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A small Utah distillery needs to raise about $1 million to get started. So, it’s using StartEngine to sell minimum 100 share lots of Clear Water Distilling stock.
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That means you have a chance to get in on the action. The minimum investment is just $250 and shares are being offered at just $2.42 each. The company’s total valuation at that price is $7.5 million. As of Nov. 6, 1,137 investors had taken the offer, raising over $568,000.
Clear Water is an example of the diverse types of businesses that can raise private equity in a public way. If a distillery on the outskirts of Salt Lake City can do it, and you have an interesting business idea of any kind, why can’t you?
The Story Behind Clear Water Distilling Stock
Matt Eau Claire, a former software programmer, is the man behind Clear Water. He calls becoming a professional distiller his mid-career “retirement.” Eau Claire told a local paper that friends bought him his first still, and his first experiment was making a sangria. “It came out really good,” he said, and “super different.”
The distillery itself is in Pleasant Grove, a southern suburb of Salt Lake City in a small industrial building near I-15. The city fathers had never dealt with a distiller before. Eau Claire said getting permission to build took a long time. The facility, with stainless steel and copper distilling equipment, opened in March.
Adam Opalek, a realtor with some experience in the distillery business, signed on as an advisor. He has been a brand ambassador for NEFT Vodka, brewed in Austria and sold in small black-and-white barrels. His LinkedIn profile says he also worked on the launch of High West Distillery in nearby Park City, Utah. High West makes bourbon and rye, with tours and its own saloon. Matt’s wife Stephanie handles the accounting.
The Opportunity
Eau Claire said the craft distilling business is a $20 billion opportunity and it has been growing nationwide. Tiny distillers, like craft brewers, can quickly gain cache and a niche in the market. Eau Claire’s twist is to add a flavors and techniques that make his products unique, literally beyond classification. The goal is liquor that can always be drunk “neat,” without ice or mixers.
One of the first two products is an eau de vie called Josephine, after the singer-dancer Josephine Baker. The other is a cinnamon rum called Lorenz, after the Arctic explorer Lorenz Peter Freuchen. Josephine is a white spirit, the mash blended with wine. Lorenz is a rum run through a process usually used to infuse gin.
Both Clear Water products fall in a “specialty” category of federal liquor regulations, noted our Josh Enomoto. The designation is something large distillers avoid but Eau Claire embraces. With the COVID-19 pandemic continuing, the primary sales channels are online, which is also unusual.
The Bottom Line
A 2018 report written for Utah distillers noted there were 1,835 craft distillers in the U.S. at that time, 15.5% more than the previous year. The market had sales of 7.2 million cases, worth $3.7 billion, and was growing at 30% per year. There were 15 such distilleries in Utah.
The market is there. If you’re buying shares in Clear Water, you’re betting on Eau Claire. You’re betting he has the taste, the skill and the flair to get word of mouth on his unique flavors. You’re betting his team can find a niche in a crowded, growing market, from a plant where the neighbors consider most soft drinks to be drugs.
The offer expires at the end of November. Step up to the bar?
On the date of publication, Dana Blankenhorn did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of the environmental thriller Bridget O’Flynn and the Bear, available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn.
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