Aces Brew Worx has enjoyed 100% year-on-year growth over the past year, which is all the more impressive considering the tough lessons its founders, brothers Lliam and Dyllan Roach, have had to learn over the course of the year – lessons that have necessitated changing the business’s name, and replacing 60% of its product line.
”It’s always difficult navigating a completely unexpected turn of events,” says Lliam. “Luckily, we were working off a strong base. We took a hit, but we’ve recovered well.” Here’s why.
In 2008, two things happened to the Roach brothers. First, like many entrepreneurs and employees around the world, the economic crash had a negative impact on their financial situation. But the second thing would be more positive. On a trip to the US, Lliam would be introduced to craft beer, a craze that was starting to take hold in a big way.
“I recognised the elements that would make craft beer a hit in South Africa as well,” he says. “South Africans love beer, but more importantly, they’re increasingly loyal to local brands and businesses.”
He saw the challenges as well, however. South Africans might love beer, but they tend to be very loyal to their brand, and so marketing would be incredibly important. The start-up capital required to set up a micro-brewery is upwards of R3 million, which the brothers also did not have.
The solution? “We began negotiations with Mitchell’s Brewery, a micro-brewery based in Knysna,” says Lliam. “Our focus would be building the brand in Gauteng and the North West. Mitchell’s was doing well in the Western Cape region, but it was unknown up here.”
Negotiations took a year, but the brothers would ultimately become the sole suppliers of Mitchell’s in their area, naming the business Mitchell’s Gauteng – and then the hard work began.
Slow and steady
“In any sector, you need to understand how the industry works, and how customers respond to brands,” explains Dyllan. “We had R220 000 start-up capital, which basically meant we were bootstrapping the business.”
Because they are competing with SAB and BrandHouse, which both instal taps as a value add at their clients’ pubs and restaurants, the brothers have had to follow suit for each client they sign up.
“When we launched, this was quite constrictive for us,” says Lliam. “We didn’t just need to convince pub owners to stock our product, but we needed to be able to purchase and instal kegs and taps as well.”
It meant growing a consumer base was slow, but the brothers were patient.
“We quickly learnt that this business is all about relationships. It can take months, even years before a pub owner is willing to stock new brands, particularly independent craft brands. Once you understand that there won’t be a quick turnaround though, you can plan for it. We’ve worked hard at fostering relationships built on trust, and always delivering on what we promise,” says Dyllan.
The team has also discovered a talent for introducing and growing new brands, which has played a pivotal role in growing the business.
“We’re at every food, beverage and lifestyle expo, getting consumers to taste the range we offer and introducing them to these great local brands. They’re organic, chemical free, and of course local.”
The slow growth has suited the fact that the brothers needed to invest in each new sale as well. “As cash flow has improved, so we have been able to afford the installation of more taps,” says Lliam. “It’s been slow growth, but very steady, stable growth.”
And of course, the brothers’ original expectations for craft beer materialised – over the past few years it’s become increasingly popular. “We don’t sell budget beer,” says Dyllan. “Craft beer can price anything from R25 to R50 a draft, which means it’s often more expensive than imported beer. The margins also aren’t high, which means we need to focus on volume.”
Within the first year, the business expanded its portfolio to include a range of other brands, including most notably Brauhauss amm dam, Nottingham Road, Standeaven, Aces Brew Worx, Clarens Brewery, Copperlake, De Garve Brewery, and Dragon Ginger Beer. Because of the nature of micro-brewers, many breweries cannot produce in high volumes, which meant the brothers needed a number of brands in order for supply to meet demand – particularly as the business and its clientele has grown.
“By the start of 2013 almost 60% of our sales were still Mitchell’s sales, however,” says Lliam.And then the unexpected happened.
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Learning the hard way
“By 2012 we had substantially grown our client base,” says Lliam. “We had great products, excellent relationships with pub and restaurant owners in our region, and craft beer was steadily gaining traction.
“Mitchell’s had new ownership, and recognised that we were doing well,” says Lliam. “Prices were raised, which we completely understood. The point of sourcing local craft beer is to support local businesses, and the brewery naturally also needs to do well.”
And then the new owners made an unexpected decision: They wanted to start distributing their products directly in Gauteng.
“By mid-year it reached a point where they stopped supplying to us altogether,” says Dyllan. The brothers went from a 60:40 Mitchell’s split, to 100% other craft brands. “We didn’t have a proper contract in place preventing Mitchell’s from stopping their supply to us.”
It meant a massive shift in gears, but the brothers had two very important things going for them: Excellent relationships with pub and restaurant owners, and a number of other breweries already on their books whose brands they had been promoting.
Dealing with the unexpected
“We realised the best thing we could do was be completely honest with our customers. We explained why we didn’t have Mitchell’s in stock, showed them what we did have, and asked them to stay with us. All but two pubs agreed – they saw us as their vendor, not the brand. They like doing business with us. They trust us, and know we offer excellent brands at good prices, and always deliver on our promises,” says Lliam.
The second challenge was having enough product. “We have signed a deal with a local brewery to create our own proprietary brand, Aces Brew Worx, which we own, and they brew under contract for us. We have also sourced a number of other breweries. Most can’t — or don’t want to – upscale, so we need a number of different suppliers to meet our stock requirements,” adds Dyllan.
A true entrepreneur, Dyllan soon saw the revenue stream value in importing dispensing equipment and kegs that the business needed, and created a second business, The Tap Room. “Dyllan found a way to make a business of importing the kegs,” says Lliam. “We recognised there was a market for good quality kegs at an affordable price. The additional revenue of The Tap Room has certainly helped the cash flow during the transition period from Mitchell’s Gauteng to Aces Brew Worx.”
Going forward, the brothers have changed the business’s name and are much more careful about how contracts are created, what they cover and the signatories involved.
“It’s taken us four years to learn these lessons. We lost the brand that accounted for 60% of our turnover, and have had to recover from that. Our own brand, the range of other excellent products we offer and of course the relationships we’ve spent four years building will all play a role in our growth moving forward,” says Lliam.
Next up is growth in Durban. “Relationships are in place and we believe the craft beer craze will take off in that area soon – and we’ll be ready for it when it does,” says Dyllan.
- Players: Dyllan and Lliam Roach
- Company: Aces Brew Worx
- Est: 2009
- Contact: www.acesbrew.com
25 Of The Most Successful Business Ideas In South Africa
Find out who’s making waves in numerous industries and how they managed to differentiate themselves in local and international industries.
“Disruption is all about risk-taking, trusting your intuition, and rejecting the way things are supposed to be. Disruption goes way beyond advertising, it forces you to think about where you want your brand to go and how to get there,” says Richard Branson.
South Africa has its fair share of innovative and disruptive businesses taking both local and international industries by storm. From cutting edge space technology to reimagined logistics, and innovative business models, here are 25 of the most successful business ideas in South Africa:
- I Am Emerge Provides An App For Township Spaza Bulk Purchasing
- Tuluntulu Offers High Quality Video Streaming On Low Data Speeds
- SSG Consulting Developed KEY360: A Cloud-Based And Web-Enabled Platform For Managing Large-Scale Construction Projects
- Pargo Solving Last-Mile Distribution Challenges
- HouseME Is A Digital Real Estate Platform
- Olympic Paints Has Developed A Built-In Paint Tray Causing An Unexpected Industry Shift
- Passion4Performance Developed A Recognition of Prior Learning Assessment Concept
- NewSpace Systems Delivers High Quality Components At Lower Costs
- My Online Presence Creates End-To-End Solutions For Online Brand Presence
- Skynamo Offering Insights To Sales Teams In The Field
- RecruitMyMom Creating A Platform For Job-Seeking Moms
- GAAP Provides A Hardware And Software Point-Of Sale And Enterprise Solution For The Hospitality Industry
- HeroTel Bringing Wi-Fi To Low Income Communities
- Saryx Engineering Offers Digitised Compliance and Safety For Companies
- BrightBlack Is An Energy Providing Innovative Solar Energy Solutions
- Howler Is An Event Technology Platform
- execMobile’s PocketWifi Keeps Business Travellers Connected
- Rhino Africa Provides Online Touring Assistance
- Snapplify Is Offering Students Access To Textbooks
- GoMetro A Commuter-Driven Mobile App
- Domestly Connecting Cleaning Professionals and Homeowners
- NMRQL Using AI To Deliver Consistent Returns
- Colony Live Connecting Users Across Multiple Platforms
- codeX Is Growing The Work Experience Of Coders In Africa
- This Is Me – Disrupting By Offering A Unique Business Model
Colin Timmis Says ‘Position Yourself For Success By Starting With The Numbers’
People pay first who they feel pressure from, so people will pay you when they feel pressure from you.
Entrepreneur Colin Timmis founded South Africa’s first cloud accounting practice in 2011, Real Time Accounting. Then, a few years after being appointed as South Africa’s first Xero partner Colin became Xero Country Manager South Africa. Xero is the emerging global leader of online accounting software that connects small businesses to their advisors and other services.
Two 20 Year Olds Reshape Entrepreneur Landscape With New Social Investment Platform
The Merge vision is to become the ‘go to’, digital meeting place for entrepreneurs and investors, and to truly make a difference in the world.
- Instagram: https://www.instagram.com/mergeconnect/
- Facebook: https://www.facebook.com/mergeconnect/
- Website: http://www.mergeconnect.co/
- Email: Hello@mergeconnect.co
- Number: 072 458 2182
It’s no secret that finding the right investor for your venture is a challenge that most entrepreneurs face. The current process of finding investment is one that is outdated, and limits entrepreneurs due to a lack of time, and network that is needed to find the right investor. But, this doesn’t have to be the case in today’s digital society, says Zander Matthee and Brandon Bate, co-founders of Merge.
“By making the Internet the middleman, we are able to connect with each other much simpler and faster than before” was Zander’s response. “We have taken advantage of this, and have created a digital meeting place for entrepreneurs and investors” added Brandon.
Merge is a social platform that connects entrepreneurs and investors. It aims to simplify, refine and accelerate the process of finding investment for entrepreneurs, and the process of finding investment opportunities for investors. From idea to developed, the platform allows entrepreneurs to present a brief outline of their venture to a network of all investor types. While doing this, entrepreneurs are able to browse through, and connect with investor profiles that suit their requirements.
From Private Investors to Venture Capital, and everything in between, Merge allows all investor types to join. Investors have the opportunity to personalise their feed to suit their investment preferences, and will be able to connect with innovative businesses – that are looking for investment – at their fingertips. Only once there is a mutual interest in each other, are users able to enter a secure private chat where they can discuss further and share documents under the protection of a digital NDA.
The two boys became good friends during their time in high school at St Stithians Boys College. However, it was only in their last year, 2016, that they decided to pursue their dreams and create the platform. They didn’t know how to code, so rather ironically, they needed some form of investment to get the platform off the ground.
“We knew we had a mountain to climb, but we believed in our vision and that we were really trying to make a difference, and if we could get others to see that, they would be onboard.” said Zander.
Chris Peters is one of these individuals that bought into their vision, and became Merge’s first investor. As a successful entrepreneur and part time investor , Chris saw how much value the platform could bring to all entrepreneurs and investors alike. His marketing and strategic background gave him insight into how Merge could play a vital role in a lucrative space, Brand involvement.
“Entrepreneurship and SME development are two key factors that drive economic growth in developing countries like South Africa. That is why brands are currently getting involved, and looking to support entrepreneurs through various means. We have built a platform that allows these brands to successfully market, and execute on the programmes they have created to assist entrepreneurs.” said Chris
Merge was created to assist all entrepreneurs and investors in finding exactly what they are looking for, regardless of age, race, sex, financial position or social status. That is why anybody can sign-up as an entrepreneur. As long as you are determined and willing to work for your dreams. For too long has the investor space been seen as an “elite club for the select few”, and Merge is here to change that. Whether you’ve gotten your bonus at the end of the year and looking for new investment opportunities, or are an active investor, you can sign-up. Whether you’re currently working, or a retired industry leader, you can join as a mentor.
Their vision is to become the ‘go to’, digital meeting place for entrepreneurs and investors, and to truly make a difference in the world.
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