Aucklander Daniel Phillips, co-founder of craft beer business Beer Hug, talks breweries, standing out in a crowded market, and running multiple organisations.
What does your business do?
Beerhug.co.nz is a craft beer subscription business. We've been operating since November last year and have over 5000 regular customers. What people are really getting behind is our service called the New Zealand Brewery Tour. People subscribe to Beer Hug and every month we send out a dozen or more craft beers from a single brewery, and we change the brewery every month. We get the brewers to showcase their beer and tell their story.
There are over 200 breweries in New Zealand and at the supermarkets or at your local liquor outlet you might see 20 or 25 if you're lucky, and then from those breweries you are only seeing two or three of the most common beers, so the brewer tour and subscription is about experiencing the best and most interesting beers one brewery at a time for $68 per month. We don't have a central warehouse; every month, product gets sent direct from the brewery to customers. We work with over 30 breweries and are growing 20 per cent month-on-month.
What was the motivation for starting it?
We started thinking about it a couple of years ago. Like all good businesses, it started as a couple of mates having a few beers. We knew that fresh beer was better beer, but it was super hard to get fresh beer because of the supply chain. The original idea was about making it faster to get fresh beer into people's hands so we originally created an idea where we'd talk to brewers around the country and figure out exactly what beer they had brewing and when it was available and were selling beer based on its freshness, but it got to a point where no one actually cared about that and no one wanted to buy beer based on its freshness.
When developing that side of the business we were doing brewery tours of our own when meeting a whole bunch of breweries and trying to understand their problems, and the big thing we realised was some of the best beers you just couldn't get at the supermarkets or the liquor outlets, and so our mission became to get better beers into craft lovers' hands and mouths.
How big is your team?
It's just Adam Prentice, the other co-founder, and I. We've both got backgrounds in marketing and we've been working on an interesting model: all the beer comes direct from the brewery and we let them choose what beers are part of the box and we focus on growing the database.
We're not yet working on the business fulltime. I have a digital marketing consultancy and Adam has a couple of other businesses. Our priorities are about operational efficiency and automation; we're not setting out to build a legion of staff.
How has Covid-19 affected your business?
We were really happy with how things are going; we're hitting all of our objectives and patting ourselves on the back a bit. The lockdown 1 hit and people were sitting at home on their computers buying stuff, and a lot of us experienced what I think was a desire to drink a bit more. With a number of liquor stores being closed, alcohol wasn't as accessible and they started buying online. Our business has really started to fly since then. We're 10 months into the journey and we have more than doubled what our year one expectations were. It was a bit of a perfect storm for us; people were buying more online and buying more alcohol.
Where do you see the business heading?
Our idea for New Zealand Brewery tours is really resonating. People are telling us that they really love the access to beers and to find out about breweries on their back step. We think there is a lot of room for continued growth in New Zealand. We will potentially look at taking the idea offshore and other craft industries as well.
Australia is interesting because it is close, but it is not necessarily the best for expansion. What we want to do is look for countries that have a bit of a distribution problem like New Zealand, markets where the craft beer industry is quite established and there are lots of people who are looking for discovery. Canada could be an option.
One of the problems we are fixing is a thing called "chiller confusion" - people who go to a chiller and don't know what to pick, and end up walking out with a box they buy every time.
How much have you spent to start up the business?
We've basically bootstrapped it - we've put in about $30,000. We haven't drawn any money from the business in the entire time and heavily invested in marketing. It's all self-funded and we've been fortunate enough to be able to reinvest everything in the business.
What advice do you give others who want to start their own business?
The amount of people I've spoken to about beer subscription who have had that idea and never done it is crazy. Don't sit on ideas and [wait until] the idea or concept is perfect. I'm a digital marketer so my philosophy has always been launch early and improve. When Beer Hug launched it certainly wasn't perfect, and it's a long way from being perfect now, but we get better every month.