Private Equity Firm Encore Consumer Capital Acquires Pennsylvania’s Lion Contract Brewery

The first top 100 craft brewery transaction announced in 2020 is in the books.

San Francisco-based private equity firm Encore Consumer Capital has completed the acquisition of Lion Beverages LLC, a Wilkes-Barre, Pennsylvania-based contract brewery and maker of the Lionshead and Stegmaier brands, from Blue Point Capital Partners’ U.S. Drinks LLC holding company.

Financial terms of the deal were not disclosed. Encore managing director Scott Sellers told Brewbound that the transaction closed just before the new year.

With the acquisition of The Lion Brewery, Encore acquires a contract brewer of specialty beverages, including energy drinks, non-alcoholic offerings, better-for-you sodas and craft beer.

“With its experienced management team and efficient operation, we feel Lion is well positioned for growth in the specialty beverage category over the next few years,” Sellers said in a press release.

Speaking to Brewbound, Sellers said Lion’s facility produced more than 10 million cases in 2019. Encore plans to invest in Lion’s facility to increase its capacity, including adding additional production lines and upgrading current lines in order to meet demand.

Although the Lion brewery dates back to 1905, the facility has received more than $20 million in upgrades since 2010, according to a 2017 press release. The facility is capable of “brewing, blending, canning, bottling, and packaging” for customers, which include undisclosed national beverage brands. According to Lion’s website, the company’s ideal contract partners produce a minimum of 60,000 cases annually.

“We are very energized and excited to work with the Encore team,” Lion CEO Michael Clarke added in the release. “We have a terrific opportunity to leverage Encore’s abilities and expertise as the business continues to drive to reach its full potential.”

In a note announcing the sale, Blue Point noted that during its ownership EBITDA at Lion “nearly doubled.” The firm also noted that it hired a “strong management team, which built out the company’s canning capabilities, made substantial capital improvements and implemented numerous operational strategies.”

“Lion’s location is ideal to serve the densely populated North East, and its consistency in product quality and delivery has afforded the company with demand that exceeds its current capacity,” Blue Point partner Juli Marley said in the note. “We are delighted to see that our support of the business and management team created numerous growth opportunities and positioned Lion to continue to build on and realize optimized results throughout its future.”

This marks Encore’s second investment in the craft brewing space. In March 2015, the firm acquired a controlling interest in Hood River, Oregon-based Full Sail Brewing. Sellers noted that the investment in Lion is from a separate fund and there is no overlap in the businesses.

After producing more than 115,000 barrels in 2016, Full Sail’s production declined 31% and 13% over the following two years, landing at 69,271 barrels in 2018, the last year in which production data was available.

Full Sail also produces the Kyla Hard Kombucha brand, which launched in 2018. Encore invested in the Kyla brand in May 2019. Sellers told Brewbound that there are no plans at the moment to produce Kyla products at the Lion facility.

Encore has raised more than $600 million and invested in more than 30 consumer products companies, including 4505 Meats, Aidells Sausage Company, Brownie Brittle, and Cece’s Veggie Co., among others. According to its boilerplate, the firm targets companies with annual revenues between $10 million and $100 million.

Cascadia Capital advised Blue Point on the sale.

*Editor’s note: This post was updated with additional reporting.

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