TLDR: New players means new buyers and more demand for great brands.

This series has been all about the blurring lines between the different alcohol segments and even traditional beverage (Coca-Cola, etc.)

If you haven’t read the previous issues, you can check them out here: (Part 1) & (Part 2)

This is one of the biggest transformations in the history of the American alcohol industry.

Personally, it was learning about this that led me to focus my investment banking practice on this space.

For brands and their investors, the opportunity is massive.

Why This Matters:

Rule #1 of spirits investing: Returns come from exits

So what happens when the universe of potential buyers triples?

Especially when those buyers are worth hundreds of billions of dollars…

But hold on. It’s even crazier than you think.

I always talk about white space: the holes in strategic portfolios where a new brand wouldn’t cannibalize the sales of existing brands.

Diageo, the largest spirits company in the world, has over 200 brands in its portfolio.

Finding white space is threading a needle.

Coca-Cola is 4x bigger than Diageo. Anheuser Busch and Molson Coors are worth billions. That’s white space on the scale of…

Each company building a new spirits portfolio has potential for every spirit and price point.

That’s quite a bit of M&A to come over the next several years.

Takeaway:

Understanding this trend is paramount to understanding the current opportunity with spirits investing.

If you want to hear my core thesis on spirits, here it is. I’m old school and think every investing thesis is BS that doesn’t boil down to some form of Buy Low/Sell High.

Buy Low: The spirits market is in post-COVID turmoil and capital is scarce. Brands are desperate and valuations are at decade lows for capital raises.

Sell High: There are more strategics with substantial white space actively investing in the spirits category. More players means more competition means better exits.

Math.