You may be a craft beer enthusiast who has acquired a wonderful connoisseurship, met people in the industry, developed an amazing palette and are ready to put some investment capital in your favourite pastime. Or you may be an everyday investor who is fully aware of the incredible growth craft beer has had in the last five years. Here’s your guide to investing in craft beer.
The first option is the most boring but also the safest: buy stock in companies that produce beer. Sam Adams is the usual favorite here. The company’s official name is Boston Beer but it goes by the ticker symbol SAM. It’s a great stock that posts consistent earnings, has positive growth catalysts and is in a good position to acquire other brands in the future. To hedge your bets and go for a more reliable but slower growing beer company you may have to leave craft beer altogether and focus on Anheuser-Busch InBev SA. The ticker symbol is easy enough to remember: BUD. It’s considered a blue chip stock, one that has been around for decades and des little exciting but continually pays its investors in wonderful quarterly cheques, known as dividends.
The second option is to get involved at the ground level and help fund a microbrewery option, whether local or through a seed company. The drawback for this is that you are going to need a lot more money. Most beginning brewery businesses are going to have a lot of expensive equipment, primetime real estate, marketing in an already crowded environment and the labour expenses. If a brewery is seeking funding through private investors expect to see minimum block investments of at least $10,000. The old saying, “the greater the risk, the greater the reward” is not necessarily true here. There are high risks here that can lead to failure or an abysmal static craft beer brand. Yours is an investment and there is often no insurance that you will get your money back.
Building from that you could seek an investment opportunity in a craft brewery through an angel investor group, which will pool the money together of many investors so that that $10,000 minimum is significantly lessened. If things go well and the brand takes off you will see only a fraction of the success a full share might have realized. Furthermore you are also going to be paying fee for management and paperwork from the angel investors. Angel investors are available in most major cities across North America but they set themselves up like clubs. You will often have to know someone – like a local professional – in order to get in.
The third option is to go all in and start your own microbrewery. Before you even get started on this and I remind you of the horrendous costs of starting one, ask yourself why? Are the awesome craft beers you’re drinking not enough? Is there something in the fine beer market that is missing? Before you act on the idea, sit down and really think about what you can bring to the table that isn’t already available. Starting a business, any business, does require discipline, some experience and definitely some capital. If you recognize a niche that is not being catered to or a market that is open for the taking explore it before jumping in head first. Perhaps you could start sharing your favourite homebrew amongst people besides your friends, attend trade shows, draw up a business plan and then see where that leads.
Alternatives do exist like Craftfund.com, which allows users who sign up to invest small amounts directly in local businesses, notably craft breweries. Unfortunately investing right now is limited to residents of Wisconsin. Check out Kickstarter.com too. Just know that it is very rare for someone who contributes to a campaign to get any equity (ownership in the company). Instead you are likely to see exclusive merchandise. Keep your eyes open as crowdfunding options for craft beer are growing.