Big Drop Brewing

From lawsuits to lagers: An interview with Big Drop Brewing founder, Rob Fink

How do you go from being an indemnity lawyer to founding one of the rising stars of the UK alcohol-free craft brewing industry?

Rob Fink, founder and CEO of Big Drop Brewing joins Strategic Corporate Finance Partner at Price Bailey, Chand Chudasama, to share his experience of developing a high-growth brewing and e-commerce business in uncertain times.

In the days before brew kettles and fermenters, Rob was a specialist, professional negligence indemnity lawyer.

Typically bringing lawsuits against insurance companies when they didn’t pay out on professional indemnity claims, Rob worked primarily on behalf of accountants, IFAs, solicitors and brokers. It was during his last few years as a practising lawyer that Big Drop Brewing came to fruition…

“At the time, I said to my wife, look, I’ll give it a couple of years, if it looks like it’s working, then great. If it doesn’t, I won’t be so far out of the law that I can’t go back in again, whether it’s to my firm or just, a consultant somewhere…

“As my dad used to say, I’ve got my certificates!”

The business was launched in 2016 by Rob and his secondary school bandmate, designer and entrepreneur James Kindred. Together the pair have navigated start-up, growth and expansion through COVID-19, economic instability and a highly competitive market, all the while developing a product that has gone on to achieve a plethora of awards.

Most recently their product has secured the 2023 Australian International Beer award, the 2023 World Beer Cup and the World Alcohol-Free awards for their 0.5% ABV beers.

Big Drop Brewing is now one of the leading alcohol-free craft breweries in the UK.

What were some of the biggest challenges you had to overcome when starting Big Drop?

“My biggest challenge early on was having absolutely no idea how the beer industry works. It took me, probably two years to work out what I was doing!”

Rob continues: “But more specifically or seriously, the biggest challenge for us as a business was finding the right brewing partners. Contract brewing in the UK is not a very mature sector. If you go over to the U.S., it’s bigger. There are a lot more co-packers, who are specifically set up to be co-packers. They’re not trying to build brands. Whereas in the UK I can’t think of a co-packing brewery that does not have its own brand. As such, those breweries are quite reluctant to enter into structured legal contracts giving certainty over volumes, growth and pricing because what they’re really doing is filling up the spare capacity they have before their own brand grows to fill it.

“That’s not a long-term sustainable relationship”

“It’s also not particularly profitable to provide co-packing services to start-up brands. To make any margin as a brewer, you want to be able to run your brew kit for as long as possible. You don’t want to frequently turn your machines off for a different recipe or can design. Every time you do, it costs money.

“But of course, if you do that then the costs are passed onto the brand owner which means that the price that the brand owner is selling to the retailer is such, that by the time it gets to the shelf, it’s often going to be too expensive to compete with the wider range of brands out there.”

“Another point, is generally people just don’t understand the intricacies of the supply chain.”

Rob goes on to share the challenges of his early days as a start-up business: “When I started, there was also a barrier to entry, in so far as you either had to build your own brewery, which I didn’t have the money to do, or you outsource the brewing to a contract brewer.”

“There was almost nowhere that would do batches small enough for me at that period. The minimum brew size was around 10,000 litres of beer, that’s about 30,000 cans of beer […] After lots of googling I found a business in Bermondsey which had a compelling business model whereby people would pay a monthly subscription fee to brew on small ‘pilot kits’ and, if they wanted, you could brew your recipes on a larger 700-litre brew kit. That’s about 1,800 cans of beer which is a much more manageable amount to deal with at the beginning!”

Like most entrepreneurs, Rob shares moments in his early years, where he wondered how he went from his corporate career to brewing supply chains: “Back then I just didn’t understand the sector – professional services is a lot different to consumer packaged goods! I was making mistakes left, right and centre. Somebody has [to] work out how to source all the ingredients, the packaging, where to get it produced, […] ship it from one place to another, warehouse it at a cost-effective rate, get a retailer to sell it, and then to convince people on the other end to buy it!

“And then there’s labelling compliance! Don’t even get me started on labelling.”

How did you go about establishing a brand in such a competitive environment?

“It was carnage!”

“It has moved very quickly. December 2016 was our first sale and it was almost like a hobby, until about May 2017, when I quit my job and I started doing it full-time. But for that period nobody was listening. Nobody cared. We were talking to the pubs, talking to the retailers and nobody cared.”

However, Rob found unexpected success early on, with retail supermarkets: “Supermarkets were a bit different. Supermarkets started to change in about 2020. The retailers started to pivot and we went straight into Tesco. Then over the last three years, the [others] have just piled into it.”

“Now there has been an explosion in alcohol-free beer brands. One of the more recent big challenges is that we now have is all the big global players creating a 0% version of their established brands. The value of the brand equity in, say, Guinness is incalculable probably, so they’re [retailers] likely thinking we don’t need to go and invest in a little start-up. We don’t need to experiment with alcohol-free brands. We’re just going to do Guinness 0% and it is flying.”

However, when talking about how Big Drop can meaningfully compete with some of the established alcoholic beer brands, Rob explains a unique selling point: “The vast majority of people, about 80% of people who are consuming what you would call an adult non-alcoholic beverage, do drink alcohol. It’s just that these individuals are moderating during the week.

“They’re then comparing the 0% version with the alcoholic version, if you will. So the Guinness 0% is good but, does it taste as good as the original Guinness? Whereas with Big Drop you’re never doing that. You’re never drinking a Big Drop IPA and comparing it with the alcoholic version.”

“The market has moved incredibly fast from nobody paying attention at all to now people realising it is a trend. It’s not a fad.”

How did the COVID-19 pandemic impact growth?

“In COVID, we pivoted to an e-commerce model straight away, as with almost every other brand on the planet. I think e-com’ was up to about a third of our total revenue, even post COVID- at its peak.”

During this period, Big Drop established dedicated e-commerce sites for UK, US and Australian markets, offering tailoring to local tastes: “Our channel was worth the investment. What that gave us then was the wonderful ability to collect and curate lots more e-mail addresses and interactions with consumers.

“But so far as the on-trade sector was concerned, COVID-19 just shut the whole sector down. In the three months before that, Big Drop, and many other alcohol-free brands, were starting to gain traction as hospitality started to realise the benefits of selling a wider range of alcohol-free drinks styles and brands.

“Then after COVID-19, when the on-trade sector had been decimated it [the hospitality secor] was primarily, and entirely understandably, interested in generating cash. That meant a larger focus on established brands, many of which by that point had released their own alcohol-free variants. Interest in start-up brands in the sector reduced, although we are seeing it bounce back considerably now.”

How has external funding supported growth of Big Drop Brewing?

“It’s brand building which is important – and that costs money. You can run a brewery profitably, but I think it’s really hard to build a credible beer brand and we have always, from the beginning, wanted to create a brand that’s big, that has global potential and that isn’t a niche.”

Has it all been worth it?

“In the UK, about 20 beer brands are doing what we’re doing. Start-up brands only doing alcohol free beer. We were among the firsts, a few more came quickly afterwards.

“But we are one of the most widely distributed alcohol-free start-up brands in the UK.

“Big Drop’s presence on the shelves relative to funds raised is very high.”

Rob continues: “The investment also helps buy you distribution and, consumers only drink what they can buy. That sounds obvious, but it took me a while to realise it.

“It’s a complex set of supply chain dynamics and market dynamics, you’ve got complexity and challenge on both sides and thin margins and big players that are really experienced on the retailer side and the competitor side.”

What advice would you give to other start-up craft brewers?

“Don’t do alcohol-free, because it’s too late for that now, the big players are piling in. All the money’s going into their brand extensions and the noise and the competition within the sector, in the start-up, scale-up sector is now sufficiently loud that trying to make yourself heard is increasingly difficult. We’ve benefited from being a first mover in terms of our position.”

“You’ve got to have a really compelling reason for why the [retailers] should take one of those big names off the shelves and put you on it because shelf space is limited.”

“That doesn’t mean that you can’t build a small craft brewery in your local area, that makes really great liquid and that has a compelling brand selling to independent pubs locally. You can make a living out of it.”

Big Drop Brewing, is a pioneer in its sector, with a mission to create an exceptional alcohol-free product that doesn’t compromise on taste.

The business has gone on to garner international acclaim, winning top prizes in blind tastings against full-strength rivals and currently operates in Australia, Canada, the USA, and the UK, and its products are available in over 20 countries around the world.

You can learn more about Big Drop Brewing and see their full range of alcohol-free craft beers on their website.

Find more about how Price Bailey supported Big Drop Brewing’s expansion and growth below.

Price Bailey and Big Drop Brewing

The team at Price Bailey, led by Stephen Reed and Seb Humberston, provided financial due diligence service to leading equity investor Panoramic Growth (“Panoramic”), in a £2.5m growth capital investment into Big Drop Brewing. The investment came as part of a £3.5m round, with Panoramic investing alongside Rubix Ventures, Flexitalian, and existing investors, including Mark Hunter, who was chief executive of Molson Coors, and Stefan Orlowski, former head of Europe at Heineken

Price Bailey provided critical insight into Big Drop Brewing, including a review of its historic performance, and developed a detailed understanding of the organisation’s recent growth. Price Bailey went on to perform a critical review of the model, applying well-informed sensitivities to assess the impact of downturn performance and establish suitable mitigation for future cash flow needs. Ultimately this work provided Panoramic with the required confidence to progress their proposed investment of £2.5m.

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