ADMP Memo Final

Memorandum

To: Clark Hansen ~ CEO of Anima Mundi Development Partners

From: Jack Perez ~ R&D Analyst at AMDP

Date: 01 March 2022

Re: Black Rifle Coffee Company Investment Proposal

After many hours of research and careful analysis, I am confident to present Black Rifle Coffee Company, as Anima Mundi Development Partners’ next investment opportunity. BRCC is a veteran founded, owned, and operated business with a passion for helping former and active military members as well as first responders and the great American outdoors. On top of their increasingly popular premium coffee selections, BRCC is also a lifestyle brand that has amassed a substantial public following. In this memo, I will illustrate the profitability of BRCC and how their long-term objectives align with AMDP’s own values. 

AMDP’s Core Ideals

At AMDP, we pride ourselves in investing in companies that are not only profitable but environmentally and socially conscious as well. I have made this the driving force behind my research and believe that BRCC meets all of these standards that are forementioned as well as explicitly listed below.

Triple Bottom Line 

The triple bottom line is a framework in which a company values more than profit alone when making business decisions. As the name suggests, there are three categories that the framework emphasizes for companies to pay attention to: profit, people, and planet. 

• Profit: a typical measure of an organization’s financial gains (Kenton). 

• People: a historical measure of how socially responsible an organization has been (Kenton). 

• Planet: a measure of how environmentally responsible an organization has been (Kenton). 

Corporate Social Responsibility 

Corporate social responsibility is the concept that organizations operate with the intent of benfitting the society and environment. This idea is truly realized when a company aligns their business purposes and procedures with the goal of doing good for the sake of humanity (Kasturi).

Social Enterprise 

A social enterprise is a company with particular social objectives that come before or simultaneously with the organization’s attempts to maximize profits. In simpler words, a social enterprise’s primary purpose is to positively impact the world around them while being a successful business at the same time (CFI).

Carbon Footprint 

A carbon footprint is the total amount of greenhouse gas that a person or entity emits in the course of everyday life. We measure carbon footprints by looking at this individual’s day to day activities and adding up all of their carbon dioxide and methane emissions. This gas we release comes predominantly from things like transportation, such as cars and planes burning fossil fuels, and housing needs, like energy and food production. Once in the air, these gases begin to collect and trap heat inside the atmosphere resulting in what is called global warming. It is imperative to reduce our carbon footprints because the effects of climate change such as the ice caps melting, and increasingly volatile weather systems are already being felt and show no sign of getting better any time soon (Albeck-Ripka).

About Black Rifle Coffee Company 

Black Rifle Coffee Company is just what its name implies and so much more. The organization was started in 2014 by Evan Hafer, an ex-Green Beret, along with fellow veterans Matt Best and Jared Taylor (BRCC). Since roasting the coffee in Mr. Hafer’s garage and selling bags one by one, these men have come a long way as their creation has become one of the fastest growing coffee, social media, and lifestyle brands in recent years (Zengerle). The original idea behind BRCC was to provide premium coffee to people who love America, and that goal has not wavered since. Looking at the social enterprise aspects of BRCC, it is clear that the organization is dedicated to serving the military, first responders, the great American outdoors, and even local communities (BRCC). Along with a description of how BRCC helps these different people, I will also detail below how this organization was able to go public in seven short years and receive a pro forma evaluation of approximately $1.7 billion (SEC).

Purpose 

Like I stated above, BRCC’s purpose is to serve high-quality coffee to people who love America specifically like our military, law enforcement, and first responders, but it does not stop there. The other side of BRCC’s mission is to bring a respectful, principled, and caring culture to their customers and the company itself (BRCC). BRCC recognizes their social responsibility and accomplishes this mission in a number of ways as follows…

• BRCC Fund: This non-profit portion of this organization is responsible for a number of programs and donations to various entities throughout the United States. The fund provides grants for things like veteran rehabilitation programs, small businesses, and environmental clean ups. Upon going public, BRCC set aside 530,000 shares for the fund which is valued at roughly $5.3 million (SEC).

• #10,000veterans Movement: The idea behind this campaign is that BRCC will hire 10,000 veterans in the next several years while the business continues to grow (BRCC). As of right now, the company has almost 700 full time employees with over half of them being veterans (Tyler).

• Coffee or Die Magazine: Launched in 2018 originally completely online, this magazine has turned into a physically printed, prominent, and objective news source that covers civil unrest throughput the world as well as certain societal issues in the U.S. (Lipton). An important aspect of the magazine is the coverage and support it provides in its stories about small businesses, veterans, law enforcement, first responders, and the environment (BRCC).

Projections 

Over the course of its history, BRCC has been a very profitable and fast-growing organization. The speed at which it has advanced may be worrisome to some individuals, but the overall numbers show that the company is still growing steadily each year. Looking at their Direct-To-Consumer returns, which come from online sales only, BRCC’s business in this area nearly doubled from 2019 to 2020 coming out to about $126 million in revenue (SEC). In 2021, this growth continued with DTC returns increasing by 30% in the first 9 months of the year. A large portion of this value comes from BRCC’s over 270,000 “Coffee Club” subscriptions that grant customers special access to certain types of coffee and different exclusive products (Lipton).

Another portion of BRCC’s income comes from their physical coffee shops called “Outposts.” In the first 9 months of 2021, these brick-and-mortar locations totaled about $7 million in revenue from both coffee and merchandise sales (SEC). While this may not seem like much, there are only a mere 16 locations—9 of which were open in the last two years—and have shown an increase in returns by over 500% since 2019 (Lipton).

Wholesale is the third channel is which BRCC earns a great deal of its revenue, and it does this through its two main product categories. The first of these is merchandise such as hats and shirts which have been getting more attention thanks to the media and the company’s increasingly popular Black Rifle Coffee Podcast and YouTube series (Zengerle). The second of these categories is their wide selection of coffee products like beans, grinds, ready-to-drink coffee beverages. Released only 2 years ago, BRCC’s RTD line is already top 4 amongst all U.S. brands in yearly sales for this $4 billion product category. Some of the retailers BRCC can be found in include 7-Eleven, Walmart, and Bass Pro Shops (SEC).

Expert Opinions 

“Regardless of what you believe, BRCC isn’t a train to get in front of and bet against.” – Investor Place

“This is a tasty gourmet coffee brand that offers a lot of variety. The packaging has a unique military theme and a practical design, and the coffee itself is bold, strong, and deeply flavorful.” – CoffeeAffection.com

“In its seven years of operation, BRCC has inspired, entertained, and informed generations of active-duty service members, military veterans, first responders, and the men and women who support them.” – Global News Wire

Recommendation 

My recommendation is that we invest in Black Rifle Coffee Company immediately. This organization has continuously demonstrated its belief in the triple bottom line just like we at AMDP value above all else. On March 16th, BRCC is expected to release their fourth quarter numbers from 2021 and I believe that once they are made public a huge wave of investors will be at their door (Tyler). I suggest we approach BRCC now before this happens so that we may capitalize on the boom in business and investments they will likely see in the coming months.

Works Cited 

Albeck-Ripka, Livia. “How to Reduce Your Carbon Footprint.” Nytimes.com, The New York Times, https://www.nytimes.com/guides/year-of-living-better/how-to-reduce-your-carbon-footprint.  

BRCC. “About Us - Who We Are.” Blackriflecoffee.com, Black Rifle Coffee Company, https://www.blackriflecoffee.com/pages/who-we-are. 

CFI. “Social Enterprise.” Corporate Finance Institute, 30 Jan. 2021, https://corporatefinanceinstitute.com/resources/knowledge/other/social-enterprise/.  

Kenton, Will. “Triple Bottom Line (TBL).” Edited by Janet Berry-Johnson, Investopedia.com, Investopedia, 8 Feb. 2022, https://www.investopedia.com/terms/t/triple-bottom-line.asp.    

Lipton. “Black Rifle Coffee Company Becomes Publicly Held (BRCC on the NYSE, at Noon Tomorrow) – a New Lifestyle Brand.” Lipton Financial Services, 10 Feb. 2022, https://www.liptonfinancialservices.com/2022/02/black-rifle-coffee-company-becomes-publicly-held-brcc-on-the-nyse-at-noon-today-a-new-lifestyle-brand/.  

MacDonnell, Kate. “Black Rifle Coffee Review 2022: Pros, Cons, & Verdict.” Coffee Affection, 7 Jan. 2022, https://coffeeaffection.com/black-rifle-coffee-review/.  

Morgan, Farahn. “Black Rifle Coffee Company Is Caffeinating the Troops This Holiday Season, One Random Act of Coffee at a Time.” GlobeNewswire News Room, Notified, 23 Nov. 2021, https://www.globenewswire.com/news-release/2021/11/23/2339890/0/en/Black-Rifle-Coffee-Company-is-Caffeinating-the-Troops-This-Holiday-Season-One-Random-Act-of-Coffee-at-a-Time.html.  

Rangan, V. Kasturi, et al. “The Truth about CSR.” Harvard Business Review, 9 Mar. 2015, https://hbr.org/2015/01/the-truth-about-csr.  

SEC. “Black Rifle Coffee Company, a Rapidly Growing Premium Coffee Company and Lifestyle Brand” Sec.gov, U.S. Securities and Exchange Commission, https://www.sec.gov/Archives/edgar/data/1836707/000110465921132680/tm2131550d1_ex99-1.htm.  

Tyler, Chris By Chris Tyler. “Black Rifle Coffee Stock Is Turning into a Well-Brewed Play.” InvestorPlace, 2 Mar. 2022, https://investorplace.com/2022/03/black-rifle-coffee-brcc-stock-is-turning-into-a-well-brewed-play/.  

Zengerle, Jason. “Can the Black Rifle Coffee Company Become the Starbucks of the Right?” Nytimes.com, The New York Times, 14 July 2021, https://www.nytimes.com/2021/07/14/magazine/black-rifle-coffee-company.html