Craft Brew News:
Southern Tier, a rapidly growing regional craft brewer located in upstate NY, has sold undisclosed stake to family office Ulysses Group. (That stake is a majority, CBN understands). And simultaneously, Southern Tier has hired a new prexy, John Coleman, formerly prexy of Pabst Brewing, an AB region vp out west and a NY native. John starts Monday.
Deal allows owners Phin and Sarah DeMink to simultaneously cash out and stay in. They retain stakes in company, but get infusion of patient capital from Ulysses Group, which has sought to enter beer space before, even looked at a sizable beer distrib. Ulysses Group has about $1.5 bil under mgt. In press release, Southern Tier referred to this deal as “partnership…. This partnership will support the continued expansion of the brewery, new distribution support, sales force growth and enhanced branding and marketing initiatives.” Ulysses Group “investment is subject to licensing approval.” First Beverage Group, which advised on Boulevard deal last yr, acted as advisor to Southern Tier. First Bev reportedly has other craft deals in the works.
Southern Tier was founded by Phin and Sarah in 2003 and has averaged 48% growth since inception. And it’s up another 40%+ this yr. It will pass 100,000 bbls and has capacity near 200,000 bbls. This yr it launched DeMunck’s Hard Cider and it will be opening a craft distillery in 2015. Southern Tier is in 30 states, but its core biz in 3: NY, Pennsylvania and Ohio. There are presently no plans to move into new states.
“The driving force” behind the Ulysses Group investment “was not liquidity,” founder Phin told Craft Brew News, but rather after a “lot of sleepless nights” and “uneasy decisions” even amidst “pretty phenomenal growth,” he and his wife looked for answer to question: “What does Southern Tier need for the future?” Ulysses Group plus hiring of John will bring “right resources, right tools.” Tho the announcements coincide, Southern Tier had been looking for ceo prior and separately. Phin praised new ceo John’s relations with distribs, retailers: “This business is about relationships. That’s very important to me.”
Phin wants to get back to doing what he does best, which he sees as brewing and innovating. “I see myself even more involved,” said Phin. Ulysses Group’s “vision” is “very much aligned” with Phin’s and he “would never have taken on a partner” if that were not the case. Interestingly, he is childhood friends with Firestone Walker’s Matt Brynildson. They grew up together in Kalamazoo, Mich and began brewing together as teens, even buying home brew supplies at Larry Bell’s store. This transaction on top of recent Uinta deal, Harpoon ESOP, increasing involvement of private equity firms and other deals in works, suggests that long-rumored craft-dealmaking is finally heating up.