London Beer Wholesaler and Retailer Kicks Off Brewery Investment Fund with Verdant

Austin Ray
photo by Brody Rossiter

photo by Brody Rossiter

THE GIST
HonestBrew, a London-based wholesaler and retailer, has revealed plans to launch a brewery investment fund. The project will allocate up to £50,000 ($65,000) a year to breweries, which will pay HonestBrew back in beer that’s available to its online bottleshop and subscription customers. To qualify, the recipient brewery must be independently owned, an existing customer of HonestBrew, and the funds must only be invested in new equipment or as capital expenditure.

The first recipient of the fund will be Verdant Brewing Company of Falmouth, Cornwall. The brewery’s £20,000 ($26,000) allotment will be immediately invested in new tanks so the company can increase its production capacity.

WHY IT MATTERS
This is the latest chapter in HonestBrew’s short-but-busy history since it was established as an online retailer in 2014. Since then it's expanded into distribution, the pace of which increasing with gusto when it received a cash injection of £1.5m ($1.96) earlier this year, derived from venture capital firm Hargreave Hale and a handful of private investors. This, plus additional investment, which included a round of equity crowdfunding, has allowed the business to quickly establish itself as a significant player within the UK beer industry.

“The HonestBrew Investment Fund is something we’ve wanted to do for a while and I'm really excited to make it happen,” founder Andrew Reeve tells GBH. “Raising additional capital earlier in the year was definitely a key part of this. It’s also meant we’ve been able to bring on new breweries, grow our team, and move forward on projects that we’ve been planning for while.”

Reeve says the investments are intended to support independent breweries, and that the fund will act as an interest-free loan, with HonestBrew receiving no equity in the breweries they invest in. The breweries that gain access to the development fund will pay HonestBrew back in stock over a 12-month period.

It’s an interesting example of the complexities separating two of the world’s most active beer markets, given that this scenario—which is perfectly legal in the UK—would be a massive three-tier violation according to U.S. laws.

Verdant is a perhaps unsurprising first choice. Currently the UK’s best-ranked brewery on Untappd, it was also named RateBeer’s 2016 Best New Brewer in England. The brewery specializes almost exclusively in modern, hazy IPAs. Verdant co-founder Adam Robertson described the investment in a press statement as a “no-brainer.” In related news, Verdant is actively recruiting new brewing staff as of earlier this week.

“When we first visited, they were brewing their first batches on a 50-L pilot kit and the beer was outstanding,” Reeve tells GBH. “We got the opportunity to brew with them a few months ago and they mentioned they were looking to install two new FVs. It was perfect timing for us getting this fund started.”

Looking to the future, Reeve says he sees HonestBrew’s investment fund as a positive for all sides of the UK beer industry. “It's a win-win for breweries and HonestBrew,” he says. “The brewery gets access to capital and, through their increased production and beer repayments, our customers get access to their beers.”

—Matthew Curtis