The Company is a brewer with more than 10 years of experience operating as a brewery. Now it will open a new and modern brewery with a restaurant and have an exclusive rent agreement in Riga – the capital city of Latvia. Brewery and restaurant are finished and waiting to get all required licenses and permits to open. According to the information provided by the management, it will open on 29th April. The loan will be used to refinance part of owner’s loan.
We evaluate the Company with a grade B. The Company has been successfully producing a beer for 10 years, and would like to expand its producing capacity, variety of beers, open restaurant and has experience, human resources, and financials to be capable of doing it. Based on the worst-case scenario analysis the Company should have no difficulties to repay principal and interest.
The brewery and the restaurant are located in industrial and fast-growing environment. It is housed in a completely restored building from 1938, which suffered a fire and was abandoned for a long time. The exterior and interior were designed by Sampling Architects, whose main focus was on preserving the authenticity of the building with as little waste as possible.
- Most of the brewing equipment is brand-new and modern.
- The Company have experienced and recognisable brewer with more than 20 years of professional experience.
- Total capacity of beer production is 10t per month.
- Produced will be more than 9 types of beers, including ale, porter and lager type beers under Odzienas muiža, Lutausis and Manufaktura brands.
- The restaurant has 23 tables and more than 50 seats.
- Within the restaurant only self-made beers will be offered.
- Restaurant menu will include variety of snacks, salads, burgers, and kebabs and will deliver food with Wolt and Bolt.
- The building has rooms that can be used for social events, small banquets, conferences, or beer tastings.
- In the gaps of active production, there will be offered tours of the brewery.
- No lunch, leisure, recreational places within the nearest city surroundings
- Experienced staff in hospitality, brewing and restaurant operation
- Closely are located public transport stops (tram, trolley, bus)
- Located in yard of industrial buildings, cannot be seen by the road
- There was no restaurant or brewery before, thus building has no link with customers
- The concept does not match local meadow area
- Premises allow to expand the capacity of the restaurant
- Apply for small brewery status and enjoy tax benefits
- Change of government policies and legislation
- Bureaucratic burden (restaurant permit, excise licences), that restricts operation- Economic downturn
The Company sells beer of EUR 35 – 40 thousand a year, in 2019 part of old equipment was sold, thus there is an increase in turnover. According to the information provided by the management, in 2021 the company sold beer of EUR 30 thousand. Based on the calculations provided by the management within the first year (2H 2022) EUR 70 thousand sales are planned and in 2023 EUR 160 sales are planned, including beer and restaurant.
Beer plays an important role, accounting for more than 70% of the worldwide alcoholic beverage market share. Lager beer has been a dominant beer category, however over the last decade an interest for craft and specialised beers has been noticed and has become a fast growing segment. Craft and specialised beers are usually made in small breweries.
Latvia has long been one of the largest consumers of alcohol in EU. In 2020 Latvia was the first country in EU by total household spending on alcoholic beverages (% of total). Based on OECD research Health at a Glance 2021, in 2019 an average Latvian consumed 12,9l of absolute alcohol (100% alcohol) a year of which 4,9 of absolute alcohol was from beer (according to the sales data). Latvia is historically considered also as a “beer country” and in average beer consumption per capita lags only behind beer superpowers such as the Czech Republic and Germany.
In 2020 in Latvia were 51 companies producing beer, while in 2011 there were only 16. In comparison - in France there is approx. 2 300 and in Germany 1 500 breweries. Although the number of breweries in Latvia is little, there has been a boost of breweries (especially small breweries) after 2011. In Latvia the largest beer brands Cēsu Alus, Lāčplēsis and Aldaris takes the largest part of beer market (9 largest beer wholesalers took 90% of the total beer market in 2019). Based on the fact that Aldaris was acquired by Calsberg Group and moved beer production to its other breweries located in Estonia and Lithuania, the total beer output has decreased in 2014 to 76Ml (in comparison, in 2013 beer output was 130M l).
There is no publicly available official statistics for craft beer breweries but based on the increasing variety of local beers at the bars and on the supermarket shelves, in Latvia the popularity of craft beer is still rising.