Eastside Distilling in Portland, Oregon, a publicly traded company that positions itself as, “The only small public company in craft spirits, we are a pure play and acquisition platform,” has announced its latest acquisition. Eastside has announced the acquisition of Azuñia Tequila from Intersect Beverage.
Azuñia Tequila offers four premium tequila products; Blanco Organic Tequila, Reposado Organic Tequila, Añejo Tequila, and Azuñia Black Tequila. Primarily sold into on-premise locations throughout the western and southeastern United States. This acquisition brings substantial product and operational assets to Eastside including over 2,600 on-premise points of distribution, a direct sales team, and a product line well positioned in the rapidly growing above premium and luxury tequila categories.
Robert Manfredonia, President of Eastside Distilling, commented, “The acquisition of the Azuñia portfolio of tequila perfectly aligns with our go forward objectives to leverage and drive our national platform strategy which we believe will significantly expand shareholder value. The above-premium and luxury tequila categories are some of the fastest growing subsegments of the spirits industry, and categories in which our regional and national distribution partners, as well as tier-one national accounts are actively seeking products. The team at Azuñia has created strong on-premise adoption of the brand, which, when combined with Eastside’s off-premise expertise is expected to benefit not only the Azuñia portfolio, but our other existing brands. We look forward to presenting Azuñia to key retail accounts beginning immediately.”
Prior to Eastside’s acquisition, Azuñia was owned by Intersect Beverage, which is majority owned by Stephanie and Pat Kilkenny, along with a minority stake held by former NBA superstar and current broadcaster Bill Walton. Pat Kilkenny is the former University of Oregon athletic director and Chairman and CEO of the Arrowhead General Insurance Agency, which he led from 1984 until 2006 when it was sold with approximately $1 billion in premium coverage.
Stephanie Kilkenny commented, “As we embarked on the next stage of growth for Azuñia, we recognized that what we were looking to create was exactly what Eastside Distilling could offer to us: a fully integrated sales organization with strong distributor relationships and an existing footprint in the country’s largest independent and national retailers. Further, the cultural fit aligns perfectly with that of the Azuñia team which takes tremendous pride and passion in the products that we produce for our customers. As I had a chance to spend time with the management of Eastside there was a clear desire to create something significant in the spirits industry, and I knew we wanted to be a part of it and a major shareholder in Eastside. I look forward to working with the team to accelerate the growth in Azuñia and the entire Eastside portfolio of products.”
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Steve Shum, Interim Chief Executive Officer of Eastside Distilling, added, “It’s hard to envision a better fitting acquisition for where we are today as a company than our acquisition of the Azuñia brand and corresponding relationship with Pat and Stephanie Kilkenny. There are clear opportunities for us to leverage Eastside’s off-premise distribution capabilities for the benefit of Azuñia, while at the same time providing the current Azuñia on-premise sales organization new and exciting brands to present to their customer base, including our Redneck Riviera Whiskey, the Burnside family and Hue-Hue Coffee Rum. Further, we see an opportunity to improve the overall profitability of the brand through a modified SKU strategy between on and off premise accounts that many of the larger, more established brands have implemented over the years.”
The Azuñia Tequila Deal with Eastside Distilling
Shum continued, “We structured the agreement on what we believe are extremely favorable terms for Eastside Distilling and its shareholders. Pat and Stephanie Kilkenny wanted to ensure the long-term success of the Azuñia brand and Eastside as a company and therefore elected to defer their equity payment and the price per share by which their equity would be valued at until the operational efficiencies and growth that we all believe are inherently available are realized. We are appreciative to have a partner of the Kilkennys’ caliber be a part of Eastside Distilling and are excited about the many opportunities that are ahead for the Company.”
As part of the transaction, Eastside expects to invite Stephanie Kilkenny to join the Eastside Distilling board of directors subject to customary board and committee approvals.
Eastside expects a positive impact on its adjusted EBITDA from the Azuñia operations in 2020.