Three Sisters Brewery

Letter from the Founders

Hi. Joe here - my wife Sarah is busy crunching numbers. Officially, I have to say a few words so you know we’re good people to have a pint with.

Where to “begin” this? I grew up next door to my Grandad Ernie’s pub, The Hand & Flowers, in a brewery town in the UK. Well, except for when my folks ran the Ferryboat Inn further up the Thames, and I lived upstairs.

Sarah comes from Koblenz, Germany, where beer is part of the furniture… Oktoberfest or not! Beer is in our DNA.

We came to NZ because I landed an engineering job. But after a whiff of the homebrew culture here, I got a starter kit with my mates Ben and Charlie. Maybe it was a dare, but the first original recipe we crafted was entered into the Taranaki Society of Beer Advocates Home Brew competition. Cheers, we won!

I decided to go all in on this “hobby”, so in 2017 Sarah and I started Three Sisters, a toast to our three daughters and our love of the Tongapōrutu region of Taranaki. A 50L pot in our basement quickly became a squeeze, and as the first awards started rolling in, we bumped capacity up to 300L.

In December 2020 we officially embraced the family tradition, turning the historic TSB bank in New Plymouth into a bar and brewery. Capacity tripled, thanks to the PledgeMe crowd whose polaroids now adorn our walls.

We won the Brewers Guild of New Zealand Champion Micro Brewery award in October, but even without it, we’d already exceeded our new brewing capacity! With so much unfulfilled demand, the time has come to raise the bar again and max out our new home.

So why you? Our brewing philosophy is all about real people and stories… those happenstance connections during a round of beer are mirrored in the way we formulate. We love the serendipity of strangers becoming friends, and I reckon a great craft beer is equal parts engineering and art. We start with an interesting story, and pair ingredients and artwork to it.

We invite you to be part of the next story, and to make us part of yours.

Joe and Sarah

Drinking Buddies

	Joe Emans Joe has been running Three Sisters since it started up in 2017 and has grown the business to where it is today. He is a self-taught brewer, part-time artist, and glass half full kinda guy. While he’s slightly mad about craft beer now, his background isn’t so grassroots. He has a first-class Master of Mechanical Engineering degree from the University of Aberdeen and spent over 20 years in the energy industries before packing it up for the world of entrebrewneurship. The last 14 years of his engineering career included management of projects and engineering departments in the UK, the Middle East and New Zealand, managing teams up to 100 people. Joe project managed the brewery expansions and performed part of the installation.
	Sarah Markert-Emans Sarah supports the business by keeping the numbers tight and the books juggled (audited by Tandem Group in New Zealand), but is learning to analyse people, too… studying for a Master’s Degree in Psychology at Massey University. She also helps with some of the brewing recipes.
	Ameya Vajpai Ameya is our Sales and Marketing Manager, and possibly about to become a good mate of yours if you don’t already know him. People like him, and so do we. Ameya joined us from Woodstock Brewing in Hokitika. He has several qualifications in the hospitality industry and is a former ‘Employee of the Year’ at the Copthorne Hotel in Queenstown.
	Marian Angeles Marian is the Marie Kondo of our venue and runs our bar. She sparks joy everywhere, keeps things shipshape and timely, in fact, we’re not sure if there is anything she can’t do? She has extensive hospitality experience and has managed venues in Auckland and Wellington, and also coaches hospitality in our local area.

Market Opportunity

The craft beer industry in New Zealand has grown rapidly over the last ten years and shows no signs of slowing down. This has been driven be a general trend towards crafted batch-produced beverages and away from mass production of limited beverage styles. Comparing data from the New Zealand Institute of Economic Research’s publications for the New Zealand Brewers Association over the last three years indicates an acceleration of craft beer consumption as it moves from a niche product into the mainstream.

Three Sisters believes that consumers are increasingly seeking the variety that craft beer provides. Three Sisters has so far produced over 60 different beers and continues to produce new beers at a rate of 2-3 per month. In fact, Three Sisters thrives on crafting new and exciting beer for our followers.

Growth Plan

Three Sisters has a long-term growth plan, with a phased approach.

We currently have significant unfulfilled demand, which we intend to meet through maximising our current iconic location in New Plymouth. We have room in our current venue, as well as sufficient staff and most of the infrastructure to increase production capacity by 3.5 times. Our minimum share offer will allow us to replace our 600L brewhouse with a 1200L one, and grow our total fermentation capacity from 1800L to over 6000L. It will also allow us to supplement our bottling system (which we’ll retain for specialty beers) with a state of the art canning line, which will satisfy a latent demand we have for this packaging format.

Beyond the minimum share offer, additional improvements to our current venue will also include converting the old bank vault into a beer chiller, which will increase our chilled storage capacity, adding an additional ten taps to the bar and booth seating for improved customer experience. We also have planned an array of brewing gadgets to help maintain our great beer quality. There is also the current option to expand to and fully fit out the neighbouring building to establish Three Sisters Brewery’s flagship location as a truly destination experience.

We do not intend to stop there of course, the second phase of our plan which is being actively developed, is to add an additional brewing location in Taranaki, currently planned for the financial year 2024. This location will provide the ability to seamlessly continue our expansion should we hit capacity again at the old bank location, and provide room to expand well into the future and to allow us to exploit export markets.

Financials

Revenue growth has been organic since we started up in 2017.

The quality of our beer, and consistent awards we have won, have led to significant consumer pull through. We have brewed flat out at full capacity since startup, and each expansion has led to a short-term stock build before we’ve hit supply constraints again. We strongly expect this to continue with the next expansion as we have a lot of unfulfilled and latent demand for our beer.

Our gross profit margin has been strong, since we have brewed every single beer in-house, and will continue to do so for the foreseeable future. Gross margin has increased recently as we commenced our hospitality operations.

Going forward, we expect gross margin to reduce slightly, as we focus more on wholesale markets. We see considerable economies of scale going forward as we do initially intend to maximise our current lease, and utilise our existing staff. Our philosophy to date has been to employ versatile staff and train them in multiple roles; this has given us the ability to scale operations without any additional staff appointments.

The additional gross margin we aim to make from increased wholesale revenue should add to the bottom line. We are anticipating that the increased production from this investment comes online in August 2022. In order to maintain growth we have included a further investment and expansion during FYE2024, with commissioning of an additional brewing location in Oct 2023. This is reflected in the increased assets in that year and growth thereafter.

Cash will be available for reinvestment in the business from FYE2023 onwards. It is anticipated that as of FYE2022 there will be related party loans to the shareholders of approximately $362k. The board reserves the right to refinance this debt into bank term debt at a future date.

Share Offer

Offer price per share - $500

Shares on offer - 2,400 shares which constitute 20% of the company in a mixture of Class A and Class B shares.

Class A – Can vote on special authorisations as defined in the shareholder’s agreement

Class B – No voting rights

Each share has the same rights to share in the dividends of the company, but there are different voting rights, conditions, and limitations between the classes and shareholder rewards levels (all of which are at the discretion of the Three Sisters board of directors).

Capitalisation Table

* Assumes offer is fully subscribed

Please note that the capital raised in this investment round will not go toward repayment of directors' loans.

Valuation

Prefunding valuation of $4.8m;  Post funding valuation of $6m (fully subscribed)

The valuation of Three Sisters Brewery was undertaken by the current shareholders. The valuation has been calculated using the ‘multiple of revenue’ method. This method has been a common valuation ratio used previously by growing craft breweries when raising capital from the market.

The current shareholders are comfortable that a multiple of 7.7 times the 2022 financial year estimated revenue is a fair market value, based on the growth potential of the business in today’s market. The shareholders feel that there is added justification for this valuation based on its diversification into the hospitality industry and Champion Micro Brewery status. This is further justified by the below Comparative Analysis of recent market transactions in the same industry.

Risks and Mitigations

Warning Statement about Crowdfunding

PledgeMe is licensed and regulated by the Financial Markets Authority, and the share offer made by Three Sisters Brewery Ltd. will only be made available for acceptance through the PledgeMe website. Equity crowdfunding is risky. Issuers using this facility include new or rapidly growing ventures. Investment in these types of business is very speculative and carries high risks. You may lose your entire investment, and must be in a position to bear this risk without undue hardship. New Zealand law normally requires people who offer financial products to give information to investors before they invest. This requires those offering financial products to have disclosed information that is important for investors to make an informed decision. The usual rules do not apply to offers by issuers using this facility. As a result, you may not be given all the information usually required. You will also have fewer other legal protections for this investment. Please ask questions, read all information given carefully, and seek independent financial advice before committing yourself.

A Note from PledgeMe

We have completed Equifax checks on Three Sisters Brewery and their Directors, as well as Google and Insolvency checks. There were no adverse findings.

Offer Details

Explanation of valuation:

The valuation has been calculated using the ‘multiple of revenue’ method. This method has been a common valuation ratio used previously by growing craft breweries when raising capital from the market.

Financial Summary

Company Details

Company Name: Three Sisters Brewery Ltd

Company Number: 6267851

Company Documents

Director Details