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Hop Stuff Brewery

Platform:
Crowdcube
Stage:
Expansion
Industry:
Food & Drink
Location:
UK - London
Date Rated:
13/02/18
Raise:
£400,000
Equity:
1.57%
Valuation (Pre Money):
£25,077,707
Industry: Food & Drink
Location: UK - London
Platform: Crowdcube
£400,000 Expansion
Valuation: £25,477,707
Date Rated: 05/02/18

MANAGEMENT

PRODUCT

INVESTMENT
Tax Status: EIS

Business Summary

Hop Stuff is a brewery and taproom operator in London and the South East with its own core range of beers. Hop Stuff Brewery has a capacity of 65hl per year and has already opened two taprooms. This round of investment will be mainly used to support the taproom expansion.

Financial Overview

Date (y/e) Dec-18 Dec-19
Sales Dec-18£4,616,823 Dec-19£11,138,923
Gross Profit Dec-18£2,896,315 Dec-19£7,234,022
GP as % sales Dec-1863% Dec-1965%
Overheads Dec-18£2,448,170 Dec-19£5,527,205
Operating Profit Dec-18£348,145 Dec-19£1,456,817
OP as % sales Dec-188% Dec-1913%
Closing Cash Dec-18£680,225 Dec-19£2,640,566

Note: This financial information has been sourced from the company on 05/02/2018. Financial data is NOT verified by Wheatfromchaff Ltd.
68%
SKILLS:
EXPERIENCE:
COMMITMENT:
The Founder has gained relevant management expertise since the company's inception and there is a complete management team covering the key roles required to support intended expansion.
Some members of the team have strong industry knowledge and relevant start-up experience and the Founder has gained a great deal of experience growing the company to this stage.
The Founder is full time and has invested over four years into the business. If he can drive the business to an exit, meeting the forecast, he could expect a substantial financial reward.
59%
MARKET:
PRODUCT:
COMPETITION:
Despite a shrinking overall beer market, sales of craft beer are growing steadily and the industry is already worth over £650m in the UK with the company is already expanding to other markets.
Hop Stuff has rapidly expanded its capacity to over 60hl a year and has thousands of customers. New Taprooms and the subscription service will further increase brand awareness.
The market is fragmented with numerous well-backed entrants in recent years, but Hop Stuff has already grabbed a meaningful share and the Tap rooms provide additional defence.
54%
PROFITABILITY:
CASHFLOW:
RETURNS:
The forecast seems realistic based on the growth achieved to date and profit margins should improve further in the mid-term once the Taprooms start maturing.
This round should provide enough cash to achieve break-even and support the Taproom expansion, although there is only limited headroom in the forecast.
Given the forecast, it is difficult to foresee more than modest returns in the next two years even if the team manages to float the business, but over the longer-term, returns could be reasonable.


Conclusion

The Founder has proven he can manage and grow the business adequately. The previous funding round provided the business with the necessary production capacity to allow rapid growth, and the team intends to keep accelerating this growth by reinvesting the profits in the short to medium term via Taproom and international expansion but also adding a subscription service. The increasing number of revenue streams would help the company to be more resilient and strengthen its cash flow profile.

Investors should however remain patient and not expect substantial returns in the short-term as this plans need time to come to fruition and enable shareholders to maximise value. The £50m flotation aspired for in two years time could treble investors money, but many risks remain in executing the business plan.

Related Links

Crowdcube Pitch

www.hopstuffbrewery.com

 

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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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