THE GIST
In the latest instance of craft-on-craft mergers and acquisitions, New Orleans-based Urban South Brewery announced on Sept. 27 that it would purchase Pensacola, Florida’s Perfect Plain Brewing Co. The move will further Urban South’s goal of being a key regional brewery in the Southeast, with a sales territory that stretches from Texas to Florida and increasing its staff from roughly 60 employees to just under 100. Urban South declined to specify the purchase price.
With Urban South’s scale and scope of distribution and the added physical locations from Perfect Plain, this acquisition is meant to solidify the company’s standing at a time when many of its medium-sized brewery peers have struggled to find paths to continued growth. The company previously opened a second brewery and taproom in Houston in 2020.
Urban South co-founder Jacob Landry says in addition to being a scalable brand, Perfect Plain comes with staff who have expertise in hospitality and spirits (it operated a brewery, taproom, and three cocktail-focused bars in Pensacola). All those factors play into Urban South’s plan of opening more locations across the Southeast, and its interest in potentially launching ready-to-drink, canned cocktails.
As Urban South eyes its next phase of growth, leadership says the brewery hopes to produce 30,000 barrels of beer next year. That would make the brewery a top-100, Brewers Association-defined craft brewery for the first time. Last year, Urban South produced 20,638 BBLs (+12% from the year prior), and Perfect Plain produced 540 BBLs (+6%), according to data from the Brewers Association.
Urban South sees Florida’s Gulf Coast as a lucrative market for its beers and those from Perfect Plain, which previously had not sold beer through a wholesaler. With its purchase of Perfect Plain, Urban South will launch on- and off-premise distribution for both brands through Anheuser-Busch InBev-aligned The Lewis Bear Company over the next six months. Florida represents the sixth state in which Urban South sells beer.
WHY IT MATTERS
Landry says his company sees a path to continued success by acquiring taproom-only breweries and bars. The ability to focus on expanding distribution and extend brand recognition of existing breweries can also help the company scale more quickly and efficiently. This is particularly important for Louisiana-based Urban South, which—under its home state’s laws—could only sell 10% of its beer through its taproom when it opened in 2016, forcing it to focus on distribution sales from the get-go.
“What we really like about this model is, because [Perfect Plain] is not in distribution, there is a lot of value to add and a way to grow them significantly and quickly,” Landry says. “We love the concept of working with a brand that’s got a great taproom business that may be interested in growing into the distribution side, assuming it’s the right market with room to grow. ”
Besides being two of the most populous states in the country and among the states that consume the most beer, Florida and Texas have seen sales trends that are favorable to Urban South.
When it comes to more expensive beer subcategories—craft, imports, and premium plus—Florida and Texas generally outperform the national average.
This indicates that consumers in those two states are willing to pay a premium for craft beer brands like Urban South and Perfect Plain.
For the most recent rolling 52-week period ending Sept. 11, craft beer volume sales in Florida chain retail outlets like grocery and convenience stores were down -3%, which still outperforms the national average: Craft sales were down nearly -9.3% nationwide during that same period. In both Texas and Florida, imports and premium plus grew sales volumes in those stores at rates well above the national average.
Urban South believes the Southeast isn’t yet as saturated in terms of craft beer as other parts of the country are.
“Looking at the styles offered by the bigger players in that region, we have some real points of differentiation,” Landry says of Florida in particular. He sees Hazy IPAs and Fruited Sours as two popular beer styles that both breweries have in their core lineups. He also sees American Lagers as a style that should perform well in Florida’s hot climate.
In terms of fruited Sours, Landry cites Urban South’s Lime Cucumber Gose, a gold-medal-winning beer at the Great American Beer Festival in 2020 and currently the brewery’s third-best-selling beer. (Sour beers have long been a hit in the Sunshine State, where “Florida Weisse”—a spin on the tart Berliner Weisse—is considered a homegrown style.)
For Hazy IPAs, he cites Holy Roller IPA, currently the brewery’s second-best seller behind Paradise Park American Lager. Perfect Plain also regularly brews a Hazy IPA called Holy Spin and an American Lager called Yachtside.
The combined brands can therefore make a strong pitch to wholesalers, in that both have core beers in craft styles popular with Florida residents like Fruited Sours and American Lagers.
“We’re similar in that the focus is … brewing to the [hot] climate and brewing to what folks locally want to drink every day,” he says.
Landry says the Southeast region will be the brewery’s sole focus for the future and that national expansion isn’t in the cards. He says the company is considering opening taprooms in a few more cities but declines to name them.
“It’s not going to be the explosive expansion that we’ve seen some of our peers do,” he says, adding that the company is still helmed only by himself and co-founder Kyle Huling. “But I still think that around the Southeast, there’s still some opportunity.”
Words by Kate Bernot