‘Cash is king’. It’s probably the most popular business maxim, but for good reason. Getting your cashflow right, whatever industry you’re in, is crucial to success, which is something Steve Brogan knows only too well. His international drinks distribution company relies heavily on rotating cash as quickly as possible. It’s not an easy task but it’s one that he’s managed to master. Less than three years in operation, Interbev, which was named service business of the year at the 2010 Startups Awards, recorded a massive turnover of £17m last year, leaving Steve’s taste buds tingling for the next big thing.
With 10 years under his belt at Scottish and Newcastle brewery, Steve was no stranger to the beverage business. He originally launched Interbev as a drinks consultancy with his partner Mark Crump in 2008, after taking a generous redundancy package. However after six months of trading, he spotted an opportunity for the international export of drinks products. “I had lots of contacts in the wholesale market and realised there was huge potential to distribute British brands to other countries,” he recalls. The consultancy side was wound down in April 2009 and Steve proceeded solo with the exports venture, distributing major international drinks brands to targeted markets around the world.
With no external funding, Steve and his father injected £450,000 of savings to launch the business, the vast majority of which was spent on buying stock. “Because of the credit crunch we paid cash per order for everything – we had zero credit so we bought our stock and sold it quickly, in order to buy the next load. At the start we had to get money back from customers as quickly as we could – it was a case of rotating the cash fast.”
Steve already knew plenty of suppliers from whom he could buy in the UK, as well as some valuable international contacts in the drinks industry. However, learning the documentation process for exportation was not so easy. “I had to learn on my feet in terms of shipments and exports, getting the right facilities from the bank so I could sell in different currencies and how to make transactions happen – most of it was self-taught.”
Bagging the big names
Once the processes were finalised Steve set about promoting his new venture, using e-commerce websites such as Ali Baba, and attending trade shows to increase the contact list. However, he affirms that direct promotion and word of mouth were by far the most effective and least expensive marketing tools. Steve utilised his extensive contact-base to secure deals with key brands – signing up Coca Cola and Inbev Breweries as his first suppliers. This was a huge step forward because it meant his business had credibility with some of the biggest names in the game.
Maintaining low overheads was always central to Interbev’s business model and with only seven full time employees at present, it has managed to remain a fairly low-cost company. With regards to pricing, Steve says they try to sell their products at market price, while ensuring they buy them much cheaper, which allows them to get the maximum margin for each individual deal.
Steve managed to secure Confidential Invoice Discounting (CID) finance of up to £1m from Clydesdale bank last year, which protected the business against customer invoices. However, aside from that, getting bank funding has been a challenge: “It’s been tough going getting finance – we’ve got big sales, good profits and a good balance sheet, but in spite of all that it has been really difficult.”
With a wholesale business like Interbev, ready capital is crucial because as Steve puts it “the more you have, the more you can do.” But judging by the impressive revenue figures – expected to reach £24m this year - the lack of early bank investment doesn’t appear to have disturbed Interbev’s rapid growth. There are some similar owner-operated businesses in its space around the world, however Interbev prides itself on its ability to deliver directly to the customer, thus making it as convenient as they can: “We’ll do the logistics, we’ll sell in their local currency and we’ll try to make the transaction as easy as possible – hopefully that gives us an edge,” says Steve.
Presently Interbev exports to Western Europe, Australia and Asia, but Steve’s keen to expand its global reach. “I’d like to find more customers in key markets like Australia, as well as extending the export network to other countries – like the US.” Increasing the supplier base is also high on his agenda – such as getting more spirit and champagne producers on board. With a few other ventures now on the go – including: logistics business Supply Chain 21; and online drink portal Drinks 21, Steve’s covering all his bases and is carving out a prominent niche on the beverage scene. Not a bad result from a redundancy package.