Please ensure Javascript is enabled for purposes of website accessibility

Middleby Buys Another Brewing Specialist

By Rich Smith - Mar 2, 2020 at 1:06PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Craft beer is a growing market. But can beer help Middleby Corporation grow profits?

Craft beer is a growing industry. According to the U.S.-based Brewers Association for Small and Independent Craft Brewers, craft beer production grew 4% in 2018 (the most recent date for which data is available) to take a 13.2% market share in total beer sales in the U.S. And the 50 fastest growing breweries in the U.S. grew even faster -- up 10%.  

Hoping to capitalize on this growth, commercial kitchen equipment manufacturer Middleby (MIDD -1.34%) bought Ss Brewtech, an onsite brewing equipment manufacturer for home-brewers and microbreweries, last June. Today, Middleby announced a second and more sizable investment in the breweries space: Deutsche Beverage Technology.

Two men clinking beer glasses

Image source: Getty Images.

Ss Brewtech was doing only about $20 million in annual sales when Middleby bought it last year. Today's purchase of Deutsche Beverage Technology is twice as large, adding a further $40 million to Middleby's revenue stream. In a statement, Middleby CEO Tim FitzGerald explained that the two businesses are "very complementary." He went on to say: "[W]e are now in a position to accelerate product development and leverage the sales capabilities of both brands. Our commitment remains to strategically expand the Middleby beverage offerings..."

For now, the two purchases only grow Middleby's business about 2%, combined. (The company did nearly $3 billion in sales last year, according to data from S&P Global Market Intelligence.) Potentially more important than the growth, though, is the fact that Middleby says its beverage products are "high-margin."

Operating profit margins slipped 30 basis points at Middleby last year, but still outperformed expectations. If SS Brewtech and Deutsche Beverage Technology turn out to be as profitable as management implies, further earnings beats could be in the offing.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Middleby Corporation Stock Quote
The Middleby Corporation
MIDD
$123.71 (-1.34%) $-1.68

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
317%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.