Yeastie Boys seeks $2.3 million to foot UK expansion, open taproom in London

Yeastie Boys co-founder and creative director Stu McKinlay. Photo / Mark Mitchell

Craft beer pioneer Yeastie Boys is seeking to raise $2.3 million from its existing shareholders to fuel its UK expansion, and open up a taproom in central London.

About 10 per cent of the Wellington-founded company is on offer, this follows a round of crowdfunding in 2015 which saw it raise $500,000 to relocate to Britain in just half an hour.

Stu McKinlay, Yeastie Boys co-founder and creative director, told the Herald the company was hoping to raise capital from existing shareholders and from people who were on its waiting list who had expressed interest during its first capital raise.

A large portion of any capital raised would fund the brewer's growth in Britain, where the company is headquartered, along with further international expansion, he said.

Yeastie Boys brews its beer under license in New Zealand, through Auckland brewer Urbanaut, Australia and the UK, and is looking to expand this to Germany, Beijing and potentially the United States. It is more interested in the research and development and experimental flavour side of craft as opposed to physically brewing its own product.

"It's worldwide expansion in the main, but with a headquarters London-based," McKinlay told the Herald.

The brewer plans to open its own taproom in the London Bridge-South Bank area in the new year, and employ five local sales reps.

Britain's craft beer market was not as mature as New Zealand's, about two to three years behind, which meant opportunity in that market was great, he said.

"We've grown quite a bit over the last couple of years with a very small staff base. The market has become a lot more like New Zealand now where it is very competitive.

"We're looking to get two more people on the ground for sales, we haven't had a sales person at all in the last four years. There are a lot of opportunities in Europe so we want to get a European sales person as well who can spend a lot more time on the road than we can as a business," McKinlay said.

"We've been here for a while and there's been much more of a move towards local ... although we are brewed locally, to have an actual flag in the ground in London and a venue where people can see we're a UK business who has invested [there], is really important."

Britain is Yeastie Boys' primary focus for the next few years - and it's biggest market.

Yeastie Boys was considered the market darling following the craft brewing surge in New Zealand, though the brand is positioned as more mainstream in Britain, with product sold in major supermarket Tesco, Waitrose and specialist wine retailer Majestic Wine.

"We sell a lot more beer here in the UK but per capita we still sell a little bit more beer in New Zealand. It is a sign of the growth in the wider industry; people have become much more interested in flavour and where their beer comes from in the same way they have about coffee and food over the last decade."

Yeastie Boys sold 1.65 million cans of beer in the UK last year. Photo / File

Yeastie Boys sold 1.65 million cans of beer in the UK compared to 220,000 cans in New Zealand last year. It hopes to grow its UK sales volumes by about four times over the next three years.

"Part of our focus in the sales investment in the UK is to head much towards the pub trade," he said. It plans to grow sales in kegs to about 60-70 per cent of total revenue from about 15 per cent today.

Where the beer brand expands to next is dependent on the pending decision over Brexit.

If there is an exit from the European Union, Yeastie will likely expand into Germany before China and the US, McKinlay said. "With Brexit looming and there is the potential of it being a little bit more difficult to get beer in, whether to compliance issues or just the fact that European are less likely to want to buy British-brewed products based on the fallout after Brexit.

"The idea of brewing in Germany is potentially a good one in that if we have the right partner we can be seen as local and exotic at the same time."

McKinlay said opportunity in the US, however, was the greatest. It would like to be brewing under licence there by the end of next year.

Up until mid-2014, Yeastie Boys was a part-time business, founded by beer enthusiasts McKinlay and Sam Possenniskie in 2008. In 2015 their crowdfunding campaign raised $500,000 its target in just half an hour, with 212 shareholders taking a total of 12.5 per cent stake.

Yeastie Boys had a turnover of $3.1m last year, and brews approximately 520,000 litres of beer each year.

McKinlay's vision for the company is to have up to four taprooms established in Britain in the next four years, followed by locations in New Zealand and Australia. It is also looking for partners to set up Yeastie Boy bars in China's capital of Beijing.