Behemoth Brewing

We are sorry you missed the current round of crowdfunding, which closed with 635 new shareholders in Behemoth Brewing and $2.06m of capital raised. Please feel free to register your interest in investing in future Behemoth crowdfunding campaigns, or the possibility of purchasing shares off existing shareholders.

The investment offer will only be accepted if a total of $1.5m NZD, or over, has been pledged from the crowdfunding offer and/or wholesale offer by 15 July 2019.

Behemoth Brewing Company (Behemoth) was created in 2013, the dream of Andrew Childs; a beer nerd, beer drinker and home brewer (and sometimes referred to as the Beer Giraffe, due to being really bloody tall).

In the last six years Behemoth has come a long way. It has gone from doing a 1,200 litre brew once every few months to brewing more than 530,000 litres of beer in the last year. This means someone drinks a pint of Behemoth every 30 seconds, somewhere in the world. Now, that is a little crazy.

We are currently the 4th biggest independent craft brewery in grocery sales in New Zealand and we are now ready to put the foot on the gas by establishing our own brewery and restaurant in Auckland.

We haven chosen to equity crowdfunding because we wanted to provide our supporters with the opportunity to Be Part of Behemoth’s Home; part of our story. A story of big beers and cheeky antidotes, a brewery, a new food and beer experience hub, and a thriving and exciting industry.

The benefit in using a crowdfunding platform like PledgeMe also means that we can include additional rewards with each share package or parcel sold, adding additional benefits to those whom purchase shares in Behemoth.

We have come up with some great benefits that Behemoth shareholders (Chur-holders) will enjoy, in addition to the share in the company they gain through their investment. The investment level chosen will determine the contents of the package and membership level.

P.S. We think they are pretty freaking sweet!

What we've done so far

Annoyed the leader of the free world? TICK

And the leader of the non free world? TICK

Given it to the Aussies? TICK

Learnt some sweet brewery yoga moves? TICK

Behemoth has grown rapidly since it was started in 2013 when we brewed our first beer "Celia Wade Brown Ale". The beers and puns have come thick and fast since and we have brewed over 125 unique beers in 6 years. We are now one of the largest independent craft brewers in New Zealand.

In the previous financial year our revenues grew by 136% as we focused on strengthening our domestic and export sales. For the first time we put our beers into 6 packs, we really ramped up the brewing of our 440ml limited release beers and shipped our beers to 11 export markets. This delivered a net profit for the first time as the business starts to mature. We look forward to doing more of the same in 2020 and onwards.

What's next?

Our strategy over the next three years is to continue to grow Behemoth domestically and overseas. We have some exciting things in the works to ensure this growth!

Churly's Bar and Restaurant - Dominion Road, Auckland

Attached to the new production facility at the top of Dominion Road in Auckland (see below) Churly's will be a brewpub with a difference. It will offer all the usual things you would expect from Behemoth and a tap room; a welcoming local place for a casual Behemoth beer, a place to bring out of towners to do tastings and tours and a place to buy beers for takeaway to drink at home (or even better someone elses home). But.....it will be something different from your usual craft beer tap room with the addition of a food and beer matching restaurant. The restaurant will focus on a nose to tail menu that will be supplied by our onsite butchery. We feel that this sustainable and low waste dining experience with a true focus on food and beer matching will be an exciting addition to the Auckland food scene.

Behemoth Brewery - Dominion Road, Auckland

Attached to Churly's Bar and Restaurant at the top of Dominion Road in Auckland (see above) Behemoth Brewery will finally mean we have our own production facility after years of begging and borrowing generous offered space in other people's breweries around New Zealand. Commerically having our own brewery is a sensible move as it helps manage the risk of reliance on contract brewing as well as providing a more economic cost base for our beers, but it also offers us the ability to really push the boat out in terms of our seasonal and limited release beers; including the start of our barrel aging and co-fermentation projects. As well as the 3,000L brewery it will feature a 600L trial kit that our brewers can experiment on and also allow us to brew small volume batches for North Hemisphere customers who don't want to be drinking Imperial Stouts in their summer.

It's not all about bigger being better!

.......well, not all the time.

We are very excited about the release of our single serve core range in 330ml printed cans. Previously our single serve core range was in 500ml bottles, but we think that 330ml cans are the future for craft beer. They reduce oxidation and light strike on the beer, they have a lower carbon footprint than glass, they are lighter to transport (once again reducing resource use and carbon emissions) and are much harder for our freight companies to smash! Plus, they look great. Ranged across the Foodstuffs network and traditional liquor we expect to see significant growth in these four core range beers in the next year.

If the Mountain won't come to Churly

Our export sales have grown from virtually zero to over 10% of our revenue in the last two years. Churly's will give us the ability to continue this growth with more allocation of speciality beers to our export customers. Longer term though we think that our export propostion needs to be provisioned from closer to the market, otherwise we will hit a ceiling in terms of what we can sell to the big wide world.

What does this mean? It means we will be looking at options to brew our beers in-market, overseas. This benefit being that the customer gets to drink fresher beer, at a better price as we aren't shipping the beer from the bottom of the world. The upside for us would be that we would sell more beer because of this. Obviously we need to ensure we brew to the same great standards we have in New Zealand and to do this we need to ensure we find partners who have the same passion for quality that we do. We are confident we can do this in time and we will work slowly and methodically to ensure we have everything in place to make such a project a success.

Revenue and Profit Growth

During 2020 we will invest in the above projects and we see that these will start to deliver profit growth, as well as revenue growth from 2021 onwards.

Use of Capital

Share Offer

Issuing up to 2m shares at the total value of $2m to crowdfunding investors through a crowdfunding offer and up to 1.5m shares at a total value of $1.5m to wholesale investors through a wholesale offer (refer to IM for explainer). This makes the total offer up to 3.5m shares, which constitutes 13.09% of the company. For the crowdfunding issue, the minimum subscribed investment threshold is $1.5m. The wholesale issue does not have a minimum threshold.

Capitalisation Table

About our Team Churly - The Behemoth Monster Behemoth's friendly neighbourhood monster, Churly, is a mainstay of our branding. He loves dressing up as different characters on our labels. From Presidents to Rappers and Little Old Ladies, nothing daunts Churly. Andrew Childs - Managing Director and Head Brewer AKA, the Beer Giraffe, he's the man with the vision. The founder. He's full of passion for great beer and has a mind overflowing with ideas. When asked who does Behemoth's marketing, his reponse is, "I am the marketing department." Hannah Miller-Childs - Operations Manager A butcher/chef by trade, she jokes that Andrew tricked her into joining Behemoth. An eye for detail was exactly what Behemoth needed and she is now referred to as "Behemoth's glue". Julie Keoghan (CA) - Finance Manager The money lady. Chartered Accountant and busy mum of three, she’s a natural when it comes to multi-tasking, which comes in handy when organising funds while wrangling debtors. Roger Kerrison - Commerical and Export Manager Overseas trade is the name of the game and his diplomatic abilities are second to none. With a strong background in selling craft beer around the world, his knowledge of the business of beer is a daily asset. Andy Graham - Lower New Zealand Sales Manager Recently married and the newest member of the Behemoth Team, he brings a first hand knowledge of the grocery side of the business having grown up in his parents Four Square. This is perfect for him to build relationships with our accounts in Wellington and the Lower South Island. Pearse Shield - Central North Island Sales Manager Behemoth’s resident beer geek. If you’re after some knowledge on the newest, rarest, biggest beers, he’s your man. And coming from a background in traditional liquor, he offers great support to our Central North Island customers. Angelo Anapa - Warehouse and Delivery Manager Forklift driver of the year! When space in the chiller gets a little tight, he always finds a slot for one extra pallet. Between that and keeping the freight companies inline, it’d be a hard days work without him. Sarah Thompson - Auckland On-Premise Sales Rep Brewer, baker, charcuterie-maker. What can’t this girl do? Her wealth of knowledge from a brewing & hospitality perspective makes her the perfect liaison between Behemoth and Auckland’s on-trade customers.

Risks and Challenges

We have thought long and hard about the risks and challenges in delivering our forecasted revenue and profit growth, they are documented below.

Risk How we’ll mitigate them BEER QUALITY – the risk of a decline in beer quality from moving to a new premises with new equipment We will appoint an experienced Head Brewer to work closely with Andrew in the brew pub premises. We plan on moving production slowly to our new brewery. If the beer is not up to scratch, it will not be released to market. Quality is of the utmost importance.. CASHFLOW – the risk of not having enough cashflow or working capital to meet obligations, due to either poor sales or late paying customers We have good systems to manage and mitigate the risk from late paying customers and we also have a credit policy that limits our exposure to individual customers. INCREASED COMPETITION – the risk of the market significantly heating up with increased competition We are a dynamic and resourceful company. As more and more brewing companies enter the market, we plan to keep making beers people enjoy, introducing new brewing techniques, and packaging our beer in new ways. We will continue to do the things that have proved successful previously and continue to grow our market share. KEY PERSONNEL – the risk of losing key personnel We pride ourselves on treating staff well, compensating them appropriately, and making them feel part of the team. We plan to retain good staff, but we also appreciate there are times when people will leave Behemoth to further their careers or follow their dreams. We, therefore, have succession plans in place for if key personal move on. PROFITABILITY – the risk of not operating profitably We have worked hard to become profitable and sustainable. We have budgets in place and if for any reason they are not met, we will act swiftly to get ourselves back on track. We produce in depth management reports on a monthly basis that examine our performance, including profitability. PROJECT DELAYS – the risk of the new brewery build being delayed by unforeseen circumstances We have allowed for the brewery being delayed due to construction delays. We want to open Churly’s Bar/Restaurant by November 2019 to make the most of Christmas and Summer trade. We believe this to be achievable if everything goes to plan, but if it doesn’t occur, we are able to delay the opening until early 2020 without much impact to the bottom line. This is why we are conservatively budgeting in our forecasts. The brewery being delayed will not be too much of an issue as we have supply contracts with brewing partners into 2020. REGULATORY – the risk of local council regulations halting the new brewery build progress We are working with the Auckland Council on getting consents for the premises. We will keep very open dialogue with Council about what they need from us. We are solution oriented and will work closely with Council to get everything up and running. DOWNTURN IN CRAFT BEER CONSUMPTION The risk that demand for craft beer will decline. We see the risk of a downturn in craft beer consumption being a low risk based on the way more developed craft beer markets around the world have continued to grow.. We have the ability to cater to people's tastes when needed and lead people to try new things at the same time. LOSS OF SUPPLY - risk of not having beer to sell. We have contracts with our contract brewing facilities, covering our production well beyond the expected date of our brewing operations getting started. Our risk is very well managed in this area and opening our own production facility will further reduce this risk.