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May 16, 2013

Portland craft brewer looks to raise $260K

Courtesy Peter Bissell Bissell Brothers Brewing Co. has raised around 40% of the capital the company is seeking from investors to join Portland's busy craft brewing scene.

Peter Bissell, 29, co-founder of craft beer startup Bissell Brothers Brewing Co., knows he's entering a market already saturated by other brands, but he plans to use social media-like tactics to carve a niche for his new brewery, located at One Industrial Way in Portland.

Peter and his brother Noah Bissell, 23, plan to officially launch their company this September or October. On May 10, they filed a Form D with the U.S. Securities and Exchange Committee to raise $260,000 in equity. Another Portland-based beer startup, Banded Horn Brewing Co. LLC, filed a $300,000 equity offering on April 16. That company is headed by Ian McConnell, formerly the head brewer for Sixpoint craft beer.

Bissell Brothers plans to use its capital for a brew house and accoutrements such as two fermenters, a keg system and walk-in-cooler, says Peter, who heads distribution and sales while brother Noah is the brewer. To date, the company has raised about $95,000 to $105,000 from family and other investors he did not want to name.

According to their business plan, the two brothers aim to brew unique, complex, unfiltered ales targeted at the growing market of craft beer in Maine and greater New England. The beers will be packaged in both kegs and silver 16-ounce cans sold in four packs, the latter of which they say is a rapidly growing segment of the craft beer market. They plan to sell, distribute and promote their product in-house, essentially by word-of-mouth and personal connections.

"We are looking at how to cut through the noise and find clients with repeat business," Peter says. The brothers have spent the past year-and-a-half taking their beer to local bars to attract customers. There are no sales yet. They plan to be selling their beer in September.

"Personal connections are the next phase for all product sales," says Peter, who's applying the business skills he learned as a commercial photographer to the new venture, founded in March of this year. "The market is so saturated that it's not about conventional means of measuring [success]. We are looking at how people attach themselves to brands, so it's more grassroots."

Their distribution effort also is grassroots, and somewhat anti-establishment.

"The trend in the industry now is to classify things such as English Ale and IP [India Pale Ale]," he says. "We'll invent a new niche and be the best at that."

While he doesn't want to compare the taste of his beer to other Maine brewers, he says it's close to Maine Beer Co. beer. Across the spectrum of drink options, Peter says craft beer represents about 10% of the market.

Millennial generation drinkers are the target. Bissell Brothers estimates they comprise only 21% of the population, but they account for 29% of the craft beer consumption. "…Portland itself has a huge hunger for locally produced products, with one small business operating for every 35 residents," their business plan says. "This fact, combined with the fact that breweries can't keep up with current demand, make Maine and the greater Portland area ideal for this venture."

In Maine, distributors must handle production over 1,600 barrels per year. A barrel is two kegs. The brothers expect to be below that level for their first two years of operation, says Peter, but then they may need distributors once they decide to enter other states.

And with their initial production plans, they still would be well under the 60,000 barrel limit for a reduced excise tax backed by U.S. Sens. Susan Collins and Angus King. That bill could be a boon to Maine's 36 small and craft breweries.

Peter expects sales to average $30,000 a month for the three months of business at the end of this year, with 15% to 16% gross margins monthly. The business plan lists revenues of $591,600 in 2014, with expenditures of $454,613 and net income of $136,987. Revenue will come from off-premise retail sales of canned ale and on-premise bar and restaurant sales of kegged and canned ale.

While the company doesn't control the cost of its beer for the end customer, he expects it to retail for about $6 or $7 for a 16-ounce drink, and $10 to $11.99 for a four pack of canned beer. The business plan notes that the company's flagship product, called the Substance, will have a slightly lower price point than the competition.

Competitors listed on the business plan include Oxbow Brewing Co., Maine Beer, Baxter Brewing Co., Marshall Wharf Brewing Co. and Rising Tide Brewing Co.

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