Professional Documents
Culture Documents
this information as accurate as possible. The authors cannot be responsible for any inaccuracies or omissions, if any, in this document. All figures in the perfume are educated assumptions and no return on investment can be guaranteed. The information contained in this business plan is confidential and is intended exclusively for the persons to whom it is communicated by the corporation. Any reproduction of the business plan, in whole or in part, or the variance of its contents without the written consent of the company is prohibited. This business plan does not constitute an offer to sell or is it a solicitation of any offer to purchase securities.
EXECUTIVE SUMMARY
High Five Co-Op Brewery: High Five Co-Op Brewery will fill an undeveloped niche in the West Michigan
business community. We are a start-up Co-operative brewery which will restore a neighborhood located in a high traffic/visibility location. Limited production for local eateries and taverns will also take place at our facility. Our world class beers will be served professionally in a warm friendly atmosphere. The atmosphere of this establishment combines modern art gallery styling with the bold contemporary elements of a gleaming microbrewery. Customers can enjoy snacks or libations while watching the beer they are drinking being produced less than ten feet away! Brewpubs are reviving a historic tradition of brewing ales and lagers as part of a regional cuisine. Featuring the in-house brewery and its products (including nonalcoholic cocktails and root beer). High Five will also attempt to apply its profits to help better the community through outreach programs including beer drinking/brewing education and philanthropic efforts at large. Throughout America today there is a growing trend toward consumption of fresh, preservative free products, including beer. Students, professors, young professionals, families, and people of all ages enjoy the atmosphere and product of the brewpub. The brewpub industry in Michigan has seen tremendous growth over the last two decades, from three in 1983 to over 126 in 2012! While over 70% of new restaurants fail in their first year of operation, only 1 in 3.5 brewpubs have failed since they became legal in 1983. The success of the industry is based on the easily recognizable superiority of freshly brewed beer, and the low costs associated with this beer. By retailing the product at the same site it is produced, costly packaging and distribution costs are mitigated greatly helping to create a more sustainable business. A gallon of fresh ale sells for $32.00 at the tap ($4.00 per 16oz glass). The product cost to produce
this gallon of beer is approximately $0.85, or less than 3% of the retail value. This leaves 97% of the income from beer sales to cover fixed and variable expenses! Sales through distribution will be less profitable but will create a cash flow. The conception and formation of High Five Co-Op Brewery has been supported by our many members and our Board of Directors. The following individuals have contributed their time and talent as inaugural board members: Nicholas LaValle: Currently serving as President of the Board Nick is an extremely active member of the local brewing community. Hes spent the last 7 years homebrewing and in the last 2 years he has been an employee of both a homebrew supply shop and the Hideout Brewing Co. Nick has a Bachelors of Science in psychology from Grand Valley State and as member of the beer city community he has hosted TV pilots on beer and taught numerous tasting/brewing classes as well as having worked with the Community Center to create a documentary centered on one of his main interests: philanthropy. Dallas McCulloch: Dallas got this whole project rolling in 2011 when he presented the idea for a cooperative brewery to the 5x5 competition panel and was awarded $5,000 in start up capital. Dallas is an active member of the community of Grand Rapids and is a part of Bartertown (first worker's collective restaurant in GR) and launched the late night hours running front of house. He has had thousands of different styles of beers from all over the world and has visiting breweries extensively across the US, Canada, UK, Spain, Italy, Costa Rica. Belgium, Germany, and Czech Republic. A true beer advocate Dallas started the whole High Five venture with a bang (and a dream) Jorel Van Os: Jorel is a technology professional and social entrepreneur. He holds a Bachelors degree in Management Information Systems and Certificate in Nonprofit Board Leadership from Grand Valley State University. In addition to his involvement with High Five, Jorel has also served as Secretary for the National Organization for Women greater Grand Rapids chapter (NOWGR) and as Secretary for WORK+SHELTER, a women's shelter he co-founded in New Delhi, India Megan E. Smith: A licensed attorney and is the chair of the Legal Committee. She graduated with honors from the University of Michigan and received her law degree magna cum laude from Michigan State University. Megan is a consultant for nonprofits and social enterprises focusing on organization, development, transitional leadership, and strategic planning. Born and raised in Grand Rapids, Megan is well connected with our West Michigan community. She is a board member for Young Nonprofit Professionals Network of Grand Rapids as well as The Geek Group, and she and her
dog Buddy volunteer with West Michigan Therapy Dogs. Megans favorite beers are dark, malty, roasty, and strong. Barry E. Johnson: Barry is a 30-year resident of West Michigan and has aided more than X breweries through the start up phase. Barry has been actively involved in the community for most of those years and is currently Mayor Pro Tem of the Saugatuck City Council, City representative on Kalamazoo Lake Sewer and Water Authority, past President and current Board member of the Saugatuck/Douglas Area Community Fund, and a 15 year member of the local Boy Scout committee. He is well known and respected, as well as being recognized in the community as a beer connoisseur. To prepare for this venture Barry attended the World Brewing Academy, graduating on April 30, 2004 in Munich, Germany with a Diploma in Brewing Technology. The World Brewing Academy is a collaboration between two of the oldest and most respected brewing institutions in the world; the Siebel Institute in Chicago, Illinois (est. 1872), and the Doemens Academy in Munich, Germany (est. 1895). Tiffany Ewigleben: age 27 is a wife, mother and social activist. Active in the local community, passionate about good causes, Tiffany has 3+ years of experience in event planning, public relations, and non profit business. She has primarily been involved with service learning and civic engagement, K-12 and college. Former YNPN award winner 2011, MI Governor's Service Award-Volunteer of the Year finalist-2011, she is currently working as a writer for Flavor 616 (a new magazine focusing on West Michigan-"for the love of local-food, beer wine and whatever!") and has been Involved with High-Five since inception. Gregg S. Hampshire: a 26 year old and native of Grand Rapids, MI. For the past 10 years, Gregg has worked as a PR rep and marketer; he started promoting local events and shows before finding work as a sales and marketer for a local custodial business. As Gregg Hampshire became more interested in nonprofit administration, he has now found work as a Program Manager of the Education Program at Junior Achievement. A marketing guru and social improvement specialist Gregg focuses on the community and his involvement therein. Eric Pell: is an Information Systems professional specializing in business processes and providing technology related solutions to help improve communication and efficiency. As an avid home brewer the prospect of joining like minded individuals to start a brewery was too appealing to resist. Eric joins the team with a passion for open information sharing which parallels the thinking which powers much of the internet backbone today. Not only would he like to see High Five become a successful brewery but also for it to be a learning opportunity for the next generation of brewing professionals.
FINANCIAL SUMMARY
The purpose of financial management in the operation of all HIGH FIVE activities is to fulfill the organization's mission in the most effective and efficient manner and to remain accountable to stakeholders, including members, employees, and the community. In order to accomplish this High Five commits to provide accurate and complete financial data for internal and external use by the Board of Directors.
High Five Co-Op Brewery represents an unusual opportunity for both investors and
the Grand Rapids community. An enthusiastic public response has already been realized due to the novelty of the concept as well as the quality of the beer. For Member-Owners, potential benefits include: a percentage patronage rebate the opportunity to work and help in a brewery training and information regarding the brewery operations and brewing techniques used by the brewing staff an atmosphere of acceptance and community involvement using beer proceeds to help benefit the community a stake and claim in an influential brewery in Beer City Grand Rapids
Authority: The Board of Directors is ultimately responsible for the financial management of all activities. The Treasurer is authorized to act on the Board's behalf on financial matters when action is required in advance of a meeting of the Board of Directors. The President of the Board is responsible for the management of the organization. The Board authorizes the President of the Board to hire and supervise a General Manager for the Front of House and a Director of Operations for the Back of House. These staff have the authority to employ servers and brewers, independent consultants, pay bills, receive funds, and maintain bank accounts as well as enter into contracts for activities that have been approved by the Board as a part of budgets or plans. The Board of Directors must approve any use of the Board designated cash reserve fund. Condensed financial projections are based on actual operating statements from a similar operation. Refer to the pro forma spreadsheets for detailed financial projections.
Operati ng (Labor Day
Year 1
Year 2
Revenu e Projecti ons Percenta ge of brew house capacity sold Custome rs served per day (5 day week) Sales (minus ingredie nt cost & beer tax at $13.3/bb l) $ Member Count Total Operati ng Expens es $ Operati ng Savings /Loss $ Operatin g Margin
Opening )
90
163
217
-30,589
80,672 208,405
MICROBREWERY A brewery licensed to manufacture and sell up to 20,000 barrels of beer per year (one barrel is 31 gallons). Take-out sales are permitted on premise. Off-premise sales to retail establishments (restaurants, taverns, beer retailers) must be directed through distributors.
A short history of the American brewing scene: One of the oldest of alcoholic beverages, beer was well known in ancient Egypt. First brewed mainly in the household and monastery, it became a commercial product in late medieval times as weary pilgrims enjoyed the wares of brewer monks. It seems likely that early taverns were located in the breweries themselves; suitable containers for distribution not being available. The modern brewpub continues this long tradition. In Europe there are brewpubs that have been operating continuously in the same location for 100 years, some over 300 years. Beer has played an important role in the development of this country. In 1609 America's first "help wanted" ad, appearing in a London newspaper, sought brewers to come to Virginia. The Mayflower stopped at Plymouth Rock instead of continuing on to Virginia as originally planned because of a severe shortage of supplies. As one passenger noted in his diary, "We could not take time for further search or consideration, our victuals being much spent, especially our beere." William Penn erected a brew house on his estate in 1683, and served beer widely, even using it to promote temperance among the Indians. In 1816, Thomas Jefferson discussed beer in a letter to a friend, writing: "I wish to see this beverage become more common." It did. By 1880 there were 2,272 breweries in America, many of them brewpubs. The city of Boston had over 200 breweries itself and there were almost 100 small breweries in the State of Wisconsin devoted solely to brewing wheat beer. The decline of the breweries began in 1892 when the "cork crown" was patented. Beer could now be bottled and shipped reliably, and by 1910 only 1568 breweries remained. The decline continued with Prohibition, and by 1930 there were only 231 operating breweries, which had survived Prohibition by producing a variety of non-alcoholic products. Upon repeal of Prohibition, thirty-eight States (including Michigan) adopted the 3-tier distribution system (manufacturer-distributor-retailer), making it illegal for the manufacturer to also be the retailer. The brewpub became history. The decline culminated in the early 1970s when, through industry consolidation and changing consumer tastes, there were less than 50 breweries in United States.
2. Off premise sales through a group of carefully selected distributors. 3. Educational epicenter for all things beer related 4. A Community outreach vehicle allowing member-owners and the community at
In 1982 the legislature in the state of Washington approved a bill that allowed a brewery to sell its beer directly to the customer in a restaurant environment; the brewpub was born. That summer Yakima Brewing and Malting Company, the first brewpub in modern day America, opened its doors. California amended its law prohibiting the sale of beer without a distributor in 1983 and two brewpubs opened. The Mendocino Brewing Company in Hopland and Wild Bill's Brewpub in Hayward both opened that year. Both are prospering today. By 1985 brewpubs had moved eastward opening in New York, Wisconsin, and North Carolina. In 1983 there were 12 microbreweries and brewpubs, 29 by 1985, 171 by 1989, and 382 at the end of 1993. In 2005 there were over 1,400! Michigan has more than 115 brewing facilities contributing over $24 million in wages and $133 million dollars in total economic contribution to the state. A new generation of consumers is now able to discover the taste and sensation of drinking fresh beer. In the process they are rejuvenating a great American tradition, the brewpub. The long term success of Bells Brewery in Kalamazoo, New Holland Brewery in Holland, Founders Brewing Company points to the rich craft brewing culture in western Michigan.
an article in Forbes (April 6, 1987), "Beer drinkers, like everyone else, will buy American - and pay up for the privilege - if you offer them something better." Comparisons are often made between the microbrewing industry and two other industries- wine and coffee. Many call it the upgrading of the American palate. In 1982 only 8% of wine sales were in premium wines, the balance being in jug wines. By 1994 sales of premium wines had climbed to 41% of total wine sales. The same phenomenon has occurred with coffee in a much shorter time span. In 1992 only 2% of all coffee sold was in the specialty category. This category constituted 18% of all coffee sales in 1994. As prime examples of this both micro-coffee house roasting and major local production of roasted coffee have exploded creating such venues as MadCap Coffee, micro-roasters like Grand Rapids Coffee Roasting and large industrial complexes like Ferris Coffee and Nut. David Edgar of the Institute for Brewing Studies writes in the 1991/1992 Brewer's Resource Directory: "...The domestic specialty beer market shows no sign of losing momentum. While there was much conjecture about the temporal nature of the microbrewing `trend' in the early years of this young industry, the evidence available today fifteen years after North America's first microbrewery and nine years after its first pub brewery opened -- clearly indicates this is not a fad." Continued growth of the brewpub/microbrewery industry is expected and every brewery opened in Grand Rapids in the last year has experienced greater demand than production. Grand Rapids, Michigan will welcome High Five to the market.
What IS a CO-OP!?
Co-ops function according to a specific set of principles and are built as an ownership model that allows more than just a limited number of individuals to benefit from the profits of the company. They exist in the capitalist structure to help communities and individuals better themselves through contribution. The Principles:
Principle 1: Voluntary and Open Membership Cooperatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination. Principle 2: Democratic Member Control Cooperatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary cooperatives members have equal voting rights (one member, one vote) and cooperatives at other levels are also organized in a democratic manner. Principle 3: Member Economic Participation Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is usually the common property of the cooperative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing their cooperative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the cooperative; and supporting other activities approved by the membership. Principle 4: Autonomy and Independence Cooperatives are autonomous, self-help organizations controlled by their members. If they enter to agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their cooperative autonomy. Principle 5: Education, Training and Information Cooperatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their cooperatives. They inform the public - particularly young people and opinion leaders about the nature and benefits of cooperation.
Principle 6: Cooperation among Cooperatives Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional and international structures. Principle 7: Concern for Community Cooperatives work for the sustainable development of their communities through policies approved by their members.
BUSINESS DESCRIPTION
HIGH FIVE CO-OP BREWING COMPANY The dramatic alternative to other brewpubs High Five Co-Op Brewery has already generated a significant interest in the media, and as a result High Five has been mentioned in a number of publications that can be found online including: http://www.mlive.com/news/grand-rapids/index.ssf/2011/12/beerbrewing_collaborative_win.html http://www.michiganbeerblog.net/2012/04/high-five-co-op-brewery.html http://www.imabeerhound.com/michigan-brewery-news/item/484-high-five-co-opbrewery-is-planning-to-be-the-first-co-op-brewery-in-the-midwest.html http://www.mlive.com/business/westmichigan/index.ssf/2012/05/beer_city_usa_poll_new_contend.html http://www.imabeerhound.com/michigan-brewery-news/high-five-co-op-benefit-atmulligans-pub-in-eastown.html http://www.youtube.com/watch?v=7BMQ6cc5DJs http://mittenbrew.com/2012/11/high-five-co-op-wheat-ipa/ But we know that converting the initial interest into loyal customers will require more than microbrewed beer.
SALES REVENUE
Sales revenue will come from four major areas: House Beer, Non-Alcoholic Beverages: House Beer The specialty of the house and the focus of the entire operation are the house beer. Brewed and fermented in view of all patrons, the beer is then transferred to the aging cellar (also visible to the public) where it ages. It is then pumped directly to the bar and the customer one glass at a time. The economics of the house beer are exciting. A gallon of house beer sells for $32.00 at the tap (at $4.00 per 16-ounce glass). Material costs to brew that gallon of beer are $0.75 which represents less than 3% of the retail value, leaving 97% to cover fixed and variable expenses! Also grouped with the house beer are the non-alcoholic sodas (root beer, ginger ale, cream soda). They have an equally attractive product cost and are a great draw for non-beer drinking adults. The soft drinks offer a craft made beverage for all of those under the age of 21. People appreciate the effort of the brewery to create a non-alcoholic alternative. Non-Alcoholic Beverages Although the profit margin is not quite as attractive as the house beer, it is still very good. These items are necessary for several reasons. Some people will be reluctant to change to the house beer from their old standby (Budweiser, Miller, etc.). With education and exposure these people can converted to loyal fans of the house products. Not everyone is a beer drinker. A nice selection of non-alcoholic mixed drinks, soft drinks, and gourmet coffees all provide attractive alternatives for non beer drinkers. In staying consistent with our image and niche, all of the above will be of the highest quality and a highly perceived value. Handcrafted, pure beer that is fresher, tastes better but is priced less than imported beer provides an excellent perceived value. The other beverages sold are a minor part of sales, but will be priced no higher than similar restaurants in town. The majority of beverage sales will come from the focus of the operation: the in house brewery. The brewpub concept is a unique business combining retailing and manufacturing. A successful brewpub start up requires several key ingredients: business experience, brewing experience, project management experience, substantial capital, the right location, and local community acceptance. Although the success rate of brewpubs is impressive, there have been some failures. These failures can be attributed to projects that did not have all of the key ingredients mentioned above. The ownership of High
Five Co-Op Brewery will be a group of no less than 500 member-owners. The team
of consultants provides the necessary experience in business planning, and brewery operation. All of the key elements are in place to make High Five Co-Op Brewery a highly successful business venture.
Distribution is designed to accommodate considerable increase in production with minimal capital investment. We envision a 5-10 barrel system and bottling facilities will allow the brewery to utilize its full capacity. The brewery will sell bottles and kegs through distribution to other restaurants and to the public for special events such as weddings, holiday celebrations, and parties. Such keg and bottle sales - in addition to generating revenue - become an effective marketing tool for the pub, expanding the brewery's reputation throughout the community. Another effective method used to maximize production capacity and increase sales is the "beer-to-go" market. Many brewpubs have been able to do significant amounts of beer sales in 1/2 gallon containers (Growlers) and small kegs. These containers require initial container fees for the jugs and deposits for the 5-gallon kegs. Growlers have become conversation pieces and collector's items, furthering the growth of the brew pub's reputation.
Merchandise Sales
One remaining source of income is merchandise sales. Hats, T-shirts, gift items, and glassware with the High Five Co-Op Brewery logo on them will be available from a retail area adjacent to the bar. These items have proven to be very successful in other brewpubs and will quickly become collector's items and gifts for tourists, students, and residents of Grand Rapids. These items also present the unique advantage that people are actually paying for the privilege of advertising the brewery. Imperial Pint Club
Membership in our Pint Club will be included with owner benefits. Benefits include discounted beverages and a Pint Glass with their name, or nickname, etched on it. This will create not only loyalty to the brewery, but will also be a valuable revenue stream.
MANAGEMENT TEAM
High Five Co-Op Brewery Brew Team The brewing Operations will be overseen by a Brewing Community that reports to an Operations Director hired by the Board of Directors to ensure the Co-Op is making the best beer in Grand Rapids. The Ops Manager will also be responsible for training the brewing staff and will work with the front of house manager to ensure the beers being produced meet demand and are represented properly Front of House Manager A person with Restaurant experience will be hired by the Board to head up the staff and rotation of management in the Front of House. This person will also function as a trainer in the presentation of the beer and he/she will educate the staff on the beer styles on tap Admin support: The administration staff will be limited to a few individuals and will be responsible for the distribution of beer and the rental of space at the brewpub as well as special events and bookings of art commissioned for the brewery. In addition to the aforementioned responsibilities the administration will be in touch with the Co-Op Community to help organize High Five member-owner voting events and special members only taste parties/competitions. Board: Responsible to the voting membership to employ and fire according to the businesss best interests. The Board is elected annually and is comprised of people who care greatly about the success of High-five, its amazing beers, and its community and philanthropic involvement.
Demographic info for GR According to the 2010 census the population of Grand Rapids is approximately 188,000 people. Within one hour drive you can be in the communities of Muskegon, Grand Haven, South Haven, Kalamazoo, and Holland. The combined population of those communities well exceeds one million people. Within three hours drive you can be in the heart of downtown Detroit and Chicago. Given the logistics, Grand
Rapids (Beer City USA) is well placed geographically to draw customers from large urban areas The average beer drinker in America today is between the ages of 21 and 35. The average age of residents in West Michigan is relatively young. Beer drinking covers the entire economic spectrum without concentrating on any income level or geographic region. The brewpub will fill a very definite niche in the Grand Rapids business district and with its inexpensive yet unique service, affordable menu prices, and an atmosphere that lends itself to drinking responsibly. High Five will provide the residents of GR a distinct alternative to the choices presently available. BREWERY OPERATIONS
High Five Co-Op Brewery will produce several styles of high quality ales and
lagers ranging from light ales, designed to be an introduction to microbrews, to the rich exciting and diverse assortment of experimental and extreme styles of eccentric ales west Michigan is known for. Specialty beers, seasonal beers, Wild ales, and even fruit beers will also be produced. By working with regional flavors (many brewpubs make green chili, spruce, pumpkin and other regional specialty beers) High Five Co-Op Brewery will develop a reputation as an innovative and exciting place to enjoy unusual beers. What follows is a compilation of possible house specialties, open to revision and expansion, with at least 4 beers available at any given time. Beer names are a great opportunity to tie our business to the community. Local landmarks, historical figures, regional wildlife, etc. are ways to name our beers. Wheat IPA - A light ale made with Pale and Wheat malts our IPA will consist and persist due to its reliance on local produce!. Light and refreshing with a KICK, its the perfect IPA in a land of breweries. Black Hole Imperial Stout A Dark and heavy concoction made with a variety of malts and hops meant to provide the rich bitter tastes of black chocolate one desires from a full bodied stout. Helles Lager: A traditional style with a bit of a sweet twist. the Co-Op is the perfect place for brewers to implement more challenging fermentation techniques to achieve both a more commercial and also more sophisticated product. So many beers its hard to name due to the vast community brewer population of Grand Rapids, High Five will allow home brewers to execute their recipes on the larger scale
for enjoyment by the general public through competitions and through merit and hard work. THE BREWING PROCESS Many people come to the brewpub to see the brewing process. Tours will be available on a regular basis, given by the brewers themselves. Brewery operations and information will be made visible to the customers. With the brewery visible from the street, passersbys will be quite intrigued and come in to see the operation. Beer always tastes better at the brewery. People will travel to see the brewery and taste the beer. Our beer will be brewed from whole grain in the traditional fashion, beginning with whole, malted 2-row barley. Malted barley is grain, which has been allowed to germinate under controlled conditions, thereby converting much of the insoluble starch to more soluble complex carbohydrates as well as breaking down proteins into simpler compounds. The malt is milled and then put into the mash tun (cooking vessel) on the main floor. In the mash tun, water is added to the coarsely ground malt and the mixture is mashed (cooked) at carefully controlled temperatures, activating various enzymes present in the grain. Some of the enzymes present (notably alpha- and beta-amylase) facilitate conversion of complex carbohydrates to simpler sugars such as maltose. These sugars along with amino acids released during the malting process later function as nutrients for the yeast. After mashing, the resulting sweet liquid (wort) is rinsed (sparged) from the grain and transferred to the brew kettle. The spent grain remains behind in the mash tun and is picked up locally and used for cattle feed. In the brew kettle, the mixture is boiled for one to two hours and hops are added. Bittering hops are added at the beginning of the boil, and the high temperature act to release the oils that give beer its bitter taste while deterring bacterial growth by acidifying the beer. At the end of the boil, finishing hops are added to give the beer a pleasing fragrance. Special flavoring ingredients such as fruit or spices can also be added at this stage of the beer making process. Hops and other particulates are filtered out of the beer as it is moved to the fermenting tanks. At this point, it becomes vital to keep the wort free of contaminating microbes so that only the yeast of choice ferments the available sugars. The wort is cooled as it is pumped into the fermentation vessels. At this point brewing yeast is added to the mixture. Fermentation tanks must be kept at controlled
temperatures to encourage proper growth of the yeast. During the fermentation process, yeast is metabolizing sugars in the sweet wort, converting them to alcohol. After fermentation is complete (approximately seven days for Ales and 2 weeks for Lagers) the beer is moved to conditioning tanks in the aging cellar. The aging cellar, located in view of the public behind the bar, is divided into two rooms. These rooms are kept at different temperatures to allow each beer style to be aged and served at the appropriate temperature. The beer ages approximately two weeks to develop complexity of flavor. When ready, the conditioning tank is hooked directly to the serving lines of the bar A variety of beers can be made using this basic process. The initial concentration of carbohydrates in the wort and the strain of yeasts used control relative sweetness and alcohol content of the finished product. Bitter flavors are generally acquired by the variety of hops used during the boil. Other flavors come from esters produced by the yeast, different barley types, mashing time, fermentation, and various other factors.
MARKETING PLAN
Since the last part of the 1980's a trend has emerged indicating a shift in the tastes of the beer drinking public to imported and premium beers. While sales from large domestic breweries remained flat in recent years, microbrewery sales have increased by leaps and bounds in the last ten years and over 400% in the last four years alone. Consumers searching for an alternative to the watery tasteless brands mass marketed throughout the U.S. are willing to pay a premium price for a quality beer. Imported brands showed impressive growth every year from 1980 through 1988 and then as microbrews became popular, showed four years of flat or negative growth. However, import sales are once again on the rise, growing every year since 1991, once again illustrating the American publics desire to find alternatives to the beer produced by the large American Breweries. Because of the trend away from hard liquors, and the growing awareness of microbrewed beers, these beers are now a sophisticated, upscale beverage with strong appeal to men and women. It will be important to distinguish High Five Co-Op Brewery from its competition. In order to do this a clear and well-constructed marketing plan will be implemented. High Five Co-Op Brewery will be quite unique in regards to its unusual pub fare, open source design, and atmosphere, but the initial marketing strategy will focus on the most unique aspect of the operation: the Cooperatively run in-house brewery and the products themselves. The following underlying ideas are key concepts to the marketing plan:
TASTE
Brewed on the premises, brewpub beer simply tastes better than other beers because it is brewed with basic ingredients. It has more body, flavor, and color. Fresh beer brewed at High Five Co-Op Brewery will taste better than any canned, bottled or even other draught beer. FRESHNESS Although freshness is the primary reason for superior TASTE, it can be marketed as a separate attribute. Brewpubs can capitalize on the consumer's concern for health and suspicion of chemical additives. Beer is best -enjoyed fresh. It does not improve with age. Major breweries typically pasteurize their products to stabilize them for shipment. Imported beers are treated the same way and typically reach the consumer months after being brewed and only after traveling thousands of miles. Freshness and quality are unavoidable casualties. High Five Co-Op Brewery will produce beer that is fresh and chemical free. Remember that our distribution system is only fifty feet. Foaming agents, head stabilizers, taste-enhancers, colorings, antioxidants, emulsions, and preservatives will never be used, nor will rice, corn, sugar or other additives unless used by the brewers for specific stylistic attributes. By not pasteurizing our beer, a far greater portion of the vitamins and minerals from the original ingredients are retained. In Ireland, unpasteurized Guinness Stout is often referred to as "liquid" bread. High Five Co-Op Brewery will produce ales and lagers worthy of the same praise.
PRICE
Brewpub beers offer the freshest beer available. This high quality product is priced competitively with import draughts, which can be several months old by the time they reach the glass.
ORIGINALITY
Although the number of brewpubs increases by a large percentage each year, they are still unique to many parts of the country. In addition to brewing a better beer, they offer an alternative to the typical bar scene. The key here is fresh beer in a comfortable atmosphere. Add to that a Co-Op business model and High Five Co-Op Brewery will be a one-of-a-kind business in Michigan. The brewpub has wide appeal in an age where people are reacting against the impersonal nature of large corporations and mass production. The appeal of handmade pasta, fresh bread, handcrafted ice cream, fresh roasted coffee, and small boutique wineries are examples of unique upscale quality driven businesses that consumers
today feel good about supporting. People you can meet make brewpub beers on premise, in full sight of the entire restaurant and bar. Beers named for famous people (both fact and fiction) and local landmarks give people a product they can identify with and are proud to share with friends. Developing local pride is the first step to a loyal local support.
MULTIPLE BEER STYLES
The small brewery design allows for the production of many styles of beer.
Specialty and seasonal beers can be produced while maintaining a constant supply of the most popular beers. MARKET SEGMENTS
High Five Co-Op Brewery will attempt to capture four distinct market segments: the downtown professional, residents of Kent , Allegan, Ottawa, and Van Buren Counties, students from Grand Rapids Community College, Kendall, Hope College and Grand Valley State University. Students, families, couples, and individuals from throughout the region will provide a lunch and dinner business and late night bar clientele. These groups will supply the brewpub with a stable financial base, which will be augmented by steadily increasing numbers of tourists due to high interest events such as Art Prize and the upcoming 2014 National Homebrew Competition. High Five Co-Op Brewery will take advantage of its local presence to tie into all festivals and celebrations, as well as creating a few of its own. Special celebration ales will be brewed for most holidays and appropriate tank tapping ceremonies will announce these specialty brews. Well-publicized seasonal festivals such Oktoberfest, or Irish on Ionia festivals will occur on a regular basis with announcements sent to an ever-growing mailing list of beer enthusiasts.
Because of the new Convention Center, an increasing number of conferences with thousands of attendees will be held in Grand Rapids next year, including the 2014 National Homebrew Convention! The majority of these people stay in Grand Rapids at such hotels as the historic Amway Grand as well as the new JW Marriot, which both help support local businesses and are receptive to the beer culture in Grand Rapids. Many tourists and conventioneers are familiar with the brewpub concept and will want to compare the beer to their own hometown favorite. By offering such a unique and diverse concept in a dramatic facility, High Five Co-Op Brewery will become an anchor for the local tourist industry. Key strategies for the tourist and convention market segment include: Appealing and informative promotional brochure for use in hotel information racks. Advertising in tourist oriented publications. Developing local pride in Co-operatively run businesses including the brewery. Developing a relationship with western Michigan Conference planners.
The following is a detailed list of target markets and the time frame in which they are most likely to visit HIGH FIVE CO-OP BREWERY.
LUN CH
DIN NER
HAP PY HR
XX
XX
XX
XXX XX
XX Touri sts Conv entio n Famil ies Profe ssion als Older Coup les Arts Crow d Sport s Crow d Shop pers Coun ty Resi dent s Dow ntow n Resi dent s Curr X
XX
XX
XX
XXX
XX
XX
XX
NA
NA
NA
XXX
XXX
XX
XX
XX
NA
NA
XX
XX
XX
NA
XXX
XX
NA
XXX
XX
XX
XXX
XXX
NA
XX
XX
XX
XXX
XX
XX
XXX
XX
XX
XX
XX
XX
XX
XXX
XXX
XX
XXX target)
XX time
Good potential
NA
Cinderella Syndrome." All restaurants go through the "Cinderella Syndrome" when everyone in town wants to try "the new place." This is the most difficult time in the business. Construction has just barely ended, systems and people are new, but the customers expect a quality product and are judging the restaurant (and telling their friends) by the quality of their first experience. Retaining the curiosity seekers as regular customers depends on serving a quality product in an enjoyable atmosphere. This is a crucial time in our development, and every effort will be made to make sure that each customer leaves ready to tell his/her friends about the quality experience they had at HIGH FIVE CO-OP BREWERY.
PROMOTIONAL PLANS
Initial promotional plans will evolve around the focus of the operation, the house beer. Tank tapping parties can be diverse and effective. Specific strategies are in place to attract predetermined target markets. One example is a guest brewer, where a professional brewer or celebrity is invited to brew a uniquely collaborative beer with High Fives Counsel of Brewers. Publicity is gathered not only on brew day, but when the beer is served. High Five Co-Op Brewery will strive to be visible and active in the community. Through contributions, promotions, and sponsorships of various non-profit, humanitarian programs (Community and Educational Foundations etc.) as well as in house events for local causes, High Five Co-Op Brewery further enhance its reputation as a business tied to local roots, always willing to give something back to the community. The management and owners of High Five Co-Op Brewery will play an active roll in the community by volunteering for local organizations.
assess when our beers will hit the market. This encouraging atmosphere in the West Michigan community lends itself to optimism that tap handles will be ready for the brewery as soon as it can distribute (with our first priority always to the taps at the pub itself). By not offering food we will distance High Five Co-Op Brewery from being perceived as a competitor. Brand awareness will be established during the formative years and High Five Co-Op Brewery envisions rapidly carving its own niche in the Grand Rapids beer scene by the second year of operation. The aesthetics of the business will be designed to make the customer feel comfortable. High Five Co-Op Brewery will be a place to talk business, visit with old friends, meet new friends, or bring the family; an energetic, fun pub conducive to the enjoyment of hearty food and delicious ales It is the philosophy at High Five Co-Op Brewery that competition is good and cooperation is even better. It keeps the business constantly trying to operate more efficiently. High Five Co-Op Brewery will also generate business for the production brewery from the local bar and restaurants by offering to brew special private label beers for their own establishments. The business owner will be invited to come brew a batch of beer and create a special name and label. This then becomes their house beer and the owner has a great story to tell about the brewing process and his special recipe.
COMPANY OVERVIEW
PERSONNEL
Quite often the success of the independent restaurants and bars is based on one key ingredient, the owners themselves. Their style, dedication, knowledge, ethics, and unwavering desire to provide the customer with the best dining and drinking experience possible, while providing a fun and fair working environment for their employees are more crucial than any other aspect of the business. These beliefs are shared by every member of the High Five Co-Op Brewery team: The Staff is our most valuable asset. There are no customers, only guests. The guest is always right (with few rare exceptions.) The service industry is one to be proud of.
Each time a guest comes in contact with any member of the staff, or the business in any form, they have a chance to form a positive or negative impression. Each of these 'moments of truth' is critical to the success of the business. If you are not directly serving the guest, you better be working for someone that is. The restaurant business is known for its high turnover rate. High Five Co-Op Brewery realizes that the staff is the most valuable asset of the company. While our philosophy is to provide a better working atmosphere than other restaurants, monetary rewards are also very important. Quite often the hourly employees are overlooked when it comes to sharing the success of the company. At High Five Co-Op Brewery The Cooperative Workers Assembly concept will ensure that employees are more than just hourly staff, they are owners and have control over operations at the pub. This vested interest model has helped co-ops succeed in Grand Rapids (such as Bartertown) and around the globe. At High Five Co-Op Brewery, these employees will earn their pay based on sales volume. While this model has a monetary cost to the brewpub, it is also the spirit and heart of the co-op model. A brewery for the people, by the people.
cover fixed and variable expenses! This number is significantly less in sales to distributors, where a typical gross profit is 33%.
2013 Operati ng Revenu e Percenta ge of brew house capacity sold Custome rs served per day (5 day week) Sales (minus ingredie nt cost & beer tax at $13.3/bb l) $ Member Count Operati ng Expens es Credit Card Fees Rent Wages (Labor Day Opening )
2014
2015
90
163
217
$ $ $
1,434 16,000
7,820 48,000
10,427 48,000
Taxes Water
$ $
Electricit y $ Gas $ Supplies $ Licence $ Trash $ Phone/In ternet $ Insuranc e $ Office Expense s $ Guessti mate on Health Insuranc e $ Guess on Unknow ns $ Total Operati ng Expens es $ Operati ng Savings /Loss $ Operatin g Margin Other Income New Member $
2,000
6,000
6,000
4,802
14,406
14,406
12,000
36,000
36,000
-30,589
80,672 208,405
45,000
22,500
22,500
Joining Fees Investme nt Member Income $ Other Expens es Start-up Costs $ Investor Share Dividend s (6% of investme nt) $ Investor Share Sell back (% of shares sold back per year?) Member Perks (3% revenue) $ Perk Dollars per Member $ Federal Income Tax $ State Income Tax $ Savings /Loss $ $211,66 -$71,240 $87,842 4 143,500
60,000
3,600
3,600
2,151
11,731
15,641
26
26
PreTax Revenue Taxes Net Profit/L oss $211,66 -$71,240 $87,842 4 $0 $10,541 $25,400 $186,26 -$71,240 $77,301 4
LICENSING PROCESS
Licensing is required on three levels; Federal, State, and City. Our first license, known as a Brewers Notice, will be issued by the U.S. Alcohol and Tobacco Tax and Trade Bureau and we anticipate no difficulties with that. Our next step will be to work with the State of Michigan Microbrewery licensing agency known as the MLCC to formally create a Co-Op model that will work for High Five and other Co-op breweries in the future. The Board of Directors has already been in contact with the MLCC agency and they are prepared for High Fives business model. Finally a license will be issued by the Michigan Department of Agriculture which will inspect the actual facility to ensure that the brewery is following all health code requirements for a business of our type.