Bier-Deluxe | Overview

Dear Companists,

We are pleased to provide you with our pitch deck, which summarizes Bier-Deluxe`s business model and strategy and illustrates our company’s potential.

As always, you can find all information on us, our team, and Bier-Deluxe in our company profile.

 Your team of Bier-Deluxe

Please click on the picture above to open the pitch deck of Bier-Deluxe.

The beer market has been subject to structural changes in the past years. One of the main challenges it faces, is that customers are attaching ever greater importance to quality, diversity and individuality. According to a current study on the future of the beer market, conducted by the GfK (Society for Market and Consumer Research), major breweries around the globe have ignored this trend toward individual beer types. The result is that revenues on the beer market are constantly decreasing: While spending on alcohol consumption has continuously increased in the last years, consumers have spent less and less on beer in the past 10 years. In 1986, beer consumption was 147 liters per head, in 2014, this figure dropped to 107 liters (GfK study, 2015).

Therefore, the large and medium-sized brewery groups have been subjected to a consolidation process that has lasted for many years. In addition, differentiation from other providers is often only possible with the help of major discounts, which has led to beer turning into a promotional product in the last few years (GfK study, 2015).

In contrast, we can observe a significant increase in small breweries, so-called microbreweries. In Europe, the number of microbreweries increased from 2,335 in 2009 to 5,054 in 2014. This growth can mainly be attributed to the so-called craft beer movement.

Craft beer is made from high-quality ingredients and focuses on unconventional flavors (e.g. fruit beers, India Pale Ale with bitter or fruity aromas, imperial stout with coffee or chocolate flavor). Craft beer breweries emphasize the importance of regional origins, diversity of ingredients and authenticity. The traditional art of brewing and creative brewing techniques take center stage in order to satisfy the consumers' values as well as their demand for more diversity and individuality.

With our e-commerce shop, Bier-Deluxe, we are the leading platform for high-quality craft beers in Germany, Austria and Switzerland. We offer end customers, as well as retailers and gastronomers a choice of more than 300 different craft beers. These include exclusive beers from Germany, Sweden, Great Britain, Spain, Japan and the US.

The craft beer movement was founded in the USA in response to the dominance of major brewery groups and the associated standardization of beer flavors. In the meantime, craft beer, with revenues of USD 22.3 bn (EUR 21.0 bn) in 2015, has achieved a 12.2% market share of all US beer sales and has exhibited consistent double-digit growth rates in the past 5 years. Aside from the US, Europe has turned into the second most important epicenter for craft beers. The movement has gained a lot of traction in numerous European counties such as Scandinavia, Great Britain, Italy and France, as well as Germany since 2012.

The fact that established craft breweries are starting to invest more frequently in German sites is evidence of the current momentum of the European and, in particular, German craft beer movement. One of the 10 largest US craft beer breweries, Stone Brewing, for example, opened the largest American craft brewery on European soil for approx. USD 25m in Berlin this year. The Scottish craft beer brewery, Brew Dog, is now one of the fastest growing food brands in Great Britain and also recently opened an own bar in Berlin. In the last of their three crowdfunding rounds in 2015, they collected around GBP 30m (approx. EUR 40m). Craft beer is therefore gaining ground throughout Europe and is no longer a niche product in Germany either.

We founded Bier-Deluxe in 2012 with the goal of introducing craft beer to a larger audience in Germany and making craft beer available to everyone via our online shop. We have been a part of the German craft beer movement from the beginning and are well-established in the scene. As a partner and brand ambassador for craft beer brewers around the world, we constitute an important distribution platform for the German market.

With more than 40,000 customers, we have generated on average approx. EUR 1.3 million in revenues in the past 3 years. With the help of our TV campaigns on Sky and the ProSiebenSat1 group (2014/2015), as well as various online campaigns, we were able to develop the largest German-speaking craft beer community - consisting of more than 24,000 Facebook fans - and as a consequence, continuously increase the popularity of Bier-Deluxe.

Thanks to the craft beer industry competence that we have developed over the past four years, as well as our know-how in the areas purchasing, e-commerce, online marketing, logistics and shipping, we have become an important partner for retailers, gastronomers, and regional and international craft beer breweries.

As an online specialist for craft beer, we benefit from the growing importance of online food and beverage retail, which is looking to increase even further in the coming years.

In just 3 years, we were able to increase our end customer order volume by 400 % - from around 5,000 to approx. 20,000 orders per year. On average, we register around 600,000 visitors to our homepage each year. Thanks to our conversion rate (relationship between homepage visits and transactions) of more than 3 %, and an average purchase of approx. EUR 48, we have established our successful business model on the market.

Our goal is to become the largest market place for craft beer and craft product brewers, retailers and end customers in Europe. To this end, we must make investments in, among others, the following strategic areas: internationalization and marketing, development of a platform for corporate customers (B2B), development of further exclusive sales partnerships, development of production of our own craft beer brand as well as expansions to our range of products.

With Bier-Deluxe, we are focusing on a large variety of beer types and flavors in order to introduce our customers to the world of craft beers. We offer a range of around 150 different national and international beer styles, such as ales, pale ales, brown ales, IPA etc.

Our range also includes craft spirits as well as alcohol-free beers and craft lemonades. Craft beer novices can choose between specially selected introduction packages that are also good gift ideas or presents for special occasions.

The products can be simply ordered through our online shop. Delivery time is just 1 to 3 working days. This means that customers do not need to put in the effort of lugging around individual bottles or crates. In the future, corporate customers will be able to place their craft beer orders via our separate B2B platform.

Our subscription model - the Bier-Deluxe Club

In November 2016, we successfully launched the Bier-Deluxe Club in order to provide our customers with the opportunity to regularly try out different craft beers. Customers can choose between attractive deals with exciting craft beer brands that have been carefully selected by us.

The Bier-Deluxe business model relies on four sources of revenue, which are divided into the following two categories: craft beer and sales and services.

Craft beer is sold via the following channels:

1. B2C online retail via the Bier-Deluxe platform

With more than around EUR 870,000 in revenues per year (2015), our online shop constitutes the main sales channel (around 60% of total revenues in 2015). So far, our focus has been on German-speaking countries (Germany, Austria and Switzerland), where we have been the largest online market place for craft beer since the foundation of the company.

With the help of the Companisto investments, we will enter further European markets.

2. B2C online retail via other online market places

Online sales of Bier-Deluxe as a so-called official Amazon Seller (sales of our product as a third-party retailer via the Amazon Marketplace) and Vendor (sales of our products to Amazon directly) generated revenues of EUR 213,000 (= EUR 191,000 Vendor + EUR 22,500 Seller) last year and the trend keeps on rising (revenues as Seller in the 1st half of the year 2016: around EUR 22,000).

Exclusive partnerships with other major online market places such as e.g. the recently concluded cooperation agreement with the digital and online division of a leading German supermarket chain are promising sources of additional revenue for Bier-Deluxe. In our joint partnership, we will be responsible for the craft beer range as both product advisor and exclusive supplier in the planned online beer marketplace.

3. B2B offline retail and gastronomy

With more than 2,000 B2B customers in our database, the sales channel via local retailers and gastronomers is a further important source of revenue. In the future, these customers will be able to place their craft beer orders on a separate corporate customer platform. Our focus will therefore predominantly be on stationary retail instead of wholesale in order to address the individual customer groups in a more targeted manner and, as a consequence, achieve more lucrative margins.

In terms of services, the following sales channels have been identified as relevant for Bier-Deluxe:

Thanks to our competence and experience on the craft beer market, we are an important partner for our B2B customers: breweries, retailers and gastronomers.

1. Marketing service packages for breweries

Most breweries place their sole focus on producing high-quality craft beer. As they often have only limited personnel capacities, they lack the know-how and competence required for successful online marketing. Bier-Deluxe considers itself a partner in this area and offers breweries online marketing packages that are tailored to their specific needs, target groups and target markets.

Thanks to the sales of our marketing services to craft beer breweries, we have generated profits of more than EUR 20,000 since the beginning of the year. We plan to further develop this sales channel by expanding our strategic partnerships with renowned national and international breweries.

2. Further services

We offer gastronomers, beverage retailers, grocery stores, as well as online market places such as Amazon, our craft beer selection expertise service and also take care of purchasing and shipping if required.

As pioneers in the German-speaking craft beer movement, we have worked very hard for our special position in the market. We are brand ambassadors for breweries, a platform for craft beer expertise and a supplier of beers from around the world.

Unique Selling Points at the Product Level

Our unique selling points at the product level lie in the variety of beers offered in our online shop and the constantly changing range of products. Customers can choose from special types of craft beer that are regularly tested and examined by our team. Due to exclusive partnerships with selected breweries, many of our craft beers are only available online at Bier-Deluxe.

In comparison to other competitors - online or in stationary retail - our customers can (depending on the product) also save up to 50% per bottle as we at Bier-Deluxe always offer our products at the most competitive prices. We can do this thanks to our structured purchasing process while simultaneously ensuring cost efficiency in storage and shipping. In addition, shipping is free of charge when you buy more than 12 bottles - irrespective of the purchase value. Therefore, our customers can place orders that are 60% cheaper than other online craft beer shops.

Unique selling points in logistics and technology

E-commerce, marketing and business intelligence

As online specialists, we have developed comprehensive expertise in the areas social networks, SEO and personalized online marketing in the past years. With more than 24,000 Facebook fans and around 8,000 regular newsletter customers, we have founded the largest German online craft beer community.

We attach great importance to ensuring that the products offered in our online shop are always available and that we can uphold the guaranteed 1-3 day delivery period. In addition, we have developed customer communication standards and guidelines for our employees in order to ensure consistently and reliably satisfying customer service. We stand out on the market in terms of reliability and customer satisfaction thanks to the more than 2,695 Trusted Shops ratings and an overall grade of 4.85 (of 5 possible points).

We were able to significantly increase the popularity of Bier-Deluxe due to our TV campaigns on Sky and the Pro7Sat1 group in 2014/2015 and our own YouTube channel. For example, the actual number of visitors to our website in 2014 increased from 1,134 (prior to the launch of the Sky TV campaign) to an average of 5,000 users - at peak times, we even registered more than 9,600 users per day.

Market competence

Due to our strategy of concluding long-term partnerships with brewers, we do not consider them as merely suppliers but more as companions over a longer period. Bier-Deluxe is a stepping stone with which they can expand their mostly regionally limited presence to the national and international markets. Therefore, we are already the preferred point of contact for developing new markets and receive countless inquiries and applications from potential new partners each year.

Aside from breweries, we also offer our experience to other partners. We offer product range consultations and training to major online market places, important players in beverage and food retail, as well as gastronomers and have already accompanied more than 100 successful product launches throughout Germany.

Logistics

In order to permanently and successfully establish our business as an e-commerce marketplace for craft products, our focus is on optimization of internal process in addition to our range of products. This is also why we moved into our own 1,000 m² warehouse in October 2016. The new found leeway in terms of independence and flexibility enabled us to achieve our first milestone: reducing the average processing time from order to shipping to a mere 2 minutes. This time efficiency is also reflected in personnel costs as we were able to better use our existing personnel to capacity. Furthermore, we were able to reduce our fixed costs by approx. 20 to 50 % per year thanks to our own warehouse (depending on respective capacity).

Breweries

With 78 national and international craft beer breweries, we maintain long-term partnerships and support these with our marketing services and logistics know-how.

Online Marketplaces

We advised Amazon Prime in the construction of their own craft beer online shops, provided content and images and are the largest supplier of craft beer there.

In October 2016, we entered into an exclusive partnership with a leading German supermarket chain to accompany them in the construction of their on-line craft beer offering and to supply them with our craft beer.

Stationary trade and catering

We supply our craft beer to numerous supermarkets, retailers and restaurateurs across Germany and we offer training and consulting services.

Logistics partner

Last month (October 2016), we entered into a co-operation with the Zapf Umzüge logistics group. This company, which has been based in Berlin since 1976, has a Germany-wide network of logistics centers in the conurbations relevant to us. By means of this co-operation, we plan to soon be able to offer our clients the option of receiving their deliveries on the day they are ordered (Same Day Delivery).

Market development

In 2015, beer sales in Germany amounted to around EUR 7.8bn. In the USA, the share of total beer sales taken by craft beer rose from 2.9% in 2005 to over 12.2% in 2014. If we apply a similar development of the craft beer market as in the USA, then the market potential in Germany is approx. EUR 935m. Considering that per head the average American only consumes 81.6 liters of beer in a year(in Germany, this is 107 liters per head), then the potential is even greater. Based on the fact that Germany accounts for about a quarter of the European beer consumption, the market potential for craft beer in Europe is approx. EUR 3.7bn.

In addition, consumers in the European countries or regions most important to us have a greater willingness to pay for alcoholic beverages, which further enhances the sales potential for craft beer. If one compares the results of the so-called beer price index, all of the above countries apart from Spain and the Netherlands evidence significantly higher price levels for beer than Germany.

The Scandinavian countries stand out as particularly attractive target markets in this regard. A further indication for this is the fact that our attractive price offering and delivery conditions have already resulted in us receiving regular orders from these countries in 2014 and 2015 without us having advertised these or owning an English-language website.

Internationalization

Thus far, Bier-Deluxe has generated over 90% of its sales in the German-speaking countries.

However, thanks to our our e-commerce approach, our business model has swiftly become internationalizable. Through online marketing campaigns and cooperations with influential local multipliers (so-called influencers) such as bloggers and craft beer brewers we will establish our brand in the craft beer scenes. In Finnland for example, we have already started a close cooperation with influential Craft Beer bloggers throughout Scandinavia in order to create viral advertising campaigns with photo shootings or online videos. Also in Spain we have already carried out common projects with Craft Beer brewers and influencers.

Besides Scandinavia and Spain we identified UK, France, Italy and the Benelux countries – that are traditional 'beer nations' and known for their strong need for quality and wide range of flavours – as target markets as part of our expansion strategy in Europe.

Target groups

A 2015 GfK study on the future of the beer market from the year 2015 concludes that: “In order to win new consumers or to break out from stagnating markets, traditions and existing rules must often be broken"(GfK Study 2015, p.68). This is the basis of the global success of the craft beer movement, as its innovative brewing techniques, recipes and flavors take it down unconventional paths.

At the same time, the study confirms the great potential of so-called specialty beers as the new growth driver in the German beer market. The authors further show that especially the younger generations between the ages of 18 to 49 years are moving away from traditional beer consumption as they prioritize different values and needs when it comes to their choice of food and luxury foods.

It is precisely on the values and needs of this target group that the global craft beer movement is focussed. It breaks with the existing rules of the industrial brewing giants and fulfills the customer’s desire for greater individuality and quality. Thanks to the renewed variety of the range and flavors, new consumers are led towards to the beer market (GfK Study 2015, Page 40)

At Bier-Deluxe, we generate 88,1% of our turnover (2015) from the 18-49 age group. This means that we achieve a majority of our sales from the age groups which have most strongly turned away from traditional beer consumption.

The younger groups of consumers accord more merit to added-value and are simultaneously prepared to pay more their beer (GfK Study 2015, Page 67) They also exhibit greater affinity for the internet and increasingly order their groceries on-line. Even though strong growth in e-commerce can be evidenced for the last few years, on-line trade will grow further in the coming years (in Europe in 2016 currently EUR 237.4bn, by 2020, around EUR 357bn 
Source: Statista Digital Market Outlook 2016). Currently, 34% of purchases of alcoholic beverages are completed on-line (Statista Konzept & Markt, 2015), and in the future this figure will increase strongly.

Apart from this, craft beer is more than just a ‘man thing’. According to a survey carried out by the German drinks industry, craft beer drinkers who have already bought such a beer more than once are 52% women and around 48% men. This trend is also evident in our on-line customers: In recent years, ever more women (31% in 2015) are ordering craft beer from us.

Craft beer is characterized by an urban lifestyle. This is why the centers of innovation for craft beer are based in the German cities. Bier-Deluxe also offers consumers in rural areas the opportunity to take part in the craft beer movement.

Milestones

Past experiences

Like any start-up, since our founding in 2012, we have tried out various strategies and have also experienced highs and lows. For you, as investors, we have compiled here the most important past experiences.  In so doing, we want to create a degree of transparency and show you what we have learned from these experiences and what conclusions we have drawn from them.

Investment Level I: from EUR 100,000

Internationalization

For the development of new markets, financial resources are mainly required for on-line marketing and the translation of the Bier-Deluxe site into the language of the respective countries.

Investment Level II: from EUR 300,000

Points from Level I and the following measures:

Same Day Delivery, constructing B2B platform, our own craft beer brand and expansion of the product range

For our German-speaking customers, we will then offer the additional option of receiving their order on the same day (Same Day Delivery). Aside from this, we will then be in a position to construct a separate B2B platform for retailers and restaurateurs.

The creation of our own craft brand and the distribution of our own craft products via our platform form a further important milestone with regards to profitability due to higher profit margins. For 2017, we therefore plan to bring our own craft beer to the market, as a so-called "Gypsy Brewer” through the use of free capacities of other breweries. Prominent examples of successful "Gypsy" breweries are Brlo, Berliner Berg or Tilmans Biere, which have all established themselves as mainstays in the German craft beer scene. In this way, we will further cement Bier-Deluxe’s place in European craft beer culture.

We also plan to expand our range with new craft beers exclusively available from us and other complementary craft products such as chocolate and snacks. It is our goal to establish Bier-Deluxe as the central market place for craft products in Europe.

Investment Level II: from EUR 500,000

Points from Levels I and II and the following measures:

Upon reaching this investment threshold, we will significantly intensify efforts to realise our plans for our own craft beer brand. We will then have at our disposal sufficient financial means to strategically promote the brand development by means of additional promotional campaigns (online, TV, events, partnerships) and to produce larger quantities and different styles of our own craft beer. Both the build-up of our own production capacities and of the necessary staff will - depending on the level of the investments - be possible.

We have already been able to convince well-known investors about Bier-Deluxe. Alongside the provision of capital, it was also important to us in the selection of investors that they would bring expertise to the table and accompany us on the road to being the leading on-line platform in Europe. Furthermore, the management by Holger and Christoph has also already made significant investments (more than EUR 500,000).

Venture Capital Investor

• Investitionsbank des Landes Brandenburg (ILB)
  The ILB is the investment bank of the Federal State of Brandenburg and since 2014 it has been active as an investor in Bier-Deluxe. As a promotional institution, the ILB primarily supports public and private investment projects in the areas of hostelry, infrastructure and housing.

Business Angel

• Aron Holtermann
  Aron is serial entrepreneur and is also founder of the successful online shop www.gartenmoebel.de. With his extensive expertise in building successful e-commerce companies, he has stood at our side for many years now with help in both words and deeds.

Team

• Holger Klumpen
  Holger is the managing director of Bier-Deluxe and has engaged with Bier-Deluxe both in terms of his personal involvement and financially. His significant investment proves that he is convinced by Bier-Deluxe and that he is interested in the expansion of the company in the long-term.

• Christoph Klischan
  Via his affiliated company, Christoph has also invested a significant amount in Bier-Deluxe and has underlined his commitment to the company

Bier-Deluxe’s life is its community. We are always therefore pleased when someone tells friends and family about us and then orders their first sample package. We want to carry on promoting the craft beer movement together with you!

Bier-Deluxe GmbH
Adresse: August-Bebel-Straaae 27
14482 Potsdam

Phone: +49 331 97 99 6680
Email: info@bier-deluxe.de

Website: https://www.bier-deluxe.de
Facebook: https://www.facebook.com/bierdeluxe.de/