1 - The idea
2 - The 10 part plan
-Initial product development and introduction to market
-Problems and errors with product and solving
-Market acceptance through distributers
-Fundraising for next stage (which is more fundraising)
-Fully operational company with management team, equity partners leading to - sales growth and company restructure (some partners will be clients and memeber of the team).
-Brand + product growth and balancing of books
-Fundraising for new production options
-Profits + debt reduction
-Continued growth and brand solidity through extra ventures (own bars/events/new product lines)
- Brand sale + cash out
3- Report on plan so far (points 1,2 & 3)
4- Problems facing the company immediately + potential solutions
5- Future problems and solutions
6 - Market analysis and competitor comparison
7 - The end goal
8 - Timeline
Whilst cycling across the USA from Oregon to Virginia, I found that the quality of beer in the US was a lot better than I was expecting - this was in 2011 when craft beer (as we will refer to the latest trend in beer) was only just starting to reach the UK - Brewdog for example was still pretty unheard of to many.
I predicted that this fresh, hoppy, carbonated yet clear (in most cases then) beer would be the next trend in London.
One year later - working in a pub in Stockwell, London, I witnessed Camden Town Pale Ale become the pubs 2nd best selling draught beer (after the house lager) which for a pub with 5 lager lines, cask ales and other drinks - showed that people were not put off paying an extra £1 for a pint of something they enjoyed. The Camden Town business model is relevant to our way of developing later, as they were not scared to subcontract brewing to Germany to meet the demand as their sales team did a great job creating demand.
At the time, I came up with a few ideas which I pitched to the MD of the chain (Geronimo Inns). He shot down most of them - but one stood out - the idea of getting kegged craft beer to the ski resorts. And from there the idea started to develop.
The IDEA is that we brew great quality American Pale Ale - through a 3rd party (I have no expertise in brewing) who we sweat in as a partner in order to get cost price beer, and have a brewery ready to brew (don't have to build one). We then get the beer to the mountains and try and sign a distributor to get it into the ski town bars. We grow a beer brand that is known to be a fantastic beer, premium and slightly more expensive than the average pint of flavourless lager, and become stuck in the nostalgia of a ski holiday in the same way vin chaud is for some, and jaegermeister or cheese fondu is for many.
As we increase our presence in the mountains, we can raise funds to increase brewing capacity - or partner with a brewery in Germany or closer which would mean the UK brewery can focus on supplying UK and building up stock for the busier winter period.
Ultimately, we can brew in any facility that can brew lager - meaning that we can expand our brand to Asia, Australia and perhaps the USA.
There are several ways in which we can expand - which will be chosen/determined by those that back Alepine early on. We could raise capital and build breweries - or work with existing breweries who are keen to become partners in the brand.
The end goal is to sell the brand to a major brewing company such as AB Inbev. The more investment we can raise now to put our stamp on the ski market - the more likely they are to come and make an acquisition.
THE 10 part plan
Initial product development and introduction to market
In September of 2014, I was drinking at the annual Chappel Beer Festival - admittedly a cask ale CAMRA gig, in north essex. I was on the hunt for a brewery that brewed great ale, though was not brewing at full capacity. The aim was to make a deal to get them to join Alepine as production partners for a small % of the business, in return to brewing the beer and selling it to Alepine Ltd at cost price (what it costs them to brew). I would then take care of the running of the company.
I found Phil and Abby Wilcox of Wibblers Brewery shutting up shop at about midnight as security was closing in on me. We had a lock in, and I pitched my idea (half cut) to them.
A week later I was at the brewery with bottles of 10 of the most popular American Pale Ales on the market - Sierra Nevada, Brewdog Punk IPA, Founders, Camden Town Pale Ale, and a few more - these were the beers that had lead the craft beer revolution in the UK, and the easiest to drink for the less educated in beer circles. A true craft beer might scoff at them, but they represented to me - good quality, consistent, popular beer... (Brewdog is now valued at £1 Billion...)
A few weeks later, Phil took me into the brewhouse and poured me the first prototype of Alepine. As soon as it hit my lips - I was confident that we were on the right lines.
Since then, we have had many troubles with packaging and the way that it has been brewed - so much so that in 2016 - I had to pour away around 70 kegs. The carbonation was wrong, and the beer had not been filtered correctly. As well as that we have had labelling problems, stock being stored incorrectly and going off, stock not shifted quickly enough and going out of date. We have had more problems than I ever anticipated - to the extent that we have not stayed true to the original course!
We have had about 6/7 tweaks to the beer. Including reducing the hoppiness, reducing the ABV, changing the hop haze reducing agents, changing the packaging to key kegs from doliums and the people who Phil subcontracts out to, to filter, carbonate and package the beer.
These product errors, changes and trials have been worth it though. As we now have a beer that when served at beer festivals - have rival head brewers conceding it is their no 1 beer. Alepine is a drinkable American Pale Ale, that is light in colour, gently hoppy, clean and crisp and at 5% abv - very acceptable to both session drinkers and occasional drinkers. It is refreshing, morish and just about the best beer in the Alps.
Since the first brew, I have taken an initial load of beer out to Val D'Isere initially in a ford transit van. The reception was good, but the market clearly not ready for such good beer. Like in the UK - bars in the Alps are 'tied' to breweries/brand/dstributors - these companies pay for the installation of beer lines, cooling systems and cellar equiptment - which run into the thousands of pounds/euros. The bars had no doubt that the beer was good, but with these difficulties on contracts with their usual suppliers, plus the fact that our beer was twice, sometimes 3xtimes the price of their normal cheap lager - they were not able to put it on tap initially.
The initial response was frustrating - we have a product that we know the end customer would love and pay an extra few euros for, but we just didn't have the power of the big boys - we were a minnow in a shark tank.
I was determined though to get Alepine out to the Alps for a winter though, and so Wibblers brewed a larger quantity of beer which I had shipped to Morzine - close to where my cousins lived. Initially (not sure still about the legality) the beer was delivered to a small bar's garage - the bar in question would be my first draft account - and be the best selling account that winter - La Kinkerne in Morzine. We struck a deal with their usual distributer HM boissons - we could use one of their lines inside - if they could use one of my beer machine's lines outside when there was an event on (they never did!).
The beer was popular in the Kinkerne, especially with the ESF instructors. This year coming it is now under the control of another early client of ours - Olly Lambourne's Mountain Mavericks.
The first full season of Alepine in the Alps was probably our best so far - as I was delivering personally, but at normal prices - it meant I had a bit of margin, but being a young naive businessman, I had no idea that those profits needed to be nurtured carefully for the road ahead - I ate my pie to quickly perhaps.
At this stage, I was naive in so many ways - the accounts for Alepine were all over the place - I was just using my own basic spreadsheets - I had no idea about accounting, my VAT returns were questionable and my poor maths skills had killed any hope of answering of any numbers based question.
What I did know though - people who bought and drank Alepine - loved it.
I knew that it was going to be important to sell at the top price as the sooner I could sign a distributer the better - and when they were signed - my margin would shrink.
Later that season, we were able to pursuade Le Verre Gourmand to take on Alepine for the following season. These guys were traditionally wine distributors who had started in a similar vein to Alepine - in the 2000's - Sam Owens had was fed up with appauling wine being served in chalets on ski holidays - when these chalets were based in France - the wine capital of the world. And so he started finding good but reasonable vinyards that would supply him with wine which he sold to chalets. Now LVG is a well known and sizable drinks wholesaler and distributer. Thanks to Alepine -they now serve craft beer across the Alps to large chalet operators and bars and restaurants.
Alepine that following season signed some tour operators, and some other bars also, but this was when we were having the most difficulty with keg problems and dodgy beer.
I asked the CEO of Dolium kegs to come and visit me in the Alps as we were having repeated dispense issues. The base problem was that most of the bars had hot cellars - meaning that the beer would overcarbonate in the keg as the bar needed to apply more dispense pressure to counter balance the fobbing... which was caused by the heat... it was a vicious circle which meant that we had to recall a lot of stock, that was unusable because of bars cellars. (Later you will see the solutions to this common problem - require investment!)
Key Kegs were the ultimate solution to this problem, as even if the bar increased the pressure onto the beer in a keg - the bag in between the beer and the gas would prevent the gas from entering into solution, and thus mean it was impossible for a barman to over carbonate (or force carbonate) the beer. Still - these warm cellars are a big problem for anyone trying to serve anything of quality. Beer needs to be packaged, transported, stored, cellared, dispensed and served COLD - 3 degrees celcius ideally.
As these problems were arising - was when I first realised that if Alepine is going to be the biggest best beer in the Alps - I was not going to be able to acheive it alone - my initial loan of £50,000 was running out, and we would need a lot more than this to put in place the plan and solutions to the problems of these early years if we were to grow, and not as any beer - but a high quality beer with an exemplary reputation, where from brewery to glass on a mountain top - the beer was kept perfectly and the end product noticeably superior to any competition. The big boys present their beers as superb premium products - but frankly the state of cellars and dispense in France is shocking. If Alepine is to be the figurehead of the Alps -we need to invest in good accounts with equiptment, training and POSM. This will eat into our bottom line initally - but partnered with the right bars and people will mean that the brand is known and loved.
Initially I hoped that the Gross Profit from the initial sales would pay for such niceties - however in reality, there has been zero gross profit due to the stock problems and product development.
In conclusion - the product is now as we want it - consistent and of excellent quality. We had no recalls this last winter season. The market is becoming aware of Alepine and it is becoming familiar to holiday makers as well as residents in the mountains.
Market acceptance through distributors
We have had an arrangment with Le Verre Gourmand (Passy, Chamonix) who now buy pallets of Alepine from us, and distribute across the french Alps to bars, restaurants, chalets, hotels, clubs and tour operators. We were the first beer LVG took on, and since have started stocking more beers. This has helped beer as a whole in the Alps, but is posing potential problems in terms of competition from other beer brands.
LVG last season opened up some new accounts, but did not sell as much as they had forecast. Difficulties with competition and Beer being a new product to them meant progress was slower than hoped.
Other distributers have shown interest in Alepine including HM Boissons, and Davide from Val D'Isere. These firms are significantly larger than LVG and specialise in beer - in honesty and hindsight - partnering with them would have been a better move, however LVG were the first to try us out, and out of loyalty we are sticking with them and also as they are only stocking exceptional beers in their range - meaning that if they do develop their own brand as a quality beer wholesaler - we should benefit in the longrun.
We plan to find distributers this winter in Austria, Germany, Switzerland and Italy to cover the areas LVG cannot reach.
Fundraising for the next stage (which is more fundraising)
The next stage for Alepine is finding significant investment in order to operate as a international brand. To get that investment we will need earlier investment to show we have not only the product, distribution, existing accounts, and a brand that is starting to become recognised. But also a business operation that is ready to grow to new distributers, offer new POSM to bars and restaurants (iconic glassware and signage), have active and constant social marketing, have a dedicated sales team on the phone to all clients and keeping relationships warm, putting on promotional events with clients, sourcing revenue from multiple channels not just beer sales to the ski market, operating in multiple countries. With this - we can start to streamline our operation to become efficient at gaining the most number of sales whilst keeping our operational costs relatively low.
The way we aim to do this is to get as many of the high skilled otherwise expensive operational costs on board as partners in the business. For example - Signage would usually cost hundreds of pounds if ordered in. Using Marcus Sharpe - we are able to keep those costs under control as he uses his equipment already in place in his other business to work on signage when it isn't used in his usual work. This means our signage is effectively free - and Marcus is a partner of Alepine.
As well as Marcus on signage, we are seeking a communications agency to take care of creating content for social media and constantly building the brand online - beer brands are not all about sales on the ground. By sweating in a top notch communications team - we are not paying high fees (not now at least) for developing the brand - instead we have the experts working on it - but for a equity in the company.
We are effectively starting as a COOP - meaning that everyone who is working on Alepine is not only an expert in their field - but a partner of our brand. As we gain investment to grow, we will have a team that cares about Alepine as it is their own company. And then when we sell the brand - everyone benefits.
We will not raise the investment needed without this team.
Communications, Marketing + PR - VOX/KINGS/JOSS FORD? In talks atm.
Sales (in each country) - To be filled
POSM development - Marcus Sharp
Head Office + planning (supporting other teams) - David Holme + Jeff John
Board of Directors (to keep company on course - held to account) - TBD/C
Production - Wibblers
Packaging and Logistics - TBD
Accounting - under review
Legal / M&A - TBC
All of these partners will be given the option to work pro bono now on condition of a smaller piece of equity and payment in the future (effectively a loan agreement) OR as higher equity holders and no fee for work, but being partners will benefit from dividends in the future.
The sooner a partner joins Alepine, the more say they will have and thus be able to help steer the route of operation - for example - a partner who invests capital might do so on the basis that he has a larger slice of equity and request that the money invested pays the teams that are involved rather than let them have equity themselves. OR a skills partner (such as Marcus) might keep their operational costs down so that their equity slice is not diluted by sweating equity to a larger investor.
We are seeking investment of around £100,000 to begin with to help with cashflow in brewing, new beer dispense equipment for bars (and not conflicting with other brewing companies), advertising budget to grow our following and POSM (glassware, merchandise etc)
This initial investment will mean that we can ramp up our sales figures and revenue which will attract further investment later which will be more aimed at improving brewing facilities and contracting our brewing elsewhere when we cannot meet demand. It will also be needed to grow the sales and sales support team which will play a vital role in keeping the revenue coming in.
Once we have updated brewing facilities we should be at the stage where the increase margin from the quantities of scale and increased turnover (and thus gross profit) means that we can start seeing a return on the investments. At this stage we will be ripe for picking from a large beer company as an acquisition, or continue to operate and grow more naturally until someone does wish to acquire Alepine.
Alepine is a brand - the sooner we can facilitate the large scale stamping of this on the mountains - through advertising, social media and dominance on tap bars and resorts - the sooner we will have value.
4- Problems facing the company immediately + potential solutions
The main problem with Alepine at the moment is me - David! I am useless on my own. I am very good at everything that is needed to run Alepine, but I am useless at doing them all at the same time. As well as this I have found it particularly difficult to concentrate on all of the operations on my own - I have no business partner nor active board of directors... as a dyslexic I have found the organisation of running the company particularly difficult and I get distracted easily. This has been to the detriment of the company - and the sooner that the team of partners is on board to help with the day to day running and take responsibility for the various roles and jobs that need doing - the sooner I can start to work more effectively as a CEO - looking at the business as a whole and working on those parts that need attention most.
If Alepine is to succeed we need the team, and resources in place to get it from a one man band into a more functional operation. We have half a team at the moment in the form of Jeff (management) Marcus (signage)
Other problems currently is that our revenue is way too low - this is linked to the above, as I have been focussing on other areas of the business in order to keep operational costs down (such as rebuilding the website, recruiting partnerships etc) and have not had the time, or resources to do what I probably do best - the selling of beer.
With investment - we are able to use resources to alleviate and support our sales burdens and get the revenue figures right up.
Currency fluctuations are helping us at the moment, but with investment and a start to brewing in Germany - we can start using the EURO to produce as well as GBP in order to spread the risk. For the time being however we welcome a slightly weaker GBP.
Brexit - We have a pretty open view about brexit - and do not think it will end up being as bad as some may think. Skiing is a sport enjoyed by many brits, but we are selling our beer successfully to the french and other europeans also. As we grow into Switzerland (non EU) and other countries - we think that Alepine will continue to be drunk by non british holidaymakers. We also think that even if skiing becomes more expensive - this will not affect the people going skiing too much... people love skiing and will always save up for it! (Ski hol sales are continually increasing even after the brexit vote).
Cashflow - we have virtually no cash left in the business, and are in debt of £50,000 which was initially a loan, however as this was a loan from myself - I will take it back as and when the business is providing enough net profit to manage it's repayment.
Board of Directors - since starting, I have only had to report to the trustees of a trust set up by my late father. They have been supportive initially, in the form of a loan. However, Alepine has not been held to account enough over this, and this is mostly my fault for dodging the meetings in fear of being shut down prematurely. The trustees have no knowledge of the beer industry and are only interested in the bottom line - the vision for Alepine is not in their mind during the AGM's. This has meant that Alepine has been allowed to wander off course. The trustees also have not been to visit Alepine in the mountains nor are beer drinkers/fans. This has simply meant that they have given up on Alepine and advise me to also! That however I will never do as long as I know it is a great product on the cusp of a fantastic market.
In order to succeed - a new board of directors can ask the tricky questions and help Alepine become an accountable company - scrutinising and advising on what we do and how we operate. We are after experienced people in their skillset, that see the vision for Alepine and can help us get there with their experience and monitoring of how we perform on an operational basis.
6 - Market analysis and competitor comparison
In the UK - craft beer has boomed, and there are new breweries opening every day. In the Alps on the other hand, though there are breweries opening, there are nowhere near as many competitors. Local french breweries also have issues with quality and consistency (two things Alepine is perfect on) which means that though they have some advantages in terms of likely producing beer at a cheaper rate - they have issues with growth, recalling of product and experience in brewing. Consistency is everything in this game.
There are other brands who have started using the labels 'pale ale and IPA' that are getting some business - however there is enough trade to go around another 100 breweries, and we hope that by subcontracting and thus not having to deal with scaling a brewery ourselves (not yet at any rate) we will have the advantage of being able to follow the Camden Town model and grow at a significant rate whilst also keeping up with demand.
The lager brands do indeed have a hold on the Alps - but all it takes is a few bars signed and invested in that sell a ton of our beer which gets the attention of the big brands as well as the other distributers and bars who clammer for the best beer in town.
2 years ago when we started in the Alps - the Kinkerne distributer HM Boissons called a meeting with myself and the direcotr of France for SAB Miller (2nd biggest beer company in the world at the time) to talk about a tap conflict. The meeting contained some interesting conversations about us opening accounts for them to sell Peroni and Grolsh in exchange for a beer line. This is an avenue worth considering if it means we have access to beer lines in bars which we don't have to pay for. It would be preferable however to have no tie to the big boys - as it means if they have a change of heart we are potentially left high and dry.
Quarterly sales vs cost of sales
Cumulative sales vs costs since establishment - overall GP
Alepine Ltd Operational costs - £75 per day
Gross Profit vs Net Profit - UK Trade
Alepine Ltd Operational costs - WAs £75 per day - now estimated to be £100 per day
Gross profits france (through distributors)
KEG SOLD IN FRANCE = £12.98 Gross Profit (7.7 p/d to break even)
Case sold in france = £5 Gross profit (20 p/d to break even)
Gross Profits uk (direct, but allowing £5/3.5 for delivery of each keg/case)
Keg sold in uk = £18.3 Gross Profit (7.5 p/d to break even)
Case sold in uk = £4.67 Gross profit (21.4 p/d to break even)
sales commission deal :
For anyone who we work with developing sales they will earn a pure 80% GP commission whilst selling Alepine to accounts - when they leave the commission is made by the Alepine Ltd (subject to exchange rates + GP margin fluctuations per month etc) rough guide :
Keg France = £10
Case France = £4
Keg UK = £10
Case UK = £4
Alepine LTD post sales commission Gross profit margin:
Keg France = £2.98
Case France = £1
Keg UK = £8.3
Case UK = £0.67