Where Beverage meets Finance

Softbank/WeWork:Constellation/Canopy
This is a real gin and it is serendipitous that I found their booth at BCB last week. The picture serves as a convenient prop - linking a conversation I had in 2018 about the STZ investment in Canopy with the contemporary focus on sustainable valuations, profit, and founder incentives. 

Over lunch in Midtown with an esteemed member of my readership (and architect of the Canopy transaction), I remember wondering what could possibly go wrong with investing $4 billion dollars in a company with trailing annual revenues of <$100 million. Turns out a lot. A lot of write downs, to be specific.

So whilst WeWork takes up majority of the headlines (and the balance between greed and fear tilts towards the latter) it is worth remembering that an analogous situation is playing out in our own industry under much less scrutiny. This isn't about the specific merits of either Canopy or WeWork's business plan (I am not in a position to comment on either) but rather about skewed incentives created by financing for blitzscaling (here's a quote from a different era i.e six months ago). The effects of both deals will no doubt percolate to the nether-regions of start-up and growth financing in drinks... 

Picks and Shovels
...but for the moment though the gold rush in new brands continues. And in a gold rush you best be selling picks and shovels. At BCB it wasn't the 300 new gins (including a Himalayan gin distilled in ... Goa) that caught my attention but what my friend L. had come up with - a new bar show for a new city that turned a profit in Year 1. I bet that has the M&A guys at Reed Elsevier interested. In a similar vein, I met a few suppliers of the mundane but necessary - bottle caps, closures etc. I will be spending some time under the hood there.

A New Breed of Craft
Also interesting at BCB was the type of new entrant: coffee and ingredient companies, Melitta and Monin, respectively, have produced beverages with all the traits and semiotics of craft/boutique brands. With their existing distribution and points of sale it would seem as it's 'Game On', particularly in the wellness space. 

Hard Selzer
When will it properly land in the UK? My highly unscientific survey at a cousins wedding in Chicago indicated that even 40 year old men are drinking this as an alternative to beer. Hardly surprising given all the NABCA data over the summer. But drinking sparkling water in Europe is not a new trend (whereas it sorta is in the US) so it remains to be seen whether spiking your bubbles will be a bridge too far for the European consumer.  

X
That line around the block in SoHo was for the brief coming together of two clothing brands - neither one of which I had heard of - for a limited time. "Collabs" are hot across consumer and they will no doubt show up in drinks. My friends at INKD are doing this in London but through collaborations with non-drinks brands. I'd really like to see two competing drinks brands come together; but given that many N.A. bourbons and Scotch whiskys share liquid it may be a bit too "authentic". Fireball x Bulleit, anyone?

Come say hi to me on Nov. 29; I am supposed to moderate a panel on F&B and the next gen consumer.