Philter to launch crowdfund "to stay Aussie owned"

Philter founders Stef Constantoulas and Mick Neil

Sydney’s Philter Brewing has opened expressions of interest for an equity crowdfund to raise capital to expand the business pitching the campaign as “a call-to-arms for Australians who seek variety and local economic support through their beer choices.”

“By rallying behind Philter Brewing, consumers can actively safeguard Australia’s rich beer legacy and support the thriving independent beer culture,” the company said in a media release (below) announcing the raise.

Speaking to Brews News ahead of the launch, co-founder Stef Constantoulas said an equity crowdfund wasn’t a decision the company had taken lightly but was necessary to fund growth in a ‘cashflow heavy’ business model.

“It’s something we really looked at, in a business that we’ve had some fairly good luck with our growth over the last six years of being an operation,” he said.

“And when you look at the options that are available to you, as a business to continue to grow – and unfortunately, this is a very thirsty, cashflow-heavy business model.”

He said equity crowdfunding was the option the business chose, because the others were less attractive.

“So you look at a couple of options, larger corporate investment, which we don’t want to go down the path of doing,” he said.

“There’s private investment companies and funds, but also that’s not appealing to us at Philter because, basically, I think they take too much of your company.

“And I think one of the great things that we love about our company is that we’re still the same owners from day one, we still control the business, we still run the business with the best interests of what we feel for our consumer. And we didn’t want to lose that control.”

“We didn’t want someone sitting over us going, ‘nah, sorry, can’t do that because some bean counter said that’s a bad idea’.”

He described the equity crowdfunding option as a way to give back to the community.

“This was an option for us to give back to the community that supported Philter from day one,” he said.

“And instead of giving ownership to some bloke with deep pockets, or girl with deep pockets, is to give back the ownership to the company to the community that we support, that actually got us to the stage.

“That’s the really appealing part of the process to us.”

As has been standard with equity crowdfunding, the company won’t reveal its valuation until the offer opens but the valuation would be “on par” with what other similar businesses have sought, citing launches including Your Mates’ 2022 raise, which raised $2.5 million on a valuation of $49.6 million.

No crowdfunded breweries have sold to provide a price comparison, however, ASX-listed Good Drinks Australia has a current market cap of $52.61 million on revenues of $106.2 million.

In a video announcing the capital raise, Philter revealed revenue of $8.5 million in 2023.

Last month Mighty Craft announced it was looking to sell its Jetty Road Brewery for $3 million.

Asked whether he thought the valuations were reasonable for something sold as an investment with the expectation of a return, Constantoulas said for the comparatively small amounts invested through crowdfunding, it was a different type of investment.

“We want to turn this business into a very profitable business and a sustainable business longer term,” he said.

“I know we’ll be paying a lot more than that value over the term to that person through its life and so if you talk about an ROI return on the investment, it’s more than just ‘will I be able to sell my shares and get the value back’.”

He said that investors will get a range of offers and benefits in the short term, and also hoped to offer financial returns in time.

“I’d love to see us still running very well into the next 10 to 20 years if we can, and to say that these people were a part of that first round of investment, I think is a pretty special thing to do,” he said.

“And that’s where I think the value is versus the person who wants to put in money and be able to sell it in a couple of months.”

While he said that the plan was for a long-term, sustainable business, and the crowd-funding pitch had a strongly anti-corporate beer theme, he also didn’t rule out a sale under the right circumstances.

“If an opportunity came up, not that we’re even looking at it, that someone would want to buy us for a stupid amount of money, there would be a return to the investors,” he said.

“Because I feel the trajectory and the growth that these funds will help us get to a level that far exceeds the valuation of what we’re asking for at this point.”

Constantoulas said that while topline information about the business would be provided in the pitch video, detailed financials won’t be provided until the offer opens.

“That’s part of the process with the platform not to release,” he said. “We will obviously have the webinars that we do in between the process where anyone can jump on and ask any questions related to where the business is.”

“I’m happy to be as honest as I can with the position of the business. You know, it’s not in a bad position, we’re actually in quite a strong position, I think.”

Constantoulas said the funds raised would be used to expand the retail space and open a bar next door to the Marrickville brewery, as well as brewery upgrades and investing in growing the brand’s distribution.

Philter’s planned raise is the first for the brewing industry for 2023, after a busy year for funding in 2022.

Early this year the corporate regulator ASIC was forced to write to Crowd Sourced Equity Funding intermediaries to notify them of its concerns that companies using the mechanism to raise funds are not complying with their obligations under the Corporations Act, including providing updates to shareholders.

Listen to Stef Constantoulas and headbrewer Max Hämmerle discuss Philter on the Beer is a Conversation podcast.

Media Release

Champion NSW brewer calls out anti-competition tactics by beer giants as it fights to stay Aussie owned

Australian industry and beer jobs under threat

SEPTEMBER 2023:            Philter Brewing, which was awarded Champion NSW Brewery last month, is joining the fight against apparent  heavy handed anti-competition tactics the world’s top beer giants are employing to muscle out Australia’s independently owned craft beers from the nation’s pubs. According to Philter, thousands of industry jobs are under threat by the homogenisation of our much-loved beer culture.

Indie breweries employ more than half of Australia’s brewing jobs even though they only account for 7% of the nation’s annual sales. It’s this statistic that has propelled Philter to launch a campaign to stay Australian owned. The company is using its respected industry position to shine a spotlight on ‘tap contracts’ that limit the presence of craft beers in pubs, while also exposing the grocery giants for their mass production of beers designed to look like craft beers – thereby hoodwinking consumers.

Stef Constantoulas, co-founder of Philter Brewing, emphasises why it’s crucial to maintain Australian ownership within the independent beer landscape. “Before I co-founded Philter with Mick Neil, I worked for one of the beer giants that currently have a duopoly over the Australian marketplace. If we were in any other country, these tactics would be considered anti competition and the government would stamp it out with appropriate legislation. Together, Carlton United Breweries, which is owned by Japan’s Asahi, and Lion Nathan, owned by another Japanese powerhouse Kirin,  account for approximately 80-85%% of sales in Australia – For decades these guys have been locking in long term exclusive contracts with pubs inhibiting independent beer from having a fair go. These beers are bland in comparison, and it’s their customers who are being shortchanged.

“Australia’s beer culture has evolved greatly over the past 10 years with the vibrancy of craft beers, and that has got the big boys worried. When CUB and Lion Nathan buy out the independents, not only will jobs vanish, but profits will also be siphoned off overseas, rather than being spent in Australia.”

Constantoulas explains how this stranglehold on the market leads to conformity and blander tasting beer, “Diversity is important because these beer giants influence what you will be drinking – beers produced conform to their shareholder wishes, not to the wishes of the punters who want diversity and flavour. There are also a number of imitation craft beers available which creates confusion for consumers and clouds the concept of independence in the industry.

According to cofounder Mick Neil, now is the time to draw attention to these issues given that there is current discussion at parliament level. “We just want a level playing field to continue doing what we love. Since we launched in 2017, Philter has been growing 43% year on year, and have  cracked $30m in sales revenue . We are bolstering our war chest so we can double our capacity and take the duopoly head on. That’s why we want our loyal supporters to become part owners in Philter– we are proudly Australian owned, and we want to stay that way. The Birchal equity crowdfunding raise means we can stay Aussie owned rather than selling off to a foreign owned beer giant in order to grow, which would sadly affect the taste of our beer. And taste is what our customers value most.”

Philter was born out of a backyard chat between Marrickville mates and neighbours, Mick Neil and Stef Constantoulas. Beer lovers and brand experts, between them they had the business, marketing and trade know-how to build a bold presence on the ever-expanding craft brewing landscape.

“We busted onto the Sydney beer scene with the release of our XPA in 2017, which won  Australian champion pale ale  in our first year,” said Mick Neil. “We quickly set ourselves apart with a look that nods to the aesthetic of iconic 1980s Australiana and now we boast arguably the most recognisable branding on the shelf or tap bank and have gone on to become one of the most awarded craft breweries in Australia”.

As a proud participant in the Certified Independent Seal initiative, Philter Brewing aligns itself with breweries championing independence. To display the seal, the brewery needs to be an IBA member, which means it has less than 20% foreign ownership, and produces fewer than 40 million litres of beer each year. It’s a great way to identify Australian breweries that support jobs and a diverse marketplace. While independent beer has less than 10% of the total market share of beer in this country, it employs 51% of the industry as it is more labour intensive – it takes time to add all that love! On top of that indie breweries provide over 26,000 jobs in sectors such as agriculture, manufacturing and logistics and contributes approximately $1.93 billion to the nation’s economy every year. There are currently over 600 independent breweries in Australia.

Philter Brewing’s equity crowdfunding campaign serves as a call-to-arms for Australians who seek variety and local economic support through their beer choices. By rallying behind Philter Brewing, consumers can actively safeguard Australia’s rich beer legacy and support the thriving independent beer culture.

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