Craft beer brewer American Brewing Company today announced that it has purchased substantially all assets of Búcha, a brand of certified organic sparkling kombucha drinks, from B&R Liquid Adventure, LLC. In a statement, Neil Fallon, CEO, American Brewing Company described the deal as the first step to “solidify [its] diversification into the full beverage industry.”
Based in Edmonds, Wash., a city 11 miles north of Seattle, American Brewing Company launched in January, 2011 and currently sells its beer in Washington State and South Carolina.
Fallon said the purchase is one that “falls in line perfectly with our strategy of acquiring profitable, existing assets and revenue streams with large footprints and merging them into the American Brewing Company family of beers and beverages.”
The purchase of the Búcha brand, however, was one precipitated by a legal battle between B&R and a contract brewer of its kombucha drinks. According to Fallon, Búcha was faced with a claim for damages to the brewer’s tanks that eventually escalated into a lawsuit and resulted in excessive attorney fees and an award.
Incoming American Brewing COO Chuck Santry told BevNET that the lawsuit “destroyed investors’ confidence in adding any new capital to the company.”
B&R investors made a decision to try and sell the Bucha brand, and American Brewing, which is a publicly traded company, identified the potential deal through Santry, who is indirectly related to a Búcha board member. The two sides eventually agreed on an purchase that took just six weeks to complete.
Fallon stated that the deal was such that American Brewing would be indemnified against the lawsuit and previous creditors of Búcha and noted that the acquisition amounted to a purchase of the brand, as opposed to physical assets of the company. Búcha contracted production of its kombucha and did not own a production facility, yet for Fallon, “phenomenal growth” in distribution and sales of Búcha products represented a big opportunity to expand.
“For us, it was simply a matter of increasing our revenues,” Fallon said. “[Búcha] is three times the size of our company in terms of revenues, so it was very attractive that way.”
American Brewing revealed the financial terms of the deal in a press release, which stated that the acquisition was for a combination of $260,000 cash, a $140,000 note payable and $500,000 in restricted stock. The deal closed last Wednesday, according to Fallon.
Fallon said that there will be no interruption in production of Búcha, which has in place a contract with UNIX-packaging, an independently owned co-packing facility in Montebello, Calif., to produce its kombucha drinks. The contract will cover the next 18 months of production for Búcha, he said. In the meantime, American Brewing is considering the construction of a new facility that could house production of its beer and Búcha products.
American Brewing will retain a handful of Búcha employees, including Frank Commanday, who is listed as the technical director and brewmaster of the company. Fallon said that the brewery went to “extraordinary measures” to retain Commanday, who, including his work with Búcha, has 27 years of experience in craft beverages, beginning in 1982 when he joined then-microbrewery Sierra Nevada Brewing company as a summertime employee.
Commanday is expected to be integral in the development of new Búcha products and extension of the brand, which Fallon said may include a alcoholic variety as well as a kombucha and beer blend.
As for sales and distribution of Búcha, Fallon expects a continued rise in placement of the brand, which is represented in Safeway, Kroger and Whole Foods stores on the West Coast.
Editor’s note: An earlier version of this story incorrectly stated that Búcha recently gained retail authorization chainwide at natural grocer Sprouts.