Minimum subscription hit - More equity on offer.!
51 days & 19 hours
4.79% - 26.04%
min - max equity offered
A$500,000.00 - A$3,500,000.00
min - max investment sought
min investment parcel
I have many questions in regard to this Equitise offer for West Winds Gin, but I will start small with three and go from there. Fwiw, I have downloaded and read all documents, so apologise if questions are obvious in your eyes. Anyway:
1. It is clearly stated the WWG primarily use a guerrilla marketing strategy of trade shows, tasting and other events to create and then maintain brand awareness, given the extreme cost of major electronic and print advertising. However, given the increased funds that will be available after the Equitise offer, does management see a gradual refinement of this strategy, perhaps using some niche media or even mass media on a smaller scale, perhaps in the lead up to events that WWG is associated with? How, if at all, will your strategies be the same or different overseas in this regard given overseas revenue (by memory in 2016/17) was only 8% overall and your brand is slightly more mature in the Australian market?
2. I noticed that the costs of raw materials/production jumped significantly in the first three quarters of 2017/18. What would you attribute that to? (I did read about 'Pugwash' and it's arrival in mid-2015, you say even on this forum that you could comfortably handle a 3, maybe 4fold increase in production before needing to upgrade at about 250K each) so keen to know some insight here.
3. With projected revenue expected to be $4 million ish at the end of the 17/18 financial year, up from $2.759 mill at the close of the March quarter, it seems apparent to me that you are basing the substantial increase in those figures based on the ongoing roll out of Sabre G+T cans and your Perth based gin bar. Obviously there have been and will be other initiatives undertaken, but these I imagine would take a little time to bear fruit. Since I haven't heard anything about this through WWG or the Perth media, exactly what can you tell us now about the bar, given I imagine that you would expect strong initial sales from the projected June 2018 launch to drive growth, for both next year and the end of this financial year?
Thanks for your response.
It is quite difficult to get a handle on the potential of this investment.
I take it a 50% COGS (not including excise) is selling wholesale.
Do you sell direct to the public at all? Venue / internet?
4 Pillars reckon they make $800K on $10M sales - does this align with industry benchmarks?
Do you see the potential for sales great then $10M? and what sort of additional capital would be required?
The alcoholic beverages industry has an overall Gross Margin of approx. 50%. This includes wine, beer, spirits etc. A reference site for alcoholic beverage industry metrics is https://csimarket.com/Industry/industry_Profitability_Ratios.php?ind=501
Within the alcoholic beverages sector, premium craft spirits have had significant growth ahead of other sub-categories of alcoholic beverages. We do not have financials for private competitors however an EBITDA of $800k on $10m sales gives an EBITDA margin of 8% which is considerably less than the alcoholic beverage industry average of approximately 28% in the linked site. We believe that this lower margin is not unusual and is reflective of start-up and growth costs for early stage companies.
The press has reported costs of $1m+ to establish alternative distilleries in Australia. West Winds established its production capacity for considerably less than this amount so our infrastructure overheads are substantially lower. Our production capability will support 3 - 4x our current sales. Accordingly, based on our current cost structure, we would expect that a significant proportion of increased sales will flow to improve gross profit and EBITDA. Our intention is to continue to benchmark our performance to achieve and exceed industry benchmarks.
Yes, we do believe that there is significantly opportunity in domestic and export market to achieve annual sales much greater than $10m. For example, annual sales of A$10m represents only 0.28% of the global gin market (based on market size of A$3,624m/USD$2,718m). The link https://www.statista.com/outlook/10020400/102/gin/europe# provides statistics on the gin market.
West Winds does sell directly to the public via our website and consumers can purchase at our distillation premises in Margaret River. We expect that these sales will continue to grow, however it is likely that sales via our domestic and export distribution partners will our remain primary sales network. We believe that using this sales network will best support substantial growth domestically and internationally.
Replied to Stuart Morton
I was wondering if you could give us more colour around your profit margins.
For example at $10m t/o what does COGS and EBITDA look like?
In Australia, our COGS are significantly affected by excise. As our focus is to build export sales where we will not incur excise, we expect this to reduce our overall COGS significantly. Secondly, we also expect to continue to reduce COGS as volume increases. For example, on past experience, we reduced our cost to bottle by over 50% as we completed larger bottling runs. Similarly, we have benefited from better raw ingredient and packaging prices by purchasing larger volumes.
The split export/domestic sales and excise costs has a significant impact on our final COGS. Backing out excise, so that Australian sales can be compared on an equivalent base to international sales, we would benchmark our COGS to target a Gross Margin based on Net Sales (that is COGS/(Sales less Excise) of 50%. This would be consistent with global industry players.
On $10m sales, subject to decisions on investing in future growth, I would expect to have a positive EBITDA. The magnitude will be affected by multiple factors including the mix of domestic and export sales however, I would expect that investment into continued growth in the business resources would be the primary objective to maximise shareholder value. Accordingly, EBITDA would be reduced by the marketing spend towards a breakeven level.
Replied to Stuart Morton
Will Investors have pre-emptive rights" Can Inevestors be Diluted out?
All new investors that invest into the company will have the same rights as the existing shareholders. The company only has one class of ordinary shares with no pre-emptive rights for any shareholders.
In the event that the company raises further capital through issuing additional shares post this equity crowd funding raise, then all existing shareholders would be diluted equally. If shares are issued at a higher valuation in future rounds, then while the total equity held is diluted, the value of a shareholding will still be increased to reflect a higher company valuation.
Replied to Janessa Rundle
Is there a way to sell the shares at a later stage?
We understand that shareholders are likely to wish to sell their shares in future. The company will review options to enable shareholders to sell including maintain a list of any interested sellers to introduce them to any interested buyers. We will also review the potential to use some of the emerging platforms for secondary sale of unlisted shares. Over the longer term, the listing of the shares on the ASX and/or any trade sales may provide a pathway to sell shares. Along the way our goal is to build a profitable business that will benefit all shareholders.
Replied to Ross Graham
Hi Paul, how many bottles a year do you produce and what's the tipping point and lead time for getting more capacity - does it take a year to build a still or a week? Are they expensive?
There are a number of elements to your question. In terms of installing a new still, in the past we have explored and/or installed stills from a range of countries including Germany, United States, China, Australia and Hungary. The costs and timelines can vary significantly and consideration of the installation labour, premises set-up and liquor license timelines is required. As a broad estimate and leveraging our prior experience, it will take 6 months to order and set up a new still of the size and configuration that we require. The cost of a new still at this scale, including installation, can range from $100k - $0.5m depending on the set-up. When required, we would expect to establish a new still at the lower end of our estimate at approximately $100-$150k subject to any decisions on still location.
Our current still has capacity for approximately a 3x production increase. In terms of bottle count, we produce a range of bottle sizes 200mL-1L as well as our gin&tonic in cans so bottle number is not the best measure of production capacity but we are producing the equivalent of about 100,000 700mL bottles currently.
Replied to Robert Connell
1. Currently, over 130 distilleries exists within Australia. Many include Gin as either the primary product or part of a range (i.e. gin, vodka, whisky). Many of these distilleries were established after The West Winds, however adding competition within the Australia Gin/ spirits market. How will The West Winds maintain market share and increase market share both domestically and internationally?
2. Do you have any information/ research of market share within the Australian Gin/ spirits market both in Aust and internationally? I.e. where do The West Winds sit compared to other producers like Four Pillars,
3. Whilst The West Winds primary focus is Gin, do you have any plans to expand the products to vodka, whisky or other spirit products? Or continue to focus on the current gin range?
Thanks for your questions, I have answered them in 3 parts.
Market data shows that almost all gin consumption in Australia is imported gin so there is a lot of scope to increase domestic market share for every Australian gin. West Winds core advantages to grow its own share ahead of other gins are below.
(1) We have a core range of established products that have been recognized both domestically and internationally as being world-class. No other Australian gin has won the premier spirits competition run by the Royal Agricultural Society in Melbourne more than once – we have won it 3 times, most recently in 2017.
(2) We already have strong distribution in Australia through the key premium wholesalers for on and off-premise in each state. It is typically hard to get new products ranged with these wholesalers unless you have sufficient volume to show that your products will be pulled through their warehouses and they only have space for a limited number of products in their ranges.
(3) We have an established and growing brand that has strong brand recognition in Australia's on-premise trade. As you mention, there are over 130 distilleries in Australia but, as stated in an article by the Australian Distillers Association, there are probably only 15-20 craft distilleries that are serious players that have scale. Most of the distilleries are primarily making product to sell from their cellar door.
West Winds is focusing on taking our products globally while still continuing to build the West Winds Gin brand in Australia, however, most small distilleries will not be able to do this as it inevitably requires access to larger amounts of capital and management of a range of new tasks at scale from dealing with distributors, shipping & logistics, bottling & packaging and so on.
Mitch Question 2. Do you have any information/ research of market share within the Australian Gin/ spirits market both in Aust and internationally? I.e. where do The West Winds sit compared to other producers like Four Pillars,
Overall, the Australian gin market is about 3% of the global gin market. As noted in question 1, gin sales in Australia are still ‘almost all’ from international gins. We estimate that Australian gin sales are about <5% of total gin sales in Australia.
Sales information on our competitors is not publicly available however, based on anecdotal feedback, we believe that we are one of the top 2 craft gin producers in Australia. Other gins that are often ranged in Australia alongside our gins are Four Pillars and Archie Rose.
We do not believe that any Australian craft gin has a significant presence internationally. This provides an enormous opportunity for West Winds Gin. For example, the UK in 2016 exported about A$866m of gin. Gin was their 7th largest export of any product category - larger than meat and grains.
Mitch Question 3. Whilst The West Winds primary focus is Gin, do you have any plans to expand the products to vodka, whisky or other spirit products? Or continue to focus on the current gin range?
As outlined in replies to Q1&Q2, the opportunity in the gin segment is significant. Currently, this is our primary focus to be supported by the funds from the CSF Raise. We will continue to release new products, which will take the form of packaging variations to meet market demands and new gins where we see the opportunity to introduce world-class Australian gins that have a clear position in our portfolio. We will be announcing a new limited-release gin in the very near future.
We are aware that the sales distribution and logistics capability that our team is developing to market The West Winds Gins has application to craft spirits products outside gin. We continually monitor opportunities so we will remain open to expansion opportunities if they can add value to our shareholders.
Replied to Mitchell Allen
I've seen some Federal Budget proposal in the press regarding craft beer paying less excise.
Can you explain if this also applies to distillers and if so how West Winds will benefit ?
Yes, we will benefit from the increase in the excise rebate. While the news headlines spoke about craft beer, this also budget announcement also applies to craft distilleries. Currently, the maximum excise rebate is $30,000 so the increase in excise rebate to $100,000 is a great Budget announcement.
Replied to Bradley Howe
There was a large turnover of Directors in the last financial year. Can you provide any further explanation for this (over what you have said already). In particular can you please confirm that there is not any outstanding issues or claims in relation to any of these former directors?
As the Company has grown, it has been key to bring on an experienced Board with the skills to support the stage of the business. The current Board has extensive experience growing start-ups and exiting them through both trade sale and IPO. Their backgrounds are under The Team tab above. We expect that additional Board renewal will occur alongside continued growth.
In the last year, Board changes were made as part of an investment round in mid 2017. These included two interim Board appointments made by the investor group who were involved in selecting and supporting the current Board members. All votes at shareholders’ meetings have been in support of current directors. The Company has no outstanding legal actions.
Replied to Toby Eggleston
1. As per AFR article titled Rise of the specialist gin distiller dated Aug 2 2013, “The West Winds was founded in 2009 by former IT consultant Paul White and his mate James Clarke, who teamed up with cocktail guru Jason Chan and spirits salesman Jeremy Spencer. “
Are the others (James, Jason and Jeremy) still involved in the day to day business? If not, why not?
2. Is a trade sale or IPO being considered as part of the company’s exit for investors down the line?
1. Yes, as one of the four founders of West Winds Gin, we had the right product and team to launch The West Winds Gins. It has been over 8 years and, like many start-ups, roles and requirements of the business have changed as we have grown. All aspects of the business have evolved over this time, including sales, logistics, production and management.
James, Jeremy and Jason provided the management team for the majority of 16/17 year but are not involved in the business now. The Board appointed me as CEO for the 17/18 year with a refreshed focus to grow revenue and the West Winds Gin brand. Dave Aris came on board as National Sales Manager. Together the team has increased the 17/18 revenue over prior years.
During 18/19, our goals are continued revenue growth, which will include an expanded export sales focus. We will retain strong cost management controls without compromising quality.
2. We appreciate that shareholders will eventually wish to be able to exit their investment and agree that the possible routes for this are an IPO or trade sale. We will review all such opportunities that create value for our shareholders. At the current time, we believe that profitable growth will make both these options more likely outcomes within the next two years.
Replied to Joshua Lau
The main reason for a drop from profit to loss from 2016 to 2017 seems to be an extra $400k or so in "Administration costs", are you able to expand on what these are, and if they have continued to increase, or otherwise in 2018? If it's wages, I'd be interested in a breakdown of new positions etc. If this is addressed somewhere already, apologies, could you please direct me to where.
Also curious as to why revenue was flat over that period, but has picked up in 2018?
The Administration costs during the 16/17 year included costs for a range of external consultants and service providers, reflecting a shift in philosophy of the Board and Management at that time. Since the reorganization of the Board and Management structure in June 2017, Tailor Made has reduced the reliance on out-sourced advisers resulting in improved returns for the business. We expect to see further flow through benefits from these changes in the coming months.
Illustrating this, Dave Aris, National Sales Manager joined the West Winds team in early 17/18. He has been a great addition to the team and, as you note, Tailor Made is achieving strong revenue growth in 17/18. .
Replied to Martin Newkirk
Hi Toby, Hope you are well. Are you able to provide detailed audited accounts for FY16A (with FY15A comparatives).Thanks
This is Paul. The detailed FY16A accounts are shown against the most recent FY17 accounts. However, I will ask the Equitise team to upload the FY16 audited accounts. These will be available alongside the FY17 accounts when uploaded.
Replied to Brenton Purslowe
Hi, the Constitution doesn't seem to be in the data room. Can you please upload? Thanks
Thank you for your question.
If you click on the DOCUMENTS tab you will see that there are 2 more tabs under this: DUE DILIGENCE and LEGAL DOCUMENTS. If you then click on LEGAL DOCUMENTS you will find a copy of the constitution.
Replied to Toby Eggleston
> Offer Type: Australian Retail (CSF) Offer This offer is open to Retail and Wholesale/Sophisticated investors in Australia. Whilst in New Zealand the offer is open to Wholesale investors.
> Company: The Tailor Made Spirits Company Limited Securities purchased are for direct equity in The Tailor Made Spirits Company Limited.
> Security Type: Ordinary Shares
> Fees Paid by Issuer: 5% of funds raised Upon successful completion of this funding round a total of 5% of capital raised will be paid by the Issuer to Equitise.
> Cooling-Off Rights: 5 working days - Retail investors in Australia are able to withdraw their applications for securities with accordance to the Australian Crowd Source Funding (CSF) regulations. For more information please click on the link supplied.
> Related Parties: None
More detailed information about this offer is contained in this Offer DocumentOffer Document
The Company is offering 2,000,000 to 14,000,000 ordinary shares under the following terms:
* The Company currently has 400,000 Convertible Notes on issue with the conversion price of the notes based on participation by the noteholders in this CSF Offer. The maximum number of ordinary shares that can be issued on conversion of the convertible notes is 5,016,544 shares. The capital structure of the Company following the close of the Offer is shown in more detail in section 2.8.1. of the Information Memorandum.
The Offer opened privately through the Equitise platform on 1 May 2018 and publicly on 13 May 2018. The Offer is scheduled to close at 5pm (AEST) on 17 July 2018.
Founded in 2011, The West Winds Gin are premium and super-premium artisanal gins combining traditional gin flavours with uniquely Australian botanicals. Over 50% of the botanicals used in The West Winds Gins are native to Australia. Our use of native ingredients is constantly diversifying as we develop new gins. Our core gins incorporate wattle seed, bush tomato, sea parsley, lemon myrtle, cinnamon myrtle, fresh lemon peel, fresh lime peel and fresh coriander.
The Sabre at 40% ABV (Alcohol By Volume) is a more traditional London Dry style of gin combining a strong citrus undercurrent with Australian botanicals such as lemon myrtle and toasted wattle seed.
The Cutlass at 50% ABV is a New World style gin with a distinctly savoury flavor profile. Australia’s most awarded gin, The Cutlass includes uniquely Australian cinnamon myrtle, lemon myrtle and Australian bush tomato.
The Broadside at 58% ABV is a big, bold aromatic gin that was likely the world’s first salty gin, combining distinctive sea parsley and seasoned with Margaret River sea salt.
West Winds is the only distillery to hold three Australian Champion Gin awards. Each of our core gins hold an Australian Champion Gin award in addition to multiple international awards:
Australian Champion Gin 2017 – The Broadside
Australian Champion Gin 2015 – The Sabre
Australian Champion Gin 2014 – The Cutlass
We know that consumers have a choice of gins and we cannot outspend larger spirits companies to gain attention, so it is essential that we continue to build on our success and experience by creating fantastic gins that leverage the uniquely Australian ingredients that we have at our disposal.
We concentrate on ensuring the team has all the core skills to develop, distill and manage the sales and marketing functions of the West Winds Gins in-house. We then outsource supporting functions, such as packaging and logistics.
This approach focuses the team on the gin that we make, minimises the capital outlays to grow the business and allows the team to work with the most appropriate strategic partners for each stage of the business. It also means that we work with great partners who are experts in their field making sure that our West Winds gins are available for consumers to enjoy.
Australian sales are primarily to third party liquor distributors who manage sales & distribution into the on-premise and off-premise accountants.
Domestic sales to on-premise accounts, most retail chains and independent retail stores are distributed through 100Proof (WA, NSW, Vic and Qld), Déjà vu (NSW, Vic and Qld), Connect Vines (SA), Liquid Library (WA) and Australian Liquor Marketers (ALM), which collectively provide access to:
20 sales representatives on the east coast,
3 sales representatives in South Australia; and
10 sales representatives in Western Australia.
Key national accounts, including Woolworths, Coles and duty free are managed directly by Tailor Made. Brands that operate as part of the Woolworths banner include Dan Murphy’s and BWS, and as part of the Coles group include Vintage Cellars and First Choice Liquor.
Tailor Made first started exporting the West Winds Gins in 2013. Distribution currently includes New Zealand, Canada, the United Kingdom, France, the United Arab Emirates, Thailand, China, Malaysia and Cambodia. The company has chosen to focus on major markets and specific strategic export markets including United Kingdom and Europe, North America and selected regions in South-East Asia.
Traditionally, the Company has worked with its international distributors directly, however in 2018 we entered into a relationship with Kollaras & Co trading to open up new markets for The West Winds Gins in South East Asia and to consolidate our New Zealand distribution. Kollaras has been identified as a strategic growth partner because of their broad reach, excellent logistic capabilities and regional knowledge.
Ultimately, we believe that everyone should be able to drink great gin with their friends wherever they may be so we strive to make this a reality with everything that we do.
The West Winds Gin's key milestones to date are outlined in the table below:
Our mission is to make the best gins we can and share them globally while building a profitable business and creating a culture and brand that our staff and our customers embrace.
To achieve this mission, we:
Develop and distill all our gins ourselves using traditional small-batch distillation techniques.
Work with strategic best-in-class partners for the packaging, distribution and sales of our gins.
Innovate in product, packaging and process to provide consumers choice when drinking our gins.
We have recently started working with our first major Airline partner Qantas, Australia’s leading airline. The West Winds Gins are now available in the Qantas Business Lounge Gin Bar in Heathrow Airport and The Sabre is now the house gin in the new Qantas transfer lounge at Perth airport.
The success to date of West Winds Gin has been on a “guerrilla marketing” budget where we use the most cost-effective channels to market and distribute our products. We focus on digital marketing, investing in our website and e-commerce functions as well as value driven social impact donations and driving adoption through taste at events such as festivals and public education sessions.
The ability to drive sales growth online is a powerful attribute of any consumer facing brand. Craft or niche brands in many markets must be able to leverage the distribution power of the Internet and drive sales through these channels.
In April 2018, we launched the first “wind-powered” website where the wind strength at the customer’s location for their online purchase of West Winds Gin influences the amount that the Company donates to our favourite charity – the Sea Turtle Foundation.
In the future our new small batch products will be launched on our website, providing a mechanism for shareholders and loyal customers to purchase them first. Our email newsletters will include details of new products, upcoming events and other gin worthy news.
Risk is commonly described as the effect of uncertainty on a company's objectives. Risk or uncertainty may result in a positive or negative outcome. Below is a description of the main risks facing the Company. Only the risks that the Company considers may significantly impact the success or failure of the business have been included.
Investors should read this section before deciding to apply for shares under the Offer. There are also other, more general, risks associated with the Company (for example, risks relating to general economic conditions or the inability to sell our shares).
The following table is a key risk summary. For a detailed breakdown of the key risks please see section 2.11 of the Offer Document.
Money raised in this fundraise will be used to:
Provide working capital for bottles and packaging, gin distillation and production costs, excise, new product roll-out and supporting costs;
Provide working capital to pay Australian government excise that is due on sales of spirits made in Australia;
Invest into marketing to increase awareness of our gins domestically;
Expand our international sales strategy and targeted marketing in key areas with our distribution partners.
The use of funds is set out in the table below:
* Excise duty is charged by the Australian government and is typically payable before the payment terms of many Australian customers. Accordingly, as sales grow funds are required to pay excise ahead of receipt of funds from the sale.
The following accounts are the financial summary for The Tailor Made Spirits Company Limited:
* Year-to-date management accounts as of 31st of March 2018 (9 months)
Appendix A - Audited Accounts
These are the audited financial statements of The Tailor Made Spirits Company Limited for the year ended 30 June 2017.Download
West Winds Gin CSF Offer Document
West Winds Gin CSF Offer Document as at 1 May 2018Download
Audited Accounts FY 2016
These are the audited financial statements of The Tailor Made Spirits Company Limited for the year ended 30 June 2016.Download
The investors below have committed capital to the business in this funding round.