Welcome to Issue #14 of The Quench Report, the newsletter that delivers the latest and greatest in Beverage Alcohol where we spill the tea (and beer, whiskey, and wine).

What’s on tap for today:;

• 🍺 The NA Beer Takeover - When Athletic Dethroned O’Douls

• 🥃 Four Roses Rumors Swirl - A New Owner Coming Soon?

• 🆕 Recess Secures $30M in New Funding - The Next Big Beverage Trend?

• ♨️ This Week’s Hot Jobs in Beverages

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WHAT’S ON TAP THIS WEEK

📊 Nov 4
• Nielsen data through Oct 25
• Circana data through Oct 26
• Molson Coors Q3 Earnings

📊 Nov 6
• Diageo Q1 Trading Statement

🍺 A RECENT HISTORY OF NA BEER

George Clooney launching an NA beer? Yep, you read that right. When Hollywood A-listers start circling your category, you know something's up.

Let's take a trip down memory lane to see how NA beer has evolved over the past few years.

Check it out here 👇️ 

🧠 A few reflections on the data:

• Incredible Change. As recently as 2020, this category was dominated by O’Douls and Busch NA. Fast forward to today? Athletic and Heineken 0.0 have stormed the castle and taken the throne. That's how fast things are moving.
  

• Athletic’s Quiet Dominance. Here's a fun fact most people don't know: Athletic Brewing is the #1 NA beer brand in America by volume. Let that sink in. An independent brand backed by a soda company is winning in beer, one of the most scale-obsessed categories on the planet. Wild.

The bottom line: The celebrities are coming - this is clearly the new Tequila! NA beer isn’t going anywhere, there is no longer a question, and the new arms race is just starting. Get your popcorn ready 🍿 

🥃 FOUR ROSES RUMORS SWIRL

Rumors swirled last week that Kirin was working with UBS to sell Four Roses. Kirin acquired the brand in 2002 and has done an admirable job turning it around, which was almost extinct as recently as 2010.

Here's the thing about Four Roses: Every spirits professional and bourbon nerd knows this brand well. But ask your neighbor? Probably blank stares. The prospective buyer who can take advantage of that profound respect and bring it to the masses will do well.

Need a reminder of the portfolio? 👇️ 

🧠Key Takeaways

It has been reported that Four Roses has adjusted EBITDA of roughly $70m. The fact that is the only number “leaked” probably means it’s perceived as the most significant sticking point to justify the $1B valuation ask. It reminds us of a common meme that this is the last thing EBITDA sees before it gets adjusted…

Given that all of those SKUs should be priced higher anyway, we think buyers will eventually get comfortable with any incremental profitability improvement strategies if profitability truly is the biggest sticking point.

Our take? Five years ago, we could've named 10 buyers who'd be salivating. Today, there are still at least five serious contenders who should look at it. Someone may bite.

🆕 RECESS SECURES $30 MILLION IN NEW FUNDING

Still skeptical about the adaptogen beverage wave? Recess just closed a $30M Series B led by Cavu Consumer Partners, yes, the same folks who backed Poppi before that sweet $1.95B Pepsi exit.

See for yourself: 👇️ 

With the new investment comes new leadership. The company appointed Kyle Thomas, a beverage industry veteran from C4 Energy and Coca-Cola, as president and co-CEO to help scale operations. Kyle is credited with having a key role in growing C4 to over $1B in Net Sales.

Some people may not recall that Recess was actually launched as a “CBD Sparkling Beverage” and pivoted away from CBD/hemp towards magnesium and adaptogens, which now dominate sales.

🧠Key Takeaways

This space is hot. According to investors we talk with, valuation multiples on FBY adaptogen beverages are several turns higher than those of other high-growth beverages today. Translation: Money is flooding into this space.

If Recess continues to be successful, expect to see copycat “Recess” strategies where companies pivot away from initial ingredients and move into adaptogens that are better for you.

THIS WEEK’S HOT JOBS IN BEVERAGES

These roles came to us via personal recommendations (not public job boards). Want your open role featured? Email: [email protected] 👇️ 

• General Manager - Garage Beer - Texas

• Manager Innovation - Pernod Ricard - NYC

• Sr. Manager Chains - Pernod Ricard - Arizona

• VP National Sales Manager - Confidential - Los Angeles, CA

• Market Manager - Pantalones Tequila - Austin, TX

• Director, Data and AI Governance - Breakthru - Remote

THANKS FOR READING

The Quench Report is a free weekly newsletter from Thirsty Insights, a beverage alcohol consulting company that serves top clients in strategy, insights, and analytics.

Any questions, please email us at [email protected]