The liquor market is littered with success stories where niche brands gain market share and attract a big payday from larger corporations. Liquor brand development company, Rogue Baron plc (OTCMKTS:SHNJF) has a portfolio built for blockbuster buyouts.
The company’s portfolio of premium liquors are concentrated on two of the more attractive types of cocktail makers; tequila and Japanese whiskey.
- The tequila market was estimated to be up 46% last year and is forecast to balloon to $14.70 billion by 2028 (Forbes Insights Research).
- The global Japanese whiskey market is projected to reach $1.1 billion by 2025 (Grand View Research).
While the size of the tequila market may be larger its CAGR is forecast at 5.8%, which is healthy, but the Japanese whiskey market is forecast at a 9.4% CAGR, making it potentially most rife for rapid market share acquisition.
Rogue Baron is developing Shinju Japanese Whiskey. It’s probably the most favorable buyout candidate of SHNJF’s 4 brands.
SHINJU FLOORS JUDGES
This past fall, Shinju won three awards at the 2021 Sante’ International Spirits Competition:
- Double Gold
- Best of Class
- Best Whiskey
For extra style points, it was one of only two entrants given a perfect score of 100.
This is especially important for SHNJF’s potential because Sante’ is a leading publication read by restaurant professionals who use its brand reviews to find new offerings for customers.
This kind of awareness will bring the kind of attention Shinju needs to make one of the majors ‘thirsty.’
BEV BEHEMOTHS COULD BUYOUT SHNJF
Trends within the spirits market have to do mostly with experimentation around flavor and production. One of the standout characteristics of SHNJF’s Japanese Whiskey is its Bourbon taste profile. Most Japanese whiskeys are closer to scotch whiskey. This differentiation is important because bourbon whiskey is more popular among consumers.
If Rogue Baron’s Shinju brand can become the next Ballast Point (Constellation $1B), High West (Constellation $160M), or Forty Creek Whiskey (Campari $185M); what spirit industry giant would be the best candidate?
In a little game of fantasy M&A matchmaker, let’s explore the three best fits:
1. Diageo plc (NYSE:DEO)
The fifth-largest spirits behemoth by revenue holds the title for being the ‘world’s largest Scotch Whiskey producer.’ Its brands include Johnnie Walker, Captain Morgan, Don Julio, and Tanqueray.
DEO may be flush with capital after Jefferies Financial Group analyst E. Mundy anticipates that the company will earn $7.52 per share for the year, up from their previous estimate of $7.46. The company could be rife with excess takeover capital.
Why DEO and SHNJF Could Work: DEO is famous for its foothold in the whiskey industry, Shinju would be a fantastic addition to its offerings. Also, at the end of 2021 the company Diageo bought into Japanese single malt whisky start-up Komasa Kanosuke Distillery, giving it an ideal setting to produce Shinju.
2. Pernod Richard (OTCMKTS:PRNDY)
Pernod Ricard produces and manages popular brands such as Absolut, Jameson Irish Whiskey, Kahlua, Beefeater gin, and Malibu.
Why PRNDY and SHNJF Could Work: In September, PRNDY acquired online spirits retailer The Whisky Exchange. The UK-based e-tailer, which has been operating since 1999 and also runs three off-premise specialist stores in London, could be a perfect launching pad for an acquisition like Shinju.
3.Brown-Forman (NYSE:BF-B)
Kentucky based Brown-Forman is one of the oldest spirit leaders, known for Jack Daniel’s, Old Forester, Canadian Mist, and Finlandia.
Why BF-B and SHNJF Could Work: Located in ‘Bourbon country’, Brown-Forman may be an ideal fit for a Japanese Whiskey with a bourbon flavor profile.
Winner:
Diageo plc, in my opinion, because the beverage giant also has a huge hold in the tequila market and could take over all of Rogue Baron’s brands in one cost-efficient swoop.
TAKEAWAY
Investors in SHNJF would most likely be thrilled if any of the above companies made a buyout offer. As Shinju Japanese Whiskey continues its rapid growth in correlation with its industry, investors would be wise to watch Rogue Baron plc (OTCMKTS:SHNJF).
This article is part of a sponsored investor education program.
