Market Watch, April 2018

SHOP WINDOW26 MARKET WATCH MARKETWATCHMAG COM APRIL 2018Kentuckys New Retail KingBlue Equity is now a dominant force in the Bluegrass States retailing sceneLouisville Kentucky based Blue Equity is invested in every thing from Mexican resorts to flooring companies to talent management firms that repre sent chefs and TV broadcasters But chairman Jonathan Blues great passion lies close to home in Kentucky where he was an early backer of Angels Envy Bourbon and more recently an investor in bever age alcohol retail In late 2015 Blue Equity purchased the two location Louisville based Party Mart group and last year the company acquired the Liquor Barn retail chain from Canadas Liquor Stores N A Ltd a roughly 26 million deal that included 15 Liquor Barn locations around the Bluegrass State which range in size from 2700 44000 square feet With the purchase of Liquor Barn Blue Equity became Kentuckys biggest beverage alcohol retailer although competition from Total Wine More is on the horizon Moving forward Blue is eyeing expansion across the state under the Liquor Barn name and planning to renovate existing stores Market Watch recently caught up with Blue to discuss his plans for the future MW Angels Envy turned out to be a good investment for you Blue We generally like to invest in later stage or mature businesses Angels Envy was young but we were one of the last investors to take a piece of them five years ago Their offices moved into our building and we also helped them get financing to build their distillery Our interest ended when Angels Envy was sold off to Bacardi three years ago MW Why the switch to retailing Blue Since new distilleries must lay down liquid for many years without knowing what future trends will be there are challenges to that business In retailing we can be a purveyor of all brands I acquired two companies with great reputa tions knowledgeable staff and marketing reach around Kentucky And weve got significant plans for growing the business For example well soon be introducing Yuengling beer into the state Well also be adding more cigar humidors in many locations with the goal of becoming the No 1 cigar purveyor in the state And eventually we hope to feature the chefs and broadcasters that our talent management firms represent in events at our stores MW Did you retain most of the Liquor Barn staff Blue Yes we kept the entire local operation which is led by COO Chris Edgerton We folded them into our existing management Liquor Barn and Party Mart are now collaborating on buying which has given us some real power buying opportunities MW Are you looking to expand with more stores Blue We would like to open more stores eventually We could grow by acquiring more liquor stores or building new ones There are under retailed towns like Paducah where we could be some day but were not looking to enter other states MW Total Wine More now has a store in Louisville and its building another one in Lexington How much do you fear a competitor like that Blue We respect all our competitors but Kentucky consum ers are very loyal to businesses like ours that are locally owned Theres another kind of competition were worried about Kentucky doesnt have legal marijuana yet but bills have been introduced in the state legislature to legalize it Thats not likely to help our liquor business or our cigar business MW Most private equity owners look to build up a business for five years and then divest Is that your plan here Blue This is a long term hold for us There are only a couple of other investors with money in this venture so its closely held Were modeling this after a family business so it will never make enough revenue to go public mwThe EditorsBlue Equity chairman Jonathan Blue pictured is heavily invested in Kentuckys beverage alco hol retail industry after purchasing Party Mart in 2015 and Liquor Barn last year