Last month, WA based brewer Spinifex Brewing Co made equity crowdfunding history with Australia’s largest ever craft beer raise, hitting its maximum funding target of $2.0 million in just over two days of being public. This comes off the back of our previous record-breaking craft beer raise with Batch Brewing who raised $1.5 million earlier this year. The raise made regional and national press and television, creating a huge buzz around simultaneous venue and product launches.
Spinifex plans to use the funds to support the development of its 24HL Nambeelup Brewery and flagship North Beach Ale House along the pristine WA coast to drive domestic and international growth.
What is Spinifex Brewing Co?
Spinifex Brewery Co. (“Spinifex”) is a veteran-owned craft beer brand based in WA that dares to be different with their native Australian Botanicals infused beers. Spinifex currently offers two brands - “Taste of Australia” and the “F88” brand. Their “Taste of Australia” range has won Silver and Bronze medals in one of the world's most prestigious competitions, the 2020 and 2021 London Beer Competition. Meanwhile, the internationally recognised “F88” has been developed to support veteran charities, where 50% of profits from the sale of F88 Lager are donated to the F88 campaign.
Their unique story around the inclusion of Aboriginal producers within their supply chain, support of Australian veterans and their ability to produce award-winning beers has resonated strongly with customers. To date, the reception and customer feedback has been incredible and is expected to continue as they carry on with their mission to bring the “Taste of Australia” to the world.
Key Takeaways from this raise
Unique Brand in a Crowded Marketplace
There are over 1,000 craft breweries in Australia so differentiation is key. Spinifex has created a new genre within the Australian and global craft markets by pioneering the fusion of Australian botanicals into beer. Their commitment to “doing better by doing good” by supporting Aboriginal producers and Australian veterans through sourcing ingredients and the F88 campaign has set them apart from their competitors. Coupled with a very passionate team and founder, Adam Barnard, who was actively engaged in the crowdfund process, Spinifex’s offering has meant that investors weren’t only sharing in Spinifex’s success, but also contributing to a worthwhile cause championed by the Spinifex team.
Driven by an active M&A market for craft beer brands, recent fundraises in the sector have seen a huge range in valuation multiples. At Equitise, we pride ourselves in taking a realistic view of valuation, giving fair value to the founders and management, whilst giving investors potential upside on their investment.
We spent time with the Spinifex team deriving a suitable valuation. Whilst currently relying on contract brewing, the business is extremely high growth (30% MoM vs 7% for the market) and has a robust growth strategy in place including its own production facility, export opportunity, and higher margin retail channels. We settled on a valuation of $5.9m (5.3x multiple, based on FY21 annualised Q4 revenue, and a 2.0x multiple on FY+1 revenue).
This sits very well versus other recent raises in the sector. Recent comparables include Co-Conspirators Brewing ($7m valuation, 7.0x multiple on LFY revenue) and Beer Cartel ($20m valuation, 6.1x multiple on LFY revenue).
Leveraging Media to Engage their Veteran Community
Similar to their predecessor Batch, Spinifex engaged with their loyal veteran following across various business and personal channels, and featured in multiple news platforms, including a 7 News feature story. A combination of Spinifex’s large veteran following and their fans meant that Spinifex’s EOI campaign had amazing initial traction. Working alongside Spinifex, we also built and nurtured Expressions of Interest (EOIs) from our own investor audience. This allowed Spinifex to nurture an EOI list of 2,000+ potential investors. Furthermore, by offering unique investor rewards such as discounts at their newly proposed Ale House, Spinifex effectively enhanced their sense of community, positioning themselves for further success in the future.
Why We Liked the Company
Strong Growth Potential
In spite of COVID, Spinifex has achieved a rapid trajectory to date, averaging monthly growth of 30% with revenues of $540K for FY21. In July alone, they had $87K of revenues. Based on their recent performance and growth strategy, they forecast domestic revenue of $3.2m in FY22, growing to $6.7m in FY23 - and that’s without considering their huge potential export revenue!
Wide Distribution Network with Impressive Partnerships
Spinifex has established a wide national distribution network, including plans to expand their east coast presence. Currently, they are sold in over 460 distribution outlets. For packaged sales, their products are sold in over 290 off-premise stores nationwide, including BWS, Dan Murphy’s, Vintage Cellars, Cellarbrations and many independent liquor stores. Over 170 on-premise locations such as RSLs, pubs and restaurants sell Spinifex, with key partnerships with the ADF at unit and Brigade level as well as lifestyle partnerships such as Perth Golf Club.
Championing Indigenous and Veteran Community
Spinifex’s unique story is driven by their commitment to include Indigenous suppliers in their supply chain and supporting veteran wellbeing. Their focus on native Australian ingredients and veteran charity partnerships through the F88 brand makes them stand out as a socially conscious brand. Likewise, through brand affiliation and partnerships, such as the Perth Gold Network, Spinifex has created a lifestyle experience around the core brand ethos. Drinking Spinifex is about embracing the “Taste of Australia” and “Doing Good with Great Beer”.
Strong Export Market Opportunity
Recognising the limited presence Australian craft beers have had on the broader export market, Spinifex is well-positioned to replicate the extraordinary success of Fosters and create a globally recognised Australian brand. Currently, they have 4 export partners that provide them access to markets including Japan, South America, Northern Europe, and South-East Asia. They are in discussions with a fifth to gain access to Germany.
Moving forward, we are excited for the opening of their flagship brewery and alehouse which marks the next stage of their growth plans. This will allow Spinifex to maintain its brand ethos and form deeper connections with its community. Considering the record-breaking success of their raise, Spinifex is poised to increase production output, achieve greater control and reliability over the production process and grow their footprint through permanent tap fixtures, venues and wholesale channels.
The expansion into overseas markets will be the first step in helping Spinifex achieve their goal of bringing the “Taste of Australia” to the world.
We’re excited to see where Adam and his team take Spinifex in the coming years. We hope to catch you enjoying their amazing beers somewhere near you soon!