Risks Specific to South Austin Brewery
Evolving, Competitive Market. The craft and specialty beer market is a quickly evolving market with a great deal of competition. There is no clear indication where this threshold is or may be for the number of new beers and breweries in the US.
The Local and national beer market is competitive with most of the beer being controlled, distributed by the large houses, Miller, Coors and Bud. This presents both challenges and opportunities in its current framework.
2. Capital Intensive Industry. Brewing beer is capital intensive enterprise. We are currently looking to purchase a centrifuge which is a large capital expense and which portions of this raise will be dedicated towards. The centrifuge will allow us to distribute nationally by increasing the stability (and, as a result, the self life) of the product. If this raise fails or we are unable to purchase the centrifuge for other reasons, this would have an adverse affect on our plans to increase our revenue streams.
3. Regulated Market. Most states operate under antiquated sales and distribution laws tied to the 3-tier system. These are very different in each state and many are being challenged, changed as we speak.
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Possible delays in state permitting to obtain licensing for distribution. The process has take 2-3 months to obtain approval from various states. Once we are approved we will required to choose a distributor.
6. Uncertain Revenue. In terms of revenue, it could be that our financial projections are not accurate or that it takes longer (if at all) to meet projections. If this is the case, our investors may experience a lengthy period on their rate of return or lack of return that is well below that of other investment opportunities. We are a start-up company with historical revenues to date. It is important to note, that while repayment dates are structured as quarterly, the repayment amount is not necessarily a fixed amortization schedule. Rather, the repayment is structured as 10% gross revenue until 1.5x is repaid.
7. Potential supply chain issues. As a new fairy new brewery there is a chance that we could experience supply chain issues with ingredients due to lack of a long-standing relationship with suppliers. For example, if there were a hop scarcity, there is a risk that we would have to amend our list of prototype brews to date. Thus creating a concern for quality control and sourcing for our tap-room and distribution capabilities. This applies to all aspects of the brewery including raw and production materials.
8. Delay in equiptment delivery. Although equipment has been sourced and is currently available, there could be a delay in delivery of key pieces of equipment. South Austin Blue Brewery may experience a delay in funding or pick-up, a situation could arise that would cause us to source elsewhere. Should we have to commission new equipment, other than what has been sourced, there could be a “delay in opening” due to lengthy fabrication times. Although we have no reason to believe we will live this scenario, as with most things – these risks do exist.