Better Beer chases a frothy valuation

Mighty Craft (ASX:MCL), who has a 33% ownership in Better Beer, has been rumoured to be on the market for a full buyout of Better Beer in exchange for MCL shares.

Better Beer is the zero-sugar, zero-carb beer brand launched by the comedic duo behind The Inspired Unemployed. You’ve probably tried one or have seen the beer around, at least on their social media accounts.

But here’s what you probably don’t know: The Inspired Unemployed launched the brand with no investment on their part back in November 2021. Just a few years later and they’re on track to generate $50 million in sales annually.

How did they pull it off?

Here’s the story:

The Very Beginning

Matt Ford and Jack Steele were working as tradies when they quit their jobs in 2019 to chase after a full time social media career. At the time the duo only had around 9,000 followers, today they have over 2 million.

The Inspired Unemployed engage with their audience through many different channels, including Instagram, TikTok, a Podcast channel and, more recently, their tv show “The Inspired Unemployed (Impractical) Jokers”. In 2021 they made their first business venture through launching Better Beer, which has had tremendous success.

Better Beer was launched in partnership with Torquay Brewing Company (TBC), a portfolio company of Mighty Craft, who had a 60% ownership with The Inspired Unemployed having the remaining 40%. To get the brand off the ground TBC put together a $1.4 million capital raise, while The Inspired Unemployed were accountable for marketing and PR to support the launch and ongoing sales of Better Beer.

Their strategy to grow Better Beer was two-part:

• Address a growing market - the beer category is undergoing a significant shift towards no or low alcohol options

• Resurrect great beer ads - using their social media following to advertise in ways that aren’t possible through traditional mediums

Beer ads have been in decline over the past decade as drinkers cut down their consumption and move towards more boutique brands. However, using cheaper ad distribution through social media, Better Beer has aims of producing ads as memorable as Carlton Draught’s “Big Ad”:

Taking Off

Better Beer came out of the gates strong with $19 million in sales in the first 9 months. Their creative marketing tactics continued the trajectory with the introduction of the “Day For It” day, an unofficial holiday pronounced by The Inspired Unemployed, to be held on the first Saturday of December each year.

In 2023 they were eying off a $20 million capital raise in hopes of taking the next step from beer cans to securing taps in pubs across Australia. However a near-death experience for Mighty Craft, the ultimate parent company of TBC, put the capital raise on hold.

Here’s the Deal

Mighty Craft has been selling off its portfolio of brands in an effort to get it’s debt under control with $22 million remaining as at 31st December 2023. The company is now considering that acquiring the remaining shares in Better Beer may be it’s best way forward, given it’s 33% ownership already contributes 90% of the company’s revenue.

There has been a recent restructure of the group that provides a cleaner cap table, allowing for a more straightforward transaction.

MCL has the 33% of Better Beer valued at $31 million and the market cap of MCL currently sits around $2.5 million. If it goes ahead it will be interesting to see how much ownership of MCL Ford & Steele end up with.

Thanks for reading,

Archie Sampson, Founder of Prepped