What are Spikes?
Spikes is the original spiked ice - flavored, alcoholic ice that keeps your beverage cold, adds flavor, and provide an extra kick of alcohol (7.5% ABV).
How do they work?
Using Spikes is super simple. Just freeze them, drop the ice in your glass, and pour your drink as usual. With our great flavors of lemon, lime, or strawberry, we routinely pour beer, wine, and cocktails over Spikes. We continue to be amazed by their versatility.
After his $12 beer at a baseball game got warm in under 15 minutes, Dan had to find a solution. He went through several prototype products before eventually bringing Brian in to help test Spikes. What followed was a series of "R&D" sessions drinking Spiked beer on the patio. Here we discovered an endless number of drink possibilities with some of the best beer, wine, and cocktails we've ever tasted. The patio is where Spikes was born!
Spikes Beverage Company LLC was founded in September 2015, and we've made great progress in two short years. We spent early months developing and designing the product in order to meet government regulations. The stringent regulatory process was finally approved in the Summer of 2017. This was followed by a test market during August 2017 in Cincinnati, OH.
We now have a completed product that is in stores. To get here, we had to develop relationships with numerous suppliers that will help us scale. Our supply chain is completely set up to provide all the raw ingredients, packaging, boxes, shrink wrap, etc. that we need. We are no longer in the idea stage. This product is in the market!
We found an alcoholic beverage manufacturer willing to take on a start-up company with unique packaging. This experienced co-packer has the ability to produce Spikes on a large scale. This will allow us to meet the demand for the product as we grow. Importantly, it allows us to focus our resources on marketing the product instead of managing a very capital-intensive manufacturing operation.
We spent almost two years getting everything approved by the federal and state governments. The approval process was time consuming and complex. Everything had to be approved from the formulas and labels, to the distribution, operations, and even the business owners themselves. While this long approval was important to help us stay safe, it also gives us an edge over anyone else who might think about entering this market. Potential competition will have to go through the same rigorous and time-consuming process that we did. We have a great head start.
We've now validated Spikes in a test market. We have been in select convenience and liquor stores in the Cincinnati area since early August 2017. We also partnered with an Anheuser-Busch distributor to get us into one of the largest liquor stores in the country. We got great feedback from retailers and the response from consumers has been spectacular. Spikes has numerous repeat customers, and they're bringing new customers along with them. Needless to say, the response has given us confidence to take Spikes to the masses.
Pricing and Margins
The Company is targeting a sales price of $5 for a three-pack in retail stores, $2 per unit in restaurants/bars, and up to $3 per unit at premium events such as sports stadiums or concerts. In order to get the product to consumers, Spikes will be marked up by both a distributor and a retailer. The distributors that the Company has approached work on 25% to 33% markup (20% - 25% margin). “Off-premise” retail shops such as convenience stores and grocery stores typically have relatively low margin expectations (10%-30%) in comparison to “on-premise” retailers like restaurants, bars, and sports stadiums that typically have relatively high margin expectations (50%-70%). To meet the margin expectations of both on-site and off-site retailers, the Company has developed two different pricing models. The pricing is discounted to restaurants/bars as there is less packaging necessary (no shrink wrap/labels) and sales to these customers create brand awareness.
See our business plan for the full breakdown.
We've learned a lot about this market in a very short time. We now know that people love this product and will buy it. We are seeking investment because we want to help Spikes grow fast. This is especially true in our marketing efforts, where we are battling against a well-established specialty spirits industry. We must grab as much market share as we can while we still have the advantage of being the first movers in this space.
Broadly speaking, we plan to use our Wunderfund success to quickly scale our operations in two vital areas - marketing and distribution. With your investment we can execute our go to market strategy and bring this product to the masses.
We'd like to offer our early investors a little token of our appreciation for believing in us and investing in our company. Below are some perks you'll take home for being an early investor.
With this being a new product in a new category, our marketing will revolve around trial and awareness.
Getting people to try the product is the best way for us to acquire customers. When people try Spikes, they instantly understand the product, and why they would want to purchase it. Some of the ways we plan to drive trial include:
We've done several already and found that 30-40% of people who try the product, buy it. We plan to greatly expand the number of these tastings in 2018.
We did a sampling at an outdoor festival in our test market and Spikes was a huge hit. Word spread quickly amongst the crowds and people began lining up to purchase. We plan to do as many of these as possible.
We also did a sample program at a bar where customers and bar employees gave us great feedback. These activities are great trial opportunities, and get our foot in the door with these establishments.
We just invented a new category in the alcohol industry! So, general awareness of the product and how it is used is our big challenge. Here are our plans to create awareness and reach customers.
Point of Sale Marketing
We've got cardboard floor and counter displays that clearly communicate what to do with Spikes. We put simple recipes and pictures right on the POS materials to make it easy for consumers to quickly understand how Spikes works.
We have 17K followers in the Spikes Facebook group! We plan to start publishing simple recipes that explain how to use the product. We'll also turn on digital ads to push the message out to more people.
Many of our Facebook group followers are social media influencers with many followers themselves. We want to engage influencers to share Spikes on social media (mostly Facebook and Instagram) by offering them fairly minimal payments and/or merchandise.
No matter how much people love Spikes, we are currently capacity limited to get it in more stores. Luckily for us, the alcohol industry has a variety of distributors around the country to help us get to market. Of course, these distributors are businesses too, and the more inventory we can build for them, the more likely they are to partner with us. We will use this capital injection to build and deliver high enough initial inventory to our new distribution partners.
Use of Funds
The Term Sheet: SAFE Agreement
The SAFE or Simple Agreement for Future Equity is a popular option in Silicon Valley for startups because early stage companies are hard to value.
Raise Target: Minimum of $100,000 and up to $250,000
Minimum Investment: $100
Conversion Discount: 20%. This means your investment reflects a discount of 20% on the future shares as reward for your investment risk (e.g. an $800 investment is worth a $1,000 in future equity compared to later round investors who would pay the full $1,000 for the same amount of shares).
Pre-Money Valuation Cap: $2,000,000. This means you're speculating the company will be worth more than this amount in the future. Since your investment will be against this valuation cap, it would result in a higher percentage of ownership, compared to the later round investors who would be investing against the higher valuation.
If you have any questions, please post your questions in the Comments Section above.
There are several equity crowdfunding sites out there, but only Wunderfund is based in the Midwest and is working to help the Cincinnati startup community. Wunderfund is a startup just like us, and we feel strongly about supporting this platform so that we may pave the way for future startups in the area. The existing crowdfunding platforms are almost exclusively based on the coasts/Silicon Valley. Wunderfund is working to help early stage companies raise capital right here in the Midwest and our home base of Cincinnati. We think this mission is vital to the success of the local startup community and is great for the area as a whole. Our campaign succeeding will be a big step forward in making this possible. By making an investment you are not only supporting our startup, but the Wunderfund startup and the Cincinnati startup community as a whole. Thank you in advance for your support!
Product Overview PDF
Business Plan PDF
What people are saying about Spikes
Want to know more? Great! Feel free to leave a question in the Comments tab for general inquiries. Also, check our FAQ and our complete filings with the SEC for financial disclosure documents linked below.