Business Plan
Business Plan This document and all information in it are provided in strict confidence, for the sole purpose of evaluation for investment purposes, and may not be described to any third party or used for any other purpose without the express written permission of PortaBeer, LLC. CONFIDENTIAL Copyright 2013, PortaBeer, LLC. All Rights Reserved Contents Executive Summary....................................................................................................................................... 4 History of Company/Background on Founders............................................................................................. 5 Company Background ............................................................................................................................... 5 Managing Founders Background .............................................................................................................. 5 Corporate Branding................................................................................................................................... 6 Intellectual Property Assets ...................................................................................................................... 6 Product Concept and Description ................................................................................................................. 7 Common Draft Beer Solutions .................................................................................................................. 7 Description of PortaDraft .......................................................................................................................... 7 Features & Benefits................................................................................................................................... 8 Comparison of Features/Benefits to Competitor Products ...................................................................... 8 Production................................................................................................................................................. 9 CO2 Refill Service ...................................................................................................................................... 9 Sales and Marketing Plan ............................................................................................................................ 10 Market Analysis....................................................................................................................................... 10 Caterers/Event Planners ..................................................................................................................... 10 Hospitality ........................................................................................................................................... 10 Event Venues ...................................................................................................................................... 11 Secondary Markets ................................................................................................................................. 11 Consumers (Tailgaters) ....................................................................................................................... 11 Bars & Restaurants.............................................................................................................................. 12 Beer Wholesalers/Retailers ................................................................................................................ 12 Breweries ............................................................................................................................................ 12 Golf Courses/Country Clubs ................................................................................................................ 13 Sales Tactics ............................................................................................................................................ 14 Pricing Strategy ....................................................................................................................................... 14 Current Marketing and Sales Activities................................................................................................... 14 Company Structure ..................................................................................................................................... 15 Management and Organization .............................................................................................................. 15 Management Team ............................................................................................................................. 16 2 Confidential – Copyright 2013, PortaBeer, LLC. All Rights Reserved Board of Directors ............................................................................................................................... 16 Source and Use of Funds............................................................................................................................. 16 Financial Projections ............................................................................................................................... 16 Conclusion ................................................................................................................................................... 17 3 Confidential – Copyright 2013, PortaBeer, LLC. All Rights Reserved Executive Summary In July of 2005, a few friends and I went on a guys-weekend camping trip near Erie to get a break from another startup project and decided to bring a keg along for the ride. Despite our best efforts, and draft beer overconfidence, our homemade beer system was a total failure. Like many of our fellow western Pennsylvanians, we love to camp and tailgate, and were convinced that someone had to have developed a solution to our portable keg problem. Unfortunately, the best option we could find is a product called the Party Kart, a hulking, ugly Rubbermaid trash can tied down to a Home Depot dolly with a beer tap sticking out of the lid that sells for nearly a thousand dollars. After three and a half years of market research and design, three business plan competition finalist placements, support from local companies like Frank Fuhrer Wholesale, and a pivot toward profitable B2B market segments, PortaBeer has since launched the PortaDraft, the only completely-portable kegerator-style draft system that allows our users to pour an ice-cold, pub-quality beer indoors or out with no electricity in a form factor that fits in anywhere from the black tie, to the back nine, or your own backyard. Featuring a self-contained design, simplified no-hand-pump CO2 system, and military-grade construction, the PortaDraft helps our customers make money by adding points of sale to take advantage of the rapidly-expanding interest in craft beer. Since its launch in March of this year, PortaBeer has raving fans across the country, including: hotels such as the Pittsburgh Marriott North, Statler Hotel at Cornell University, and the Cosmopolitan Hotel & Casino in Las Vegas; a CORT furniture party rental subsidiary in Seattle; stadiums and arenas such as Wings Stadium in Michigan and Alfond Stadium at the University of Maine; and nationally-recognized catering companies such as the Common Plea here in Pittsburgh and Triangle Catering in Raleigh, NC. For those going to PNC Park to see winning baseball, Atria’s on Federal Street sells cold draft beers from a PortaDraft before every home game. To build upon this success, the PortaBeer team is looking for a $100,000 convertible note in order to do the following: expand sales operations in existing growth markets (including catering, hospitality, and event venues, which represent more than 75,000 potential customer sites); take advantage of interest expressed by mass-market retailers such as Amazon.com and Sam’s Club; develop and launch a mailorder CO2 refill subsidiary similar to the SodaStream model that would represent considerable highmargin recurring revenue; and purchase component inventory for continued operations. Unlike many hardware startups, PortaBeer is already in production and owns critical assets, such as tooling and molds, that are needed to scale the business. The company has protected its intellectual property through patents currently pending as well as important trademarks. In addition, we have exceptionally strong sourcing relationships, with secondary sources for nearly all critical components. Finally, with an enthusiastic group of reference accounts and a current “whale” prospect that could represent up to 300 units of revenue in a single order in 2014, the company is poised for sustainable growth. 4 Confidential – Copyright 2013, PortaBeer, LLC. All Rights Reserved With this investment, PortaBeer can grow faster and be a profitable business next year, reaching $4.6 million in revenue with $1.5 million in net profit by 2016 and an average of 27% net margin over the next five years. We will achieve this through an experienced ownership group that boasts years of success in marketing, operations, finance, and engineering that will be supplemented by adding experts in sales, sourcing, and retail channel management. The PortaBeer opportunity is a low-risk hardware investment as shown by: our proven success in our high-value target markets; yet-unexplored recurring revenue opportunities; and a team that has demonstrated its ability to execute a lean business strategy. What investor couldn’t raise a glass to an opportunity like that? History of Company/Background on Founders Company Background PortaBeer was founded as a Limited Liability Company (LLC) in 2009 by four co-founders, including two current owners (Albert Ciuksza Jr. and Todd Barnett) as way to allow consumers to transport and enjoy their favorite beers, no matter how far away they may be from a bar or restaurant. The four, all close friends, embarked on a camping excursion in July of 2009 in northwestern Pennsylvania. Attempting to transport and dispense their favorite draft beer using off-the-shelf parts and a large bucket of ice, the men realized that there had to be a more efficient way. After an extensive search for a solution, which included the blue bucket with ice/hand pump method, a “jockey box” solution, the team discovered that there was no elegant, completely-portable draft beer system. Seeing the opportunity and opening in the market, especially in light of the continuing craft beer boom, the team decided to build a system that solved all of the problems currently associated with craft beer. Building the system, later named the PortaDraft, required years of research and the help of beer technicians, industry experts, and mechanical and plastics engineers. In November 2010, a retail web site (PortaBeer.com) was launched to sell helpful accessories for cans, bottles, and barrels of beer. The proceeds from the sales paid for a contracted engineer to continue the design of the signature product. During this time, the vendors and contacts from the site lead to a greater network of advisors and future customers. Since the founding of the business, two of the four partners have since moved on. Ray Robbins, vice president of engineering, and a silent investor have since joined the ownership team Managing Founders Background Albert Ciuksza, MBA. Albert has a history of successful entrepreneurial endeavors – most recently as a co-founder of Pittsburgh-based Eyenavision. A beer lover with a varied and expansive background, Albert brings a thirst for a great user experience to the team. His career highlights includes roles in business analysis, marketing, sales, and operations at organizations ranging from a Fortune 500 company to a successful start-up. After earning his MBA at the Joseph M. Katz Graduate School of 5 Confidential – Copyright 2013, PortaBeer, LLC. All Rights Reserved Business at the University of Pittsburgh, Albert became adjunct faculty at Saint Vincent College, focusing on entrepreneurial marketing. Todd Barnett, MBA. After meeting Albert in college in 2000, Todd and Albert became roommates and eventually built one of the most legendary home bars in American History. Always eager to entertain, creating the PortaDraft was a natural extension of this experience. Professionally, Todd brings experience in market research, data analysis, customer insights, and photography. In 2013, Todd earned his MBA as well from the Joseph M. Katz Graduate School of Business at the University of Pittsburgh. Corporate Branding The PortaBeer brand is meant to reinforce the image that beer should be something that can be enjoyed anywhere. The goal of the brand was to provide a memorable touch point for consumers and commercial users who encounter the challenges traditionally associated with portable draft beer. The PortaBeer identity package (logo, colors, design elements, etc.) support this approach to the by using visually demonstrating the ease of portability of the unit. The PortaBeer logo, name, "Your Beer. Anywhere." tagline, and the product name "PortaDraft" are trademarks of the business and are in the process of being registered with the USPTO. Intellectual Property Assets PortaBeer has filed for design patent rights for the PortaDraft, and owns trademarks for its brands. Intellectual property is as follows: • 6 Corporate Identity Registered Trademarks PortaBeer and PortaBeer logo design “Your Beer. Anywhere.” tagline PortaDraft Domain names www.portabeer.com www.porta-beer.com www.yourbeeranywhere.com pbeer.me (URL Shortening) www.portadraft.com Confidential – Copyright 2013, PortaBeer, LLC. All Rights Reserved Product Concept and Description The taste of draft beer is best, but kegs can be intimidating even for those who are experienced with dispensing systems. Kegs are large and heavy, traditional consumer hand-pumps pour flat beer while spoiling it in the process (introducing oxygen to the keg leads to spoilage within 48 hours), CO2 systems are counter-intuitive use, and large tubs filled with ice can make a mess while creating a negative visual impression. Common Draft Beer Solutions For context, the following are photographs of the inelegant solutions most commonly implemented, including by those businesses that serve high-end clients: Bucket with ice and pump: $60 Jockey Box: $275 - $610 SuperCooler: $878 PartyKart: $932 Description of PortaDraft In contrast, the PortaDraft is the only completely-portable, self-contained draft beer dispensing system that makes it easy to pour a bar-quality beer anywhere. Featuring an attractive design, a user-friendly, no-hand-pump CO2 system and military-grade construction, the PortaDraft helps our consumer target enjoy their gatherings in a worry-free way and enables our commercial targets to make money by adding points of sale to take advantage of the rapidly-expanding interest in craft beer. 7 Confidential – Copyright 2013, PortaBeer, LLC. All Rights Reserved Features & Benefits Feature Fits all standard commercial kegs (1/2, 1/4, 1/6, and homebrew corny kegs) Five-minute assembly with custom faucet coupling nut Stainless steel beer-side parts (faucet, shank, tail pieces, keg coupler) 20oz CO2 tanks supply enough pressure for two 1/2 kegs of beer on one fill Elegant, self-contained design Integrated lid seal and best-in-class rubber draw latches Military-grade components, materials, and stabilizing insulation High-strength collapsible handle 12-inch never flat wheels PortaBeer CO2 tanks are made and cleaned using the same process as medical oxygen tanks Integrated handles on front and sides of unit Benefit Universal design for diverse needs No tools needed Rust-Free Easy (and inexpensive) to refill at thousands of locations across the country, self-refill, or mail order (coming soon) Protects CO2 tank and other critical components from damage Ice and water stay inside the cooler while minimizing air flow, keeping beer colder longer Rugged, durable, able to handle heavy use Almost effortless movement enabling anyone to move a full 1/2 keg to any location Can transport over nearly any terrain No graphite or other particulate matter in beer Easy lifting over obstacles, into/out of transportation vehicles, etc. Storage area Carry 20 cups (included) or an extra CO2 tank 30+ color options Can match most professional college and professional sports teams as well as indoor and outdoor decor Color palette can be matched to any PANTONE color Find just the right shade to match corporate colors Logos can be permanently applied through Units can be branded for companies and other stenciling, decals, or mold-in graphics applications Rear of unit can be used for changeable/replaceable Easily switch out temporary signage: draft details, signage advertising, special events Comparison of Features/Benefits to Competitor Products Problem Difficult to transport Bulky, Unstylish, or Gimmicky Difficult to operate correctly Need specialized tools to set-up 8 PortaDraft Solved Solved Solved Solved Problem Solved? “Kegerators” “Jockey Boxes” No No No No No No No No Confidential – Copyright 2013, PortaBeer, LLC. All Rights Reserved Production The cooler component is created using a rotational molding process. The molding tool was created with consultation of Sterling Technologies, Inc. in Lake City, PA. The molding tool is property of PortaBeer. Currently, the PortaDraft is being produced and assembled by El Monte Plastics in Ohio City, Ohio. Their facility allows for production of more than 300 units per month, offering extensive flexibility and a twoto-three-week turnaround time from order to shipments. Internal components are sourced from domestic and international suppliers. While about 70% of the product cost is made in the USA (plastics, regulators, CO2 tanks, axles, miscellaneous components), many additional components come from China (wheels, handle, miscellaneous parts), India (internal beer components). The PortaDraft includes several custom parts made to fit our system exclusively, including the adjustable CO2 regulator, grommet between the cooler and CO2 system area, face plate, beer shank, and faucet coupling nut. Distribution takes place directly from the plastics production plant, as well, with items able to be transported by major carriers both through FedEx Ground and LTL as appropriate. Shipment is coordinated by the plastics productions plant. CO2 Refill Service PortaBeer is currently developing a process to deliver CO2 refills by mail. Commercial customers who do not have the time or personnel to refill their tanks themselves, or to take them to a refill facility, will find option to fill by mail attractive. Additionally, some residential users may live in an area that is not serviced by sporting goods stores, and a CO2 refill by mail may be the easiest way to replenish their supply. Due to hazardous materials shipment regulations, pressurized gas, including Carbon Dioxide, must be sealed in safe containers, and contain no more than 16 ounces gas. One 16 ounce fill of a PortaBeer CO2 tank will be sufficient to push two half barrels, upholding quality standards. To develop this procedure, PortaBeer is currently seeking refill partners. PortaBeer is also developing back-end software for the implementation of a mail order CO2 fill business to track incoming and outgoing shipments. PortaBeer hopes to launch this service by mid-2014. 9 Confidential – Copyright 2013, PortaBeer, LLC. All Rights Reserved Sales and Marketing Plan Market Analysis The company will be targeting the following three markets the most closely: Caterers/Event Planners Catering in 2012 is a $6.6 billion industry in America according to IBISWorld. Annualized growth is expected to be 2.7% over the next five years. After surviving an 11% decline in revenue in 2009, the catering industry has rebounded, to pre-recessionary levels of business. As of April 2012 there were over 9,060 catering companies. Most catering companies are small- to medium-sized businesses. 54% of caterers have less than 5 employees. 84% have fewer than twenty. While the number of employees tends to be low, the labor costs are relatively high in this industry, as the number of man-hours involved in setting up, serving, and cleaning up after events is difficult to streamline. Nearly two-thirds of catered events are celebrations for families and friends. The largest catering segment is wedding/reception catering (22% of all catering). Engagement parties (11%), birthday parties (15%), and other private parties (15%) form the remainder of the personal catering market. The other third of catered events are corporate events and seminars. Corporate functions such as annual meetings, product launches, and press conferences comprise 20% of all catering. Seminars and conferences are the final 11% of all catering. Additionally, food service contractors, such as Compass Group, Aramark, and Sodexo provide food and beverages to stadiums and event venues. Besides food courts and freestanding concession stands, these contractors are responsible for servicing luxury suites, corporate boxes, and VIP lounges. Hospitality The over 52,500 hotels and other lodging facilities in the US in 2012, earned $155.5 billion in revenue, according to the American Hotel & Lodging Association. (2013 LODGING INDUSTRY PROFILE) Among the largest hotel chains in the country, Hilton leads supply with 3,382 hotels; 506,455 rooms. Marriott International is second with 3,110 hotels; 501,070 rooms. Wyndham Worldwide is third with 5,815 hotels; 451,755 rooms. Choice International comprises 5,081 hotels; 385,827 rooms. Starwood Hotels & Resorts is next with 495 hotels; 152,693 rooms. Hyatt Hotels Corporation is made of 354 hotels; 91,590 rooms. Carlson Rezidor Hotels round out the top seven chains with 549 hotels; 59,742 rooms. 10 Confidential – Copyright 2013, PortaBeer, LLC. All Rights Reserved Hotel ballrooms are often structured without permanent bar facilities. With events such as weddings, conferences, and banquets, a year-round cycle of mobile bar solutions, including draft beer are necessary to meet client needs. Event Venues Event venues, such as the aforementioned banquet facilities in hospitality, dedicated space in social clubs, country clubs, museums, galleries, and theaters, are often used for variable scale receptions, parties, and events. With the ability to deploy mobile draft solutions as needed, and to store when not, multi-use space can reap the benefits of a fully portable solution, and return to other business on various days. Secondary Markets Consumers (Tailgaters) According to Tailgater Monthly (monthly circulation 220,000), an estimated 50 million people enjoy tailgating concerts and professional/collegiate sporting events annually in North America. Of those, over 60% are very dedicated and do so five or more times per year. To afford to do engage in this hobby, tailgating aficionados tend to be financially very comfortable. 71% have household incomes over $100,000. These people tend to be men (75%), with college/advanced degrees (71%), who are married with children (69%), and who own their own homes (82%). 42% of tailgaters spend over $500 per season on food and equipment. Tailgaters are also a group dedicated to bringing large groups of friends and families with them: 78% tailgate with a party of up to 19 people. Tailgating tends to occur most often in the Mid West, North East, and South East of the US, which trends with major professional and college football programs. 65% of all tailgating activities occur at football games. With roughly 6,600 major sporting events each year, the U.S. is rarely without an opportunity to tailgate. There are over 270 NFL games, nearly 2500 MLB games, over 3700 NCAA football games, and over 110 major car races. Tailgaters take the term literally, with 69% of these people driving light trucks or SUVs to their event, in order to fit their food, drinks, and equipment. According to a Tailgater Monthly 18-month survey, the number one item tailgaters feel is necessary for a successful event are coolers. Alcoholic beverages follow closely behind at number three. Tents and shelters were number 16, leading to the assumption that regardless to the exposure to inclement weather; tailgaters want to enjoy a cold alcoholic beverage. 11 Confidential – Copyright 2013, PortaBeer, LLC. All Rights Reserved Bars & Restaurants In 2012, the 65,774 bars and nightclubs in the US earned $22.7 billion in revenue, 42% of which was from sale of beer. As the economic recovery continues and individuals are more willing to enjoy nightlife activities, the industry is projected to grow at 2.5% through 2017. (IBIS) Restaurants are also expected to grow over the next five years. Chain restaurants will see a larger percentage of growth (3.6%) in revenue, up from $54.6 billion in 2012(IBIS), while single location restaurants will see a higher total dollar increase up 2.7% from $94.0 billion. (IBIS). Currently there are 628 companies owning various chain restaurants, with 34,211 locations. This represents a small uptick of 1.1% growth in locations from the year prior. The 202,410 single location restaurants are up 1.3% Regardless of whether the restaurant has just one location, or if it is part of the chain, there is a 40% it is a casual dining establishment, such as Applebees or TGIFriday’s. Likewise, 20% of both types of restaurants feature Asian food; 12 percent feature American food such as barbecue or steaks; 10% sell primarily pizza; 10% serve more European fair, and 8% are specialize in Mexican food. (IBIS) Beer Wholesalers/Retailers Due to the three-tier beer distribution system in the United states, all beer flows from beer wholesales to retail establishments or restaurants before any individual may consume the beer. While 39% of the wholesalers’ inventory is sold to restaurants and bars, 23% is sold directly to retail beer or beer and liquor stores and 15% is sold to food stores. The remainder goes to hotels, casinos, gas stations, etc. (IBIS) In a very fractured market, over 1,300 wholesaler/distributors exist, but none control over 5% of the national market share; however, there is a tendency for these companies to exhibit strong control over limited regions. Regulations make it difficult for distributors to cross state lines. The retail beer market was valued at $108 billion in 2010 with the average price of a gallon of beer totaling $17. (Fredonia) Breweries The beer brewing industry, according to IBISWorld, is valued at approximately $24.5 billion as of July 2012. This represents annual growth of 1.6% over the past five years. This also reflects a rebound from a low of $20.5 billion in 2008. Annualized growth is expected to remain positive, over the next five years. While the two largest players in the American Beer Market, AB-Inbev and MillerCoors (combined market share of 84.1%), have been struggling to keep revenue from declining, craft and regional brewers are and have been growing revenue at a rate far faster than the market as a whole. Craft brewer revenues were up 14.5% in 2011. AB-Inbev, and MillerCoors have continued in their trend of acquiring successful craft brewers. 12 Confidential – Copyright 2013, PortaBeer, LLC. All Rights Reserved In 2011, total brewery output was over 199 million barrels of beer produced. Craft brewers drove roughly 9.1% of industry revenue by dollars (Craftbeer.com), producing nearly 11.5 million barrels of beer According to the Brewers Association, breweries producing less than 6 Million barrels per year are considered Craft Brewers. Craft Brewers can further be broken down into Regional Brewers (who produce between 15,000 and 6 Million Barrels) and Microbreweries (who produce up to 15,000 Barrels). Additionally, Brewpubs are primarily restaurants that also brew their own beer. To be considered a brewpub, the business must sell at least a quarter of its beer on site. Finally, a new classification of breweries is emerging. Nanobreweries are very small operations that typically produce 3-4 barrels of beer at any given time, although no formal definition has yet to achieve industry consensus. As of July 2012, the number of craft brewers in the US is at an all-time high of 2126. In terms of numbers of unique brewers, the largest sub-segment would be brewpubs, at 1072 locations (50.4% of total), next are microbreweries with nearly 922 locations (43.4%) of the total. There are also about 81 regional craft brewers. As of 2011, the share of beer dispensed from kegs (versus cans, bottles, or plastic) was highest in Colorado at 19.7%, followed by DC at 18.2%, and then PA at 16.8%. The nation-wide share was 10.00%.(Brewers Almanac) As consumer spending picks up over the five years to 2016, barrels and kegs are anticipated to increase as a share of revenue, while canned products decline.(Brewers almanac) 5.2% of beer sold by dollars is in barrel/keg. Beer drinkers - 42% Women, 58% men (IBIS). Consumption of draught beer is projected to total 645 million gallons in 2015 based on annual gains of 1.1 percent from 2011, a faster pace than in the packaged beer segment, supported by a rebound in foodservice revenues (FREDONIA) Golf Courses/Country Clubs Golf courses have seen a small, but steady growth since the beginning of the economic recovery. Industry revenue in 2012 was $22.7 billion, with annual growth expected to be 1.4% in the next five years. 21% of these revenues come from food and beverage sales (39% are from membership fees, and 25% are from green fees). Beverages are sold both in the clubhouse, and often on the links with courseoperated beer carts and “grab and go” beverages and food for golf group outings. There are currently nearly 11,900 courses in the US owned by about 11,100 companies. In this splintered market, there are only a few firms that own large numbers of courses. (The four largest account for less than 8% of market share). A slightly larger number of mid-size firms own between 5-20 courses, but most proprietors own only one or perhaps two courses. Two of the largest golf course companies are based in Dallas, TX. ClubCorp and Century Golf Partners (aka Arnold Palmer Golf Management) account for less 5.5% of market share, and about 2% of the nation’s fairways. 13 Confidential – Copyright 2013, PortaBeer, LLC. All Rights Reserved The largest, by far is Dallas-Based ClubCorp, with nearly 4.5% of market share ($1.0 Billion revenues 2012) and 150 golf courses and country clubs in the US, with an additional handful in China, and Mexico. ClubCorp has more than 350,000 members and receives more than 1.0 million guests at its properties annually. Century Golf Partners, which operates its courses under the Arnold Palmer brand name, controls roughly 1.1% of the market. Operating 76 courses under the Palmer brand, its revenue totals a quarter of a billion dollars. The region of the country with the highest percentages of courses is the South East, due to generally favorable weather for outdoor activities. The next highest is the Great Lakes region, due to lower land prices and the abundant availability of water, leading to increased operating profit. Sales Tactics PortaBeer is growing sales through leads generated by direct sales efforts of the managing team and our strategic involvement in events. These activities are largely targeted at local companies that fit within our identified markets. In addition, PortaBeer continues to leverage the leads gathered at the CATERSOURCE trade show that served as the product launch in Las Vegas. As sales increase, a dedicated salesperson will be hired. PortaBeer is working with an experienced sales manager to determine the qualifications, training, and incentive programs necessary to build a successful sales force. Pricing Strategy Currently, there are two elements of pricing that PortaBeer has introduced to target to different markets (broadly, consumer and commercial). Commercial: Packages range from $799 to $999 – Developed for each target vertical to entice purchasers to upgrade to different models. Main features are color options, stainless steel internal components, additional accessories, and choice of regulators. Consumer: $649 – Developed for consumers only. Offered in only one color (light gray), uses chrome-plated brass components, offered with no additional accessories and includes only the preset regulator. PortaBeer has chosen this strategy to be near, but generally below, the products offered by competitors that most closely match the features of the PortaDraft Current Marketing and Sales Activities PortaBeer has begun to execute some of the marketing and sales activities outlined in this document. Chief among these activities is a partnership agreement signed with Bar Rescue, a hit television show similar to other business makeover shows. In exchange for the product, the host of the show will make specific mention of the benefits of our product, with an average of 10-15 seconds of air time. This 14 Confidential – Copyright 2013, PortaBeer, LLC. All Rights Reserved partnership is expected to generate at least four product placements over the remaining 11 shows, exposing the PortaDraft to a major target market in a highly-visible way. Additional activities include: Marketing o Identity and branding o Development of collateral materials o Participation in CATERSOURCE 2013 trade show in Las Vegas, and sponsorship of a party at the Hard Rock Café on the Las Vegas Strip. The PortaDraft served all of the beer for the 1,500 guests during the night. o Advertising in CATERSOURCE magazine (trade show special issue) o Advertising in Tailgater Monthly Magazine (Holiday Gift Guide, website, e-newsletter) o Sponsorship of 2013 and 2014 Summer Pittsburgh Beerfest (and 2014 Winter Beerfest), held at Stage AE, and Winter Beerfests in Columbus and Cleveland o Crowd-funding campaign through indiegogo.com o Radio and Television interviews – KDKA Pittsburgh o Print interviews – Pop City Pittsburgh, Pittsburgh Tribune-Review Sales o o o 70 units of sales as of 9/15/2013, including: hotels such as the Pittsburgh Marriott North, Statler Hotel at Cornell University, and the Cosmopolitan Hotel & Casino in Las Vegas; a CORT furniture party rental subsidiary in Seattle; stadiums and arenas such as Wings Stadium in Michigan and Alfond Stadium at the University of Maine; and nationally-recognized catering companies such as the Common Plea here in Pittsburgh and Triangle Catering in Raleigh, NC. For those going to PNC Park to see winning baseball, Atria’s on Federal Street sells cold draft beers from a PortaDraft before every home game. Retail sales of PortaDraft units through portabeer.com Establishing relationships with craft breweries, large national brewers, and beer distributors Company Structure Management and Organization The management team consists of a group of experienced individuals dedicated building PortaBeer into a Company known for its innovate products in the beer industry. This team brings a diversity of age, creativity, and sales and operations experience. These characteristics put this team in an ideal position to further develop the Company. 15 Confidential – Copyright 2013, PortaBeer, LLC. All Rights Reserved Management Team The following individuals will be responsible for management decisions that will be critical to the growth of the Company: Todd Barnett, VP of Finance Albert Ciuksza, CEO Ray Robbins, VP of Engineering Silent owner/investor Board of Directors The Company will have five voting members that will sit on the Company’s board of directors: Albert Ciuksza, President Todd Barnett, Secretary/Treasurer Ray Robbins Silent owner/investor TBA/investor Source and Use of Funds PortaBeer is currently seeking an individual investor or investment group that will provide the $100,000 in financing via a convertible note. This funding will be used to: Hire one full-time sales staff member to implement nationwide sales strategy ($25,000) Invest in targeted marketing activities, including trade shows and events ($25,000) Develop back-end software for the implementation of a mail order CO2 fill business ($15,000) Develop component for emptying CO2 bottle from customer ($1,000) Inventory of developed component ($2,000) Research & development of two accessories needed for specific target markets ($2,000) On-hand inventory for the production of 150 additional units ($20,000) Financial Projections PortaDraft & Accessories 2013 2014 2015 2016 2017 PortaDraft Units Sold PD Retail Sales PD Wholesale Sales 150 600 1,200 1,800 2,400 10 500 1,500 3,000 5,000 Total Revenue (PD & Accessories) $ 138,450 $ 885,000 $ 2,130,000 $ 3,735,000 $ 5,700,000 Costs of Goods Sold $ 68,800 $ 473,000 $ 1,161,000 $ 2,064,000 $ 3,182,000 16 Confidential – Copyright 2013, PortaBeer, LLC. All Rights Reserved Gross Income $ 69,650 Gross Income % $ 412,000 50% $ 969,000 47% $ 1,671,000 45% $ 2,518,000 45% 44% Total Expenses $ 30,000 $ 296,200 $ 380,000 $ 555,000 $ 665,000 Net Income $ 39,650 $ 115,800 $ 589,000 $ 1,116,000 $ 1,853,000 Net Income % 28.6% CO2 Refill 13.1% 2013 27.7% 2014 PortaDraft Units 160 CO2 Bottles Filled - 29.9% 2015 32.5% 2016 2017 1,260 3,960 8,760 16,160 10,080 31,680 70,080 129,280 CO2 Income $ - $ 120,960 $ 380,160 $ 840,960 $ 1,551,360 Total CO2 Cost $ - $ 60,480 $ 190,080 $ 420,480 $ 775,680 CO2 Gross Income $ - $ 60,480 $ 190,080 $ 420,480 $ 775,680 CO2 Gross Income % Development Expenses Net Income 0% $ 15,000 $ (15,000) Net Income % $ 138,450 Total PB Net Income $ 24,650 50% 50% 50% $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 55,480 $ 185,080 $ 415,480 $ 770,680 0% Total PB Income Total PB Net Income % 50% 46% 49% 49% 50% $ 1,005,960 $ 2,510,160 $ 4,575,960 $ 7,251,360 $ $ $ 1,531,480 $ 2,623,680 171,280 774,080 18% 17% 31% 33% 36% PortaDraft % 0 68% 76% 73% 71% CO2 % 0 32% 24% 27% 29% Conclusion PortaBeer represents a significant, low-risk investment opportunity. Unlike many hardware startups, PortaBeer is already in production and owns critical assets, such as tooling and molds, that are needed to scale the business. The company has protected its intellectual property through patents currently pending as well as important trademarks. In addition, we have exceptionally strong sourcing relationships, with secondary sources for nearly all critical components. Finally, with an enthusiastic group of reference accounts and a current “whale” prospect that could represent up to 300 units of revenue in a single order in 2014, the company is poised for sustainable growth. With this investment a minimal investment of a $100,000 convertible note, PortaBeer can grow faster and be a profitable business next year, reaching $4.6 million in revenue with $1.5 million in net profit by 2016 and an average of 27% net margin over the next five years. We will achieve this through an 17 Confidential – Copyright 2013, PortaBeer, LLC. All Rights Reserved experienced ownership group that boasts years of success in marketing, operations, finance, and engineering that will be supplemented by adding experts in sales, sourcing, and retail channel management. The PortaBeer opportunity is a low-risk hardware investment as shown by: our proven success in our high-value target markets; yet-unexplored recurring revenue opportunities; and a team that has demonstrated its ability to execute a lean business strategy. 18 Confidential – Copyright 2013, PortaBeer, LLC. All Rights Reserved
© Copyright 2024