Blake’s Hard Cider and Austin Eastciders are merging under the Blake’s Beverage Company umbrella, bringing together the top-selling cider brands in Texas and Michigan and creating the second-largest cider company in the U.S, the company announced today.
Michigan-based Blake’s, Texas-based Austin Eastciders and Oregon-based Avid Cider Company, which Blake’s acquired last year, will collectively fall under the Blake’s Beverage Company while continuing to operate as distinct brands, Blake’s Hard Cider founder and CEO Andrew Blake told Brewbound.
The merger was “a cashless” deal that saw each company’s stock rolled up into the new entity, Blake said. The transaction closed October 31.
Blake’s Beverage Company will operate with five board seats, with Blake’s holding four seats and Austin Eastciders’ shareholder group holding one seat, Blake said.
Chase Kushak, former Founders Brewing chief operating officer, will lead Blake’s Beverage Company as president. Kushak was hired in June in preparation for the acquisition and integration of the teams, Blake said.
Blake credited Austin Eastciders president and CEO John Glick as “instrumental in helping” put together the merger between Blake’s and Austin Eastciders. Glick was the one to make the first call 12 months ago, he added.
“Our founders’ vision 10 years ago was to be the No. 1 cider in Texas and the No. 1 craft cider everywhere we choose to go,” Glick said in the announcement. “With this partnership, we believe we can fulfill our founders’ mission to bring more cider to the masses.”
Glick, who joined Austin Eastciders in March 2022 as president and GM, will remain with the new company as chief transition officer. The transition is expected to be completed by May 2024, Blake said.
Blake’s Beverage Company will operate across New York, Michigan, Oregon and Texas with an expected output of around 200,000 barrels in 2023.
The merger is the latest move by Blake’s in its ambition to compete with market leader Angry Orchard, which is owned by the Boston Beer Company. It follows a $9 million investment last year to build a production facility in Wolcott, New York, with 1 million cases of capacity, as well as the acquisition of Avid.
Those moves were aimed at solving the supply side of Blake’s business, insulating it from the volatile year-over-year apple supply with a “supply chain foundation” across the primary apple-growing regions in the U.S. and infrastructure to scale the business, Blake said.
“When we put together that infrastructure, it just so happened we really shored up our supply chain of apples and had a robust production infrastructure,” Blake said. “And we realized we were in a place where we could bring in more volume to that platform to help scale not only our brands, in Blake’s and Avid, but also brands like Austin.”
Moving forward, Blake said his efforts will be to ensure that “we do no harm in all three brands that are on great trajectories and have great 2024 plans.”
Beyond 2024, the company will look for incremental growth nationally.
“We want to be very mindful and intentional with anything we’re doing because we have three great brands that are working well in their regions, and we want to make sure that we continue to not just go wide but go deep and all the areas that we’re currently servicing,” Blake said.
The combined entity will allow Blake’s Beverage to “deliver a high quality product at a more aggressive pricing to distributors than we’ve been able to do in the past,” he added. The platform will also allow the company to “invest more heavily in the sales and marketing front” than in the past, not just for its brands but for the cider segment.
Blake said there is “very little overlap” in the three brands’ distributor networks, although they skew more toward Anheuser-Busch aligned distributors. He added the company isn’t in a rush to get aligned.
“We feel like the next six months are gonna be a lot of learning, and hopefully a lot of growing,” he said. “And ultimately, when it’s all said and done, we’ll have put together one of the most exciting beverage companies in the fourth category. So we’re super excited about the opportunity.”
Blake believes the combined Blake’s Beverage Company portfolio is set up to appeal to flavor-seeking Generation Z and millennial consumers, while also competing with Angry Orchard.
“The hope with what we’ve put together with Blake’s Beverage Company is a company that can bring competition back to the cider category for AO [Angry Orchard], and hopefully they’ll respond with innovation and investment in the category,” he added. “If that happens, you could see cider doing some really amazing things from a market share perspective and total alcohol, and I think over the next 12 to 18 months retailers, distributors and the general market will start to start to see some of that play out.”
Blake’s dollar sales are up +5.7%, to $13.9 million, while volume is down -1% year-to-date (YTD) through September 9 in NIQ-tracked off-premise channels, according to data shared by 3 Tier Beverages. Meanwhile, Avid’s off-premise dollar sales are down -10.3%, to $2.45 million, as volume has declined -15.1%. Austin Eastciders’ dollar sales are down -4.6%, to $14.7 million, as volume has declined -17.5%.
Comparatively Angry Orchard dollar sales are down -4% YTD, to $194.6 million, while its volume is down -8.7%. Declines for the national brand have accelerated in the last four weeks (dollars -5.2% year-over-year, volume -9.4%), while trends for Blake’s (dollar sales +7%, volume +2.2%) and Austin Eastciders (dollar sales -0.9%, volume -4.2%) have improved.
Avid’s declines accelerated in the last four weeks, with dollar sales down -27.1%, and volume down -30.7%.