Deal Review: Bucket Boys are serving up a triple threat in the craft beer market
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In Marrickville in Sydney’s inner west, craft beer heaven ‘The Bucket Boys Beer Shop’ has been a drawcard for Sydney craft beer aficionados.
Positioned as brewery, bar and bottle store, Bucket Boys serves consumers with a palate for premium craft beers, offering everything from Australian local beer to scarce beers from around the world.
Beer experts and co-founders Clinton Elvin and Jonathan Hepner are passionate about all things craft beer and the Bucket Boys bar is inspired by the Scandinavian style of bars, where the bottle shop takes the form of an art gallery or curated space, bestowing the exclusive beers on offer.
The Bucket Boys’ mission is to provide an inclusive and creative craft beer experience, developing a passionate and engaged beer loving community. The Bucket Boys beer brand has hopes of a Sydney-wide expansion with its premises and an online store extending Australian-wide.
Complementing the craft beer store, the Bucket Boys run a brewery, offering a holistic beer experience for their customers. Putting their own mark on the brewing industry, limited batches of unique craft beers are created and sold by the glass.
Whilst there is an abundance of breweries in and around Marrickville, Bucket Boys aim to capture their own portion of the market focusing on innovative flavours, brands and formulations. By developing interesting and unique ingredients, Bucket Boys deliver beers that many Australians have never had the opportunity to try before.
Featured on Birchal’s crowdfunding platform, Bucket Boys Craft Beer Co is raising capital at an indicative pre-money valuation of $9 million.
The company targeted a minimum investment of $200,000, up to a max of $1m. With the round scheduled to close at midnight (May 23), the company has reached its minimum investment goal, with more than 220 investors collectively pledging over $340,000.
The minimum investment is $100 per investor, with shares valued at 50 cents. The new funds will be put towards working capital, marketing and business development.
“Bucket Boys is also offering a discount scheme for investors which can be redeemed for store purchases targeting their loyal customer base,” the company said.
Over the past five years, the annual growth in the craft beer sector is approximately 5% per annum, with craft beers’ market share infiltrating the traditional beer marketplace. Bucket Boys is attempting to capitalise on the industry’s growth, promoting a widely recognisable brand image to craft beer consumers.
In the year of 2018, Bucket has attracted over 1,000 new online customers through their website. Moreover, the Marrickville beer store has received an average turnover of $1 million per annum.
The one of the risks surrounding Bucket Boys Craft beer is consumer preferences. Considering the recent market appreciation of craft beer, investors will need to be satisfied that this beer trend will be enduring over the term of their investment.
The entry of new market participants is also under constant threat. Big industry players such as Liquorland and Dan Murphy’s have the capacity to deploy capital and take up market share in the sector. Moreover, competition from substitute products is overwhelming as there are countless variations of alcoholic drinks available, all vying for consumer attention.
The industry has witnessed much consolidation with large players such as Wesfarmers and Woolworths have a history of brand acquisition, buying up emerging and established brands.
For example, Wesfarmers established their interest into liquor market by acquiring Liqourland and Vintage Cellars. Similarly, Woolworths have snatched up bottle store brands such as Dan Murphy’s, BWS and Langton’s.
For Bucket Boys to be targeted by an acquiring major, they will likely need to build a substantial market share in the sector first.
Whilst there is only very minimal financial information that is publicly available, it is difficult for an investor to consider the prosperity of the company, so investors will find it challenging to analyse whether the valuation is relative to Bucket Boys Craft Beer’s economic outlook.
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Former fund manager and finance academic, Dr Nigel Finch advises growing business on strategy execution, corporate governance and capital raisings. He has worked across all stages of the business cycle from start-ups to seasoned ASX-listed companies including many who have tackled Asia’s emerging markets. Authoring more than 5 books and 100 scholarly articles, Dr Finch has a thing or two to say about business.