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Capital of the World

Beverage World

By Bill Anderson

One of the most interesting beverage stories in the last several months was the announcement that Kirin had invested a reported $6 million into the innovative, brain-health drink Nawgan.  Nawgan is a well-conceived product pioneered by St. Louis professor and entrepreneur Rob Paul. But the brand’s sales are still small, and it is only sold in a few limited markets. The investment size has to be considered miniscule compared to most of Kirin’s investment targets.

There may have been many reasons underlying Kirin’s investment decision, but the deal points out the interest of large internationals in establishing broader beachheads in the US beverage business.

Our firm was involved in negotiating Tata’s investment into Activate, and we’ve been contacted by many other international companies looking for investments in the US market.  Activate and Nawgan are just two of several investments completed by large international entities in the last 12 months.

International conglomerates see the systemic changes taking place in all tiers of the US business, and they know that emerging brands will need capital, guidance and introductions into foreign markets. They also realize that large portions of the US profit pool in all segments are at play.

There couldn’t be a better time to come into the US market.

International companies will look for a few key characteristics in potential acquisition targets. First, like anyone else, acquirers want products with true differentiation. The teams at Activate and Nawgan both understood this well. Internationals know that American consumers are looking for something local, artisanal, organic, highly functional or innovative, with an authentic and compelling brand story.  Non-US investors will want the same things.

Second, international buyers may likely be more interested in the investment if the brand has an experienced management team in place around which the acquirer can build a platform. Most investors will then take that initial investment and acquire complimentary, add-on brands.  A network of experienced sales and marketing professionals is critical.

Third, brands need to show that they have a deep understanding of the US distribution business. As more channels are defined and open up, a company’s ability to pick and choose different distribution strategies becomes more and more important.

And finally, many international investors will want to know that the US brand will be successful back in their own countries. Linking a US brand’s characteristics to the consumer trends within the international acquirer’s market will be an essential selling point.