Benchmark

Something's Brewing in M&A: Craft Beer Gives New Perspective to the Industry

Posted on June 6, 2018 By

Who doesn’t love microbrews? The explosion of the craft-beer revolution has spread across the country.

Western cities, such as Portland, Denver, San Diego, Seattle, and Los Angeles are seeing a large increase in new jobs and establishments in small-scale breweries. This trend is spreading nationwide, and how do we explain this craft-beer boom? It’s relatively simple, the American breweries lack of distinct, indigenous brewing traditions in the past has been conducive to the rise of craft brewing. The small, independent, and traditional brewery adds to the eclectic style and diversity consumers are demanding. The niche styles of beer, particularly hoppy IPA’s, pale ales, infused blends, and specialty brews are leading the way. This changing landscape has created multiple opportunities for the M&A industry.

So, what does this craft beer boom mean to Benchmark International and the M&A industry? The sustained success of craft beer and the changing demographics of brewery ownership has led to more mergers and acquisitions and transactions than ever before. Since 2014, there has been more than one transaction per month. Global players, such as SAMMiller and InBev, are leading the way in the direct M/As of craft beers. What is more interesting in this recent trend of mergers, is the allowance of once previous competitors to combine styles and taste with new hosts to release new and creative craft beers. The rising popularity of craft beers has fueled industry growth and increased valuation multiples towards all-time highs over the last few years.
Why are craft breweries selling at this rate? Owners understand the industry is in a “sweet spot” in this sector. Also, financing, with low interest rates, is more available today than in previous years. Some have claimed the “Trump effect” to the rise of M&A’s in craft breweries due to the strong economic state of the United States today and, of course, people love to drink beer! A recessive- proof business in both good and bad economic times. Consumers are always going to drink.

A good acquisition example that’s around the block from our Tampa office was Cigar City Brewing. The company just inked a deal with Oskar Blues Brewing Co. last year. Since the acquisition, Cigar City has been able to expand its craft beer across the United States and has been able to produce and can new styles of beer for the first time under Oskar Blues Brewing.

A few other notables making deals on their own have included, Dogfish Head Brewing, Brooklyn Brewery, Avery brewing, and Wicked-Weed brewing.

With this trend on the rise, let’s not overlook the potential add-on opportunities in craft breweries M&As. Bottling companies, labelers, and distribution companies have all seen a significant amount of activity from private equity investors. These industry sectors work hand-in-hand with many small craft breweries and this offers the ability to produce a one-stop shop for craft brewery acquisitions. In the past, the majority of these operations outsourced because of additional expenses incurred by the brewery.

As a one-time Wine and Spirits and craft brewery business owner, I understand the excitement and satisfaction of seeing your hard work and name continue to stay alive in the market and strive as an industry leader. The acquisition process can be stressful and challenging as you are passing on your company and recognition to another once competitor. Benchmark International understands this process completely and continues to work one-on-one with sellers to ease the transaction process for both parties.

ABOUT BENCHMARK INTERNATIONAL

Benchmark International’s global offices provide business owners in the middle market and lower middle market with creative, value-maximizing solutions for growing and exiting their businesses. To date, Benchmark International has handled engagements in excess of $5B across 30 industries worldwide. With decades of global M&A experience, Benchmark International’s deal teams, working from 13 offices across the world, have assisted hundreds of owners with achieving their personal objectives and ensuring the continued growth of their businesses.

Website: http://www.benchmarkcorporate.com
Blog: http://blog.benchmarkcorporate.com/

WE ARE READY WHEN YOU ARE.

Call Benchmark International today if you are interested in an exit or growth strategy or if you are interested in acquiring.

Schedule a call to speak to an Analyst

Americas: Sam Smoot at +1 (813) 898 2350 / Smoot@BenchmarkCorporate.com

Europe: Carl Settle at +44 (0)161 359 4400 / Settle@BenchmarkCorporate.com

Africa: Anthony McCardle at +2721 300 2055 / McCardle@BenchmarkCorporate.com

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