Gin has been a phenomenon in the last few years and as I walk down the drinks aisles of many a supermarket the choice of spicy, floral, sloe, navy is vast.
Gin is huge and gin is popular. This popularity has fuelled the exponential growth of businesses such as Fever Tree which is now valued at £4billion on a forward price earnings of 79 times earnings (as at 5 August 2018). There are now shortages of lime, pink grapefruit and pink peppercorns – showing how our tastes have changed. This is an excellent example of disruptive businesses riding high on a change in consumer tastes.
So is this gin boom here to stay?
In my opinion tastes have changed forever. However like many a ‘boom’, there will be winners and losers – new sustainable businesses and others that will struggle to survive.
I’m not sure we are at ‘peak gin’ but it may be some time soon as customers start to understand the quality variances between the various gins.
If you are growing your gin businesses you need to look at the sustainability of the product and ensure you have the appropriate working capital structure and funding.
If you are worried about ‘peak gin’ then you need to ensure you have a robust business model that will survive the top of the market and is future proof. Below are just some of the factors to consider for business growth:
• Are you appropriately capitalised?
• Have you got the right funding package both asset based and other?
• Have you maximised your capital allowances?
• Have you reviewed your R&D tax credits?
• Is your excise duty right?
• Is the culture of the business right?
• Do you have the right leadership team in place?
• Do you know your customer and your market?
• How are you different from the other gins out there?
Having considered these factors and having a plan in place will ensure that you survive ‘peak gin’, whenever that comes. Who knows, you could be the gin version of Fever Tree with 80 times multiple!
For more information on the contents of this blog, please contact me here, or speak to our Businesses Improvement team to discuss how you can ensure a robust business model fit for the future and competitive, growing industry.
0141 886 6644
The information in this blog should not be regarded as financial advice. This is based on our understanding in September 2018. Laws and tax rules may change in the future.