Yeastie Money

00:29, Jan 28 2015

“Hey, do you want to share this with me?”

I was at The Fish on Friday night, sipping on a pint of Mac’s Sassy Red I had carried over from The Celtic Inn. If you were anywhere near the Regent Arcade in Palmerston North this past Friday night, you would know why I sought out the relative serenity of the cocktail bar instead of staying at the Irish-themed boozer. I’m not saying I hate bagpipes, but there are only so many times I can put up with a drone going off in my ear before I contract sub-bass tinnitus for the next month. 

Anyway. I am sitting at the bar chatting to the barman about the random selection of United States-import beers his boss recently purchased, when I spot Yeastie Boys Rex Attitude in the fridge. Infamous for its divisiveness, the man responsible for its inception, Stu McKinlay, got hate mail when he released the peat monster on an unsuspecting public. 

“Hey, do you want to share this with me?”

The barman pulls a bottle of Rex from the fridge. Turns out the bar just got a case of it in, and he needs to know what it tastes like so he can sell it to people. It is 7 per cent, but I’m walking. Also, I do not have to pay for it.

It would be rude not to, right? 

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While I am used to the intense burst of smoke, fish, spice and fruit Rex throws into your face – I pity the fool who gets it in the eye – the barman had no idea what he is getting himself into. The boy would learn soon enough.

Five minutes later, he is taking the half-empty glass to anyone in the bar willing to listen to his raving review. The Rex Effect sure gave him a good trip. 

But the team behind Yeastie Boys – Stu, Sam Possenniskie and their respective partners – are hoping to convert people to more than just their mad-yet-magical beers. They want you induct you into their tribe.

They want your money

It is about now some disclaimers need to come out. I have loved Yeastie Boys beer since the first time I drank one. I have only met Sam a couple times, and always while working in a crowded bar, but have had beers with Stu many times. Stu also taught me how to brew, and we made a big batch of beer together that time. I even gave him a box of my home brew once. He did not use them as Molotov cocktails, so I assume he enjoyed them. 

Right, that’s done. Now it’s time for me to remember that I was once a business journalist, and I wrote about Moa’s share offering that time for a magazine, and now I get to save you all reading the 50 page document to let you know at least the bare essentials about Yeastie Boys’ attempt to take your money. I might just be contributing to their claim of getting more press per litre of beer than any other brewery in the world, but I needed something to write about. So, bugger it, this will do. 

I also knew trying to get Stu to talk about this at the moment would be pointless, so I did not bother trying to. That is because I have been trying to talk to him about something completely different, only to fail to connect. I cannot hate him for it; the man is busy hustling, trying to get people to give him their hard-earned money so he can execute Yeastie Boys’ grand plan.

Luckily for me, and you, Yeastie Boys’ plan is online for anyone to read. 

The plan is simple: sell $500,000 worth of shares, use that money to start contract brewing beer at BrewDog in Scotland, sell that beer across Europe and – their words, not mine – “become the leading New Zealand beer in UK and Europe”. 

Contract brewing is nothing new for Yeastie Boys. In fact, it is all they do. They rent space at other breweries, get their beer made there, then sell it. Sure, some people are a bit miffed about it, but it makes sense. The brewery gets extra income while the contractor gets their product out there. The Yeastie Boys say their growth potential “is not bound by the investment in stainless steel”, but that is not entirely true. 

Just look at what happened with Renaissance and 8 Wired. They both grew quickly, and Renaissance ran out of space for 8 Wired to contract there, forcing 8 Wired to go elsewhere. BrewDog is the fastest growing food and beverage manufacturer in Britian for the past three years, and has export goals of its own. Keeping an eye on how much space is available at BrewDog will be important for Yeastie Boys. 

Europe is where the money is. Large parts of Yeastie Boys’ pitch, like Moa’s initial public offering document, focuses on spelling out the craft beer ‘situation’ - it is here, it is not going anywhere, and the market is growing. Yeastie Boys expect European sales to make up nearly half of their revenue by 2018, with New Zealand’s share dropping from 60 per cent to nearer 30 per cent in the same time. Read the comments on this article about Yeastie Boys’ crowdfunding plan to see why they are so confident in that growth eventuating. 

The great thing about Yeastie Boys is that the company has actually turned a profit, unlike others in the same industry who go out cap in hand to the public. But how much money will they make in the future? Well, that answer involves lots of maybes. Maybe BrewDog runs out of space. Maybe Europe proves a tough nut to crack. Maybe Bavarians will take over Europe and impose the Reinheitsgebot continent-wide, inflicting a cruel blow to a company that has put beetroot, Earl Grey tea, camomile and candi-sugar made from botrytised viognier into its beers. 

The reason I love Yeastie Boys’ offer document is because they have considered at least some of these situations and given three different sets of forecast financials – gold, silver and bronze. In a perfect world for them (and you, if you invest), the company will turn a profit larger than $500,000 in 2018, with no losses on the way. Third-best scenario, the company turns a $41,000 profit in 2018, but burns $225,000 on the way there. Worst-case scenario probably involves Prohibitionists taking over the world. I am unsure if Yeastie Boys have a plan for that. Ask them when you seem them, especially if you are going to throw money at them. 

But I know what you are wondering - is buying a share of Yeasite Boys a good deal? Personally, I think it is a better buy than Moa was – hindsight may be at play here - and possibly a safer investment than Renaissance. If I was not so worried about awkward conflict of interests, and earned more than a journalist’s wage, I would probably by some shares. I base that confidence on the fact they are a contract brewing company. 

When Renaissance and Moa both asked for your money, they said they were going to put it towards buying new equipment. Yeastie Boys do not have that problem. They simply need to pay for someone to make beer for them. It is a very lean model, which gives them flexibility. It is the brewing equivalent of renting a house instead of owning it; it is much easier to move on if you simply have to give notice to the landlord. 

It is the perfect exit strategy if things do go to bollocks in the UK. But no doubt everyone involved does not have that in mind. The current owners - along with a Craft Beer Collective made up of Tuatara, 8 Wired, Three Boys and Renaissance which Yeastie Boys will be joining up with – want to take a great Kiwi product to the world. Surely that is something worth supporting.

 And even if you do not want to own part of a company, a 10 per cent discount on Yeastie Boys beer for life (one of the perks of becoming a shareholder) would be handy. I can think of a few people who would save a fair bit of cash, considering how much Gunnamatta they drink. Or how much Rex Attitude they try shove down people’s throats. 

So, hey, do you want to share Yeastie Boys? 

Disclaimer: I am not a financial advisor; my pay packet is far too small for me to claim that title. Read this document and talk to some friends who know something about investing before blowing your life savings on Yeastie Boys shares. Oh, and do it fast, because shares go on sale today at 6pm.