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Investors are “Hopped Up” on Craft Beer

Posted 1:45 PM by

Hoosiers can’t seem to get enough craft beer these days. With popularity increasing, breweries are popping up all over the state and are topping the tech and manufacturing markets in terms of growing capital. With craft beer sales growing 20% in 2013 ($14.3 billion), breweries and distilleries have drawn considerable attention across the nation. In fact, our own Hoosier state falls right in line with over 90 different breweries listed by the
Brewers of Indiana Guild.

Craft beer, once thought of as a hobby, has grown into a credible, desirable investment opportunity for private capitalists. Brewing companies not only have a fan base that loves craft beer, they have made an entire tasting experience out of it, offering:
  • Private brewery tours 
  • Bus brewery tours that provide transportation from brewery to brewery
  • Outdoor festivals (the 18th Annual Indiana Microbrewers Festival is coming up July 20, 2014)
  • Beer tastings 
  • Fundraising events 
  • Restaurant experience 
Starting a brewery is not a cheap endeavor, but luckily there are plenty of beer fans out there with deep pockets that are jumping at the chance to join this national and local movement. 

Technology is among one of the other fastest growing investments for the venture capitalists out there. Investor Alex Shortle, a venture capitalist in Colorado that invested in Bloomington-based Cardinal Spirits states, “I’d need to invest in, maybe, 20 software companies to get one or two hits. I’m young. I don’t have the money to invest in 20 startups.”      
So, why are breweries winning investors over?
  • Investors easily understand the business model and product
  • Ability to generate revenues quickly
  • Dividends / revenue sharing opportunities 
  • Revenues are generated outside of just being a beer manufacturer
In an Indianapolis Business Journal (IBJ) article, Breweries turn to outside investors to underwrite growthOmar Robinson, partner and president of Sun King Brewing Co., added to the list of reasons investors are being wooed by the industry: there is “romance." 

“A lot of the brewers are entrepreneurs. They’re anti-establishment, if you will,” he said. “They want to start out on their own. They don’t want to work for the man. That’s the romantic, Harley-Davidson type of mentality, and people get caught up in it.”
The IBJ compared breweries and distilleries to all other manufacturers showing that since Jan. 1, 2013, breweries had 11 offerings for outside capital with all other manufacturers combined having only seven. Whether it’s the “romance” of the industry or it’s just a good investment, the Indiana breweries have become an entire social experience leaving investors and customers wanting more. 

About the Author
Sarah Hammond is a manager in Katz, Sapper & Miller’s Business Advisory Group. Sarah provides financial, tax and consulting services to a variety of industries. She has experience in tax planning, forecasts and projections, and financial analysis. Connect with her on LinkedIn.

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