When it comes to stating the future value of the UK’s up-and-coming breweries, there are wildly varying views currently at play.
Below are three increasingly common views we see being expounded by industry insiders on the one hand, and growing breweries on the other.
Inside the industry
According to some industry insiders, brewing is a very difficult business to build value in, with tight margins, problems on access to market and “Progressive Beer Duty” limiting Mergers & Acquisitions. From this perspective, if you are not one of the big players it will be very difficult to succeed.
Then as an alternative view, a number of ambitious breweries are much more buoyant when predicting their future value.
Big Vision, Crowd-funded Brewers
With these go-getters, there appears to be no issues on valuation. We’ve seen several breweries in this arena stating: In future, by realising our growth forecasts we aim to float on a recognised exchange. …. We believe our growth strategy would make us an attractive proposition for anyone looking for a diverse range of quality products.
Our analysis over the last few years shows companies claiming valuations of 7 times current turnover. This is happening even when those companies are not making a profit. Some alternatively estimate an increase of x200 their current profits within the foreseeable future. As an example, on a company with a true turnover of circa £750k and no profit, we saw this statement recently issued ….”Based on the above multiples, a year 3 post investment valuation could be at or around £50,000,000 for the Brewery”
Small & Growing Breweries
For many other brewers in the £500k - £1.5M turnover range, the strategy is increasingly to double or even triple turnover in the medium term. They are full of enthusiasm and are actively seeking to increase their capacity by investing in new equipment and people.
So where does the truth lie?
- Is this a difficult market to build value in and are the recent Coors, SAB Miller/Asahi and AB Inbev deals the end?
- Or are there more deals to be done with acquisitions being planned by other “Big Players” and second league Drinks companies?
- Are there, in fact, enough “Big Players” who each want their own craft beer brand, looking and ready to invest in the rising stars?
- Could there be an alternative to the “Big Players? A consortium of independents perhaps?
- And can growing independents succeed and stay true to their values whilst remaining outside the ‘Mergers and Acquisitions’ market?
If you are considering what value means for your business, then why not join us on the 7th of March at the IBD. We'll be taking a business view on how to develop value into your brewery from a number of perspectives.
Find out how you can generate value by:
- Building a brewery that makes great beer and is ethical, organic, sustainable, provides local employment and supports a community.
- Generating sustainable, profitable revenue
- And if you so desire, selling your brewery for a price that rewards your hard work and resource investment