EBar

In an equity crowdfunding world of so many ‘me too’ companies and ideas, it is thoroughly refreshing to come across a campaign for a novel business that solves a problem experienced by so many of us.  Anyone who regularly attends large sporting events or music festivals will immediately identify the pain point that EBar is addressing. 

Is there anything that spoils the experience of a football match or a concert more than standing in a lengthy queue for a beer?  Step forward EBar!

EBar has developed a high-speed vending dispenser for carbonated drinks.  Their patent-protected, self-service dispense kiosk (the EBar®) enables a customer to order, pay and dispense two drinks in less than 30 seconds, half the time taken by a typical event bar.

To date, the company has built 25 EBar units and expects to have a further 15 commissioned by this February.  Over the course of 2022, their units sold 193,000 pints of beer at over 45 venues, including high-profile locations, such as Murrayfield and Twickenham.  The company states that it is also prototyping a ‘built-in’ solution at a Premier League stadium.  Between the number of units sold and the prestigious locations at which they have been sold the company can make very strong market validation claims.    

So far, so good with the business model.  But, what about the Revenue Model and the calibre of the promoters to execute the plan?  (For the uninitiated, the business model describes how a company generates value. The Revenue Model describes how a company generates revenue from the value it has generated for customers.)

EBar charges a commission on each drink sold through its vending machines.  The beauty of a revenue model like this is that the interests of EBar, the drinks company and the venue are aligned.  The venue has an incentive to locate the machines in prominent locations and the drinks companies have an incentive to ensure that the beer doesn’t run out.  All three have an incentive to ensure they are operated efficiently and trouble, including underage drinking, is minimised. 

2022 was a break-through year for EBar.  188,000 drinks were served by its units, which generated beer sales of £1.18m and revenues of £289,000 for EBar.  This was spread across 50 different venues, which demonstrates that the company is not reliant on a small number of venues.  Significant progress was also made on the operations side where a depot was opened in Yorkshire and the outsourced assembly and commissioning process was established.

Outlook – Blue Ocean Strategy

EBar is a perfect example of a business that is adopting a Blue Ocean Strategy, and, as any business strategy student will tell you – these are as rare as hen’s teeth.    

Blue Ocean Strategy is the simultaneous pursuit of differentiation and low cost to open up a new market space and create new demand.  First articulated in the best-selling 2004 book of the same name by Chan Kim and Renee Mauborgne, it is about creating and capturing uncontested market space.  It is based on the view that market boundaries and industry structure are not a given and can be reconstructed by the actions of industry players.  Cirque du Soleil is typically trotted out as the best case study for blue ocean strategy. 

Cirque du Soleil’s blue ocean strategic move challenged the conventions of the circus industry. Cirque’s productions have been seen by more than 150 million spectators in more than 300 cities around the world.  In less than twenty years since its creation, Cirque du Soleil achieved a level of revenues that took Ringling Bros. and Barnum & Bailey—the once global champion of the circus industry—more than one hundred years to attain.

In the case of EBar, they are creating and capturing uncontested market space (i.e. increasing the size of the market and capturing it for themselves) by offering drinks in a way not previously envisaged or possible.  In the absence of rivals building units of their own and securing locations at the sporting and music venues, it is very difficult for new arrivals to compete with EBar.  Success now depends on how quickly they can manufacture the machines and roll them out to as many venues as possible, both domestically and in overseas territories.  The ‘land grab’ has started and EBar is perfectly positioned to capitalise on it, given its clear delivery capability and (presumably) its strong references from the blue chip venues in which they have provided a service. 

EBar is prototyping a ‘built-in’ solution at a Premier League football club at the moment, which is a perfect example of Blue Ocean strategy in action.  It would be reasonable to expect that a successful trial here will lead to ‘easy win’ sales from other football grounds up and down the country.  That is a very attractive market and a compelling reason to consider an investment in EBar. 

In start-up land, there is an apparent premium to be described as “X-as-a-service” and in the case of EBar that X could be ‘beer’.  However, that would imply that the company is somehow involved in the production, distribution or selling of beer, which it definitely is not.  One of the most appealing aspects of EBar (as an investment opportunity) is that it is a technology company facilitating the selling of beer, as opposed to selling the beer itself. 

Heineken UK carried out some research into beer sales at sporting and music events.  The data provides insight into the average amount of beer consumed per person at two specific types of events – Premier League football matches and music festivals.

The average amount of beer consumed per person at a Premier League football match was 1.3 pints. This suggests that while beer consumption is common at football matches, the amount consumed is relatively low compared to other events such as music festivals.  One possible explanation for this could be that football matches have a shorter duration compared to music festivals, which may limit the amount of time attendees have to consume alcohol.  Another (more likely) explanation is that the queues for getting a beer are so long that people don’t bother doing it. 

On the other hand, the average consumption of beer per person at a music festival was 4.5 pints. This is a significantly higher amount compared to football matches, which could be attributed to a number of factors.  Music festivals often have a longer duration, spanning over multiple days, providing more time for attendees to consume alcohol.  Additionally, the festive and party-like atmosphere of music festivals may contribute to higher levels of alcohol consumption.  But, here again, if the unsatisfactory experience of long queues can be eliminated it is likely beer sales per head would be a lot higher. 

Finally, I really like the way in which the EBar founders, Sam Pettipher and Nick Beeson, have gone about funding this business over the last 3 years with a series of equity crowdfunding campaigns in which they raised only enough funds to get them to their next milestone, at which point they raised again at a higher valuation.  Very clever.