The challenges of running a contract brewing operation were highlighted when a craft brewery pitched its business on Shark Tank this week.
Christen McGarry and Matt Hepburn from Sunshine Coast’s Your Mates Brewing appeared on the Channel 10 show seeking an investment of $750,000 to build a physical brewery.
For the investment they offered a 25 per cent share of their currently contract-brewing based business.
The business partners said that, while they were selling 100 per cent of their current production, the contract model wasn’t working.
“Our business model is expensive, inefficient and prevents us from growing outside of our backyard,” McGarry explained.
The pair said that on their current contract model a carton of beer costs them $56 to produce, with contract canning adding to that cost. They sell a carton for $72.50.
Your Mates currently brews 100,000 litres of beer per annum, but “one major problem is that we can’t brew enough beer,” they said.
McGarry and Hepburn said they had grown “three times this year” and were the “biggest brewery on the Sunshine Coast”.
The last claim appeared to draw a quizzical “yeah?” from one of the sharks, Steve Baxter.
The pair projected revenue of almost $500,000 this year, with projections of $2.2 million and $3.5 million in sales for the two years following the building of their brewery.
Baxter, who has a known interest in the beer scene, queried the projections.
“Have you spoken to [Burleigh Brewing CEO] Peta Fielding?” he asked. “It’s taken a long time for them to grow,” he said.
“I look at this business, and it’s just bloody tough. Those numbers are adventurous.”
The panel was complimentary of the emotional relationship that the pair were creating in the brand, but none of the sharks invested, even after Your Mates sweetened the deal to offer a 40 per cent share for the $750,000.
Hepburn nonetheless told Brews News that it was a very positive experience.
“When you’re pitching to someone like Steve Baxter, who has a bit of knowledge of the industry, it was received as well as possible,” he said.
“They looked at the brand and the product and everyone said ‘great branding, the beer tastes good’, so that’s the basics. From there it’s an upscale thing.
“We’re at the point where we are selling everything we produce and they felt it is getting much more competitive and crowded in the market.”
On the back of their appearance, Your Mates has launched a campaign to attract investors to join their dream of building a brewery.
The full episode of Shark Tank is available to watch here.