$305M deal for Woodchuck Hard Cider
By Bruce Edwards
STAFF WRITER | October 24,2012
Vermont Hard Cider Company, the largest maker of hard cider in the United States, is being sold to an Irish cider company for $305 million.
C&C Group of Dublin announced Tuesday that it has agreed to purchase the Middlebury company, which is best known for its Woodchuck Hard Cider.
Vermont Hard Cider Company will become a subsidiary of C&C Group with its offices and production facility remaining in Middlebury, the companies said.
Vermont Hard Cider said C&C Group will retain all 125 workers and that the acquisition has the potential to increase employment.
President and CEO Bret Williams will remain with the company as will Dan Rowell, chief financial officer.
C&C Group (www.candcgroupplc.com) is also committed to moving forward with the previously announced expansion of the cidery in Middlebury. The company expects to break ground in the spring or early summer once all its permits are in hand.
In a conference call with reporters, Williams said his intent since purchasing the company in 2003 was to grow and not sell the company. But in August he received an unsolicited offer from C&C Group that was too good to turn down.
Williams said if he had gone out and shopped the company around he would have undoubtedly been able to command an even higher price.
But he said Vermont Hard Cider and C&C Group are compatible in that their business focus is on hard cider and both have shared corporate values.
“If this was a large global brewer like a Miller, Coors or Anheuser-Busch, I wouldn’t have sold,” Williams said.
He also said Vermont Hard Cider will benefit from C&C’s financial strength.
“They’ve got deep pockets and a very powerful innovation team,” he said. “They’ve led the innovation of cider over in Europe doing some really neat new products.”
Williams said as competition for the hard cider market increases C&C has the resources to ramp up the Middlebury company’s sales and marketing staff.
The company expects to finally break ground in the spring or early summer on a $24 million expansion of its cider production facility. The project is awaiting Act 250 approval and other permits.
But Williams said C&C has indicated they prefer a larger cidery in the neighborhood of $30 million and 120,000 square feet to meet future growth.
Once complete, he said the expansion will add between 30 and 35 jobs to the existing work force of 125.
C&C Group CEO Stephen Glancey said in a statement that Vermont Hard Cider deserves credit for growing the business in the United States.
“The cider category wouldn’t exist today, if not for the hard work they have put in over the last two decades,” Glancey said. “Their ability to innovate rare and limited batch ciders serves to push the category forward in the years to come.”
C&C Group has been making cider in the United Kingdom and Ireland since 1935.
Robin Scheu, executive director of the Addison County Economic Development Corp., said given the success of the company the acquisition wasn’t unexpected.
“One could imagine it being a prime target for acquisition because it has been incredibly successful and growing really fast and the No. 1 manufacturer of hard cider in the U.S.,” Scheu said, “which is a much smaller market than the European market for hard cider.”
Hard cider sales nationwide are up nearly 60 percent over last year with Woodchuck Hard Cider sales growing at a 25 percent annual clip.
Vermont Hard Cider also produces Wyder’s cider and has a 20 percent stake in a Chinese startup, Gold Hard Cider.
The acquisition of Vermont Hard Cider is the latest effort by C&C and big brewers to capitalize on growth in the cider market.
According to Bloomberg, C&C last year paid $26 million for Hornsby’s, a U.S. cider brand headquartered on the West Coast. Earlier this year, MillerCoors LLC, a joint venture, purchased Crispin Cider Co. for an undisclosed sum. Bloomberg noted the acquisitions are designed to help offset a decline in beer sales in the United Kingdom.
The Vermont Hard Cider transaction is subject to antitrust and other regulatory approvals. Closing is expected by the end of the year.
C&C said it would fund the purchase with cash and its existing line of credit.
The company said that Vermont Hard Cider will generate approximately $15 million in earnings for 2012. Including non-proprietary brands, which are not part of the purchase, earnings are estimated to be in the range of $23 million for the year.
Vermont Hard Cider has come a long way since Joseph Cerniglia started the company in 1991 out of a two-car garage in Proctorsville. Williams joined the company in 1996 as its first sales representative and in 2003 took a chance and paid $2.3 million for the struggling company, which was hemorrhaging $300,000 a month.
“Everybody told me not to do it,” he said. “(I) put my mortgage on the line, my 401(k), pulled change out of my ash tray and went all in on this small cider brand in 2003.”
At the time, the company was selling 700,000 cases a year. Today, nine years later, Vermont Hard Cider is on track to sell 4 million cases with revenues of $70 million.
“So, it’s been a tremendous turnaround,” he said.