¶ Batch Crowdfunding Campaign and Growth Strategy
It was always part of the plan to put a brew in, but for many years it it was just a plan. It's a hundred percent acquisition of Green Beacon. No, we had a chat with everybody. Anyone would have seen this coming a mile away. Super simple and direct question. And that's just what we're here to do. Talk about beer and money in this very special edition of Beer is a Conversation.
As I record this, the Batch Brewing Crowdsource Funding Campaign has been open for one day and has exceeded its minimum target of$500,000 and is halfway to the$1.5 million full raise. Incidentally, it has nearly raised more in one day than brewdog has in four months, to put that into perspective. While the expression of interest phase has been going for a few weeks now, we hadn't covered the raise until now, as the company's financials and valuations hadn't been available.
And we considered those important to any meaningful discussion of the investment raise because it was being sold as an investment. Now that they're out, we get the chance to discuss the batch business and its valuation with Chris Sidwar and Andrew Fineron. As you'll hear, it's a pretty robust discussion as we talk about the, arguably, inflated valuations that crowdsource funding permits for business.
And also the prospects that Batch will be able to execute their expansion strategy in a highly competitive market. I'm a big fan of Batch and also Andrew and Chris personally, and I respect those guys even more for being willing to openly discuss some of the important, sometimes challenging questions I ask about the equity crowdfunding of their business.
Needless to say, none of what follows constitutes investment advice. You should consider seeking independent, legal, financial, taxation, and other advice to check the information in this podcast and the offer, and how it relates to your unique circumstances. Anyway, enjoy this chat about the batch brewing crowdsource funding campaign. Andrew Finnerin, Chris Sidwar, welcome to Bureau of Conversation.
Thank you. Thanks, Matt. Appreciate it. Big times for you guys. Uh I the CSF uh offer opened yesterday and you've sort of fifty percent uh there l as we uh look at the yep, seven thirty four, two fifty. So it it's ticked along You know, in in through the morning of day two?
Yeah. It's off to a solid start. We've never done this before. We've you know, if we're working with uh company Equitize who've who've managed one at least, if not a couple. Uh and there's a few other examples in in the Australian industry and over in New Zealand. So we have a little bit of an indication of of what it looks like when it's done. But I haven't lived through one so um don't know what to expect. But yeah, very pleased with what we've
seen happen so far. Maybe start by talking us through the decision'cause we we last caught up in twenty eighteen. Um it was just over three years ago and it was interesting to go back and listen to to that conversation, um, you know, and talking about what your plans were and you did
¶ Crowdfunding for Growth and Investor Value
flag that you you were looking at options even e even back then. Um and I specifically asked uh whether what you were doing then was scalable. Um so I'd encourage listeners to go back and listen to that. But
Talk us through what led to this plan to uh to go through a crowd uh source funding uh campaign. Well, we um you know, w we uh we I guess we don't sit on our hands for too long, I suppose. We we open up small bat Um and uh You know, we I we I I'm sure you've heard us heard us talk about we went smaller instead of going bigger at the time and and um we think that that's really helped us to, you know, produce better product uh in the market, at least we have a test kind of facility for that.
And then obviously COVID hit and during that time we've, you know, we we we put out 375 mil cans for uh everything that's coming out of um Merrickville and 440 mils um at smallback. And you know, we kind of got into the stage where we um we can see with the three seventy five mil uh cans, we're in a bit more of a uh you know, typical format um 375 mil by 24 pack cartons was before it was 440 mil by 16 packs.
And we said we we're seeing that um there's we're starting to get on shelves a little bit cheaper now because because of the format size and we can see that we can really start to grow a little bit more volume there. So for us we're like what is this what is the next stage and and and what are we going to do? Um we can see that we we have a great brand and that we can really start to grow
our wholesale base um quite significantly if we really just kind of um take a step back to plan a bit more and then re and really reattack it. We've We've we've had a few goes at it and um it's been um you know we've got to be able to do that. whatever whatever you want to call it. Like we just didn't hire some of the right people to help us get to where we needed to be. Um it's partly, you know, my fault as well. I take that responsibility, but we're kind of resetting um
you know, our product mix and all that kind of stuff through the s three seventy five mil can to hit that. So we sit there, we sit we said, We've got tons of opportunities out in the wholesale market. What is what is it that we need to do to grow. Um and part of that is just investing in sales and marketing for the business. And Chris and I have been growing this business organically for eight years.
putting in a lot of blood, sweat, and tears. And we just kind of got to the point where we said, okay, we're ready. We think this is big enough and worth enough now that we can we're happy to sell off a little bit of it and really kind of get
whether whether however you want to consider business partners, whatever in to to help us achieve these goals and really realize the potential that this brand has. Um and so w we explored a lot of different options, but Crowdfunding ended up landing through a lot of kind of
backroom kind of conversations we're having with people who'd done this before and we kinda gone back and forth between traditional um partners and crowdfunding. And we didn't granted we didn't know a whole lot about crowdfunding, but once we kind of started to dig into it, we realized that Um it was for us and the the our size, it's actually a really good avenue for us to go down. Um, mainly because
Uh and and through seeing it, you know, right now, people wanna see us more. So that's very it's very positive to see, you know, hundreds of people investing in this business right now as we're talking. Um, but they become advocates and so
uh you know, they're they're gonna help us achieve our goals uh because they're going to drink our beer um and become uh more hopefully more regular purchasers, but they're gonna tell all their friends about it and their friends' friends. How much of the attraction of crowdfunding
¶ Valuation Debates and Historical Context
is you know, th th there's no way to sort of soften this is the overinflated values that crowdfunding gets over any other form of investment. Definitely a factor. You can't ignore it. But the market is the market. And when the market is um is broadened to allow in, you know, different people with different motivations. Uh then the game changes. if you were only talking to very sophisticated, you know, very much um capitalist f people.
uh then then yeah, you you're you're talking multiples on Ebata and you're talking, you know, a totally different ball. You well, we're not quite frankly, we're not gonna have that conversation'cause they don't wanna talk to us and Um, we're too small. We just don't, you know, hit their radar. Yeah. Uh so we're I mean, we're almost out of that that picture anyway. But even if we could get, you know, some people to the table, you know, we we see more value in it than than they do.
Um and part of that equation is just that it's it's you know maybe it's one, maybe it's five of them with us. collectively trying to push the brand forward. Whereas, you know, you turn over to you know, uh equity crowdfunding and instead of having four or five you've got, you know, fifteen hundred.
Uh and they've got different agenda, they've got different motivations. But you still very much sell it as an investment. You know, go I I I I appreciate and we'll we can sort of talk about that um sort of the motivations of uh an engaged community have. But it's still sold as an investment and an investment is something that comes with the promise of a return as opposed to
selling this as something, guys, if you love our brand, you can be part of it. The the language that you use is very much around investing. Mm-hmm. I I guess my question was looking at the you know CSF and the values that are attributed to it. Uh I d I I hear you talking about that engagement and that there are people are do have different um motivations. Is it a good investment for them in terms of getting a return on that? Yeah, absolutely.
Um, I mean Andrew and I are gonna go out there and we're gonna continue to hit the streets as hard as we can to keep growing, keep delivering, you know, additional revenue, additional value. Um, in which case when there is an exit, they'll, you know, conceivably get a better price than what they paid for it and get a return. At the same time, if they're out there advocating they will be contributing to that movement, to that progressive, you know, growth.
and value. So they'll they'll be able to participate, be along for the ride, but they'll also be able to build their own value. um by you know broadening our consumer base through their network and you know through themselves. Yeah, and and I I guess to be to be before like to to add to that, um, you know, we've comparatively evalued this um, you know, at a a at a revenue multiple that is
in our opinion, very reasonable compared if you compare it to what other revenue multiples there are out there based on the performance of this business. So our intention is to very much grow the value of this business um and and bring those people um on that journey along the way. And and and and realize, as I said before, the untapped potential that this brand has. Um we've we've really
I haven't even scratched the surface of what we can do in New South Wales, let alone the rest of Australia. But l let's talk about those multiples because comparing yourself favourably to other overvalued businesses. doesn't n necessarily represent the the the true value of the business. And uh, you know, one that you compare to is Endeavour, for example. Um and, you know, they've been spectacularly uh a spectacular failure since their
Equity Crowdfund. In fact, you know, they've completely gone off stream in terms of communicating with their equity crowdfunders um and have had a uh you know a a board push and uh you know all sorts of things like that. Um so You know, i is that really where you want to be? pegging your value to, you know, companies that haven't lived up to expectations? I I I am looking at our situation uh well, yeah, in that table we are comparing ourselves to to other businesses.
Um, you know, the other one, which is also one of the outliers in there is uh is Brewdog, who've managed, I think, seven or eight of these transactions in each time, you know, grown their market share, grown their base, grown their support network and Um I don't know if if any of their original investors have had a liquidity event. I honestly I don't pay enough attention to to know that. Um but I I do stand behind the valuation that we put on ours and I do, you know, expect to
get people a return on their investment. So yeah, it's an interesting question that you pose, Matt, that, you know, is it fair to compare against a, you know, another pig with lipstick on it. But I'm not describing you as a pig with lipstick.
when you look at a m a a revenue multiple of, you know, eleven times when hospitality businesses generally um operate on revenue multiples on uh on EBITDA multiples of four to ten, which would value, you know, even on a fairly grand um valuation of, you know, four million as opposed to fourteen.
¶ Future Growth: Retail, Wholesale, and Returns
Well I I mean I I think the game is potentially changing slightly. So I mean we've had this, yeah, we we we've we've had this before. People will say, well, Ebita versus revenue multiple. You know, when you when you look at Ibitta multiples, um You know, it it it can be i for a business that that you know has so much potential Um, and you need that extra push to help you move uh your revenue and your margins um, you know, exponentially, but you just need that bit of a push.
Um, and you can see that. Uh, but yet you have an accountant or, you know, a private equity company or somebody that's just trying to basically say, well, no. Um, we're only gonna value you at that e bid down multiple, but then they at in r in return, you then get screwed over, you have to sell fifty percent or more of your business. Um, and then you realize all this great upside that they then take.
So I think for us, you know, this is an opportunity for us to use what's been what's been happening in the market. I mean, it it is changing. Like there are a decent amount of crowdfunding things that you can point back to. A and it's hard to point back to sales of breweries'cause most of that stuff gets um like you you can't find the figures on it because the bigger companies that buy them out, they keep everything private.
Um so we actually don't know what they've been sold for. Well, I I I I wouldn't even think that that's a fair comparison, you know, like Bolter with, you know, four million liters um, you know, versus Um bat you know, batch it. uh three hundred and fifty thousand litres probably isn't you know, and and and growing and uh all of those sorts of you know, Balta was growing at a much faster rate and those sorts of things. But you know, then I look at MOA in New Zealand that has a
very strong brand presence, um, but only went for one point eight million for the brand, the the four million litres and the um brew house um recently. So it look I mean i even on your own figures, um, I would seem to You you you mentioned in the in the documents that um there was a buyout in twenty twenty where some of your initial investors were offered the chance to to sell out and made a two hundred and eighty five percent increase
um in the value of their investment. Um, you know, what was the event what was the valuation that you calculated that on when when they sold out? The the transactions were done between private individuals. So I mean, we facilitated the conversation and then they had their, you know, private negotiations both looking at the financials that, you know, were available. Mm. Um, so beyond that, uh
I wasn't party to it, so I can't really answer, but Andrea you m you might have more information. No, I mean I think that uh my my comment on that is that those are yeah, they're
Yeah, it that's a private transaction. So even in this Well, it's a private transaction that you're willing to use to talk about the value of the business. Um, you know, and and I'd I would imagine that that would you know you would have had some idea of what the business was valued at in coming up with that two hundred and eighty five percent figure.
Mm. Yeah, uh yes and no. I mean if someone has uh It was during COVID if someone has a a price in there they say they're saying I'm happy to um sell at this certain rate and someone's happy to buy at that rate, then that's their um
that's that uh we we introduced people that who are w some of the people that were willing to sell and then someone who was willing to buy. Um this is prior to us um going down this this path and really starting to set a proper um well what what valuation we think is behind the business.
But, you know, um, even now if someone if someone were to buy through equity crowdfunding, but then they wanted to sell their shares privately, I I I mean, I as far as I can tell, they they could sell it for whatever value they wanted to. Um'cause it's th those are their shares. I mean surely it's a relevant metric in terms of looking at what some people perceive the value of the business at. Some people who are internal to the business
you know, value the business at.'Cause sure I mean y you you've certainly used it to talk about the you know um growth that they got from their investment. Uh yeah, I think I I think the growth we're talking about was from the there from our shareholders' initial investment in us. Isn't that right, Chris? Yes, it was. It was the price they paid versus the price they got back. Yeah. Which you could divide against the you know, their share of the business to come up with a rough
value um based on that that number? Yeah, well I mean I think when we started this, we valued the business at Like seven hundred thousand or something? Yeah, in twenty thirteen, yeah. Yeah. So that's what that's that that's what that is based off of. Hm. But they sold in twenty twenty, which would have valued the business to them in twenty twenty.
They sold, yeah, first person was an eighteen. Um, I'm not sure if the rest were all in 2020, but it was it was in the heart of COVID when we had an excited person who was very interested in getting in, who saw a lot of potential. And then we had people on the other side who had personal situations going on in their lives that led them to, you know, happily take uh some cash. Uh so I mean look, it I think the the broader valuation question does come back to, you know, people's motivations.
In in that situation, yeah, six months changes a lot when you've got, you know, a very bleak outlook versus something a little bit more positive with, you know, thought and and energy and capital and and all the rest going along with it to to support. you know, an ambitious plan. The the the enthusiastic person that came in that that you mentioned from the um
conversation you had with uh Chris Lukinko on the the beer healer. I understand he was the founder of Campos Coffee. Is that have I got that right? Yes, Will Smith. Sorry, Will Young. Yeah. Yeah, that would be a coup. Um so so he I mean he was enthusiastic, but not enthusiastic enough to invest more heavily in in in the business to to sort you know, give you the the the this ad um growth that you're talking about now.
Um, i well it would have been a similar equation with him. I think again, when you have, you know, a lot of people making small investments, their risk tolerance changes. But if you're asking a person to write a seven figure check like th they're gonna want a different, you know, they have a very different expectation. So I think that's that coming back to the crowdfunding question, I mean, a lot of focus can get put on traditional valuations and time will tell, you know, what happens.
Uh but I think I'm not sure. It's just the fundamental difference of what people are looking for when they when they go into the market. I do believe that we're going to deliver a return. I wouldn't be taking people's money and promising them to, you know, that I'm gonna do my best if I But there is, you know, there is upside for us to deliver a very strong return for these people, uh, you know, if we
it's do everything right and if we, you know, keep making beers that people want and um keep, you know, expanding and and, you know, I hate using buzz buzzwords, but disrupting. Uh I think the the other traditional sort of distribution model that that a lot of brewers are are working uh through with, you know, major retailers and and and the pubs is is is very challenging. I mean we're we're constantly, you know, getting some traction and then losing some traction, getting some traction and
um, you know, progressing forward and and and doing our best there. Um But where we, you know, where we get really excited with this plan that we put together is is in, you know, additional um batch branded retail spaces.
¶ Adapting Business Values for Scale
So, you know, getting getting better margin on the product sold is is fantastic, but giving people a better experience than, you know, what they can get by going to say a BWS, buying our beer and taking it home. Um, you know, that is going to lead to, in our opinion, just a much more uh loyal base, um greater share of wallet.
um bringing more people into the fold. I mean, we've been talking a little bit, I think before this recording started about, you know, the sheer number of breweries and and what it takes to to punch above and and capture um some market share. I think I think the the problem that a lot of us craft brewers get stuck in right now is just fighting against each other because we can see our tap get taken by the other craft brewer. And it distracts us from the fact that the other 15 beers on tap.
are the major brewers. Uh I know, I mean that's that's not news. I mean, we all know that we're all up against the major brewers, but it's easy to to lose that um that visibility when when you're watching your shelf space get taken up by, you know, the next trendy uh style of beer.
So just being out there in the market in a greater way with our branded experiences, uh, we are hoping that we're gonna bring a lot of folks who are, you know, either not beer drinkers or um Or young folks who are, you know, coming of age, who have the choice of, you know, consuming lots of different things.
Um, we're hoping that, you know, they'll they'll get on to enjoying what we do. Hearing you sort of talk about, you know, the lower margin of, you know, Dan Murphy's and and and the wholesale. When you look at the um forward estimates um in in in your income statement, um, you know, the you're looking at, you know, on a current revenue of around about a million, you know, one point uh you know, low one millions for your Marriottville tasting room.
Um, new venue revenue will hopefully match that by financial year twenty three. But you're looking at growing um your wholesale revenue from two point one to seven point five million. Where'd that number come from? Because it's the competition in that wholesale market is only getting fiercer and the margins are you know, as you show are v are are very low.
Yeah. Um, I mean it's it's a two-pronged approach, right? So having people experience what we do in person, um, you know, we have seen it lead to greater wholesale sales in those areas. So the numbers that we look at. in terms of our success at nature retailers. um points to that. Um, you know, we've we've had conversations with similar
consumer businesses where where they have their own retail, they also do better in grocery. The the market for the kinds of beers that we do that sell really well in our tasting rooms, I mean, we believe that to to be bigger than what it is for us now. Uh that's why we believe in having more um tasting rooms and tap rooms around.
But we do still see that the major scale is going to come from from wholesale. I mean, when we get beers that we're happy with, that, you know, punters have uh, you know, demand beyond what we can produce. That's when we do work with our contract brewing partners. And that's where the exponential side of the growth still is available to us. So tasting rooms are gonna be, you know, a major push, a major experiential um aspect to what we do.
Uh, you know, we're gonna roll them out. I think at this point we can definitely fund one, if not two. And, you know, that's going to support the bigger push, which again is is wholesale. And and and I hear what you're saying, but you know, the wholesale revenue for nineteen, twenty, and twenty-one seems to have been fairly um static. Yeah, I think I think that's that's a bit of my fault because for a while I wasn't comfortable with contract brewing.
Um, you know, we've built some relationships, we've gotten comfortable with the brewers at the facility. um, you know, facilities. Uh, you know, for a long time I still had the stigma attached to contract brewing that I had when we started in back in twenty thirteen and you know, when I was tasting beers at my local shop, um, and just realizing that so many of them were brewed in the same facility. You know, that really stuck with with me for a long time.
You know, in fact, I think there's a handful of instances where I've held us back in a wholesale um perspective. I wasn't comfortable. shipping beer to non-refrigerated um distributors. I wasn't comfortable sending beer interstate. Um, there's a lot of things that you know, I just needed to to shut up and get out of the way.
¶ Wholesale Growth Through Contract Brewing
so that we could start to to go and grab them. I think Andrew can speak to the opportunities that we're getting based on the inbound phone calls because he services them. Or did you just before you move on from that, it it it it's interesting to hear that you were wrong in those sorts of
decisions. Um,'cause that would w that was a big part of our conversation back in twenty eighteen was, you know those value statements that were so important to the batch brand and, you know, were the things that I saw as really making you a strong active player in the Marrickville market where um you know, now you're describing those as wrong and having to jettison them to some extent or, you know, compromise those to some extent to get the growth. Will that in turn, you know,
brand, you know, that that value style. Well, you know, I I I I go round and round on this one a lot and and I think you and I are a lot alike in that we are purists and and um, you know, do hold hold the industry in very high esteem and and want the best from it. Um but what I have found is that not all the punters do. You know, there's there's a lot of environmental initiatives that we do fund um out of our bottom line. There's others that I would like to do, but we can't because quite frankly
People don't want my beer when it's priced the way it has to be priced to be, you know, environmentally friendly. So until consumers
you know, want to get on board with with these things. Um, we can sit here and and and be purists, but the market's gonna swallow us up and move right around us. Um but at the same time, in in my defense, I think Um, you know, understanding the logistics process a little bit better and that the, you know, just coming to the realization that, you know, the folks who are running these bigger operations with the ambient storage. They don't have any vested interest in sitting on your inventory.
They're paying for it. They want it gone. You know, they're working just in time, just like we are. And and they're doing the best that they can. And and for the most part, it's it's working. You know, we're not getting you know, complaints coming back saying I can taste that this was sitting warm for months and months. Because it's not. It's it's moving through the system. It's getting into, you know, retailers and getting into people's fridges at home quite quickly.
Um and then on the flip side, we also came across an organization that um, you know, helps me get over my, you know, uh fuel usage and and and um you know carbon emissions. So Because we can now pay somebody to plant trees, I'm okay with shipping a pallet of beer down to Melbourne. Whereas before it just seemed ridiculous that you know, I should send my pale ale and they s send their pale ale north and, you know, we've got trucks crossing in the in the
on the highway. Funnily enough, that was what you uh yeah, w w one of the things we talked about uh in twenty eighteen was exactly that uh phenomenon. Yeah, yeah. I mean it it is still true. It still bugs me, but you know, since we can spend a little bit of our profits doing, you know, good
Um, you know, then then then why not? People want the beer down there, so why why say no if, you know, we can do it responsibly. Yep. Yeah. And to and to jump in, I mean, like a lot of the the you know, I don't I don't completely blame Chris for that. Yeah, I mean c we I supported Chris and his his decision. Uh me wanting to sell more.
Um, obviously there there there are frustrations at certain times and you're like, Okay, we're not gonna sell it to this market because we're not confident of it. But the what's more important is that we also have to make sure that
And I'm talking about the environmental aspect aside,'cause um you know, y you have to make sure that your your your product is good when it goes to those markets. And once we start to get a lot more confident, I mean, that's the thing I want is to have bad product out in markets. So once we got
were confident with that shipping and also with the offset scheme. Um, you know, w we're able to to start to open that up a little bit more. Um, but like also we have gone through, you know, kind of a series of having um some sales team um that, you know, didn't quite fit the bill for us. Um So, you know, now this is a time for us to kind of reset.
Um, and really, you know, um, be able to kind of I guess level up or, you know, look at it from five or ten thousand feet or whatever you want to say and um sit there and say what's the right structure for this team to help us grow. Um and then we can really start to achieve that. Now, the other thing is like kind of going back to the original idea, um, Chris and I would both love it if like
we could build this brewery um and this kind of like hub and spoke model kind of network and never really have to leave New South Wales. I mean, that'd be awesome. You know what I mean? And build it into something
that where ever you come to your local city or state or whatever you want to call it and and everyone's just drinking batch. And um, you know, like and sorry guys, we can't we can't get it out of the state because everyone's drinking it here. Like that would be really, really cool. But unfortunately that
There's just a lot of competition in the market right now. So we we do have to send our pale ale down while they're sending their pale ale up. You know, it's just the at the moment that's just the way it is. But I think if there is Kind of back to our conversation that we were talking about before this. Um, you know, if there if if if some things change in the market.
uh there's vo some volume could open up and we could end up sitting kind of just growing into our own state, which is kind of a it's is kind of a fun thing to think of. But For now, we we and that's what we're very much going to be doing. We're focusing on New South Wales in in the short to medium term, and we will start to grow interstate.
Um uh you know, it probab well, I mean we're we're working on it now, but like are we are going to try to grow New South Wales much bigger first before we try and take over any other states. And if that if that really goes really well in New South Wales, that's a great thing.
¶ Maintaining Creativity and Brand Identity
It's just it's better for the environment overall. But and and my understanding is that at the moment you're at capacity in terms of your in house production. So Will that eight times revenu uh wholesale revenue growth from from now have to come from contract brewing?
Yeah, I mean most of it will. We um we do have some room to to you know upgrade some of the tanks. We've got some um you know some twelve hect tanks in the back of the corner that you know could easily be replaced with some bigger ones. Uh, you know, brewing itself. Um we can do it more often. We we have the ability. Uh we just don't right now because you know we've started to
to use hawkers for um tango. So we've you know we do have one skew that we do down there. Um you know we're looking at offloading a couple other skews that are a little simpler to make, you know, the things that require souring and nitrogenation. You know, we don't necessarily want to have to, you know, convince somebody to install more equipment in their facility just to to service a one beer from us. So we'll have to shift.
the beers that most suit contract brewing to contract brewers. But I mean, they know what they're doing. It's it's not like the old game where You know, you had these small brands brewing way too much beer at a contract brewer because they only had one size tank.
And then having that product sit around for months and months and months. Like, you know, they know what they're doing. They've got different size tanks. We, you know, are are at a point where some of our SKUs do have higher demand and can justify that. So So you know, I ha I don't have any issue anymore working with a different brewer. And again, it's it's absolutely sometimes when you ask that question it sounds like you're anti contract brewing, which is a perfectly legitimate model, I guess.
when you look at the brands that have you know, increased to those sorts of volumes, those sorts of wholesale revenues. And Endeavour is a great example. You know, they started as a wholesale um you know, contract brand that felt the need to create a a a venue to try and
give that touch point. Um and but they you know th their their revenues even after ten years of really working for the big majors, um, didn't get to that sort of seven and a half million wholesale value. Um so I'm just wondering what the strategy is to grow to that level and still keep the the resonance and, you know, that batch um branding that has made you so strong.
Well, yeah, I mean that's that's where the tasting rooms come in. That's where small batch comes in. Um we didn't want to go straight to to trying to do high volumes of of fewer SKUs and lose that. So we put in that smaller system to, you know, A, make sure that we We're testing better processes for our for bigger SKUs, but also B um, you know, continuing to do what we did.
uh when we had the space to to make lots of different beers. So, you know, because it's a three barrel system, we've got ten fermenters, we can continue to pump out as, you know, as much variety as our as our um brewers can come up with. So that that ethos is is pretty well cemented with the stainless steel that's there. Yeah, I I I g I I mean I I guess the point is others have said the same thing and haven't.
manage to do it. Wh which is why I'm wondering you know, what your secret source will be to be the ones that actually pull that strategy off in an ever increasingly um complicated market. Um you know, w when it hasn't worked for for others that have tried a similar strategy. Yeah, it's a fair question. Um
I guess I would, you know, part of me is is an eternal optimist in that sense that, you know, we haven't had any issues staying creative to now. You know, we've we've shifted where our creative um influx comes from. You know, traditional previously it was, you know, working our way through all of our homebrewing books. Uh and then once we, you know, sort of tested everything that we, you know.
that had been done before, we, you know, stumbled upon at this around the same time, um, you know, the idea of of of using better malt, using malt that's more suited to um craft beer, that, you know, l un deindustrialized beer. Um And I don't know what's gonna be our next inspiration. You know, we we've we've had a great run of fantastic brewers coming in. Um
you know, maybe maybe the inspiration will come from somebody who's who's, you know, just brings a different viewpoint to the table. Uh maybe it'll continue to come from, you know, the folks at Gladfield and Voyager who keep putting up some different products for us to work with.
Um, I can't speak to exactly how it's gonna be, but I'm confident that we can do it because we've done it before. We've been doing this for for a while. I mean, and and look, there's gonna be uh beers that have we've brewed before that are gonna come back out again and we we you know we try and improve those recipes and there's gonna be beers uh fr and that's at small batch and that's also at
Merrickville for limited releases that are, you know, reruns um of what we've done before. And we still do that now. Um, but we continue continue to try and offer the right thing to the market at the right time. Um, and you'll find that, you know, there's even if you're re releasing like I us always use Big Kahuna for example, like there's new and different ways to bring that beer to life that we can continue to improve on. So for us we are, you know, we're we're trying to even make the
the the reruns of beer is better, um, so to speak. So I mean it's like it's not an trying to just to jump in on kahuna, the guys the guys we use a a coconut in a in quite a few different beers and they they have come up with a new process um for how they, you know, infuse that flavor. So kahuna this coming year, which we haven't started brewing yet, it's on the schedule for later in April.
Um, Kahuna this year should should be better than it's ever been. And that's, you know, because of small batch and because of our team. Mm. Yeah, and I think for for us, like that to me, that's success. That means that we're we are continuing to to try and strive to be better and do better. Um
Yeah, so it's like how how many new beers can you brew? I've got no idea. I mean, it is infinite. You can do tons of different flavor variations, but at the same time we know that some people and like me in particular, I just want to see certain beers come back out again at certain times of the year. So um you know this
this is going to allow us to continue to do that because sometimes some of the beers that we that we want to see. And if I'm being selfish about a certain beer, like we'll just do it at small batch and then we have the ability just to sell it through small batch. And if we have tap rooms, sell through the tap rooms.
¶ Growth, Authenticity, and Future Relevance
um so that it's gone it's here and gone quickly and we move on to the next thing and we keep that exploration journey for for consumers um going. And and also having said that, most people in in New South Wales, for example, Never even had our beer. So it's good this is gonna be new for people for a long time. Um I think that's that's a good point. Like just coming back to your Endeavor example, um, going straight to big box retailers.
you know, means that that they played that card and when they did their crowdfunding there wasn't really another card to be played, I guess. Um I think one of the things that that's unique about our situation is that to Andrew's point, we
I mean, partially because I'm stubborn, partially because, you know, we w were brewing a relatively small amount of beer. We haven't ventured very far. Again, w as I said um at the start of this, it was fascinating to go back and listen to that twenty eighteen conversation because I I was actually surprised I even asked the question, is what you do scalable? Um
What was that answer? It was really around the l the the ideas of, you know, our customers will guide our business and you know if they keep asking for our beer we'll sort of keep servicing them.
Which is interesting because what I'm hearing now is that you're in instead of being pulled by your customers who you can't supply, you're now going looking for customers that you haven't yet reached. Um uh the the the question that that raises m for me is could you just sort of say we're happy at the level we are now we have a viable business or do you need this growth in order for for batch to be a you know a a viable business long term?
Uh that's an interesting question. I mean, I I have personal aspirations that that exceed where the business is sitting now. Um I think our staff do as well. Uh you know The the price of inputs constantly goes up, rent constantly goes up, salaries go up. I want our people's salaries to go up because
they have increased expenses in their life. Um, but the only thing that's not going up right now is the price of beer, uh, partially because of you know, all that competition. Could we be satisfied with the size of what it is now? Um, you know, probably in the hands of somebody else who's a little less ambitious, but but I mean for me, no. Um
You know, does that mean we have to go out and find new customers? Yeah, we do. Um, does that mean that, you know, we'll we'll dilute what we do? I d I don't think so. No. Yeah, I think I think if we stay where we are now, like the way Chris and I are will both get um mm we we would we would we would get bored because we just know there's this potential for for the brand. I I think that um there there's to to go back to your point about cons finding consumers versus
consumers telling us what they want. Right. We are still very much brewing what our consumers want. But man, I'm telling you right now, like it's hard to find like to figure out exactly what they want. It's changing all the time. It literally I mean, you see it. You know, there's new new um uh Nipa's coming out all all the time. Those are not our favorite beers, but we still we still brew them occasionally um because we know people want them.
Um, we still brew the beers that we want to see'cause we really like to see it'cause we're in this too. So we we're definitely listening to them and brewing for them, but we also Like we we want more people to experience it. So we th we then also have to look out and sit there and say, What is What are these other people? You know, what do they want to see? I I personally think that sours have a long, a long way to go. And we've firmly planted ourselves um in the
as a sour uh or a brewery that puts out a lot of and good sours. So I think that we're gonna see a huge um a huge increase um ideally and kind of in that segment um and you know people coming into that and exploring that.
Um, and when when they do, we've got a v very deep uh portfolio there of beers that we can put out and a lot more exploring in that particular style to do with in terms of flavors. Like we're We're using um uh triticale um uh malt from Voyager, which is a wheat rye hybrid um that we're gonna start testing um uh out a bit more to see what, you know, low lower A B V beer or, you know, what do we do we put fruit in it? Do we not put fruit in it? So it's a
It's a malt that you that ha is so flavorful and also gives off this great aroma that you potentially don't have to use any fruits. I mean, we're exploring and Chris commented on this earlier, like we're still exploring those options and I think there's just a huge amount of potential for that. So like We are we're kind of being we're kind of doing a little bit of both, you know, in terms of finding consumers and also servicing our current uh c customers and consumers.
But we're also driven in terms of what we wanna do. So we we yeah, we do wanna drive the business forward. I think if we if we sit back and don't um and and and just kind of do what we're doing now, I think there's Um there's with all the competitions, there's only so much we'll be able to do. And I don't know. I mean, I guess part of me maybe worries that we start to become we're not relevant anymore if we're not trying to
to continue to push it forward. So who knows? I don't know. I mean there's there's a there's a there's a you know subset of consumers out there who aren't necessarily hyper, you know, into craft beer, but they do want to support something authentic. And you know, I'd I'd much rather, you know, they find a good authentic experience than you know, just go path of least resistance and buy the, you know, whatever's being marketed to them at, you know, the the big box store.
Um because as as we've discussed offline already or or on the call, I can't remember. It's always the problem with having a conversation before we start recording is you can never remember what was said on Mike and not. There there's yeah, there's a fair number of beers out there that that are a little bit more formulaic and and don't come from, you know, as deeper roots as as us and a lot of our peers who you know who who do work really hard in
you know, in their breweries, in in the fields and, you know, testing and and and trialing and and putting something forward to the market that's that's genuine. I'd I'd much rather it be
somebody who's, you know, authentic than than not. Well, uh look, uh I mean these are the discussions I love most in in in what I do. You know, I I I know that it's uh n not not easy, but I you know appreciate you guys being uh so open to to uh answering these questions because, you know, it it's it it is the prism that we have to look at the uh the the the rapidly changing industry through. So uh the g the good news is as we've been speaking, a couple of thousand dollars has been added. Um
to to the uh to to the equity raise. The needle has still been moving. Excellent. Yeah, that's good. Well Andrew and Chris and and again, like we're one day into it and you are rapidly coming up on the halfway mark for uh for for for the target and you've got another month to go. So uh certainly um
Yeah, brewdog might be looking to take some uh notes fr fr from your capital race thing. I think you might have even exceeded Since we've since we've been in this talk, uh a friend of mine sent me a text saying we've yeah, we're outperforming Brewdog. Ah, there you go. So w which is which is something. Um, you know, and and and the valuations are certainly uh very different. Um
But uh anyway, look guys, uh all all the very best. And as I said to you off mic, I was in uh the the the brewery last week. I snuck in as part of a tour of uh Uh Marrickville and surrounds and uh really enjoyed it. It had a really good vibe and uh you know the the beers were certainly tasting uh very good and we're hoping Pete and I were
saying on the podcast last week that we need to do another sweep through so hopefully we can include you in that. Yeah. Good on you guys and all the best for the uh crowdsource funding campaign. Thanks, Matt. Thank you. And that was Chris Sidwar and Andrew Finan. For the record, I've bought one share worth$250 as part of this raise. And hopefully you can see why I genuinely respect those guys for coming on and being willing to answer some pretty hard questions about the business.
If you're a member of our Facebook group, I'd love to hear your thoughts about not only the raise, but also whether you invested as well.