sg rabbit alt sf.png

Opportunity

 

1. Location

 

The City of San Fernando offers Shadow Grove many potential benefits. Newly implemented legislation permits alcohol production and serving in a taproom as a right in its downtown district, eliminating the time and expense of obtaining a conditional use permit. Additionally, commercial leases are on average 10–20% cheaper than other nearby locations.

Our sales projections take into consideration our closest competitor (San Fernando Brewing) who has proven the concept in the city with sales reaching over 1,000 barrels in 2017.

 

Considerations

  • Large community (population density is 4,322% higher than California average)

  • Median age of 32.2 (11% lower than California Average)

  • Lack of competition (only one additional brewery in the area)

  • Located in the heart of the Downtown District (foot traffic)

  • San Fernando Planning Commission is actively pursuing this project

  • Will be a part of the well-known San Fernando Beer Corridor which runs from Los Angeles to San Fernando and includes over six breweries

Shadow Grove Brewing Front 3d
Shadow Grove Brewing Front 3d

Shadow Grove Brewing Front Door
Shadow Grove Brewing Front Door

Shadow Grove Brewing From Alley 3d
Shadow Grove Brewing From Alley 3d

Shadow Grove Brewing Front 3d
Shadow Grove Brewing Front 3d

1/9

2. Industry Growth

 

The craft beer industry continues its impressive growth. Between 2013 and 2017, craft breweries have seen their total market volume share grow from 7.8% to 12.7%, with a total addressable market of $26 billion nationally.

In late 2016 there were a total of 623 breweries operating in the state of California, ranking the state 1st in the nation for total number of breweries in a state. However, California comes in 23rd in the number of breweries per capita (100,000 adults). A 50% growth rate has been reported between 2013 and 2016—that number is still on the rise.

In 2009 there were only 5 craft breweries operating in Los Angeles County. As of April, 2018 that number has grown to 81. For a county with a population of roughly 6 million adults over 21, that equates to a ratio of 1.27 breweries per capita, which is roughly half of the total state per capita ratio. According to the L.A. County Brewers Guild, the end of 2017 saw its 74 guild associated breweries take in $61 million in revenue combined and created $96 million in economic impact. This economic impact represents a 45% increase relative to a 2015 study by the National University System Institute for Policy Research.

3. Low Failure Rates

 

While craft breweries can shut their doors, the failure rates are marginally lower than that of other industries. In 2014, Brewer’s Association Chief Economist Bart Watson said:

 

“Here are the long-term figures. Based on the 2013 data, 51.5 percent of the brewpubs and 76 percent of the microbreweries that have opened in the modern era (since 1980) are still open (so failure rates of 48.5 percent and 24 percent respectively). At first glance, this is a remarkable success story, far higher than rates for comparable industries/new businesses. One of the best studies I have seen on the restaurant industry found a 60 percent failure rate over a three-year period. These numbers also hint at the added complexity of running a brewpub, which essentially means running two businesses plus the synergies between them.”

 

4. High Profit Margins

 

While opening a brewery is a very capital intensive process, the actual cost to produce a pint of beer is very low and with the boom of direct to customer sales in the taproom, it has made brewing significantly more lucrative than years past with distribution only models.

 

Here’s some simple math for you:

 

Average cost to produce one pint (16oz) of beer: $1.00 (depending on style and ABV)

Sale price to customer in the taproom: $6

Gross Margin: $5

 

With gross margins in excess of 80% we can begin to understand why the retail-focused craft brewery model is growing at such a fast rate.

For anyone that would like invest or to see the full details: a copy of our business plan and subscription agreement, please fill out the form below to request access.