DUNNS Food & Drinks has revealed the opportunity to capitalise on the craft beer boom was the driving force behind its acquisition of Dameck Drinks Company.
The Lanarkshire-based wholesaler bought the specialist beer distributor, which supplies 1,200 world and craft beers to 350 pubs, bars and restaurants in Scotland, for an undisclosed sum.
Dameck became one of the first specialists to import beers to the Scottish on-trade from Belgium, Germany and the Netherlands when it set up in 1994.
Privately-owned Dunns said the deal will allow it to drive turnover to £25 million in 2015 from its current £22 million. And it has identified the potential to add a further £1 million in sales to Dameck customers by selling in food, soft drinks, spirits and dispense products.
Dunns generates half of its turnover from the Scottish on-trade, where it serves about 2,000 customers.
It said it shares only 35 customers with Dameck, giving it potential to grow sales among the customers it has inherited - notably in Edinburgh.
In addition to an expanded product range, Dameck has also brought expertise and strong trading relationships with suppliers to its new owner.
Dameck managing director Danny McGeough has joined Dunns as craft beer business development manager, leading a nine-strong sales team, with a further four Dameck staff also arriving.
Dameck will continue to operate as a standalone firm for the first two to three months.
With craft beer sales expected to grow from £21 million to £30 million in the Scottish on-trade in the next three years, having been £10 million in 2011, Dunn managing director Jim Rowan said it was a market the wholesaler was keen to engage. Among the products it is looking to introduce is Fuller's Black Cab, a stout it hopes will rival Guinness.
Mr Rowan said: "We looked at our own beer selection and we are only carrying 90 ourselves.
"These 1,200 world beers allow us to move into the marketplaces we would not have been able to get into had we not taken them on.
"[It also gives Dunn] a pretty robust and on the edge customer base we would not have been able to access unless we had this level stock. We also see this as being a real complement to our food business. People are now talking about matching craft beers and world beers with food."
In addition to craft beer, Dunns has identified wine, non-food and chilled foods as areas of growth. It has launched its own Wine Academy and joined The Society of Vintners, giving it access to 300 wines which previously would have been beyond its reach.
Mr Rowan said: "That strategy has really pushed forward and we have picked up some cracking accounts. We're tracking at 15 per cent on last year alone [on drinks sales]. I'd say in the last 18 months we've become more recognised as a player against the Mortons [Inverarity Morton] and the Wallaces [Express] of this world, which we are very pleased about."
Mr McGeough and wife Elizabeth were equal joint shareholders in Dameck, according to the most recent annual return for the firm at Companies House.
No information was provided on any windfall they may have earned as a result of its sale, though Mr Rowan noted that, with turnover in the region of £2 million, Dameck was by some way the biggest player in its field.
Mr Rowan did say that Dunns remains on the acquisition trail, stating it would consider doing deals in either non-food or wine. But he ruled out further acquisitions in the beer sector.
The Dameck deal is the latest in a series of takeovers in the Scottish drinks supply sector.
Tennent Caledonian Breweries completed its acquisition of Wallaces Express in March, JW Filshill acquired Lawrence McQueen in January, and Inverarity Morton snapped up Forth Wines in October.
It also comes amid a major investment programme at Dunns, which has spent £100,000 on a new IT system and started work on a £250,000 project to renovate its 70,000 square foot warehouse and office in Blantyre.
A further £160,000 is being spent upgrading its 26-strong vehicle fleet, while £40,000 has been earmarked for staff training and development over the next two years.