Ambitious plans for Gage Roads as it reaches 15-year mark

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WA’s Gage Roads Brewing is celebrating 15 years with a revived brew and an ambitious approach to future growth.

It is on the cusp of opening its first Atomic Beer Project venue over on the east coast, after receiving approvals from the City of Sydney Council earlier this month, and looks set to change its name to Good Drinks Australia to focus on its multi-brand approach (with Gage Roads staying on as a sub-brand), but these are just the latest highlights for a company which has experienced all the ups and downs of both brewing and business.

In the 15 years of its existence it has grown from a small independent production brewery in WA to being owned by Woolworths before regaining its independence as an ASX-listed brewer.

It is now a far cry from its beginnings in a former margarine factory outside of Freo, with second-hand equipment shipped from the US, bought on a credit card with a $20,000 limit.

This week at the company’s AGM, managing director Jon Hoedemaker told shareholders that on top of revenues of $39.7 million for the year, Gage has seen 10 per cent growth on the east coast as it looks to expand its reach.

Gage’s history has been intertwined with that of Australia’s brewing industry since its inception, and Aaron Heary, chief strategy officer at the Fremantle-based brewery, was the second person employed by founders Bill and John Hoedemaker and Peter Nolin, and the first in the brewteam, so he has had a birdseye view of the development of Gage and the industry as a whole.

He said that the 15-year mark was an important one. Gage has faced hard times like all emerging and growing businesses, but to have got this far and achieved this much was something to celebrate.

“Gage got in early in the Australian craft beer scene,” Heary said.

“Back when we first started the brewery it was really tough. No one knew what craft beer was. Now it’s a really different space.

“Back then there might have been 10 or 15 breweries. When you look back a lot have been taken out [of the independent craft beer market] but we were an independent brewery and 15 years later we still are.”

He said they would be celebrating the big anniversary with events and he launch of its Small Batch Lager.

“I’ve pulled out some of the old paper recipes that were sitting in an archive folder in my office,” Heary said.

“We brewed a bit of a hybrid between a couple of those recipes, and some of those early hops aren’t necessarily still available, so we’ve switched a few things out but it’s true to the original.

“That’s our little celebration of our 15 years that we’re really proud about.”

But that’s not the only plans the team have in store at Gage.Heary says the brewery wants to invest in a brewery in every state.

“[We’ll be] building breweries that are bigger than a brewpub, but smaller than a production brewery like Gage Roads, so they are able to brew beer and service the local market, but not big enough for a national packaging or distribution.

“They’ll certainly be doing kegs and limited releases for the local market and with a taproom attached to that there’s a whole lot of benefits and gives us a base for our team in each state. What better way than to have a little brewery they can work out of?”

Having moved the national sales team to Sydney, Gage is making a serious move at Australia-wide domination.

Winding it back

The team Gage Roads have been intertwined in the history of Australian craft beer, and all its issues and challenges throughout its 15 years, and Heary is no exception.

After a gap year that turned into gap years, Heary found himself in the Margaret River region at the Devil’s Lair vineyard.

“The house I was living in in Perth at the time burnt down so I didn’t have really anything left except my car and ended up staying there,” he said.

At Devil’s Lair, Heary met Janice McDonald, a winemaker there who had also been one of the brewers at Matilda Bay with industry legend Phil Sexton – recently announced to be reviving the brand.

After 4 years under McDonald’s tutelage, Heary moved to Little Creatures with her. Having been born and bred in Fremantle, it was a chance to return to his roots, and study at the Institute of Brewing and Distilling.

“The beer bug had hit me,” he explained, but the travel bug had too, leading to a move to Canada, to the Steamworks Brewing Company in British Columbia.

It was a major change for Heary, brewing constantly rotating beer styles on a 12hL brewkit for a small brewpub, compared to Little Creatures, which at the time focused on a small range or recognisable styles.

“There was a million things going on that were streets ahead of anything going on in the Australian beer scene at that point,” he said.

“The market over there was 15 years in front, they were already drinking wheat beers, IPAs, things that just weren’t available in Australia, at least in WA where I was.”

After a year at Steamworks, Heary jumped in the car and drove down through the Americas to surf, and experience all the breweries, and beer, he could on the way down.

In San Diego, however, a chance meeting with one of Gage Roads’ original founders, Peter Nolin, proved to be a decisive moment.

“I didn’t really know anyone there [at the World Beer Cup ceremony for which Steamworks had won an award for its Champion Stout] but I got off stage and got a tap on the shoulder, and it was one of the founders of Gage Roads, Peter Nolin.

“He said look me up when you get back – I said, I’ll be back in six months, I’ve still got some more surfing to do.”

It turned out to be perfect timing, as the team were ready to start brewing when Heary arrived back on Australian soil.

“Little did I know that back in Fremantle, that John, Bill and Pete had been hatching this plan.

“They’d found an old butter factory, an old Meadowlea factory and they had started to set up shop here.”

They started brewing on a 35hL secondhand kit built in Syracuse New York, and thus Gage Roads was born.

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15 years of industry trends

Gage Roads went straight into wholesale with its new brewkit, but while it might seem an unusual move to today’s industry, with its emphasis on hyperlocal brewpubs, it made sense in the early landscape of Australian craft beer – though it, and many other industry trends have come and gone since then.

“There’s this exponential growth and I think the market can continue to sustain those smaller pub breweries, but people trying to enter into wholesale space may potentially find it more difficult than ever before.

“There’s so much competition, there’s so many breweries and people have these desires to do national, and not all of them can succeed, but all the little pub breweries can.

“It’s a really valid model and it’s exciting to see so many small independent breweries firing up all over the place, it’s going back to the way it should be,” Heary said.

Part of what is allowing smaller breweries to develop their brand and make a name for themselves in a crowded market was the advent of social media.

“When we first started Gage Roads, we discussed how we were going to tell people about who we are. It was old school marketing – let’s get a billboard, we said.

“[But now there is that] immediacy of information and the ability for breweries, off very low marketing budgets, to tell their story. But the biggest change is the consumer and obviously the proliferation of breweries.”

He said consumers were now vastly different in terms of their knowledge about the space and what they expected from their beers.

“The consumer has come a long, long way. The days of trying to convince someone who’s a VB drinker to drink a craft beer (what’s that in there, a bunch of flowers mate?) are over.

“It was a difficult conversation to have with people back in 2004, you were really convincing the consumer to come along for the ride.

“Now the consumer really understands what craft beer is, the drinkers out there are so much more sophisticated, they know a lot about beer styles, they’re really well educated.”

As a result, brewers have to get more creative, and also more realistic when it comes to beer style.

“Craft brewers are not necessarily going for distinct beer styles now, it’s more about who they are, what they stand for and what their ethos is. You can see brewers launching beers like a lager, whereas five years ago people were talking about ‘fizzy yellow liquid’ – now they’re brewing fizzy yellow liquid.

“Breweries are becoming more sophisticated, with a raft of products for all consumers not necessarily just targeting hop heads or sour beer heads.

“Those types of brewers that are niche in that space will continue to do well, but I think we’re going to see more breweries doing beers for the broader market and bringing more people away from the big mainstream beers.

“Lot of people are spruiking doom and gloom, but I don’t think so, while the market continues to grow there’s room for more.”

Times are a-changing

Being an independent brewery has never been an easy option, whether you’re a local brewpub or a nationally-focused production brewery, or anything in between.

“We had a bit of early success, but not enough to be sustainable financially at that point,” explained Heary.

“We raised money here and there, and we got to the point where we really needed to partner with someone bigger to make that happen.”

This is when Woolworths stepped in to back the business, buying a 25 per cent stake in 2009, before the brewer announced a capital raising to buy back the stake in 2016.

“That part of the journey made us and helped form us, we got some of the best brewing equipment out of it. We were able to build meaningful brands and distribute nationally and just brew great beer.”

“That gave us the opportunity to go to the next phase which was to take the business independent again and have another crack at it now that the market is a bit more mature and people really are understanding what craft beer is.

“A wholesale-only brewery of our size and scale can exist now, back then it wouldn’t unless you had millions and millions of dollars to fund it.”

It was a challenging time for the business, but Gage weathered it.

“It’s always challenging to be honest, I know that sounds cliche, if your business is in decline it’s challenging, if it’s in growth its challenging.

“We were doing 50,000 cases per year about 2009 when we did the deal with Woolworths. With no capital input, we did 350,000 cases, seven times the volume in a 12 month period.

“The next year we did 1 million cases, after we started to throw in some capital, throwing people and brewers at it, 24 hours a day, 7 days a week brewing, squeezing the lemon as hard as we could.

“Managing the brewery personally for me through that process was challenging, and breaking the market before that was challenging.”

The ‘Return to Craft’ ethos after ousting Woolworths added another layer of complexity – the brewer now owns multiple brands including Matso’s, acquired in 2018 as well as Alby and the new Atomic Beer Project, leading to its Good Drinks strategy..

“All the complexity that comes with owning, selling, distributing, marketing and producing your own beer brand nationally, and now that we’ve got sales overseas, internationally, is mind boggling.

“Producing the amount needed for a Test Match [at Optus Stadium] when you don’t know how long it will go on for and you can’t let people run out of beer is something we’d never considered possible five years ago, let alone 10.

“Every phase we’ve been through has its own unique challenges. But we’ve always had this one value and say it to each other, have fun doing it. When things were harder in the early days struggling to break the market, everyone would go out and have a laugh.

“[Whatever the challenge], we’re still inspired to keep going.”

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