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New Investment: Beija Cachaça

No it’s not a bizarre name for a Web 2.0 company or type of cloud computing infrastructure.  But we have looked at this investment very carefully over the last few months and are thrilled to find something that offers strong potential returns but sits outside our very concentrated portfolio of technology investments.

Cachaça is sometimes referred to as the “tequila of Brazil” and may follow a similar pattern of adoption in the United States where new foreign spirits like tequila, gin, vodka and scotch have all come to dominate the shelf space behind American bars.  (We are still partial to Bourbon and Rye but we know we are in the minority.)

Although huge volumes of cachaça are consumed in Brazil, very little is exported.  This is changing not only due to the efforts of Beija but marketing powerhouse Bacardi has acquired a small local producer to popularize the liquor and the famous cocktail, the Caipirinha, globally.  (Bacardi paid $20M for Leblon which was still in the early stages of development at the time.)

The founders of Beija know how important marketing and brand is to success in this market.  They have developed and delivered an outstanding product in terms of quality and packaging, first in Boston and now in NYC.  They have focused on the high end cocktail bars and “mixologists” who are eager early adopters of this new liquor and the number of refreshing and unique drinks cachaça provides.

Beija doesn’t have to be the worlds leading brand to offer attractive investment returns.  The global liquor market is dominated by a number of large conglomerates like Brown-Forman (NYSE: BF.A, $49, $7B Cap), Fortune Brands (NYSE: FO, $36, $5.5B Cap), Diageo (NYSE: DEO, $54, $33B Cap), LVMH, and Bacardi among others.  They will all end up having their own brands of cachaça as the market develops.  Many will also have multiple positions with “super premium,” “premium” and “superior” labels to address the market opportunity.

Our assessment is that Beija has the right ingredients to make it in the market.  The valuation parameters are in line with the stage of company development and potential valuations in this market are easy to calculate since they are largely driven by case volume.

Beija cachaça is poured at many (if not most) of the high end bars in Boston today and is rapidly spreading to many more in NYC this summer.  It’s already the exclusive cachaça at NYC favorites like the Campbell Apartment in GCT and found in such hip places as Death & Co.

If you’re interested in learning more about Bejia please see the link and feel free to contact us if you’d like an introduction.

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