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Not all kombucha is created equal. Batchwell proudly makes New Zealand’s best tasting, small batch, organic kombucha, right here in Auckland. 100% New Zealand owned, Batchwell is the market leader of gut health beverages.
Batchwell Limited has been creating high quality, batch-brewed kombucha with organic ingredients and fresh pressed juice since 2016. In November 2020, Batchwell launched its new alcohol brand, Blume, which combines Batchwell's kombucha with premium New Zealand spirits.
The business is led by an experienced management team and board and has been self-funded by the 4 founders, with a total of $725k having been invested to date. Batchwell has been run off a low cost base since the beginning by sourcing high quality second-hand production equipment, relying mostly on organic customer growth and basing operations out of its very own production facility in Penrose, Auckland.
Batchwell has enjoyed revenue growth to $620k since launching and achieved 63% CAGR over the past 3 years, with consumers loving Batchwell’s visually appealing and great tasting kombucha. Hospitality channel sales grew by 10% from FY20 - FY21 despite COVID-19. Blume had a soft launch into the Auckland market in November 2020 and is now ready for expansion through on premise hospitality and retail channels to capitalise on the growth within the better-for-you alcoholic drinks category.
The better-for-you beverage market is one of the most disruptive trends in the global beverage industry. This is primarily driven from consumer values being influenced by the health concerns associated with a high sugar diet. Kombucha, a subset of the better-for-you beverage market has quickly evolved over recent years from servicing a niche population to becoming a mainstream preference among consumers. The growth and size of the global market illustrates this growing trend. The global ready-to-drink (RTD) alcohol market was worth over USD $22.5 billion in 2019 and the global kombucha market is enjoying similar growth now currently worth USD $1.84 billion.
Batchwell's intention is to be a dominant producer of kombucha and other gut health products in New Zealand and abroad. Its core product, Batchwell kombucha, is already a prominent brand across the segment being rated the best tasting kombucha in New Zealand in 2019 by Metro. Blume, while still young, has shown impressive signs of growth and quick distribution, providing compelling growth opportunities both domestically and abroad. The strong brand and unique products place Batchwell in an excellent position to capture significant market share.
Batchwell is now raising up to $1m to invest in production capability, portfolio expansion and increased investment in sales and marketing activities for all products.
Batchwell’s growth strategy involves aggressively expanding the reach of its existing portfolio across the New Zealand hospitality and traditional liquor channels. Growth will come from new products, with several key innovations to be launched under the Batchwell brand utilising its existing distribution channels. Enabling this new product opportunity will be an investment in production capability and efficiency, with new equipment significantly increasing output and margins. FY22 is expected to show revenue growth of 161% as Blume trades for a full year and distribution gains and successful new product launches accelerate non-alcoholic growth. Batchwell remains committed to producing the best, for your gut.
This is your opportunity to join us at an exciting point in our growth journey.
Batchwell has a strong management team and board with a high level of experience across a variety of industries which has supported the businesses growth to date and will help to execute future opportunities.
The complexity of the gut and its overall importance to mental and physical functionality has increasingly become an important topic of research in medical communities globally. The gut has been called the “second brain” in terms of its importance to health, energy, mood and cognitive function.
According to Euromonitor International’s Health and Nutrition Survey 2020, about one-quarter of consumers globally suffer from lower digestive health issues. In half of those cases, consumers claim that this has a moderate or even severe impact on their overall health. Gut health goes far beyond solely digestive health, encompassing immunity support and weight management. Gut health refers to a well-balanced microbiota in the gastrointestinal tract and is shown to impact physical and mental wellbeing. Gut health is also related to numerous diseases, such as diabetes, obesity or autoimmune disease, and recent research even suggests an impact on mood due to the so-called gut-brain axis.
The gut is made up of more than 100 trillion live bacteria which collectively make up the gut microbiome, which functions at its optimum when there is a variety of the bacteria living in it. Within those trillions of gut bacteria are about 1,000 different species, represented by some 5,000 distinct bacterial strains.1 Everyone's gut microbiota is unique, but there are certain combinations and collections of bacteria that are found in greater quantities in healthier individuals.
62% of people worldwide suffer from digestive issues at least once a year.
95% of serotonin, a major mood influencing hormone, is produced in the gut.
70% of your immune system is located in the gut.
Evidence confirms that the types of food and beverages we consume directly determine the levels of good and bad bacteria in the gut and one of the leading causes of a damaged gut microbiome is the consumption of processed and high sugar foods and beverages.
With limited healthy alternatives available, consumers have been subjected to high sugar, artificially flavoured products which have little or no nutritional benefit. This is fuelling the shift towards functional fermented products, such as kombucha, that are naturally better-for-you and contain strains of bacteria and acetic acids that are good for your gut.
If you’re not familiar, kombucha is a fermented functional beverage made with water and black or green tea. The traditional process of fermentation involves leaving a symbiotic culture of bacteria and yeast (SCOBY) to ferment in a sweetened tea mixture for 1-3 weeks. The resulting probiotic beverage is a rich source of vitamins, amino acids and bacteria that encourages gut diversity and healthy digestion.
However, a thriving kombucha industry and increased consumer demand have led many organisations to take short cuts in order to mass-produce products.
Many companies have to cut the fermentation short to prevent continued carbonation and to make a consistent tasting product. This typically leads to fewer varieties of bacteria being formed.
Companies pasteurise their products to increase shelf life and allow for international distribution. The heat during pasteurisation reduces the number of live probiotics found in the kombucha.
Kombucha initially requires sugar to feed the SCOBY but there should only be a small amount left in the final product. Sweeteners are sometimes added post-production to mask the residual taste, however, the use of sweeteners causes an imbalance in gut bacteria.
Some products are made using kombucha concentrate (a syrup that is diluted with water), which does not have the same nutritional values as a product fermented traditionally.
Batchwell is an award winning drinks company that strives to make the most delicious, high quality, better-for-you beverages. Our kombucha is traditionally batch brewed in glass jars with organic ingredients which means it has tons of healthy bacteria that enhances gut health.
Batchwell's mission is to continue to create quality small batch kombucha and other gut health related products that complement the unhealthy soft drinks currently available in the market. Our aim is to provide our consumers with products that are actually beneficial for their health, unlike many of the cheaper ‘kombuchas’ on the market.
Batchwell offers a range of non-alcoholic and alcoholic beverages under two foundation brands.
Batchwell is our range of award winning probiotic kombuchas. We combine traditional kombucha brewing techniques with modern flavour combinations to create quality products that consumers love.
We are a small batch brewer that ensures every bottle of kombucha is packed with as much nutrients as possible and has the added probiotic benefits that can help improve your gut health. Our unique organic tea blend is handcrafted by us, and steeped in twice-filtered water. Our juice is cold pressed in our brewery and we only use organic whole ingredients in accordance with our BioGrow certification.
The Batchwell brand has a strong connection with its consumers and is modern and clean - much like the product. The brand's sleek design is positioned to appeal to consumers seeking a premium yet accessible product.
We have secured our spot as one of the leading kombucha brands in the country with seven flavours currently on the market. Our range includes a mixture of core flavours and limited edition releases made in collaboration with other New Zealand Brands.
In 2020 we launched Blume, a premium alcoholic kombucha cooler and disruptor in the “better-for-you” category currently shaking up the NZ drinks scene.
Blume currently has three refreshing flavours blended using Batchwell’s organic kombucha, sparkling water, natural fruit, botanicals and quadruple distilled spirits for a silky smooth taste. Blume is low in sugar, low in calories and free from any artificial flavours or sweeteners, with a 4% ABV.
Aside from carefully considering what’s in the can and catering to the health-conscious consumer of today, the Blume cans themselves are a reflection of the brand's cheeky, chilled and unique identity. The colourful Blume illustrations on a simple white background were created by internationally renowned French artist, Jean Jullien. The quirky illustrations are intended to poke fun at the once serious kombucha crowd, bring a smile to mind and encourage light-hearted conversation.
Richard Old, Head of Operations and co-founder, manages all of the production and warehousing activities. He is supported by the production team, two production assistants and a great network of supply chain partners.
We take pride in where we source our organic ingredients from and employ best practices where possible. We are BioGrow certified and have well established supplier relationships for sourcing ingredients for both Batchwell and Blume.
Our tea, which makes the base of our kombucha, comes from India and China. Our choice of fruit is integral to the production of our unique flavours and is predominantly sourced from various locations locally. Our limited edition release flavours consist of Sauvignon Blanc grapes from Amisfield Winery in Queenstown, Fairtrade Certified Cascara from Papua New Guinea and Motueka Hops.
We have solid supply partnerships with like-minded organisations, including Tea Total, Ceres Organics and MG Marketing. The spirits we use for Blume add to the smoothness of the final product and are sourced from 1919 distillery - a handcrafted distillery based in Auckland, New Zealand.
Packaging is procured from local New Zealand suppliers, with the exception of our 1L glass bottle, which comes from China.
Batchwell kombucha is produced in-house, from start to finish, which allows for flexible and responsive stock management, quality control and fast iteration of new products.
Our factory in Penrose is both food grade and BioGrow organic certified. We have two years remaining on the lease with an option for a further 3 years if required. We also have the ability to expand into the neighbouring low-cost tenancy should we need the space.
We employ traditional small batch brewing techniques to brew our kombucha. This allows us to monitor the quality and taste of every batch. The kombucha base is brewed in 10L glass jars for a period of 7-10 days. Once it hits required sugar and acidity levels, as well as taste profile, the product is then filtered and chilled. We juice organic produce using a commercial cold press juicing machine in-house, then add this to the kombucha base for flavour. We then bottle each kombucha brew by hand, into 375ml and 1L glass bottles, or 20L kegs, before chilling the product, leaving it raw and unpasteurised.
We are currently bottling at between 220 - 300 bottles per hour, with capacity being 300 bottles per hour. Following the capital raise, we plan to acquire additional equipment that will enable us to increase production by 3-6 times. For Blume, we combine our award winning Batchwell kombucha with fresh pressed fruit juice and a splash of sparkling water, before mixing in the finest locally distilled spirits we can find. We make the bulk of Blume in house, to ensure quality before sending it to a contract manufacturer, which creates cost efficiencies at scale. The product is put into 330ml cans.
We pasteurise Blume in order to ensure it remains shelf stable during transport to traditional liquor channels and while exporting.
Batchwell possesses a loyal following of cafe and foodservice customers, delivering into channels through a distributor and courier model.
We manage all of our non-alcoholic products from our temperature controlled factory. Direct orders are sent via courier on an overnight service (this includes north island café and grocery stores). South Island non-alcoholic orders are fulfilled by Cool and Fresh, a chilled sales and distribution service provider that stores and sends Batchwell products to all customers in the South Island.
Blume products are held at an off site storage facility, Store Rite, who fulfil orders to our distribution partner, Euro Vintage. Euro Vintage has two warehouses, Auckland and Christchurch, which order each SKU by the full pallet.
Sales resources are currently split between Batchwell and Blume.
Batchwell’s new sales channel leads are managed either in-house or via Nudes' sales representatives. Nudes is a co-operative sales and distribution company that Batchwell founded in 2019, in partnership with Six Barrel Soda Co., Chia Sisters and For The Better Good.
Blume sales are currently managed by our distributor, Euro Vintage. Marketing for both brands is managed in-house.
Product development is managed by the Operations Manager and is influenced by the board and management team, who have developed expertise in making quality food and beverage products.
For new flavour combinations, we use retail sales data to educate us on what flavours are trending. We then look for flavours we can get that are whole fruit and organic.
For new products, we take a holistic view on consumer needs and category insights to identify gaps in the market. We then evaluate each opportunity, applying a rating based on internal criteria, including market size, growth, competition, in house capabilities, margin and channel access.
We involve our customers and consumers when testing and sampling any new product or flavour.
We currently operate a flat management structure, with all staff reporting to Michael. We have a team of four full-time employees (FTE) and one part-time employee (PTE) - excluding the sales representatives employed by Nudes. We plan on growing the team to eight FTE’s and one PTE by the end of FY23.
We have an outsourced accounting provider, Cloud9, which is overseen by Michael Tutty. The board plays a key role in reviewing accounting information, preparing budgets and financial modelling.
Batchwell and Blume are protected with trademarks in NZ and Australia and we rely on trade secrets for our recipes and processes.
We recently changed our company name to Batchwell Limited from Olbies Limited.
Nudes is a co-operative of like minded independent kiwi drinks companies, including Batchwell, that offers retailers a range of quality drinks, on one invoice.
Nudes was established in order to increase the sales time in front of customers, while managing resource costs efficiently. Nudes allows Batchwell to scale its sales force economically and establish fridge infrastructure in leading outlets.
Joining Batchwell in founding the co-op is Six Barrel Soda Co., Chia Sisters and For The Better Good - each owning 25% of Nudes. Founder brands equally contribute towards shared resources for marketing, distribution and sales.
Nudes also distributes a small range of complimentary products including Otis Oat Milk and Cameo Cafe Syrups and expect to have more brands on board soon. For these distributed brands, Nudes collects a margin on sales, helping to reduce operating costs.
Whilst created as cost saving incentive, potential exists to evolve Nudes into a sales and distribution business, which would be upside for Batchwell shareholders.
Priorities for all Nudes members include:
Our drinks are all bottled in glass or compostable plastic made from plants. We all use recycled cardboard cartons to create minimal waste.
All companies have a lower or no sugar policy, and use fresh and real ingredients in place of chemical flavourings.
Chia Sisters and For The Better Good are both certified Carbon Positive meaning they offset 20% more emissions than they create.
By working together we can help each other create better and more resilient businesses and take on the big guys in a more impactful way.
Nudes currently employs two full time sales resources, one in Auckland and one in Wellington.
Products sold under the Nudes model are stored at Batchwell. Orders are picked and packed from our Penrose factory, under a fee-per-order-packed arrangement, and delivered on a courier.
Consumer behaviour has shifted in recent times, with health consciousness and quality, among other factors, having more influence on consumer decisions.
A lot of the characteristics that we are seeing across our product segments are described internationally as Mindful Consumption - the premise of having consciousness in thought and behaviour about the consequences of consumption. Our consumers are driven by the four key factors:
Health and wellness has become an important part of our consumers' every days lives. To them it's about creating a balance in life with a particular focus on staying active and being aware of what they are consuming. They are motivated to make smarter choices for their wellbeing every day. This ranges from reducing sugar intake and calories, minimising preservatives in food and keeping active.
Consumers of kombucha gravitate toward Batchwell because of its traditional brewing process and high quality ingredients. However, a large portion of consumers are unaware of the shortcuts taken to make cheaper products and still purchase based on price.
When it comes to consuming alcohol our audience tends to prioritise quality of product over quantity and price on most occasions. As such they are generally prepared to pay a higher price for a better quality drink. This is often justified by the fact that they will drink less in one sitting.
Generally our audience are kombucha lovers, with a strong loyalty and love for the Batchwell brand. Batchwell is described as a premium kombucha offering and is often a household favourite. This association has been the driver behind a lot of people wanting to try Blume as they trust it will be a great product and like the added health benefit that kombucha brings.
Our consumers like the idea of supporting a local brand and in most instances are prepared to pay a bit more to do so. Not only does it make them feel good knowing they are supporting a small local business, they are also becoming increasingly aware of the environmental footprint associated with imported products.
Batchwell has strong coverage across premium retail outlets in New Zealand, including Farro, Huckleberry and Commonsense Organics. It also has access to the mainstream retail channels, sold in selective New World and Pak N Save stores nationally. Batchwell services premium retail with a direct relationship, while the mainstream channel is managed by Cool N Fresh, Batchwell's grocery sales and merchandising partner.
Batchwell found immediate success when it launched, developing a highly desired group of cafe stockists. Auckland focused initially, it now delivers to some of New Zealand's best cafes including Dizengoff, Ripe, Fabric (Auckland), Gather & Roam (Whangamata) and Niche (Sumner). Batchwell services Auckland and Wellington cafe customers through Nudes, while the relationship for outlets outside these main metro regions are managed directly.
Batchwell is served on tap and in bottles into some of New Zealand's top on premise outlets including Kingi, Prego (Auckland), Floriditas (Wellington) and Amisfield Vineyard (Central Otago). As consumers demand more sophisticated non-alcoholic options, Kombucha is beginning to be an increasingly popular mixer and beverage of choice. Being available in kegs also allows Batchwell be to a premium mixer for bars, while its beautifully designed bottles are a statement on the table.
The foodservice channel is a key focus for Batchwell in FY22, with product able to be served on tap or in bottles. As consumers become more aware of the sugar content in beverages, Kombucha's wellness credentials are quickly gaining share from traditional sodas and juices. With strong relationships across both independent and organised groups Batchwell can be found in Burger Burger, Fatima's and Hello Mister to name just a few.
Batchwell also sells beverages, direct to consumer, via each brands' online platform. Batchwell has a loyal customer base of one-time and subscription purchasers, with orders fulfilled from its Auckland brewery, delivered via courier. Consumers are able to order both Batchwell and Blume in single flavours, or the popular "mix-ups".
In 2020, Batchwell added a kombucha home brew kit to its online offer, reinforcing Batchwell's traditionally-brewed credentials. Sold for $90, each brew kit gives consumers the knowledge, ingredients and equipment to make great tasting kombucha at home.
Rising health consciousness has been a significant driver of the global kombucha market. Consumer demand has shifted from high-sugar soft drinks to bottled water and functional drinks such as kombucha.
The global functional beverage market size is predicted to reach US$204.1 billion by 2024. The kombucha segment alone was worth US$1.84 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 23.2% to 2027. The unique flavour and fizzy taste of kombucha makes it stand out amongst the wide variety of beverages available in the market.
The kombucha market is seeing strong growth due to developments that have been made to the production process and a reduction of inefficiencies throughout fermentation, however, this has resulted in a loss of quality and numerous cheap products entering the market. New and accessible technologies, such as bottling and automated labelling replaces the need for manual labour, further reduces production time and positively influences market growth.
Asia-Pacific is the fastest growing region in the kombucha market. Owing to the rise in the availability of kombucha in local retail shelves, especially in countries like Australia, New Zealand, China and Japan.
The global RTD Alcoholic Beverages Market is expected to enjoy growth of 3% per year to be worth over US$32 billion in 2024.9 Better-for-you innovation is responsible for the growth, taking market share from traditional, high sugar, incumbent RTD's.
Low calorie offerings, natural ingredients, sophisticated and craft flavours, and Instagram-friendly brands that fit into consumers health-focused lifestyles are playing a big role in growing the RTD segment. As a competitive industry, more brands are focusing on new product development, portfolio expansion and capacity extension to gain a greater market share.
Online and delivery distribution channels for RTD sales are anticipated to experience significant growth owing to increasing popularity of e-commerce platforms.
The drinks market in New Zealand has grown over the past five years, driven in part by the demand for healthier options, mirroring global trends.
Kombucha has quickly emerged as a significant category in the wider beverages industry in New Zealand.
Rising health consciousness has led many consumers to reduce their sugar consumption, fuelling growth in naturally low sugar products like kombucha at the expense of high-sugar soft drinks. Overall, the wider New Zealand drinks industry revenue is expected to grow at an annualised 2.1% over the next five years to NZ $1.3 billion. This includes an anticipated decline of 4.4% in 2020, due to the negative effects of the COVID-19 pandemic.
FY21 total annual supermarket kombucha sales amounted to NZ $30.7 million with over 6.7 million units sold. The large majority of supermarket sales came from the top two Australian commercial brands, as opposed to small batch traditional brewers. However, the value contributed by major brands declined by 24.9% as consumers became more educated about the lack of quality of cheaper kombucha drinks - meaning they are more likely to purchase from traditionally brewed local brands.
Batchwell was ranked the 7th largest kombucha brand in New Zealand and the 2nd most premium brand.
Traditional RTD beverages have been losing market share to better-for-you beverages with consumers instead opting for premium, healthy and unique offerings.
New Zealand RTD category sales grew by 20.3% in 2020, compared to 2019. This growth is largely due to the emergence of clean, low sugar better-for-you RTDs. This has been driven by the rising health concerns, causing many consumers to make more conscious decisions about their choice of alcoholic beverage.
New Zealand liquor sales have remained stable with 2020 industry revenue being reported as NZ $2 billion. The majority of sales come from beer (35 %) and wine (29%). RTD’s growing market share currently sits at approximately 12%, representing $198 million in total sales.
The performance of online sales, licensed venues and liquor stores continue to influence the success and growth of the RTD category. Brands that perform well will continue to see growth in market share, while poor performing brands will be quickly replaced. Restrictions placed on downstream liquor retailers through COVID-19 had a significant impact on sales through 2020 but brands that provided e-commerce solutions, such as Blume, were impacted less.
In an increasingly competitive flavoured soda RTD market, Blume maintains a defensible product with its kombucha base as a differentiator.
There are only a handful of kombucha brewers in New Zealand which can compete with Batchwell on quality of ingredients and taste due to our traditional approach to brewing. This provides a unique opportunity for us to maintain market share.
However, the growing trend of consuming healthier beverages has generated interest from a number of beverage companies, leading to a wide variety of kombucha drinks on the market.
The vast majority of competition sits in the low cost, low quality category, with only a smaller number of premium brands available. Increased competition of low quality kombucha has resulted in market growth and uptake of kombucha. Batchwell sits above these brands with little competition while cheaper brands have been exiting the market due to competitive intensity - Frucor's Australian kombucha brand Amplify recently withdrew from New Zealand shelves.
Biodet Services conducted a microbiological analysis of a select range of kombuchas in April 2021. The laboratory tested for an Aerobic Bacterial Count, which is an indicator of helpful bacteria present in the kombucha.
We make the best Kombucha in the country and we’re now ready to expand our categories while staying focused on high-quality products that are good for your gut.
Our recent customer research project has given us valuable insights that will inform our next phase of product development. We plan to leverage our existing brands to support growth across our core business and launch and scale new products. To achieve our forecasted growth we will focus on expanding our channel coverage.
The next 18 months will be focused on significantly increasing our sales and marketing resources across both alcoholic and non-alcoholic ranges. Testing overseas markets, such as Australia and the United States, is a key priority for Blume. So far Blume has only had a soft launch with almost nothing spent on marketing and Batchwell has had organic growth through the same retailers for the past 3 years. Both brands will benefit enormously from targeted marketing spend and increased distribution in their respective channels. Expanding the non-alcoholic portfolio also remains a priority.
18 months onwards the business plans to launch a targeted range of new products in the alcohol category as well as our first non-beverage product. This expanded portfolio provides economies of scale to reduce our overheads per unit and increases our leverage with larger retailers for wider distribution.
The above table assumes we raise our minimum capital raise target of $700k. Any additional funds will be put towards bringing forward growth initiatives and NPD.
We will continue to invest in market research and product development in order to increase our product range and appeal to a wider audience.
The growing interest in gut health products is creating a demand for new products, flavours and formats. We launched our new Ginger & Tumeric Batchwell flavour in June and plan to launch four new products and flavours in the next 24 months, including:
We've built a strong and committed operational team but will increase the focus on sales and marketing in 2021.
Post raise, we plan to hire two new business development managers who will have a split focus: driving kombucha distribution and improving the rate of sale for Blume. We also plan to hire a marketing manager to drive brand awareness, sales and oversee the activation of new products. Operational resources will increase with demand.
We will continue to leverage the Nudes co-operative by accessing the shared sales resource, expanding where appropriate.
Our strategy on branding and marketing is to continue to grow an even stronger brand that resonates with more consumers as a leading producer of gut-health products.
We intend to leverage our existing strong brand to build a positive platform to continue to communicate from. Marketing activity will be engaging, authentic, and increase the awareness of good gut health.
As we broaden the product portfolio of the business, our marketing strategy will continue to build the Batchwell brand as a leader in gut health. Messaging will focus on the importance of your gut to a healthy lifestyle, and how Batchwell helps achieve this.
We'll remain committed to telling the Batchwell story in an engaging and authentic way, building brand connection and value.
We believe that now is the right time to introduce Blume to a global audience.
Blume is enjoying early success in New Zealand as industry growth continues to support better-for-you beverages. Through existing relationships, we plan to test and launch Blume in new target export markets such as Australia and the United States (California) in FY22.
We plan to invest $110k in new and improved production equipment in order to improve our production capability, efficiency and margins.
In addition to new equipment, we also have the ability to expand our Penrose facility into the next door tenancy. A larger premises will allow us to increase brewing capacity and product storage. This will enable us to fulfill larger orders without facing capacity constraints.
Our strategy of dominating in New Zealand while entering selected export markets is designed to ensure the company is an attractive prospect for a range of potential acquirers in the next 3-5 years.
Potential acquirers could include beverage companies with exposure to both alcoholic and non-alcoholic segments. Equally food companies with a focus on health and wellness, looking to expand into beverages. Both Batchwell and Blume may also attract interest as stand alone companies in the respective segments.
We believe our strategy and approach will provide excellent returns for investors.
We have no current plans to return internally generated profits to shareholders, instead preferring to reinvest in the business to enable us to best execute on our growth plans.
As we grow in scale and potential profitability, the directors will consider all avenues for generating returns for shareholders. In the absence of a trade sale and subject to profitability and cashflow, Batchwell may pay dividends to its shareholders.
All financial projections contained in this document are based on our best assessment of future financial performance and assume that we successfully raise the minimum funding target of $700k. If we raise more than the target amount, we will execute on our growth strategy more aggressively by allocating more funds to sales and marketing and new product development.
Valuation of the company before funds are invested
Amount required for the offer to be deemed successful
The maximum amount the company is looking to raise
Percentage of the company offered at the minimum target
Percentage of the company offered at the maximum target
The cost of each share
The minimum investment amount for this offer
See the Subscription Agreement for details
Batchwell Limited may have rights to shorten or extend this end date
We are seeking to raise up to $1m of new growth capital to fund our market growth strategy which is centred around improving production capabilities, growing our brand presence and new product development.
The board has resolved to allow the company to raise an additional $200k of over-subscriptions (beyond the $1m maximum target) at its discretion. If over-subscriptions are accepted, the company has the ability to accept up to $1.2m in aggregate which would equate to 34.29% equity.
The board and existing shareholders of Batchwell, having regard for the historical growth and the significant market opportunity, have set the pre-money valuation of the business at $2.30m. This equates to a multiple of 2.54x forecast revenue for the 12 month period ending 30 November 2021 (includes actual revenue for the 6 month period ended 31 May 2021).
The valuation has been determined having regard for:
The following table sets out the current shareholding structure and the shareholding structure on completion of the offer.
The final shareholder structure may vary from this due to the actual amount raised and rounding of individual allotments.
The cap table below provides a fully diluted position, including shares that may be issued under existing share options scheme.
Batchwell Limited is offering ordinary voting shares (Ordinary Shares) ranking equally with all other shares on issue. The Ordinary Shares to be issued by Batchwell are to be issued to Snowball Nominees Limited (“Nominee”), who will hold legal title to those Ordinary Shares on trust for the relevant beneficial owner of those Ordinary Shares (i.e. the investor). Further detail on why Batchwell is choosing to use a Nominee is described under the heading “Nominee Shareholding Structure”.
Holders of Ordinary Shares have:
Holders of Ordinary Shares are also subject to drag and tag along rights (as set out in the Shareholders’ Agreement).
The Subscription Agreement, Shareholders’ Agreement and Constitution set out other terms that will apply to a shareholding in Batchwell. You should read these documents before subscribing to Ordinary Shares under the Offer.
We are making use of a nominee shareholding structure to simplify the share register and prevent Batchwell from becoming a “Code Company” for the purposes of the Takeovers Code in the future. In broad terms, a company becomes a Code Company when it has 50 or more (voting) shareholders and share parcels and it (including subsidiaries) has total assets of at least $30 million or total revenue of at least $15 million at the end of its last financial year. Shareholders of Code Companies can be restricted in how and when they are able to transfer their shares. Given the forecast growth, the Batchwell directors do not believe it is in the best interests of the company, its existing shareholders, or investors for Batchwell to become a Code Company and bear increased compliance costs.
The Ordinary Shares to be issued by Batchwell are to be issued to the nominee company Snowball Nominees Limited (the Nominee), who will hold legal title to those Ordinary Shares on trust for the relevant beneficial owner of those Ordinary Shares (i.e. the investor). The full terms on which the Nominee will hold the shares are set out in the Nominee Deed Poll (which forms part of the Offer Documents).
In broad terms, the Nominee must:
Under the Nominee Deed Poll, each beneficial owner indemnifies the Nominee against any losses, damages, costs, actions, proceedings, claims and demands that may be made against or incurred by the Nominee as a result of it holding the Ordinary Shares under the Nominee Deed Poll (unless the Nominee has been fraudulent or grossly negligent).
The company intends to use Orchestra.co.nz to manage their share registry.
We intend to keep our investors updated through:
Shareholder communication will be distributed through Orchestra.co.nz
The founders have invested $725k in cash to date.
While there is no existing plan, or identified requirement, to raise additional funds after this funding round, the Batchwell board may elect to raise additional capital in the future to accelerate growth plans or take advantage of other opportunities that will increase shareholder value, as they arise.
Batchwell currently has four directors, Tom Darby, Zak Darby, Catriona Toop and Richard Old. Two independent director will be elected after the capital raise and Catriona Toop will step down as director, leaving five on the board.
All remuneration of key executives and team members will be reviewed regularly by the board to ensure that remuneration is market driven and reflects individual performance and achievement of role objectives.
There are no past or current litigations or disputes known to the directors or management.
Batchwell currently does not have an employee share option scheme in place but has made an exception for the GM, Michael Tutty.
The board will review this regularly and may choose to implement a formal employee share option scheme at a later date.
Founders and board members, Tom and Zak Darby, have an interest in Amisfield Vineyard, one of Batchwell's suppliers for the Sauvignon Grape juice and a customer.
Tom and Zak Darby also have an interest in Jacks Point Golf Course, one of Batchwell's on-premise customers.
Snowball Effect charges a fee, if the company successfully reaches its minimum funding target, of the greater of $25,000 or 7.5% of the funds raised.
The distribution of this offer outside of New Zealand may be restricted by law. This is not intended to, and does not, constitute an offer of securities in any place which, or to any person to whom, the making of such offer would not be lawful under the laws of any jurisdiction outside New Zealand. This includes, but is not in any way limited to, Australia and the United States. It is the responsibility of any Snowball Investor to ensure compliance with all laws of any country outside New Zealand relevant to their subscription, and any such Snowball Investor should consult their professional advisers as to whether any governmental or other consents are required, or other formalities need to be observed to enable them to apply for securities pursuant to each offer. The failure to comply with any applicable restrictions may constitute a violation of securities law in those jurisdictions. The securities in each offer have not been and will not be registered under the US Securities Act or the securities laws of any state of the United States.
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It's crucial for you to understand the characteristics and risks of this investment opportunity. New Zealand law normally requires people who offer financial products to provide in-depth information to investors before they invest. The usual rules do not apply to offers by companies through Snowball Effect. As a result, you may not be given all the information you need to make an informed decision. Investing is risky. Some of the key risks include loss of capital, illiquidity, lack of returns, dilution, loss of key people and customers, and lack of control. You should only invest money that you can afford to lose.