HonestBrew launches craft beer investment fund

Online craft beer retailer HonestBrew has launched an investment fund that aims to raise £50,000 each year to help fund the growth of independent craft breweries.

The funds will be divided between selected breweries to help them expand and “provide the capital required to purchase brewing and packaging equipment”.

The breweries will in turn provide HonestBrew with stock for its online bottleshop and craft beer subscription service over a 12-month period.

Commenting on the launch, Andrew Reeve, CEO of HonestBrew, said: “We’ve been vocal about supporting independent breweries in the past; now it’s time for us to put our money where our mouth is. The HonestBrew Investment Fund will not only contribute to the growth of independent breweries, but it will also ensure our customers are getting more of the beers they love”.

The first brewery chosen for funding is Cornwall’s Verdant Brewing Company which will receive £20,000 to buy new fermentation tanks, helping it to increase its capacity.

Cornwall’s Verdant Brewing will be the first recipient of the funding.

Verdant, founded in 2014, has announced that the funds from HonestBrew will help it to increase production to 8,000 litres a week.

In a tongue-in-cheek statement on on its website, the brewery said: “We have no shame! That’s right we are a bunch of sell outs. The first opportunity of money and we bite their hands off without a second thought!”.

Continuing the website states that the brewery has coupled the investment with an EU grant, allowing it to buy two new “double size fermentors”.

Co-founder of Verdant Adam Robertson said: “The HonestBrew investment fund is quite simply a no-brainer. We get to increase our capacity and upscale our business, and they get to have the beer they want available to their customers. Plus without this fund we wouldn’t be looking to upscale at this current rate, we really can’t thank the HonestBrew team enough”.

Brewers that wish to be considered for funding must be existing HonestBrew suppliers, independently owned and plan to use the funds “to invest in new equipment and/or capital expenditure.”

Speaking to the drinks business, Reeve clarified the terms of the deal with respect to what beer HonestBrew will receive in return for the investment.

“We’re certainly not in the business of telling breweries what to brew. Diversity and uniqueness is one of the many aspects of independent beer that we love, we’re not about to do anything to undermine that. We’ll have the same say in what we receive as before, there’s no exclusivity involved within the agreement,” he said.

When asked how breweries were selected over others that have also submitted requests for funding, Reeve said that while “countless breweries can be considered,” “we also look at how much stock we’re likely to sell from that brewery over the next 12 months to make sure we get that balance right”.

HonestBrew has been working on “several projects” including the investment fund for several months with the ultimate goal “to help independent beer thrive” and to help breweries “meet the demand of beer lovers across the country”.

While funding will first be given to UK breweries – “as that’s where the majority of our customers are based,” Reeve told db – Honest Brew’s CEO is not ruling out opening up the investment fund to breweries further afield.

“We’re now importing more beer than ever directly from independent European breweries. The opportunity for European breweries to benefit from the investment fund is definitely there,” he added.

Speaking to the drinks business Steph Shuttleworth, freelance marketing consultant at MASH Marketers, a specialist in craft beer and small-scale producer marketing and events, said: “Breweries regularly apply for funding which stipulates how the money must be spent, so this is nothing new in terms of restriction of spend. However, it is unusual that they’re asking for payment in kind in the form of beer. If you take away the restrictions on how the funds are spent, this could be viewed as simply an extremely large pre-order by HonestBrew.”

“Using the example of the first recipient Verdant, a £20K pre-order is a very large one indeed and they will have to brew specifically for this order, but that isn’t all that different to brewing for anticipated orders from frequent wholesale customers. All in all, I think it’s a very sensible mutual agreement between business if HonestBrew has the money to help other businesses grow. Of course, as with any agreement that comes with stipulations, it is open to exploitation but HonestBrew are seemingly being really rather ‘honest’ about their plans, so I think this is a positive move for the industry.”

She added that: “Hopefully, brewers will consider the impact on their other trade customers and how this will affect how consumers are able to get hold of their beer. If not, then this could cause issues for the wider industry and the availability of beer to consumers”.

HonestBrew was founded in 2014 and stocks over 500 beers on its online bottleshop as well as providing a craft beer subscription service. It also supplies the on-trade with its craft beer range.

Earlier this year, it received a £1.5m investment from contributors led by capital venture firm Hargreave Hale VCTs. Prior to this, the company had raised £900,000 through several rounds of crowdfunding.