Hi Gabrielle, I received this very sad news today:Dear shareholders,I'm sorry to say that we are emailing with bad news regarding The Beer Boutique Ltd, one of the companies operated by Two Heads Beer Co Ltd. Unfortunately we have had to take the sad decision to put the company into a Creditors’ Voluntary Liquidation (CVL), with all stores closing down with immediate effect. This affects all The Beer Boutique sites, in Putney, Wandsworth Town and Tunbridge Wells.Whilst I'm sure this news will come as something of a shock, it follows several months of us trying to effect a turn around through improvements in store, staff training, events & promotions and new products such as coffee and pizza. All 3 sites were loss making last year and whilst performance has not been awful in terms of like for like sales (we were actually up in February), we are some way off the level that would make The Beer Boutique profitable.As directors of Two Heads, we do not believe it is a prudent use of our remaining shareholder funds to continue to support The Beer Boutique.Without the support of Two Heads, the directors of The Beer Boutique Ltd (Jon and I) have had no other option but to appoint an insolvency practitioner in order to effect a CVL. This process has started and will be completed within the next two weeks.Why has this happened?It is impossible to escape the almost weekly news stories of high street retailers struggling with high fixed rent & rates costs and we are unfortunately no different. Even with our success at pushing up gross margins to around 50% (higher than most of our independent competitors), it just hasn't been enough to cover the rent and rates of the 3 particular high street locations we currently operate as The Beer Boutique. Coupled with the supermarkets becoming much more aggressive in the craft beer market, means that even our core customers are now buying more than 50% of their craft beers from the supermarkets. Finally, uncertainty around Brexit has led to consumer confidence being consistently low which has meant the customers we do have, are spending that bit less.Our initial instinct was to slim down, and we have been trying to assign the Tunbridge Wells lease and or sell the site as a going concern. As yet however, we have not had any takers. We also believe that the Wandsworth Town store will not become profitable: it is simply too small with not enough local customer interest. Whilst we did develop some good plans to turn Putney into a Beer Cafe, with all day coffee and breakfast, lunch and dinner food options, it would require a fresh investment in the region of £50-£60k for us to be able to realise this vision. Whist we believed it to be a strong concept, following a thorough review of our finances, and given the inherent uncertainties surrounding any new concept, Jon and I decided that the risk reward benefit of doing this is too great.What's next?As for the future of Two Heads Beer Co Ltd, the company in which you invested, we plan to continue to trade the We Brought Beer branded stores, using those as a base to supply our customers with beer whilst working on a new strategic direction for the business that focuses more on value add online services and less on physical bricks and mortar stores, at least in the immediate term. With fewer stores across which to spread our limited resources, or to put it another way, with a greater focus on the existing WBB stores, we are confident that we will not only be able to significantly improve in-store sales but also develop the other revenue generating ideas we have mooted in the past - using our expertise and reputation in the field of craft beer to (i) launch a trade focused beer training program and (ii) to pursue more corporate tasting opportunities, both of which are high revenue and high margin.This was not a decision taken lightly and no one is more devastated than Jon and myself. We've taken a hit but our focus must now be on making a success of We Brought Beer.I'm sure some of you will have questions. Please feel free to reply to this email and ask away, I will answer them as best I can.Kind regardsJames
Stewart Hunter ● 2793d