If you're a supporter of independent beer in need of some good news as a distraction from the COVID pandemic, look away now.
Lion today announced they've acquired Stone & Wood in a deal that includes the other brands in the Fermentum Group, such as Fixation, Two Birds and Sunly Seltzer. While rumours have been swirling for some time, the 100 percent acquisition (subject to regulatory approvals) of the country's largest independent brewing company outside Coopers will still send shockwaves through the country's beer community.
Launched in 2008 by three mates who met while working at CUB / Foster's, Stone & Wood has grown to a size well beyond any other indie brewer in recent years; sales of their flagship beer, Pacific Ale, were in the region of 15 million litres in the last financial year, with the company's total output several times that of most of their former indie peers.
Since launching the Fermentum Group, the founders – Jamie Cook, Brad Rogers and Ross Jurisich – have diversified the business. They launched Fixation with a focus on IPAs with former Mountain Goat rep Tom Delmont in 2015, as well as Forest For The Trees, focused on farmhouse styles and headed by Brad. The family of brands also included Bucha of Byron, Treehouse Cider, Sunly Seltzer and Little Dragon ginger beer, while they bought Two Birds back in January of this year.
Their greatest impact on the Australian beer world, however, was through the creation of Pacific Ale. Originally called Draught Ale – you can read a detailed history of the beer here – it made Galaxy hops the centrepiece at a time when the Australian variety was in its infancy, winning over a legion of fans inside and outside the craft beer scene and creating a new Australian beer style, a pale ale for a new era.
In 2016, they won Champion Large Brewery at the Australian Independent Beer Awards – the first time they'd entered – while Pacific Ale has been the most successful beer by far in the ten years-plus of the Hottest 100 Aussie Craft Beers poll. In recent weeks, they announced a partnership with the Wallabies rugby union team centred around their Green Coast Lager, following that with the release of a mid-strength version in clear glass bottles targeting the contemporary beer market.
Throughout their rise, they have been heavily involved in their local community in the Northern Rivers, supporting many causes via their inGrained Foundation, and have put sustainability front and centre. They have also spoken often and at times loudly about their independence, and support for the independent beer industry more widely – on occasion calling out owners who have sold to a multinational, which will no doubt make today's sale harder for their many loyal fans.
In a past feature on ownership, Jamie said: "My resolve has certainly been strengthened by the continual drain of businesses giving up their independence," adding that businesses that were sold "fall into a long line of breweries over the last sixty years or so that, for one reason or another, have been swallowed by a race amongst the large corporate brewers to consolidate and control the market."
Stone & Wood's founders played key roles in the launch of the Craft Beer Industry Association, which became the Independent Brewers Association (IBA), with Jamie chair of the IBA as recently as last year. When Lion bought Little World Beverages (owner of Little Creatures and White Rabbit) in 2012, Stone & Wood bought back the 20 percent that was owned by Little World Beverages. And in October 2015, following a spate of sales in the local beer world, they put out a statement called In Beer We Trust, affirming their position as "truly, fiercely and proudly independent spirits" and a commitment to continue brewing all of their beer themselves.
The challenges of the years since – managing growth beyond a level to which any independent has grown in the craft beer era, the unforeseen impact of COVID – would seem to have undermined those positions, while the need to finance another round of expansion led them to admit they were weighing up a number of options earlier in 2021.
There was no mention of a possible takeover, however, with Ross telling The Crafty Pint at the time: “We’re still working through that process; there’s a number of things available to us which remain a capital raise, banks and a possible IPO."
As recently as two weeks ago, Stone & Wood GM Nick Boots talked about the challenges for the "family-owned business" in our article on future trends. And he said the Fermentum team had been "really spooked" by the situation with New Belgium in the US, once a leading independent that ended up having to sell to Lion / Kirin.
In a statement announcing the deal, Lion managing director James Brindley said: “We want to grow what they’ve started, giving their people and beers even more reach across the country."
Stone & Wood co-founder Jamie referenced New Belgium in the statement, in which he said finding the right custodian to take the business forward made the sale the natural next step for Fermentum.
“After an extensive strategic review exploring options to set us up for future growth, we decided to test the waters on whether now was the right time for the founding families to find a custodian to grow Fermentum’s legacy, its people, its culture and its brands, and continue to drive the business forward whilst staying true to its purpose," he said.
“We only looked for a custodian who would be committed to building the brewery and to support our work in the community. Not only did Lion welcome these ideas with enthusiasm, they demonstrated they have similar values and a focus on Environmental and Social Governance aligned to our 'Force for Good' approach.
“Lion’s custodianship of Little Creatures, Four Pillars and New Belgium demonstrates they in fact learn from new businesses, and grow their impact and reach.”
Whether things could have panned out differently if it wasn't for COVID – the founders told The Crafty Pint in the past of their desire to pass the business onto future generations of employees who would continue on the path they'd established – we'll never know. What we do know is that the three founders, and the many who've worked with them over the years, have helped change the face of beer in Australia, left a lasting legacy in Pacific Ale (which has spawned scores of imitators in the wake of long-running court battles over the name), and earned their celebratory beer (or pinot noir) today.
What it means for the independent sector they leave behind, and the IBA they helped create and guide – already hard-hit by two years in which BrewCon has been cancelled due to COVID, and those at the helm of other brands within the Fermentum Group, is another question entirely.
That said, their sale will create opportunities for others. As Jamie put it in an interview for this site in 2018: "It is encouraging to know that, for every brewery that is sold, there are new startups willing to step up and take their place."
Read reaction from around the industry in this follow up article here, and get more on the founders' reasons for selling here.
Media Release: Fermentum Group, creators of Stone & Wood, to become part of Lion
- Fermentum and Lion have reached an agreement for a 100% sale that will hand custodianship of the Fermentum family of brands to Lion, subject to regulatory approvals.
- The unique Fermentum Group, led by ground-breaking Stone & Wood, will be backed by Lion to grow further, and continue their positive impact in the community.
- Lion will continue Fermentum’s commitment to the Northern Rivers community, building a new brewery in Murwillumbah, donating $5 million to the inGrained Foundation for long term positive impact and another $1 million to Big Scrub Landcare Inc.
The Fermentum Family of Businesses and Lion have reached an agreement for the sale of 100% of the Fermentum Group. The Fermentum Group is comprised of leading brands, including the flagship Stone & Wood, Two Birds, Fixation, Little Dragon and Sunly Seltzer. The deal is subject to regulatory approvals, the process for which has commenced.
Lion Australia Managing Director James Brindley said, “We have huge respect for what Jamie Cook, Brad Rogers, Ross Jurisich and the team have created; great beer, wonderful brands, spiritual homes in their breweries and tap rooms, an inclusive culture and a commitment to the community.
“We want to grow what they’ve started, giving their people and beers even more reach across the country.
“We have a shared vision of ‘Brewing as a Force for Good’. Lion is Australia’s first large-scale carbon neutral brewer and we will be backing the Stone & Wood, Two Birds and Fixation breweries to go carbon neutral as well. There are lot of areas where we can learn from each other.
“The Fermentum business will continue to be a unique player in the drinks industry and we are excited about the opportunities for growth ahead,” ended Brindley.
Fermentum Co-Founder and Chairman Jamie Cook said the combination of timing and finding the right custodian to take the business forward made this the natural next step for Fermentum.
“After an extensive strategic review exploring options to set us up for future growth, we decided to test the waters on whether now was the right time for the founding families to find a custodian to grow Fermentum’s legacy, its people, its culture and its brands, and continue to drive the business forward whilst staying true to its purpose.
“We only looked for a custodian who would be committed to building the brewery and to support our work in the community. Not only did Lion welcome these ideas with enthusiasm, they demonstrated they have similar values and a focus on Environmental and Social Governance aligned to our “Force for Good” approach.
“Lion’s custodianship of Little Creatures, Four Pillars and New Belgium demonstrates they in fact learn from new businesses, and grow their impact and reach,” said Cook.
After reaching one per cent of the national beer market in a decade, the next chapter as part of Lion will unleash Fermentum’s full growth potential while maintaining the values and purpose so central to the business’ ethos.
Lion has a proven record of growing unique businesses, creating an unmatched portfolio of ground-breaking brands; Little Creatures and New Belgium Brewing in beer through to Four Pillars and Vanguard Luxury Spirits, which have all accelerated as part of the Lion family.
The Fermentum business will continue to be a unique player in the drinks industry.