Behind The Sale The Wasn't To Be

"We feel we've got great beer, a great brand, great brewers, great venues and a great team. So, we think we’re as well placed as any to work our way through whatever's coming. But we don't really know what's coming."

Those are the words of Steve Jeffares, one of Stomping Ground's founders, as they reflect not only on last week's announcement that their sale to Good Drinks Australia was off, but also the wider economic picture for craft breweries. 

He says the mutual decision to call off the sale – first announced last August – was driven by the reality of the craft beer market at the moment; conversations within the industry and data are pointing to one thing: the market is softening.   

“There's a great deal of uncertainty about what's happening, and what's going to happen,” Steve says. “And because of that, that's where we both got a bit wobbly.

“Obviously, interest rates are starting to bite and consumer confidence is falling. While we’ve had a fantastic summer in our own venues, we're kind of cautiously wondering what's around the corner.”

Such background conditions meant the proposed acquisition, which had been in the works for some time prior to the announcement six months ago, became less appealing to both parties.

“The view that we both had was we're best to focus on our own brands, in our own markets, which we know so well," he says.

The Stomping Ground team feel it was unfortunate the sale was announced before it had been finalised, a move that was driven by the fact Good Drinks are listed on the ASX and, as such, have to meet disclosure requirements.

“In most circumstances and with most of the acquisitions,” Steve says, “they've been foreign companies that aren't on the Australian stock exchange, so they don't have that same duty of disclosure.

“Getting this close to a deal and falling over – for whatever reason – is not that unusual. It's just this one has played out in public a little more than we all would have liked.”

 

Stomping Ground founders Steve Jeffares, Guy Greenstone and Justin Joiner, with Up Property managing director Adam Davidson (second left) when they announced plans for their Moorabbin brewpub in 2019. Their venues will now become an even greater focus for the Collingwood-based operation. Photo: Guy Evans

 

Although the acquisition process consumed plenty of hours and energy – and has left them with a bill they’d prefer not to have – Steve says he already feels last week's decision was for the best. What's more, he remains excited about Stomping Ground’s future.

"That’s just part of the process and we have no regrets,” he says. “And I’m pretty comfortable in six or 12 months down the track that we’ll all look back and go, ‘This was for the better.’.”

As for the wider economic challenges facing the beer industry (which you can read about here), Steve says he’d be surprised if most brewery owners aren't currently concerned about the growing costs involved in running their businesses.

“I think these black clouds have been building on the horizon," he says. "As to what impact it has it's going to have on us and the broader economy, time will tell.”

The wholesale market, which has always delivered tight margins for brewers, is only getting tighter, making it ever more challenging to build a sustainable business outside your home market.  

“You might get a short-term sugar hit of volume, but to create a sustainable brand out of your own home market is increasingly hard,” Steve says.

“Our venues have always been designed and proven to be the engine room of our business. Even in a time of economic downturn, we think those venues are going to perform for us.”

With the dust settling on last week's surprise announcement, along with co-founders Guy Greenstone and Justin Joiner he's hopeful that a strong Melbourne-based brand, an impressive tally of beer awards amassed over recent years, and a large team imbued with a positive culture, will help them to withstand the considerable headwinds facing the beer industry.

And it's the last of those he points to as a silver lining for the craft beer industry: the quality of its people.

“Most of us look out for each other and look after each other,” he says. “And I'm sure that, while this might be a bumpy road, we will continue to do that.”

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