Keystone Brewing Group, the UK investor that has snapped up a clutch of local breweries in the last year, expects to buy more by the end of May.

CEO Mark Williams told Just Drinks the investment group was in talks with three breweries it wanted to add to its portfolio.

In the last year, Keystone – until this week known as Breal Group – has bought four breweries either upon their entry into, or on the brink of, administration.

Last May, the then Breal bought Black Sheep Brewery after the Yorkshire business entered administration.

In June, Breal moved for Brick Brewery, following that deal a month later with the acquisition of Brew By Numbers.

The private-equity firm’s latest deal was in January when it took over Purity Brewing Co. for an undisclosed sum.

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Williams said Keystone wants to grow its beer business to a turnover of £100m ($126.6m) by 2028, with the bulk of that growth coming through M&A.

Discussing the value of companies it is targeting, Williams said: “I guess our sweet spot would be maybe £10m turnover-plus.”

Williams claimed Keystone’s focus is not on only buying struggling breweries. The investor’s live takeover talks are with companies that are “entirely solvent”, he added.

“When you go into an administration acquisition, you might pay less for the business because it’s in a sticky situation but, actually, the amount you then end up paying on the short to medium term to get it back on his feet is just significant,” Williams said. “It’s an easier acquisition always to buy a solvent business.”

Keystone eyes pubs purchase

Williams told Just Drinks Keystone is in talks with on-premise owners and franchises in the UK to acquire a raft of bars through which to promote and sell its products.

“We recognise that we need an estate, we need a group of pubs that can promote and sell our liquid,” he said. “Now, we are already getting to the stage where we could probably fill an entire bar with the range of drinks that we have.”

Keystone is looking to buy between five or twenty pubs in one deal, depending on their location and how profitable they are.

When asked what Keystone’s M&A war chest was, Williams said the company’s 18 investing partners have “significant personal wealth” and that its available capital was “a lot, several 100 million [pounds]”.

Plans to enter the zero-alcohol category

Keystone wants to enter the zero-alcohol beer category and is assessing whether to spend capital on the installation of reverse osmosis equipment at either its Purity Brewing or Black Sheep facilities.

Reverse osmosis filters a brewed product through a membrane to create a liquid of water and alcohol, from which standard distillation can be applied to remove the alcohol. The technology keeps a degree of the flavour of the processed beer as, on the other side of the membrane, a brewer is left with flavour compounds and a syrup of sugars that is remixed into the final product.

Keystone’s plan to possibly invest at Purity Brewing or Black Sheep are subject to change if the investor identifies an acquisition target already using reverse osmosis equipment.

“We are in discussions with equipment manufacturers to understand the cost and installation time and lead time for installing that equipment,” Williams said.

Purity Brewing and Brew by Numbers produce 0.5 abv products but none of the Keystones’ four acquisitions have a zero-alcohol variant in their roster.  

The stated end goal for the investment group is to build a portfolio of breweries and pubs it will acquire and, once they have taken it “as far as we can with the expertise we have”, the group will sell it to a suitable buyer, Williams said.