Craft beer makers refreshed by E2m capital investment
The company behind McGargle's craft beer has received a fresh €2m from investors and has restructured its balance sheet.
The deal is part of a turnaround plan at Rye River Brewing which has brought the company into positive EBITDA (earnings before interest, tax, depreciation and amortisation).
The brewer received the cash injection from Blue Bay Ireland Corporate Credit last November.
It plans to use the money to add further brewing capacity and continue to grow sales volumes.
In accounts covering the year to the end of December 2017, the company's directors state that in 2015 and 2016 the company had incurred heavy losses due to an overly ambitious expansion plan.
After a cost-cutting programme, as well as exiting deals to distribute beer for third parties, the company's profitability has been boosted, the directors said.
"Rye River is now an exclusive craft brewer with no commercial ties for third-party brands, apart from a small volume of contract brewing."
Blue Bay Ireland Corporate Credit has now been renamed, with its principals having moved to a different entity called Dunport, after Blue Bay head office decided not to raise a second fund for Ireland.
Rye River had EBITDA of €618,825 last year, compared with a loss of more than €2.5m on an EBITDA basis the prior year.
In the first quarter of this year the company's trading has been in line with a plan to grow sales and production by 40pc this year.
But managing director Tom Cronin warned that the industry is facing challenges.
"Our bottle costs have gone up 7.5pc this year," Mr Cronin told the Irish Independent, adding that his business had also faced increased malt costs because of a reduced harvest affecting its supplier last year.
But Mr Cronin said the Irish craft beer category as a whole has a "huge runway ahead of it if, as a nation of independent craft breweries, we ensure quality and consistency."
"The consumer that's out there is drinking less but they're drinking better quality.
"They're willing to pay a little more but they want to know that when they sit down to enjoy whatever premium beverage they've paid a bit more for, it delivers."