Oregon Juice Supplier Acquires Stake in Multiple Cider Makers

Austin Ray

THE GIST
An interesting cider deal was quietly made official in the Pacific Northwest recently, when the founder and co-owner of Wandering Aengus Ciderworks sold his shares in the company to its top juice supplier.

Nick Gunn, who founded the business with his wife in 2004, sold his stake in the high end brand—and its offshoot, Anthem Cider, which uses primarily dessert apples—to David Ryan, president of Hood River Juice Co., this past October. Although Ryan is now a co-owner of the company, his relationship with the cider maker as its number one vendor goes back nearly a decade. James Kohn, company co-owner and manager alongside Ryan, expounded further on that pre-existing relationship in a press statement:
 
“David has been a great supporter and supplier to both us and the cider industry for over seven years,” Kohn said. “The new partnership will provide our company access to resources and expertise to further refine our quality and expand sales of both of our Wandering Aengus and Anthem brands in existing markets, and new ones too.”

WHY IT MATTERS
With the slow-down in the craft cider market, many producers who were leveraged for growth are suddenly looking for stability and integration. And vertical integration in the agriculture or processing is where it seems to be happening for cider makers.

Kohn tells GBH the deal will effectively alleviate the financial burden associated with producing its premium Wandering Aengus brand.

“The way we arranged it is Hood River purchases our fruit for us,” he says. “So we’re kind of brokering the fruit, in a way, and that helps Wandering Aengus financially. What happened previously was Wandering Aengus was financed by Anthem.” 

(The company expects to produce 8,000 barrels of Anthem cider this year, compared to 500 barrels from Wandering Aengus.)

For Anthem, meanwhile, the deal will create “tighter integration with the apple selection,” Kohn says. And for both brands, the company will gain access to Hood River’s sales and marketing force.

That said, Hood River isn’t technically part of the acquisition at all—it just benefits due to Ryan’s personal involvement.
 
“It’s kind of like they’re financing our harvest for us,” Kohn adds. “They could’ve done that as a vendor, but it’s much more beneficial to David Ryan now because he’s benefitting now on the cider side and on the juice side.” 
 
A somewhat similar deal in the hard cider space occurred earlier this fall when Agrial, a French farmer-run co-op, acquired Seattle Cider (and its sister company, Two Beers Brewing). At the time, we likened the deal—in which an orchardist buys into a cidery—to a hop farm buying into a brewery. It was a “link in the agricultural chain attaching itself directly to another link at the end of said chain,” we wrote. It’s not an exact parallel, but because Ryan does indeed own orchards, it’s not so far off, either.

“Ultimately, I grow fruit, and as a grower, you wanna be as vertically integrated as you possibly can,” Ryan tells GBH. “This really aligns the full supply chain, all the way from true farm to bottle.”

And it gives juice suppliers like Ryan a way to funnel their produce into super-premium product categories. In this case, craft cider is worth far more than the grocery produce market, for which its value can multiple many times over, especially if they own a piece of the whole value chain. 
 
On that note, Ryan has also acquired stakes in multiple other cider makers, further aligning the supply chain and diversifying his customers, though he declined to specify which ones or how many. From a broader perspective, Ryan is part of a fast-growing network of suppliers, selling commodity juice to cider makers of all types, including both high-end artisanal cideries as well as breweries doing simple fermentations for mass-market.

While the cider market continues its schism between high-end and commodity ciders, behind the scenes, much of the product has similar roots, or in this case, juice, especially when one company tries to play to both ends of the market.

As for Gunn, who sold his shares, he’s working on building out BenchGraft Cider Consulting, an advisory agency geared toward early stage cideries in need of some help with everything from orchard planning and development to branding and marketing. This is common practice for winemakers as well, who often consult on other businesses and projects even as they build their own cash-strapped or land-constrained operations.

“It’s just an extension of my gained knowledge from 12 years of professional cider making,” Gunn says. “I’ve accumulated a lot of dos and don’ts that I feel like are good to share with others. I wish I existed when I started my company in 2004.”

With regards to the company he’s leaving, Gunn says he expects it to remain in good hands with Ryan. “From where I see it, his purchase of this half of this company signals that he wants to stay heavily involved in the entire industry,” Gunn says. “He’s first and foremost a juice processor and orchardist, so he sees a vested interest in growing the cider category, and he needs to make sure that both companies are successful ultimately.”

—Dave Eisenberg