The wheeling and dealing between Classic Beverage and Scout Distribution continues in California.
Classic Beverage of San Diego announced a deal on Friday to acquire Scout Distribution’s business in San Diego. Financial terms of the transaction were not disclosed, but the deal is expected to close by August 11, pending supplier approvals.
The San Diego deal between Scout and Classic follows a September transaction that saw Scout and Classic merge beverage-alcohol portfolios in the greater Los Angeles area under the Scout Distribution LA banner. As part of that move, Newport Cove Investment Holdings, the parent company of Classic Beverage, became an equity partner in Scout Distribution’s parent company, Ocotillo Holdings.
Ocotillo Holdings CEO Jeff Hansson told Brewbound that the departure of canned cocktail and hard kombucha maker JuneShine for Stone Distributing earlier this year was a triggering event for the deal.
“Losing JuneShine was unexpected and was a material amount of our business in San Diego,” Hansson said. “We made a conscious decision to not pile on debt as we have seen so many friends in this industry get overleveraged and eventually losing it all. We chose to fight another day by re-capitalizing our business and focusing on our critical mass.”
For Classic, the addition of Scout’s San Diego portfolio will increase its volume to more than a million cases from brands such as Harland Brewing, Latitude 33 Brewing, Nova Brazil Hard Kombucha, Thorn Brewing, 2 Towns Cider, Eppig Brewing, Abnormal Beer Company, and Fall Brewing, among others.
Earlier this year, Classic Beverage added several non-alcoholic brands to its portfolio from Congo Brands, including celebrity-backed offerings such as Logan Paul and KSI’s Prime Hydration and Energy brands and Alani Nu energy drinks.
The latest deal will not affect Classic Beverage’s non-alcoholic business in Los Angeles or Scout’s distribution branches in Los Angeles, Arizona, and Idaho.
Asked about Scout’s San Diego workforce, Hansson said “Classic will be absorbing a good amount of our staff and we will be retaining several people in a shared services capacity for Scout Greater LA, Scout Arizona and Scout Idaho.”
Hansson, in a press release, said the two distributors “have been looking at putting Classic and Scout together in San Diego for quite a while now.”
“This transaction provides Scout Distribution the financial resources to put a laser focus on our critical mass markets,” he continued. “The flipside of that is the resulting business in San Diego has a portfolio loaded with high growth suppliers and will benefit by having more scale in the market.”
“We have great respect and admiration for the team at Scout and what they have created in less than five years in San Diego County,” Classic Beverage chairman CJ Sanchez added in the release. “We are honored to continue building on those successes with our combined portfolio of world-class beverages. We look forward to welcoming new team members and brands from Scout into our portfolio and continuing to deliver first-class service to the San Diego community.”