)
Perth-based distillery Old Young's is calling another round of drinks for the capital table with its second crowdfunding raise on Birchal in two years, with more than 300 investors committing $1.15 million within around three days of the offer opening.
It's not quite the runaway success that its first crowdfunding round was in March last year when Old Young's broke its $2.7 million target in less than 24 hours, but it far exceeds the minimum subscription of $400,000 as the group aims for a maximum take-up of $1.6 million.
"We’re also extremely pragmatic - this is not an easy environment to raise funds. To have over $1 million dollars committed in the first 48 hours, before we even open up to the public is again, very exciting," says founder James Young.
The raise, at an estimated pre-money valuation of $37.52 million, will go towards the development of the company's planned $30 million architectural marvel described as the "Cathedral of Gin" in the Swan Valley, which it hopes will emulate South Australia’s d’Arenberg Cube.
Old Young's is emboldened by the fact the d'Arenburg Cube opening played a role in a 140 per cent boost in McLaren Vale tourism in its debut year.
Designed by architects Cumulus Studio, the gin company's planned structure is an artistic tribute to Old Young’s original tin shed that dramatically unfurls like a lemon peel twisting toward the sky, which it describes as the perfect garnish for their iconic martini.
Inside, visitors will find a state-of-the-art, sustainable distillery with accommodation, immersive gin experiences, event spaces, dining and tasting rooms, and even a secret bar, all designed to embody Old Young’s quirky, bold spirit.
"Having gone through this process once before, it is equal parts nerve-wracking and validating. There’s a lot of work that must be done to launch, but the support and positive reinforcement that comes from people supporting our plans is amazing," says James Young.
"I won’t lie - there were a couple of nights in the last week when I didn’t sleep, just working to get this across the line and I haven’t done that since uni days. It was pretty emotional when the offer went live and the first investment came in."
He says it has been "immensely gratifying" to see investors take up the higher levels of investment offered, which has been boosted by an investor rewards initiative whereby a random backer who invests at least $2,000 will be offered a "Ginternship" to travel the world and educate their palate from industry icons, before returning to the Swan Valley and creating their own signature gin that will be made available for sale.
This opportunity will also be offered to anyone who invests more than $250,000.
"The average investment has been high for a crowdfund and I think that’s been driven by our ultimate reward - the Grand Gin Masterclass. There’s a lot of psychology to why people invest and I’m fascinated by it," the founder explains.
In the offer document, Young says the company recorded a healthy $5.6 million worth of sales this year, although it represented a drop of 9.3 per cent "rather than the consistent growth we have become accustomed to".
"That being said, our revenues dropped significantly less compared to many of our competitors, which we see as an opportunity," he says.
"Every distillery in the country has been dealing with the same challenges, but a small number can seize the opportunity to build sizeable brands with larger market share of the market. Our goal is to be one of those brands."
These challenges include macroeconomic headwinds and what Young describes as a "misguided excise remission scheme" that has led to the exponential growth of small distilleries.
"One of the unfortunate realities of these shifts has meant that some strategies we employed last year, including an East Coast sales team, were poorly timed," he says.
"They increased our costs at a time when our revenue was under pressure. The lack of expected growth also put the entire cost profile of the business under pressure as well.
"We have responded to these challenges by making the important strategy and operational changes required to bring us back to health."
This involved refocusing sales efforts in Western Australia and leveraging its local advantage in the state.
"Internationally, our award-winning brands give us the opportunity to work with the best distributors - an important advantage for us," he adds.
"We are still maintaining our East Coast presence, via strong relationships with the national retailers: Endeavour (Dan Murphys and BWS) and Coles (Vintage Cellars, First Choice & Liquorland) while our products are all still available outside of WA through our existing distributors.
"Operationally, we’ve sharpened our focus on identifying inefficiencies and hardening our process and risk management."
)
