Feral Brewing Company spoke to all the major brewers along with other potential buyers prior to settling on Coca-Cola Amatil as its preferred suitor, former owner Brendan Varis has revealed.
Confirming a deal had been reached today, Varis said he had only begun to consider the possibility of selling late last year, after the company completed the relocation and expansion of the production brewery it shares with Nail Brewing.
“We’d just done a big upgrade and the brewery was great, the beer was going better than ever and we had some nice growth happening,” he told Radio Brews News.
But he said the extra debt the business had taken on to finance the new brewery brought with it additional stress for him as Feral Brewing’s only shareholder.
“It wasn’t that we weren’t growing or we were worried about not growing, it was more just that I might have underestimated what that extra pressure might have felt like,” Varis said.
“As a single shareholder, it’s a very unique capital model in Australia. I don’t think there’s too many people that have a single shareholder that’s managed to grow their business and also buy out other shareholders along the way,” he said.
“The reality of some of what we’d spent and some of the leveraging debt-wise that was sitting on top of one set of shoulders… I started to feel the weight of that and that was when I started to have a conversation with my wife Gab and think, ‘what’s next’?
“Cleaning up a bit of debt on the balance sheet was the original driver, but it quickly became apparent that for all people concerned, all stakeholders – so that’s staff, ourselves and also consumers – there was a benefit to an entire sale.”
Varis has previously said there will be limited buyout opportunities for independent brewers who may be looking to exit their investment, but said this was not the reason why he had decided now was the time.
“That’s not really a motivator. The conversation was more around, what are we going to do with it?”
“I’ve got a couple of daughters, they’re not particularly interested in being entrepreneurial and certainly not interested in beer at all.
“When was the right time? There’s no point dying and willing it off to lord knows who.
“We had a chat with everybody. There was even suitors that we didn’t know existed outside the usual suspects,” he said.
Varis said that while there was interest in the Feral business from various quarters, Coca-Cola Amatil put the most appealing offer on the table.
“I think we went with Amatil for a couple of reasons. One was their beer team quickly understood what they were buying. I got really comfortable that they knew… that there’s more effort probably involved in continuing to maintain and grow our business than perhaps some other brands, because they are a bit less challenging perhaps in their offering,” he said.
“The size of where they’re at in their beer journey too, they’re in a brand building stage. Feral I think still needs building as a brand and they’ve really got that mindset within their business right now, so it’s not going to have to be a whole new thought pattern for them.”
He said this contrasted with other potential buyers that already had many big brands within their portfolio and may not have been able to give Feral the same focus.
Varis said it also swayed his decision that CCA would not compel him to stay on for a given amount of time to receive the balance of the money.
“I didn’t want to sell under conditions that perhaps would mean I’ve got to do another three years or five years in order to complete a process,” he said.
“I’ll absolutely still be there and I’m 100 per cent fully involved but it’s by choice rather than because of finalising a commercial arrangement that perhaps starts now and goes on for many years into the future.”
Proud and satisfying
Varis said that having finalised the sale had already taken a big weight off his shoulders.
“The idea that I’m going to be able to get back to concentrating on what I like most, which is working with brewers, mentoring brewers, talking about beer, promoting what craft beer is and what’s good about it… as opposed to having to worry about balance sheets and things like that… is fantastic.
“There’s clearly sacrifices along the way. The daughters will probably tell you I haven’t been here time to time and there time to time.
“Whilst I was able to brew before Feral Brewing was opened, I didn’t know anything about running a business so that was kind of something that has been learnt on the fly, often… at great inconvenience to those that are closest to you.”
The Feral Brewing boss said the sale price is confidential and will not require ASX disclosure by Coca-Cola Amatil, because Feral is not considered a material acquisition for the company, which has a market cap of $5.92 billion.
But he confirmed it is a good outcome for his family. “It’s satisfying and we’re happy with how it’s ended.”
Let time judge us
Varis said he is absolutely confident that Feral Brewing will continue to make beer at the highest quality under CCA’s ownership.
“One of the things I’m most proud about is, we’ve stuck to what we’ve hoped for. It’s really quite easy to make beers that we want to drink and that we’ve got personal respect for. I roll that line out all the time but it’s been our thing from day one and we’ve carried that right through to today.
“People are going to have their views on what ownership means and that’s their right, but I’d just ask perhaps going forward that before the doomsayers say the beer’s going to be bad and we’re not going to be as prolific in relation to new releases… Let’s maybe let time judge that before you go and jump on that bandwagon.
“Maybe judge us on our efforts going forward and hopefully everyone will be pleasantly surprised, or at least those people that have doubts,” he said.
Committed to beer
Varis said that regardless of how long he stays with CCA, he is absolutely committed to the beer industry.
“Over the journey I’ve made outstanding friends both within the business and then amongst other brewers and even trade partners and suppliers,” he said.
“I’ve no intention whatsoever to walk away from that.”