Drink Local Florida Blog
How to invest in Florida Craft Breweries and Distilleries
There
are many ways you can support the local craft beer (and spirits
and wine) community. First, and most obvious, is purchasing your
beer (or spirits or wine) directly from the local establishment
that produces it. During the pandemic I tried my best to support
breweries by only buying beer directly from them. Many
distilleries produced their own hand sanitizers as well. But
when you buy from a grocery or liquor store, the
brewery/distillery/winery is getting a much smaller cut of
profit. But maybe you're ready to take the next step. If you have the resources to do so, one way to support your local craft breweries (and distilleries and wineries) is to invest in them. Or maybe you just have a little extra money you want to invest, and in that case it is best to invest in things you know and understand.
I wanted to provide the Florida craft beer and libation community with information I have learned over the years - from my experience consulting with private equity firms, instructing economics at the college level and managing my own portfolio of investments - with a specific focus on investment vehicles that are related to the Florida craft brewery, distillery and winery markets. I've organized these investment opportunities across three different categories, listed below.
* Note: The content on this web page is for informational and entertainment purposes only and is NOT investment advice. All investments involve risk of capital.
Direct Equity Investment in a Craft Brewery, Distillery or Winery
Imagine owning equity share in one of your favorite craft breweries or distilleries. Believe it or not, it is achievable. Equity crowdfunding has been a reality since 2016, when the legal framework changed to allow small-time investors to crowdfund start-ups and small businesses. Prior to 2016, you needed big money to invest in a small business or startup, to include local breweries.
The pandemic brought a wave of hardships to the craft beer, wine and spirits industry. As a result of forced closures while being lumped in with bars and nightclubs, many craft breweries are in need of some extra working capital.
Occasionally, a craft brewery or distillery will make a direct offering of equity shares, but this is often at a minimum of a $5,000 to $10,000 investment. Thanks to equity crowdfunding services, opportunities to invest in local craft breweries are more frequent and can be initiated for minimum investments in the hundreds of dollars.
Florida Cane, a craft distiller and tasting room in Ybor City, is currently hosting a funding round on WeFunder.
This opportunity won't last long, so act now if you are interested. Going forward, you can continue to check other equity crowdfunding sites for opportunities to invest in other craft distilleries, breweries or wineries. Some equity crowdfunding sites include:
Peripheral Investments in Craft Suppliers
It is possible to invest in publicly traded companies that support craft beer operations. I realized years ago how big the craft beer market would become and started investing in companies that are vendors or suppliers to this market. If you invest in the stock market or index funds today, you can easily add to positions in these companies through your brokerage account. Here are a few examples:
WestRock Company
- Corrugated packaging (AKA cardboard) - Stock symbol WRK
- During the pandemic I bought several crowlers and
six-packs of beer from Big Top Brewing Company in Sarasota (on
multiple occasions). This beer was put in a cardboard flat box
that was branded with Big Top logos, which is pictured here
(side and bottom view). When I went to recycle the box, I saw
a logo on the underside showing the box was produced by
WestRock. This was a pleasant surprise to me, as I already
owned shares of WestRock stock (disclosure: I am long WRK
stock with a material position). I get it - cardboard
is not very sexy. But the reality is that we need it. Also,
the cardboard supply market is oligopolistic (my economics
background at work), meaning there are only a handful of
producers that can influence the price. When you think bigger
picture, not just beer but eCommerce, the market for cardboard
isn't slowing down anytime soon. Ownership of WestRock stock
also provides a quarterly dividend.
Ball Corporation - Most known for their mason jars, Ball Corporation also makes cans many breweries use for canning and distributing their beer. Stock symbol: BLL - Ball reports that they produce over 50 billion recyclable aluminum cans per year. Next time you grab a can of beer, look towards the bottom and see if you can find the Ball logo in it's cursive font. As of writing this article I do not own any shares of Ball and it is my opinion that the stock is a little overvalued currently. If you are interested in investing in this company, I suggest keeping it on your list but waiting for a pullback in price.
Crown Holdings Inc. - If you are holding a can of beer and that aluminum can was not made by Ball, then chances are that it was made by Crown Holdings. Stock symbol: CCK - In addition to providing metal cans for canning beer, Crown Holdings offers can design services and differentiates with quality design and can printing. While Ball produces more cans worldwide, Crown Holdings has a deeper focus on the craft beer market. At the time of writing, Crown Holdings had a similar per share price as Ball Corporation (both around $100), although Ball offers a small dividend while Crown does not.
Ball Corporation - Most known for their mason jars, Ball Corporation also makes cans many breweries use for canning and distributing their beer. Stock symbol: BLL - Ball reports that they produce over 50 billion recyclable aluminum cans per year. Next time you grab a can of beer, look towards the bottom and see if you can find the Ball logo in it's cursive font. As of writing this article I do not own any shares of Ball and it is my opinion that the stock is a little overvalued currently. If you are interested in investing in this company, I suggest keeping it on your list but waiting for a pullback in price.
Crown Holdings Inc. - If you are holding a can of beer and that aluminum can was not made by Ball, then chances are that it was made by Crown Holdings. Stock symbol: CCK - In addition to providing metal cans for canning beer, Crown Holdings offers can design services and differentiates with quality design and can printing. While Ball produces more cans worldwide, Crown Holdings has a deeper focus on the craft beer market. At the time of writing, Crown Holdings had a similar per share price as Ball Corporation (both around $100), although Ball offers a small dividend while Crown does not.
If You Can't Beat 'em, Join 'em
Lastly, I would like to mention opportunities to invest in publicly traded companies that have stakes in the Florida craft beer industry. It's not like investing in a small, local craft brewery, but it does provide investment in Florida craft beer via the big companies in the beer space.
Constellation Brands (stock symbol: STZ), who owns major beer brands like Corona, Modelo and Ballast Point, also owns Broward County's (more specifically Oakland Park) Funky Buddha Brewery.
Concrete Beach Brewery in Miami was founded by Boston
Beer Company (stock symbol: SAM),
makers of Sam Adams and parent company of Dogfish Head. The
company recently decided to rebrand Concrete Beach Brewing as
Dogfish Head Miami, while keeping the flagship Havana Lager. AB-InBev (stock symbol: BUD),
the Belgian company that acquired Anheuser Busch, completed
their acquisition of Craft Brew Alliance in September 2020.
Craft Beer Alliance owned a 24.5 percent of Wynwood Brewing
Company in the Miami area, meaning Budweiser (AB-InBev)
now owns this stake in Wynwood Brewing.
Investing in
AB-InBev not only provides partial ownership into Wynwood
Brewing, but also into Veza Sur Brewery, which is also located
in Wynwood. Veza Sur was founded by and wholly owned by
AB-InBev.Lastly, Florida Beer Company was acquired by a Trinidadian conglomerate that also owns Carib Brewery and is licensed to brew exports for Heineken, Guinness and others. The company, ANSA McAl Limited, is a publicly traded company (stock symbol: AMCL) but listed on the stock exchange of Trinidad and Tobago. Investing in this company requires access to international stock exchanges and involves currency risk in addition to capital risk.
Posted: November 8, 2020
