FruitCraft Fermentery & Distillery: Fruit-based alcohol. Community-owned. Social value.

FruitCraft Fermentery & Distillery

Fruit-based alcohol. Community-owned. Social value.

fruitcraft.com

San Diego California

As a leading progressive thinker, Alan’s passion and creativity only accentuate his entrepreneurial DNA. His timely expansion into the private event industry pairs perfectly with the tasting room’s core demographic and the distilleries vast product offering. It’s just one of many examples of his courageous leadership and effective guidance of FruitCraft, pivoting as necessary while remaining steadfastly committed to the company's principles.

FruitCraft undoubtedly has a phenomenal product line, revered by their loyal customer base and incidental consumers alike. My own personal anecdote would recall my very first visit to the fermentery. Before I finished my first glass that night, I was frantically conceiving how I would transport 10 cases of this flavor packed, refreshing and one-of-a-kind fruit wine from San Diego back home to Boston.

Alan has fast-tracked FruitCraft’s progress by incorporating its devoted community in a joint effort to model a reformed version of capitalism that seeks to benefit all of its contributors, not just the upper echelon. The School of Social Value is not a short-term trend. Corporations across the globe have begun adopting aspects of the social enterprise model and in turn they continue to fuel a seismic transformation in the way for-profit companies operate.

In my decade of investing, I have only come to know one thing for certain. That when all else fails, companies run by creative people delivering a high-quality product will always find a way to thrive. The most lucrative investments originated when an investor believed wholeheartedly in a driven, innovative and charismatic entrepreneur. The combination of people, product and profit margin has previously sufficed as grounds to invest in a blossoming enterprise. But as significant capital moves towards socially conscious investing and ESG funds (Environmental, Social and Governance), it is imperative that we incorporate a fourth “P” during our due diligence, by far the most critical – Purpose.

Prioritizing where I distribute my investment capital has always been essential. I seek to find companies whose underlying purpose is to better the quality of life for their consumers, employees and most importantly their community. I will only commit to founders and owners who allow their mission to steer their decision making process. Alan embodies that prerequisite to the fullest extent and I would put my money behind any venture with his name attached to it. When there is an obstacle, he envisions a solution. When things are static, he embraces flexibility and adjusts willingly. When there is an opportunity, he capitalizes and executes upon his strategy. I am proud to support FruitCraft and all that they stand for, but more importantly I support Alan. He has a knack for making this world a better place through meaningful change and a glass of vino.

We welcome you to join our community and embrace FruitCraft's initiative by raising a glass to good!

Here For A Purpose,
Zachary Caraviello

P.S. – The wine rocks!!

Zachary Caraviello Independent Private Equity Investor
Lead Investor Investing $1,000 this round & $110,000 previously

Alan Haghighi

Founder/CEO of FruitCraft Fermentery & Distillery

Started the company in his garage. Raised over $3 million without VC's or big angels. Pivoted the company from distribution to direct to consumer tasting rooms. Is pioneering a new model for business called a social value enterprise.

FruitCraft Fermentery & Distillery

FruitCraft was founded in 2009 in a garage in San Diego, CA.

The founders were intrigued that the only fruits used in the production of alcohol were wine grapes and apples. It was obvious tons of other fun, delicious products could be made from the fermentation of other fruits like pineapples, mangoes, kiwis etc.

While the original concept was to make wine from fermented fruit, FruitCraft has applied its expertise in fruit fermentation to bring to market a wide array of other high quality and disruptive craft beverages.

Franchising the FruitCraft Concept

As a fermentery and distillery, we are makers of the newest types of craft alcoholic beverages. Hard Seltzer, Hard Cider, Mead, Hard Kombucha, Wine from Fruit and Craft Spirits/Cocktails. We dispense these beverages in our flagship San Diego location where we recently launched a robust membership program and host all types of events from corporate to weddings. This is a novel concept that can spread across the country.

As such, with the proceeds of the Wefunder campaign we’ll begin the process of franchising, so that dozens of other concepts can be launched in a short amount of time, resulting in tremendous amounts of company growth.

Think Global, Act Local

We’re not just on Wefunder raising money. We’re pioneering a new model for business called a social value cooperative.

A social value cooperative is a company that is community-owned and uses its profits to create social value (or societal wealth).

This conversion is being made possible by the donation of the founders' shares into a community-owned trust (a social value trust).

“From the time we started this company we always knew we wanted to give it away, we just weren’t sure how,” says Alan Haghighi, FruitCraft founder.

“Now it’s been decided. We’ll be giving control of the company to people who want the same things we do. To leverage the FruitCraft brand to make as big of a difference as we can in our communities.”

These times are showing us that there is a demand to consume more consciously and that we have to be the change we want to see in the world. With your support we feel this is a step in the right direction.

Become an Owner - Take the Social Value Pledge

While anyone can invest in the company to become a FruitCraft investor, only those who take the Social Value Pledge will become owners and be given voting status in the cooperative.

To obtain voting status as an owner of the FruitCraft social value cooperative you must take the Social Value Pledge by:

Investing Social Value: Invest $500 or more here on Wefunder.
Consuming Social Value: Subscribe to our membership for $35 per month (click link)
Laboring Social Value: Join our social media army or participate on a committee.

Social Value Credit - It Is Better To Give Than To Receive

Unlike traditional cooperatives, a social value cooperative weighs an owner’s voting influence based on the amount of social value credit they’ve earned over the course of the previous year.

Participants can earn credit any time they bring value to the organization in excess of any compensation or return.

The most straightforward opportunities to earn social value credit are through helping spread the word via social media and by producing surplus value as an employee or a volunteer.

This system is also designed to identify servant leaders to qualify them to serve in positions of influence within the company, up to and including serving on the board of directors.

Community-Owned: The Next Big Value Proposition

Over the past 30 years, new value propositions of organic, local, fair trade, and vegan have become mainstream concepts and have disrupted the marketplace causing large migrations of consumers who want to use their economic choices to make a difference.

As the negative consequences of our collective consumption become more visible, it is apparent that there is a growing interest among conscious consumers to minimize any collateral damage and maximize the potential impact of our choices.

To this end, we've pursued designing a social value cooperative to meet the needs of the conscious consumer and leverage the value proposition of “community-owned” to drive loyalty and advocacy.

Free Tasting Flight for Prospective Investors

If you’re local to the San Diego area or will be visiting, we invite you to make a reservation to receive a complimentary flight of our products before you choose to invest. While the flight is complimentary, we will collect a $3 gratuity at the time of the reservation.

To receive a complimentary flight, select which day you’d like to make a reservation from the link below.

Prospective Investor Reservation

Thank you for exploring. Don’t hesitate to reach out with any questions alan@fruitcraft.com

Investor Q&A

Expand all

What does your company do?

We are makers of the newest types of craft alcoholic beverages. Hard Seltzer, Hard Cider, Mead, Hard Kombucha, Wine from Fruit and Craft Spirits/Cocktails. We dispense these beverages in our flagship San Diego location where we recently launched a robust membership program and host all types of events from corporate events to weddings.

Where will your company be in 5 years?

I'd like to see the FruitCraft concept grow in 4 major marketplaces (San Diego, Orange County, Los Angeles and the Bay Area). In each market FruitCraft expects to plant several tasting room locations and to build inroads into restaurant and retail distribution.

Why did you choose this idea?

I believe fruit-based alcohol deserves to exist. Before mankind invented beer, sake and most other alcohols, nature was making alcohol from fruit with no intervention from mankind. Fruit-based alcohol is the most ancient and the original of all alcohols. I believe it's appalling that there aren't more produced and made available in the marketplace.

Why is this a good idea, right now? What changed in the world? Why wasn't this done a few years ago?

Craft beer opened up the floodgates to show what kind of willingness existed for migration by consumers within the alcohol industry. From 1999-2019 the category grew from $2 Billion in annual consumer spending to over $20 Billion. This was fueled by the experience at the brewery tasting room (since distribution was not provided in the early years of the category's inception). In essence, by studying craft beer, one can understand that consumers crave new experiences and tastier beverages. And when a tasting room experience delivers on these pain-points the resulting consumer demand can result in the emergence of a new category on store shelves and at restaurants/bars.

What is your proudest accomplishment?

Pivoting the company from near death to its current cash flow positivity is my greatest accomplishment. Back in 2016 Wholefoods was our biggest customer and they were experiencing negative growth for the first time in their history. As a result they started to back off from local suppliers like ourselves and prioritize national accounts. This almost put our company out of business. But I wasn't willing to give up and knew that the tasting room model was the way to go. Unfortunately, after 6 attempts at securing leases over the course of the previous 2 years we were unable to obtain a lease due to not having collateral. I creatively solved that problem by acquiring a distressed winery with an existing lease at the end of 2016. This is now our flagship tasting room where we've engineered our customer experience, refined our most important revenue models, and now have a foundation of predictable revenue to build the company off of.

How far along are you? What's your biggest obstacle?

As an entrepreneur I'm very far along. I've been living and breathing this company since I started it in my garage in 2009. And while I've always been quick to learn crucial business lessons about our industry and path to market, I haven't had plentiful access to the resources needed to pivot things in an effecient manner. This pivot from a distribution model to a profitable direct to consumer model took 3 years. And the obstacle that caused this was a lack of capital. As a business we've laid as strong of a foundation as one can to build a franchise company off of. So we're still relatively early on with our 1st and only storefront. But I look forward to leveraging my deep understanding of the alcohol industry and all other types of knowledge acquired over the past 10 years to drive the company to many dozen storefronts all over the country over the next decade.

Who are your competitors? Who is the biggest threat?

When thinking about distribution we have obvious competitors that would be next to our products on store shelfs and on restaurant menus. However, our tasting room is a different story. We compete with other wedding venues and other "things to do" in San Diego. In both the alcohol and the wedding market there is so much market share to compete over that even carving out a small part of the overall market can mean big gains for a company like ours. So I don't consider any competitor a threat in the truest sense of the word. But I do consider all other breweries, cideries, restaurants, bars and wedding venues competitors and have built a set of brand value propositions that has allowed us to win business in light of a highly competitive environment.

What do you understand that your competitors don't?

I understand how industries are established and how they mature. That's why our business model is geared towards opening up tasting rooms all across the country. This is how we expect our brand to build loyalty and establish deep relationships with our customer base. This in turn provides long term defensibility which usually isn't afforded alcohol brands who build their brands primarily through distribution. Most of the big craft breweries who are competing with Big Beer's acquired "craft breweries" are now seeing a decline in their revenue through their distribution channels because as the category has matured so have those they've been in competition with. In summary, by studying the craft beer phenomenon it's become evident that the best way to sustain the brand we're building is to manage our customer relationships through direct to consumer storefronts and not just by being widely distributed on store shelves.

How will you make money?

We have 3 core revenue drivers through the tasting room. 1) Incidental patronage (just like any bar or restaurant) 2) Private events (wineries and breweries have seen an uptick in interest for hosting weddings and other high-dollar events. Private events may be one of the best tools to result in break even level revenues for any FruitCraft concept. 3) Memberships (wineries have been doing this for years. We have a program that we've beta tested and will be rolling out a full-fledged program later on in 2020. But this doesn't take into account revenue I'm expecting from distribution and from online sales. Money we don't plan on leaving on the table once we've made the appropriate investments into our direct to consumer revenue channels.

What are the biggest risks? If you fail, what would be the reason? What has to go right for you to succeed?

So many of the risks FruitCraft could experience have already been experienced over our 10 year history. Our revenue was heavily dependent on WholeFoods in 2015 and 2016. That subjected our company to risk that could have been lowered if we diversified our revenue channels to include a direct to consumer tasting room (of course diversifying would have required capital we didn't have). Our company almost went out of business because of that exposure. But we've learned that hard lesson and now generate revenue from multiple customers in a predictable fashion. As can be seen from the growth in our monthly revenues, we're well positioned against many business risks as we've created predictability in our revenue and in its growth.

What do you need the most help with?

The reason we're pioneering a new model for business is because we believe that a company run by the community can be far more successful than one run in a traditional way. What we'd really like to see from investors on Wefunder is the contribution of ideas to perfect the way the company is organized and how it can reach higher levels of productivity and impact. We believe that we can find more qualified employment candidates by leveraging the community. We believe that we can find better business development opportunities when our whole community is keeping their eyes and ears peeled for places to grow. We believe that we can make a newly planted FruitCraft concept profitable in a shorter amount of time by inviting our community to invest, to labor, and to consume with our brand.

What would you do with the money you raise?

All of the funds we raise are geared towards two ends. 1. We intend on strategically investing into business development opportunities to drive our revenue beyond $100k per month in the next several quarters. The best opportunities we're seeing are with private events. We'd invest $200k into beautifying our outdoor ceremony space and into other improvements to better accommodate 200 person events. This is expected to increase all wedding conversions by 50% and is expected to increase our conversions with weddings of 120 people and larger by 200%. 2. We'd like to consolidate debt to better work with our cash flows and leave us a bigger slice to reinvest into growth. Now that our cash flows are strong the relative cost of capital has lowered and we're looking to pay off $300k of the loans we have on the books. 3. We'd make strategic investments ($50k) into customizations related to the participation of our members, investors and employees. Much of this would live on our website and within the respective profiles of participants. A reward/gamification system will be the backbone of creating value-added incentives that allow for much of our marketing and business development efforts to be automated and turn-key. 4. We'll be formalizing the franchise documents and creating the training systems for franchisees who want to launch a new concept. $150k will be needed for this effort. Half will go towards the legal framework for franchising. The other half towards video and in-person trainings around all aspects of successfully running a FruitCraft concept. 3. We'd keep $300k on hand to invest into a 2nd storefront location when the time is right. This depends on what opportunities become available as we enter a recession. We're expecting to see a number of ideally located restaurants/bars/breweries go out of business in the next 12 months and are looking forward to some attractive opportunities to present themselves as we plan for growth.

How has Covid-19 affected your business?

We're very fortunate to have developed a business model with a diversified approach to our revenue. When Covid-19 hit and the government shut down all restaurants and tasting rooms we were unable to generate revenue from our tasting room channel. However, we maintained our revenues for the weddings we had booked as well as the members we acquired. As such we were able to maintain break-even cash flows during the initial 3 months of the crisis. 93% of the weddings we had scheduled between March & August have rescheduled while staying on their originally agreed upon deposit schedule. This gave us the capital we needed to be on much more solid ground than the restaurants around our establishment without a robust private events program. Additionally, we began to supplement our revenue by making and selling hand sanitizer. And lastly, we obtained a $35k PPP loan that we expect to become 100% forgivable. All-in-all the Covid-19 situation hasn't affected our ability to break even each month, though it has resulted in a dip to our top line revenue that has lowered our revenue forecast in 2020.

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1	We began turning a profit in Oct. 2019 with over $70k in monthly revenue. Up from $31,927 Oct. 2018
2	We're the only concept with mead, cider, seltzer, wine, kombucha and spirits all made in-house
3	Annual Revenue = $342k in 2017, $472k in 2018, $687k in 2019
4	Our founders are donating their shares to make the company community-owned
5	Conscious consumption is mainstreaming. 63% of consumers prefer to buy from purpose-driven brands
6	When existing shareholders require liquidity Wefunder investors will have opportunity to purchase
7	You can help the company succeed by voting on future business development opportunities
8	You can help improve the social value cooperative model to maximize the impact of conscious business