trinity river brewing company chad montgomery –[email protected] 214- 675-1610 jett...

Trinity River Brewing Company Chad Montgomery [email protected] 214- 675-1610 Jett Andrews- [email protected] 903-975- 1230

The Company and the Opportunity Products: Craft Beer Company, based in Dallas that focuses on brewing beers that will be aged in previously used spirit and wine barrels including wine, bourbon, whiskey, etc. Services: Tours Separate tasting room Delivery of new beers Cleaning draft lines Co-organizing special events Size of business: Operate under the brewpub license Limits annual production to 10,000 barrels Or 310,000 gallons of beer Discussion of venturing out Background of Entrepreneur(s) A beer festival organizer A local craft beer enthusiast and homebrewer with a passion for craft beer.

The Problem or the Unmet Need The Unmet Need: Several metro areas much smaller than DFW (such as Portland) have 60+ craft breweries, and there are only 18 operating in DFW as of October 2014 North Texas brewers occasionally produce 1 barrel- aged beer at a time, once per year Barrel-aged beers are one of the most sought after styles of beer worldwide amongst craft beer consumers.

Solution: Trinity River Brewing company will use previously used spirit/wine barrels. These barrels previously held wine, bourbon, cognac, port, rum, and brandy. Provide regularly rotated barrel-aged beers in North Texas

Value Proposition: Focus on bringing customers a high-quality product, that does not readily exist in the marketplace today Sell barrel-aged beers at a higher cost. Benefits of quality and taste will surpass the cost to the consumer due to the scarcity and unmet need of our product. Business Model: The business model consists of four different streams of revenue. 750mL Bottles Draft Accounts Tap Room Tours

Brewing Process: Ingredients: Charcoal filtered and Reverse Osmosis water, Barley (Grains), Hops, & Yeast

The Marketing Plan Target Market: Craft Beer Drinkers Craft Beer Drinkers and Wine/Spirit drinkers Dallas/Fort Worth and Surrounding Area Residents Tourists looking for Local Craft Beer Anyone 21+ interested in quality, local products or craft beers Marketing Model and Advertising: Brewery Events Bar Events Retail Store Tastings Beer Festivals Social Media Accounts (Facebook, Twitter, Instagram, etc.) Sales Estimate 80% of sales direct from brewery

Competition Available Alternatives Scoring RubricSubjectAlt 1Alt 2Alt 3 Value Creation ElementsScore 0-10 TRBLakeCommFire 1AtmosphereMax = 1010670 2PriceMax = 106977 3QualityMax = 109899 4AvailabilityMax = 108266 5PriceMax = 106897 6DistributionMin = 102857 7Artisinal LifestyleMax = 1010438

Analysis of competitors: In North Texas, there are 18 craft breweries 2 of the beers these breweries produce only partially barrel-aged product All are produced seasonally or in limited-release fashion Market segmentation (targets): Craft beer consumers Wine and spirit drinkers Beer market generates approximately $100 billion in revenue with craft beer responsible for 14.3%. Offer a premium product to a niche market.

Management Team Team and Skills Profile: Owner/president/Sales team-ownership, streams of revenue. Head Brew Master- brewery operations. Barrel Master-barrel division. Bottling line- the front line/Shipment. Strengths: Thorough Understanding of Industry Small Workforce Weaknesses: Small Team Unproven Brand Name

1 st Year Sales 1st Year productions is estimated at 1,000 Barrels yielding approximately 90,000 750ml bottles (60% of total production) The average sales price per 750ml bottle is $16 The increase in sales is 15% per annum, projected just below market average growth of 18%. January (month 7 ) $ 195,233.78 February $ 229,686.81 March $ 270,219.77 April $ 317,905.61 May $ 374,006.60 June $ 440,007.77 July $ 517,656.20 August $ 609,007.29 September $ 716,479.17 October $ 842,916.67 November $ 991,666.67 December $ 1,166,666.67

Milestones: At start (assuming equipment has been installed and all regulations have been met): Submit recipes to TTB - must be done for each new recipe Begin brewing beer (brewing will be a continuous event, as beers will be in brewing, fermenting, or aging stage all throughout the year) at 3 weeks : Move first beer from fermenters to barrels they will age in, and place them in aging area Form draft accounts Begin offering tours at 6 months : Bottle and keg first beer assigned to be opened Send designated product to draft accounts open Tap Room at ~17 months: Break-Even at 23 months: Investors at break-even at 24 months: Longest aged beer can be opened at 60 months: Investors can cash out at 1.5X investment consider expanding past Brewpub license

Questions?

Timeline of Events and Milestones Timeline of Events: Before TRBC can open (time zero): Funds must be acquired (mix of personal investments, SBA loans, and money from investor(s)) Find personnel - engineers, architects, contractors, banker, lawyer, accountant, etc) Network with others already in the industry Create/finalize marketing plan Check with the Secretary of State and the United States Patent and Trademark Office (USPTO) to make sure that TRBC is an available name, and beer names are available Form an entity File for a Trademark with the USPTO (This can take 1 - 1.5 years) File for Trademarks for the Beer Names (you can do this up to 36 months before the beer is meant to be sold) This must be done for each new beer Find property/building Purchase all necessary equipment Apply for Brewers Notice with Alcohol and Tobacco Trade and Tax Bureau (TTB) (This can take 6-12 months) Apply for applicable state and local licenses

Industry and Market Analysis Future Outlook and Trends: In 2009 craft beer held only 4.4% of the total beer market Almost doubled from 2009 to 2013, capturing 7.8% total market share last year. Retail sales show that there was a 20% increase in dollars from 2012 to 2013 Total beer market is approximately $100 billion Craft beer owns 14.3% of those dollars. Craft brewer volume grew by 18% Texas is the 2nd largest beer revenue state, but ranks only 42nd per capita in number of breweries.

Industry and market forecasts: The Market Development Committee of the Brewers Association projects that by 2022, craft beer will make up 22% of the total beer market, which would be a 300% market increase over the next 9 years.

Possible challenges: Time: The brewery will be based upon making beers which need to age in barrels between 6 - 24 months Space: barrels take up space, must be stored in temperature-controlled areas Site: Almost every craft brewer is expanding and needs additional space Sales Projections: In 2013 Texas craft brewers produced 833,191 barrels, growing approximately 18% from 2012 to 2013.

Market Positioning: 1 00+ People Surveyed from Craft Beer Forums

Pricing Strategy and sales forecast:

The Financial Plan Income Statement: Sources and Uses of Funds: We believe we need 1.5 million dollars to start this business Personal/Family/Friends investments-$250,000 (non- equity) SBA Loan- work to get a $500,000 loan Year 1Year 2Year 3Year 4Year 5 Revenues $ 1,166,666.67 $ 1,376,666.67 $ 1,624,466.67 $ 1,916,870.67 $ 2,261,907.39 Costs $ 1,273,361.18 $ 1,303,333.34 $ 1,398,833.34 $ 1,419,650.00 $ 1,442,545.00 Net Gain/Loss $ (106,694.51) $ 73,333.34 $ 225,633.33 $ 497,220.67 $ 819,362.39

Breakeven Analysis: Q1Q2Q3Q4 Revenue $ 270,219.77 $ 440,007.77 $ 716,479.17 $ 1,166,666.67 Cost $ 189,153.07 $ 719,689.00 $ 965,355.74 $ 1,273,361.18

Funding Sources and Investment Deal Company Valuation: $3.5 Million (1 st Year Revenue x 3) How much equity for investment: $750,000 for 20% stake Projected Returns: Investors can get their money back 6 months after breakeven ($4$) For investors who wish to get a return and cash out, 3 years after break even will return the money at 1.5 times. Longer Term Return on Investment (TBD)

In Summary Market Growth: Craft beer is expanding at a rate of 18% Empirical Data: When we surveyed our target market, 50% of craft beer consumers either Agreed or Strongly Agreed that there was an unmet need for barrel aged craft beers in North Texas. Value Proposition: Our company will be focusing on bringing customers high quality, barrel aged craft beers that are not readily available in the North Texas market today Profit: Barrel aged craft beer demands a price point of $16-25+ per 750ml bottle, yielding high profits once barrel aging has begun Revenue Streams: 750ml bottles, draft accounts, our own Tap Room, and Tours

Risk Assessment Cost Structure: could potentially be high due to tighter FDA regulations on how the spent grain is utilized. Technical Risk: The welfare of employees Few employees Market Risk: T here are now more than 2500 breweries operational For the most part our Premium services and niche products Financial Risk: Unpredictability of the Agriculture market Keep a differentiation margin Operations Risk: beer leakage due to unforeseen circumstances. This risk can be minimized through financial planning we can budget and set aside for overhead cost and deprecation of our equipment.

The Organizational Plan and Offering

Equipment: Building with a loading dock Brewing Equipment (brewhouse) Fermenters Hot Liquor Tank Brite Tanks Barrels Kegs Bottling Line Bottles Keg and Bottle Sanitation Equipment Delivery Truck Draft Equipment for our Tasting Room and Tap Rooms Cold Room Storage Computers Brewhouse Software Accounting Software Office Furniture Tap Room Furniture (tables, seating, and a bar) Personnel Head Brewmaster Assistant Brewmaster/Barrel Master Owner/President/Sales Bottling Line/Carpenter/Handyman

References 750ml Plastic Beer Bottles (dozen). (2014). Retrieved October 12, 2014, from http://www.brewshop.co.nz/plastic-beer- bottles-750.html BA Insider: Growth in the Craft Beer Segment: Sky Is the Limit - Brewers Association. (2014, September 2). Retrieved October 12, 2014, from http://www.brewersassociation.org/news/ba-insider-growth-craft-beer-segment-sky-limit/ Berman, A. (2014, March 31). Brewers Association Announces 2013 Craft Brewer Growth - Brewers Association. Retrieved October 12, 2014, from http://www.brewersassociation.org/press-releases/brewers-association-announces- 2013-craft-brewer-growth/ Celebration 750 ml Glass Beer Bottles in Cases. (n.d.). Retrieved October 12, 2014, from http://buyourbottles.com/amber-glass-bottles/glass-750ml-celebration Community Beer Company: A first look. (n.d.). Retrieved October 12, 2014, from http://www.examiner.com/article/community-beer-company-a-first-look Craft Beer Production by State. (2013). Retrieved October 12, 2014, from http://www.brewersassociation.org/statistics/by-state/?state=TX Deep Ellum Brewing Co. | Love Runs Deep. (n.d.). Retrieved October 12, 2014, from http://www.deepellumbrewing.com/ Lakewood Brewing Company loves craft beer. (2014). Retrieved October 12, 2014, from http://lakewoodbrewing.com/ Navigation. (2010). Retrieved October 12, 2014, from http://specificmechanical.com/products-services/brewery- systems Rahr & Sons Brewing Company. (2014). Retrieved October 12, 2014, from http://rahrbrewing.com/ Schrader, N. (2011, December 13). ADVICE: Guy Gift Guide, Beer Growler. Retrieved October 12, 2014, from http://www.essentialstyleformen.com/advice/advice-guy-gift-guide-beer-growler/ Shikes, J. (2011, May 10). Upslope Brewing toasts its new tap room and cans a new beer. Retrieved October 12, 2014, from http://blogs.westword.com/cafesociety/2011/05/upslope_brewing.php Thurmond, M. A. (2013, March 13). Stories Tagged Chelsea Brewing Company From Everywhere. Retrieved October 12, 2014, from http://guestofaguest.com/tag/chelsea-brewing-companyhttp://guestofaguest.com/tag/chelsea-brewing-company http://www.brewersassociation.org/press-releases/statement-from-the-brewers-association-on-fda-proposed- rulemaking-on-spent-grain/ http://www.brewersassociation.org/press-releases/statement-from-the-brewers-association-on-fda-proposed- rulemaking-on-spent-grain/ http://www.beallinsurance.com/insurance-news/2013/11/risk-concerns-for-craft-breweries http://www.riskmanagersinc.com/commercial-products/coverage-for-specific-industries/craft-brewery-insurance) http://www.riskmanagersinc.com/commercial-products/coverage-for-specific-industries/craft-brewery-insurance http://www.rmmagazine.com/2012/06/02/trouble-brewing/ http://www.hanover.com/linec/docs/114-1255.pdf

Based on 15% growth rate. Trinity base brewing company sales revenue should flourish based on the industry contribution of $33.9 billion to the U.S economy. The consumer demanding high quality full-flavored beers should provide a high-level production outcome generating profitability. By focusing on our primary revenue stream of bottle sales to consumers, our initial profits should be met.

The Operations Plan Location and whether manufacturing is outsource:

trinity river brewing company chad montgomery –[email protected] 214- 675-1610 jett...

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