Chad Montgomery chadbigtexasbeerfestcom 2146751610 Jett Andrews jettandrews1547gmailcom 9039751230 The Company and the Opportunity Products Craft Beer Company based in Dallas that focuses on brewing beers that will be aged in previously used spirit and wine barrels including win ID: 419510
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Trinity River Brewing Company
Chad Montgomery –chad@bigtexasbeerfest.com 214-675-1610 Jett Andrews- jett.andrews1547@gmail.com 903-975-1230Slide2
The Company and the Opportunity
Products: Craft Beer Company, based in Dallas that focuses on brewing beers that will be aged in previously used spirit and wine barrels including wine, bourbon, whiskey, etc. Services:
Tours
Separate tasting room
Delivery of new beersCleaning draft linesCo-organizing special eventsSize of business: Operate under the brewpub licenseLimits annual production to 10,000 barrelsOr 310,000 gallons of beerDiscussion of venturing out Background of Entrepreneur(s)A beer festival organizer A local craft beer enthusiast and homebrewer with a passion for craft beer.Slide3
The Problem or the Unmet Need
The Unmet Need: Several metro areas much smaller than DFW (such as Portland) have 60+ craft breweries, and there are only 18 operating in DFW as of October 2014 North Texas brewers occasionally produce 1 barrel-aged beer at a time, once per year
Barrel-aged beers are one of the most sought after styles of beer worldwide amongst craft beer consumers.Slide4
Solution:Trinity River Brewing company will use previously used spirit/wine barrels.
These barrels previously held wine, bourbon, cognac, port, rum, and
brandy.
Provide regularly rotated barrel-aged beers in North TexasSlide5
Value Proposition:
Focus on bringing customers a high-quality product,
that does not readily exist in the marketplace today
Sell barrel-aged beers at
a higher cost. Benefits of quality and taste will surpass the cost to the consumer due to the scarcity and unmet need of our product.Business Model: The business model consists of four different streams of revenue.750mL BottlesDraft AccountsTap RoomToursSlide6
Brewing Process:
Ingredients:
Charcoal filtered and Reverse Osmosis water, Barley (Grains), Hops, & YeastSlide7
The Marketing Plan
Target Market: · Craft Beer DrinkersCraft Beer Drinkers and Wine/Spirit drinkersDallas/Fort Worth and Surrounding Area Residents
Tourists looking for Local Craft Beer
Anyone 21+ interested in quality, local products or craft beers
Marketing Model and Advertising:Brewery EventsBar EventsRetail Store TastingsBeer FestivalsSocial Media Accounts (Facebook, Twitter, Instagram, etc.)SalesEstimate 80% of sales direct from brewerySlide8
Competition
Available Alternatives
Scoring Rubric
Subject
Alt 1
Alt 2
Alt 3
Value Creation Elements
Score 0-10
TRB
Lake
Comm
Fire
1
Atmosphere
Max = 10
10
6
7
0
2
Price
Max = 10
6
9
7
7
3
Quality
Max = 10
9
8
9
9
4
Availability
Max = 10
8
2
6
6
5
Price
Max = 10
6
8
9
7
6
Distribution
Min = 10
2
8
5
7
7
Artisinal Lifestyle
Max = 10
10
4
3
8Slide9
Analysis of competitors:
In North Texas, there are 18 craft breweries2 of the beers these breweries produce only partially barrel-aged product
All are produced seasonally or in limited-release fashion
Market segmentation (targets):
Craft beer consumersWine and spirit drinkers Beer market generates approximately $100 billion in revenue with craft beer responsible for 14.3%. Offer a premium product to a niche market. Slide10
Management Team
Team and Skills Profile:Owner/president/Sales team-ownership, streams of revenue.Head Brew Master- brewery operations.Barrel Master-barrel division.
Bottling line- the front line/Shipment.
Strengths:
Thorough Understanding of IndustrySmall WorkforceWeaknesses:Small TeamUnproven Brand NameSlide11
1st Year Sales
1st Year productions is estimated at
1,000
Barrels yielding approximately
90,000 750ml bottles (60% of total production)The average sales price per 750ml bottle is $16The increase in sales is 15% per annum, projected just below market average growth of 18%.January (month 7 ) $ 195,233.78
February
$ 229,686.81
March
$ 270,219.77
April
$ 317,905.61
May
$ 374,006.60
June
$ 440,007.77
July
$ 517,656.20
August
$ 609,007.29
September
$ 716,479.17
October
$ 842,916.67
November
$ 991,666.67
December
$ 1,166,666.67 Slide12
Milestones:
At start (assuming equipment has been installed and all regulations have been met): Submit recipes to TTB - must be done for each new recipe Begin brewing beer (brewing will be a continuous event, as beers will be in brewing, fermenting, or aging stage all throughout the year)
at 3 weeks : Move first beer from fermenters to barrels they will age in, and place them in aging area
Form draft accounts
Begin offering toursat 6 months : Bottle and keg first beer assigned to be opened Send designated product to draft accounts open Tap Roomat ~17 months: Break-Evenat 23 months: Investors at break-evenat 24 months: Longest aged beer can be openedat 60 months: Investors can cash out at 1.5X investment consider expanding past Brewpub licenseSlide13
Questions?Slide14
Timeline of Events and Milestones
Timeline of Events:Before TRBC can open (time zero):
Funds must be acquired (mix of personal investments, SBA loans, and money from investor(s))
Find personnel - engineers, architects, contractors, banker, lawyer, accountant, etc)
Network with others already in the industry Create/finalize marketing plan Check with the Secretary of State and the United States Patent and Trademark Office (USPTO) to make sure that TRBC is an available name, and beer names are available Form an entity File for a Trademark with the USPTO (This can take 1 - 1.5 years) File for Trademark’s for the Beer Names (you can do this up to 36 months before the beer is meant to be sold) This must be done for each new beer Find property/building Purchase all necessary equipment Apply for Brewer’s Notice with Alcohol and Tobacco Trade and Tax Bureau (TTB)
(This can take 6-12 months)
Apply for applicable state and local licensesSlide15
Industry and Market Analysis
Future Outlook and Trends: In 2009 craft beer held only 4.4% of the total beer market Almost doubled from 2009 to 2013, capturing 7.8% total market share last year.
Retail sales show that there was a 20% increase in dollars from 2012 to 2013
Total beer market is approximately $100 billion
Craft beer owns 14.3% of those dollars. Craft brewer volume grew by 18%Texas is the 2nd largest beer revenue state, but ranks only 42nd per capita in number of breweries.Slide16
Industry and market forecasts:
The Market Development Committee of the Brewer’s Association projects that by 2022, craft beer will make up 22% of the total beer market, which would be a 300% market increase over the next 9 years. Slide17
Possible challenges:
Time: The brewery will be based upon making beers which need to age in barrels between 6 - 24 monthsSpace
: barrels take up space, must be stored in temperature-controlled areas
Site
: Almost every craft brewer is expanding and needs additional spaceSales Projections: In 2013 Texas craft brewers produced 833,191 barrels, growing approximately 18% from 2012 to 2013. Slide18
Market Positioning: 1
00+ People Surveyed from Craft Beer ForumsSlide19
Pricing Strategy and sales forecast:Slide20
The Financial Plan
Income Statement:
Sources and Uses of Funds:
We believe we need 1.5 million dollars to start this business
Personal/Family/Friends investments-$250,000 (non-equity)SBA Loan- work to get a $500,000 loanYear 1Year 2
Year 3
Year 4
Year 5
Revenues
$ 1,166,666.67
$ 1,376,666.67
$ 1,624,466.67
$ 1,916,870.67
$ 2,261,907.39
Costs
$ 1,273,361.18
$ 1,303,333.34
$ 1,398,833.34
$ 1,419,650.00
$ 1,442,545.00
Net Gain/Loss
$ (106,694.51)
$ 73,333.34
$ 225,633.33
$ 497,220.67
$ 819,362.39 Slide21
Breakeven Analysis:
Q1
Q2
Q3
Q4Revenue $ 270,219.77 $ 440,007.77
$ 716,479.17
$ 1,166,666.67
Cost
$ 189,153.07
$ 719,689.00
$ 965,355.74
$ 1,273,361.18 Slide22
Funding Sources and Investment Deal
Company Valuation: $3.5 Million (1st Year Revenue x 3)
How much equity for investment:
$750,000 for 20% stake
Projected Returns: Investors can get their money back 6 months after breakeven ($4$)For investors who wish to get a return and cash out, 3 years after break even will return the money at 1.5 times.Longer Term Return on Investment (TBD)Slide23
In Summary
Market Growth: Craft beer is expanding at a rate of 18%
Empirical Data
: When we surveyed our target market, 50% of craft beer consumers either “Agreed” or “Strongly Agreed” that there was an unmet need for barrel aged craft beers in North Texas.
Value Proposition: Our company will be focusing on bringing customers high quality, barrel aged craft beers that are not readily available in the North Texas market todayProfit: Barrel aged craft beer demands a price point of $16-25+ per 750ml bottle, yielding high profits once barrel aging has begun
Revenue Streams:
750ml bottles, draft accounts, our own Tap Room, and ToursSlide24
Risk Assessment
Cost Structure: could potentially be high due to tighter FDA regulations on how the spent grain is utilized. Technical Risk:
T
he welfare of employees
Few employees Market Risk: There are now more than 2500 breweries operationalFor the most part our Premium services and niche productsFinancial Risk: Unpredictability of the Agriculture marketKeep a differentiation marginOperations Risk: beer leakage due to unforeseen circumstances. This risk can be minimized through financial planning we can budget and set aside for overhead cost and deprecation of our equipment. Slide25
The Organizational Plan and OfferingSlide26
Equipment:
Building with a loading dock· Brewing Equipment (
brewhouse
)
· Fermenters· Hot Liquor Tank· Brite Tanks· Barrels· Kegs· Bottling Line· Bottles· Keg and Bottle Sanitation Equipment· Delivery Truck· Draft Equipment for our Tasting Room and Tap Rooms· Cold Room Storage· Computers· Brewhouse Software· Accounting Software
· Office Furniture
· Tap Room Furniture (tables, seating, and a bar)
Personnel
· Head
Brewmaster
· Assistant
Brewmaster
/Barrel Master
· Owner/President/Sales
· Bottling Line/Carpenter/HandymanSlide27
References
750ml Plastic Beer Bottles (dozen). (2014). Retrieved October 12, 2014, from http://www.brewshop.co.nz/plastic-beer-bottles-750.htmlBA Insider: Growth in the Craft Beer Segment: Sky Is the Limit - Brewers Association. (2014, September 2). Retrieved October 12, 2014, from http://www.brewersassociation.org/news/ba-insider-growth-craft-beer-segment-sky-limit/
Berman, A. (2014, March 31). Brewers Association Announces 2013 Craft Brewer Growth - Brewers Association. Retrieved October 12, 2014, from http://www.brewersassociation.org/press-releases/brewers-association-announces-2013-craft-brewer-growth/
Celebration 750 ml Glass Beer Bottles in Cases. (
n.d.). Retrieved October 12, 2014, from http://buyourbottles.com/amber-glass-bottles/glass-750ml-celebrationCommunity Beer Company: A first look. (n.d.). Retrieved October 12, 2014, from http://www.examiner.com/article/community-beer-company-a-first-lookCraft Beer Production by State. (2013). Retrieved October 12, 2014, from http://www.brewersassociation.org/statistics/by-state/?state=TXDeep Ellum Brewing Co. | Love Runs Deep. (n.d.). Retrieved October 12, 2014, from http://www.deepellumbrewing.com/Lakewood Brewing Company loves craft beer. (2014). Retrieved October 12, 2014, from http://lakewoodbrewing.com/Navigation. (2010). Retrieved October 12, 2014, from http://specificmechanical.com/products-services/brewery-systemsRahr & Sons Brewing Company. (2014). Retrieved October 12, 2014, from http://rahrbrewing.com/Schrader, N. (2011, December 13). ADVICE: Guy Gift Guide, Beer Growler. Retrieved October 12, 2014, from http://www.essentialstyleformen.com/advice/advice-guy-gift-guide-beer-growler/Shikes, J. (2011, May 10). Upslope Brewing toasts its new tap room and cans a new beer. Retrieved October 12, 2014, from http://blogs.westword.com/cafesociety/2011/05/upslope_brewing.php
Thurmond, M. A. (2013, March 13). Stories Tagged Chelsea Brewing Company From Everywhere. Retrieved October 12, 2014, from
http://guestofaguest.com/tag/chelsea-brewing-company
http://www.brewersassociation.org/press-releases/statement-from-the-brewers-association-on-fda-proposed-rulemaking-on-spent-grain/
http://www.beallinsurance.com/insurance-news/2013/11/risk-concerns-for-craft-breweries
http://www.riskmanagersinc.com/commercial-products/coverage-for-specific-industries/craft-brewery-insurance
)
http://www.rmmagazine.com/2012/06/02/trouble-brewing/
http://www.hanover.com/linec/docs/114-1255.pdfSlide28
Based on 15% growth rate.
Trinity
base brewing company sales revenue should flourish based on the industry contribution of $33.9 billion to the U.S
economy.
The consumer demanding high quality full-flavored beers should provide a high-level production outcome generating profitability. By focusing on our primary revenue stream of bottle sales to consumers, our initial profits should be met.Slide29
The Operations Plan
Location and whether manufacturing is outsource: