Good Drinks Australia buys Melbourne's Stomping Ground
Publicly-listed brewer Good Drinks Australia is set to acquire Melbourne-based independent brewery Stomping Ground.
The acquisition will see Stomping Ground, the reigning Champion Medium Australian Brewery, retain its status as an independent brewery under the Independent Brewers Association definition.
GDA shares, which had been trading at 74.5 cents, have been placed in a trading halt pending the official announcement of the purchase.
No price has been given yet for the sale, though Brews News understands that the three Stomping Ground founders – Steve Jeffares, Guy Greenstone and Justin Joiner will become ‘significant’ shareholders in GDA, in addition to a cash component and performance aspects to the deal arragements.
Co-founder Steve Jeffares said the sale came about as the founders looked at how the business could raise the capital needed to underpin the growth that it thought Stomping Ground was capable of.
“Three years ago, before COVID, we were looking for capital to give us growth, the sort of growth that we felt it warranted,” Jeffares explained.
“GDA approached us about 18 months ago, and we initially had some discussions with them, about possibly them investing in us, and giving us that capital boost that would help us.
“But over time, we grew to like each other for one, and they’ve got had great success around the country, particularly in the West.
“And we think we’ve got the makings and the talents and the product to be a really strong Victorian brand.”
“It increasingly became a conversation that – if they invested in us – why would we have separate sales, marketing and other production teams when there are some benefits of joining together,” Jeffares explained.
He said that while the company had considered Crowd Sourced Funding for the capital injection, they dismissed it as an option.
“Crowdfunding has certainly been discussed amongst, Guy, Justin and our shareholders in the past, but it just didn’t feel that was for us,” Jeffares said.
He said that the sale price was significantly less than the valuations being sought by equity crowdfunding breweries.
“Crowdfunding valuations are daring and wild but they’re not what we’re not talking about sort of valuation.”
He said the valuation on Stomping Ground was a “fair valuation”.
Jeffares said Stomping Ground was pleased it could remain independent.
“It would be wrong to say that we didn’t – like most growers these days – entertain the idea of one of the multinationals, but that those offers weren’t coming and we weren’t courting them,” he said.
“Our preference, always, in an ideal world would be to retain our independence.
“That’s been devalued a little bit in recent years, and it’s become less relevant to some, but for us, it’s always been important, and it’s always been our preference.
“So when GDA approached us it was an attractive proposition because they are a strong independent brewery in Australia and is important to them too. So it kind of worked. It was a really nice outcome. It wasn’t a driving factor, but it was a really nice outcome.”
The deal, which includes the Local Taphouse, will see Stomping Ground join GDA, but stay run by the founders.
“It’s really is a bit of a joining,” said GDA’s Chief Strategy Officer Aaron Heary. “Steve is coming onto the executive committee and we’ve got Justin and Guy as key management within the organization.”
“We really want to want to help Stomping Ground become the number one independent Victorian brand. With that joint goal and both of our resources coming together, one plus one equals three in this case.”
Heary said that while GDA had purchased Stomping Ground, they were acquiring skills through the purchase.
“We’re a really fast growing business, it’s hard for us to find good people and Stomping Ground business is full of great people,” he said.
“This isn’t about ‘synergies’, we have committed to keep on all our Stomping Ground people that are currently working within that organisation and to help grow our business.
“It’s not some sort of ‘get out the knife and cut the jobs out’.
“The way we’ve structured it is that Steve and Justin and Guy are being plugged into GDA and our resources, but very much still running their own race so that they are making the key decisions for this business in this market and will continue to lead in this in this market.
“Stomping Ground will become our lead brand in this market in the craft beer space. We’re really relying on these guys and the people, the great people that they have in their business and that culture to help us. It’s a bit of capital to them to help them do that.”