South Austin Brewery: Texan brewery, makers of Evel Ale, the official Evel Knievel Tribute Beer

We are excited about the partnership between South Austin Brewery and K&K Promotions. We have a collaborative relationship that has resulted in the new and iconic “Evel Ale.”I was incredibly proud of my dad, he was a one of a kind character who did everything in his life boldly and with determination. Whether it was jumping buses and canyons, or just waking up every day full of imagination and purpose, Evel Knievel's drive is an inspiration to us all. Together, with South Austin Brewery, we have created a beer that is truly representative of Evel Knievel and how he lived his life. Evel Ale is a beer that honors this legacy - a classic brew that is for everyone, a beer for the ages that compliments the character of Evel Knievel!

Kelly Knievel

Owner K&K Promotions, son of Evel Knievel

Hi guys I am General Stan from the U.S Virgin Islands. I play the steel drums and love the ocean. I now reside in Florida. One luv everyone

Timothy Brown

Martin and Cristy Colombo..... My husband and I have always enjoyed South Austin Brewery. We had our round-up party there and it could not have gone better. Love the folks there. Thanks for the opportunity to invest.

Cristina Colombo

Investor Q&A

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What does your company do?

We're an award-winning craft brewery/brewpub inspired by tradition, music and people like the legendary daredevil Evel Knievel. We have the licensing rights to the official Evel Knievel tribute brew: Evel Ale, a 70s style blonde ale brewed for generations, inspired by the legend himself. With other unique brews like our award-winning Kolsch, Crossroads Coffee Stout, Texas Pale Ale and more, South Austin Brewery is already on shelves in over 900+ stores in Texas alone. We're now ready to go big.

Where will your company be in 5 years?

We've doubled our sales from 2014 to 2015 and are on track to do the same in 2017—and that's just in Texas. We've added 2 new states and are ready to distribute in 15 more by 2018. Our facility can handle 3x our current production and we're prepared to rev it up. The demand of our new Evel Ale gives us the leverage to expand nationally, then internationally. Our goal is to ride the craft beer trend (growing 16% every year since 2010) and have Evel Ale and our classic Texas beers on every shelf.

What is South Austin Brewery?

In 2014, a group of guyswho were committed to and excited about making exceptional Texas beers founded South Austin Beer Partners LLC. We wanted to focus on the kind of beers that we like to drink and enjoy here in Texas. We're also big fans of music and the live music scene here in Austin. We also wanted a music-centric environment that really represented the Austin culture and ideals. We built a giant sound stage and taproom right in the middle of the brewery that can hold a 10-person band. We recently added a new taproom upstairs for smaller acts and private parties & events. Our goal is to bring all of that together in an environment where people can come in and hear great music, grab a bite to eat at one of Austin’s famous food trucks and enjoy great Texas beers. We call that South Austin vibe, the “liquid soul of Austin”.

Can you take us back to the beginning? How did you get started?

We were presented with an opportunity to buy the infrastructure of an existing brewery, which allowed us to get off to a quick start. We launched in February of 2014. Our first beer was called Kol'Beer. We wanted a name that really resonated with Texas. Kol’Beer was a quick success and has been our house beer since inception. We've had several beers that came in sequence after that. The TPA, Texas Pale Ale, an every day, sessionable IPA style beer. We then introduced our Crossroads Coffee Stout along with Belgian-style Ale called 6 String Saison. We also introduced an award winning German style Bock beer called Lukenbock. We also have a very active in house rotating tap selection and the brew team is creating new small batch beers weekly that are served at the taproom.

You’re known for the Evel Ale—how did that happen?

One of my investors and good friends Lathan McKay is an aficionado of everything Evel Knievel. He and Kelly Knievel own the largest collection of Evel Knievel paraphernalia in the world. For many years the Knievel family has been trying to find the right partner to make a beer that honor’s the late great Evel Knievel. After months of discussion and meetings we were able to work out an agreement to create and bring to market a beer that really honors Knievel legacy. Evel Ale is an all-American blonde ale. To be involved with this brand and person I grew up idolizing was something special just like the beer!

How fast are you growing? How are you measuring growth?

In 2014 we had about $250,000 in sales and produced roughly 850 barrels. The next year we doubled that to about $580,000 in sales and produced close to 2,100 barrels. This year has been a transition year for the brewery. We have added new distributors, changed our can design, size and packaging format. We have also added additional production equipment and tanks. We have also added a new canning line to address the timely nature of production and to become more cost efficient in the production process. We're planning on additional growth in 2017. We currently have over 900 retail customers around the state of Texas.

Tell us about the beer market in Texas and how you tackled that market.

Rather than align ourselves with one particular distributor we have been fortunate to create relationships with seven different distributors around Texas and we recently added one in Kansas. The national franchise laws are one of the biggest challenges for any brewery that's starting out or one that’s been in existence in Texas. We've been very fortunate to have great distribution partners. They all have their strengths and weaknesses but our core goals are in alignment and we are all interested in selling more product.We have also seen a crowded beer market in Texas. Everybody wants to bring his or her beer to Texas. The number of breweries is growing. We've decided to really focus on some of our core brands and follow the demand. We're seeing a lot of interest outside of Texas with the new Eve Ale and with some of our core brands as well. There is great potential for us to grow outside of the Texas market. This is one of the key drivers in our partnership with the Wefunder folks.

Tell us about your production capacity.

Our capacity with only running a single crew dayshift of brewing is 7,000 barrels a year. We have a 40-barrel brew houseand have recently added additional 60-barrel fermentation tanks along with a 60-barrel bright tank. By adding another shift we could easily produce up to 12-14,000 barrels. We have a 12,000 square foot facility and have space to add additional tanks and increase production even more.

How will that evolve as you scale?

One of the things we have to consider in this modelis to expand the operations to a bigger facility. We do have some options inmoving to other larger facilities if we need larger space. We have a coupleoptions but this is a few years out. We have a great home at Saint Elmofor now. We invested in a state of the art canning line from Wild Goose. Thisis a significant piece of the puzzle in terms of cost of production andbringing beer to market. We're poised to react quickly and scale when weneed to. We've also built our pads and infrastructure at the brewery in a waythat we could add more 60 or 90-barrel tanks when needed so we're in a goodposition from a production scalability perspective.

What ideas do you have for growth in the next months?

I spent several weeks this summer visiting someof the major markets that we want to target in this model. Right now we are inTexas, Kansas, and most recently Montana, but we are going to target stateslike Nevada, California, Oregon, Colorado, Wyoming, New Mexico, Illinois, NewJersey, New York, Florida and a few more over the next 12 to 18 months. Mosthave the essential distribution model and demographically they have solid marketpotential and the ability to support very good numbers. Strong indication on alllevels; individual retailer, individual customers as well as distributionpartners that want to get behind the brand and what we're doing.

How has the Evel Ale been affecting your growth?

Initially we launched the Evel Ale here in Austin and have grown the brand over the last 9 months with very little marketing dollars. We also launched the Evel Ale this summer in Topeka, Kansas. The Evel Knievel Museum, which is the largest Evel Knievel museum in the world. It will be opening this fall. The beer is going to be an instrumental part of the museum and supporting activities, events in terms of the fundraising. There is talk of an Evel Brew Pub on site that will be serving exclusively Evel Ale. The museum is going to be a very important piece of the Topeka community. We did a similar thing in Montana this summer with the Evel Knievel Days, the largest festival celebration of all things Evel. We had two giant pallets of beer, which was supposedto be enough for 4 days. It sold out in 3-4 hours on the first day! But even more importantly, we have worked out theentire model for how to get beer to another state and how to get the licensingdone and the logistics on the distribution side. We're currently working onNevada. We should have that done this month. There’s going to be a CaesarsPalace Evel Knievel 40th anniversary celebration next year and there is greatinterest in having the beer in Las Vegas.

What does it cost to go into a new state? How quickly do you get that money back?

Our initial model takes about $15,000. Cost of acquisition in terms of time, travel, and set up, logistic fees and everything else. It depends on the market size and can take anywhere between 6 to 12 months to have everything up and running. This is why it’s important to do this in parallel. In some of these bigger markets we can pull that back to probably 3 to 6 months. We choose our new markets carefully. It's really about where can we spend the money and get the money back quickly and also build the brand with a good partner that understands the beer, the brand and has good events and a good demographic to really pull the beer through.

What is it going to take to get the Evel Ale into international markets? What’s your relationship like with the Knievel family?

We've identified that wherever there's an Evil fan club there's a fan base. There is a very strong fan base in Canada. The biggest fan base outside of the US appears to be in Great Britain. This all started with Evel’s Wembley Stadium jump. Interestingly enough there's are strong followings in France, Japan, China, Portugal and Chile in South America. People have expressed tremendous interest in hosting events and doing partnerships to bring the brand to those areas.I think the first market will be England just because of the reach and there's such a strong fan base there. What we've talked about at a very high level is doing an event. A lot of this will be coordinated with Kelly Knievel and the Knievel family. Knievel Enterprises is organizing a jump with a guy named Doug Danger here in Austin next summer. He will be jumping the Congress Ave Bridge during the ROT rally. He's a huge Evel Knievel fan and every time he jumps it's a tribute to Evel Knievel. Doing an event like that to kick off the launch across the pond would be a perfect example of how to get that brand going. We are excited about sponsoring Doug in 2017

How involved are you with the Evil Knievel brand?

Lathan McKay, one of our investors and my partner in this project, introduced me to Kelly and the Evel Knievel family. Kelly is their main representative of the Knievel family. He and Lathan have been working together for years and they, together own the majority of all the historical collateral such as Evil’s motorcycles, skyrockets, helmets, leathers and various other items. With Kelly, Lathan and their history we've been able to build a very productive, honest and forward leaning relationship. Everything we do is really about honoring Evel and the brand. We're very involved in terms of developing the design of the can the logos and the taglines. From a financial perspective we pay a royalty to the Knievel family for the licensing rights. Anytime we sell beer we pay them a royalty per case. What we get in return is complete access to that portfolio of collateral and information from videos to images.

What’s next for your business and why are you raising money now?

The biggest upfront expense in a production facility is the cans, packaging and raw materials. One of the primary uses of the money is to get all this lined up. We will need to buy enough cans, trays and 6-pack holders. To have everything ready to scale and be in a good position to ramp that up quickly. Our partner Berlin will house everything, and then ship it to us every week to us. Right now we keep everything at the facility. A lot of the vendors we use are geared for very large production partner/facilities. Getting that whole model in place is going to need some up front capital.A key piece of equipment we will need is a filtration system for the beer. Shipping out of state will require our craft beer to be stable in various temperatures. Many smaller breweries do not filter their beer and have stability issues during shipping and distribution. The final need for funding is to build out the sales and distribution network within our key states. We've got some key hires to make in people with experience in setting up the distribution model, the merchandising side and the marketing and sales. Fortunately we have some experience and have learned a lot over the last couple of years.

What's been your biggest challenge so far?

The biggest challenge has been distribution and dealing with distributors. When we built our original model we were heavily reliant on our distributors in terms of playing a very active role in building the brand, merchandising, sales activity and growth. We soon realized that it really fell on us to create the demand and it was a big challenge. It caused us to spend a significant amount of time and money that wasn't in the original plan. We have re-engineered this process on a local basis so when we launch a new market we are driving the demand and brand interest. This will be a key part of our success as we move forward nationally.The bottom line is we need distributors and they are our partners. We have learned that to make it work you both have to lean in pretty hard. We have to be realistic about their role and what they can do well. This is an ongoing challenge. We've learned a lot so we know what to expect going forward as we bring on more and expand. If you have realistic expectations about what your partners can and cannot do it allows you to plan realistically going forward.

What keeps you up at night about the business?

What keeps me up at night is that this market is changing so fast. On the retail side, it's causing things to get very complicated and very crowded. New breweries are coming in and they want their beers represented and on the shelf. The distributor is under tremendous pressure to take on new brands and create new revenue opportunities. At the end of the day the retailers are not adding shelf space weekly or building new coolers every week. There's a logjam in terms of new brands, new beers and retail space.This is an inherent problem in the industry. It concerns us but at the same time, we are recreating ourselves. We’re doing two things. One is the Evel brand in terms of creating a very unique and iconic brand that’s out side the traditional mold of a brewery just producing another seasonal beer. Also, we’re creating something truly unique! A historical brand, iconic packaging and branding, a story and a history that is both interesting and intriguing. It is working.Also, the largest growth area in the whole brewery sector is brewpubs. We're putting a lot of time and energy into the brewpub. We're adding about 2,000 more square feet upstairs in an air-conditioned area because people want it. They want to come to the brewery and they want to have a good experience with food and music. We now have a great platform for people to enjoy new beers. This allows us to follow the feedback, positive market trends and make decision about new beers, styles going forward.

The beer brewing industry is incredibly competitive. Why will you win?

We know the category style approach to bringing a beer to market is very unique. Everything that we've done research-wise and demographic-wise really points in a very positive direction. We have a lot of access to powerful data through our partner Vic Camozzi. The brand interest in the Evel Ale is a broad 21 to 85 age group. This is a very broad spectrum. I've been involved in many industries; software, banking, insurance, finance, security and healthcare and I've never seen a broader demographic tied to a brand. This is a large market -demographic. This includes the Millennials, GenXer’s, Boomer’s. Its people that love extreme sports, its racers and daredevils and many more. It’s also the people like my dad that enjoyed watching ABC's Wide World of Sports featuring all of Evel’s heroic events.We have 2 years under our belt. We've made some mistakes, we have a lot of experience and we have a good team. We've got a strong relationship with the group that's tied to the Evel Knievel brand. We've mitigated a lot of what I think are the potential risks in the process. We used this year as a transition year to get things right and position ourselves for success in years to come. We've launched the new Evel Ale beer, we're in major metropolitan areas and people love the beer. They love the packaging and they love what we're doing. We've done a lot of work to get to this point and we're poised to really do some exciting things.

Tell us about the team.

There are three founders. Myself, Bryan Wallace and Vic Camozzi. Bryan and I have worked together for the last 20 years in different businesses, mainly in the software industry. Vic is a serial ad and a marketing guy. One of the best in the industry. He was one of the primary creative directors at GSD&M for 15 years and has led major beer campaigns for Spaten, Pacifico, Kronenbourg and others. He has a lot of experience with creating and building a brand, understanding the demand. He helped me put together the names; create the brand and the beer styles and names. He has an amazing team and talented resources. We're very excited about what we have been able to do so far and more so about the future.We then hired Russ Hall, an experienced brewer with almost 20 years of brewing experience both here in Austin at Live Oak and at Portland Brewing Company in Oregon. He also ran a famous brewpub here is Austin called Love joys, an experimental brewpub early on before it was trendy and cool. He made exotic and unique beers that still get talked about and referenced today. He is an amazing brew master and has both large brewery experience and knack for small batch specialty beers. We also have a great taproom and sales team. Seasoned folks that are passionate about the brewery.

This is an unusual fundraising strategy. Why have you given your customers the chance to invest online via Wefunder?

We have all of this interest and demand from all over the US and the world. We've had a very difficult time outside of social media connecting with these people. They're asking for the beer. How do I get the beer? Where can I get the beer? The crowd-funding model creates an interesting proposition and allows us to connect or deal directly with these potential customers and the fans of the brand. This is a huge departure from dealing with a few selected investors. People around the country can get behind the brand and invest in the company on an incremental basis. We can develop that relationship. We can provide them with collateral and info; they can become ambassadors of the brand. As we go to these new markets, having investors and having people that can participate in the funding process to me is a very exciting and a unique model.

1	SAB on track to hit $1 million in sales in 2017; 2x growth year over year 2014-2015
2	South Austin Brewery has licensing rights to Evel Knievel's tribute beer, Evel Ale.
3	Distributing to 900+ stores in Texas, expanding to 15 more states in 2017-2018
4	Official beer of the Evel Knievel Museum & sponsor of Doug Danger and the Spirit Skyrocket
5	Craft beer market is worth $22 billion, growing by 16% every year since 2010

1	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.
4	A crowdfunding investment involves risk. You should not invest any funds in this offering unless you can afford to lose your entire investment. In making an investment decision, investors must rely on their own examination of the issuer and the terms of the offering, including the merits and risks involved. These securities have not been recommended or approved by any federal or state securities commission or regulatory authority. Furthermore, these authorities have not passed upon the accuracy or adequacy of this document. The U.S. Securities and Exchange Commission does not pass upon the merits of any securities offered or the terms of the offering, nor does it pass upon the accuracy or completeness of any offering document or literature. These securities are offered under an exemption from registration; however, the U.S. Securities and Exchange Commission has not made an independent determination that these securities are exempt from registration.
5	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.

Director	Occupation	Joined
Bryan Wallace	Sr. Director, Strategic Accounts @ Accruent LLC	2014
Martyn Buffler	Managing Partner @ South Austin Brewery	2014

Date	Amount	Security
03/2015	$496,667	Priced Round
02/2014	$400,000	Priced Round

$50,000	Funds will be used for marketing programs, establishing distribution and initial and ongoing licensing agreements, and a keg washer.
$150,000	Funds will be used for critical sales resources and programs along production materails and equipment. Plus, a new SAB Evel Van – CIP System.
$300,000	Funds will be used for national sales/marketing programs, product marketing work andkey production and brew house equipment
$750,000	Expanded national marketing and sales programs and merchandising programs. Strategic alliance and partnership development. Create national sales force and marketing structure. Additional equipment for lager beers and equipment. SAB transportation, Vans and beer filter system
$1,000,000	Expanded production facility and international sales opportunities. Export business.

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DAREDEVILS & BEER: A MATCH MADE IN HEAVEN

We're an award-winning Texan brewery and the makers of Evel Ale—the tribute brew to the legendary an iconic daredevil, Evel Knievel.

HOW IT BEGAN

Meet Our Beers

Our portfolio is diverse, unique, and award-winning.

The One and Only Evel Ale

Kol' Beer

Crossroads

Texas Pale Ale

Six String Saison

CRAFT BEER IS RISING FAST

Today, $25 billion barrels of craft beer are produced every year.

WE DOUBLED SALES FROM 2014 TO 2015

We're on track for continued growth in 2017 and targeting sales of over $1 million.

OUR BEERS ARE IN OVER 900+ LOCATIONS IN TEXAS ALONE

We're been working with 8 distributors to get South Austin Brewery on every shelf in Texas, then the rest of the U.S.

WE'RE NOW READY TO DISTRIBUTE IN 15 MORE STATES

We plan to leverage the demand of our Evel Ale brand and several of our classic Texas beers for shelf space countrywide.

OUR JOURNEY SO FAR

We're ready to produce 3x our current levels, increase margins, and spread our brand.

IT'S GONNA BE A WILD RIDE

“There’s a little Evel in all of us!”

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