What’s Driving Acquisition of Craft Distillers? Fear. What Big – and Small – Distillers Need to Consider in the M&A Dance

Large distilled spirits companies have looked at what’s happened in the beer space and vowed not to repeat the same mistake.

The “mistake,” of course, was ignoring the growth of craft beer until Big Beer found that, like Pac Man, craft brewers were steadily eating away at Big Beer’s market share.

We interviewed Akshat Dubey and Rakesh Mani, who are Continue reading

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The Secret Sauce in Acquiring a Craft Distiller? Balance

“The secret sauce is that you need to balance between size and scale to maintain a direct connection with consumers” PwC’s Akshat Dubey and Rakesh Mani told us.  Obviously, the distillery needs a taproom, but not just to serve its products.

“When you talk to people they should tell you the story behind every flavor….how an accident Continue reading

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Who & What –

Vineyard Brands, Birmingham, Ala., hired Lara Sailer Long as its VP-Director of Brand Strategy.  She joins from Pebble Beach Food & Wine, where she was executive wine director.

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Study Finding Huge Jump in Alcoholism May Have Been Seriously Flawed

Last week, multiple media outlets, including the Washington Post and Bloomberg, — but not Kane’s Beverage News Daily —  reported on a study in JAMA Psychiatry that had an alarming finding: The rate of alcohol use disorder (alcoholism) in the US increased by more than 49% from 2001-’02 and 2012-’13.

Now some Continue reading

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F.Y.I.–

Eating Habits Affect Skin’s Protection Against Sun

Sunbathers may want to avoid midnight snacks before catching some rays.

A study in mice from the O’Donnell Brain Institute and UC Irvine shows that eating at abnormal times disrupts the biological clock of the skin, including the daytime potency of an enzyme that protects against the sun’s harmful ultraviolet radiation.

Although further research is needed, the finding indicates that people who eat late at night may be more vulnerable to sunburn and longer-term effects such as skin aging and skin cancer, said Dr. Joseph S. Takahashi, Chairman of Neuroscience at UT Southwestern Medical Center’s Peter O’Donnell Jr. Brain Institute.

“This finding is surprising. I did not think the skin was paying attention to when we are eating,” said Dr. Takahashi, also an Investigator with the Howard Hughes Medical Institute.

The study showed that mice given food only during the day – an abnormal eating time for the otherwise nocturnal animals – sustained more skin damage when exposed to ultraviolet B (UVB) light during the day than during the night. This outcome occurred, at least in part, because an enzyme that repairs UV-damaged skin – xeroderma pigmentosum group A (XPA) – shifted its daily cycle to be less active in the day.

Mice that fed only during their usual evening times did not show altered XPA cycles and were less susceptible to daytime UV rays.

“It is likely that if you have a normal eating schedule, then you will be better protected from UV during the daytime,” said Dr. Takahashi, holder of the Loyd B. Sands Distinguished Chair in Neuroscience. “If you have an abnormal eating schedule, that could cause a harmful shift in your skin clock, like it did in the mouse.”

Previous studies have demonstrated strong roles for the body’s circadian rhythms in skin biology. However, little had been understood about what controls the skin’s daily clock.

The latest research published in Cell Reports documents the vital role of feeding times, a factor that scientists focused on because it had already been known to affect the daily cycles of metabolic organs such as the liver.

The study found that besides disrupting XPA cycles, changing eating schedules could affect the expression of about 10 percent of the skin’s genes.

However, more research is needed to better understand the links between eating patterns and UV damage in people, particularly how XPA cycles are affected, said Dr. Bogi Andersen of University of California, Irvine, who led the collaborative study with Dr. Takahashi.

“It’s hard to translate these findings to humans at this point,” said Dr. Andersen, Professor of Biological Chemistry. “But it’s fascinating to me that the skin would be sensitive to the timing of food intake.”

Dr. Takahashi, noted for his landmark discovery of the Clock gene regulating circadian rhythms, is researching other ways in which eating schedules affect the biological clock. A study earlier this year reinforced the idea that the time of day food is eaten is more critical to weight loss than the amount of calories ingested. He is now conducting long-term research measuring how feeding affects aging and longevity.

 

What Does It Take to Thrive in Elite Sports?

What does it take to thrive in elite sports?

Usain Bolt. Serena Williams. Cristiano Ronaldo.

Those at the top of their sporting game put their heart and soul into doing their best, but new research has shed light on why thriving at elite sports is far more complex than it appears.

In the first study to examine thriving in elite sports performers, Dr Daniel Brown, a sports scientist at the University of Portsmouth, and colleagues at the University of Bath, have identified internal and external factors which contribute to a sportsman or woman being – and feeling – outstanding.

In a small-scale study examining the views of athletes, coaches and sports psychologists in elite sport, the researchers found 16 personal and external factors which promoted thriving, eight characteristics of thriving, and five outcomes of thriving.

Dr Brown said: “Doing your best as a sportsman or woman sounds simple, but we’ve found a complex mix of factors which promote thriving and could help those working at elite level.”

The results suggested thriving is likely to involve a combination of being optimistic, focused and in control, knowing what needs to be improved, being highly motivated, developing holistically (as a person as well as an athlete), seeing upward progression, and having a sense of belonging.

“Enablers such as support, self-belief, and an appreciation of, trust in and commitment to the process of development combine to help some make it all the way to the top of elite sport and, critically, to enjoy it,” he said.

“The results could also help explain why some individuals gifted at sport don’t thrive at elite level. Increasingly in high-level sport we are hearing stories of those who achieve high-level performance, but at the expense of their well-being.

“Research into what promotes thriving in such an environment is needed now more than ever.”

Dr Brown’s research found that elite athletes felt having the desire and motivation to do well and setting challenging goals were the key factors enabling them to thrive at the highest level.

When interviewed by researchers, all of the coaches said an athlete’s belief in and commitment to the process of development was important if they were to thrive. Sports psychologists recognized an athlete’s ability to manage stress was important, if they were to thrive.

All three groups agreed broadly that for an athlete to thrive at the highest level they needed high quality relationships and the support of their family and a coach.

Unsurprisingly, athletes and coaches agreed that the key indicator an individual was thriving was sustained high-level performance.

The researchers are not yet able to judge which single factor is the most potent, or to be able to assert confidently that altering some of the conditions or enablers of thriving could bring about a change in athlete performance, but both are the subject of Dr Brown’s forthcoming research.

One practitioner interviewed said concentration and focus were vital if an athlete was to thrive: “How you concentrate and what on is important, and the quality and depth of your concentration. People get distracted very easily by things and fail to be in the moment. Life slips through their fingers because they’re too busy on games consoles or social media. To concentrate on being a champion, your mind has to be developed to such an extent that you can really stay very tuned in to what you’re doing.”

A BBC report in July said that in recent months, a third of UK Sport-funded governing bodies have had to confront athlete welfare issues or complaints, raising fears medal success has come at the expense of duty of care.

Sports minister Tracey Crouch told the BBC she would be meeting with governing bodies this autumn in a bid to tackle the issue, and UK Sport has promised a “root-and-branch review” of culture in high-performance programs.

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What’s Driving Acquisition of Craft Distillers? Fear. What Big – and Small – Distillers Need to Consider in the M&A Dance

Large distilled spirits companies have looked at what’s happened in the beer space and vowed not to repeat the same mistake.

The “mistake,” of course, was ignoring the growth of craft beer until Big Beer found that, like Pac Man, craft brewers were steadily eating away at Big Beer’s market share.

We interviewed Akshat Dubey and Rakesh Mani, who are members of PwC’s strategy consulting business about what large players should look for in the small companies they seek to acquire – and what small companies should do to increase their attractiveness to large bev/al firms.

The attraction of the craft distillers space should be evident:  Last year, craft distillers in the U.S. sold 5 million 9-liter cases.  The PwC team expects craft spirits volume in 2020 to grow to 25 million cases.

Today, 1,300 craft distillers produce 2% of all liquor.  Just five years ago, craft distillers produced 0.8%.  Take a look at what happened with craft beer, they argue, which today represents 13% of the total beer market.

“If you believe craft spirits will behave anything like craft beer, potential upside is for share to go to 10%-12%, they told us.

A lot of categories in spirits have benefited from this renaissance.  Some categories have led this growth – bourbon, tequila, gin – while others, such as rum, have been slower to grow this traction.  “We expect those categories that have been slower up the curve, to hit their tipping points.  That’s happening with rum already/”

When it comes to acquisitions, it’s important, they said, that large companies acquire craft distillers have a broad assortment of products.  They noted that most craft brewers have eight to 15 regular flavors, as well as a lot of seasonals and other special products.  Spirits producers can have brown spirits, white spirits, etc., which enables them to take care of seasonality.

Even more important is that the craft distiller be able to scale up.  “It’s important for the distiller to be able say, ‘well, we do brown spirits, and that’s our core business, but we’ve also got a range of clear spirits where volume can be pumped up a bit more easily.’  A range of spirits also lets a distiller respond to a broader range of consumer occasions . . . seasonality, sipped drink vs. a cocktail, etc.

How should a larger company manage and grow a craft distiller, we wondered.  “First and foremost, they said, maintain the original credibility of the craft brand.  A lot of acquirers let the craft beer run a bit independently after the acquisition.  They help with marketing, with access to raw materials, while the founder or ceo stays on board.”

They noted the larger company can bring benefits that a craft distiller may not have.  These could

include the stability of raw material supply – many big spirits firms have long-term contracts with farmers who grow the raw ingredients – as well as the ability to drive down the cost of production, access to distribution networks and marketing agencies.

Two percent of the 1,300 craft distillers in the U.S. product more than 50% of all craft spirits volume, they said.

This, we thought, would make them a natural target for acquisition.  But the PwC consultants suggested this may not be the case.  They noted that large distillers are trying to get into the craft distilling business much earlier than Big Beer got into the craft beer business.

Large spirits producers are seeking regionally oriented companies, they said.

The large distillers have looked at what happened in beer.  They noted that Big Beer feels it didn’t get involved with craft soon enough, allowing a lot of independent brewers to succeed in establishing themselves.

So the larger spirits companies are going for slightly smaller distillers that have great products but are more regionally oriented.  Yes, the PwC consultants said, that’s a risk, especially that they will be able to scale a small firm.

“But they are buying them a bit cheaply.”  The simple fact is that, “if you’re a larger player, you need an acquisition that will move the needle for you.”

‘What’s really important is how much unused production capacity is available,” they told us.  “That determines the near-term growth potential that has a big impact on the valuation.  But also, what is the ability of the existing infrastructure to support expansion in the medium term.”

 

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