TLDR: Who your consumer is decides your M&A options
Let's recap spirits investing fundamentals:
Spirits investments generate great returns if the brand is acquired.
Strategic buyers only acquire new brands that don't cannibalize the sales of their brands.
There are a finite amount of potential strategic buyers.
So the most important element when evaluating a spirits investment is whether there is enough "white space" for it in the portfolios of potential buyers.
That white space can come in different forms:
- Spirit Category - Rum vs Tequila vs Bourbon
- Price Point - A $100 tequila isn't competitive with a $20 one
- Flavor - Cookie Dough whiskey has a different use case than Jack Daniels
I know multiple $20M+ revenue, bourbon brands that are stranded, because there are very few strategics left without an asset in that category.
But it's hand-crafted with real American grains!
We won quadruple platinum gold at the West Memphis Junior High spirits competition!
If you take the time to map out all the strategic portfolios, you will notice there isn't much white space left within the main categories...
So where do we find it?
Culture. The white space of selling to consumers who are not white.
It's Modelo Time...
In 2023, Modelo ended Bud Light's 22-year run as the most popular beer in America.
Bud Light made it easy on them with the marketing case study of the century...
but you don't sell 4 billion bottles/cans per year without tapping into something.
It's not just the growth of the Latin American population, but the explosive popularity of Latin culture across the globe.
^This picture is from Thailand. Apparently, there is a massive Chicano subculture in Asia. Fascinating rabbit hole if you get bored.
The opportunity applies to any culture or sub-culture if it's big enough to move the needle on sales: African Americans, Korean Americans, Indian Americans, etc.
Who drinks bourbon?
White Dudes.
I didn't have to look it up to know that, but I did anyway.
I was right...
78% of bourbon drinkers are white men.
Heaven Hill is one of the largest spirits producers in the US, with more than 15 whiskey brands in their portfolio including Elijah Craig and Evan Williams.
Strong argument that there is near zero white space in that category for them regardless of price point.
Any new whiskey brand would likely cannibalize at least one, if not most of their portfolio
unless 80% of the consumers for the brand are Asian women...
They pick up that phone call.
^If your pitch deck cover looks like this, you are going places
Takeaway: Brands that focus on capturing the loyalty of specific consumers have more options when it comes to M&A and are better investments. | 
