If you invest make an investment in Molson Coors or Anheuser-Busch InBev, will you make a difference?
If you buy a share of Molson Coors today at today’s price of $60.26/share, you will own one of 195,585,037 Class B shares (0.00000051%). If you buy a share of Anheuser-Busch InBev at $94.42/share, you will hold one of 1,693,242,156 ordinary shares (0.000000059%). Will your investment make a difference?
By contrast, if you choose to invest the same amount of money in a local craft brewer, the same dollar investment will get you a far greater percentage of ownership. $100 in a $1 million valued craft brewer will get you 0.01% and the same investment amount in a $10 million valued craft brewer will get you 0.001%.
More importantly, what can the craft brewer do with your money? A small startup brewery can be started for as little as $250,000 and a 30 barrel brewery may cost $1.2 million with lots of factors impacting cost of start within this range. Therefore, your $100 combined with 2,499 other people could start a small brewery. If you use an equity/debt ratio of 20/80, you would need only 500 investors at $100 each and borrow the rest of the money to establish a new brewery on your block.
Smaller amounts of money may enable an existing brewer to expand by adding another barrel system, bottling or canning equipment or open another location. The craft brewer may finance expansion by borrowing money from the bank, but getting the same money from you, a customer, may be lower priced. As a customer, you buy beer and contribute to sales. If the bank uses the craft brewer as a vendor for each of its events, you may not be the biggest customer, but, again, maybe you can influence that.
However, we are still very narrow in our thinking by just talking of money. As a fractional owner in a craft brewer, there are lots of things you can do to help the craft brewer succeed:
- Give customer feedback
- Advise on the operation of the business
- Share information from the community
- Promote the business to everyone in your networks
Whereas your money is important, your contribution of time, knowledge and reputation may make the difference between the success or failure of the craft brewer.
By becoming a fan of the craft brewer and sharing their story, you will engage in ‘word-of-mouth’ marketing – the highest form of advertising. The average person has somewhere between 150 and 300 people within their personal and business networks. If your endorsement would cause each of these people to buy one beer a week (the definition of a ‘craft beer consumer’) at a price of $6 per draft, you can drive between $48,000 and $96,000 per year in sales to the craft brewer.
That’s just a start. Let’s add to this illustration the possibility that within your circle are one or more restaurants that sell beer on tap from local craft brewers. If you arrange for the restaurant to buy kegs from the craft brewer, your ability to influence sales may be amplified by the thousands of people who are customers of that restaurant.
There are so many things you can do as a fractional owner that will be helpful to the business owner. You can make a difference!
Karl Dakin, Executive Director
Brewing Investors Guild