San Diego’s Scout Distribution is making another big move, this time in its Southern California backyard.
Scout announced today that it will acquire Classic Beverage beverage-alcohol portfolio in the greater Los Angeles territory, covering LA, Santa Barbara, Ventura, San Luis Obispo, Orange, Riverside, Kern and San Bernardino counties. The transaction is expected to close in November, with suppliers receiving 60 days’ notice of the transition.
Scout Distribution CEO Jeff Hansson told Brewbound that talks with Classic Beverage CEO CJ Sanchez have been ongoing for a couple of months, with the purchase agreement finally signed last Friday.
Classic’s San Diego business and its non-alcoholic portfolio in greater Los Angeles are both carved out of the deal. Both Scout and Classic will operate independently of each other in the San Diego market.
For Scout, the acquisition is about increasing “scale” and “efficiencies,” while adding a portfolio of craft brands.
“It’s all about brands, and it’s all about people,” Hansson told Brewbound.”That’s kind of the stance we’ve always taken at Scout: We put our people first, we put our brands first, and we’re so excited to work with these brands and show them what we can do in the greater LA area.
“This is the biggest thing we’ve ever done by far,” he continued. “It’s definitely the biggest thing I’ve ever done in my career.”
“We have known Jeff and Anthony [Levas] for a long time and have great admiration for what they have accomplished in four short years with Scout Distribution,” Sanchez said in a press release. “Scout’s unique skill set and culture when applied to their commitment to customer service make them the perfect fit for our high-end portfolio of beer and spirits in the greater Los Angeles area. We look forward to combining our resources and knowledge to build the best distribution option in Los Angeles for both alcohol suppliers and retailers.”
Scout’s deal with 30-plus-year-old Classic Beverage in Los Angeles follows last week’s announcement that the nearly 4-year-old independent wholesaler has formed a joint venture with Columbia Distributing to launch Scout Idaho in October. Idaho is fertile territory for both, as neither distributor had previously operated in the state. Hansson told Brewbound that the companies have a five-year plan to reach 1 million cases via the JV.
“The JV with Columbia is massive and this one is so different because it just really gives us a lot more scale and doubles us in size,” Hansson said. “It’s going to be a lot of work, but we’re pumped.”
Prior to the deal with Classic, Scout was projecting sales of more than 1 million cases this year, with 850,000 cases coming from Southern California and 180,000 in Arizona. The deal with Classic will more than double Scout’s case volume in Southern California.
November 11 is the target date for the brands transitioning to Scout in the greater Los Angeles area. Classic’s portfolio in the LA area includes Coronado Brewing, Shiner maker Gambrinus, St. Killian imports, 2 Towns Cider, Brouwerij West, Modern Times, Rogue Ales, Ninkasi, Melvin Brewing, and Duvel USA brands Boulevard Brewing and Brewery Ommegang.
“We’re talking to all of the brands now,” Hansson said. “I spoke to several of them over the weekend, and this week we’ll be talking to a lot of them.”
The Scout and Classic portfolios also include some overlap, including Fort Point, Karl Strauss, Toppling Goliath, and Artifex Brewing.
Scout has begun transitioning to Classic’s warehouse in the LA area, and the company plans to meet with staff next week.
“We want to meet all of them and to see who is a good culture fit for us, who has the right experience, and so we’re excited about meeting their team,” he said. “We know some of them already. But the goal is to get out there and meet every single person.”
Hansson added that if there are job cuts, “it’s very minimal because they have some really great people up there.”