Craftbeer brewer Yeastie Boys is looking to the crowd to raise $500,000 through PledgeMe to spearhead its expansion into the UK market by selling 12.5% of the company, valuing the company at around $4 million.
Started six years ago by Stu McKinlay and Sam Possenniskie, the beer maker says in its offer document that the UK expansion is expected to help the pursue its strategic growth. Financial forecasts provided show the potential for turnover to rise by over three times within the next three years.
The funds raised will, among others, go towards having its beer made in the UK by Aberdeen-based BrewDog, and distributed by Instil Drinks, the beer arm of the recently merged Bibendum PLB Group.
Yeastie Boys current turnover is around $666,000. Turnover in the best case scenario are $5.96 million in 2018, $3.98 million in 2017, and $2.62 million in 2016. Its best case scenario puts earnings before interest and tax at $45,000 in FY2016, growing to $352,000 in 2017, and $791,000 in 2018. The best case scenario is premised upon moderate growth with a successful UK market, a tender being won and retained in Scandinavia, and the company picking up of one or two other large European markets.
The least optimistic forecast shows a loss of $150,000 (before interest and tax) for FY2016, a loss of $60,000 in 2017 and a profit of $59,00 in 2018. In the least optimistic scenario, turnover for 2018 is forecast at around $2.2 million.
From the ground up, Yeastie Boys beer. Picture from Yeastic Boy's Facebook page.
Assuming the shares on offer are fully sold, McKinlay and Possenniskie will see their holding fall to 39.37% from 45%. Two other significant shareholders' -- Fritha Burgin and Anna Possenniskie -- holding will fall to 4.38% from 5% before.
Yeastie Boys's valuation
Yeastie Boys beers are currently sold in 11 countries. It hopes to brew in UK in time for its appearance at the Wetherspoon International Craft Brewer’s showcase, similar to the one it attended in 2014, which will see its beers hit 900 pubs across Britain.
Yeastie Boys is hoping investors will help the company reach its funding target within 24 hours. Its PledgeMe campaign starts on January 28.
"Putting together an offer like this takes a lot of time and energy" said Yeastie Boys’ co-founder Stu McKinlay. "Our heart, soul and mind has been invested into getting the business plan right. Now we want get the job done and refocus back on the business of making great beer and getting it to the people who want it!"
Winning UK, winning Europe
The company’s model for a successful European market conquest is to produce beer in Europe for the Europeans. This approach reduces delivery time by six to eight weeks, and saves about 25% in costs, the company says.
It says it currently produces “a meagre 0.5% of the 23 million litres a year of ‘craft beer’ sold in New Zealand. “Our dream is a domestic market in which 98 breweries control all but 3% of the market, rather than the current situation where three breweries control 98%,” its information document says. The company also hinted that more fund raising might be needed for it to pursue additional growth opportunities.
Picture from the Yeastie Boys Facebook page.
Shareholders invested in Yeastie Boys get a lifelong 10% shareholder discount on merchandise through the company’s online store (beer will be made available on its online store in the future).
Shareholders buying 2,000 to 19,999 shares receive (all of the above plus) get to go to the company’s annual brew day while shareholders of 20,000 or more shares receive a lifelong 20% shareholder discount on merchandise through our online store, among others.
The full offer document can be viewed here