Perhaps the biggest story in Australian craft beer this year was the sale of Feral to Coca-Cola Amatil (CCA). It brought about the end of the business partnership Feral had enjoyed with Nail for the past six years. Here, Guy Southern chats to Nail founder John Stallwood – closing in on two decades since the launch of the first Nail Ale – about what Feral's sale means for him.
The first time I interviewed John Stallwood (above left) was at the first incarnation of BrewCorp, the collaborative brewery Nail launched with Feral, back in 2014. The mood was ebullient; both breweries were two years into a partnership with increased volume flowing through distribution channels and with awards piling up.
In the shared office space as the interview concluded, John danced to and from the BrewCorp staff fridge like a brewing Iggy Pop with a Cheshire Cat’s grin while his comedic sparring partner and best mate, Feral co-founder Brendan Varis (above right), laughed sanguinely at proceedings; life was good.
Three years on, a lot has changed.
Increasingly ephemeral drinking tastes, escalating competition and market saturation, craft beer identity and authenticity questions and buy-outs have changed the beer landscape dramatically – the last of which has had the most obvious impact on Nail. The October 2017 sale of Feral Brewing to Coca-Cola Amatil saw Nail’s 25 percent stake in BrewCorp purchased by Feral before its eventual transition to the distribution giant.
From the outside, it’s this part of the Feral deal that’s been the least commented on but, perhaps, poses the most unresolved questions. Tucked in the back corner of his second office, Clancy’s Canning Bridge, over a bottle of the yet to be released 2017 Clout Stout and pints of Nail Red, the answers unfurl over what might be best described as a Sisyphean brewing career.
There’s a lot of questions about what’s next for Nail and yourself but, first, can we talk about your relationship with Brendan. You've known him since the brewery install at Bobby Dazzlers in 1999; has anything changed since the sale?
Brendan and me are best friends and that remains the same. Although we aren’t business partners anymore, we are still best friends and both of us have been around over 15 years brewing. Over six years ago, BrewCorp started and we’ve had a big, hard journey together.
Unfortunately, a lot of people are seeing Brendan as taking the money and running, but what people need to realise is that life is hard and short. Brendan’s plan was always to keep doing Feral but he’s got two daughters and that’s not their plan. The stress of running a brewery with a massive loan that came with more equipment and the stress of having your house on the line is exhausting. The bigger you get, the harder it gets.
A lot of people of social media have been pretty good but there’s another side, especially on the Feral page, and people need to understand it’s really about Brendan looking after his family.
What about yourself in all of this change?
If Brendan was a bad guy, he could have destroyed me. I can’t ride Feral’s wave but he made sure that I could keep going and help me move towards the next step. It’s been a struggle for myself, I’m not as big as Feral but I still have family security (for the business), a big loan and big stress.
Now I don’t own any equipment and I’ll have no loan. It puts me in a more stable, less stress and better financial position, which is a step forward for Nail.
I’m better because it’s happened and Brendan has been good to make sure that it’s happened. That’s basically on the handshake that we’ve always had as friends and business partners. You don’t see that around a lot in business and it’s good that when things change and things happen that the trust that you have comes through. Brendan made sure that I wasn’t screwed around and I have a better path.
So what is next step on the Nail path?
The next step? I’m still trying to find the answer. (laughs)
It happened just as I got back from China and it was a bit of a surprise that Brendan had looked to selling Feral, but I totally understand. He’s made the right decision but we’d just moved into a new premise, which was a very expensive move and part of the next ten to twenty year plan.
So, without a brewery, equipment and business partner, in many ways your back where you started.
I am. Yes. (laughs)
I’m basically evaluating where I am. A year ago I was trying to work out what I needed to do to with the changing market and to keep my head above water and stay ahead of the massive competition that’s coming into the market and new problems. Now I’m in a somewhat better position in that I don’t have a loan but I don’t have equipment or production facility.
So the plan is to have a brewpub, but that costs lots of money and has the hospitality side of things. I don’t have the money and skills to run that and a production facility. The ideal situation is to have a good production facility like I’ve got now but I’d struggle to pay the rent, so, basically, the next six months I’m concentrating on making the changes work best.
We’re looking at whether to have a production facility or a brewpub or a production facility with a brewpub. So we’ve just got to decide our path and we don’t know where we are going (laughs). But it’s exciting that we can decide the direction and I’ll be happy in a year’s time.
Putting the sale aside for moment, what has changed for you over the past six years at BrewCorp?
Back in 2012, it used to be Brendan and me hands on brewing beers. I used to mash in to make it easier for the brewers but, for the last six months, I haven’t mashed in once. I’ve been more on the computer and the phone.
Is that where you want to be?
Where I want to be is a whole different question that I need to think about.
OK, given the changes, what’s the dream situation for you and Nail?
I’ve got to have more money (laughs). People think that I’m rich and I’m unfortunately not. I am doing my dream and I’ve been involved before craft beer took off in Australia, trying to sell Nail to people and educate people back in 2000 where people didn’t like Nail Ale, they thought it was too flavoursome, [to] where now Nail is now seen more like mainstream, so it’s been an exciting time to be part of the industry.
I love seeing people buy Nail from the bar and I love not having someone tell me what to do but I’m also 47 and it needs to add up. I’ve got a five-year-old and a seven-year-old, I’ve gotta decide what their path is when they get a bit older but I need to start earning money because I’m not.
If I died today, I’d be proud as a person for what I’ve done in the industry and what I’ve done with brewing and achieved winning awards, but I’ve got two sons and the’re a priority in my life and, myself, I’ve got to have a proper life. I’m living my dream without money. Most people have money and don’t live their dream.
So the plan is to have a brewpub within 18 months and a production facility in 18 months but I highly doubt that will happen.
The clear answer is I don’t know what the hell I’m doing but we’ll find out soon. (laughs)
You must have had buy-out offers too?
You need to make money to get offers. If someone today offered me a decent amount of money and I could retire I’d take that and cheer and be happy because I’m a long way from that, twenty years from that, ten years if I have a good ten years. I’d take that offer but no one will because I’m a struggling small business and people don’t understand how hard it is. Even though we are sold in hundreds of outlets or all around Australia we still struggle.
I’m not going to give 17 years away for what it’s worth. The history and time are a key part of Nail but it doesn’t add to the value.
Are you concerned that in five or ten years' time that most of the buy-outs may have already taken place and you may have missed your chance?
Nail started in March 2000. Around that time, I had someone come in from Swan or Matilda Bay and say: “We’ve added this up and it can’t work out, you can’t make money from this."
And they were right (laughs). But, from that time, Matilda Bay is no longer here, Swan is no longer here and Bobby Dazzlers is no longer here. So, Nail’s survived and we’re still here so we’ll see what happens in the future.
So, at the moment the focus is consolidation but, more broadly, have you considered East Coast expansion?
I don’t have major plans over East but I just want people to be able to buy Nail beers in every city in a few locations consistently. I don’t see it as a volume thing. Perth is where the volume is. It’s where our presence is and it’s our home.
It’s a different market than what it was five years ago with heaps of growth. Now there are a lot of breweries and they have a lot of different goals. It’s become more of a money industry but the money’s not there. It’s weird, it used to be a passion industry and the money was there.
So we’ve reached "peak beer" and the market is saturated?
We are definitely oversaturated in our present market. There’s no doubt about that. You could have a brewpub in every suburb in Australia but when they start doing wholesale beer there’s no money in that unless you sell a million litres a year. That’s a problem: 450 breweries are doing wholesale beer and they won’t make money longterm and, unless they are very smart like Balter and Pirate Life, they’ll realise that it just doesn’t add up. There will be a lot of breweries crashing.
Shelf space is now getting a lot more saturated, which is good for the consumer as long as the products are good and the best products keep selling. Tap space is harder in that you can get a bad beer on and take the tap position, which takes so many kegs from the people that are selling good beer.
That’s another thing in the industry: Nail Ale was introduced in 2000 and was our biggest selling beer for ten years and now people only want Nail Ale at a cheaper price because they see it as similar to many other beers. Now you need a beer that’s new to the market like VPA, which is booming, and Nail Red, that’s booming, but we’ll need another one in the next year to keep our head above water. Hopefully that’s MVP, our new mid-strength beer.
You need to keep coming up with a good beer, consistently, every couple of years because, even though Nail Red and VPA are our biggest sellers by far, I have the fear they can end too.
With all of these challenges, what keeps you motivated?
One, I can’t get out of it. I’m screwed for life (laughs). I could have got out of it in 2004 [see NOTE below] but my passion was too strong.
It’s very rewarding as a job. I’ve worked really hard for 15 years. Ten years of that would have been 80 hour weeks and I’m finding it hard to do that now. Social media has been very supportive of Nail and has looked after us. That kind of stuff gives me motivation.
Looking back at your whole career, with all its ups and downs, would you do it all again?
I’d do my career again, definitely, but one thing that made my life hard was my major brain injury in 2004. It probably would have been better to duck.
I love what I’m doing but I’d just like less stress and to be in a safe financial position.
NOTE: In 2004, John was king hit outside a Fremantle pub while trying to break up a fight between two strangers. As a result, he was placed in an induced coma, had a titanium plate placed in his skull and is lucky to be alive. His parents were forced to sell his brewing equipment to pay for medical treatment, which stalled Nail for many years.
John closed the interview by mentioning that the full Nail range, including Nail Red, will be moving into cans and that barrel aged Clout Stout is not on the cards until a new Nail production facility or brewpub is operational. In the meantime, Nail continues to be brewed at the BrewCorp facility, with the new MVP and Clout Stout 2017 scheduled for release in mid-December.