Will Magic Rock leverage Kirin portfolio into UK?

Last week’s purchase of UK brewery Magic Rock not only refocused interest on the country’s potential takeover targets, but it also highlighted Kirin’s growing international web of breweries.

At last month’s Society of Independent Brewers’ (SIBA) annual Beer X trade conference, Fourpure founder Daniel Lowe said that interest in purchases was declining.

“I don’t think we’ll see many more,” Lowe said.

“Maybe one or two deals but nothing more after that.”

Two weeks later Lowe’s prediction came partially true with Lion, which 10 months ago purchased his own brewery, acquired Magic Rock Brewing for an undisclosed sum.

Founded in 2011 by Burhouse and head brewer Stuart Ross, Magic Rock quickly grew in popularity thanks to its hop-forward beers inspired by trips to the American West Coast.

It expanded to its current site near the centre of Huddersfield in 2015. The brewery and taproom currently employs 45 people. In 2018 it produced just shy of 16,000hl—a figure Burhouse only expects to double or triple in the short to medium term.

By comparison, following the sale of a minority stake to Heineken in 2018, London’s Beavertown brewery intends to increase capacity from around 70,000hl to 450,000hl annually, thanks to the construction of a brand new £40m (A$74.3m) facility dubbed “Beaverworld.”

Burhouse states such upscaling isn’t his or his brand’s new owners intention.

“Our focus is to maintain the ethos of [Magic Rock] as a premium proposition,” he says. “People are willing to back us both locally and nationally and we don’t want to change things too much.”

He also played down any intention from Lion to use its new purchase as a distribution hub “for the next 12 months at least”.

Stating that Magic Rock is not currently fit to take on extra capacity.

At Beer X, Fourpure’s Lowe also spoke candidly not just of close ties the purchase brought him to Lion, but also to parent company Kirin’s US investment Brooklyn Brewery. Kirin acquired a 24.5 per cent stake of in October 2016.

It also now has a stake in 21st Amendment in California and Colorado’s Funkwerks, which Brooklyn took minority stakes in back in July 2017.

Lowe was open about the knowledge sharing between the US breweries and his own, thanks to the connections put in place by Kirin.

At the time of Kirin’s investment in Brooklyn, the NYC brand was contract brewing at Cooper’s Brewery in Adelaide, which it had been doing since June 2015. Production was moved to Lion-owned Little Creatures’ Geelong Facility in December 2018.

Through its partnerships with Funkwerks and 21st Amendment, Brooklyn was also able to expand distribution to Colorado in October 2018 and California in January this year, respectively.

This could perhaps point to a similar future for both Magic Rock and Fourpure in the UK and beyond, as well as Little Creatures and Lion’s New Zealand brand Panhead’s own British operations.

Both Little Creatures and Panhead are to open London facilities at the end of April. The former with a brewpub in Kings Cross, and the latter with a taproom in Bermondsey. Fourpure has been actively involved with the setup of these facilities, including the training and management of staff.

Outside of London however, brands like Panhead and Little Creatures have little relevance in a market where there are 2500 operational UK breweries. Now with a portfolio that sees them paired with both Magic Rock and Fourpure – alongside Kirin investments such as Brooklyn, they become part of a far more attractive portfolio.

For Burhouse however, his intention in the short term is to steady the ship and double-down within his local market.

Plans are already in place to open a second taproom in the nearby town of Holmfirth, as well as a third in an undisclosed Yorkshire location. Burhouse did not confirm when these new sites would open, however.

Magic Rock also intends to press on with its June event “Seshfest”, a festival of session beers. However after multiple breweries—including the UK’s Cloudwater and Jester King from the US—pulled out of Beavertown’s “Extravaganza” following its Heineken investment, Burhouse says he understands the reasoning if some breweries no longer choose to participate.

“We’re lucky to have so many local people who’ve taken us to heart,” Burhouse says of his decision to sell up.

“Lion are willing to support this and that means a lot to me.”

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