24 September 2021

Lion splashes out AUD 500 million for craft brewer Stone & Wood

Australia | It sent shockwaves around the industry when Lion announced it has acquired 100 percent of the Fermentum Group, which owns one of the country’s largest and most staunchly independent craft brewers, Stone & Wood, for an estimated AUD 500 million (USD 370 million). The transaction, which is subject to regulatory approval, was reported on 9 September 2021.

Fermentum is profitable, says the Australian Financial Review, with EBIT running at AUD 25 million-plus annually, despite the hospitality shutdowns during the pandemic. The group is estimated to control about 1 percent (200,000 hl) of the 20 million hl Australian beer market. Insiders suspect the deal was struck on a hefty multiple, which could have put the price tag at more than the rumoured amount.

Stone & Wood has been operating from the Byron Bay region in northern New South Wales since 2008.

IPO or trade sale

Before the sale, Fermentum had been examining a potential listing (IPO) on the Australian stock exchange to help fund growth, including a proposed AUD 50 million brewery with a 200 hl brewhouse near Murwillumbah, some 50 km north of Byron Bay. Lion will most likely continue with the project.

Fermentum expanded in January this year, when it acquired Melbourne’s Two Birds brewery, Australia’s first female-owned craft brewer.

The business was owned by founders Jamie Cook, who served as its chairman, Brad Rogers, Ross Jurisich and a handful of other shareholders. Among them was Trevor O’Hoy, who was CEO of the Foster’s Group, before it split into the Carlton & United Breweries (CUB) and the wine company Treasury Wine Estates in 2011. The three founders are expected to stay on for another year.

All branch out into craft beer

The Kirin-owned multinational brewer Lion, which makes mainstream beer brands including Tooheys, XXXX Gold and West End, has been steadily building its craft beer portfolio, which is led by Little Creatures, White Rabbit, Kosciusko and Malt Shovel, as well as New Zealand’s brewer Panhead. It acquired US craft brewer New Belgium in 2019 for up to USD 400 million.

CUB, which was taken over by Japanese brewer Asahi from AB-InBev in 2019 for AUD 16 billion (USD 11 billion), has also been on a spending spree. While under AB-InBev, CUB forked out an estimated AUD 200 million (USD 150 million) for Gold Coast-based craft brewer Balter. Previously, it had swallowed up craft brewers 4Pines from Sydney and Pirate Life from Adelaide.

Asahi Beverages, for its part, bought the Green Beacon craft beer brand in late 2019. It has been expanding beyond beer, and this year acquired the Allpress coffee business, which operates in New Zealand and Australia.

There are currently about 600 craft breweries operating in Australia.

The Independent Brewers Association loses a member

Commenting on the sale of Fermentum, the IBA’s Chairman Peter Philip said: “The IBA are obviously saddened by the loss of Stone & Wood from our stable of indie brewers and, of course, as valued members of our association. Ultimately, the reality is that business owners need to make decisions every day on what is best for them, their shareholders and their staff.”

“The Stone & Wood team, including my predecessor Jamie Cook, have given a lot to our organisation and the industry as a whole, and we will always be appreciative that they laid the foundation for the independent craft [beer] industry to flourish,” he added.

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