First Beverage Group: News: In The News

Beverage Business INSIGHTS

May 19, 2010

Joth Ricci, who in Apr moved from running Jones Soda Co to post as mgg dir of operations at investment shop First Beverage Capital, has been named to board of key First Bev holding, Activate Water marketer Rising Beverage Co. He joins First Beverage's Bill Anderson and Michael Wong on board. Joth, who earlier was gm at Columbia Distributing, joins Activate prexy Dan Hollander (ex-Mission and Haralambos) as wholesaler vet involved in rollout of brand that has positioned itself to channel as uncommonly wholesaler-friendly.

INSIGHTS Express

March 5, 2010

LAND OF THE GIANTS: MCLANE'S BUYING GA SPIRITS DISTRIB, EMPIRE

Fascinating somewhat leftfield development as distribution giant McLane's ($31 bil subsidiary of Warren Buffett's Berkshire Hathaway) has deal to buy Ga/NC spirits distrib Empire (also sells Boston Beer, Sierra among other beer brands). Gotta imagine this purchase is just the beginning. Unlikely a behemoth like McLane's got into spirits distribution for just this one deal alone. Bill Anderson's First Beverage Group, including ex-GE Capital exec Sean McLaren, served as advisor. Recall that Berkshire Hathaway also has $11 bil stake in Coke and formerly had big stake in AB. Entry of McLane's into alc bev distribution along with recent Coke deal to buy CCE represent sweeping changes on DSD distribution landscape. So Warren Buffet will be in alc bev distribution biz.

Beverage Business INSIGHTS

March 11, 2010

JONES CEO RICCI LANDS AT FIRST BEVERAGE CAPITAL

Joth Ricci, who decided to move on from job as prexy/ceo of Jones Soda as co moves to close merger with Reed's Inc (BBI, Mar 9), is teaming up with entrepreneur Bill Anderson and his First Beverage Group's private equity div. A day after Tues announcement of Reed's/Jones merger plan, LA-based First Beverage said Ricci is signing on as managing dir of operations for unit, called First Beverage Capital, where he'll work with managing partner Michael Wong to oversee firm's portfolio cos, including Activate functional waters and spirits developer Altamar Group. "Joth's wealth of experience will be a tremendous addition to our team and our partners," said First Beverage chmn/ceo Anderson, referring to resume that includes serving as gm of giant Columbia Distributing in Portland, Ore, and earlier tenure in sales and marketing management slots at McNeil Consumer Healthcare/Johnson & Johnson.

INSIGHTS Express

March 5, 2010

LAND OF THE GIANTS: MCLANE'S BUYING GA SPIRITS DISTRIB, EMPIRE

Wine & Spirits Daily

March 5, 2010

MORE ON BUFFETT BUYING EMPIRE

As we first reported yesterday, a subsidiary of Warren Buffett's Berkshire Hathaway has struck a deal to purchase Atlanta-based Empire Distributing, which has operations in Georgia and North Carolina. Empire is owned by brothers David and Michael Kahn. That subsidiary is grocery distributor McLane's, worth $34 billion. Bill Anderson's First Beverage Group, including ex-GE Capital executive Sean McLaren, advised Empire on the deal.

McLane provides grocery and foodservice supplies for thousands of c-stores, mass merchants, drug stores, military locations and chain restaurants, with 38 distribution centers nationwide. Berkshire Hathaway purchased McLane from Wal-Mart in 2003 for $1.45 billion.

Ironically, the beer industry believed not too long ago that McLane would make an entrance and bypass franchise beer distributors. Turns out they had their eye on wine and spirits. So what now? We can only speculate the impact this will have on the industry but it seems unlikely Buffett will stop with Empire Distributing. Recall that Berkshire Hathaway also has $11 billion stake in Coke and used to have a large stake in Anheuser-Busch.

We told you yesterday that Buffett likely paid top dollar since Georgia is a franchise state. A law in Georgia caps acquisition based market share at 25% so it would seem that he can't buy too much more market share. However, there are indicators that the 25% law won't always be in place.

This deal could have sweeping implications for the wholesale wine and spirits business. Clearly McLane was smart to obtain their beachhead in a franchise state, where the suppliers are not able to fly. From that established and well-protected base, McLane can move into other regions. This isn't the last we've heard from them. What is unknown at press time is what the wine and spirits suppliers think of such a large public company buying into their distribution system.

What is also unclear is how much McLane, a logistics expert, will integrate Empire's operation into their own. McLane has 38 distribution centers, including one in Georgia and NC. It already services many of the same off-premise accounts and a few on-premise accounts. Will we see wine and spirits on McLane trucks? Time will tell.

As you can see, there are many unanswered questions which we will attempt to answer for you in the coming weeks. Stay tuned...

Wine & Spirits Daily

March 4, 2010

BUZZ: BUFFETT BUYS EMPIRE

The streets are a'buzz with unconfirmed reports that legendary investor Warren Buffett, through a subsidiary owned by Berkshire Hathaway, has purchased wine and spirits distributor Empire Distributors. Representatives at Empire and Berkshire were unavailable after hours at press time.

If true, this could signal a new era in distribution in the industry with a new well-capitalized player. Empire likely is not the end, as Buffett looks to roll up the regional players or possibly go after the Big Kahuna, Southern Wine & Spirits. It's likely that Buffett paid top dollar since Georgia is a franchise state. Also, he can't buy too much more market share in Georgia as the state has capped acquisition based market share at 25%. However, this may be a beachhead to purchasing more wine and spirits wholesalers in other states. It will be interesting to see how the suppliers deal with a public company as historically spirits companies prefer privately held distributorships.

Buffett is no stranger to the alcohol beverage industry, once being among the largest shareholders of Anheuser-Busch. Stay tuned...

Beer Marketers INSIGHTS

August 12, 2009

MONARCH'S $50 MIL WAREHOUSE AND CORPORATE HQ OPENS

Yep, $50 mil, perhaps a record for a new beer distrib's building (and way up from $35 mil originally announced, mainly because of Verticue system, INSIGHTS understands). Monarch, a 15-mil+ case MC distrib in Ind (run by NBWA chairman Phil Terry) has just opened its state-of-the-art 500,000 sq ft facility on 93 acres, which it's calling "the largest combined beer and wine center under one roof." Recall, new warehouse funded by First Bev Capital.

Beverage Business INSIGHTS

August 4, 2009

HOLLAND BUILDING DSD NET FOR ACTIVATE WITH LONGTIME DISTRIBUTOR'S PERSPECTIVE; CALIF, ARIZ AND HAWAII ARE INITIAL TARGETS

Activate Beverage prexy Dan Holland figures he's uniquely positioned to foster effective working relationship with demanding DSD distributors: after all, for more than 30 yrs, he was of that breed himself. As reported, Dan recently left role as vp/gm of Haralambos Beverage Co in LA to run brand launched by youthful entrepreneurs Anders Eisner and Burke Eiteljorg, in process reuniting with Bill Anderson, core Activate investor via his First Beverage Ventures for whose family's beer distributorships Holland had worked previous 27 yrs (BBI, Jul 1). So what does that perspective mean in practical terms? Holland says prospective distributors can count on Activate's maintaining 3 principles: best agreement in biz regarding buyouts, adequate feet on street to support brand, and equity opportunity for distributor partners. "It's my 1st shot on this side of the table, but hopefully my distributor experience will help," he said. Note that similar experience is unfolding on East Coast where former Big Geyser ceo Harold Baron has jumped to ceo spot pitching Beverage Innovation's Venga functional infusions to distribs (BBI, Jul 1). Activate, of course, is among flock of functional lines coming to market that drop active ingredients into liquid at time of use, for greater efficacy; interesting product proposition and substantial kitty have generated considerable buzz in trade.

In initial mos on job Holland has been scrambling to assemble comprehensive DSD network for Calif, Ariz and Hawaii by Labor Day, with Midwest markets like Ind and Ill likely next and then East Coast. In launch market, 4 counties of LA metro served by Haralambos Beverage, he's brought on 1 regional mgr and is seeking 2 more, each of whom will hire 3-5 area sales reps. Brand has entered upscale retailers like Bristol Farms, Gelson's and Henry's Market, and is being presented to major grocery chains. He's confident of bringing Paradise Beverage aboard in Hawaii shortly, and is readying presentations to distribs in northern Calif and Ariz. Recruited as sales dir is former Cadbury exec Joe McCoy, who'll be managing sales force that is planned to grow to 50+ by May, not counting East Coast. Production currently is at Chameleon Beverage in City of Commerce.

Dan readily acknowledges that 55 is somewhat advanced age to hang out shingle as entrepreneur for 1st time, but says he's relishing the hurly-burly. As for split with Haralambos Beverage owner Tony Haralambos, that was amicable, coming at time that distrib has had to sharply downsize after losing brands like Vitaminwater, Honest Tea, Muscle Milk and several beer brands during brands' transitions to new owners. Holland said he made case that he wasn't as crucial to operation right now as key sales execs. Besides, he joked, "Tony's a big investor (in Activate) - so I'm watching his money."

Beverage Business Insights

July 1, 2009

Beer Innovator Anderson Enters Emerging-Bevs Space via Stake in Activate; Vitamin-Enhanced Water Names Haralambos Vet Holland as Prexy as It Preps Expansion Beyond LA

Bill Anderson, familiar beer-world figure who's carved out rep as innovator on distributor-financing front, has just thrown his hat into emerging-bev ring via investment in Activate, vitamin-enhanced water co-launched by former Disney chief Michael Eisner's son Anders Eisner. Financing round of $3 mil is being made by Anders Eisner along with First Beverage Ventures subsidiary of Anderson's First Beverage Group, until now focused on warehouse sale-leaseback deals. Activate has brought in as prexy Dan Holland, former vp/gm at Haralambos Beverage and earlier a 27-yr vet of Mission Beverage distributorship owned by Anderson family. Investment "signifies a vote of confidence from a very well-respected firm in our industry," said Eisner's co-founder, Burke Eiteljorg. "That endorsement, combined with Dan's expertise, will be very helpful for us as we build relationships with distributors and retailers" as part of planned expansion. So far brand has only tested in LA, via Haralambos Beverage, whose owner Tony Haralambos is major investor. For next round, co plans to solicit investments from distributors, Bill told BBI. Activate, in functional and hydration sublines, uses cap-dispensing technology to discharge vitamins in powder form at point of consumption to avoid degradation on shelf. Functionals include Vitamin, Immunity, Antioxidant and Energy sku's, while Workout hydration line is offered in 4 flavors. Stevia-sweetened line contains just 5 calories per bottle. "It's hid in the lid" is slogan.

Capital Shop with Beverage-Only Focus, Including Brands and Distributors Beyond implications for brand, investment signals emergence of what could prove to be significant capital source in NA bevs. In interview with BBI this morning, Bill noted First Beverage Ventures is planning investments across all bev segments, alcoholic and NA, and is currently in "active talks" with several on both sides. Just 3 wks ago it quietly made 1st investment on alc side, in mid six figures, in Altamar Brands, developer of hi-end spirits brands established by Brown Forman vet W.L. Lyons Brown whose stable now includes Tequila Ocho, Kubler Absinthe and Right Gin. "We started with a simple assumption, that there are not enough friendly, knowledgeable investment sources" for emerging bev brands and distributorships, Bill said. "People kept saying the real estate component is great, but there really is a need for good advice and additional capital."

To date, Anderson's First Beverage Group (firstbev.com) has focused mainly on warehouse sale-leaseback deals involving beer distributors, and has also offered fresh thinking on potential of real=2 0estate investment trust (REIT) concept to help solve capital crunch for distributors. Co broadened purview in May with establishment of First Beverage Financial Advisors, led by former GE Capital bev banker Sean McLaren, to offer advice and mezzanine financing to cos in all bev segments. With First Beverage Ventures, "we're now a broader financial services firm dedicated to beverages and knowledgeable across financing, marketing and distribution," Anderson said.

In contrast to most other players, "we do nothing but the beverage business . . . We're not looking for distressed assets and not coming in as a controlling investor." Key advisors include former Coors strategy chief Rob Klugman, soft drink M&A specialist Marion Glover, beer distribution broker Joe Thompson and Holland. Thru Topa Equities, Anderson's family owns major beer houses Ace Beverage and Mission Beverage in Southern Calif and Paradise Beverage in Hawaii (tho Bill's businesses are separate). Unusually among major multi-location distribution operators, Topa's operations span Anheuser-Busch, Miller and Coors brands, plus wide range of imports and craft brews, allowing Bill to develop breadth of experience and "non-denominational" view of potential investments. He said Activate will discuss assignment of brand to Paradise but not to Ace or Mission, whose LA territories overlap Haralambos'. More details from co shortly on distribution plans, he promised.

Activate Investment Bill said First Ventures has been evaluating brand investments for past 9 mos with particular interest in functional waters that are healthy, low-cal and have clear point of differentiation. Co was "very intrigued" by Activate's patent-protected cap-dispensing technology, while brand's co-founders were seeking investor with expertise in distribution as they planned move beyond LA. He credited co-founders with doing "terrific job taking it this far." Partners will take "very distributor-centric approach" to future growth, incl looking to distribs for next capital round. No details beyond $3 mil total round from both parties.

Beer Business Daily

May 6, 2009

First Beverage Hires Ex-Ge Capital Exec, Launches New Division

Need money? You'll want to read on. You will no doubt recall Bill Anderson's firm, First Beverage, which has purchased several beer distributors' warehouses in a lease-back program to free up capital. Well, yesterday First Beverage announced that it has formed First Beverage Financial Advisors, to be led by former GE Capital beverage banker, Sean McLaren, as its president. The new financial advisory group will provide debt and M&A advisory services, as well as mezzanine financing to distributors.

"We formed First Beverage Financial Advisors in response to the increasing needs of beverage operators for a long-term, comprehensive financial partner with deep ties to the beverage industry," said Bill Anderson, chief of First Beverage. "Sean is one of the preeminent beverage bankers and he brings a deep knowledge of the industry and operator economics. We are both extremely excited to be able to provide this wider array of financial services to the leading operators in the beverage industry."

Beer Marketers Insights

February 9, 2009

Finally, tho brewers have traditionally frowned at private equity cos owning distribs, concept may have to be revisited to make some of next wave of deals happen. In fact, First Beverage Capital, which so far has provided "real estate capital solutions" for distribs, "is exploring expanding into an equity financing program," Chairman Bill Anderson told INSIGHTS. This trend towards private equity "makes sense" sez source, noting strength of cash flow and "less risk" in beer compared to other bizzes. These private equity cos have a bunch of dough, which they're committed to spend. They're looking for safe investments in "recession resistant" industries with a "proven track record," said another. So lotsa angles, which may lead to some very interesting plays in 09 and beyond.

Beer Marketer's Insights

January 7, 2009

Save the Date, May 3-4; Insights 3D Consolidation Conference in Chicago

Speaking of Chi, that will be scene of upcoming CCIII, or Consolidation Conference III. Distributor consolidation is hottest topic in industry again. So Beer Marketer's INSIGHTS will host its 3d consolidation conference in downtown Chi in early May. It will be an intensive one-day conference focused on just one subject: beer distributor consolidation. We'll explore it from every angle, with lots of new insights, analysis and data. Confirmed speakers already include NBWA chairman Phil Terry, consultants Mike Mazzoni and Joe Thompson, First Bev Capital's Bill Anderson, and consultant Rob Klugman. We'll have a panel of supplier execs (MillerCoors participation confirmed), and a panel of financial execs. Stay tuned for more details, including registration, later this week.

Beer Business Daily

September 15, 2008

First Beverage Announces Huge Facility Deal with Monarch

Bill Anderson and his team at First Beverage announced that it has entered into an agreement with Monarch Beverage Company for the development of its new 530k square foot facility in Indianapolis. First Beverage will own the new facility, and Monarch and First Beverage have entered into a long term lease, which includes an option to expand the facility by an additional 400k square feet. The project is estimated at $35million, exclusive of the expansion option. Monarch chief Phil Terry said First Beverage was 'by far the best source of capital' for the facility, as the deal was 'extremely complex' with its tax incentive financing, says First Beverage.

Beer Marketer's Insights

September 11, 2008

First Beverage Capital Partners with Monarch in $35 Mil Facility

Biggest deal yet for First Beverage Capital, which provides real estate capital to bev industry. It's developing 530,000 sq-foot-facility with Monarch Bev of Indiana, the 15+ mil-case megadistrib, headed up by incoming NBWA chairman Phil Terry. Monarch will lease from owner First Bev. Project "estimated at $35 million" and was "extremely complex," said First Bev. First Bev "was by far the best source of capital," said Phil. Last yr, First Bev bought $26 mil Crescent Crown facility in Phoenix. First Bev founded in 2005 by Bill Anderson. "This is our 12th deal and we're over $100 million in assets," Bill told INSIGHTS. "Phil's deal takes us to a whole new level," he added. Plenty in pipeline.

Beverage Industry Magazine

February 2008

Marion B. Glover, president of Atlanta-based Glover Capital, Inc., has joined the Industry Advisory Council at First Beverage Capital, Los Angeles.

Beer Marketer's Insights

December 18, 2007

First Beverage Buys Two Warehouses for Keg 1

Two new angles in consolidation have found they can work together. First Beverage Capital, "focused on becoming the top provider of capital to the beverage industry through sale-leaseback transactions," bought warehouses in Odessa and Alpine, Tex that formerly belonged to Permian. Permian, a 2-mil-case Miller/Coors distrib, is first distrib bought by Keg 1, comprised of "11 leading primarily Miller-Coors distributors focused on the strategic acquisition of beer distributorships."

Beverage World

November 2007

NBWA Convention: Financial Solutions

In response to increased consolidation, distributors are investing in larger facilities or advanced, automated systems for their warehouses. First Beverage Capital helps beverage operators turn their real estate into ready cash to fund growth and improve operating efficiencies.

Beer Business Daily

October 15, 2007

First Beverage Capital Acquires Distribution Facility in Chicago

First Beverage Capital (formerly called National Beverage Properties) purchased a 52,000 square foot warehouse in Illinois operated by Euclid Beverage, Ltd., owned by the McEnery family. This is First Beverage's fifth acquisition this year and increases their total properties to over 1.1 million square feet throughout seven states. FBC chief Bill Anderson says Euclid Beverage will lease the facility back from First Beverage on a triple-net basis for up to 30 years.

Modern Brewery Age

June 18, 2007

NBP Acquires $26 Million Beer Distribution Facility in Phoenix

National Beverage Properties announced that it has closed on the purchase of the 250,000 square foot Crescent Crown Distributing warehouse in Phoenix, Arizona.

According to Bill Anderson, NBP chairman and CEO, this increases NBP's portfolio to over one million square feet of beverage warehouse space and is its fourth acquisition this year.

Built by the Pearce family, the Phoenix property is currently occupied by Crescent Crown Distributing as a result of their 2004 purchase of Pearce Beverage Company.

"The Pearce family built a world-class facility in terms of its functionality, quality of construction, access to rail and overall location," Mr. Anderson said. ''It's one of the best sites in the beverage distribution world, and we're very excited to start a relationship with Crescent Crown, one of the standout Miller/Coors/All Other houses in the beer industry."

"Partnering with Bill and his team at National Beverage Properties is the best solution Crescent Crown could have asked for to address our real estate needs here in the Phoenix market," said James R. Moffett, president of Crescent Crown Distributing. "As the Phoenix metro market continues to expand exponentially, Crescent Crown is going to need a real estate partner that not only understands the beer business but is flexible and well capitalized enough to provide our warehousing and office solutions over the next five to 10 years."

"If you're in the beverage distribution business and looking to free up capital to build brands or fund an acquisition strategy by tapping the value of your real estate assets, National Beverage Properties has both the real estate and beverage distribution know-how to be the logical choice as your real estate partner," added Moffett.

Beer Business Daily

April 25, 2007

NBP Closes Another Deal

And finally, to bring our Simplicity Issue to an end, what could be simpler than selling your warehouse and leasing it back? Bill Anderson's outfit, National Beverage Properties, announced that it has closed on a sale-leaseback transaction for a 94,000 square foot beer warehouse with Crown Distributing Co., an A-B distributor in Arlington, Washington. Crown will lease the property back from NBP on a triple-net lease basis for up to 30 years. This sale-leaseback marks NBP's sixth acquisition and its first partnership with an A-B wholesaler.

Beer Marketer's Insights

January 19, 2007

National Beverage Properties Closes 4 Warehouse Deals, Gets Big Capital Infusion

National Bev Properties ... has just taken a big step forward. NBP closed 4 more deals totaling 585,000 sq ft of warehouses, making 5 in all. Includes distribs like Superior Bev and Central Bev in Oh (John Antonucci), Valley Wide Bev Co in Calif (Lou Amendola) and Capitol Distribs (John Shea) of NH. Recall, NBP buys distrib warehouses, leases 'em back, giving distribs capital to do deals, among other things. Deal with NBP is "win-win," sez John Antonucci, that "allowed us to redeploy capital and provides us flexibility as we move forward with our organic growth and acquisition plans."

NBP also formed JV with Oak Hill Realty LLC (part of Bass family holdings), one of several separate platforms "under the Oak Hill umbrella" that total over $20 bil in investment capital, according to release. Oak Hill has participated in "the formation of several public real estate investment trusts." NBP is brainchild of ceo Bill Anderson (son of John Anderson, Sr).

Beverage Industry Magazine

March 2006

Real Estate-Driven Capital

A number of distributors who are undertaking expensive acquisitions and consolidating have been turning to National Beverage Properties (NBP), Los Angeles, as a real estate partner to strategically provide the financing to purchase real estate assets.

William Anderson, NBP's chairman and chief executive officer, with experience as executive vice president at his family business Topa Equities, began NBP because he saw a need for a different type of capital source for beverage distributors. He also witnessed how well the car dealership REIT had performed for car dealers, and saw similarities between car dealers and beverage distributors.

"Both are primarily family-owned businesses," Anderson explains. "They have strong cash flow-operating businesses, and they don't necessarily need to own the real estate that they are operating under. And both industries are going through quite a bit of consolidation so they have fairly urgent capital needs to grow their businesses going forward."

Beverage distributors across all channels, but particularly beer and spirits, are finding NBP's services useful. Formed in 2005, NBP provides capital for beverage distributors through value-added real estate solutions. For example, NBP provides sale-leaseback solutions for warehouse acquisitions and expansions, setting the stage for enhanced bottom-line results.

NBP offers its distributor partners real estate and capital strategies, such as providing growth capital to beverage distributors who are purchasing a new distributorship, including the seller's warehouse. In these cases, NBP buys the warehouse for the acquiring distributorship, which allows it to save its capital for brand acquisitions. NBP then enters into a long-term lease to provide the distributor with an industry-specific real estate partner and long-term control over the real estate.

The company also constructs, renovates and develops new, larger and more efficient facilities for distributors. NBP takes care of tasks such as site acquisition, design, permits and construction management. The distributor, in this case, receives operational benefits from a new facility designed to meet its specific needs, and moves into the facility with no disruption to its existing operations. NBP also is able to assist the distributor with flexible options for a 1031 tax-free exchange on its old property.

Beer Business Daily

January 23, 2006

Getting Cash from the Dirt

As you know, Beer Business Daily is everywhere: We attend beer conventions, seminars, rallies, parades, parties, seedy bars .... live in person or incognito. Last year I couldn't walk through an airport without bumping into National Beverage Properties' Bill Anderson, who has got the middle tier a'buzz with the possibility of pulling together distributorship warehouses into a publicly traded REIT, just as many car dealerships have done.

While I don't normally do vendor interviews, Bill's concept is generating enough talk that my curiosity was piqued; (plus, he's a genuinely nice guy).

So I checked in with Bill, who hails from a large California and Hawaii A-B and Coors distributing family, about this "REIT thing" that he is organizing. You, gentle reader, are a fly on the wall. Here's an excerpt of our conversation:

HARRY: So Bill, what is this REIT business people are taking about and how is it going so far?

BILL: Harry, it is going extremely well. National Beverage Properties works in two ways: in our first phase, we are providing capital to help distributors acquire or develop their next warehouse facility. The second part of our business plan is making a series of warehouse acquisitions with the goal of becoming a public real estate investment trust [REIT].

It's really two different tracks: in one we are an industry-specific capital provider and real estate partner, and in the other we are seeking to become an attractive long-term investment vehicle and estate-planning tool for the beer distributor community.

HARRY: Let's start with the first one and we'll circle back to the other; how's that work?

BILL: We help distributors reallocate their capital from their real estate into their core businesses or to other investments that maybe would provide them with a much higher return.

For example, a distributor who is looking to acquire another distributorship will have to put out between 5 to 10 million [dollars] into the acquisition of the beverage brands, yet he may also have to put out another 5 to 10 million for the real estate that's associated with that distributorship. What we do, Harry, is we utilize our capital to buy the real estate and provide them with a long-term flexible lease that's tailored to their needs to allow them to save their capital for the acquisition of the brands....

We also help distributors who have outgrown their current space. As you know, distributors are seeing increasing breakage costs. Some are under pressure from their suppliers to get into a larger, more efficient facility and others need more room for their sign making equipment or another 10,000 square feet for POS. We buy a new facility for the distributor or we acquire land and build a new facility -- taking care of all of their real estate headaches -- and providing them with a new facility that's built exactly to their specifications.

HARRY: I always pay cash for my warehouses in gold bullion, but sadly not everybody is as rich as me. But Bill, seriously, why not just go to a bank?

BILL: Well, NBP is different from a bank-financed transaction; with a bank the distributor owns the warehouse but must devote a substantial portion of his capital for the equity in the transaction. A $10 million dollar warehouse would require the distributor to invest between $2.5 to $4 million of equity. So the distributor, in this case, is still allocating his capital to his real estate rather than to his core business -- which will likely earn him a significantly higher return than the real estate.

In a transaction with us, we provide the capital and a favorable long-term lease rather than the distributor having to take out a loan, pay the numerous bank fees and interest, and devote his capital and other resources to the dirt. Our goal is to take care of everything related to the real estate -- the capital, the financing, and the necessary improvements -- so the distributor is free to focus on his operating business and on making more acquisitions with better returns.

HARRY: What about going forward long term, does it worry you that the middle tier has been under attack?

BILL: No, we're in fact very bullish about the beer distribution industry despite the attack from Costco and other legal threats to the three-tier system. We're focusing on distributors who are intent on making additional acquisitions, who have strong management teams and who are building a strong family legacy and who are using their capital wisely.

Having said that, we're watching the Costco case and we're picking our potential partners very carefully. We want partners who are in this for the long haul, who are strong and growing and we think those distributors are going to do very well in the future.

HARRY: Well, what else, Bill, that I haven't asked you? Is there anything?

BILL: We think our plan will assist in the next wave of consolidations, Harry. We hear about a number of consolidations that are stymied or delayed because of this need not only to buy the brands at a very full price, but also to buy the warehouse that's associated with the selling distributorship....

HARRY: I've been involved in a deal before that was killed because of the warehouse.

BILL: Right. It happens. So, we can come in as the real estate partner, be ready to close when the acquiring distributor wants to close and we can structure the lease and the improvements according to the distributor's specific timetable and needs.

HARRY: And has your personal experience in the beer industry helped or harmed you? It's no secret that your family is a big A-B [and Coors] distributor. How has that been received?

BILL: I think it's very helpful for distributors to know that I grew up in the beer distribution business and that they know I spent all my summers working in our distributorships as a kid. And I think it's helpful for them to know that I helped on many of our acquisitions and helped manage many of our beverage distribution warehouses. They know I have the experience for this and they know I'm dedicated to this industry.

Beer Marketer's Insights

August 16, 2005

National Beverage Properties Closes First Deal

National Beverage Properties, which aims to be a beverage Real Estate Investment Trust (REIT), closed its first deal and acquired 78,000-sq foot warehouse of RMC Distributing in Colorado Springs. RMC pres. Pete Betka (who used to be a Coors exec) called it 'win-win in areas of real estate partnering, liquidity, diversification and long-term real estate planning.'

NBP was founded by Bill Anderson, son and brother of John Andersons Sr. and Jr. respectively, and is modeled on the car dealership REIT, Capital Automotive (CARS). CARS is a public company that includes 375 auto dealers, and its stock has more than doubled since 2000.