| Many thanks to those of you who joined us for our Live Webinar Q&A last week. It was a really good session that we thought was very rewarding and covered a lot of ground. A number of you have asked for an update, so please see below for some of the highlights that we covered: Q- What can investors look forward to in the future with Asterley Bros?
In the short term, we have a number of rewards for investors, both discounts on products and early access to some of our new releases, and these include our next edition of Xmas cocktails and our fourth product, our English Dry Vermouth. We’ll be hosting an ‘Investor’s Party’ at the end of this campaign, and also holding annual shindigs to say thank you to all those who have been a part of the journey so far. In the mid-term, we will be focused on developing our customer base and expanding sales over the next 12 months, but will also be developing a range of new ‘house vermouths’ which our investors will help us develop as part of our Beta Testing process, as well making some Ready To Drink Vermouth cocktails in cans, so there should be lots of opportunities to have access to products way before they are released to the market. In the longer term, by the end of year 1 we will have 4 FT employees, including a Sales Manager, and will also be working with a national sales and distribution agency. We will be tapping into their support structures including PR, marketing and sales teams, to drive sales across the UK through a number of promotional channels including trade shows, PR campaigns, and consumer shows as well as in store activations and bar takeovers. From that point onwards we will be looking to grow our export opportunities to drive sales over the coming years. Commercially we are looking to give an 8 - 10x return on investment over a targeted 5 years, with an estimated 50-60% annual leverage over that period. Obviously we can't guarantee it, but that is our target. Q - If there was one market that you were really going to focus on gaining scale and presence, where/what would that be?
The initial answer to that is London. There are more than 30,000 licensed premises in the capital, approximately 23,000 on-trade and 7,000 off trade. We believe that up to 15% of the London on trade market is a potential target for Asterley Bros (3,450 sites) and 5% of the on trade market (350 sites). That gives us an addressable market in London alone of 3,800 target sites. Because of its size and proximity, it is the most efficient way for us to grow sales, particularly in Year 1, and will allow us to maximise the efficiency of staffing / logistics / resource allocation. There are a number of other British cities with strong bar scenes, including Manchester, Leeds, Liverpool, Edinburgh & Brighton. The vermouth and bitters trends are moving quickly to these key locations in the UK, bringing further opportunities outside of London. From Years 2 onwards we will target better penetration of Asia, including building on our presence in Singapore and Hong Kong, before looking at further export opportunities in Europe, USA and India. Q - Can you describe the competitive landscape?
The big players in the marketplace (Campari / Branca / Cocchi) are leading the charge in terms of marketing and education. They are converting consumers globally to enjoy aperitif liqueurs and vermouth. We are hoping to ride the crest of the wave, slightly behind them, and benefit from the changing consumer desires and market growth. There are also now a number English winemakers who are adding English vermouth to their product range (Albury and Bolney are two examples) so the English Vermouth scene is starting to take an early shape. Gin has been a huge success story over the last 5-10 years, but is now starting to see a slowdown in its growth. We believe that vermouth and aperitifs are primed to be the next big growth category. This is due to a resurging interest in botanicals, the consumer’s growing appetite for bitter aperitif drinks and the desire for low and no alcohol serves. These three things put vermouth and amaro in a really exciting position for growth and we feel that vermouth in particular is starting to move into the spotlight now. US imports of Italian vermouth are up more than 30% YoY 2019 vs 2018, and in the aperitif sector the UK is seeing sharp increases in YoY Campari and Aperol consumption of 39% and 56% (2018 vs 2017) so there are some pockets internationally that are seeing phenomenal growth rates. The key is to identify them and be part of that stratospheric growth. Q - Can you tell us a little more about your manufacturing process?
We don’t distill at all, unlike gin, so don’t need large amounts of Capex to set up or further expand our operation. Instead we use large tanks, and macerate raw materials (citrus, herbs, spices, bittering agents and other botanicals) in either English wine, or English grain spirit. These botanicals are submerged in liquid for between 2 weeks and 8 weeks, depending on the product and are then strained and filtered. We will then sweeten with organic cane sugar and filter again before bottling. A full list of processes, botanicals and details can be found on the side of each of our bottles by scanning the QR code. This transparency of process and ingredients sets us apart from the big players in the marketplace, who prefer not to share any details generally. We think that consumers are looking for more authenticity from the products they buy and we want to lift the lid on vermouth production, to get consumers to understand it better, and therefore engage. Let us know if you have any other questions we can answer, and a reminder that we will also be at the Crowdcube Investor Networking Event this evening if you would like to say hello and try the range. The link for registration is here:
https://www.eventbrite.co.uk/e/crowdcube-investor-networking-event-tickets-73950037553 Thanks, Rob, Jim & Joe | 