide?

We will attempt to answer these questions as the story develops...

Beer Business Daily

Wednesday, 13 October 2010

FIRST BEVERAGE MAKES INVESTMENT IN THOMAS KEMPER SODA CO.

First Beverage Group announced that the company has made an investment in the Thomas Kemper Soda Company. In addition, Joth Ricci, Managing Director of Operations of First Beverage Capital, will join Thomas Kemper's Board of Directors. Ricci is the former President and Chief Executive Officer of Jones Soda Company and the former general manager of Columbia Distributing.

"The First Beverage team believes strongly in the opportunities ahead for Thomas Kemper. Their new product plans along with regional expansion provide a solid blueprint for the future," said chief Bill Anderson. "Our team is impressed by the existing product line, including the Spiced Ginger Ale, Blood Orange, and other natural flavors the company introduced over the past summer and we look forward to helping them to expand their portfolio and distribution footprint."

Beer Marketer's Insights

Tuesday, 12 October 2010

NBWA CONVENTION: COSTCO, CRAFT AND CARE IN THE AIR; A "BITCHY BUNCH OF UNHAPPY PEOPLE"?

With volume tracking down for 2d-straight year and unresolved tensions between NBWA and suppliers over CARE Act, plus Costco-driven attempt to privatize/deregulate in Wash, not exactly a celebratory mood in Chi at this yr's NBWA convention. Once again, NBWA leaders focused many remarks from big stage on threats to state-based regulation, assn's response via CARE Act and saddling up to battle Costco. Warnings about threats to status quo also marked several education seminars and even Jim Koch's talk to his distribs where he suggested possibility of "Armageddon" down road for current 3-tier system. We heard plenty of comments reflecting sense of anxiety/distrust between distribs and suppliers. One big exception: love affair with craft brews continues to blossom, at least on sales front. Every distrib we talked to rockin' with craft. And even while no big brewer or importer spoke at mtg, craft took center stage for 1 panel and subject of well-attended seminar.

Challenges "escalated" in 2010, prexy Craig Purser said, with tuff biz environment and "significant threats" to 3-tier and state regulation via litigation, ballot initiative and attempts to de-fund state ABCs. NBWA is "last line of defense" and "making a difference" against these threats, said Craig. CARE Act provides oppy to educate Congress (and others) about state-based regulation, 3-tier system and why separation of tiers "works for the public interest." (See more on CARE below.) That's also reflected in "strange bedfellows" that joined Protect Communities coalition to fight Costco, including distribs, brewers, law enforcement, teachers, local govts, labor, alcohol control advocates and health groups. Incoming chairman Larry Del Papa called current threats "the most serious since the pre-Prohibition" era. If deregulators prevail, he warned, "it could be devastating." Regarding NBWA-BI/BA relations, Larry by turns combative and conciliatory. Tho some charged NBWA's portrayal of challenges "unfounded, contrived" or even "manufactured to energize the membership," Wash initiative shows "NBWA'a analysis" was "spot on." Larry made no apologies for NBWA advancing a "distributor-focused agenda," and noted NBWA "did not seek permission to advance distributor interests." At same time, Larry said "strengthening relationships with brewers" one of his 2 key goals for 2011. (Other is expanding advocacy.) "Significant trust gap" between the 2 "must be narrowed." Even while many dwell on "poor state of relations," Larry thinks NBWA, BI and BA have "better knowledge of each other than ever" and know each others' "strength and resolve." Distribs can be loyal to NBWA and to brewers, and he vowed that in Wash, "the industry will prevail together."

Elsewhere, Boston Beer's Jim Koch made some provocative comments to his distribs that fanned flames of tension between big brewers and distribs. More likely than not, Jim believes, AB InBev will buy/merge with either Pepsi or Coke down road, which will provide alternative route to market and threaten 3-tier system of independent beer wholesalers so important to Boston and other craft brewers. In fact, Jim advised distribs to pass state laws to bar big brewer branches in 50% of US where they're allowed -- while carving out exception so small brewers can self-distribute -- and do it as soon as they can. From much different angle, consultant Joe Thompson warned that "status quo will be impossible to maintain much longer" as distribs gotta decide whether they want to be "logistics systems, brand builders or something in between." Joe believes biz "gravitating too much to logistics" and too far away from brand building. In another seminar, First Beverage Capital's Bill Anderson cited "game-changing" distrib transactions that alter status quo, including emergence of private equity financing (BDT Capital recent buy of 70% of City Bev in Chi) and McLane's (a subsidiary of Warren Buffett's Berkshire Hathaway) as significant new sources of financing deals. Suppliers can't get consolidation they want with "existing capital structure," said Bill, so "new waves of capital" coming in. With new routes to mkt, new "waves of capital," soft sales, deregulation, and brewer/supplier disagreements, no wonder Larry said beer biz execs seem these days to be a "very bitchy bunch of unhappy people." Craig said too that beer distribs "feel like they've been going through hell" lately. Yet as both acknowledged, beer biz still a great place to be.

Beverage Business INSIGHTS

Tuesday, 12 October 2010

FIRST BEVERAGE MAKES ANOTHER FORAY INTO NAS, THIS TIME WITH THOMAS KEMPER SODAS

First Beverage, investment shop run by veteran beer man Bill Anderson, has made another investment in NA bev space, taking small stake in Thomas Kemper Soda Co of Portland, Ore. As part of deal, First Beverage's managing dir of operations, Joth Ricci, who's based in Ore and vet of that state's distribution scene, will take board seat in co that was bought from struggling Pyramid Brewing by investor group several years ago. Prexy/ceo Bill Germano told BBI investment co was intrigued by recently launched natural offering, Purely Natural Soda, that's gotten off to good start and become main vehicle for expansion outside West. First Bev's other NA play is Activate, much buzzed-about enhanced-water brand that employs twist-cap to dispense nutrients into water at time of consumption.

"For us, we consider Thomas Kemper to be an emerging brand on a national scale, with opportunities with its (current) portfolio and new products and geography," Joth told BBI yesterday. "It's attractive to get in now." He said First Bev admires both co's current management and the ownership group (which includes Columbia Distributing, where Joth served as gm earlier in career). Key investor is Adventure Funds, whose principal, Tal Johnson, earlier ran Tazo Tea, now part of Starbucks, and was part of investment group that bought into Columbia Distributing.

Investment comes as Kemper actually has decided to exit Columbia in favor of 6 smaller houses, mainly Bud shops, that might be offer brand greater focus in non-grocery accounts (BBI, Oct 5). Over past year, Kemper has pulled back some on national geographic footprint on grounds that most regions are well-served with local entries, making its new Purely Natural entry its main vehicle for national presence, via the natural-foods and gourmet channel. It's taken more gourmet approach, with flavors like Blood Orange and Spiced Ginger Ale.

Beer Business Daily

Thursday, 7 October 2010

"BLACK SWAN" EVENTS CHANGING LANDSCAPE FOR DISTRIBUTOR ACQUISITION, SAYS ANDERSON

We are "seeing new capital enter the industry and new players" which is bringing a "public company mentality" to the industry versus a "family business mentality," said First Beverage Capital chief Bill Anderson in an NBWA seminar. It's becoming "less about relationships" with a "greater emphasis on financial metrics and performance."

"Times are changing radically...it is more about numbers than it ever has been," says Bill. Pointing out three deals that are unusual, "black swan" type transactions:

1. Merchant banker Byron Trott of BDT Capital buying the 70% stake in City Beverage [first reported by BBD 09-17-10]
2. Sioux City Iowa Coca-Cola bottler Chesterman Co.'s pending deal to buy two Iowa A-B distributors, Chuck Whittenburg Distributors in Spenser IA and Kabrick Distributing of Britt IA. [first reported BBD 08-24-10].
3. Warren Buffett's McLane buying wine and spirits house Empire Distributing in Georgia. [first reported WSD 03-04-10]

These are "game changing events," says Bill, because each brings fresh new types of capital to beer distribution.

Bill notes that black swan events "have a higher impact because they were never expected" He points out that ten years ago nobody would have thought the Busch family would leave the US beer business, and now distributors in Chicago are competing against Byron Trott, who will "bring a different mentality to the business."

The Trott deal is a "gateway" to how the mentality will be in the future. Suppliers still want consolidation, so "there will have to be new financial capital" in the future. Private equity firms will give a 10-15 year window "that will make suppliers breath easier," rather than a short 3-5 year flip. Another wrinkle: Bill thinks there could be public ownership in the distributor tier in the future

So in these times where big money capital is entering the business, what to do? "We're not telling people to sell," adds Bill, "but keep your eyes open to game changing events." In these more complicated times, bringing in an outside manager "can be very effective mediator on your family business" and help mentor the second and third generations. They're "not that expensive" and can work with the new generations "better than anyone in your organization." "Prove you are the next generation wholesaler."

INSIGHTS Express

Wednesday, 6 October 2010

THREE GAME-CHANGING DISTRIB TRANSACTIONS, SAYS BILL ANDERSON; "NEW WAVES OF CAPITAL"COMIN'

So far in 2010, 3 game-changing distributor transactions announced, says First Bev Capital's Bill Anderson at NBWA convention. The first, Ia Coke bottler Chesterman's acquisition of 2 AB distribs, admittedly not approved and Bill didn't even really deal with its implications. But it would be without any known precedent in AB system, we believe. The 2d transaction: McLane's (a division of Berkshire Hathaway, Warren Buffett's co) bought Ga wine and spirits distrib Empire. Alc bev distribution "very attractive" to Warren, sez Bill (whose co advised sellers in the transaction) as "he loves things that are this stable." And the 3d game-changing transaction, according to Bill, is Byron Trott's BDT Capital purchase of 70% of Soave Enterprises City Bev in Chicago. Bill characterized this as a "black swan" event (as in the book of same name), that is, one far outside of normal expectations. For AB to buy 70% of City it didn't own or someone in AB distrib family to buy 70% or whole thing, or even Soave to have bought AB's 30%, all these would have been "reasonable expectations." But as a $2 bil private equity fund, BDT Capital enters this transaction with a "very different set of business strategies."

And so perhaps we are on cusp of change in distrib deal financing. "There can't be the amount of consolidation that suppliers want with the existing capital structure," sez Bill. The industry will need "new waves of capital to effectuate that change. Without a doubt, another wave of new money" will be coming in to beer biz. He talked of private equity funding that would have much longer-term timeframe and lower expectations of returns, dubbing that "private equity lite." There was also some discussion of the possibility (which some deemed a probability) of "public money" in distribution sector in next few years. Currently, AB and MC don't allow that. But of course, Warren Buffett's Berkshire Hathaway is a public company. It is very interesting how much his name keeps poppin' as a possibility these days. Tho Byron Trott is Buffett's "most beloved banker," word is he is not a participant in the City Bev transaction.

Beverage Business INSIGHTS

Wednesday, 19 May 2010

RICCI JOINS ACTIVATE BOARD

Joth Ricci, who in Apr moved from running Jones Soda Co to post as mgg dir of operations at investment shop First Beverage Capital, has been named to board of key First Bev holding, Activate Water marketer Rising Beverage Co. He joins First Beverage's Bill Anderson and Michael Wong on board. Joth, who earlier was gm at Columbia Distributing, joins Activate prexy Dan Hollander (ex-Mission and Haralambos) as wholesaler vet involved in rollout of brand that has positioned itself to channel as uncommonly wholesaler-friendly.

Beverage Business INSIGHTS

Thursday, 11 March 2010

JONES CEO RICCI LANDS AT FIRST BEVERAGE CAPITAL

Joth Ricci, who decided to move on from job as prexy/ceo of Jones Soda as co moves to close merger with Reed's Inc (BBI, Mar 9), is teaming up with entrepreneur Bill Anderson and his First Beverage Group's private equity div. A day after Tues announcement of Reed's/Jones merger plan, LA-based First Beverage said Ricci is signing on as managing dir of operations for unit, called First Beverage Capital, where he'll work with managing partner Michael Wong to oversee firm's portfolio cos, including Activate functional waters and spirits developer Altamar Group. "Joth's wealth of experience will be a tremendous addition to our team and our partners," said First Beverage chmn/ceo Anderson, referring to resume that includes serving as gm of giant Columbia Distributing in Portland, Ore, and earlier tenure in sales and marketing management slots at McNeil Consumer Healthcare/Johnson & Johnson.

Wine & Spirits Daily

Friday, 5 March 2010

MORE ON BUFFETT BUYING EMPIRE

As we first reported yesterday, a subsidiary of Warren Buffett's Berkshire Hathaway has struck a deal to purchase Atlanta-based Empire Distributing, which has operations in Georgia and North Carolina. Empire is owned by brothers David and Michael Kahn. That subsidiary is grocery distributor McLane's, worth $34 billion. Bill Anderson's First Beverage Group, including ex-GE Capital executive Sean McLaren, advised Empire on the deal.

McLane provides grocery and foodservice supplies for thousands of c-stores, mass merchants, drug stores, military locations and chain restaurants, with 38 distribution centers nationwide. Berkshire Hathaway purchased McLane from Wal-Mart in 2003 for $1.45 billion.

Ironically, the beer industry believed not too long ago that McLane would make an entrance and bypass franchise beer distributors. Turns out they had their eye on wine and spirits. So what now? We can only speculate the impact this will have on the industry but it seems unlikely Buffett will stop with Empire Distributing. Recall that Berkshire Hathaway also has $11 billion stake in Coke and used to have a large stake in Anheuser-Busch.

We told you yesterday that Buffett likely paid top dollar since Georgia is a franchise state. A law in Georgia caps acquisition based market share at 25% so it would seem that he can't buy too much more market share. However, there are indicators that the 25% law won't always be in place.

This deal could have sweeping implications for the wholesale wine and spirits business. Clearly McLane was smart to obtain their beachhead in a franchise state, where the suppliers are not able to fly. From that established and well-protected base, McLane can move into other regions. This isn't the last we've heard from them. What is unknown at press time is what the wine and spirits suppliers think of such a large public company buying into their distribution system.

What is also unclear is how much McLane, a logistics expert, will integrate Empire's operation into their own. McLane has 38 distribution centers, including one in Georgia and NC. It already services many of the same off-premise accounts and a few on-premise accounts. Will we see wine and spirits on McLane trucks? Time will tell.

As you can see, there are many unanswered questions which we will attempt to answer for you in the coming weeks. Stay tuned...

INSIGHTS Express

Friday, 5 March 2010

LAND OF THE GIANTS: MCLANE'S BUYING GA SPIRITS DISTRIB, EMPIRE

Fascinating somewhat leftfield development as distribution giant McLane's ($31 bil subsidiary of Warren Buffett's Berkshire Hathaway) has deal to buy Ga/NC spirits distrib Empire (also sells Boston Beer, Sierra among other beer brands). Gotta imagine this purchase is just the beginning. Unlikely a behemoth like McLane's got into spirits distribution for just this one deal alone. Bill Anderson's First Beverage Group, including ex-GE Capital exec Sean McLaren, served as advisor. Recall that Berkshire Hathaway also has $11 bil stake in Coke and formerly had big stake in AB. Entry of McLane's into alc bev distribution along with recent Coke deal to buy CCE represent sweeping changes on DSD distribution landscape. So Warren Buffet will be in alc bev distribution biz.

Wine & Spirits Daily

Thursday, 4 March 2010

BUZZ: BUFFETT BUYS EMPIRE

The streets are a'buzz with unconfirmed reports that legendary investor Warren Buffett, through a subsidiary owned by Berkshire Hathaway, has purchased wine and spirits distributor Empire Distributors. Representatives at Empire and Berkshire were unavailable after hours at press time.

If true, this could signal a new era in distribution in the industry with a new well-capitalized player. Empire likely is not the end, as Buffett looks to roll up the regional players or possibly go after the Big Kahuna, Southern Wine & Spirits. It's likely that Buffett paid top dollar since Georgia is a franchise state. Also, he can't buy too much more market share in Georgia as the state has capped acquisition based market share at 25%. However, this may be a beachhead to purchasing more wine and spirits wholesalers in other states. It will be interesting to see how the suppliers deal with a public company as historically spirits companies prefer privately held distributorships.

Buffett is no stranger to the alcohol beverage industry, once being among the largest shareholders of Anheuser-Busch. Stay tuned...

Beer Marketer's Insights

Wednesday, 12 August 2009

MONARCH'S $50 MIL WAREHOUSE AND CORPORATE HQ OPENS

Yep, $50 mil, perhaps a record for a new beer distrib's building (and way up from $35 mil originally announced, mainly because of Verticue system, INSIGHTS understands). Monarch, a 15-mil+ case MC distrib in Ind (run by NBWA chairman Phil Terry) has just opened its state-of-the-art 500,000 sq ft facility on 93 acres, which it's calling "the largest combined beer and wine center under one roof." Recall, new warehouse funded by First Bev Capital.

Beverage Business INSIGHTS

Tuesday, 4 August 2009

HOLLAND BUILDING DSD NET FOR ACTIVATE WITH LONGTIME DISTRIBUTOR'S PERSPECTIVE; CALIF, ARIZ AND HAWAII ARE INITIAL TARGETS

Activate Beverage prexy Dan Holland figures he's uniquely positioned to foster effective working relationship with demanding DSD distributors: after all, for more than 30 yrs, he was of that breed himself. As reported, Dan recently left role as vp/gm of Haralambos Beverage Co in LA to run brand launched by youthful entrepreneurs Anders Eisner and Burke Eiteljorg, in process reuniting with Bill Anderson, core Activate investor via his First Beverage Ventures for whose family's beer distributorships Holland had worked previous 27 yrs (BBI, Jul 1). So what does that perspective mean in practical terms? Holland says prospective distributors can count on Activate's maintaining 3 principles: best agreement in biz regarding buyouts, adequate feet on street to support brand, and equity opportunity for distributor partners. "It's my 1st shot on this side of the table, but hopefully my distributor experience will help," he said. Note that similar experience is unfolding on East Coast where former Big Geyser ceo Harold Baron has jumped to ceo spot pitching Beverage Innovation's Venga functional infusions to distribs (BBI, Jul 1). Activate, of course, is among flock of functional lines coming to market that drop active ingredients into liquid at time of use, for greater efficacy; interesting product proposition and substantial kitty have generated considerable buzz in trade.

In initial mos on job Holland has been scrambling to assemble comprehensive DSD network for Calif, Ariz and Hawaii by Labor Day, with Midwest markets like Ind and Ill likely next and then East Coast. In launch market, 4 counties of LA metro served by Haralambos Beverage, he's brought on 1 regional mgr and is seeking 2 more, each of whom will hire 3-5 area sales reps. Brand has entered upscale retailers like Bristol Farms, Gelson's and Henry's Market, and is being presented to major grocery chains. He's confident of bringing Paradise Beverage aboard in Hawaii shortly, and is readying presentations to distribs in northern Calif and Ariz. Recruited as sales dir is former Cadbury exec Joe McCoy, who'll be managing sales force that is planned to grow to 50+ by May, not counting East Coast. Production currently is at Chameleon Beverage in City of Commerce.

Dan readily acknowledges that 55 is somewhat advanced age to hang out shingle as entrepreneur for 1st time, but says he's relishing the hurly-burly. As for split with Haralambos Beverage owner Tony Haralambos, that was amicable, coming at time that distrib has had to sharply downsize after losing brands like Vitaminwater, Honest Tea, Muscle Milk and several beer brands during brands' transitions to new owners. Holland said he made case that he wasn't as crucial to operation right now as key sales execs. Besides, he joked, "Tony's a big investor (in Activate) - so I'm watching his money."

Beverage Business INSIGHTS

Wednesday, 1 July 2009

Beer Innovator Anderson Enters Emerging-Bevs Space via Stake in Activate; Vitamin-Enhanced Water Names Haralambos Vet Holland as Proxy as It Preps Expansion Beyond LA

Bill Anderson, familiar beer-world figure who's carved out rep as innovator on distributor-financing front, has just thrown his hat into emerging-bev ring via investment in Activate, vitamin-enhanced water co-launched by former Disney chief Michael Eisner's son Anders Eisner. Financing round of $3 mil is being made by Anders Eisner along with First Beverage Ventures subsidiary of Anderson's First Beverage Group, until now focused on warehouse sale-leaseback deals. Activate has brought in as prexy Dan Holland, former vp/gm at Haralambos Beverage and earlier a 27-yr vet of Mission Beverage distributorship owned by Anderson family. Investment "signifies a vote of confidence from a very well-respected firm in our industry," said Eisner's co-founder, Burke Eiteljorg. "That endorsement, combined with Dan's expertise, will be very helpful for us as we build relationships with distributors and retailers" as part of planned expansion. So far brand has only tested in LA, via Haralambos Beverage, whose owner Tony Haralambos is major investor. For next round, co plans to solicit investments from distributors, Bill told BBI. Activate, in functional and hydration sublines, uses cap-dispensing technology to discharge vitamins in powder form at point of consumption to avoid degradation on shelf. Functionals include Vitamin, Immunity, Antioxidant and Energy sku's, while Workout hydration line is offered in 4 flavors. Stevia-sweetened line contains just 5 calories per bottle. "It's hid in the lid" is slogan.

Capital Shop with Beverage-Only Focus, Including Brands and Distributors Beyond implications for brand, investment signals emergence of what could prove to be significant capital source in NA bevs. In interview with BBI this morning, Bill noted First Beverage Ventures is planning investments across all bev segments, alcoholic and NA, and is currently in "active talks" with several on both sides. Just 3 wks ago it quietly made 1st investment on alc side, in mid six figures, in Altamar Brands, developer of hi-end spirits brands established by Brown Forman vet W.L. Lyons Brown whose stable now includes Tequila Ocho, Kubler Absinthe and Right Gin. "We started with a simple assumption, that there are not enough friendly, knowledgeable investment sources" for emerging bev brands and distributorships, Bill said. "People kept saying the real estate component is great, but there really is a need for good advice and additional capital."

To date, Anderson's First Beverage Group (firstbev.com) has focused mainly on warehouse sale-leaseback deals involving beer distributors, and has also offered fresh thinking on potential of real=2 0estate investment trust (REIT) concept to help solve capital crunch for distributors. Co broadened purview in May with establishment of First Beverage Financial Advisors, led by former GE Capital bev banker Sean McLaren, to offer advice and mezzanine financing to cos in all bev segments. With First Beverage Ventures, "we're now a broader financial services firm dedicated to beverages and knowledgeable across financing, marketing and distribution," Anderson said.

In contrast to most other players, "we do nothing but the beverage business . . . We're not looking for distressed assets and not coming in as a controlling investor." Key advisors include former Coors strategy chief Rob Klugman, soft drink M&A specialist Marion Glover, beer distribution broker Joe Thompson and Holland. Thru Topa Equities, Anderson's family owns major beer houses Ace Beverage and Mission Beverage in Southern Calif and Paradise Beverage in Hawaii (tho Bill's businesses are separate). Unusually among major multi-location distribution operators, Topa's operations span Anheuser-Busch, Miller and Coors brands, plus wide range of imports and craft brews, allowing Bill to develop breadth of experience and "non-denominational" view of potential investments. He said Activate will discuss assignment of brand to Paradise but not to Ace or Mission, whose LA territories overlap Haralambos'. More details from co shortly on distribution plans, he promised.

Activate Investment Bill said First Ventures has been evaluating brand investments for past 9 mos with particular interest in functional waters that are healthy, low-cal and have clear point of differentiation. Co was "very intrigued" by Activate's patent-protected cap-dispensing technology, while brand's co-founders were seeking investor with expertise in distribution as they planned move beyond LA. He credited co-founders with doing "terrific job taking it this far." Partners will take "very distributor-centric approach" to future growth, incl looking to distribs for next capital round. No details beyond $3 mil total round from both parties.

Beer Business Daily

Wednesday, 6 May 2009

First Beverage Hires Ex-Ge Capital Exec, Launches New Division

Need money? You'll want to read on. You will no doubt recall Bill Anderson's firm, First Beverage, which has purchased several beer distributors' warehouses in a lease-back program to free up capital. Well, yesterday First Beverage announced that it has formed First Beverage Financial Advisors, to be led by former GE Capital beverage banker, Sean McLaren, as its president. The new financial advisory group will provide debt and M&A advisory services, as well as mezzanine financing to distributors.

"We formed First Beverage Financial Advisors in response to the increasing needs of beverage operators for a long-term, comprehensive financial partner with deep ties to the beverage industry," said Bill Anderson, chief of First Beverage. "Sean is one of the preeminent beverage bankers and he brings a deep knowledge of the industry and operator economics. We are both extremely excited to be able to provide this wider array of financial services to the leading operators in the beverage industry."

Beer Marketer's Insights

Monday, 9 February 2009

Finally, tho brewers have traditionally frowned at private equity cos owning distribs, concept may have to be revisited to make some of next wave of deals happen. In fact, First Beverage Capital, which so far has provided "real estate capital solutions" for distribs, "is exploring expanding into an equity financing program," Chairman Bill Anderson told INSIGHTS. This trend towards private equity "makes sense" sez source, noting strength of cash flow and "less risk" in beer compared to other bizzes. These private equity cos have a bunch of dough, which they're committed to spend. They're looking for safe investments in "recession resistant" industries with a "proven track record," said another. So lotsa angles, which may lead to some very interesting plays in 09 and beyond.

Beer Marketer's Insights

Wednesday, 7 January 2009

Save the Date, May 3-4; Insights 3D Consolidation Conference in Chicago

Speaking of Chi, that will be scene of upcoming CCIII, or Consolidation Conference III. Distributor consolidation is hottest topic in industry again. So Beer Marketer's INSIGHTS will host its 3d consolidation conference in downtown Chi in early May. It will be an intensive one-day conference focused on just one subject: beer distributor consolidation. We'll explore it from every angle, with lots of new insights, analysis and data. Confirmed speakers already include NBWA chairman Phil Terry, consultants Mike Mazzoni and Joe Thompson, First Bev Capital's Bill Anderson, and consultant Rob Klugman. We'll have a panel of supplier execs (MillerCoors participation confirmed), and a panel of financial execs. Stay tuned for more details, including registration, later this week.

Beer Business Daily

Monday, 15 September 2008

First Beverage Announces Huge Facility Deal with Monarch

Bill Anderson and his team at First Beverage announced that it has entered into an agreement with Monarch Beverage Company for the development of its new 530k square foot facility in Indianapolis. First Beverage will own the new facility, and Monarch and First Beverage have entered into a long term lease, which includes an option to expand the facility by an additional 400k square feet. The project is estimated at $35million, exclusive of the expansion option. Monarch chief Phil Terry said First Beverage was 'by far the best source of capital' for the facility, as the deal was 'extremely complex' with its tax incentive financing, says First Beverage.

Beer Marketer's Insights

Thursday, 11 September 2008

First Beverage Capital Partners with Monarch in $35 Mil Facility

Biggest deal yet for First Beverage Capital, which provides real estate capital to bev industry. It's developing 530,000 sq-foot-facility with Monarch Bev of Indiana, the 15+ mil-case megadistrib, headed up by incoming NBWA chairman Phil Terry. Monarch will lease from owner First Bev. Project "estimated at $35 million" and was "extremely complex," said First Bev. First Bev "was by far the best source of capital," said Phil. Last yr, First Bev bought $26 mil Crescent Crown facility in Phoenix. First Bev founded in 2005 by Bill Anderson. "This is our 12th deal and we're over $100 million in assets," Bill told INSIGHTS. "Phil's deal takes us to a

Beverage Industry Magazine

Friday, 1 February 2008

Marion B. Glover, president of Atlanta-based Glover Capital, Inc., has joined the Industry Advisory Council at First Beverage Capital, Los Angeles.

Beer Marketer's Insights

Tuesday, 18 December 2007

First Beverage Buys Two Warehouses for Keg 1

Two new angles in consolidation have found they can work together. First Beverage Capital, "focused on becoming the top provider of capital to the beverage industry through sale-leaseback transactions," bought warehouses in Odessa and Alpine, Tex that formerly belonged to Permian. Permian, a 2-mil-case Miller/Coors distrib, is first distrib bought by Keg 1, comprised of "11 leading primarily Miller-Coors distributors focused on the strategic acquisition of beer distributorships."

Beverage World

Thursday, 1 November 2007

NBWA Convention: Financial Solutions

In response to increased consolidation, distributors are investing in larger facilities or advanced, automated systems for their warehouses. First Beverage Capital helps beverage operators turn their real estate into ready cash to fund growth and improve operating efficiencies.

Beer Business Daily

Monday, 15 October 2007

First Beverage Capital Acquires Distribution Facility in Chicago

First Beverage Capital (formerly called National Beverage Properties) purchased a 52,000 square foot warehouse in Illinois operated by Euclid Beverage, Ltd., owned by the McEnery family. This is First Beverage's fifth acquisition this year and increases their total properties to over 1.1 million square feet throughout seven states. FBC chief Bill Anderson says Euclid Beverage will lease the facility back from First Beverage on a triple-net basis for up to 30 years.

Modern Brewery Age

Monday, 18 June 2007

NBP Acquires $26 Million Beer Distribution Facility in Phoenix

National Beverage Properties announced that it has closed on the purchase of the 250,000 square foot Crescent Crown Distributing warehouse in Phoenix, Arizona.

According to Bill Anderson, NBP chairman and CEO, this increases NBP's portfolio to over one million square feet of beverage warehouse space and is its fourth acquisition this year.

Built by the Pearce family, the Phoenix property is currently occupied by Crescent Crown Distributing as a result of their 2004 purchase of Pearce Beverage Company.

"The Pearce family built a world-class facility in terms of its functionality, quality of construction, access to rail and overall location," Mr. Anderson said. ''It's one of the best sites in the beverage distribution world, and we're very excited to start a relationship with Crescent Crown, one of the standout Miller/Coors/All Other houses in the beer industry."

"Partnering with Bill and his team at National Beverage Properties is the best solution Crescent Crown could have asked for to address our real estate needs here in the Phoenix market," said James R. Moffett, president of Crescent Crown Distributing. "As the Phoenix metro market continues to expand exponentially, Crescent Crown is going to need a real estate partner that not only understands the beer business but is flexible and well capitalized enough to provide our warehousing and office solutions over the next five to 10 years."

"If you're in the beverage distribution business and looking to free up capital to build brands or fund an acquisition strategy by tapping the value of your real estate assets, National Beverage Properties has both the real estate and beverage distribution know-how to be the logical choice as your real estate partner," added Moffett.

Beer Business Daily

Wednesday, 25 April 2007

NBP Closes Another Deal

And finally, to bring our Simplicity Issue to an end, what could be simpler than selling your warehouse and leasing it back? Bill Anderson's outfit, National Beverage Properties, announced that it has closed on a sale-leaseback transaction for a 94,000 square foot beer warehouse with Crown Distributing Co., an A-B distributor in Arlington, Washington. Crown will lease the property back from NBP on a triple-net lease basis for up to 30 years. This sale-leaseback marks NBP's sixth acquisition and its first partnership with an A-B wholesaler.

Beer Marketer's Insights

Friday, 19 January 2007

National Beverage Properties Closes 4 Warehouse Deals, Gets Big Capital Infusion

National Bev Properties ... has just taken a big step forward. NBP closed 4 more deals totaling 585,000 sq ft of warehouses, making 5 in all. Includes distribs like Superior Bev and Central Bev in Oh (John Antonucci), Valley Wide Bev Co in Calif (Lou Amendola) and Capitol Distribs (John Shea) of NH. Recall, NBP buys distrib warehouses, leases 'em back, giving distribs capital to do deals, among other things. Deal with NBP is "win-win," sez John Antonucci, that "allowed us to redeploy capital and provides us flexibility as we move forward with our organic growth and acquisition plans."

NBP also formed JV with Oak Hill Realty LLC (part of Bass family holdings), one of several separate platforms "under the Oak Hill umbrella" that total over $20 bil in investment capital, according to release. Oak Hill has participated in "the formation of several public real estate investment trusts." NBP is brainchild of ceo Bill Anderson (son of John Anderson, Sr).

Beverage Industry Magazine

Wednesday, 1 March 2006

Real Estate-Driven Capital

A number of distributors who are undertaking expensive acquisitions and consolidating have been turning to National Beverage Properties (NBP), Los Angeles, as a real estate partner to strategically provide the financing to purchase real estate assets.

William Anderson, NBP's chairman and chief executive officer, with experience as executive vice president at his family business Topa Equities, began NBP because he saw a need for a different type of capital source for beverage distributors. He also witnessed how well the car dealership REIT had performed for car dealers, and saw similarities between car dealers and beverage distributors.

"Both are primarily family-owned businesses," Anderson explains. "They have strong cash flow-operating businesses, and they don't necessarily need to own the real estate that they are operating under. And both industries are going through quite a bit of consolidation so they have fairly urgent capital needs to grow their businesses going forward."

Beverage distributors across all channels, but particularly beer and spirits, are finding NBP's services useful. Formed in 2005, NBP provides capital for beverage distributors through value-added real estate solutions. For example, NBP provides sale-leaseback solutions for warehouse acquisitions and expansions, setting the stage for enhanced bottom-line results.

NBP offers its distributor partners real estate and capital strategies, such as providing growth capital to beverage distributors who are purchasing a new distributorship, including the seller's warehouse. In these cases, NBP buys the warehouse for the acquiring distributorship, which allows it to save its capital for brand acquisitions. NBP then enters into a long-term lease to provide the distributor with an industry-specific real estate partner and long-term control over the real estate.

The company also constructs, renovates and develops new, larger and more efficient facilities for distributors. NBP takes care of tasks such as site acquisition, design, permits and construction management. The distributor, in this case, receives operational benefits from a new facility designed to meet its specific needs, and moves into the facility with no disruption to its existing operations. NBP also is able to assist the distributor with flexible options for a 1031 tax-free exchange on its old property.

Beer Business Daily

Monday, 23 January 2006

Getting Cash from the Dirt

As you know, Beer Business Daily is everywhere: We attend beer conventions, seminars, rallies, parades, parties, seedy bars .... live in person or incognito. Last year I couldn't walk through an airport without bumping into National Beverage Properties' Bill Anderson, who has got the middle tier a'buzz with the possibility of pulling together distributorship warehouses into a publicly traded REIT, just as many car dealerships have done.

While I don't normally do vendor interviews, Bill's concept is generating enough talk that my curiosity was piqued; (plus, he's a genuinely nice guy).

So I checked in with Bill, who hails from a large California and Hawaii A-B and Coors distributing family, about this "REIT thing" that he is organizing. You, gentle reader, are a fly on the wall. Here's an excerpt of our conversation:

HARRY: So Bill, what is this REIT business people are taking about and how is it going so far?

BILL: Harry, it is going extremely well. National Beverage Properties works in two ways: in our first phase, we are providing capital to help distributors acquire or develop their next warehouse facility. The second part of our business plan is making a series of warehouse acquisitions with the goal of becoming a public real estate investment trust [REIT].

It's really two different tracks: in one we are an industry-specific capital provider and real estate partner, and in the other we are seeking to become an attractive long-term investment vehicle and estate-planning tool for the beer distributor community.

HARRY: Let's start with the first one and we'll circle back to the other; how's that work?

BILL: We help distributors reallocate their capital from their real estate into their core businesses or to other investments that maybe would provide them with a much higher return.

For example, a distributor who is looking to acquire another distributorship will have to put out between 5 to 10 million [dollars] into the acquisition of the beverage brands, yet he may also have to put out another 5 to 10 million for the real estate that's associated with that distributorship. What we do, Harry, is we utilize our capital to buy the real estate and provide them with a long-term flexible lease that's tailored to their needs to allow them to save their capital for the acquisition of the brands....

We also help distributors who have outgrown their current space. As you know, distributors are seeing increasing breakage costs. Some are under pressure from their suppliers to get into a larger, more efficient facility and others need more room for their sign making equipment or another 10,000 square feet for POS. We buy a new facility for the distributor or we acquire land and build a new facility -- taking care of all of their real estate headaches -- and providing them with a new facility that's built exactly to their specifications.

HARRY: I always pay cash for my warehouses in gold bullion, but sadly not everybody is as rich as me. But Bill, seriously, why not just go to a bank?

BILL: Well, NBP is different from a bank-financed transaction; with a bank the distributor owns the warehouse but must devote a substantial portion of his capital for the equity in the transaction. A $10 million dollar warehouse would require the distributor to invest between $2.5 to $4 million of equity. So the distributor, in this case, is still allocating his capital to his real estate rather than to his core business -- which will likely earn him a significantly higher return than the real estate.

In a transaction with us, we provide the capital and a favorable long-term lease rather than the distributor having to take out a loan, pay the numerous bank fees and interest, and devote his capital and other resources to the dirt. Our goal is to take care of everything related to the real estate -- the capital, the financing, and the necessary improvements -- so the distributor is free to focus on his operating business and on making more acquisitions with better returns.

HARRY: What about going forward long term, does it worry you that the middle tier has been under attack?

BILL: No, we're in fact very bullish about the beer distribution industry despite the attack from Costco and other legal threats to the three-tier system. We're focusing on distributors who are intent on making additional acquisitions, who have strong management teams and who are building a strong family legacy and who are using their capital wisely.

Having said that, we're watching the Costco case and we're picking our potential partners very carefully. We want partners who are in this for the long haul, who are strong and growing and we think those distributors are going to do very well in the future.

HARRY: Well, what else, Bill, that I haven't asked you? Is there anything?

BILL: We think our plan will assist in the next wave of consolidations, Harry. We hear about a number of consolidations that are stymied or delayed because of this need not only to buy the brands at a very full price, but also to buy the warehouse that's associated with the selling distributorship....

HARRY: I've been involved in a deal before that was killed because of the warehouse.

BILL: Right. It happens. So, we can come in as the real estate partner, be ready to close when the acquiring distributor wants to close and we can structure the lease and the improvements according to the distributor's specific timetable and needs.

HARRY: And has your personal experience in the beer industry helped or harmed you? It's no secret that your family is a big A-B [and Coors] distributor. How has that been received?

BILL: I think it's very helpful for distributors to know that I grew up in the beer distribution business and that they know I spent all my summers working in our distributorships as a kid. And I think it's helpful for them to know that I helped on many of our acquisitions and helped manage many of our beverage distribution warehouses. They know I have the experience for this and they know I'm dedicated to this industry.

Beer Marketer's Insights

Tuesday, 16 August 2005

National Beverage Properties Closes First Deal

National Beverage Properties, which aims to be a beverage Real Estate Investment Trust (REIT), closed its first deal and acquired 78,000-sq foot warehouse of RMC Distributing in Colorado Springs. RMC pres. Pete Betka (who used to be a Coors exec) called it 'win-win in areas of real estate partnering, liquidity, diversification and long-term real estate planning.'

NBP was founded by Bill Anderson, son and brother of John Andersons Sr. and Jr. respectively, and is modeled on the car dealership REIT, Capital Automotive (CARS). CARS is a public company that includes 375 auto dealers, and its stock has more than doubled since 2000.