The brewing industry can be a challenge at the best of times. Throw in a global pandemic, and the strain on business and cashflow increases significantly, demanding different ways of thinking.
For Todd Matteson, co-founder and Director of the Mondo Brewing Company, it meant looking beyond ‘traditional’ lending or an overdraft to a cashflow funding tool that better suited his needs.
Thanks to the support of a tailored Invoice Finance facility from Optimum Finance, Mondo has not only weathered the recent storm, but is also expanding steadily, launching new craft beers, opening new tap rooms, and forging new partnerships that are taking it to an exciting future.
Todd discovered a passion for brewing and began experimenting with his first brews while employed in advertising sales in New York and working part-time in a Manhattan-based brewery. When his wife moved to the UK for work, Todd followed. Working full-time on nightshifts in an East End brewing company, Todd met his future business partner, Tom Palmer: “We bonded over a love of American brews, and eventually decided to launch our own business – inventing the world of beer through our own, distinct lens.”
Todd well understood the risk; brewing is a capital-intensive industry, not only at the start, but also the ongoing costs of raw materials needed to maintain levels of production. It’s a business model that in many ways doesn’t make sense. Then in 2020 came the global pandemic: “Navigating the industry through a tricky macroeconomic and trading environment was a tall task,” he admits. “With the business being highly reliant on energy and raw materials to create our product, it was a testing time for us all.”
Although Todd took full advantage of Government support by way of Furlough and COVID-related loans, he also began exploring Invoice Finance: “My first experience wasn’t so good as we did not have control of our sale ledger,” he explains. “and our customers didn’t like it. Some are on non-standard terms and that led to confusion, but the real issue was not having a direct line with our own accounting team.
“With Optimum Finance, however, it is different. They not only advance us the cash but leave us to collect payments from our customers which is better for all concerned. It gives us much greater flexibility and control in our transactions with customers, suppliers and distributors.”
Invoice Finance is a method of cashflow funding that uses receivables (invoices) as the principal asset against which money can be raised. Optimum Finance pays Mondo an agreed percentage of the invoice value as soon as it is submitted, driving access to liquidity at the point of invoice as opposed to needing to wait. In this case, Mondo retains the management of its sales ledger:
“Mondo is crucially centred around the customer experience and Optimum Finance gives us the freedom and control to chase late payments, rather than leaving it to somebody our customer doesn’t know,” Todd continues. “Optimum advances 85% of the invoice value, with access to up to £250,000 at any one time, and this is a tremendous benefit in paying our own suppliers and giving us greater flexibility in our purchasing decisions.”
Mondo buys hundreds of kilograms of hops and many tons of malt weekly, along with the chemicals necessary to the brewing process. It creates something in the order of 45,000 litres of craft beers every month to a total of approximately 5,000 hectolitres a year. Its beers can not only be found in London, but also across mainland Europe, Scandinavia, Australia, and the East Coast of America.
With the pandemic now behind them, business volumes have recovered. London people, Todd knows, like to go out, and any impact was always going to be temporary. Mondo’s performance in 2022 was 60% up on the previous year, and with a supportive finance provider in place, Todd is excited about the future.
“We have plans to open a number of additional tap rooms around London,” Todd continues, “to add to the partnership we’ve had in place since 2015 with London’s Dishoom Indian Restaurant to supply their beers. We’re also partnering with Joe Public pizzas in Clapham and most recently opened a food stand in Borough Market to offer Mondo beer and pizza so there is plenty on the horizon.”
The end goal is for Mondo to open a bigger retail unit in the coming years, and with Optimum Finance’s continued support, anything is possible.