It’s a topic near and dear to my heart: beer.
One of my favorite business success stories of the past 10 years is the craft beer boom.
It’s not just because I love a full-bodied IPA after a long day at work, but because the whole industry started out as a labor of love and blossomed into a money-making miracle.
These craft breweries began with true connoisseurs: mom-and-pop operations with a love for their product and the drive to make it happen. They created breweries in their garages and sheds and grew them into million-dollar businesses. They created brews that transcended the typical tasteless, watered down, light beer that has defined America for decades. And they created entire brands that blew the roof off of consumers’ expectations.
In short, the public has clearly shown that it’ll pay top dollar for high-quality beer, which left the Budweisers and MillerCoors of the world desperate to catch up after years of selling cheap swill.
We’re about to see history repeat itself — but on a much larger level for investors. But it won’t be in beer…
That’s because right now, you can actually buy these new “craft companies” before they are snapped up by the big fish… and make a fortune on both the predator and the prey.
I first witnessed the phenomenon about a decade ago with Dogfish Head Brewery. It is a craft brewery that operates close to my family home in Delaware.
I toured its brewery and was treated to the best damn IPA I’d ever had.
Other beer drinkers clearly agreed: the company grew 400% in the three years after I first had a 120 Minute IPA. What once was a regional delight became a powerhouse in the beer industry and can now be found in 31 states.
While Dogfish Head is still proudly independently owned, many of its ilk have been bought out for millions and even billions of dollars…
Over the past two years, larger companies have bought the following craft breweries outright:
- Ballast Point (Constellation Brands Inc. for $1 billion)
- Elysian (AB InBev)
- 10 Barrel (AB InBev)
- Hop Valley (MillerCoors)
- Terrapin (MillerCoors)
- Revolver (MillerCoors)
- Devil’s Backbone (AB InBev)
- Saint Archer (MillerCoors)
Other small brewers reached partial ownership and distribution deals that were incredibly lucrative, but still gave them some control over their product:
- Brooklyn Brewery (try the Brown Ale) sold about a quarter of its business to Kirin, the Japanese brewer responsible for the beer served at your favorite sushi joint
- Heineken bought 50% of Lagunitas for $500 million (try the Little Sumpin’)
- Firestone Walker (try the Velvet Merlin) was “invested in” by Duvel Moortgat — alongside Brewery Ommegang and Boulevard Brewing
These were all massive, million-dollar windfalls for the companies that sold. But individual investors like you and me would have had no chance to invest in these companies. None were publicly traded…
That’s why I have my eyes on a much greater opportunity with an identical business model, but an even greater upside…
I’m looking to invest in its cousin — craft liquor. The very same thing that happened with craft beer is now happening in the craft liquor segment.
In 2003, there were 60 craft distillers in the United States. Now, there are more than 1,280 of them: a 2,000% increase in just over a decade. And that doesn’t include the 200 distilleries that are currently under construction.
I’ve noticed it myself. Typically, when I patronized my local Baltimore wine and spirit shops, there would be a free tasting for wine or craft beer. That has recently changed…
The last several trips I’ve made to whet my whistle have been met with a new craft liquor.
Upon my last visit, I was treated to Shot Tower Gin — the first gin distilled in Baltimore since prohibition. The founder poured me a gimlet and I have to say — it was the best damn gimlet I’ve ever had.
The gin is from the Baltimore Whiskey Company, an upstart distiller based in my old neighborhood. Founded in 2015, the Baltimore Whiskey Company produces gin, apple brandy, and ginger-apple liqueur. Its namesake rye whiskey is currently aging in barrels and is set for release next year.
If it’s anything like the Shot Tower Gin, I cannot wait…
Distillers like this are rapidly expanding all around the country. I think we’ll see an explosion in popularity similar to what we saw in the craft beer boom.
But — like beer — there are very few distillers that are publically traded — and even fewer that look like good investments. Thankfully, my colleague Nick Hodge has uncovered one that could become the poster child for the whole industry. Sales have been climbing rapidly and are on the verge of breaking out. The company is only distributing to less than half the states now, but recent key hires of veteran liquor industry sales execs are helping to push sales nationwide.
Once that starts happening, there is no telling how far the company can go. And if/ when they are bought out by one of the big boys, this could be a life-changing stock. Nick is predicting 1,400% gains in short order.
But you have to act now.
It could be like buying Anheuser-Busch (NYSE: BUD), Molson Coors (NYSE: TAP), and Boston Brewery (NYSE: SAM) — right BEFORE the end of prohibition.
