Crowd-Sourced Funding for Breweries - Why do breweries pair well with crowdfunding?
Craft brewing is a thriving industry, with local breweries popping up all over the world, but what sets apart the successful ones from the rest? It turns out that key factors often include their ability to connect with their community, collaborate with others, and align their values with those around them. An effective method of expediting success and assessing capital required for growth is through a crowd-sourced funding (CSF) campaign - and it turns out that the key factors of a successful CSF campaign overlap those of becoming a successful brewery.
This is the first article of OnMarket’s CSF for Breweries series, which explores the reasons why craft breweries and crowd-sourced funding are the perfect match and how breweries can leverage crowd-sourced funding to fuel their growth.
What makes a brewery successful?
Craft brewing is not just about brewing great beer. The key to success in craft brewing revolves around community engagement, collaboration, provenance, adaptability, and hiring and training the best people for the job.
Let's take a closer look:
Connection to community – keep the locals happy: Craft breweries thrive on their connection to the local community. They often become hubs for social gatherings, events and celebrations, fostering a sense of belonging and loyalty amongst their customers.
Collaborate – work with others to realise positive synergies: Craft breweries often collaborate with each other and other local businesses, such as suppliers, restaurants, food trucks and musicians to create unique experiences and expand their market reach.
Provenance matters – your identity, values and ambitions build the brand: Authenticity and transparency is highly valued amongst craft brew lovers. Breweries that are consistent in their identity, rooted in their local community and driven by innovation tend to be more successful in growing their consumer base and building a recognisable brand.
Have a plan but be adaptable – you don’t know unless you have a go: Although successful breweries have a well thought out business plan, they are also adaptive and embrace opportunities as they arise. They are willing to take calculated risks and learn from their mistakes.
Align values with those around you – makes good things happen: Breweries that align their values with those of their customers, employees and partners tend to foster a positive culture and encourage strong relationships, leading to increased support and sales growth.
Good people can make you – or break you, so hiring and training are key: The atmosphere and identity of a brewery relies heavily on the skills, passion, and dedication of its people – from those in management to those welcoming customers and pouring beers. Hiring and training the right employees who share the brewery's vision is crucial for long-term success.
Why does crowd-sourced funding expedite a brewery's success?
Crowd-sourced funding is a capital raising method that allows companies to raise capital from a large number of retail and sophisticated investors, including their customers and business stakeholders. Crowd-sourced funding can be a powerful tool for breweries in expediting their success in several ways;
It’s likely your customers are brand advocates already, so inviting them to join your company by becoming a shareholder creates a deeper level of loyalty and engagement as they have a vested interest in the brewery’s success. This, in turn, expands your organic market reach as they will promote your products to their network and recommend your brewery for social gatherings.
By enabling your community to become investors you can realise growth ambitions more quickly with less risk. Crowd-sourced funding provides breweries with access to capital from individuals who are interested in investing because they want to be a part of the owners’ group, receive discounts and exclusive event invitations. CSF brewery investors are less focused on the short-term monetary returns they will see and are more focused on the inclusive, exclusive community they will join. So, breweries who raise via CSF do not need to feel pressured to give their investors returns in the form of capital, such as dividends, or feel pressured to provide shareholders with an exit event, such as an IPO or trade sale. Click here for more CSF brewery investor insight.
This helps breweries receive the funding they need to expand their operations, invest in new equipment or technology, or launch new products or services whilst simultaneously growing their customer base, adopting brand ambassadors, increasing sales and sharing their success with the individuals who have continued to support them.
A CSF campaign is a marketing channel to communicate and reinforce your values, meaning brand awareness and customer acquisition are by-products of your campaign. Marketing to your target market provides breweries with the opportunity to tell their story to a wider audience and educate the public on their success to date and growth ambitions – who they are, what they do and why they do it.
Those who see your CSF offer advertised and are unfamiliar with your brews but enjoy craft beer may end up purchasing your products or investing in your company… or both. Therefore, lowing your customer acquisition costs, increasing your following and building your brand.
How can you leverage CSF and when is the right time to launch a campaign?
Craft breweries can leverage crowd-sourced funding (CSF) as a strategic tool to achieve their goals. The right time to launch a CSF campaign is when there is an upcoming milestone or event that you may need to promote or need funding to achieve. Here are some examples:
Moving or opening a new venue: When a brewery is planning to expand its operations by moving to a larger location or opening a new venue, it requires investment as new premises can be a significant expense. Running a CSF campaign to assist this transition can help the brewery raise the capital it needs to cover the costs of acquiring or renovating the new premises, allowing the brewery to scale and target craft brew lovers in the new location as well as advertise the campaign. This provides the brewery with the funding they need as well as an engaged, new group of customers – breweries can even offer investor benefits, such as discounts or VIP passes, to incentivise investors to attend the opening of the new location!
Increasing capacity and production: As a brewery grows, there may be a need to invest in new equipment to increase production capacity. Funds raised from a CSF campaign can provide the necessary capital to purchase new brewing equipment, fermentation tanks, bottling or canning lines, and other necessary machinery to scale up production and meet growing demand. Raising capital via CSF for this reason highlights your traction and success to date, which may further increase demand.
Widening distribution: Expanding distribution to new markets or increasing sales resources, such as hiring additional salespeople or investing in marketing and promotional activities, can be a key growth strategy for breweries. A CSF campaign can help generate the funds needed to attract new suppliers or industry partners, expand distribution networks, enter new markets, and implement effective sales strategies to increase revenue.
Improving efficiency: Investing in modern packaging equipment can reduce costs and significantly improve efficiency. A CSF campaign can provide the necessary capital to upgrade packaging equipment, such as canning or bottling lines, labelling machines, or packaging materials, leading to improved productivity and profitability.
Improving sustainability: Many breweries are committed to sustainability and environmental responsibility. Investing in renewable energy sources, such as solar panels, or other eco-friendly technologies can help breweries reduce their carbon footprint and lower operating costs in the long run.
Updating or refreshing branding: Branding plays a significant role in the success of breweries because the distinctive and attractive branding is a key factor in purchasing decisions. Refreshing or updating the brewery's brand, including packaging design, marketing campaigns, and promotional materials can attract new customers and retain existing ones.
New product development: Diversification and innovation are key strategies for breweries to stay competitive in the craft beer industry. Launching new product lines, such as spirits, ciders, seltzers, or developing a kitchen and dining offering, or providing accommodation for visitors, can open up new revenue streams and attract a wider customer base. With the capital raised, and a few hundred new shareholders who are willing to try new products and offer feedback, CSF breweries have an innovation advantage.
As a craft brewery owner, you are likely quite comfortable in chatting with individuals in your community, nurturing your relationships with stakeholders and innovating new products with your creative mind.
You can leverage these skills throughout your crowd-sourced funding offer to convert customers, suppliers, and partners into investors and raise growth capital with OnMarket.
So, why do craft breweries pair so well with crowd-sourced funding? Because breweries are already focused on the very success factors that are hallmarks of a successful CSF campaign. Engaging a brewery’s community to open share ownership to them should feel very familiar to a brewery owner in terms of their normal daily operations. And in a growing, capital intensive industry, the various capital requirements that can arise provide a catalyst to bring breweries and CSF together.
To learn more about the process behind crowd-sourced funding, access our library of resources, and review success stories from others who have successfully raised via crowd-sourced funding, click here.
You can also contact Mark Hubbard, OnMarket’s Campaign Manager specialising in Breweries, at firstname.lastname@example.org.
We know breweries, and we know how to attract investors.