Southern Highlands Brewing acquired by UK group
In one of the more interesting announcements of 2023, regional New South Wales brewery Southern Highlands has been acquired by UK-based Powder Monkey Group.
The ‘all-paper transaction’ with the Powder Monkey Group, owners of Powder Monkey Brewing and Powder Monkey Taphouse in Gosport near Portsmouth, will provide expansion capital for Southern Highlands Brewing.
It will also see Southern Highlands Brewing brew Powder Monkey beers in Australia and take advantage of Australia’s proximity to South East Asia.
As part of the deal Southern Highlands Brewing owner Ben Twomey has also been appointed to PMG Board in the UK.
The move came about as a result of a long business association between Twomey and Powder Monkey Chairman Mike McKeever.
“Mike and I had been working together for 24 years,” Twomey said.
“We’ve been co-invested together, we’ve started businesses together, we’ve exited business together, we’ve had businesses that haven’t gone well together.
“So we had a pretty sound track record of working together.”
Twomey said working from that position of trust, the two businesses saw synergies that went beyond “a few more points on your PE ratio”.
“The first thing we’re going to do is launch Powder Monkey in Australia,” Twomey said.
“Shipping fluid is very expensive, so what we’ll be doing here in Australia is running two brands.
“We’ll have Powder Monkey and Southern Highlands Brewing, both with a different client set.
“One of the issues we always had was with being an eponymous brewery is Southern Highlands resonates very well in Sydney, Canberra, Newcastle and Woollonging, because nost people in those areas have been to the Southern Highlands.
“It has got that provenance.”
He said selling further afield was harder.
“So having an agnostic brand gives us a little more flexibility to open certain markets.”
Twomey said the reverse was true in the UK.
“Southern Highlands doesn’t mean a lot, but having the Kangaroo on the can tends to work quite well.”
“Before COVID we were quite successful in exporting based on the kangaroo on the can.
“Unfortunately that was to Hong Komng adnwe all know how that ended.”
Ben said the merger came about after Powder Monkey raised £750,000 in private equity.
“They’ve got a scheme in the UK, it’s called the EIS Scheme, which encourages people to invest in small businesses and there’s some tax relief.”
He said that the equity injection enable him to move his brewery from its current location in the original shed on his property.
“We’ve got to the point now where we need to move it because I think we’ve expanded incrementally over time,” he explained.
“And the other thing we really want to do is unlock the brewpub model. Retail, straight out of the fermenter into a pint glass, and the gross margin on that is a really compelling part of the business case.”
Southern Highlands was launched in 2015 when Twomey returned to Australia after a career in corporate finance in London and Dubai.
In 2017 the company opened a 150-seat taphouse in Moss Vale, though this closed with Twomey saying it wasn’t the ideal model.
“While it was itself cracking, we had a restaurant with a Primary Service Authorisation, so you could serve beer as long as you’ve got food available,” he said.
“It was a good business in its own right, but I probably got the business model wrong.
“We sold a lot of beer, but in the end I was running a restaurant.”
Listen to the full story behind the sale and Ben’s plans for the business on the Beer is a Conversation podcast.
Southern Highlands Brewing merges into Powder Monkey Group UK via a script for script acquisition
Award winning regional Southern Highlands Brewing (SHB) has merged into the fast-growing Powder Monkey Group Limited (PMG), owners of Gosport based Powder Monkey Brewing Co and Powder Monkey Tap House in the United Kingdom. This follows a successful conclusion of a PMG UK share placement of over £750,000.
The all-paper transaction provides expansion capital for the Southern Highlands Brewing brand and the opportunity for Powder Monkey Brewing to brew for the Australian market and take advantage of the proximity to South-East Asia. As part of the deal SHB owner Ben Twomey has also been appointed to PMG Board in the UK.
Andy Burdon, CEO of PMG commented:
“We need to significantly increase capacity to meet the growing number of enquiries both nationally and latterly from international customers, and the deal with Southern Highlands Brewing fits a key part of that strategic plan”
Ben Twomey, founder and owner of the 8-year-old brewery commented:
“this is a perfect deal for SHBC, a merger of two fast growing, award winning businesses either side of the world. It allows for the best of both to be combined and grow in both capacity levels and of
course access additional markets. Key to this growth will be the ability to move the Brewery and access the profitable retail market – a journey we have already started. We are looking forward to
seeing our Aussie beers brewed in the UK too. Very exciting times”
The Chairman of PMG, Mike McGeever added:
“The raise and the deal with Southern Highlands Brewing has been a momentous point in Powder Monkey’s evolution. I want to thank Ben and Andy and all the teams involved in both organisations for giving us the opportunity to establish the Powder Monkey Group brand internationally and be well positioned to take our fair share of a combined UK and Australian market worth over £25bn.