West Michigan investors join growing interest in craft distillery market

The 18 Michigan investors who invested in a Florida craft rum distiller are backing a fast-growing industry that offers plenty of opportunity. Nearly all of the investors involved in the $1.33 million investment in Key West-based Papa’s Pilar rum are from West Michigan, according to Dale Grogan, managing director at Grand Rapids-based investment bank Charter Capital Partners.

The group of investors was part of Papa’s Pilar’s equity offering that was significantly oversubscribed and drew strong attention from investors, Grogan said. Grogan sees in craft spirits an industry that’s “following exactly the same trajectory” as craft beer nearly a decade ago with high growth rates that helped to attract investors. “We’re very much in an upswing of this business,” Grogan said. “If you can find that brand that has good management, coupled with good product and good distribution, then you have something really special there.”

In Papa’s Pilar, investors connected with a brand that recorded strong growth in recent years, Grogan said. The brand is based on a connection to Ernest Hemingway, the late American novelist and adventurer nicknamed “Papa” and who named his boat “Pilar.” The appeal around the brand “is it’s very easy to identify those people that want to see themselves as the adventurer sitting on their boat, fishing for marlin and drinking good rum,” he said.

The group Charter Capital Partners assembled invested in Papa’s Pilar through Charter’s Papa Fund LLC, a special purpose entity formed to make the investment. The offering was “definitely one of the fastest we’ve ever completed,” Grogan said. The quick success of the offering resulted from pent-up demand to invest during the COVID-19 pandemic, a product with a strong name-brand appeal, and simply that “this is a fun deal,” he said. Grogan expects craft spirits to remain a hot investment area for quite a while. “There’s nothing new to supplant it. There’s not that threat and you’ll start to see some real returns,” he said. “We’re just scratching the surface in terms of where these craft distillers are going.”

Charter Capital Partners earlier this year put together a deal that raised $785,000 from 14 investors for craft spirits brands, including Papa’s Pilar. Read more at MiBiz

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