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Redchurch Brewery

Platform:
Crowdcube
Stage:
Expansion
Industry:
Food & Drink
Location:
UK - London
Date Rated:
03/05/17
Raise:
£400,000
Equity:
7.41%
Valuation (Pre Money):
£4,998,111
Industry: Food & Drink
Location: UK - London
Platform: Crowdcube
£400,000 Expansion
Valuation: £5,398,111
Date Rated: 28/04/17

MANAGEMENT

PRODUCT

INVESTMENT
Tax Status: EIS

Business Summary

The Redchurch Brewery is a pale ale and stout producer, starting with an initial core range it has since developed a wide range of experimental beers. The Redchurch Brewery has grown with sites in Poyser Street, Bethnal Green and in 2016 an expansion to Harlow in Essex. This round of investment will be mainly used to add further capacity and to accelerate growth.


Financial Overview

Date (y/e) Jun-16 Jun-17 Jun-18
Sales Jun-16£564,237 Jun-17£1,175,805 Jun-18£2,561,669
Gross Profit Jun-16£292,538 Jun-17£714,722 Jun-18£1,737,014
GP as % sales Jun-1652% Jun-1761% Jun-1868%
Overheads Jun-16£449,805 Jun-17£813,850 Jun-18£1,220,500
Operating Profit Jun-16-£177,912 Jun-17-£291,094 Jun-18£335,782
OP as % sales Jun-16-32% Jun-17-25% Jun-1813%
Closing Cash Jun-16£21,234 Jun-17£407,025 Jun-18£559,842

Note: This financial information has been sourced from the company on 02/05/2017 or from public sources. Financial data is NOT verified by Wheatfromchaff Ltd.
76%
SKILLS:
EXPERIENCE:
COMMITMENT:
Since the last round, the Founders have filled key roles with the required finance, sales and marketing skills to accelerate the company's growth.
The management team has gained substantial start-up experience and the newest members of the team will add relevant industry knowledge in terms of product and business development.
The Founders have invested six years and £150k as Director's loans into the business and all the management team is full-time.
63%
MARKET:
PRODUCT:
COMPETITION:
Sales of craft beer are growing strongly in the supermarkets and the industry is already worth over £650m in the UK with no signs yet of a slow down.
Redchurch has increased its capacity significantly since the last funding round. Deliveries to M&S and Waitrose commence in April and the business is already exporting to other countries.
The market is extremely fragmented and increasingly competitive. Last year, there was an 8% increase in breweries to 1,700 and several of them are well-funded.
45%
PROFITABILITY:
CASHFLOW:
RETURNS:
Increasing production volumes supported by firm orders from two major national retailers should help underpin growth in both sales and profit margins.
The team has assumed £80k of overfunding in this round which if delivered will provide significant headroom; if not the cash position will be very tight.
Given the current valuation, if an exit is achieved in the mid-term, investors should not expect more than modest returns.


Conclusion

The previous expansion round has provided the necessary capacity to meet substantial demand and the commencement of deliveries to two national supermarket chains should finally allow sales to accelerate. If the team can deliver the intended profit margins, the business could become really attractive but it could take some time to achieve the necessary scale to get on to an acquirer's radar so investors will need to be patient.

Note: We have not received a business plan from Redchurch Brewery and therefore this rating is based on the information available within the Crowdcube pitch.

Related Links

Crowdcube Pitch

www.redchurch.beer

 

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The Ratings we publish have been approved and issued at Financial Promotions in the United Kingdom by Wheatfromchaff in the United Kingdom who is Authorised and Regulated by the Financial Conduct Authority FRN: 751017. Wheatfromchaff Limited registered office is Kilver Court, Kilver Street, Shepton Mallet, Somerset, BA4 5NF and telephone number +44 (0) 1749 347 577. Telephone calls may be recorded. VAT No: 214 0196 49

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