MicroVentures Logo MicroVentures Logo MicroVentures Logo, large text MicroVentures Logo mv-icon-reply mv-icon-bubble mv-icon-bin

MicroVenture Marketplace

Thumb Butte Distillery

American small-batch craft spirits and distilling

107%

Investors

125

Time to Invest

Security Offered

Preferred Shares

Minimum Investment: $100.98

  • Thumb Butte Distillery’s craft spirits are distributed to over 400 locations across Arizona

  • Wholesale distribution customers include Costco, Total Wine, Bevmo, Safeway, Walmart, and independent liquor stores

  • Has won multiple awards for its whiskeys, gins, and vodkas

  • Won two medals at the 2016 American Distilling Institute competition for its Special Release #2 whiskey

Terms

Security Type: Series Seed Preferred Stock

Round Size: Min: $50,003.46 Max: $600,000.21

Price Per Share: $4.59

Valuation: $1,750,000

Liquidation Preference: 1x

Conversion Provisions: Convertible into one share of Common (subject to proportional adjustments for stock splits) at any time at the option of the holder.

Perks

*You are investing in Preferred Stock in this Offering. Perks are meant to be a thank you from the company for investing. The perks below are not inclusive of lower dollar amount perks. Alcohol perks are redeemable at the Thumb Butte Distillery or investors can request it to be delivered, in which case they must pay a shipping fee that will be based on their state or country assuming it’s legal to ship to that destination.

$250+: Free private tour with customized tasting scheduled by the investor

$500+: Free private tour with customized tasting scheduled by the investor and two bottles of gin and/or vodka

$1,000+: Selection of spirits: one whiskey, two gins and/or vodkas, and two logo tumblers

$2,500+: Selection of spirits: two whiskeys, two gins and/or vodka, and two logo tumblers

$5,000+: Selection of spirits: two whiskeys, two special edition bottles, three gin and/or vodkas, four tumblers, two whiskey tasting glasses, and one logo flask

$10,000+: Invitation to the 2019 Distillers Dinner for two, plus the $5,000+ level perks

Overview

Opportunity

Distilling has been on the rise in the U.S. with the number of distilleries increasing from less than 50 to more than 1,800 over the last 18 years.  In 2017, the production of American craft spirits increased by nearly 25% compared to the previous year, and investments in the facilities that manufacture craft spirits doubled from 2015 to 2017. The craft category now represents 3.2% of the total U.S. spirits production by volume and 4.6% of total dollar sales. Revenue for the craft spirits market grew roughly 33% year over year to nearly $3.7 billion.  Due to this trend, small-batch craft spirit producers are aiming to capitalize on the growth opportunities in the market.

Founded in 2013, Thumb Butte Distillery’s mission is to stake a claim in the American small-batch distilling business in historic Arizona by making vodka, gin, rye whiskey, single malt whiskey, bourbon, and dark rum. It handcrafts award-winning small-batch spirits in its hometown of Prescott, Arizona and intends to continue the western American tradition of creating spirits from locally grown grains, herbs, and fruits. Thumb Butte spirits are distributed statewide in Arizona, and the company is seeking to expand its distribution footprint to more states including Nevada, Wyoming, Illinois, California, and New York. Bottles can also be purchased at the distillery’s tasting room or directly from the company’s website.

Press

Product

Thumb Butte uses technology like motion and vibration processing that seeks to replicate old methods of barreling and shipping whiskeys. This process helps release the flavor compounds present in wood barrels and increases the complexity of the flavor profile. The company’s lead distillers use charred American white oak barrels to impart color and flavor into each product. They also use smaller 5-gallon barrels to achieve a greater liquid-to-wood ratio, which helps accelerate the aging process. Local corn and Durham wheat are used to make Thumb Butte’s whiskeys, and the company also gathers its own wild juniper berries and sage to use in its vodkas and gins. In the future, it plans to produce at least four special edition whiskeys a year and expand its gin offerings to include Arizona specific terroir offerings. It also plans to develop a line of bitters, including Amaro, to be released in the coming year.

Hometown

Prescott is in Arizona’s central highlands and is situated at an elevation close to one-mile high,iii  and Thumb Butte Distillery gets its name from the volcanic plug—resembling a thumb—that overlooks the town. The distillery’s founders   chose to distill spirits in Prescott because of the city’s long history with whiskey and the town’s aptly named main street, “Whiskey Row.” Thumb Butte Distillery is a proud member of the community; it engages in philanthropy for local charities, and provides a musical venue for local musicians every week.

Awards

Thumb Butte’s line of whiskeys include Bloody Basin Bourbon, Rodeo Rye Whiskey, and the Crown King Single Malt. In 2017, Bloody Basin Bourbon won two bronze medals, one from the American Distilling Institute,iv  and one at the Washington Cup Competition in Kansas City, Missouri. The Crown King Single Malt also won a bronze Medal at last year’s Washington Cup Competition.v  In 2015, Rodeo Rye Whiskey won a bronze medal at the Los Angeles International Spirits Competition.vi

Thumb Butte’s other spirit lines have also won multiple awards. In 2017, its Winter Flower Gin and Premium Vodka won silver medals at the Washington Cup Competition,vii  and the Western Sage Gin won a silver medal at the 2015 Los Angeles International Spirits Competition.viii

Spirits

Bloody Basin Bourbon

Bloody Basin Bourbon is made with 70% Arizona corn, and the mash bill is finished with rye and barley. It’s smooth and slightly sweet with a dark, rich finish. It’s aged in new charred American oak barrels, and shows hints of vanilla, butterscotch, caramel, and rye spice.

Rodeo Rye

Rodeo Rye whiskey is 90% rye whiskey and is inspired by traditional whiskeys made in the Old West. This whiskey brings out robust flavors like rye, vanilla, caramel, pepper, and oak.  These deep rich flavors come out over ice, but they also make a nice addition to a Sazerac or on Old Fashioned.

Crown King Single Malt

Crown King Single Malt whiskey is made from malted barley grown in Northern Scotland and is aged in oak barrels previously used for Bloody Basin Bourbon. After aging, the whiskey is then transferred to Oloroso Sherry oak barrels to be finished. This whiskey has a light smoky nose, and a delicate golden color. It’s great with cocktails or on the rocks.

Gurley Street Gin

Gurley Street Gin was designed to be refreshing and clean, while delivering a traditional London dry experience. The gin goes through the distilling process six times and the spirit is infused with a bundle of herbs and Juniper Berries. The Juniper berries are sourced locally and help create a smooth, clean taste. Gurley Street Gin pairs great in a traditional martini or a gin and tonic.

Western Sage Gin

Western Sage Gin was created as a tribute to the herbs that grow in the American West. The herb bouquet was designed and bundled by Thumb Butte’s founder Dana Murdock. The recipe for Western Sage Gin calls for a reduced amount of local juniper berries and an increased amount of sage, fennel, coriander, Arizona oranges, and lemons. This gin has an herbal bouquet with a crisp citrus finish.

Winter Flower Gin

Thumb Butte’s holiday season ode to gin became so popular that the company decided to produce it year-round. Its Winter Flower Gin delivers a botanical selection of taste, including light notes of juniper and a host of flowers including Elder, Passion, and Hibiscus.

Meyer Lemon Vodka

Thumb Butte’s Meyer Lemon Vodka is an infused vodka, not a flavored vodka. The Meyer is a cross between a Eureka Lemon and a Mandarin Orange, and has a delicate lemony smoothness. These lemons are grown and picked in Phoenix, Arizona. This vodka is great in a martini, lemon drop, or a cocktail to add a sweet citrus touch.

Premium Vodka

Thumb Butte’s signature vodka is a blend of 80% Sonoran wheat and 20% Polish potato. This vodka makes a strong base for vodka drinks and can be stored in a freezer to make chilled martinis.

Special Release Spirits

Roberts Rye

Robert’s Rye is a tribute to Robert Mitchum and his 1947 film “Out of the Past.” In the film, Robert Mitchum played a rugged and solitary anti-hero, and like the film character, this rye whiskey is edgy and full-bodied. Roberts Rye has all of Thumb Butte’s original flavors, but at 100-proof, it has more heat, and finishes with a healthy burn.

Special Release #2

Special Release #2 contains a blend of rye, corn, and barley whiskeys. It contains 65% rye, 30% corn, 5% barley, and was aged in small barrels that were previously used to store dark rum. This whiskey won two medals in the American Distilling Institute’s 2016 competition.  This first medal was a Gold in the blended whiskeys aged two to five years class, and the other was a Gold medal for the Best of Category title.​i​​​x

Special Release #3

Special Release #3 is an Arizona “Grain to Glass” whiskey. The mash bill is malted barley, heirloom corn, and whole grain rye. Because this whiskey was distilled and stored in Arizona’s Central Highlands—where the daily temperature can vary up to 50 degrees from day to night—Thumb Butte’s distillers believe that the flavor profile is more  distinguished and that the aging process is accelerated due to the temperature variation. Special Release #3 is a full bodied, full flavor American whiskey. It’s great straight from the bottle or over ice.

The Tasting Room

With its current state license, Thumb Butte Distillery has the ability to operate two remote tasting rooms in the Arizona area. Its current tasting room is located inside the Prescott distillery building, and visitors can sample various lines of spirits, hand crafted cocktails, and enjoy small bites to eat. Tours of the facility are available for special events or parties. In the near future, the company aims to identify a location for a remote tasting room and still-house within the greater Phoenix area. Plans for the new location include a bar, craft food, and a large still.

Use of Proceeds

Thumb Butte Distillery has developed its own small-batch craft spirits distilling business and has created a distribution business model to help expansion efforts. The funds raised will be used to increase distribution throughout the United States and into Canada. If Thumb Butte raises the maximum amount of $600,000.21, it plans to use the proceeds primarily for manufacturing (33%), general working capital (19%) equipment purchases (17%), future wages (17%), general marketing (8%), and research and development (5%). If Thumb Butte Distillery raises the minimum amount of $50,003.46 it plans to use the proceeds primarily for manufacturing (40%), general working capital (30%), general marketing (20%), and research and development (10%).

Business Model

Thumb Butte sells its craft spirits through its online store, distributor network, and on-site in its tasting room. Prices range from $23.99 for its vodkas to $500 for its special release whiskey. Currently, it has distribution throughout Arizona and is in over 400 locations, including resorts, hotels, bars, and restaurants.

User Traction

Thumb Butte Distillery’s retail customers include local residents and tourists, while the distillery’s wholesale distribution customers include Costco, Total Wine, Bevmo, Safeway, Walmart, and independent liquor stores throughout the Southwest. Thumb Butte Distillery’s craft spirits are distributed to over 400 locations across Arizona.

Historical Financials

In 2017, Thumb Butte generated $298,113 in revenue, versus revenue of $138,112 in 2016. Year-to-date as of October 2018, the company has generated $225,051 in revenue.

In 2017, expenses totaled $301,595, which is down 25% from 2016’s total expenses of $404,458. This included $18,305 related to costs of goods sold (COGS), and $301,595 attributed to operating expenses. Within operating costs, the top expenses were payroll ($66,157) and rent costs ($56,268). As of October 2018, year-to-date expenses have totaled $190,362, which is down 5% over the same time period in 2017. The two largest expenditures over the period were wages ($63,775) and utility costs ($14,521).

In 2017, Thumb Butte generated a net loss of $4,356, versus a net loss of $272,553 in 2016. Year-to-date as of October 2018, the company has generated a net profit of $34,688.

Industry

Distilled spirits gained market share relative to beer for the eighth consecutive year in 2017. In 2017, suppliers reported that distilled spirits sales rose by 4% year over year, with total sales worth $26.2 billion. Total volume rose 2.6% to 226 million cases, up 5.8 million cases from the prior year. Furthermore, the distilled spirits market has been primarily driven by growth in high-end premium and super premium products—bottles that retail for at least $20.x

In 2017, vodka accounted for almost one-third of total spirits volume, with 71.3 million cases sold. Total vodka sales generated $6.2 billion in revenue, up 3% year over year. Revenue from high end premium vodka—bottles that retail for over $30—rose 15% to reach $1.6 billion. American whiskey volumes increased 6% to 23.2 million cases. Super premium American whiskey volumes increased 18% to 2.4 million cases, while revenue jumped 18% year over year to $551 million.xi  While overall volume for rum was down 0.4% year over year to 24.6 million cases, super premium rum sales increased 10% in 2017 to 546,000 cases and generated $140 million. Similarly, in 2017, overall gin sales were down 0.6% year over year to 9.9 million cases, but super premium gin sales increased 11% to 159,000 cases and generated $28 million.xii

Local distilleries have contributed to the overall growth in the distilled spirits market. In 2016, the craft spirits industry generated roughly $4 billion in retail sales, up about 33% year over year. Overall volume reached nearly 7 million cases in 2017, up 23.7% from 2016. There were 1,835 active craft distillers in the U.S., as of August 2018, up 16% over the prior 12 months. The largest concentrations of distilleries were primarily in the West, mostly in California, Washington, and Colorado, and in the South, mostly in Texas. The investments in craft distillery expansion have also increased. As of 2017, total investment in the sector reached $593 million for craft distillery expansions, up 49% from the $398 million invested in 2016.xiii

As of 2018, 92% of craft distillers were defined as small producers. Yet, because small distilleries produce a limited quantity of spirits—usually single batches at a time—they accounted for just 13% of the craft spirit cases sold. For these small distillers, generating revenue on-site at the distillery is especially important, as on-site sales make up 40% of their total sales. Of small craft producers’ revenue, out-of-state sales account for less than 10% of total business sales.xiv

In 2014, Arizona’s legislature established a license system exclusively for the craft liquor industry. The law made multiple modifications to existing laws that placed restrictions on bars, restaurants, and alcohol manufacturers. The rules now allow distillers to sell directly to consumers and removes the permit requirement needed to host special events like a St. Patrick’s Day party. As such, wineries and distilleries are now able to host more festivals and events.xv

In January 2018, the White House signed a tax bill that made several changes to lower the tax bill on beer, wine, and distilled spirits. The “Craft Beverage Modernization” provision cut the federal excise taxes on alcohol, which was especially helpful for smaller producers. The new law changes the previous fixed $13.50 flat tax per proof gallon of liquor to a tiered system, which levies a $2.70 tax per proof galloon on the first 100,000 gallons produced and increases to a rate of $13.34 on the next 22.1 million gallons. Anything produced above that threshold is taxed at the original $13.50.xvi

Competitors

Arizona Distilling Co

Founded in 2013, the Arizona Distilling Company is a micro distillery that specializes in small- batch, handcrafted spirits. It uses local ingredients to create a line of spirits that include Cooper City Bourbon, Desert Durham Wheat Whiskey, Commerce Gin, Humphry’s Arizona Malt Whiskey, Park Rye Whiskey, and Mission Vodka. In May 2018, the company officially opened a new tasting room and cocktail lounge inside a 5,000-square-foot space in Tempe, Arizona. The new tasting room will include a 36-seat outdoor patio, and feature two stills—one 100-gallon still and another larger 300-gallon still.xvii

Adventurous Stills

Formally established in 2015, Adventurous Stills provides small-batch, handcrafted spirits and oversees everything in the distilling process from grain to bottle. It uses a custom-made mash tun and two handcrafted copper stills to create various lines of spirits that include Cold Fusion Vodka, Peralta Moonshine, Papago Rum, Camelback Gin, Peralta Bourbon, and Fossil Creek Whiskey. Tours of the distillery are available during working hours, and guests are provided four to six samples of spirits or craft cocktails at the tasting room after the visit. The company also provides two hands-on experiences for guests who want to learn how to distill their own spirits. The “Day at the Distillery” option costs $150 and is limited to a class of three individuals, and the second distill your own barrel option allows guests to create their own barrel of spirits at a cost of $1,350.xviii

Desert Diamond Distillery:

Established in 2009, Desert Diamond Distillery offers customers a variety of spirits, including clear white rum, dark rum, agave rum, barrel reserve rum, and vodkas. The distillery is owned and operated by the Patt family, and although it was established in 2009, it officially opened its doors to the public on April 1st, 2010. The distilling production room features a 1,000-liter still with double stack semi-automation processing. Tours of the distillery are available at a cost of $5 per person and are free for guests under 21. On average, tours are usually between 20 to 30 minutes long.xix

Lucid Distilling Co

Located in a historic fire station in Old Town Peoria, Arizona, Lucid Distilling Co, distills a line of artesian small-batch spirits that include Forcible Entry Vodka, Crooked Ladder Rum, Dispatch Gin, and Fire Station No.1 Whiskey. Its distilling facility includes a tasting room that is open to the public and offers tours for special events, large groups, and private parties. The tasting room’s craft kitchen features an assortment of sliders, fries, charcuterie, and salads. At the bar, bottle prices range $30 to $50.xx

Three Wells Distilling Company

Founded in 2013, Three Wells Distilling provides various small-batch craft spirits which include Sonora prickly pear fruit spirits, American Made Agave Spirits, Mt. Lemon Gin, Old Tom Gin, and vodka. The company gets its name from the source of water it uses—well water from well #3 in Three Wells Court in Sahuarita, Arizona. Three Wells’ spirits are available throughout Arizona, and distillery tours and tastings can be scheduled through the company’s website. Prices range from $32 for the vodka to $100 for the Sonora Gold prickly pear cactus fruit spirit.xxi

 

Team

Dana Murdock

Owner and President

Dana is the president and one of the original founders of Thumb Butte Distillery. She is also one of the lead distillers and is actively involved in the company’s day-to-day operations. She personally designs all of the distillery’s gin spirits. Dana’s previous experience includes ceramics, artisan baking, health care analysis, and vocational counseling.

Jim Bacigalupi

Owner and Head Distiller

Jim designs all of the whiskeys, oversees the aging processes, and is one of the founding members of the distillery. He worked as an artist for more than 40 years designing furniture and has worked in the glass and metal craft industries. He helps operate the distillery on a day-to-day basis and oversees every distillation. He is from California and has lived in Arizona for 14 years.

Discussion

Endnotes

Invest in Startups

Check out the background of our broker-dealer and investment professionals on FINRA's BrokerCheck

MicroVentures is an equity crowdfunding investment platform, combining the best of venture capital with equity crowdfunding. MicroVenture Marketplace is a FINRA registered broker-dealer, offering both primary and secondary investment opportunities through special purpose vehicles or directly into issuers. Our team of investor relations associates is committed to personal relationships with our investors to provide high-touch customer service to help you to invest in startups.

11601 Alterra Parkway, Suite 100, Austin, TX 78758

© 2019 MicroVentures, Inc. All rights reserved.

Brokerage Products: Not FDIC Insured • No Bank Guarantee • May Lose Value

Important Disclosure: MicroVentures.com is a website owned and operated by MicroVentures, Inc. All securities-related activities are conducted through MicroVenture Marketplace, Inc., a registered broker-dealer and member FINRA/SIPC. By accessing this site and any pages thereof, you agree to be bound by our User Agreement and Privacy Policy. MicroVenture Marketplace, Inc. does not provide investment advice or make investment recommendations. No communication, through this website or in any other medium, should be construed as a recommendation for any security offering on or off this investment platform. Regulation D 506 (b) and (c) private placement offerings on this Site are only available to "accredited investors" who are familiar with and willing to accept the high risk associated with these transactions. Similarly, Regulation Crowdfunding offerings on this Site are inherently risky; these transactions are open to all investors aged 18 or older and involve the risk of loss of an entire investment. Securities sold through private placements and crowdfunding are not publicly traded and are intended for investors who do not have a need for a liquid investment. There can be no assurance the valuation is accurate or in agreement with the market or industry valuations. Additionally, investors will receive restricted stock that will be subject to holding period requirements of at least a year, but in most cases much longer. Investing in private placements and crowdfunding requires high-risk tolerance, low liquidity concerns, and long-term commitments. Only invest an amount of money you can afford to lose and without changing your lifestyle. Neither the Securities and Exchange Commission nor any federal or state securities commission or regulatory authority has recommended or approved any investment or the accuracy or completeness of any of the information or materials provided by or through the website. Investors must be able to afford the loss of their entire investment.