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Fri 24th May 2019 - Friday Opinion
Subjects: Shattered dreams, keeping fans onside, advantage independents, and Plan B
Authors: Glynn Davis, Richard Samarasinghe, Neil Walker and Ann Elliott

Shattered dreams by Glynn Davis

Crowdfunding has dined out for far too long on the story of Camden Town Brewery delivering a highly profitable exit for its investors on Crowdcube in 2015.

Since then, the reality is there has been little positive news accompanied by the occasional blow-up to upset the party. Until recently, that is, as we’ve seen a growing number of failures in recent weeks, with the craft brewing industry in the eye of the growing crowdfunding storm. The credibility and validity of this route to raise money is now firmly under the spotlight.

There’s no doubt crowdfunding has been a terrific boon for the craft beer industry and has been the first, middle and last port of call for many businesses looking to raise money. However, the ease with which they have been able to do this has sadly come at a high price. The lack of due diligence undertaken at the time of many fund-raises is coming home to roost.

Very little of what’s been contained in the crowdfunding documentation – I hate to call them prospectuses because that gives them more credibility than they deserve – has ultimately been delivered. Much has been promised to investors but, sadly, they’ve been badly let down on too many occasions.

One of the disappointments has been Two Heads Beer Co, which recently closed the three Beer Boutiques it acquired following a £375,000 crowdfund last summer. The objective of raising the money was to open more stores but the company seems to have adopted a reverse store-opening programme.

Then there’s been The Bottle Shop, which raised £400,000 to build a cold chain platform and open more units. While the former was delivered as promised, no headway was made on adding bars or shops to the business. The company called in the administrators earlier this year, wiping out all the crowdfunding investors.

Most interesting of the bunch has been Hop Stuff, which recently had its brewery seized by the landlord after failing to pay its rent – and taxes. It’s unclear exactly what Hop Stuff Brewery’s future holds but perhaps its parlous state shouldn’t have come as that much of a surprise because it had the most doubtful business model I’d heard in a long time.

The plan was to open a number of bars under its Taprooms concept supplied by Hop Stuff but with the “unique” aspect of selling beer from other breweries too. That sounds like a bog-standard pub to me – or am I missing something? I think I must be because the valuation placed on the business at the time of its latter fund-raise was a staggering £25m. I say latter as the company went to the crowdfunding well on three occasions and brought in a total of £1.5m from investors. I’m not sure exactly what the company is worth right now.

For anybody wondering where a figure as high as £25m comes from, I can tell you – it’s pretty much plucked out of the air. There’s nothing scientific about it – it’s all art. When businesses use crowdfunding platforms they are encouraged to use large numbers in their pitch because this shows they have big growth plans and it helps draw more investors into offering their money.

The most recent craft beer company to hit the buffers was Redchurch Brewery, which called in administrators last month. The company was immediately bought, with the new owners hailing the “great news”. Yes it is good news the employees can remain on board but Redchurch had raised almost £900,000 in two crowdfunding rounds in 2016 and 2017 and in the company’s statement there was no mention whatsoever of those investors, who were wiped out once more.

Most startups fail but it seems to me many crowdfunded businesses adopt an attitude of easy come, easy go. The lack of reference to their investor community when these companies hit the rocks suggests they cared little for the enthusiastic investors who made it possible for them to reach for their dreams. I predict many more nightmares to come.
Glynn Davis is a leading commentator on retail trends

Keeping fans onside by Richard Samarasinghe

One question that keeps owners and operators awake at night is “how can I drive additional revenue streams”? Visiting Tottenham Hotspur’s new stadium it’s clear the north London club has found some of the answers while raising the bar for stadia hospitality in the UK. Spurs’ stadium includes an in-house bakery, micro-brewery and 65 food and drink outlets. Figures presented at an industry event recently revealed the Beavertown Tottenham micro-brewery and taproom, which was expected to account for 10% to 15% of beer sales at the ground, actually accounts for 38%. Overall, on a match day, the stadium serves an average of two pints per spectator, which is circa £1m in beer sales alone. 

The US is still arguably ahead of the curve when it comes to stadia but the dynamic is different as an American football match is an all-day affair that often involves the whole family. However, lessons can clearly be learned from the US. Food and drink will remain key but, overall, shouldn’t stadium operators be working out how to increase guest dwell time by offering other activities, not just getting people in and out as quickly as possible? 

While stadiums in the UK are evolving to meet consumer expectations, many continue to disappoint visitors. Long queues, basic catering, warm beer and poor Wi-Fi are among the top grievances of UK consumers. Similar to the casual dining market, consumer expectation has become much higher. We have experienced a general shift to a more relaxed approach to social eating across the hospitality sector, which plays well to the needs and expectations of guests at all levels in a stadium. The demographic of consumers who visit stadia has evolved – almost three-fifths (58%) are now white collar workers – and the offering at stadia needs to evolve too.

When it comes to food and drink, more than half (52%) of 12.1 million British adults surveyed recently rated the food and drink on offer as “Ok”, “poor” or “awful”. Clearly stadiums across the UK are falling short when it comes to the food and drink on offer and, with a captive audience to sell to, an obvious opportunity is being missed. Our recent survey, in partnership with CGA, into the UK food and beverage stadia market found those attending live sport events spend 27% more on food and drink out-of-home per month than the national average, while more than two-thirds (71%) consider themselves knowledgeable about food and drink – with 54% describing themselves as “foodies”.

Despite turbulent times, the UK has almost 2,000 more restaurants than it did five years ago. Casual dining has continued to rise in popularity – and this should be the inspiration for stadium operators. Casual, fast dining and street food are trends that could be transferred into stadia. Even recent developments such as Boxpark Wembley highlight the opportunity around pre and post-stadia event food and drink sales, which sees operators start to capture some of that dwell time we see in the US.

Sport and music are tribal affairs and many sporting grounds in the UK are sleeping on a loyal customer base, one with a genuine desire to consume good-quality food and drink and, most importantly, the willingness and ability to pay for it. The opportunity for stadium operators to upgrade their food and drink offer and therefore their revenue is tremendous. There is also potential for a casual dining brand to align itself with experiences some fans will savour for the rest of their lives while gaining a loyal new following.

While improvements are required at many stadia, it’s not all doom and gloom. Wembley, Twickenham and Norwich City’s Carrow Road are other good examples of UK stadia evolving their offer. Wembley has eight restaurants, 34 bars and 688 food and drink kiosks.

Twickenham and Carrow Road both leverage their association with well-known chefs – Carrow Road has joint-owner Delia Smith with her restaurant and bar opening on Friday and Saturday nights, while Tom Kerridge is at Twickenham with restaurant The Lock.

Carrow Road and Derby County’s Pride Park are examples of stadia that may not have the huge budgets of Tottenham Hotspur or Wembley but are representations of how to effectively improve a food and drink offer. They have also explored a range of non-match day-related activities such as conferences, weddings, birthday parties, concerts and other sporting events.

Two-fifths (40%) of stadia-goers cite long wait times for food and drink as a major frustration so clubs can significantly increase revenue by improving efficiency and cutting queues.

In an ever-demanding, experience-led society where every element is scrutinised, there’s tremendous potential for UK stadia – and casual dining has blazed the path to follow. 
Richard Samarasinghe is head of brand and business development at Harrison

Advantage independents by Neil Walker

Independent craft brewers have got an advantage over global companies when it comes to low ABV beer – flavour. British beer has always had a broad range of ABVs, from low-strength mild and bitter to punchy, mid-strength IPA and stronger barley wine or imperial stout. 

Beer comes in a variety of colours, flavours, strengths and sizes, from session beer drunk by the pint to more intense, full-strength beer drinkers can take their time over and enjoy in much smaller measures. But something strange happened when the popularity of mass-produced golden lager grew in the 1970s and 1980s – beer became homogenised and standardised. Lager, and by extension all beer, became seen by many as being around the 4% mark and was always sold by the pint.

Therefore it’s no surprise that when the first wave of craft beer burst on to the UK beer scene – full of hops, flavour and added alcohol oomph – it was a shock to the system, literally. However, the beer industry has matured since those early days and the focus isn’t limited to high-strength, hoppy IPA. In fact, some of the most interesting beers being brewed in the UK at the moment have fairly modest ABVs.

London brewer Five Points’ XPA is a perfect example of getting a lot of bang for your buck. It currently sits alongside global lagers on Nando’s new (and much improved) beer menu and, at 4% ABV, presents itself as the sensible choice for those seeking a lower-strength option. Of course in flavour terms the tropical fruit notes and light body make it moreish, refreshing and altogether more interesting than mass-produced lager.

Elsewhere in the country, Northern Monk’s Striding Edge is one of the best beers I’ve tried in some time. Full of soft tropical fruit flavours, it has a long-lasting finish with just the right amount of bitterness and refreshment to push you back in for another sip – yet at 2.8% ABV this “light IPA” is something you could glug happily without wobbling home. It’s a beer that works brilliantly across cask, keg and can too – something tricky to pull off at that ABV.

The key here is independent craft brewers are able to pack in bags of flavour across a variety of ABVs. The recent British Craft Beer Report by the Society of Independent Brewers (SIBA) showed people have become increasingly conscious of the strength of drinks they enjoy. Editor Caroline Nodder said: “A good spread of ABVs is now a must, with consumers increasingly choosing lower-ABV beers for weekday and eating occasions but sampling stronger ales as a weekend treat.”

The percentage of low alcohol beer brewed by SIBA members increased to 5.3% last year from 3.4% in 2017, with this number likely to rise further in 2019. Ethan Kannor, head brewer at Brentwood Brewing Company, said: “It is the industry’s responsibility to promote sensible drinking. We’re witnessing an increasing demand for lower-ABV beer. Yes, there are alcohol-free beers on the market but are they the best they could be? We think beers mass-produced by big companies in huge factories have little going for them in the flavour department. We don’t believe we’re alone in that view.”

Beer writer Will Hawkes highlighted the trend for lower-strength beer as a key part of the industry landscape in 2019, but under the guise of “table beer”. He said: “The desire for healthier options will drive the rise of table beer over the next 18 months or so.” The term table beer has all sorts of historic connotations but for modern purposes it’s a circa 3% ABV hoppy pale ale. 

With another hot summer potentially ahead of us, now is the time to start thinking about stocking lower-strength options – and the evidence points towards the best being brewed by genuine independent craft brewers.
Neil Walker is head of PR and marketing at the Society of Independent Brewers

Plan B by Ann Elliott

On Tuesday, Holly Addison, Emma Causer, Kate Nicholls and I ran the fifth Plan B speed-mentoring session with another group of fantastic mentors and mentees. 

Plan B mentoring, put simply, helps women who are one to two steps away from board level to get there with the help of a senior mentor (male or female) in the sector. The first stage is a speed-mentoring session, where mentees typically see four to six randomly selected mentees for 15 minutes each. Mentors then decide who they would like to work with and together with the mentee decide how the process will look. It could be a monthly face-to-face session, a Skype meeting every fortnight or a phone call every week – it’s up to the two of them to determine. The only commitment we ask from a mentor is to attend one three-hour session in the year then, if they want to mentor someone, the time commitment is up to them. 

Following five speed-mentoring sessions, it’s a good time to step back and look at what has been achieved in the sessions to date and apply the lessons to the next sessions, which are booked for October. 

Mentors
Our mentors have been board-level men and women from this sector and we’ve been blown away by their generosity in terms of time and advice. Many offered their services without being asked and not knowing what speed-mentoring was all about – they just went with the flow. 

They listened intently to the career aspirations of the women they met and offered clear advice and strategies. In one hectic evening some mentors saw up to eight mentees, which was a real challenge mentally and physically.

Some mentors attended both the January and May sessions, which was unbelievable, and some have already signed up to take part in October. One company provided five mentors for the three sessions in May. The commitment from some companies in terms of mentoring and offering team members the opportunity to be mentored has been awe-inspiring. We can’t thank our mentors enough. Without them, we wouldn’t have a programme.

Mentees
Our mentees have been ambitious women wanting a bit of additional support, advice or help to move up one or two levels in their own business (usually), although some have been interested in becoming entrepreneurs.

Again, none of the mentees had experienced speed mentoring before but everyone came with an open mind. Of course, the advice they received wasn’t the same from everyone but that’s real life. Some clicked with certain mentors more than others, but ditto. They felt they gained something from every encounter.

It’s early days to gain feedback from recent sessions but here are some emails from our mentees.

“I just wanted to drop you a note to thank you for last night. I’ve never been to an event like that before and found it so personally useful and took away some incredibly sage advice.”

“Massive thank you to the team again for a wonderful event last night. I have certainly taken a lot away from it so thank you for including me on the invite!”

“By speaking to different mentors, I have gained confidence and clarity for the near future.”

Without exception, the comments have been positive and supportive and make us think we are doing the right thing.

Hosts 
Revolution has been our host for all five sessions to date and those planned in October. The company has provided all the facilities (including food and drink) free, which has been gratefully received. Rob and Kate have been incredibly positive and helpful and without their help we would be working much harder to find somewhere for up to 15 couples to talk in confidence. Thank you.

Overall
We have been genuinely thrilled at how well the speed mentoring and follow-up sessions have worked – the whole programme to date has exceeded our expectations.

If you would like to be a mentor or to be mentored, email ann@elliottsagency.com or PlanB@odgersberndtson.com. It’s all free (thanks again to Revolution).
Ann Elliott is chief executive of Elliotts, the leading integrated marketing agency in the hospitality and leisure sector – www.elliottsagency.com

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