Urban Growler Kickstarter

So you don't find it at all greedy and a poor business model when a for profit company reaches out to the public for a cash handout? -Hey, give me your money to help grow my business, so I can make more money. I checked with the bank first and they said no.

It would be completely different if you were looking for a loan from the public, and offered something that pays your supporters back and then some over time, similarly to a bank charging the principle plus interest. Plenty of people use crowd funding/kickstarters this way and are well received (Modist Brewing). People have an issue with Urban Growler (and plenty of others like Four Firkins) because they don't want a loan, they want a free handout.

Furthermore, there's normally always a valid reason why a bank won't contribute to a companies expansion. It's not like they don't want to issue loans.

 

I think another point worth raising in this instance is the value of a canning line. Perhaps $60k will buy them something that will suit their needs but that's an awfully small amount of money for this type of equipment. Perhaps that is just enough to put them over the top for the $200k+ investment this type of project is, but in that case I question why this is the logical next step in their business growth. Of the many other local breweries I've gained a pretty decent relationship with my understanding is that most of them prefer to use the local mobile canning line resource in the mean time as a very cost effective approach to packaging while putting off their own packaging line for a time in their growth when it's absolutely necesarry. Just this week I spoke with the owner of a brewery much bigger than UG who described this very situation and said that at this point it just doesn't make financial sense to invest in their own line.

 

I think local food/drink businesses asking for funds for a capital-heavy investment is not as uncommon as people think. Case in point: in 2014 Birchwood Cafe in Minneapolis raised over $112k on Kickstarter for an expansion and remodeling of their dining space. I think the thought process behind these community-funded enterprises is, "I will donate to this fund since they are a vital part of my community and I want to see them grow and prosper." I don't see anything wrong with that philosophically, even if the idea of donating money to a business is somewhat paradoxical. However, my two critiques of what Urban Growler is doing are: a) their compensations for donating are pretty paltry, and b) I don't see really how canning benefits many of their loyal community of customers since if you really want their beer, you'll probably just go to their taproom for a pint or growler. The only people I could see benefiting from this Kickstarter are people who live a ways out of the City, really enjoy Urban Growler's beer, and would like it on their local store shelf.

Also, perhaps they should just threaten to move their future canning operation to Mexico and the president elect would make them a deal to stay? Imjussayin'...

 

IMHO I'm not interested in seeing another mediocre brewery cramming their mediocre beer onto store shelves, regardless of how they get their canning line.

 

It just doesn't make sense for an existing business to do crowdfunding. Consumers support you buy buying your product; if there isn't enough support/profit to expand, then you don't have enough support. Either make a better product (not saying UG is bad), find ways to increase your consumer base, or be patient and see what happens in the next few years.

Diversifying revenue streams is good, but if you can't pay for it or secure funding for it, then it's probably a bad practice. I wish them well, though. If I'm in the area, I'll maybe stop by and show support by giving them money for a relatively fair exchange of goods (you know, $5 for a pint or whatever), but I would never donate to such a "cause."

 

There may be instances in which seeking such an investment helps a business to make a better product or expand business beyond which is unattainable given current circumstances, which kind of sounds like what UG is claiming in this case. Not to say I agree with the approach but I can understand the principle behind the move. If I was them I would have contracted with the local mobile canning line as a way to expand business and generate growth to subsidize expansion and future dedicated packaging.

 

I'm perfectly fine with a brewery crowdfunding whatever they want. If the rewards aren't worth it to you, don't contribute. Whether it is kickstarter or a society or a barrel program, you are providing added funds to help a brewer expand the services offered or delivered in some capacity. I would gladly hand over some cash to a billion dollar corporation such as InBev if they could guarantee me bottles of BCBS and variants under the guise of "expanding their barrel program."

Anyone who has an issue with brewery crowdfunding should probably channel it at Brewdogs first- how many millions of pounds have they raised with their crowdfunding "investment plan" .

Also, does anyone know how the money a brewery receives from Kickstarter gets taxed? Is this considered a gift, investment, or sale proceeds?

 

So a couple random things on this. First, their press release is headlined with the fact they are a women owned brewery. I just don't care about that. Sure, it'll matter to some, but the fact they are women owned means absolutely zero to me. I dislike this sort of categorization of who they are. First women's brewery. First gluten free brewery. First bird friendly all organic local brewery. Rather you be the 20th brewery to make really good beer. They also try to use that fact as part of the reason they have had such a hard time getting funding. I'm calling bullshit on that. Banks don't give a crap if you are women or men. Give them a good plan that'll secure their loan and they'll give you money.
Also, this canning line is all to get 1 beer in cans in the market. I'm not a businessman and do not own some fancy degree, but that seems like a bad idea as well. At least do two. Give customers and option. You better really hope that one beer is going to be a hit in stores.

 

New Glarus built an empire with a cream ale, why can't dozens of other breweries do it as well?

Side note: Urban Growler's first women-owned Minnesota brewery claim should have a "for-profit" asterisk.

 

That's fine, but the entire craft beer industry cares. Women and minorities are severely under represented in craft beer. The more opportunities for women and minorities in craft, the more people you get to care about craft beer and the more beer gets sold. More people from diverse backgrounds (women/minorities) bring in new ideas to beer, more innovation and potentially the next whale or new style.

 

You don't understand the difference between this Kickstarter campaign &, say, Cigar City's El Catador club?

One if basically a charitable contribution to a for-profit enterprise, the other is a pay-for-service club. That's comparing apples to road apples, my friend.

 

That's what I have such a difficult time processing. How do for profit companies not understand there is a huge difference between offering a supporter something of greater value over time for their cash injection vs pretending to be a charity and thinking they deserve a donation?

 

Yeah, and New Glarus' cream ale does not taste good to me.

 

No, the entire beer industry doesn't care. Yes, women and minorities are under represented. Why is that?

And how do we get more people to care about craft beer and get more beer sold? To me, it's not pandering to those who will buy something because a woman made it or some minority made it, but that the beer is good.

 

I contributed $25 to the Birchwood Kickstarter. I got a tomato plant, a loaf of bread, some sort of fancy aioli, and a pound of awesome bacon (the idea was make your own BLT). Not $25 worth of stuff in return, but to your point a), not paltry IMO.

 

UG should have a sack of 2-row as a reward.

 

I didn't realize you were on a small, sheltered farm with only one kind of apple. You see there are many kinds of apples out there, just like El Catador isn't the only beer society. Many of the societies don't include beer- you pay to reserve the right to purchaase an allocation of beers. How is paying to reserve the right to purchase a limited beer any different than someone donating money to a brewery for a canning line so they have a better chance of getting the beer they want through increased output? In both you are paying the brewery so they can build up their infrastructure to increase the supply of the beer you want.

 

Not sure why you're arguing about a hyper-local brewery from Illinois, but whatever.

And if you don't see the inherent contradiction in your two back-to-back sentences above, then I can't help you. It's the difference between paying for something concrete (reserving the right to awesome beers) vs. paying for something diffuse that depends on many others doing the same ("building their infrastructure"). Or if you like, paying for something with value (getting awesome beers) vs. giving a for-profit entity money in hopes that hundreds of others do too & thus getting some kind of return down the road that's not guaranteed (canned beers sometime between now & 2020...maybe).

There are cases that I'd happily pay for the former, while very few of the latter that I would support with my dollars.

 

When I first visited UG when if first open I talked to one of the investors which I think they did $40,000 for 1/2 of a percent ownership of the company. I wonder if the majority owners (two women) asked them for more investments for a larger pie of the ownership of the company?