Cold Spring Brewing Company Sold to Private Equity Firm

Minnesota-based Cold Spring Brewing Company has been acquired by Brynwood Partners, a Connecticut-based private equity firm with existing investments in a variety of food and beverage companies.

A purchase price was not disclosed and the transaction – which includes Cold Spring’s Third Street Brewhouse and Monarch Custom Beverages divisions — was finalized on August 3, Brynwood managing director Dario Margve told Brewbound.

In addition to brewing its own line of craft beers under the Third Street Brewhouse label, Cold Spring has made products for companies such as Pabst Brewing, 21st Amendment and Boulevard Brewing, among others. The 143-year-old company also produces flavored malt beverages and co-packs a number of non-alcoholic beverages, including soft drinks, sparkling waters, teas and energy drinks (most notably, Monster Energy).

In a press release, Brynwood said Cold Spring generates more than $60 million in revenue annually and employs 350 people. According to Margve, Cold Spring’s beer division is “growing double-digits” but is a “smaller piece of the overall business.”

Brynwood, which describes itself as a “lower middle market buyout fund that acquires consumer products companies,” has raised over $1.1 billion across seven funds since it was founded in 1984. Four of those funds are still active, according to its website. The Cold Spring purchase is part of the company’s seventh, $420 million fund – Brynwood Partners VII L.P — which includes investments in Juicy Juice, Sunny Delight and Daily’s Cocktails, which are anchored under the Harvest Hill Beverage Company rollup.

The firm, via the Harvest Hill Beverage Company venture, already operates eight manufacturing facilities throughout the U.S., and the Cold Spring acquisition is aimed at strengthening the company’s position as a contract beverage manufacturer.

“We have a history of leveraging our portfolio companies across their various capabilities,” Margve said. “We don’t have any products that are merchandized in cans, and that is pretty intriguing — there could be some opportunity for Juicy Juice or one of our other brands at Cold Spring.”

Margve said Brynwood is investing “quite a bit of capital” into facility upgrades at Cold Spring that will boost brewing capacity by 70 percent and double the company’s warehouse space. The Third Street Brewhouse is currently capable of producing about 180,000 barrels, he said, and the Cold Spring facility can push out about 19 million cases of product each year.

Once those capital improvements are complete, Brynwood could venture into the private label craft beer space, Margve said, noting that the firm already has “strong relationships with retailers,” and that many have expressed a desire to develop proprietary offerings.

“There has been some interest and we have the capability to do that,” he said.

According to the release, Brynwood manages “more than $725 million of private equity capital” for its limited partners, which include pension funds, endowments as well as high net worth family offices and financial institutions.

Margve said the firm typically maintains its consumer products investments for five-to-seven years, but that it would “hold on to them longer if the need dictates.”

Cold Spring is the sixth beverage investment Brynwood has made, and Margve said the company is considering more.

“If an opportunity to add other assets around the country presented itself, we could do a rollup in that space,” he said.

A press release with additional information is included below.

Brynwood Partners VII L.P. Acquires Cold Spring Brewing Company, Inc.

GREENWICH, Conn., Aug. 4, 2017 /PRNewswire/ — Brynwood Partners VII L.P. (“Brynwood VII”) announced today that it has acquired Cold Spring Brewing Company, Inc. (“Cold Spring”) from its current owner, the Lenore family. Terms and conditions of the transaction were not disclosed.

Located in Cold Spring, MN, Cold Spring is a leading beverage manufacturer that produces energy drinks, carbonated flavored waters and brews craft beers. The company primarily manufactures products, both non-alcoholic and alcoholic beverages and beer, for other companies’ proprietary brands and retailers’ private labels. Cold Spring also brews beer under its own brand, Third Street Brewhouse, for distribution locally in Minnesota and Wisconsin.

Founded in 1874 in Cold Spring, MN, the company is one of the oldest beverage manufacturing plants in the U.S. Today, Cold Spring is a leading independent beverage manufacturer with over $60 million in net sales and employs approximately 350 people.

“We are pleased to announce the acquisition of Cold Spring,” said Henk Hartong III, Chairman and CEO of Brynwood Partners. “The well-run facilities and exciting growth plans for the company represent a great investment opportunity for Brynwood Partners.” Mr. Hartong continued, “While Cold Spring will be operated as a standalone company, we believe it will benefit greatly from the scale and national distribution and manufacturing foot print of Brynwood Partners’ Harvest Hill Beverage Company investment. We look forward to working collaboratively with Cold Spring’s management team to grow the business.”

“On behalf of Brynwood Partners, I would like to express my sincere gratitude to the Lenore family for working with us on this transaction,” said Ian MacTaggart, President and COO of Brynwood Partners. “This marks Brynwood VII’s sixth investment in the beverage sector and is a significant investment for our firm. We look forward to supporting Cold Spring’s loyal employees and growing its operations in Cold Spring, MN, where it has resided for 143 years and plays such an important role in the community.”

Brynwood VII did not retain an investment banking advisor but was represented by Holland & Knight LLP on legal matters. Cold Spring retained Cascadia Capital LLC as its investment banking advisor and was represented by Stinson Leonard Street LLP on legal matters.

About Brynwood Partners:

Brynwood Partners, founded in 1984 and based in Greenwich, CT, is an operationally-focused private equity firm that makes control investments in North American-based lower middle market companies in the consumer sector.

Brynwood Partners currently manages more than $725 million of private equity capital for its limited partners, which include U.S. and international pension funds, fund-of-funds, endowments, high net worth family investment offices and financial institutions. For more information on Brynwood Partners, please visit www.brynwoodpartners.com.

About Harvest Hill Beverage Company:

Harvest Hill Beverage Company, based in Stamford, CT, was formed by Brynwood VII in July 2014 to acquire the iconic Juicy Juice® brand from Nestlé USA, Inc. Juicy Juice® is the largest 100% juice brand in the U.S. focused on the kids segment. The company markets Juicy Juice® products in single-serve and multi-serve formats to the retail and foodservice channels. In March 2015, Harvest Hill acquired American Beverage Corporation (“ABC”) from Wessanen, a publicly-traded food and beverage company based in Holland. With the ABC acquisition, the company added the Little HUG® juice brand and Daily’s Cocktails® brand. ABC’s brands are distributed to a blue-chip customer base that includes leading grocery retailers, wholesalers, supercenters and foodservice distributors. In October 2016, Harvest Hill acquired Faribault Foods, Inc.’s juice pouch manufacturing facility in Elk River, MN and other selected assets. Most recently, in December 2016, the company acquired the Nutrament® energy drink brand from Nestlé HealthCare Nutrition, Inc.

Brynwood VII acquired Sunny Delight Beverages Co. (“Sunny Delight”) from a private equity fund in February 2016 and, in May 2017, merged the company into its portfolio company, Harvest Hill. The 54-year-old SunnyD® brand is a leading chilled juice drink in the U.S. In addition to the SunnyD® brand, Sunny Delight markets the Fruit2O®, Veryfine®, Big Burst® and Guzzler® beverage brands. The company’s products are widely distributed through leading retailers in the U.S. and Canada.

Harvest Hill, which currently operates seven manufacturing facilities strategically located across the U.S., intends to continue to grow its branded, private label and co-manufacturing businesses both organically and through strategic add-on acquisitions. For more information on Harvest Hill, please visit www.harvesthill.com, www.sunnyd.com, www.littlehug.com, www.dailyscocktails.com, www.fruit2o.com, www.veryfine.com and www.nutrament.com.