NB: Since recording this documentary earlier this year, Alexis Roitman has departed her role as CEO of the Independent Brewers Association. We wish her the best of luck.
We kick off season two of the Drinks Adventures podcast with a in-depth look at the brewery founded in Byron Bay, Australia in 2008, Stone & Wood Brewing Company.
Stone and Wood celebrated its tenth anniversary last year and I started covering drinks as a journalist not long after Stone & Wood started brewing.
As such, I’ve followed their evolution very closely over the years, reporting on their key milestones along the way, which has given me a lot of insight into their business and some excellent resources to draw upon in putting this story together.
But in fact, this story isn’t only about Stone & Wood, it’s also a bit of a look at the current state of play in Australian independent brewing, an industry sector that is in the midst of an unprecedented boom that is not without its challenges.
This episode would not have been possible without the generosity of the organisations that gave me permission to use their audio. Thank you to the Telstra Business Awards, Finance News Network and Matt Kirkegaard at Australian Brews News.
Thanks also to the wonderful music acts that cleared their tracks for use on the show: From London, Asad Rizvi AKA Silverlining; From New York City, No Regular Play and from my home town of Sydney, We Lost The Sea.
Ricky is a big We Lost The Sea fan and I’m privileged to be able to use that same track on this episode of the podcast.
And thank you to Dave Robertson for his massive efforts in mixing and editing this episode and all episodes in Season Two.
If you enjoyed this episode on Stone & Wood, go back to Season One, Episode Three and check out my interview with Janice McDonald, who was the first head brewer at Little Creatures. It’ll give you some fantastic insights into Australian independent brewing in the decades prior to Stone & Wood’s arrival.
Thank you to the companies that have sponsored the Drinks Adventures podcast as of this year. The support of our major partner Bintani Australia and other brands makes the show viable, so I’m very grateful for it and I’m sure our listeners are too.
I know some listeners enjoyed the weekly giveaways we had throughout season one. We’re still going to be doing those whenever we can but you’ll have to keep an eye on my Facebook page for announcements of those competitions.
Wayne Jones – Under Cover
Josh Lippi & The Overtimers – St. Francis
No Regular Play – Where They Lay
Silverlining – Sticky Snails
Silverlining – Devocion
We Lost The Sea – A Gallant Gentleman
The 126ers – End of Summer
Theme music ‘Sandbox’ by Rudists.
Stone & Wood Brewing Company spearheads third wave of independent craft beer: Full transcript
JAMIE COOK: I guess just a little bit about our story, I guess the Stone & Wood story started when the three of us, Brad, Ross and myself, decided to quit our corporate gigs and put the house on the line and do our own thing, start our own brewery.
TIM LORD: The way they set that up originally, with the investors they had, with the location they had, with the access to taps they had. Really it gave them the best start you could possible hope to have with a business like that. I mean they really made sure their stars were aligned correctly before they even started making beer.
HOWARD CEARNS: Jamie, Brad and Ross all had the experience themselves through Matilda Bay from a corporate point of view but they also I think, had the right mentality going into running their own business. If you spot somebody who is capable of being an entrepreneur, they have a view that they are going to have to take salary drops and mortgage houses and buy old cars to kind of start and keep costs under control. So everything they were saying was not indicative of some people who leave the corporate world and expect everything to be the same so, I think it’s a really important point. These guys were really doing it on the sniff of an oily rag and risking everything really.
JAMES ATKINSON: Stone & Wood Brewing Company was founded by Jamie Cook, Brad Rogers and Ross Jurisich in 2008. The trio famously met each other while working for Australia’s largest brewing company, Foster’s Group, and hatched the plan to launch their own brewery in Byron Bay. This is Jamie speaking at the Telstra Business Awards in 2014.
JAMIE COOK: If it wasn’t for the good people of the Northern Rivers we wouldn’t be here. The real support of the local community up there, and Byron has a fantastically strong community spirit, that really attracted us to the region. They really celebrate diversity, they really understand that local spirit is what it’s about. And, without their support and without selling beer in the local pubs up there we wouldn’t be here accepting this award tonight.
ROSS JURISICH: We consider our backyard to be anywhere from a three hour drive of Byron Bay. So, north to Hervey Bay really and south to Coffs, arguably. 50% of our beer is still sold within that three hour drive.
JAMES ATKINSON: And that was Ross Jurisich. But in just 10 years, Stone & Wood has gone far beyond being a successful regional brewer to become a genuine national player in the Australian beer market. Alexis Roitman is CEO of the Independent Brewers Association.
ALEXIS ROITMAN: We have a lot of very small brewers around the country, about 75% of my members are in the smallest production volume band. So less than 100-thousand litres. And of course we have some really big ones as well, but there is only one member over 5 million litres.
JAMES ATKINSON: That one member is Stone & Wood, which produced in excess of 12 million litres of beer last year.
JAMES ATKINSON: Little Creatures got to a certain size, Coopers Brewery is obviously significantly larger than you guys are and still independent. Where do you guys sit in terms of what you have managed to achieve?
JAMIE COOK: It’s a good question. I think if you look at, let’s say the last 70 years of the Australian brewing industry. There’s only been a handful of regional brewers that have actually sort of grown from their own home base. And Coopers would be one, James Boag’s, Cascade Brewery, Little Creatures, are a cluster of brewers that have probably jumped from being a small sort of regional player to something on a national basis, and not much else at scale. So, I guess we’re probably in that club. And when you look who’s in that club, it’s a fairly handsome sort of club to be in.
RICHARD WATKINS: Well I think when you look back 10 years ago and see what was actually happening in the Australian brewing industry, realistically, there was lot of small breweries, and no one really looking at paving the way to have independent beer available to all their fans around Australia. So that’s what Stone & Wood has done, they’ve been the first independent brewery in Australia to be able to service their fans all around Australia.
JAMES ATKINSON: That was Richard Watkins from Canberra’s BentSpoke Brewing Company. Founded in 2000 and now part of multinational-owned Lion Beer Australia, Little Creatures is the only other brewery in the modern era to have achieved a similar feat to that of Stone & Wood. This is one of the founders, Howard Cearns.
HOWARD CEARNS: When we started Little Creatures, I remember Nick and I having a chat about that exact point. That in 100 years, there had been some attempts but largely, the brands that were the brands were the brands. There were very few in sort of that whole time frame that had actually cracked through to establish what you would probably really call true brand value. And that being national awareness, national distribution; because if you think about a lot of the craft players they have a multitude of SKUs et cetera but you know, they are all a bit ‘bitsy’. Whilst they might be nice little businesses, they struggle to really get the scale of someone like Stone & Wood or Little Creatures. It is about having a flagship brand, or a flagship product I should say, that is really meeting the demands of the consumer and is able to crack through all those trade barriers.
JAMES ATKINSON: Flagships don’t come much bigger than Pacific Ale, the only beer that has been on the winners’ podium in the influential GABS Hottest 100 Aussie Craft Beers Poll nine years running, among other accolades.
MATT KIRKEGAARD: And it’s official we have just seen the number one, Stone & Wood is indeed number one.
STEVE JEFFARES: I’m Steve Jeffares and I’m one of the founders of the GABS Beer, Cider and Food Festival as well as The Local Taphouse in St. Kilda in Melbourne. There’s not a huge number of beers that have been around for as long as the Hottest 100 Poll has, when we started it at the Local Taphouse originally. But the fact that it is the only beer that has resisted the drop, if you like, there are other beers like Little Creatures Pale Ale most notably, Feral Hop Hog to name another than have slid down the rankings for a variety of reasons I imagine. Somehow Pacific Ale has managed to stand the test of time in a hyper-competitive market when now there are so many options. It is quite remarkable that they have managed to stay at the pointy end of the poll consistently for so long.
MATT KIRKEGAARD: It was at a time when everyone else was amping the hops up and they came out with this beer that it turned out people just wanted to drink.
JAMES ATKINSON: Matt Kirkegaard speaking there, founder of leading beer publication Australian Brews News. Pacific Ale accounts for 90% of Stone & Wood’s total production. Its signature tropical aromatic profile is thanks to the Galaxy hop variety developed by Hop Products Australia (HPA). Tim Lord is Managing Director of HPA.
TIM LORD: Brad came across it originally in his role with Matilda Bay with samples that were supplied to him at CUB. He’d done a bit of work with it and was aware of the hop and hence he was interested in the characteristics and the possibility in the future of using it in a Stone & Wood beer when they started up in 2008.
BRAD ROGERS: Doing what we were doing back in the empire you came across so many different flavours, so many different hops. It was something that I sort of came across back in those days, I just put it up my sleeve and, you know, at the right time brought it out for Pacific Ale. And the main flavour in that hop is very much a passionfruit, tropical fruit, mango, that sort of light, fresh, very aromatic hop. And, back when Pacific Ale came out there was nothing like it.
ROSS JURISICH: Arguably, today it sits in the Australian summer ale category, Brad? But back then, there was no style for it, so we came up with another name, and we thought, what are we going to call it? It’s still an ale. We’re as close to the Pacific Ocean as any other brewery in Australia that’s for sure. So we said, well, let’s just call it Pacific Ale.
JAMIE COOK: And we thought Byron, you know, the quintessential beer occasion in Byron is you come out of the surf. At main beach you walk across the sand, over the park into the Beach Hotel, into the beer garden. You’ve still got that salt water dripping on, drying on your back, you order a schooner, and that first beer you have is just this thirst quenching moment. So, that was really what we were trying to develop in a beer and Brad did a fantastic job of developing this beer that had that incredibly aromatic nose to it that sort of got your attention the moment you picked a schooner up.
JAMES ATKINSON: In parallel with the success of Pacific Ale, the Galaxy hop has turned into a global smash hit for HPA featuring in beers produced by craft beer heavyweights such as Beavertown, Treehouse and Trillium. I asked Tim Lord whether I had heard correctly, that Pacific Ale had played a vital role in introducing Galaxy to the world.
TIM LORD: There is no doubt about that at all, that is absolutely 100% true, that Stone & Wood Pacific Ale, I used it relentlessly to show brewers, I tool eskys full of it with me to Europe to showcase Galaxy. And, to this day it remains one of the very few beers in the world that you can take into a hop garden and grab a fresh Galaxy cone off a mature hop plant, rub it, smell it and then open a Stone & Wood beer and have a drink and people just get it. It just reflects Galaxy really, really well.
WORLD BEER CUP: The silver award goes to Pacific Ale, Stone & Wood Brewing Company, Byron Bay Australia.
HOWARD CEARNS: Choosing Byron was clever, there’s a huge population draw around there and it’s got identity and depth to it, if you like, with regards to what you can talk about with the brand.
JAMES ATKINSON: Howard Cearns again, he joined the board of Stone & Wood in 2009 when Little Creatures’ then ASX-listed parent company Little World Beverages acquired a 20% share in Stone & Wood.
JAMIE COOK: You know we had already put our houses on the line for this thing.
BRAD ROGERS: Nothing much else to put on the table, really.
JAMIE COOK: So we decided we probably needed to bring in a fifth investor. And we kicked around the idea of what that sort of investor would need to look like. We didn’t want to bring someone in who just brought money to the table, we wanted someone to come in who understood the business we were in, understood how long any payback would be and maybe could add some other strategic value. And we looked at a few different options but settled on tapping the guys from Little Creatures on the shoulder because I’d worked with them in a previous life back in the early Matilda Bay days in the 80s and at that time they were chugging along, they were market leaders.
HOWARD CEARNS: We knew they could make great beer through Brad, and Jamie knew a lot about the whole business if you like. Bringing on board Ross and their other shareholder Tom was not dissimilar to the way we started. Making sure we had the right team in place with the various skill sets, it’s very hard to do what they’ve done and what we did with just one person. You’ve got to get a lot of things right in the beer game, and, having the right people is important.
JAMIE COOK: We said look guys, would you be keen to join in, put some money on the table and act as our mentors around the board table and given they’d been through what we were about to go though, it seemed like the right thing to do. They were pretty keen on it, they liked what we brought to the table in terms of business, our combined skills etcetera. So, they put some money in and that sort of helped get us through that early patch. We knew they had Lion there as a shareholder but a minority shareholder at that time, I think they had about 25% of Little Creatures at that time.
FINANCE NEWS NETWORK: Little World Beverages shareholders have approved the 362 million-dollar takeover bid from Gaelic Investments, a wholly owned subsidiary of Lion. An overwhelming 99.97% were in favour of the deal that will see the company de-list from the ASX becoming a wholly owned subsidiary of the Japanese brewer, Kirin Brewery.
JAMIE COOK: In the middle of 2012, when Lion moved on them, it gave us the opportunity to revisit that we had a change of control clause in our shareholders agreement which allowed us to buy those shares back. And the timing couldn’t have been better, it was just one of those times in your life that was perfect timing. Because we were only just becoming profitable and the valuation, we brought the shares back from them was a historical valuation. And since we hadn’t made any money at that point, pretty much we gave them the money they put in back.
JAMES ATKINSON: Were you surprised that they decided to buy Lion out?
HOWARD CEARNS: Not at all, I think one of the things that benefited a lot of players with the sale of Little Creatures was the recognition that these sort of breweries had value. Suddenly therefore capital was more readily available, not just to Stone & Wood but to others.
JAMIE COOK: The Creatures / Lion deal happened in June, but it actually couldn’t get in front of of the Little Creatures shareholders until October. So, there was, what’s that, a four-month period where we were basically being seduced by everyone at Lion providing us every reason in the world why they should still stay a shareholder, and we had some great bottles of wine courtesy of Lion.
BRAD ROGERS: We saw some good wine lists.
JAMIE COOK: But at the end of the day it didn’t take us long to realise that why we got into this in the first place was to get out of corporate life and do our own thing, and stepping back into that just wasn’t in our psyche, we did this for a reason and it wasn’t to get back in to having corporate sitting on your shoulder.
JAMES ATKINSON: In 2016 the Stone & Wood parent company was re-badged as Fermentum, a new corporate identity for the family of proprietary brands that now includes Stone & Wood, Granite Belt Cider Company and Fixation Brewing Company. Last year Stone & Wood established the Ingrained Foundation, a national not-for-profit that supports grassroots, environmental and social charities. The brewery now has 135 employees and Ben Summons is Managing Director.
BEN SUMMONS: We take the role of being the village brewer very seriously about being the hub of the village and trying to create value for all those communities around us; our local communities of drinkers, suppliers, customers, and so forth. Over the journey through our fundraising over the last 10 years we’ve been able to raise over $630,000 through donations of a dollar per hectare litre and raising money at key events, things like Karma Kegs. So the Ingrained Foundation is sort of formalising that process going forward.
MATT KIRKEGAARD: Good beer with a story is always going to come out at number one. Your story needs to be real, whatever story you’re telling has to have integrity and you actually have to walk the talk. Which is such a silly thing to say but they do that. The things that they say, they do, and, on some level, that resonates.
JAMES ATKINSON: Matt Kirkegaard again. While Stone & Wood has maintained its independence with ownership controlled by the three owners and Northern Rivers publican Tom Mooney, several of its counterparts have been snapped up by multinational brewers in recent years. After Little Creatures in 2012, fellow pioneers Mountain Goat sold to Asahi in 2015. Feral Brewing, Pirate Life and 4 Pines were soon to follow.
ALEXIS ROITMAN: I think what we are talking about is six such trade sales in the last 10 years, out of six hundred brewers. It’s not a concern for us. And I think as you can see with the sales data, the IRI sales data for the last year, our independent industry, in terms of sales is still growing strongly. So what that is telling us is that even with Pirate Life and Feral taken out of that equation, we’re still growing strongly, we’re still delivering a hell of a lot of value. People are starting to attach a premium, starting to consider important, the ownership of the beer.
JAMES ATKINSON: Alexis Roitman there. Regardless of how few trade sales there have been relative to the number of breweries that exist in Australia, that trend of breweries that have achieved a certain scale, has inevitably created speculation around the next chapter for Stone & Wood.
JAMES ATKINSON: What’s your plan moving forward for what you see happening in terms of succession planning for the business? There is only trajectory that most drinkers know of in the craft beer space and that’s that you grow to a certain point until you’re ready to cash in and then you sell to one of the majors.
ROSS JURISICH: We have always been of the view that a business without direction, without a succession plan, is a business for sale. Fermentum or Stone & Wood, we have direction and we have a succession plan, so over the last couple of years Jamie, Brad and myself have gone about replacing ourselves within the business, arguably with smarter people than us. Well not arguably, definitely! People sell for different reasons, and we have seen a lot of it recently, a lot of it comes down to founder fatigue and where to from next or it could be a lack of expertise to keep going on their own.
STEVE JEFFARES: Listen I think they have made pretty clear that they will continue to exist as an independent brewery and there’s nothing to indicate to me that they’re going to do a Little Creatures, I think that the three lads have managed to largely replace themselves in the company with people as talented, if not more so, than they are. They play to fly the independent flag strongly as far into the future as I can see.
JAYNE LEWIS: They’ve done an amazing job, I think where they find themselves after 10 years is really something to be celebrated and something that we, I think certainly look to across the industry.
DAVE MACGILL: It’s a pretty amazing level of growth in such a short period of time. Ten years really doesn’t seem that long when you look at the lifespan of a brewery like that. What they have managed to achieve is nothing short of remarkable that’s for sure.
HOWARD CEARNS: I think there was the time of Matilda Bay and Hahn and a few others but that was a wave that never really got to the heights it probably should. And then you had I guess the Little Creatures, Mountain Goat and I guess you could call it the Pale Ale / IPA wave and that was certainly when Stone & Wood came into it but put their own spin on it, particularly with Pacific Ale. I think they’re going past us, where we were at the rate of knots and given the growth in the craft beer market and various players being swallowed up and they’ve stayed independent, I think there’s a lot of headroom left for them. So, I think they’re an extraordinary business and they’ll continue to be an even more extraordinary business.
JAMES ATKINSON: So what does Stone & Wood look like in 20 or 30 years than if you’re not going to sell the business? You’ve got to do something with it.
JAMIE COOK: It will continue to grow, as I said that momentum will continue. In terms of ownership, I mean there’s four founding families that own the bulk of the business, nearly 80% of the business so the rest of it, is owned by a handful of minority investors. And then there’s, at the moment 75 employees, nearly 70% of the business that owns shares as well, and that number will continue to grow every year. In 20 years’ time, it could be the Coopers of the East Coast. That’s probably our ambition, to be a regional brewer, and if it takes us five years, ten years, 20 years to achieve that, then so be it.
BRAD ROGERS: You know I think at the end of the day what we’ve been able to achieve outside of a large business has been quite phenomenal. I mean the three of us are a great team, we get on very very well. I think the really nice thing is the three of us love what we do. And I think that’s the important thing that comes out of the Stone & Wood business. We’re sort of chasing ghosts by wondering what would have happened if we all would’ve stayed back in the Foster’s business.