West Berkshire Brewery chairman David Bruce has told M&C Report he is planning to launch his first ever crowdfunding push.
Bruce is in the final stages of fundraising through the Enterprise Investment Scheme (EIS) to raise £4m to move the brewery, to invest in sales and marketing and to buy a “stonking great, wet-led managed pub in London”.
But he said that crowdfunding is “the future” and wants to launch a pitch to allow investors who can’t afford the £6,000 minimum payment for EIS to be involved.
He said: “The problem with EIS is that many of our regular customers who would love to get involved in the brewery find themselves priced out.
“Crowdfunding is absolutely wonderful because it opens it up to anyone who can get together £100. What Camden Town have done just shows the potential of it.
“What we will probably do is launch a crowdfunding campaign next time for the consumers of our beer in and around West Berks and the Thames Valley.
“We are going to see how much we get in the next fortnight through our EIS funds. We will probably then go off and do some crowdfunding.
“It’s the future because you get a much wider shareholder base and for those that do want the EIS tax benefits they can do that too.”
Bruce told M&C Report he was close to securing a site for the new brewery – a former dairy site close to the existing facility.
He said the move had been prompted by rocketing sales which had risen 39% in January, 74% in February and Bruce forecasts the total for the 2016 financial year will be a 42% hike.
The new brewery will include a bottling line, kegging line and canning line as well as visitors café. Bruce said he was inspired by the work Black Sheep had done at their brewery.
He said: “The aim now is to grow the brand and that’s why we will be strengthening the sales and marketing team and also investing in a pub.
“I don’t want to set up a rival pub chain so we would have one maybe two. Looking at the pubs we have got with City Pub Company East and west – the worst are probably doing £20,000 a week and the best are doing £60,000, so it would have to be a £1m to £2m a year turnover. It will probably be somewhere in West London, will cost us a couple of million for sure but will throw out probably £250,000 of profit.”
Bruce said the brewery had already been given a boost this year by the appointment of Simon Lewis, previously of Purity as the company’s first chief executive and Simon Robertson-Mcleod, who was previously sales and marketing director at Fuller’s.
On the future for the brewery, Bruce said: “Clive (Watson) and I are proven at building up companies and exiting them at the right time and for the right price. We are a good five years off that with this business but then we will probably do what Doom Bar did – build the brand up at Sharp’s Brewery then along come Molson Coors with their £20m and the brand continues but without the people that have built it up.
Bruce and Watson are also fundraising for £25m in EIS investment for the City Pub EIS Fund. The plan is to raise the same amount for another two years before topping up with £25m of borrowing to create a £100m war chest for acquisitions.
Bruce said the company had already identified a number of “cracking sites” as potential acquisitions.”
He said “several million” had already been raised for the pub fund and one and a half million for West Berks Brewery but he said “I know from past experience that people don’t get out their chequebooks until the last minute.
He said the pub sector was in rude health at the moment and that this week’s announcement of another beer duty cut was another boost.
He said he welcomed the pubs code debate was unsure yet of how the market rent only option would affect brewers.
On competition within the sector he said: “It goes full circle – when I started out in my Firkin days I was taking pubs off the big brewers and doing things they wouldn’t dream of. Now instead of the brewers we have the big pubcos and they are sitting on sites where they can’t appreciate the full potential. You get entrepreneurial operators going in there and quadrupling sales.
“When I started out there was very little competition but now you have some fantastic operators who are driving invention in the market.
“The sector is now probably as competitive as it has ever been and you are seeing that in the competition for sites and the prices that result from that.”
He said the buoyancy in the craft beer market was very positive but warned that consumers could get “confounded by choice”. He predicted that appetite for craft beers would remain undimmed but the more “bizarre” brews were likely to fall by the wayside.
He also mused on the unintended consequences of one of how own early campaigns.
He said: “It’s quite ironic because as a founding member of the Small Independent Brewers’ Association I was right at the forefront of pushing for small, start-up brewers to pay less duty than the big guys. Now those start-up brewers are using the saved beer duty to undercut our prices in the free trade. They use the saving in beer as an extra discount – and that was never the idea of progressive beer duty.
“The Government ought to now look at the effects of it and we have to look at how you can stop people undercutting the brewers that have grown to a bigger size.
