E&A Scheer's Sale - What Might it Mean?
E&A Scheer's Sale - What Might it Mean?
Between Plantation Rum changing its name to Planteray and the news that E&A Scheer has been sold to Platinum Equity, it’s been a busy week in rum!
While not as sexy as a highly anticipated Appleton Rum release, the news of Scheer’s sales perked up the ears of those interested in the business of high-end rum. No company holds larger stocks of rum from around the world than E&A Scheer, which blends rum for many well-known brands, including Smith & Cross. What might this sale mean for the company and the rum industry?
As someone partially responsible for broadening awareness of Scheer, I’ve followed the company’s moves very closely since 2016. Several of my articles, including Rum Merchants to the World, The Dutch Masters Behind the World’s Funkiest Rums, and Vintage Cask Valhalla, are among the earliest reporting taking readers inside the E&A Scheer/Main Rum Company businesses.
Originally a family-owned company that began in 1762, Platinum Equity is the third parent company for E&A Scheer in the last two decades. CL Financial purchased E&A Scheer in 2006 and then sold it back to the family and management in 2010. The Riverside Company, a US-based private equity firm, purchased Scheer in 2019. Then, on Jan. 11th, 2024, Riverside announced it had sold Scheer’s to Platinum Equity, another US-based firm.
So, what are we to make of this sale, if anything? Both Riverside’s and Platinum’s press releases are full of the standard-issue PR fare that doesn’t any real insights on why the sale took place. However, a bit of digging reveals some potential clues.
Riverside’s press release title is “Riverside Toasts Successful Exit of E&A Scheer,” suggesting Riverside views the sale positively. Elsewhere, Karsten Langer, Managing Partner of Riverside Europe, calls it a “successful exit.”
The press release further notes that during its ownership, it had “…developed E&A Scheer’s digital and automation processes and increased its focus on ESG through decarbonization initiatives, water and waste reduction and extending the offering with Bonsucro, Fair Trade and Organic Rums.” Further on, it states “… the company more than doubled its workforce, moved into a brand-new headquarter office and created customer experience centers at E&A Scheer in Amsterdam and at The Main Rum Company in Liverpool.”
What do we know about Riverside? The company’s website states the company is “focused on the smaller end of the middle market.” (Per Wikipedia, “middle market” means companies between USD 100 million and 3 billion in revenue.) Scheer may have grown enough over the past five years that Riverside took its chips off the rum table to reinvest elsewhere in other smaller companies that Riverside focuses on. (Smaller companies are typically able to grow faster than large companies.)
As for Platinum Equity, a quick spin through its portfolio companies reveals few household names. The three I took note of were Jostens (class rings and yearbooks), Ingram Micro, and McGraw Hill. However, Platinum Equity CEO Tom Gore’s ownership of the Detroit Pistons will undoubtedly grab the most attention. Gores was #9 on Forbes 2021 Richest Private Equity Billionaires list.
What jumps out from Platinum’s press release regarding the Scheer acquisition is this quote from Managing Director Fernando Goni:
“E&A Scheer’s scale and unique position in the value chain make it an attractive platform for growth, both organically and through prospective additional acquisitions. With our financial and operational resources, we see a lot of runway for E&A Scheer’s continued growth and intend to support it via international expansion and M&A. We are excited to partner with the company’s experienced leadership team on the next chapter.”
“Acquisitions” appears twice in the above quote. It’s speculation on my part, but could a potential acquisition include a rum distillery? Or might the company branch out into other categories? The mind reels at the possibilities. I’ll be watching closely.
Meanwhile, I wish the teams at E&A Scheer and The Main Rum Company continued success in bringing more bespoke rum blends and single cask rums to a flourishing premium rum market.
For a full background on E&A Scheer and The Main Rum Company, see chapter 13 (“Bulk and Sourced Rum”) in Modern Caribbean Rum.
Very interesting. I read an article recently detailing Private Equity players getting directly involved in buying full Bourbon Barrel’s (aged & unaged Bourbons) on a purely speculative play to cash in on the ever growing demand for premium bourbon. Tequila is having its time in the spotlight currently. No doubt, Rum’s turn in the spotlight may be next ….
It’s a private equity group where most have a 3-5 year plan to help grow the company and then sell off to another group to maximize their return on investment.
Inorganic growth to gain market share definitely seems to be apart of this PEGs strategy. I could only see them purchasing a distillery if that distillery was also bottling and selling their own rum. If they are mostly selling to a blender or someone else who bottles their rum, then that seems more unlikely to me. I imagine the revenue and margins are higher for blending/bottling versus purely distilling.