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When I read the news that Empathy Wines was acquired by Constellation Brands…the $35B giant of the alcohol industry…

I was blown away.

It wasn’t the acquisition itself that surprised me (that’s common in this space) –– it was how quickly they were snatched up.

You see, it was just last year that entrepreneur and internet personality Gary Vaynerchuk set out to disrupt the wine industry.

Empathy Wines used a direct-to-consumer model to bring high-quality wines direct from vineyards to the consumer for half the price.

At the time of acquisition this July, they’d only sold 15,000 cases with around $3.6 million in revenue.

To give you some perspective… 

The alcohol company we just invested in has already sold 200,000 cases of their flagship wine-based product.

My point with all this? 

Acquisitions can happen at record speed in the alcohol industry, especially when you have something of extreme value.

In this case, it was Empathy’s brand building know-how, their consumer data, and direct-to-consumer model –– all things Constellation was willing to pay big for.

Now let’s take a look at some other acquisitions in the alcohol space.

I think you’ll find the 3rd on the list (Seedlip) pretty interesting…

 

Alcohol Acquisitions

 

One of the best ways to judge the potential of an industry is to look at its exits. If you find an industry with many startups that have been recently acquired or gone public, you have found yourself a hot industry. 

Right now, the adult beverage industry is hot. Over the past few years, we have seen huge changes in the industry give way to numerous IPOs and loads of acquisitions.

In today’s market, there is a mad dash for new products that can connect to consumers on health, lifestyle, and marketing. Capturing the changing demand of younger, digitally-native drinkers has become an absolute priority for beverage companies. Even the most established brands are needing to pivot, often filling in portfolio gaps through acquisition.

You need to be watching this space. 

Investors who know just a bit about the happenings here can find outstanding opportunities.

Today, I’m going to show you some recent exits. These exits cast light upon the biggest trends within this diverse and active market.

 

Radiant Pig Beer Company

 

Radiant Pig is a craft beer company that has found success with its line of innovative beers that vibe with modern drinking culture. 

Colorful label designs and humorous beer names like “Save the Robots”, “It Ain’t Easy Double IPA”, and “TV Party,” catch the eye and make for a fun and engaging brand identity. Beauce of this, and its outstanding brews, Radiant Pig has become a force within the New York City craft beer scene. 

Newport Craft Brewing & Distilling Co. has brewed and built a portfolio of over 100 distinctive beers and spirits over the last 20 years. The Rhode Island-based company has a way of keeping things local. It found Radiant Pig to fit right in with their Northeastern, New England-style brand.

Newport Craft acquired Radiant Pig in June of 2020. This partnership bodes well for both parties, as Newport gains the trending momentum of Radiant Pig, Radiant Pig can now surmount numerous scaling hurdles that had kept them from meeting the ever-growing demand. 

One of the biggest changes in the alcohol industry has been the shift away from traditional domestic beers towards craft beers. In 2019, the only types of beer that saw any growth were craft and foreign beers. Even staple, flagship brands like Budweiser and Coors reported losses that year. 

Craft beer is the beer to look out for in the current market. Big-brand breweries are buying up craft startups like Radiant Pig to future-proof and balance out their beer portfolios.

 

Seedlip

 

Seedlip is a fascinating startup that makes a surprising product. This company makes the world’s first non-alcoholic spirit.

UK-based Seedlip draws inspiration and distilling methods from a 17th-century text, “The Art of Distillation” that explains how to distill herbal remedies using copper stills for medicinal purposes. 

Now, these arcane recipes are used to make sophisticated and complex alcohol-free spirits like Spice 94, Garden 108, and Grove 42 for the rapidly-growing market of consumers who choose not to drink.

In the UK, 22% of people aged 16 to 24 and 20% of people aged 65 and up abstain from drinking alcohol. And yet, these people still celebrate, eat at restaurants, and socialize at parties. Now they can take part in the ritual of sharing a glass with friends and family without harming their health or principles.

Health is one of the biggest selling points in the new adult beverage market, with many customers report a strong preference for low-calorie, natural, and low- or no-alcohol drinks.

As silly as this all may seem to some, the idea was good enough for the largest spirits company in the world, Diageo, to pull out its checkbook. 

On August 7, 2019, Diageo acquired Seedlip for an undisclosed amount. With just three products, Seedlip had built a presence in more than 25 countries. Being a pioneer of the no-alcohol spirit made Seedlip extremely attractive — with the purchase, Diageo essentially gained the entire worldwide customer-base for non-alcoholic spirits. 

 

BrewBilt Manufacturing

 

BrewBilt designs and manufactures specialty craft brewing systems. This is a company that serves the companies in the growing craft beer industry. 

BrewBilt satisfies all the needs of a budding craft brewery from consultation, manufacturing, and maintenance. After a meeting to discuss the specific needs of the brewer, BrewBilt builds a custom system using only American-made components made of high-grade American stainless steel. Finally, their technicians install the system and maintain it for up to six years. 

They do this not only in craft beer systems but cannabis and hemp processing systems too. 

In 2016, just two years after its founding, BrewBilt went public. After the IPO the company went live on the market selling at $1,770 per share, giving early investors a massive payday.

 

BNA Wine Group

 

BNA Wine Group is a startup that became famous for its unique California wine selection. BNA wines manage to be distinctive, premium, and on-trend without losing accessibility. This recipe helped them secure many retail partners across the country. Offerings like their Butternut, Volunteer, and Humble Pie wines quickly gained recognition, winning awards and converting loyal customers.

California wine empire, Miller Family Wine Company, saw what BNA had accomplished and wanted to bring it into their wine portfolio. Miller Family Wine is a multigenerational family-owned business and one of California’s premier wine-growing families.

On October 13, 2020, it was announced that Miller would acquire BNA in a spectacular Cali-winemaking union. Along with diversifying its wine portfolio, Miller stands to use BNA’s customer-favorite wines to deepen its presence in retail chains and to expand its DTC channels.

This acquisition again follows the industry-wide trend of large companies seeking out young premium and craft startups.

 

Cocktail Crate

 

Finally, we have Cocktail Crate. 

In 2012, 24-year old Alex Abbott Boyd quit his job to pursue his dream of creating craft cocktail mixes. Seeing the demand for authentic, natural mixers, he began formulating recipes to revolutionize the way people drink at home. With just $5,000 raised via crowdfunding, he set off and started Cocktail Crate. 

For as much as people love cocktails, not everyone loves making them. It’s difficult, time-consuming, and requires many ingredients. Cocktail Crate solves this problem.

Premium mixers for home and personal use come at the perfect time amid a long-running trend toward socializing and drinking at home, away from bars and restaurants. As of 2018, 55% of American consumers prefer drinking at home. Products, like the ones offered by Cocktail Crate, capitalize on this trend, allowing for enjoyable, premium cocktails right in your backyard.

Don’t let the humble beginnings fool you, Cocktail Crate quickly became incredibly popular, eventually garnering the attention of Michigan whisky icon Traverse City Whiskey Co. This craft distillery saw huge potential in selling non-alcoholic products like mixers alongside their whisky. 

On October 14, 2019, Traverse City acquired Cocktail Crate for an undisclosed amount. This acquisition shows the popularity of not only craft beverages and products, but also the shift towards at-home drinking we have seen recently.

 


The alcohol company we just invested $125,000 into is now accepting investors. Get instant access to our complete Investor Package, analysis of the company’s upsides and risks, and investing portal.


 

Author: Chris Graebe

 

We’re in the middle of the biggest shift the alcohol industry has seen in decades. 

It’s like in the late 70s when beer cans went from pull tabs to the stay tabs we use today… Only bigger.

 

 

However, the big difference is this…

…you can actually profit off this latest trend we’re seeing. 

In fact, we believe in it so much, we doubled-down and invested $125,000 into a BevTech company that’s leading the way in the RTD (ready-to-drink) alcohol space.

You see, consumer demand shows people’s tastes and desires are changing –– they want more than a refined buzz from their drink.

They want more flavor variety from lower-calorie, low-carb beverages, with sustainable packaging that helps the environment.

And the ready-to-drink (RTD) alcohol brands are surging to meet the demand and bringing countless opportunities for the startup investor.

I unpack the biggest trends in the RTD market and share future growth projections (read: upside potential) in my latest briefing.

 

The Latest Trend In Alcohol

 

In 2018 the ready-to-drink (RTD) alcoholic beverages market accounted for over $26 billion with a projected 4.6% compound annual growth rate, which would bring the market to over $39 billion by 2027.

Changes in society and consumer preferences have pushed forward innovative products. We are witnessing a once-in-a-lifetime opportunity for alcohol entrepreneurs and investors to mold the industry’s future.

I’d like to show you why RTDs are hands down the best-positioned type of drink to thrive in this new market.

 

What Exactly is an RTD?

 

RTDs are simply single-use, pre-packaged beverages. These are things like energy drinks, iced teas, and smoothies.

A huge part of the RTD market — and our focus for today — is alcoholic RTDs

These are pre-packaged drinks infused with alcohol and include hard seltzer, alcopops (hard sodas), and pre-mixed cocktails. 

 

Ingredients to RTD Success

 

Let’s explore the trends and data behind RTDs. These are the factors that set RTDs apart from other drinks and help them win in the minds of consumers.

 

Premiumisation

More and more, consumers value quality over quantity. This can be seen across the food and beverage industry, but it is especially true in the adult beverage market. 

Think about this — alcohol spending is increasing faster than alcohol consumption. Between 2018 and 2019, spending increased by 2.5% and consumption by only 0.3%. People aren’t paying for more drinks, they are paying more per drink.

Craft beverages are agents of premiumization. Their growth shows us how much consumers favor small-batch, quality-focused products.

Craft wine and spirits are poised to increase their volume market share by one percent each year until 2024 in the U.S. and China, the two largest craft wine and spirits markets in the world. 

In 2019, craft beer consumption grew by 4.1% while all other types of domestic beer struggled. Even the big flagship brands are in decline, but craft still manages to captivate drinkers.

RTDs are set to mirror this trend. They are already seen as “premium” compared to traditional drinks, and there are many craft RTDs to choose from. 

 

Health Trends

Health concerns are fueling the current market. 

While alcoholic beverages will never be seen as 100% healthy, a huge chunk of consumers are turning towards low- and no-alcohol drinks, low-calorie drinks, and drinks with more natural ingredients to keep their health in check. The pandemic has only compounded the interest in these products. 

More than any other type of drink, RTDs have healthy options. There are low-sugar, CBD-infused, low-alcohol, vitamin-rich, gluten-free, and low-calorie RTDs. 

It has become a simple and frequent choice for health-conscious drinkers to swap high-calorie beers for healthier RTDs.

 

Convenience

It doesn’t get much easier than twisting a top off. 

Consumers love cocktails, but don’t always love making them. They require at least two if not five or ten ingredients combined in the right balance to make a good cocktail. With ready-to-drink cocktails, you can have the same result with none of the work. 

The RTD spirit-based cocktail category grew 40.7% over 2019 while malt-based RTD cocktails grew an incredible 574%. 

Now that much drinking happens at home, not on-site with a bartender handy, cocktail lovers are reaching for RTDs.

For young drinkers, the most popular occasions for RTDs are things like picnics, beach and pool excursions, and during travel and holidays. While socializing outside, far away from any bartending paraphernalia, many consumers are reaching for RTDs over beers.

 

Marketing and Packaging

In the age of social media, attractive, modern, recognizable packaging is essential. Just as we eat with our eyes, we drink with them, and we shop with them.

RTDs are known for their eye-catching colors and design. The best RTD packaging communicates an accessible yet premium beverage. 

As I mentioned before, RTDs are most consumed at outdoor social gatherings and events. At these events, RTDs are selected for their portability and convenience, and then end up photographed and posted across social media. This gives brands free marketing and associates them with young, fun, social events. 

 

Biggest Success in the RTD Market

 

We have said a lot about RTDs in general, but now it’s time we get into the specifics. What types of products are winning in the new market? What should we watch out for moving forward? 

Here are the drinks you need to know.

 

Hard Seltzers

The biggest trend in the entire alcohol industry is hard seltzer. 

Hard seltzers spectacularly burst onto the scene. In 2019 the volume of hard seltzers rose by 50%. Today, this single type of beverage makes up 43% of the entire RTD category. And current projections see hard seltzer consumption tripling by 2023

This isn’t the end of the RTD boom, it’s just the beginning. Hard seltzers popped up at the right time, giving consumers a low-calorie and exciting new way to drink. Now that seltzers have broken the mold of the beer-wine-spirit paradigm, other RTDs are coming into prominence alongside them.

 

Craft Spirit RTDs

Established brands have introduced their own spirit-based RTDs which have seen success. At the same time, following the trend of premiumization in the RTD market, craft spirit brands are gaining ground. 

Many consumers are opting for cocktails and mixes with craft distilleries’ products, paying a premium for what is perceived as higher-quality spirits. These craft brands win on the promise of localized ingredients or botanicals and more herbaceous and unique flavor combinations. 

As the big brands and the smaller craft brands duke it out, there is an overall shift towards variations on classic drinks and new mixes with unusual ingredients. Consumers’ interest in varied products makes for an open and diverse playing ground in which many brands can find their niche.

 

Hard Tea

These days, some very interesting ingredients are blended into heard teas. The ingredients show us what health-oriented drinkers are looking for, and what the future RTD market has in store. 

Hard teas now boast spices like turmeric and ginger and botanicals like herbs and berries as flavorful, immune system-boosting additives. 

Wine, beer, and spirits are unable to compete with the flexibility of  RTDs. Almost anything that tastes good and is considered healthy can be used in an RTD brand. Moving forward, nearly anything that improves perceived healthiness, can and will be blended into an alcoholic beverage.

 

Takeaway

 

Drinkers’ new desires are met more readily with RTDs than with any other type of beverage. 

Young consumers are drinking less at bars and more in outdoor social events where the convenience of RTDs plays well. 

Consumers of all ages are more concerned with what goes into their bodies, and the solution — low-calorie, low-alcohol, natural-ingredient beverages — is coming from RTDs more than any other drink.

Finally, people want new flavors and experiences. RTDs encompass teas, cocktails, seltzers, and sodas, mixed with alcohol and any number of flavor combinations. No other category of drink has the incredible potential of blends and combinations that these do. The possibilities are limitless. As trends shift, the ingredients will follow.

RTDs are like the manifestation of all adult beverage trends. This is precisely why RTD growth is the highest in the industry and why we are sure to see continued success from this category long into the future.


We just invested in an alcohol company with a full lineup of ready-to-drink beverages. And they’re The Boardroom’s highest revenue investment ever. Get instant access to our complete Investor Package, analysis of the company’s upsides and risks, and investing portal.


 

Sources

 

Author: Chris Graebe

I’ve evaluated countless startups this year.

Most of them don’t make the cut for one reason or another.

I have a specific set of criteria I use when evaluating them.

Think of it as my startup evaluation formula, if you will. 

One thing I’m looking for is…

TIMING.

Is the market ready for this product?

Is there a strong market need for it?

  Are there any trends in the market?

My partners and I just invested in a company we’re calling the “Red Bull of the Alcohol Industry.”

Their line of alcoholic drinks is the perfect alternative to beer.

And their massive expansion couldn’t come at a better time.

There’s a paradigm shift underway right now in the alcohol industry.

 

The Decline of Beer

In the U.S., beer sales have been in decline since 2015. From 2018 to 2019 alone there were 1.4 million fewer beer barrels shipped and the entire beer market dropped by 2.3%.

Beer has been such an institution in American drinking culture and still will be for some time, but looking at the most recent data, we can safely say that traditional beer won’t be able to keep up with changing consumer preference. 

This article isn’t about celebrating the decline of beer. From an investors point of view, I want to show you what’s happening so you can find opportunities in the changing adult beverage market.

New types of drinks are coming up, beer is going down, and there is loads of opportunity for the angel investor who knows the trends in this industry. 

 

What’s Brewing?

Domestic beer has been hit the hardest. Over the past few years, the only types of beer that saw any growth were craft and imported beers. Big American brands’ long-time staples just aren’t doing it for drinkers like they used to. 

The flagship products of these large breweries have perhaps suffered the worst. While Anheuser-Busch InBev still leads the domestic segment with 43% of domestic beer sales, it is slowly losing market share, mostly due to its under-performing flagship brand, Budweiser. 

And things are even worse for Molson-Coors. A 3% year-over-year decline on its entire portfolio with an additional 2.4% decline on its flagship brand, Coors, has sent out a warning shot to the rest of the “traditional” beer industry.

What is causing this? Are Americans drinking less alcohol across the board or are they choosing different drinks? 

Based on the data, it’s clear that traditional beer brands are failing to stimulate consumers changing preferences. Meanwhile, newer and more exciting options are being welcomed into the market.

And yet, as it stands, beer is still America’s favorite alcoholic beverage. The question arises — are we witnessing a momentary dip in beer’s popularity or a full-on paradigm shift?

 

Consumers are Drinking More and Spending More on Drinks

We can rule out a decline in drinking in general as the cause of beer’s decline. In fact, between 2018 and 2019, there was a 0.3% increase in alcohol consumption. What’s more, Americans are spending significantly more on their alcohol — over the same period, alcohol spending increased by 2.5%.

Brandy Rand, chief operating officer of IWSR Drink Markets Analysis, says that these trends are a “clear indicator” that U.S. consumers are willing to pay for more premium products. 

What’s causing them to pay more? 

Rand points towards “the rise in low-and no-alcohol products” and “trends towards health and wellness,” as the answer. 

To further unpack this, we first need to see what are the root causes of beer’s decline — what do consumers want in a drink that beer just doesn’t give them?

 

Reasons for Beer’s Decline

Consumers are moving towards low-calorie, low-sugar options. Products that follow health trends and support weight loss are taking precedent. Beer just doesn’t fit into this category.

When asked about beer, consumers report beer as the highest-calorie drink. It has been baked into the cultural consciousness that beer is heavy and unhealthy, even though many beers are relatively low-calorie. A quarter of beer drinkers specifically admit to cutting back because of health concerns.

While beer companies are trying to adapt and bring healthy and trendy beers to market, other types of drinks still beat them out on health.

Baby Boomers, a critical demographic for beer, have more health concerns than any other group of beer drinkers. As they get older and face these problems, products like beer are likely to be at the top of the list of what to cut out.

Millennials are still engaged with beer, being the group that drinks the greatest range of beers and enjoys it more frequently, but their preference leans towards craft, true-craft, flavored, and blended beers. 

Meanwhile, Gen Z is a tricky market to capture. They are the most likely to drink daily but also the most likely to not drink at all.

Both Millennials and Gen Z follow trends more than older generations. Generally, they aren’t loyal to one brand and are open to new drinks advertised on social media. 

Young companies with modern marketing tactics have built their brands from the ground up targeting them. While big American brewers are hurriedly trying to captivate this audience with blended beers and the like, they still haven’t cracked the code. 

Lastly, lifestyle changes are bogging down beer. 

As a part of a general shift in consumer behavior, people are eating more at home and prefer casual socialization. Because of this, on-premise beer consumption is declining. Places like restaurants and bars have seen a dip in beer sales. 

And consumers aren’t just taking beer home with them, off-premise beer consumption is shrinking too, just not as quickly.

 

Other Drinks on the Rise

The biggest challenge for beer is competing with the new, competing products and new preferences of drinkers.

 

RTDs

At the top of this list are RTDs or ready-to-drink beverages. RTDs have quickly grown into an $8 billion industry. 

What exactly is an RTD? These are pre-packaged mixes and cocktails like hard iced teas, alcoholic fruit juices, alcopops (sodas mixed with alcohol), and hard seltzers. 

But the belle of the ball of the RTD movement is hard seltzer. Hard seltzers make up 43% of the entire RTD category. In 2019 the volume of hard seltzers went up nearly 50% and by 2023 it’s expected that consumption will triple.

 

Spirits

While beer sinks, spirits like whisky, vodka, tequila, rum, and gin are becoming more popular. 

These drinks grew 2.3% last year. At the same time, niche spirits are breaking into the mainstream, and craft products are gaining an edge. This can be seen by the recent passing of torches in the vodka world, as craft-brand Tito’s Handmade Vodka knocked Smirnoff out of its top spot. 

This aligns with the happenings of the beer industry — newer brands that bring something fresh to market are thriving.

 

Craft, Foreign, and Non-Alcoholic Beer

While beer as a whole declined, craft, low-alcohol, and no-alcohol beer consumption is growing. 

Non-alcoholic beer dollar sales grew 23% in 2019 and craft consumption increased by 4.1%.

Consumers want healthy, different, and craft products. Even those who love beer don’t get that from flagship products so they are looking for alternatives. 

 

A Changing Market, New Opportunities

It remains to be seen whether beer is in for a lengthy decline or if it’s only dropping a few points while the market shifts its weight.

What’s clear is the opportunity for entrepreneurs to stake out a claim in the market while the big brands play catch-up. 

Investors that bet on hard seltzer a couple of years ago are now making a killing. Hard seltzer and the rest of the RTD segment are still on fire, with plenty of room for competition. 

The gap left behind by beer needs filling. And in the fight for market share, startups that focus on health, flavor, and quality are especially fit to win.

 

This Alcoholic Beverage Company Is The Boardroom’s Highest Revenue Investment Ever. Get instant access to our complete Investor Package, analysis of the company’s upsides and risks, and investing portal.

Author: Chris Graebe