InvestBev remains upbeat about the opportunities to invest across the US drinks industry amid pressure on spirits sales and changing consumer habits.
The Chicago-based investor has more than 60 drinks brands in its portfolio, with a focus on spirits, an industry where sales have slowed in the US in recent quarters.
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Much of the company’s investment has been in Bourbon, a category where sales are declining amid an over-supply of whiskey.
However, InvestBev continues to put its funds to work, this week announcing financing for Bourbon supplier Registered Distillery One. In March, the investor said it had partnered with an unnamed “leading global asset manager” to inject up to $100m in Kentucky Bourbon barrels.
InvestBev’s portfolio takes in products including RTDs, gin, cannabis drinks and non-alcoholic alternatives. The company is set to finalise deal to invest in an energy-drinks business.
“We are continuing to invest. We are bullish. This is a time – if you look at whether it’s a UK recession, an EU recession, a US recession, or any of the above struggling in any way from a geopolitical standpoint – to go to the fire,” InvestBev founder and chairman Brian Rosen told Just Drinks on the GlobalData Consumer podcast yesterday (15 May).
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By GlobalData“That’s the time to go in and support. You can pick up some distressed assets. You can pick up some great assets. We feel very strongly about putting money to work now.”
The tough trading environment in the US whiskey market has prompted some distillers to reassess strategies.
In January, Brown-Forman announced plans to cut more than 600 jobs from its global workforce and the closure of a barrel-production facility in the US city of Louisville.
According to NABCA data for the 12 months to the end of March, sales of domestic whiskey in the US were down 2.1% in volume terms at 9.4 million nine-litre cases. Sales were flat at $2.86bn.
Of InvestBev’s $250m of assets under management, more than $100m is Bourbon, Rosen said.
The InvestBev founder remains upbeat about the longer-term prospects for the Bourbon category but suggested distilleries will have to close amid the slowing in demand.
“There needs to be – and there will be – three to four bankruptcies of distilleries. One has happened already and I won’t name them but they’ll be two to three more by the end of the year,” Rosen, speaking after a trip to Kentucky earlier this week, said.
“Post-Covid, the industry built up quite a bit. They thought, greedily so, that we can support producing four million barrels a year.
“I was very pleased and encouraged yesterday to hear that a lot of the bigs – Jim Beam, Bardstown, Green River, Brown-Forman – are cutting down production.
“We are betting on the industry because, no matter what, someone’s going to drink Jim Beam. I’m not worried about that.”
To hear the podcast with Rosen in full – in which he also discusses changing drinking habits in the US, Gen Z consumption, InvestBev’s investment strategy and being approached to buy brands from some of the largest drinks companies – please visit Spotify here.
