Why I invested $100k in a Startup Brewery

Anyone that knows me knows I love a beer. I always had big ambitions to open my own bar one day. Pretty strange considering my hospitality career ending after serving just one shift when I was 22.

Why? Not exactly sure? Maybe I just love beer that much I wanted a place where I could go every day & drink beer without being questioned by my lovely wife. “it’s a business honey, I’m working I promise”

In all honesty mid to late 2014 I noticed a gap in the Gold Coast market. I’ve travelled all round Australia with my Sales role & I’m regularly overseas travelling with my wife enjoying a craft beer or two whilst taking in the local sights. It didn’t take long to notice that the craft beer market was on the rise in Australia & there was soon to be a boom!

Prior to 2014 I had paid a lot of attention to the Craft Beer market in USA & early on identified the following things.

Craft Beer Sales had risen between 2008 & 2012 from 5% of total beer sales to 8% then to 12% of total beer sales in USA in 2015. For a population of 323 million people that’s 38 million people drinking Craft Beer!! Almost twice the population of Australia!!

So… Understanding that the Craft Beer scene in USA was booming year on year & recognising that independent breweries were slowly taking more & more market share from the big Corporates like Anheuser-Busch (InBev) I started to look at Australia in more detail.

In Late 2014 early 2015 Australia’s Craft beer sales took up just 3% of the entire market. Tiny in comparison to USA yet it had risen year on year & was predicted to continue it’s growth based on what had happened in USA.

The Industry predictions were that Craft Beer in Australia will grow in 2016 to approx 5%. There were then further predictions that Sales will follow suit of USA & it may grow to 8% of total beer sales or even higher 2017 onwards

In all honesty, who knows? It was a gamble right!

Back to the Gold Coast!

Melbourne & Sydney had a shit load of Breweries 20-30+. Brisbane had approx 10 breweries & Gold coast had just 1.

My thought process was simple. If USA is going crazy for Craft Beer & the evidence supports this theory & Australia is slowly following suit. Then surely? Once Sydney, Melbourne & Brisbane explode the Gold Coast will certainly follow? I was pretty confident that this is what will happen.

Back to me wanting to open a bar.

In early 2015 whilst I’m thinking about all this stuff & having my epiphany moments I googled “Gold Coast Breweries” knowing there was only 1 (Burleigh Brewing Co.) when suddenly I stumbled across “Black Hops Brewing”. Wait a minute!!! So there’s now 2 breweries ?

As you can appreciate I got a little excited & wanted to visit the brewery the next day.

Just one small problem they didn’t exist. They had no physical location. (just an address in Burleigh which was actually Eddies house). I couldn’t find too much about them online except a Facebook page with a few pics & an Instagram page showcasing some beer called “Eggnog stout”.

Sounds amazing!! I want it now!!!

A week went by & still I couldn’t find out anything about “Black Hops” then “Ze Pickle” a local Burleigh Craft Beer burger restaurant (the kind I wanted to setup) said they were hosting a Black Hops Beer on tap! Well you don’t have to guess where I was for dinner that night!!

I forget the beer that was on tap that night. Possibly an early version of Code Red? The tap label was a piece of paper printed on a home printer displaying the name of the brewery & the beer, then laminated & cut out by hand!!

After asking the boys at Ze Pickle who Black Hops were? I was told they were 3 local Gypsy Brewers. Now being English a Gypsy is usually a reference to a “traveller” who lives in a caravan. In Australia the term “Gypsy Brewer” is derived by Brewer’s who travel to already established breweries & for a fee use their equipment to brew their own unique recipes.

Anyhow, this Gypsy Beer was great & better still I now knew a little extra about Black Hops Brewing. I was happy. It gave me great pleasure knowing my “gut feeling” may be right! The “Craft Beer” movement is coming!!

Now I truly believe in being in the “right place at the right time”

The following Sunday, maybe a week later I was on Facebook scrolling through my feed when I came across an update from Black Hops Brewery. It simply said “Want to own a Brewery?”

Shit yes!!!!

I ran into kitchen & said to my wife “Babe we’re buying a brewery”

Ok. You can probably appreciate that didn’t go too well but after my amazing sales pitch she agreed to exploring the idea. Result!!!

At the end of the day I wasn’t in a position really to open a bar. I was working full time in a Senior Sales Role & was in no position to leave & spend 6 months building a bar.

For me this was the opportunity to explore & what I’d been waiting for!!

I sent the Black Hops boys an email asking for their prospectus & the next day I followed up with a phone call to Dan Norris one of the 3 founding members.

Within 24 hours I had their investors prospectus.

Within 1 hour of receiving that I head read it about 40 times & crunched some numbers on a spreadsheet.

Within 1 hour after that I had convinced my wife to meet with them for dinner.

Within 10 mins we had a meeting locked in at a brand new bar in Palm Beach, QLD called Lester & Earl. An American themed smokehouse & Craft Beer bar!! Would you believe it!! (I just happen to live in Palm Beach).

All the stars were aligning. Timing is everything, the Craft Beer movement is coming!!! I wanted in & I hadn’t even met them yet.

We met on a Tuesday in March 2015. My wife Teneille joined me & we had dinner & drinks with Eddie, Govs & Dan. I had a shit load of questions I’d prepared & they had all the answers.

They sold me their dream of building & opening QLDs 2nd largest production Craft Brewery. They had done a ton of research & had received quotes Direct from factories in China to build their Brewhouse, along with a timeline of when they see everything to be completed. They had a core range of beers laid out & had 5 star ratings & reviews on Untapped. (a beer related app for beer nerds). They knew the detail down to the exact number of kegs this system would produce & what the costs would be to manufacture the beer & sales forecasts for the next 3 years.

I was hooked!!! At this stage though, it was all still a dream. There was no physical venue or actual Brewery.

After the meeting I was super excited. My wife too.

I said to her. “Are we actually going to buy Equity in a Startup Brewery that doesn’t exist?”

After a couple days we thought Fuck It!!! I trust my gut a lot in life, probably too much. My gut was saying yes!! This is a big risk, its $100k. Certainly a decent enough number I don’t want to lose.

As humans we buy things emotionally & we justify things logically.

The logical part of me saw this as an educated risk. Based on the fact that Craft Beer had exploded in the USA & starting too throughout Australia, I was certain the Gold Coast will follow. Why wouldn’t it? My emotional part just wanted to own a Brewery!!

We made an offer within 7 days. It went back & forth & within another 7-10 we agreed on a number & % of equity. The next steps were the Legals. (the fun stuff). This process was a little slower & probably took around 3 months.

Eventually in June 2015 contracts had been signed, money exchanged & we were proud owners of part of a brewery that didn’t exist! We were both over the moon!!!

Fast forward to 2018. Black Hops Brewing has now been fully operational for 2 years. They secured a cool factory in Gardenia Grove, Burleigh Heads & have continued to grow their following both locally & online.

with over 6000 Breweries Craft Beer in the USA 2018 now accounts for nearly 22% of the $107.6 billion U.S. beer market so the market share has continued its growth year on year! Australia is also still following suit.

After reaching Brewing capacity within their first 12 months Black Hops recently raised another $400k in 2017 for further expansion. Late November more tanks arrived from China & our system is now 3 times larger than before & able to produce over 500,000 litres of beer per year with even further expansion plans late 2018 to grow this to 1.8 million litres!!! Watch this space as we will be looking for Investors mid 2018.

In Jan 2018 Black Hops became the highest debut Brewery to enter into the GABS Festival Top 100 beers in Australia with their Black Hops Pale Ale. Awesome achievement for a beer that just 9 months ago was in its concept stages.

2018 is going to be a huge year for Black Hops & I’ve certainly enjoyed being part of the journey. It’s been amazing to witness 3 awesome guys achieve their dreams & to see how they have turned Black Hops Brewing into a well established Brand here on the Gold Coast & soon to be Australia wide.

Find out more on Black Hops Brewing here. https://blackhops.com.au/

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