West Berkshire Brewery
- Investment sought:
- Equity offered:
The West Berkshire Brewery PLC (WBB) is an independent brewery that makes award-winning beers, has grown 20% for the year to November 2015* and has tremendously exciting plans – to build a much larger brewing facility and to buy its first pub.
The brewery was founded in 1995 and is situated in Yattendon, Berkshire from where it produces a range of bottled, kegged and cask-conditioned beers and lagers for which over 40 awards have been won, including Champion Strong Beer of Britain.
The company currently employs 19 people. Sales in the year to March 2015 were up 23% on the previous year,* and at the current rate of growth, the directors believe the brewery will reach its production and storage capacity within two years.
This campaign is intended to provide the widest opportunity for our customers, consumers and all interested investors to ‘beer part of our journey’.
** Please note, the company has an option agreement in place for 6% of the issued capital which will convert on a £4m raise. This conversion has been factored in to the equity offered. Should £5m be raised then the conversion will increase to 7.5% which would result in a slight dilution for the investors in this round.
Since 2013 the business has been led by David Bruce. In a 48-year international brewing and licensed retailing career, David has co-founded and invested personally in:
Bruce’s Brewery and the Firkin pubs.
The Paris Real Ale Brewery (now frogpubs.com).
The Brooklyn Brewery, New York City (New York State).
The Wynkoop Group of Brewpubs, Denver, Colorado.
The Elysian Brewery, Seattle (Washington State)
The Capital Pub Company PLC.
The City Pub Companies East and West PLC.
During the past 15 years, David has raised over £80m. through the Enterprise Investment Scheme for start-up ventures in the brewing, pub and farm shop sectors.
In March 2013, David was invited by the founders, Dave and Helen Maggs, to invest in their company and become its chairman. Initially, David led a private placing of some of the founders’ equity to “the beer drinkers and residents of Berkshire”, thereby raising c. £1.23m. for the founders who have subsequently retired but remain significant minority shareholders.
A completely new Board was appointed and a five year strategy for the Company was implemented, focusing on sales and marketing. As a result, like-for-like beer sales have increased beyond expectation.
In November 2014, West Berkshire Brewery launched an offer for subscription and raised £2.75m under the Enterprise Investment Scheme in order to:
* build a brand new high-specification brewery with bottling, kegging and canning lines together with a visitor centre, shop and café.
* acquire a drink-led, managed pub in an urban location in which to promote all of our brands.
* provide working capital in order to further strengthen our sales and marketing teams as we enlarge our distribution area and expand into new export markets.
We have worked on all of these aims. The team has been recruited. The brewery specification has been finalised and suitable pub sites have been identified.
Substantial accomplishments to date
So far, a total of £2.75m. has been raised through this EIS offer.
Since April 2015, the business has grown by 20% versus the previous year. West Berkshire Brewery brands are now listed with; Enterprise Inns, Waitrose, Tesco, Majestic and Fortnum & Mason. We are the official cask beer of Reading FC, official ale of Henley Royal Regatta and in 2015 we were the official beer supplier to the BMW PGA Golf Championship at Wentworth.
Recently the company has successfully recruited for new roles in the business; marketing, finance, brewery and two new sales positions have been added, including the company’s first sales person dedicated to supporting the growth of our customer base in London.
Simon Lewis was appointed CEO in February 2015. Simon has worked extensively across the UK drinks industry with a wide range of leading companies including Bass Brewers, Coors, Red Bull, Monster Energy and Purity Brewing. Simon is charged with the delivery of the company’s strategic plans.
Our plans are very clearly focused on making the very best of the skills we have, what our customers and consumers are demanding and making sure that we develop a capability to win in all the markets in which we compete.
WBB aims to leverage the recent investment made in our sales and marketing teams. With two dedicated field-based Account Managers, working alongside two sales Executives servicing our customer base on the phone, the reach of the business will be dramatically enhanced. Focus for the business will be on generating an increased loyal customer base looking for a variety of great quality beers.
We aim to develop a range of beers that will meet the increasingly curious taste buds of our consumers. This will include a new craft keg and bottle range utilising the very best ingredients from around the world to make interesting and accessible new beers. In addition, we are in the process of agreeing the distribution of an exclusive range of beers from continental breweries.
We aim for the development of other income streams to be achieved through:
• Contract bottling.
• Managed Pub(s).
• Brewery Shop and Café.
The plans for the growth of WBB start with the need to build a new state-of-the-art brewery. It is our intention to remain on the Yattendon Estate, preferably in adjacent but now redundant dairy farm buildings. In conjunction with the landlord, we have received pre-planning approval for the development of a site capable of hosting a brewery that would allow an immediate tenfold increase in capacity. That means that we would not have to consider a move from this site for many years. Our vision is to build a facility that is future proofed in size, capability, flexibility and ultimately is a sector-leading brewing production and packaging facility. This investment is an opportunity to benefit from this long-term vision.
Use of proceeds
The Company intends to take advantage of the exciting, substantial and growing craft beer market.
The Company will outgrow its current site by 2017. Therefore, WBB plans to construct a purpose-built, high-spec brewery, installing kit that will allow for a significant increase in production with massively improved efficiencies. WBB intends to build a new visitor centre complete with a larger shop and a café.
We expect that the proposed new bottling, kegging and canning facilities at the new brewery will reduce in-house costs, and will provide a significant additional revenue stream as we aim to provide flexible outsourced packaging services to other brewers.
• SALES AND EXPORTS:
The company has already expanded its sales and marketing team to drive domestic sales through pubs and supermarkets.
After successful initial sales overseas, WBB intends to promote export sales.
• MANAGED PUBS:
WBB intends to acquire at least one drink-led, managed pub in an urban location.
WBB is predominantly an on-trade supplier, with approximately 20% of its business in the off-trade.
The company has devised a strategic plan to target the right drinks for both customer and consumer type. Within this financial year, our brewing team have developed several new beers including a 'Craft Lager' to appeal to the widest audience possible, with lager accounting for 75% of all beer sales in the UK (CGA 2015).
At the heart of the current business is the recognition of the massive potential for our traditional cask ale range. The latest Cask Ale Report by Pete Brown identified that: "Cask ale is in volume growth; Cask Ale is increasing its rate of sale; cask ale is increasing in market share in the on-trade." WBB aims to continue to grow a strong stable of cask brands. We will grow distribution out from our heartland and across the UK. In particular, Good Old Boy will be the company's focus brand. With 20 years of heritage and experience we expect that these beers will benefit from the growing demand in cask beer. The Cask Report 2015-16 identifies that the cask ale drinker is driven to find a "premium experience that can't be replicated at home", they visit the pub twice as often as the average drinker, and they spend more.
If cask beer is what we do now, then the trend towards craft beer cannot be ignored. We believe that we have the team to capitalise on this trend.
The growth of craft beer in the UK on-trade last year was +62% (CGA) and that trend is forecast to continue. WBB intends to approach this market with a new range of inspired craft beers in bottle and keg to make the most of this growing sector. Our young, skillful brew team have created the Renegade Brewery brand to provide a new identity for our craft beers. Using only the finest ingredients, the development of this new range targets the growing market for interesting and premium beers with 20% of British adults having drunk a craft beer in the last six months.
Characteristics of target market
Beer drinkers are changing their habits. People are seeking more quality and less quantity. The overall beer market is in decline at -0.5%, however consumer movement is into premium categories and more diverse choice.
• Cask drinkers are affluent, educated and have money to spend. 61% are considered to be in the ABC1 demographic.
• Nearly 20% of real ale drinkers tried it for the first time in the last three years.
• Cask ale appeals to all ages.
• Cask drinkers are more likely to pay more for a good pint of beer.
• CAMRA now has over 175,000 members.
There is an increasing demand from women beer drinkers. Our new Renegade craft beers are designed to target this opportunity.
Our core market in the South East and London accounts for 29% of all UK on-trade beer sales. We believe that WBB is well placed geographically to make the most of this opportunity, with London accounting for 20% of all beer sales, and our focus here will be vital in the growth of the business.
We have developed a marketing plan built around the delivery of our range of beers and imported brands;
* Own Cask Ale.
* Own Craft Beer.
* Third Party products.
Our business will focus on delivering the strongest brand quality and variety for the trade. We aim to work with our loyal customers to support them in brand value and brand support using quality glassware and other materials to enhance the overall consumer experience.
As a business we aim to drive sales, predominantly led by our free trade, direct delivered, customer base. Strategically, we aim to develop greater exposure to national retailers, both on-trade and off-trade. Significant gains in the last six months include beer listings with Punch Taverns, Mitchells & Butlers and Greene King. Finally, we aim to develop a sales and marketing strategy to expand the export of our beers around the world. The appetite overseas for UK produced beers is considerable.
The development of the new brewery site will be a focal point for the business and a stand-alone operation that we expect will attract new customers and consumers to the brewery to see and experience the facility first hand, giving opportunity for a great brewery experience and income stream.
The addition of one or more managed pubs will add extra streams of both income and marketing potential. As a showcase for the brewery and our brands, these pubs allow us to market directly to our consumers and develop an integrated approach to brand development.
According to CAMRA, there is now in excess of 1,400 breweries in the UK, many of which have a focus on the production of craft ales. Approximately 170 microbreweries have been established within the last year. We expect that these new microbreweries will provide a new source of competition for longer-established breweries such as West Berkshire Brewery. However, this trend has helped to raise the profile of real ale and small breweries in general.
We expect that WBB will successfully compete with other businesses in our sector by:
* Virtue of our heritage and experience.
* Maintaining the highest standards of product quality and consistency.
* Innovating with, and promoting, interesting and distinctive products.
* Taking advantage of existing supply lines and customer arrangements to distribute new products.
We expect that an emphasis on customer service and a dedicated and well-trained sales team will keep West Berkshire and Renegade Brewery products at the front of the queue.
In addition to our sales strategy, WBB intends to add further income streams to the business in the shape of a top of the range, high speed and automated, flexible packaging line. The specification of this packaging line will include the potential for both bottling and canning of the highest standards.
There is a current shortage of packaging operators in the UK, WBB knows through day to day experience. Following extensive research and negotiation, we are going to build a facility that will allow WBB not only make cost savings by bringing our brands in-house (we currently outsource all packaging), but also provide an increasingly sought-after contract bottling/canning solution for the ever-expanding brewing community. Already several significant customers have been identified for this service. Our plans include the potential to scale this operation based on capacity requirements and contract gains.