Distribution of Ukrainian craft breweries to Retail Chains

Project basis

Investing into retail equipment and infrastructure that would allow to introduce new category of products - beer from small craft breweries into organised retail. This beer is brewed by special technologies and recipes available mostly to small breweries. Specifics of the production result in substantially much diverse, intense tastes and wide aroma profiles of beer. As of today, Ukrainian craft beer is already capable of competing with imported craft beer but is lacking the distribution infrastructure.

Project details - due to the business processes specifics, Ukrainian craft breweries have a limited representation in organised retail. We would eliminate the existing barriers, supplying the complete infrastructure - centralised marketing support, logistics, canning to aluminium cans directly at the supplier’s brewery, necessary retail equipment, merchandising.

Today the Project already has:

• Detailed market audit, quantitative and qualitative researches of the Ukrainian market;
• Established core of the team;
• Portfolio that includes most of the small Ukrainian craft breweries;
• Proposals of cooperation from some of the biggest retail chains;
• Detailed business plan and financial models;
• Developed logistical chain based on actual data;
• Ukraine’s first mobile canning line, already launched and having its separate revenue steam. It already has its clients base and trained personnel;
• Already made founder investments around 450 000$.

Creating a niche distributor, specialised at Ukrainian craft beer, having experience and competences with this product category would solve the following problem - currently Ukrainian craft beer is underrepresented in retail, while economically this category has one of the biggest potential in the whole beer market (in comparison with rest of the world). Uniting small craft breweries in distributors' portfolios would solve the problem of sufficient product volume required for retail, as well as uniting the marketing budgets under a single distributor’s umbrella brand would make the category’s marketing more capable to compete with industrial beer. Currently marketing is one of the biggest issues limiting the craft beer market development.

Ukrainian craft beer already has an established user base and market share around 1% out of total Ukrainian beer market in volume, being represented mostly in HoReCa segment. Distributing craft beer to retail chains is a development of an established market into a new segment.

Project key performance/financial indicators

Revenue - 300 000$ - 500 000$/year - distribution, 600 000$ - 850 000$/year - mobile canning.

EBITDA - 180 000$ - distribution, 270 000$ - mobile canning.

EBITDA margin -30%+ - distribution, 45%+ - mobile canning.

Payback period - 3-4 years.

Proposal for Investor

Overall required investments of 400 000 $ include:

150 000$ - tangible assets (retail equipment);

100 000$ - financing stock and variable costs;

50 000$ - marketing and licensing for the first year.