Good Drinks Australia, the parent company of well-known beer brands like Gage Roads, Atomic, and Matso’s, is expanding its craft beer portfolio by acquiring the Melbourne-based brewery Stomping Ground. This strategic move aims to bring more diversity and strength to the company’s existing beer offerings.
Under a binding term sheet, Good Drinks will purchase 100% of Stomping Ground for $7 million in cash, along with 4.5 million Good Drinks ordinary shares and a trailing five-year performance component. This acquisition is expected to bring several advantages to Good Drinks and enhance its presence in key markets, particularly in the Victorian market, which offers significant growth opportunities.
Stomping Ground, founded in 2016, is one of Victoria’s leading independent breweries and a hospitality venue operator. It boasts a flagship venue in Collingwood, The Local Taphouse in St Kilda, and a new Stomping Ground branded ‘brewpub’ in Moorabbin. The company currently produces approximately 1.5 million litres of beer to meet its sales demands, with the capacity to brew and package up to 2.1 million litres annually at its Collingwood facility. This capacity can further expand to 2.8 million litres with additional fermentation vessels.
One of the key benefits of this acquisition is the complementary nature of Stomping Ground’s brand and consumer loyalty to Good Drinks’ existing beer range. This collaboration aims to capitalize on the strengths, experiences, and resources of both companies to maximize growth opportunities in the craft beer market.
Stomping Ground’s co-founders, Steve Jeffares, Man Greenstone, and Justin Joiner, will play a significant role in the new partnership. They will join Good Drinks’ executive and management teams and become significant shareholders in the company. This collaboration is expected to create a synergy that will drive brand visibility and sales growth for Stomping Ground’s beer.
The financial structure of the deal is designed to be earnings-per-share accretive for Good Drinks shareholders. It will be funded through debt facilities and ongoing operating cash flows, eliminating the need for equity raising. The acquisition is projected to contribute $1.5 million to Good Drinks’ earnings in its first year, with plans to increase annual volume to 4 million litres by the 2027 financial year.
This strategic acquisition is set to be completed around November 2022, and it is a clear indication of Good Drinks’ commitment to strengthening its position in the craft beer industry. As the craft beer market continues to grow and evolve, partnerships like this one exemplify the industry’s resilience and commitment to delivering unique and high-quality beer experiences to consumers.
In conclusion, the acquisition of Stomping Ground by Good Drinks Australia is a significant development in the craft beer sector. It not only demonstrates the vitality of the industry but also highlights the potential for continued growth and innovation in the world of craft brewing. As beer enthusiasts eagerly await the fruits of this collaboration, it’s clear that the craft beer landscape in Australia is poised for exciting developments in the near future.