Balter bought by CUB
Peter Filipovic discusses the buyout of the craft beer.
Balter Brewing has confirmed its sale to the country's biggest brewer, Carlton & United Breweries.
Announcing the sale today, Balter CEO and co-founder Ant Macdonald said the CUB buyout would help the company fund its next stage of growth.
"This deal will help us achieve our sustainability goals, upgrade capacity and hospitality at our Gold Coast brewery and create new jobs," he said.
Founded by surfers Mick Fanning, Joel Parkinson and friends in 2016, Balter has fast become one of Australia's biggest independent breweries, and an obvious takeover target for the multinationals.
The brewery has been surrounded by buyout speculation from day one, given the celebrity involvement, and that of other high profile investors such as former Channel Nine boss, David Gyngell.
There were also co-founder Josh Kerr's links with Saint Archer, the San Diego 'lifestyle beer brand' started by a harem of surfers, skateboarders, artists and entrepreneurs in 2013, then flipped to US brewing giant MillerCoors two years later.
Balter's founders insisted from day one it would not be another Saint Archer, so there is an air of cynicism surrounding today's news.
As recently as January 2018, head brewer Scott Hargrave told beer website The Crafty Pint that capitulating to a buyout, "would be like bringing a virus into the industry I love".
"That was never the intention with the guys who wanted me to be part of it."
Reflecting on those words today, Hargrave says much has changed for both him and Balter in the intervening period.
"I've just got cop that on the chin," he says.
"I hope even-minded people out there would realise that you don't think the same way when you're 17 as what you do when you're 45."
The sale of Balter, like that of Pirate Life to CUB in November 2017, highlights that breweries with highly fragmented ownership structures will always be vulnerable to a takeover.
Growing a brewery requires ongoing investment in expensive equipment, marketing and distribution channels.
Investors are often confronted with the prospect of having to tip more money into the business before having seen a return – or see their shareholdings diluted.
Hargrave says his own mindset changed as Balter began to confront these types of realities.
"We've got 49 shareholders that need to have their investment in us protected – people who put their life savings into us when it was just an empty shed," he says.
"How else are we going to repay them for allowing us to build our dream?
"We have 65 staff whose jobs we wanted to ensure were safe. I had an awakening that, you know what, I've got to think beyond my own stance, my own ideology."
Meanwhile, competition in the craft beer landscape continues to heat up, so there are no guarantees that Balter will continue to enjoy the same rapid growth as an independent.
Balter's flagship XPA and minimalist brand aesthetic had some clear air in the market at the time of their arrival, but times have changed.
"It's like XPA built its own little beer style, and it has now been populated by other beers bearing that name, at times with a similar sort of template, so that's pretty flattering," says Hargrave.
"But there's probably another 100 more breweries in Australia now than when we started, if not more.
"It all adds up to much fiercer market competition, and us having to be really adult about this stuff now."
Balter's sale is the second such transaction of 2019, following Asahi's purchase of Brisbane outfit Green Beacon in August.
The Independent Brewers Association said in a statement that this activity demonstrates its members, "are successfully tapping into the growing thirst for independent beer".
"The continued growth and excitement the independent brewers are experiencing is driving the large brewers to be far more acquisitive.
"Independent beer is at six per cent of the total beer market by volume and growing rapidly at 25 per cent versus the previous year."
The association congratulated Balter, while noting that its membership had already lapsed.
"As they have made the decision to sell the business to a large brewer, they made that decision in full knowledge that they are no longer eligible to be a member of the IBA," it said.