San Diego-based hard kombucha and canned cocktail (RTD) maker JuneShine will acquire beyond beer brand Flying Embers in an all-stock transaction, the company announced today.
JuneShine co-founder Forrest Dein told Brewbound that the deal is an asset purchase agreement for the Flying Embers brand, trademarks and distribution rights in exchange for stock in JuneShine. The deal is expected to close later this week.
As part of the acquisition, Flying Embers co-founder and CEO Bill Moses will join JuneShine’s board of directors, which includes Dein, JuneShine co-founder and CEO Greg Serrao and two other large investors. Additionally, some members of Flying Embers’ sales team will join JuneShine.
Flying Embers’ parent company Fermented Sciences and production facility are not not part of the deal, Dein said.
The Fingers newsletter first reported the potential JuneShine-Flying Embers deal on Friday. At the time, the deal was still in question and not finalized.
JuneShine and Flying Embers combined will account for 63% of all hard kombucha sold in the U.S., according to Dein. The combined portfolio will exceed 116,000 barrels and 1.6 million cases, he added. The company’s points of distribution will also increase by 50%, including adding new markets where JuneShine products are not yet sold.
Dein said the two brands have a lot of overlap outside of smaller markets. Although JuneShine will eventually seek “as much continuity as possible,” the company is in no rush to combine distribution networks.
Following the deal, the company will be the 14th largest beyond beer and spirits-based ready-to-drink (RTD) brand family in the U.S. and the sixth largest in California, fifth largest in Southern California and third largest in San Diego, the company said.
“It really levels us up in that top list of breweries in the country and gets us very profitable overnight,” Dein said.
Flying Embers founder and CEO Bill Moses added in a press release: “We are thrilled to be placing the Flying Embers brand with JuneShine, whose innovation, leadership, and execution is exemplary. This merger expands the combined product portfolio to include a robust line of spirit-based RTDs, cocktail-inspired FMBs [flavored malt beverages], hard kombucha, and beer.”
Dein told Brewbound that he and Serrao began to evaluate the future of JuneShine last year as the company was on the verge of its fifth year. They came to the realization that they were building a “next-generation beverage” brand platform with a strong sales and marketing ops infrastructure in the Southwest region, but they also concluded that “there’s strength and profitability and scale” in adding brands. When the Flying Embers opportunity presented itself it was a “right time, right place” moment, Dein said.
“Combined, we’re more powerful than apart,” he said. “It was the right time, right place and right phase. This deal four years ago probably wouldn’t have made sense for JuneShine. But today, as we’re building this platform, it was perfect timing.”
Dein said JuneShine’s founders felt like the company wasn’t reaching its “full potential from a revenue and a scale standpoint” due to “the size of the hard kombucha category.”
“We’re still super bullish on that category, both short-term and long-term, but for us to reach our goals short-term, we felt like we needed to have multiple brands and product lines,” Dein said.
In Flying Embers, the JuneShine founders found a brand that was “more complementary than we originally thought,” Dein said.
“For example, we just launched our third 8-pack; they’re coming out with a second 8-pack. They have an 8% [ABV] 8-pack; we’re at 6%. They’re zero to one gram of sugar and carbs; we’re no added sugar but a little bit more real fruit juice.”
Among the gaps that Flying Embers fills in JuneShine’s portfolio is with its line of FMBs.
“We have the spirit-based cocktails, the hard kombuchas, now light beer, but there’s a lot of states where you can’t sell spirits-based cocktails in grocery,” Dein said “Their 19.2 oz. actually does very well in convenience, and we haven’t really cracked that channel yet with our brands. So once we started looking a little deeper, we’re like, ‘Oh wow, this actually fits very well and complements our portfolio.’ They actually outsell us in North Carolina and Texas pretty significantly. So this increases our geographic balance as well.”
The addition of Flying Embers to the JuneShine portfolio follows a “reset year” for hard kombucha in 2023, Dein said.
“We were able to continue to grow, but a lot of the smaller brands weren’t,” Dein said.
The growth for JuneShine is carrying over into 2024, with the addition of 2,000 points of distribution in Target stores primarily in California and 600 mandated placements in Walmart stores in the southwest as part of the spring resets.
“If JuneShine works in Walmart, that’s a big next step for the category as a whole,” Dein said.
In addition to adding Flying Embers, JuneShine has officially launched Easy Rider, a 4.5% ABV light lager.
Easy Rider 12-packs hit the market two weeks ago from San Diego to Santa Barbara with Stone Distributing, and in the Ventura-Santa Barbara area with Pacific Beverage. RNDC will take the brand to Hawaii in March.
The opportunity Dein and Serrao see is to be Southern California’s affordable light beer brand in the $15.99 to $16.99 range for a 12-pack. The band is already picking up social media momentum, with 10,000 followers in 10 days, Dein said.
The company is partnering with new ambassadors, like X Games star Twitch, and comedians Chad Kroeger and JT Parr.
Although the growth drivers for the future are JuneShine’s canned cocktails and hard kombucha and Flying Embers’ FMBs, Dein sees light beer brand as a way to “diversify and reach new consumers,” with the brand skewing 90% male, as opposed to 80% female for JuneShine’s hard kombucha.
“The Southern California beer market is larger than the national RTD market,” Dein said. “It’s like $2 billion just in SoCal light beer. So massive opportunity in our backyard.”