Portland, Oregon’s Reverend Nat’s Hard Cider has completed a multi-faceted financing round led by hometown firm, Hawthorne Capital, the company announced Friday.
As part of the transaction, Hawthorne Capital will acquire an undisclosed stake in the five-year-old company and receive seats on the board, founder Nat West told Brewbound.
New York-based Rafferty Holdings, which previously held equity in the cider company, exited its position as part of the transaction, West confirmed.
“We had an opportunity to shuffle the investors around a bit,” West said. “They [Rafferty] were super helpful in getting us to where we are today, but ultimately how we go about making money is very different than what they like to see their investments do.”
The latest funding round — which West said ranged between $1 and $10 million — will also include a new line of credit and debt financing. The money, he said, will be used to hire new salespeople and expand the brand into new markets like Northern California and Montana.
The brand — which is on pace for about 7,500 barrels in 2016 — is currently distributed in Oregon and Washington via Columbia Distributing and Southern California via Reyes Beverage Group. The company also distributes in Idaho, via Hayden Beverage, and exports small amounts of product to Japan.
Company-wide revenue, which is up 38 percent this year, will approach $3 million in 2016, West said. Reverend Nat’s also plans to expand into a new 25,000 sq. ft. production facility in Portland, Ore. while converting an existing 8,000 sq. ft. facility into a taproom.
West characterized the financing round as “short term capital,” and said another funding round, which could include an opportunity for new investors to acquire equity in the company, would begin next month.
“The bigger picture was getting the business, the ownership and control with people who were aligned and understand the beer industry,” he said. “Our issues and struggles with profitability did not scare off the new investors at all. The new investors are all very interested in improving margins and increasing sales.”
The U.S. cider business had grew considerably in 2013 and 2014, but category-wide sales began to slow in 2015 and, according to market research firm IRI Worldwide, volume sales are currently down 11.6 percent year-to-date. That’s primarily due to declines for larger brands — like Angry Orchard and Vermont Hard Cider — while smaller players like Reverend Nat’s are still seeing growth, however.
Reverend Nat’s is the second Pacific Northwest cider company to be involved in a transaction in the last month. Nearby Seattle Cider Company sold to the Agrial Group, a leading French agri-business cooperative, in September.