Well, where on earth has that year gone?
It was one year ago that we kicked off our crowdfunding drive, raising investment to keep Siren driving forward. Much has happened since our last written update, so I will attempt to fill you in while keeping this as succinct as possible. Here goes...
Investment
I am sure many of you have now had the chance to enjoy the fruits of the largest part of the investment - the canning line. We went live and released our first cans in early July, with an amazing range of newly designed flagship beers and a mouthwatering pair of Futurist and Santo alongside them.
Hot on the heels was an amazing collaboration, Oats on Oats, brewed in collaboration with our former Head Brewer, Kyle. Since then we have managed to commission our 440ml cans, and you were all correct to ask for them - the limited editions have been flying out. The new releases have just kept flowing - looking back through our output since switching to cans, I hope you agree with me that it’s been consistently up there with the best beer we’ve ever made as a brewery.
The new branding has been extremely well received and we have been exceptionally happy with the QC side of what we have been getting in to cans. In fact it’s exceeding our initial targets.
Other investments have unfortunately not tracked on time. As I think is fairly widely known at this point, ongoing issues with our landlords have prevented us from commissioning the outside tanks that were so important to our growth plans this year. Unfortunately this impacted production severely and also stalled other plans, which will have knock-on effects I will discuss shortly.
Business Update
As of the end of Q3 we have achieved a turnover of £3.5m which represents 22% year-on-year growth. This is ahead of our published forecasted targets which we’re pleased to have delivered on.
Our primary strategy this year has been to grow recurring income with permanent lines in the on-trade, and this has been incredibly successful with ‘Soundwave’ and the ‘Suspended in…’ series performing extremely well. To give some perspective, in the whole of 2018 we sold 3,750 kegs to the UK market, and so far year-to-date we have sold more than 7,500.
We continue to see some great results with key customers such as the Fuller’s pub estate. There are 14 new Fullers sites pouring Soundwave or Yu Lu across London for the next 12 months. We have also opened four new export markets and are particularly pleased that you can once again find Siren in Sweden.
The new canning line has made a good impact on our ratio of small pack to large pack (cans/bottles to kegs/casks). You may remember this was a key driver behind switching to cans, because at one point, bottles make up just 17% of our total volume and 20% of our overall revenue.
In the three months since we’ve had the line up and running, volume of small pack has crept up to 20% of total packaged product, while the revenue this generates has grown to 27%. As you can see, the impact this makes on revenue is significant, and although we have plenty of work to do, we can be encouraged by the start that has been made.
Although we’ve had many conversations over the past few years with major retailers, we’re staying resolute in making the right deals at the right times. One such opportunity recently arose with Morrisons - where we have listed Soundwave, Calypso and Pompelmocello in a three-week festival on a national level. Soundwave and Calypso will then be stocked in 200 of the best-performing stores following the festival. Sell-through rates have been strong so far and it’s been very rewarding to see our cans in the hands of so many new drinkers.
As you know, the independent off-trade is the area that we’re particularly keen to grow, support and champion. Consumers get a real value-added experience visiting these shops and I’m confident that there is demand there for both our one-off releases and flagship beers that may be more widely available. Some of our best and longest-standing customers are in this category and we’ll do everything we can to make sure they continue to thrive.
So while there are plenty of positives, we have also faced a number of challenges this year, first and foremost the issues surrounding our external tanks. The maxing out of capacity, combined with the success of core range growth, has limited the space we’ve had available for high-value batches that were important to the business plan. Margins have also come under pressure from higher beer duty than expected, higher laboratory and QC costs than planned due to more strenuous procedures being implemented, and ongoing increases in raw material costs due to, dare I say it, Brexit. The upshot is that our margin is below where it should be.
At this stage, I feel that whilst we will exceed our turnover targets for the year, we will not hit our profit targets, and am currently projecting an EBITDA of around £140,000.
We are working hard on all levels to turn this around, and a number of projects will help significantly, including the commissioning of the new tanks which can now go ahead. It is unlikely that we will reach the margin level we projected for 2020, however I am confident that we will make significant strides in the right direction. In fact, this is already underway.
Brewery Life
At the start of July, we were finally able to secure a new Head Brewer with outstanding pedigree in Sean Knight.
Sean comes with enviable experience and knowledge in beer, working previously for the likes of Sambrook’s and Fourpure in lead roles. He’ll oversee our growing team as we expand with tank space, improved lab facilities, and of course that small matter of maintaining our top-end canning line. He’s very highly regarded in the industry and an exceptional asset to Siren.
In case you missed it, you can read a Q&A with Sean here.
We've just come off the back of a very successful Festival Season, culminating in room sponsorship and one of our best ever years at Indy Man Beer Con. This festival never disappoints, with its truly unique surroundings providing an exceptional backdrop for world class beer. Closer to home, we've also been working hard to improve our Tap Yard experience here at the brewery. One notable addition is a new General Manager, Max, so if you're local then please do pop by and welcome him to the family.
To round out this update with an inside tip, I am really excited to announce that we are planning on unveiling a Caribbean Chocolate Cake bonanza on the 28th November, that will include 4 releases.
It will include the three classics - Original, Imperial and Barrel Aged, along with one new twist that will definitely turn some heads! We’ll be packaging them into 330ml cans to ensure a price point that isn’t prohibitive, especially when picking up a set of all four. It’s still one of the most expensive beers to make for us! Stay tuned for details of a national launch including some fun events. Of course, first dibs will be for investors on the online shop.
Investor Rewards
If you are missing anything at this point, please contact us on awaken@sirencraftbrew.com. We’re particularly keen to get the last few personalised growlers etched and glasses collected.
