Lion’s acquisition of the Fermentum Group, which includes Stone & Wood, is one of the biggest craft beer deals Australia has seen, and certainly one of the most surprising.
Fermentum’s Jamie Cook is a former Chair of the Independent Brewers Association, and many people didn’t think Stone & Wood would go down the same path as the likes of Balter, Feral or Pirate Life.
So what changed?
Cook told The Shout: “What’s changed is basically the founding families got to a point in their journey where some wanted to continue and some didn’t. And we arrived at this point where it was time to hand the custodianship on.”
In terms of independence he added: “I think there’s more to our brand and just independence, while to some people that’s important. The brand and the business has always been built around a conscious business philosophy, of looking after all of our stakeholders our people, the community, the environment, our customers and suppliers, etc.
“That’s really the way we behave in the marketplace is what’s really built the brand. Sure there’s been an ownership piece, but that’s a very small element of the business.
“So when we looked at the hand the custodianship of the business over, we didn’t just look at value we looked at values because all those things that made us so successful to date, we wanted to see in the next custodian and Lion really meet that, well and truly in spades actually.
“A lot of the elements of the deal around how we’re going to continue to be loyal to people, the donations to the Big Scrub Landcare, and the inGrained Foundation, building the new brewery. All those things were about ensuring that all their stakeholders the local economy, the community and the team are benefiting from this.”
“Independence is important to some, but there’s 14 million beer drinkers out there or so, and they’re not all one big homogenous lump. There are a small number of consumers that value independence and this change might not appeal to them but our brands are about more than just about independence.
“We built their brands around much more important things around values and purpose. And that’s what consumers have bought into, and that will continue due to the same values that Lion bring to the table, going forward.”
And in terms of why the business decided to sell to Lion, Cook said: “If you look at the way Lion behaved in the last 12 to 18 months through COVID, in terms of the way they supported the trade and the customers through keg credits and various other programs and looked at their employees and their people.
“We really took comfort out that, because that’s exactly what we did, obviously on a much smaller scale to what Lion did. And that really said to us that we’re both driven by similar things, so it makes a big difference.”
Lion Managing Director, James Brindley, told The Shout that he thought anybody in the liquor industry in Australia would be an admirer of Stone & Wood.
“I certainly am, as are many colleagues of mine,” he said, “when the opportunity came about, there was a real connection with similar values.
“We buy into the legacy that the founders want to create. We buy into the fact they want to give it to a custodian that they trust. And investing in the local community, B Corp certification, doing good in the world, they are the things we try and do at Lion. I know other companies do as well but they resonate with us so we put our best foot forward and as Jamie said it’s a unique deal. There’s the financial component, but there’s the commitment to community and doing the right thing.
“That’s a nice intersection and we were lucky enough to be the ones lucky enough to come up trumps on custodianship.”
Brindley added: “I think we’ve got a reasonable track record of following through on the beliefs of brands, founding shareholders of Little Creatures and we’ve continued to invest in that brand. Chuck Hahn is still here 20 years later, and most recently Four Pillars, we’re half shareholder and we let them run that brand.
“Stone & Wood has been capacity constrained and we’re going to build a new brewery and then take it to more people so there’s upside and downside and no change. We’re going to focus on growth and doing the right thing.
In terms of the opportunities for growth, Brindley said: “Speaking on behalf of Ross and Jamie. they’ve been capacity constrained for the whole life of Stone & Wood. So, once we settle, the first thing we’ll do is follow through on their dream and commitment to build a new brewery so there’ll be more Stone & Wood made in Northern Rivers going forward.
“Then we’ll be able to expand it, through our network, and then also across Australia. We’ve got opportunities in New Zealand, in the US that the guys have tapped into, and perhaps we can tap into that better. I’m really optimistic about the Green Coast mid strength lager. The other brands all have their own platform for growth as well.”
Regarding the other brands, Cook told The Shout: “Tommy at Fixation and Jane and Danielle at Two Birds have been across the latter part of this and they’re very supportive of it. They understand that as business owners themselves, they understand they get to a point, and Jane and Danielle went through this process earlier in the year when we acquired them.
“They’re very understanding that you get to a point as a founder, where regardless of how you hand it on, you’re going to hand it on, whether it’s being carried out in wooden box or doing it in time so you can enjoy the benefit of.”
He also said that while COVID had impacted the decision, it was probably not in the way that many people would expect.
“COVID actually accelerated our growth in the back end of last year,” Cook said. “We were impacted early in the year when we had the lock downs back in March, but we accelerated out of that, and once again we couldn’t meet demand over Christmas last year. That put the new brewery project on the table for us again.
“That really triggered where we’ve ended up today after reviewing how we’re going to fund that, and how we were going to still make that big leap forward which is what made the founding families re-evaluate their motivations and their commitments going forward and where we decided to hand over the custodianship.”
Ross Jurisich elaborated on this, telling The Shout, that the process with Lion has been going on since the back end of last year.
“As Jamie alluded to on the brewery, we’d dusted off the plans to start on the new brewery. And then we’ve started the real work around the capital raise process around February and then we’ve been doing our due diligence, both sides back and forth since then.
“There were plenty of people at the table. Over the years, we’ve had to field the calls from all manner of businesses and organisations.”
He added: “The business is a real fork in the road, and breweries are very capital intensive things. We were looking at a $50m investment in the new brewery. So you either commit to that, and everything that goes with it over a long period of time, you don’t just build $50m brewery overnight.
“It takes a tremendous amount of work and having four founding families in the business, there’s a different appetite for risk and work etc. The timing was right, we all got together and said, ‘OK, do we want to head down this path together or is now the time that we look to pass that custodianship onto someone else and let them run with it’. So we went through that process and it was a very intensive process.”
Cook told The Shout the three founders of Stone & Wood are staying on in an advisory board capacity, “Lion guys have asked us to hang around and provide some transitional support for the team and some guidance and help them understand the business a bit more, once they start to get inside and understand the business a bit we’ll help them through that process,” he said.