Sometimes it’s a brand’s challenges that make it an attractive acquisition target.
Last week, the Aether Group, a recently launched incubator and brand house from a former Coca-Cola executive made its first acquisition: Corte Vetusto, a mezcal brand with a U.K. footprint whose U.S. distribution stalled due to the pandemic. That runway stateside makes it a fit for the Aether portfolio, which aims to inject new resources or capabilities into brands that have “stuttered.”
Created by David Shepherd and Richard Black, Corte Vetusto Mezcal is a U.K.-based Oaxacan mezcal that sits on the higher end of the shelf. The brand can be found in seven global markets and some hot accounts such as Nobu, The Savoy (U.K.), Vesper Bar (Thailand) and Hotel de Russie (Italy).
Corte Vetusto offers three core SKUs ranging from $69 to $134 and plans to continue its premiumization strategy by offering nano-batch, rare mezcal expressions as retail exclusives, and will launch another main SKU later this year. Higher-end mezcals and tequilas have contributed to the growth of the agave sector over the past few years, and after a pause have seen other investments this month from bev-alc groups.
Despite carving out inroads in the U.S. several years ago, Corte Vetusto hit a roadblock and paused U.S. efforts when the pandemic shuttered bars and supply chain constraints put pressure on a small team. But with American accounts still asking for the brand and a track record in global markets, the task at hand now is to go deeper into the U.S. market, expand in the U.K. and get broader consumer adoption, said Aether Group founder Matthew Tarallo.
“What I like about the product being in the ultra premium prestige space is that it has high pricing and it’s financially very sound, so you don’t need to chase 30,000 cases,” Tarallo said.
The motivation for acquisition was also two-fold: by signing an importer, national distributor and broker team for Corte Vetusto, Tarallo is creating a funnel for other products.
The Aether group complements RFT Ventures, Tarallo’s investment portfolio that focuses on funding early-state businesses and founders. The group is composed of three pillars: an owned brand portfolio (beginning with Corte Vetusto); non-owned brands which the company will reposition and relaunch as part of its operation services (Oval:CBD patches is one example); and services for larger beverage companies to launch and test brands— in most cases physically creating concepts in flavor, branding, or packaging and doing small market testing as as a learning tool.
As test cases, Aether has launched NOMU Sake and Casa Alma Cocktails. Future acquisitions will likely stay in adult beverages – either energy, non-alc or bev-alc – and at least have similar profiles to Corte Vestuto with room for scale and founders who are willing to adapt to a new strategy.
Tarallo is pulling on his experience in CPG to create the model for Aether: his latest role was as senior vice president of business development and beyond nicotine at tobacco company Reynolds American, and he is currently a mentor for CPG accelerator SKU. The digital framework he built as global vice president of Amazon for The Coca-Cola Company (including business at Whole Foods and Amazon-owned media Twitch), makes him bullish on e-commerce for bev-alc. “It’s a slow build,” he said but with the right position some brands have had “massive success” using it as a way to scale and start engagement with the consumer.
“So I think it’s an untapped opportunity, because I think most of the bev-alc businesses just look away from it because it’s too complicated,” he said.
As for Corte Vetusto, with its founder still engaged, the relaunch will focus on “taking some broader sponsorships to get better above-the-fold awareness,” said Tarallo with partners to be announced soon.