Crikey! It’s March already, Spring is in the air and slowly but surely, we’re all migrating outside to drink those cold, fresh beers…meanwhile at The Baby Goat we already have a bunch of projects in flow, and some exciting times ahead in 2023, but also a dramatically different market/society in which we (all) find ourselves, and that is also important to provide comment and perspective on.
As with every year, before we start to update you in more detail via the blog on all the individual great things ahead, we’re going to do our yearly run down of our progress against our Objectives in 2022 and then our 2023 outlook for you, our GOATs and our Shareholders (gosh that feels great to say!).
For posterity, you can read the previous editions of our Review/Objectives from 2021 here, and 2022 here.
So, Let’s GOAT!
Our 3 Objectives for 2022 were as below:
Those really paying attention will see that these Macro Objectives take a very consistent structure and despite minor tweaks over the past two years to make these slightly more encompassing, these will always hold true for our company. Goals and Key Results falling under these Objectives are what we track on a daily, weekly, and monthly basis, but for the purpose and simplicity of this exercise, here we’re sticking to these headlines.
Let’s take a critical look at how we did against those last year, and where we’re going, and what we’re focussing on in 2023.
Our Grade: 7/10.
We stepped up our volume from 150HL in 2021 to 479HL in 2022 - that was primarily out of necessity due to the addition of our 2nd Pub (more below). Now, some of that remains ‘auf Lager’ so doesn’t reflect a sales volume and you must keep in mind that 2021 was pandemic-affected, but we’re pleased by the growth and will look to keep that trend going.
Within that brewing volume, we also added 5 more styles; the Golden Ale (which we designed for German gastronomy and is super-easy-drinker), the Belgian Blonde, the Lemongrass Blonde (which will be staying!), the Caramel Session Ale, and a Pale Ale, ‘TWO’, for our second Anniversary. New styles keep our drinkers interested and are a great vehicle for generating interest through releases and tap lists. Too much variety does, however, present its own challenges which we look at here later.
Most importantly, the quality of our beer and processes have (objectively) progressed hugely in the last 12 months - primarily through extremely positive partnerships with our two partner breweries in Holland with whom we have been extremely happy to work on our recipes and processes to ensure consistent quality in our beers - particularly those as fixtures within our ‘Core’ range. Overall this year’s efforts took our range up to 17 beers brewed (after 3 years of brewing), and our aim is always to keep 10 beers on tap at all times, 6 Core beers, and 4 Seasonals or Specials.
All-in-all, a positive year, but there are areas where we see clear room for optimisation and improvement, which we will take into 2023…
1. Keeping our Core beers on tap. Always. - This is a continued feature of contract brewing based on available capacities in our partner breweries. Given the popularity of some core styles, and therefore requirement to constantly re-produce them, next to our desire to also continue exploring new varieties, we again had some short outages on tap. Nothing drastic, but good learnings and something which shouldn’t happen and therefore a need to better assess and plan our available capacity.
2. Offering consistency and variety - Finding the right balance is critical here; ensuring that the crowd-pleasers are always there, but also that we can continue having fun with and shouting about seasonals and new styles. Interestingly, Germany is still a market that is dominated by Pilsner and Helles, so that commands capacity. But there is also a (growing) demand for IPAs and more, which means keeping a rotating basis here is also required. But not too much variety….in the end, our key outlet remains our Pubs and whilst variety and spontaneous recipe development has been fun, for now, we will stick with more structured planning in 2023. Look out for our brewing schedule which we will publish by the end of March.
3. Leveraging economies of scale - It should come as no surprise to anyone that the cost of raw materials, production, utilities, and logistics in almost all sectors sky-rocketed through 2022 in line with post-pandemic markets and the ongoing Ukraine war. The brewing industry as a whole feels the effect of this due to the energy-intensive processes and the reliance on Grain from eastern Europe. As a small beer brewer, our cost of production per/L is already higher than the average brewery, and we are proud that this isn’t necessarily reflected in our price points. The positive in this respect is that we have great room for improvement in our cost of production and the effect of setting a Core range is that larger batches can be brewed at a better price point, to avoid the passing-through of costs to consumers. It will also, crucially, allow us to stay competitive in the B2B On- & Off-Trade sectors, which in Germany are already super-competitive.
Given all of the above, we have initiated a new partnership in our Brewing process which we are happy to share for the first time!… in 2023 we will be switching half of our production to BrewDog Berlin. We have been impressed by their work with other breweries in our sector and we have, together, already completed a pilot batch of our Shave It Off Session IPA with great success.
The benefit of this move is 3-fold:
So, a positive year but ‘Luft nach oben’. Plenty more beer and beers to come in 2023 but the Macro Objective stays the same:
Our Grade: 7/10.
Well, we certainly made great progress here by finding and opening our second pub, The Baby Goat Barn in the St. Pauli area of Hamburg. This was and remains a huge project for us; a 90-seat Gastro-Pub which we turned into a Pub and Pizzeria, using some of the existing kitchen infrastructure. There are countless learnings from the set-up into the running of a fully-functioning Gastronomy and those we will take with us on the way (see new Objective 4).
Physical pubs remain over 90% of our business activity, but we have also developed on our list of Gastronomy customers and with the appointment of a Sales & Events manager we have a person dedicated to taking our product out to the market and also ensuring that the spaces our Pubs offer are also being used efficiently through private and corporate bookings - which were back to normal levels following the final easing of Pandemic restrictions in January 2022. As part of our successful Crowdfunding campaign, we published our 5-year plan and which includes a new pub per year…which means we are absolutely already on the hunt for Pub number 3 (in Hamburg). That process is one which we have now done twice and is very much a marathon rather than a sprint. It’s also true that verbal commitments on properties don’t always result in rental contracts so there have already been locations where we almost completed and there may well be more before we eventually find the elusive #3. But when we know, you’ll know.
We have grown our reach in the area of On-Trade (Gastronomy) Sales, now delivering beer to a growing list of fantastic Pubs, Bars, and Restaurants in Hamburg. We are very candid here in saying that this space is incredibly challenging - the German market is dominated by the large industrial breweries that can offer financed contracts and staggeringly low prices/L of generic commercial light beers. It is, at times, disappointing, to observe the stranglehold on the market - particularly when in discussion with Gastronomy concepts who claim to champion ‘craft & quality’ - for us that statement isn’t reflected by the choice of a Carlsberg, Astra, Holsten, Heineken, etc. But each to their own, and for now at least it does add a fairly simple filter to our sales pipeline - we focus on gastronomy open for great beer, at a slightly more premium price point, to deliver a great customer experience - happily there are still plenty of just such concepts and we will continue with more structure, focus and also added value to our customers in 2023 through the addition of Merchandising and volume discounts - things which we simply need to add as we ‘grow up’ in the Sales department.
If you have any contacts, tips or thought for us on potential partners then please do share them with us….We're happy to pay in beer.
Likewise should you know of a location or empty gastro space then we are always happy to explore new opportunities.
Distribution into Supermarkets and Wholesale we view very much as a separate channel but one with huge opportunity if done well. That said, it’s a channel that relies on the scale as all parties in the retail chain have a close eye on their margin. At this stage in our journey, our position as a relatively small-scale brewery in the market, in our opinion, isn’t optimal to really thrive there (yet). We do, however, feel that as our awareness and reach in Hamburg grows, the opportunity in retail listings grows with it and our tasks in this area for the time being are around gathering learnings and planning for the eventual implementation of a brewing schedule which would fulfill a need in this space.
The Pubs and our current sales network will continue to grow, and as eluded to, we see this all as a means of growing our brand awareness In Hamburg. Month on month, year on year. Within this Macro Objective, we are always keeping two things in mind:
1. By the end of 2023 we want to be a Household name in Hamburg - that means known by most (if not all) of our target group and as recognized destination for beer, food, and a great time. We like to think we have made good progress here, but there are so many great concepts to learn from and we really want to mix them with the best. So we will.
2. We want to go where our customers are - be that a new Pub in a new neighborhood where our target audiences live or a specific Gastronomy where we know our customers like to hang out, that’s where we want to be. And if that means physically taking the Pub to our customers when they’re hanging out by the beach in Summer, rather than in pubs, then that’s where we need to go. We intend to have a lot of fun with this; we already executed a ‘Pub on Wheels’ day in 2022 where we drove around the city handing out beer, and local beer & street/music festivals are also going to be a great means of reaching further target audiences. In 2023, we will, for the first time, join the Hamburg Beer Festival (30.06. + 01.07.2023) and we have also applied for other local craft (beer) festivals in northern Germany. We look forward to seeing you there with our Pop-up Pub, fresh new beers, and obviously a great environment.
So, 2023 is all about continuing to grow our reach and awareness on the way to becoming that Household name in Hamburg (and beyond - look out for that in 2024!). In short, continue to:
Our Grade: 6/10.
This continues to be the most fun part of what we do - seeing our community of GOATs grow, those people responding positively and sharing the experience with others - incredibly rewarding, but also challenging.
Seeing some initiatives thrive has been fantastic, like the International Social - a weekly meet-up for newcomers to Hamburg to find common ground and find new friendship circles, or the Pub Quiz - a traditional, buzzing event that encourages all to take part. For every success, some concepts don’t catch on and the art here seems to be trying, testing, and moving on if the idea just doesn’t land - for example a Sunday get-together for Singles. Hard work!
2022 was, perhaps most notably, a huge year for us in that we took the ultimate step in engaging our community by offering you the chance to own part of our company through our crowdfunding campaign. In July, 2022 we emerged with a successful, overfunded campaign and a community of over 150 Shareholder GOATs who are very literally invested in the company. That experience is without doubt a hugely positive one for us and we really can’t wait to host our first AGM (Coming October 2023) to bring all those shareholders together under one roof. Learnings are aplenty again, integral as we know that we will be funding again in the future, but that only once we have made sure that our shareholders can see the fruit of their investment.
The body of this work took place in 2022, but the funding round was only completed in 2023, which is why we can’t rightfully score ourselves higher than a 6 in this field - some of the great pieces on engaging and rewarding the community are still to come, which simply means we must score well in 2023!
We continue to be a proud sponsor of the Hamburg Rugby Club and are excited to add further rugby communities to that (coming soon!), likewise, our connection within our Hockey Communities remains as strong as ever and but for some big-company sponsors, could even be bigger. Weiter so! On top of Sponsorship, we are also the official Beer partner at the Factory Hammerbrooklyn, a co-working community in the harbor area of Hamburg, a fantastic community and concept. We happily provide the liquid refreshment for their monthly community ‘Check-Out’ drinks and should you be interested in a co-working space for your company then we can highly recommend them.
Our ‘Tribe’ started as a simple Newsletter Sign-Up with the promise of exclusive, offers, updates, and Info. That word Tribe is something that we really want to mean more than just a Newsletter (which are annoying), and that’s why being part of that Tribe now really does come with benefits - simply by joining the Tribe you get a 5% discount, forever, in our pubs. You also get a free beer on sign-up. You also get discounts on venue hire and truly exclusive benefits and invites. The Tribe is going to keep growing, and this year we would like to add a referral scheme to it…but first things first, make sure we really deliver a benefit to being part of The Baby Goat. What are you waiting for ;-)
Our goals this year are to make sure we get all of our audiences into this Tribe and, of course, to make sure that we keep growing our audience. All to:
So there you have it...our progress against our Objectives from last year, and also the outlook for this year on how we plan to tackle the remainder of the year ahead - time will fly! To that list of 3, consistent, objectives we now have a 4th to add, against which we won’t measure our progress in 2022 but will give some context on for the outlook in 2023:
We’re now (just) 2,5 years into running the business and have two active Pubs in Hamburg, and are planning more. Whilst it is easy to set sales targets in our Out Of Pub activities, the setting of targets when it comes to pubs is more complex because, at least in the short term, we lack the context, data, and experience with the seasonality of the business, geographical implications of a location, representative results from marketing campaigns and so on…but what we do now know after those 2,5 years of running two very different locations is that whilst we are set on making sure we offer new ways and places for GOATs to find us, and Pubs being an effective channel as part of that, it is even more critical that we learn how to continuously optimise our existing locations and build a great team around them.
All of the learnings that we have gathered since 2020 are an invaluable start into the world of gastronomy and we have, perhaps, had the luck of great people, contacts, and employees around us with the experience, know-how, and advice to help us tweak models, adjust schedules, change suppliers or negotiate contracts. The truth is that it is a constant process of optimisation. We are a lot better than we were 2 years ago, but we still have a long way to go. That doesn’t mean we want to be a chain or a franchise, but it does mean that aside from brewing great beer and being more available in the market for you to find it, we will also be working every day to make those Pub models and all the processes that go with it better and more efficient.
When it comes to the market and the general economic environment, there's no other way of labelling it than 'challenging'. But that is true for everyone. Prices are repeatedly being raised - seemingly arbitarily and often with little transparency - knowing if those are truly due to an increase of material & process costs is almost impossible to determine and it feels like many service providers or producers just leverage the opportunity to jump on that wave becuase it's there. But it is certainly true that global economic factors did directly influence our industry of beer (and now pizza) production and increasing prices is really the last thing that we want to do, but we have had to increase our in-pub beer prices marginally to reflect the costs. The upside...as our economies of scale grow we will work to ensure these also decrease in line with better production costs. We are quick to remind people that our original and continued passion lies in Beer, and Gastronomy and running Pubs is the part that has happily come to it. The 'Gastronomy' sector is fantastic for so many reasons, and we tip our Baby Goat hats to all those out there doing great things and continuing to deliver amazing concepts and experiences to customers - there are some incredible role models out there.
Now, the last and most important word in all of this belongs and is dedicated to our team of employees; All employees past and present have played a role in shaping The Baby Goat as it is today and it remains a huge pleasure to go to work together every day. Our Pub teams do an incredible job of ensuring that our guests enjoy our product and feel welcomed - that is so much more difficult than you might imagine. So, here is a big toast to all of our Pub Stars, our Pub Legends, our Sales Champs & our Marketing Heroes. Time to attack 2023 and enjoy a few beers along the way!
Our Objectives for 2023:
And that’s it! Thanks for reading this far. A long one but hopefully also insightful for those looking forward to what we have ahead of us this year. As mentioned at the start of the Blog article, we will be providing individual updates on the more specific topics and initiatives aligned to our main objectives, but this annual process of review and outlook keeps us honest and keeps you informed.
If you have any questions or comments, please don’t hesitate to share, and we look forward to seeing you in the Pubs some time soon.
Lots of love,
The Baby Goat Team