Zeffer Cider’s crowdfunding campaign launched this morning, after a private launch yesterday.
It aims to raise $700,000 to $1.2M. This is equity crowdfunding – Zeffer values itself at $4.5M and the shareholding will make up 21.05% of equity at maximum subscription.
Zeffer is currently building its own facility in Hawke’s Bay, and will move out of its current North Auckland site in May. It says the move will save $200,000/yr in transport costs, as Hawke’s Bay is where its apples grow. It will also improve links with winemaking infrastructure and talent.
The rest of the crowdfunding will go to develop new markets in China and Thailand, increasing its local market share, and to buy new tanks and filtering equipment.
The campaign offers three levels of benefits, but warns that no dividend is anticipated. “At this stage, the company has no plans to pay a dividend, instead preferring to reinvest profits into ongoing growth of the business.”
Instead, the payoff to investors might come one day if Zeffer sells to Big Beer or Big Wine. It is explicitly grooming itself for a future takeover: “The most likely long-term exit opportunity for shareholders will be through a trade sale….All the major players have made investments in cider and beer and have benefitted from the higher gross margins and EBIT as a result. Now they are investing in craft beer to offset declining mainstream beer volumes and investments in craft cider is expected to follow.”
Zeffer’s crowdfunding campaign is being run through Snowball Effect here. It was launched yesterday to pre-registered investors, with $372,502 pledged at 9am today.
Zeffer by the numbers
- Current value $4.5M
- For 2016 financial year Zeffer made a net loss of $210,000 on a gross revenue of $1.48M.
- Net loss in 2015 FY was $95,000 on a gross revenue of $1.23M.
- Gross margin of 35% in 2016 – this is projected to stay consistent as the new site reduces operating costs.
- Campaign targets $700,000 (min) to $1.2M, equalling 13.46% to 21.05% of equity.
- Current annual production 300,000L/year
- Current New Zealand market share (off-premise cider sales) is 1-2%
- New Zealand’s “largest independent, dedicated cider producer”
- Established distribution partnership with Quench Collective