Ginmeister Limited Investment Review - Q1 2019

Summary

The gin craze shows no sign of slowing down. With more and more pink gins on the market, Pinkster continues to capitalise on burgeoning consumer demand by championing its pioneer credentials and fresh fruit USP.

Status Update

• The nine months to 31st December 2018 saw a raft of brand innovations and positive news for Pinkster.
• Sales via distributors and wholesalers continue to account for the bulk of Pinkster’s revenues. It is now listed by all the key regional and national players who are ensuring much increased visibility in on-trade outlets across the country.
• Sales through Matthew Clark alone, the UK’s leading wholesaler, have trebled over twelve months.
• In the UK, direct wins include Marston’s (360 venues), EI Group (30 venues), Jurys Inns (36 city centre hotels) and a prominent travel retail wholesaler.
• In Australia, Pinkster has just won a big listing with Coles, a major national retailer who are stocking it in 350 of their outlets across the country. Their initial order of 5 pallets (over 3,000 bottles) is hopefully a sign of things to come.
• With this strong progress, Pinkster will add £1m to the top line for 2018-19 (representing growth of 52% year on year). FY sales are expected to fall short of the £3.5m originally forecast due to pipeline discussions with significant trade accounts taking longer than planned and the challenging trading conditions across the industry in January.
• Costs to date have exceeded budget due to additional investment being made into event marketing and a series of pop-up shops opened across the country in Debenhams department stores.
• In other developments, brand partnerships include teaming up with Buttermilk Confectionary to launch a Pink Gin Fudge currently listed by all 353 branches of Waitrose, and an Interflora collaboration with 70cl bottles being sold alongside a themed bouquet.
• Three new gift sets were launched ahead of the festive period showcasing miniatures, half bottles, and branded glasses - these offered shoppers a range of elegantly packaged options. The sets also allow Pinkster to fully capitalise on other gifting calendar hooks, such as Valentine’s Day and Mother’s Day.
• Pinkster’s new creative, ’The Do’s and Don’ts of Pink Gin,’ reinforces the fact that Pinkster is a seasonal product which can only be produced during the summer months.

Market News

• UK gin sales reached almost £2 billion in the year ending 3rd November 2018, totalling 66.3 million bottles, up 53% in value terms on 2017.
• 2018 was a record year for sales of coloured and flavoured gins, driving over half of all growth in this period. Almost three quarters of the growth in flavoured gin can be attributed to pink gin, thanks largely to drinks majors Diageo and Pernod-Ricard investing heavily to promote this burgeoning sub-category.

Fundraising Update

• The total number of Ordinary E shares sold to date is 42,640, raising a total of £1.13m (£0.43m from the Board, £0.29m from Growthdeck Shareholders and £0.41m from new investors).
• A total of 21,575 E shares remain available for sale and discussions are ongoing with interested parties.
• Of the £1.13m raised, £0.23m was directors loans rolled up in to equity leaving £0.9m of new cash. This has so far been invested into sales and marketing (£0.28m) and stock (£0.24m). The additional stock relates to a significant increase in the amount of Pinkster produced (200k v 120k litres), extending our gift offering and investment into branded glassware to support the acceleration of on trade sales.

Exit Planning

It is still anticipated that a trade sale to one of the drinks majors continues to be the most likely liquidity event and the aim is to achieve this by 2022.