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Pennsylvania

Red Star Kombucha

About Documents
400%
$40,000 Funded
$10,000 Target
Closed Time Left
38 Investors
$10,000 Min. Raise
$40,000 Max. Raise
36 mo. Term Length
13.0% Interest Rate
Closed

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Introduction

Red Star Kombucha is a kombucha brewery located in Point Breeze North in Pittsburgh, PA. After more than 6 years of brewing, we are growing out of our current production space. We are moving to a new facility in the East End that we need to outfit with new electric and plumbing along with a larger walk-in cooler and other fixtures.

We are looking to borrow between $10,000 and $40,000 at 13% over 3 years. Anyone at least 18 years old can invest.

 


About Red Star Kombucha

Red Star Kombucha was founded in 2012 by me, Naomi Auth, and my partner, Joseph Reichenbacher. I had been making kombucha since around 2005.  At the time, friends and family and even local small businesses were frequently asking to buy my kombucha and I realized that I loved not only making kombucha but also sharing it. I'm totally fascinated with fermented foods. They're a crucial part of our diet but they're just starting to get the recognition they deserve. I also love helping people learn how to make their own kombucha and other fermented foods. It's important to me that my company can provide a top quality product and experience for my customers, a rewarding environment for my employees, and help to create a culture of awareness and education about fermented foods so they can be accessible to everyone, whether they want to purchase them or make them on their own.

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That is why I am planning to move into this new location, it will bring my retail and production space under one roof. I will be able to produce more, my products will be more accessible, and I can provide a place for people to come and spend time to relax, work, socialize or learn. 

 


Fast Facts

  • 13.0% interest rate with additional investor perks
     
  • Run by a veteran kombucha brewer with 12+ years of experience
     
  • Create a more convenient location with greater accessbility and in-store offerings
     
  • Significantly increase capacity to service wholesale offerings

 


The Project

I have been producing all of my kombucha out of a space that is probably about the size of your living room. My taproom, while an awesome location for downtown, only has space for 4 bar stools, two tables and a bit of standing room. My customers keep telling me that they would love to buy growlers regularly, but going downtown can be daunting and I don’t blame them! I want to provide a convenient location to not only have people come in to get their weekly supply of kombucha, but to also be able to sit, relax, work and socialize. The new location will have free wifi, comfortable chairs and tables to work at, a large bartop and space to host events. Plus, with the production facility just on the other side of the bar, tours and workshops will also be available!

I cannot wait to get into this new production facility which is nearly 3 times the size of my current facility. In the new space I will have the room to produce more at any given time, have an organized and designated location for maturing kombucha and have a large cooler for when it is done. The cooler will sit against the same wall as the bar so as you look out over the bar, you will see the taps on the wall behind it. This will not only save on the need for a seperate cooler system for the bar area, but look really great too!

 

Floor Plan for Red Star Kombucha's new production facility and retail location

 

The other important aspect of this project will be Red Star Kombucha's ability to take advantage of more wholesale opportunities. Up to this point, I have not been able to keep up with the volume required to regularly sell to wholesale distributors. When I am able to keep up with this demand it will vastly improve my revenue and bottom line.

 

Tier 1

$10,000 Total

Installation of new electric and plumbing throughout new production and retail space

The space as it stands currently does not have the eletrical and plumbing infrastracture to support production

Tier 2

$5,000 Total

Final payment for architectural drawings

Tier 3

$15,000 Total

Fixtures for production area

CoolBot, a used walk in cooler shell, wire rack shelving, hot water boiler and sinks

Tier 4

$10,000 Total

Direct draw tap system and fixtures for bar/retail area

The tap system will pull kombucha straight from the walk in cooler on the other side of the wall in the production space. The other fixutres will include a bartop, chairs, tables and lighting fixutres

$40,000 Total Total cost for Tier 1, Tier 2, Tier 3, and Tier 4 combined. 

 


Investor Perks

Early Bird

First 10 investors have the option of 2 pints on the house at the downtown location or a free growler when you buy a fill

$100+

Red Star Kombucha t-shirt

$500+

First dibs on kombucha making classes and a DIY kit, including a scoby, when you come

$1,000+

VIP invitation to the grand opening of new location

$2,200+

A private investor function at the new new location

 

* All perks are cumulative

 


About The Team

I am a Pittsburgh native, having grown up in South Hills. I have spent 20 years working in the food and beverage industry, 6 of which has been with Red Star Kombucha, but before that I ran my own cafe. I am always looking for the next new challenge for myself and for where to learn something new. Running my own business and brewing kombucha has provided that adventure and I love it. When I’m not at work, I’m at home with my daughter and our cats.

 


Deal Summary

Issuer

 PIG HILL BREWREY, LLC DBA Red Star Kombucha

Security Type

 Unsecured Loan

Loan Purpose

 Running electric and plumbing in new space, paying for architectural drawings and equipment for production and retail space

Offering Amount

 $10,000 - $40,000

Interest Rate

 13.0%

Payments

 Monthly, Disbursed to Investors Quarterly

Maturity

 6 months interest only followed by 36 months fully amortizing

Personal Guaranty

 Yes, Naomi Auth (owner)

Security Interest

 No

 


Summary Financials

Red Star Kombucha has outgrown its current brewing operation and retail space. by moving to a larger location, we believe we can increase sales by housing more seating area for customers, while simultaneously improving our production capacity, in-house.

For additional financial statements, please see page 11 of the Form C - Offering Statement under the investor tab.

 

 


The Location

Currently, my production facility is located at 6901 Lynn Way in Homewood and my tap room is at 33 Graeme Street just off of Market Square, in downtown Pittsburgh. Both of these locations have been very good to me and it is exciting that we are growing out of them. I am still considering keeping the tap room downtown as a second retail location with my new flagship location being in Larimer, but I still have some time before I need to make that decision.

 


Your Earnings Potential

If you choose to invest, you will make a one-time investment via ACH that will be transferred to a secure escrow account. Once the campaign successfully reaches its target, the funds will be distributed to Red Star Kombucha.

For more information on the mechanics of Honeycomb’s crowd investing platform, please review our Education Materials.

Investment Amount One-Time Fee Potential Quarerly Returns* (Interest Only Period) Potential Quarterly Returns* (Amortizing Period) Potential Total Repayment*
$100 $2.85 $3.25 $10.10 $127.70
$500 $14.25 $16.25 $50.54 $638.98
$1,000 $28.50 $32.50 $101.07 $1,277.84
$5,000 $37.25 $162.50 $505.41 $6,389.92

*Individual payments may vary slightly based on rounding. Potential repayments include principal and interest, they do not include the one-time fee which is assessed when you make your investment. Red Star Kombucha will have 6 months of interest-only payments as they settle into their new space followed by a fully amortizing 36 month period where principal and interest are paid down starting with the 7th payment. There are no prepayment penalties and Red Star Kombucha may pay down their loan early which may impact your earnings potential. Please note, returns are not guaranteed and investors could lose some or all of their investment.

Your ongoing responsibilities from investing are very limited. Each year over the life of the loan you will receive a 1099-INT, this is a simple tax document similar to what you receive for most savings accounts.

When Red Star Kombucha pays as agreed, you will receive quarterly payments directly into your bank account. In the event of a default, you will be contacted by the Administrative Agent to manage the collections process on investors' behalf.

 


How Honeycomb is Compensated

Honeycomb charges Red Star Kombucha a 6.0% loan origination fee if this campaign is successfully funded. Our origination fee is reduced and our posting fee is waived for Red Star Kombucha because they are an Early Adopter.

Additionally, to cover expenses associated with each investment, Honeycomb charges a 2.85% investment fee capped at $37.25 per investor.

Like what you see?  Check out our other campaigns here!

View our
Offering Documents

Updates

Comments

Q & A

+ Can you be more specific regarding the location of your new facility?

Our new location is in part of the old Animal Rescue League building at 6632 Hamilton Ave. at the intersection of Washington Blvd. This is in the Larimer neighborhood of Pittsburgh. - Naomi, Red Star Kombucha

+ Will there be any other businesses co-located with you at this new location? If so, how will that complement your business?

A doggy daycare is moving into the other side of the building, next door is going to have a coffeeshop/roaster plus a high-end lingerie maker. Across the street is a CrossFit gym and a screenprinting shop East End Brewing is a few blocks away with their new restaurant inside. With this variety of businesses, plus offices located nearby, we expect cross-traffic as people fill growlers when they patronize these businesses. Our taproom will also be an ideal place to have a drink or meet clients or friends who are associated with these businesses. - Naomi, Red Star Kombucha

+ Will you still be able to implement the complete renovations at the new space if you do not raise the full amount money for all 4 tiers on Honeycomb?

We are pursuing micro loans through several other local organizations as well. We did not expect to raise the full target amount through Honeycomb but since we had to list a maximum amount we aimed high. Even if we fall short of the target amount we will have raised enough to finish plans, permits, and construction. We set the target amount to be able to have the space looking the way we want it inside and out when we're ready to open. However, we are an existing business with loyal clientele so we are confident that our customers will still come in even if the space is open for business before all the esthetic details are finished. - Naomi, Red Star Kombucha.

+ It looks like Revenue for 2018 is estimated to be roughly equal to 2017, using your prorate estimates. Are Nov. and Dec. seasonally strong months whereas we could expect growth when including those two months? Also, I would think it reasonable to assume revenue growth as a result of this project, but what are your estimates for margins? Should we expect margin to stay the same or expand and thus higher profits?

December is typically a stronger month than October or November so we may see 2018 finish slightly higher than 2017. You are correct that this project is very much about revenue growth, by way of significantly increasing the amount of product sold. The current margin from COGS to retail sale has always been around 90%. However, this good margin has been choked by high fixed overhead and low sales due to poor space rental choice, and an inappropriate ratio of retail labor to sales, again due to the unsuitability of the only current retail spot. To sum up, we expect margins to remain good and for profits to be made in the increased volume of sales due to a rental situation that is much more favorable for us and our customers. -Naomi, Red Star Kombucha

+ What kind of wholesale opportunities specifically do you plan to pursue after expanding? Bars? Grocery stores? Other?

I've edited this answer for clarity. The first step of our wholesale plan going forward is to increase production and variety of products. We will have 3x the production space and 4x the walk in cooler space in the new facility, allowing us to start making different flavors of kombucha ale, do small runs of cans of any product, and start making hard cider kombucha again. We can sell these to our existing wholesale accounts, offering them better variety than previously available. Our current accounts are bars and bottle shops. The second step will be hiring a part-time wholesale rep to manage our current accounts and get new local accounts. The businesses we are targeting for this step are more bottle shops, large grocery stores that can sell beer, and hotels and restaurants. This person's work will be supported by the tap room as a larger, more accessible space for customers to get to know Red Star and our products. The third step will be selling to small groceries and co-ops who want to have their own Red Star Growler Filling Station. Unfortunately due to PA laws, the majority of stores like this are located in neighboring states. - Naomi, Red Star Kombucha