USA: Constellation Brands acquires minority stake in Black Button Distilling

Victor, NY-based Constellation Brands announced on February 5 that it had acquired a minority stake in craft spirits maker Black Button Distilling, whose production facility and tasting room is on Railroad Street near the Rochester Public Market, the Democrat & Chronicle reported.

The investment was made through Constellation’s venture capital group that invests in premium, emerging brands in categories that provide strong scalability, consumer appeal and a unique niche in the market. Terms of the transaction were not disclosed.

"This is a great day for Black Button," said Jason Barrett, head distiller and president of Black Button Distilling. "We’re going to be able to make more of our spirits, get them in more people’s hands and spread them farther afield."

Black Button will remain an independent company, Barrett said. It will continue to manage, produce, market and sell its award-winning spirits such as its Straight Bourbon Whiskey, Citrus Forward Gin, seasonal Lilac Gin and Bespoke Bourbon Cream.

A working relationship between the two companies dates back to the beginning of Black Button, Barrett said. Constellation Brands allowed Black Button to run tests on equipment the small distillery couldn't afford, and Black Button has done a few small projects for Constellation Brands.

Barrett compared the relationship to the kind of support Genesee Brewery provides to small breweries in the area. "I think overall the craft beverage community in western New York is very supportive," Barrett said.

When it came time to raise equity to grow the company, Black Button reached out to various companies, Barrett said. Constellation Brands was a good fit because it was in Western New York and is supportive of the agriculture in the area.

"They shared our values and their expertise would come in handy as we try to navigate beyond New York state," he said.

He noted that the craft spirits industry is capital intensive and difficult to navigate, with different laws in every state. The new relationship offers Black Button the opportunity to tap into the knowledge base at Constellation Brands. It also will allow Black Button to accelerate its growth; Barrett believes its 10-year plan will be compressed to three to five years.

The first grain-to-glass craft distillery in Rochester since Prohibition, Black Button was founded by Barrett in 2012. Its retail store and tasting room opened on Railroad Street in 2014. Sales have more than tripled since then, and it now produces 115,000 bottles of spirits each year, which are distributed in 11 states and Japan. In 2017 the distillery expanded and opened a tasting room and bottle shop in Buffalo.

More than 90 percent of the ingredients in Black Button's spirits are grown or produced in New York state. It is starting its own farm that focuses on juniper and oak, which make major contributions to the flavors of gin and whiskey, respectively, but are hard to come by locally. It plans to plant the juniper and install beehives in the spring.

“As a company headquartered in the greater Rochester region, we’re especially proud to make this investment in this local favorite,” said Bill Newlands, Constellation’s president, chief operating officer and incoming chief executive officer, via a press release. “Black Button has a proven track record of producing premium craft spirits that resonate with consumers and they have a variety of products that are aligned to consumer trends and fill white space within Constellation’s spirits portfolio.”

03 February, 2019