Dainton Beer co-owner Dan Dainton

Dainton Beer is near to completing the major expansion plans it announced in March which will see it double capacity from 900,000 litres a year to 1.8 million.

Dan Dainton, co-owner of the Victorian brewery which was founded in 2013, said the business had ordered a 40hL from Brewtique.

“It came from overseas, and that’s always a little bit concerning, but it got here in the timeframe we were hoping for. It’s all arrived, it looks all great, high quality, we couldn’t have asked for more,” Dainton said.

“The guys have been working round the clock to get that up and running.

“It will basically double our capacity to 1.8 million litres, and we can go a fair bit higher with a new canning line which is on the cards,” he said.

The brewkit will be installed in the next two weeks, and with extra capacity in the short term, Dainton said the team are taking on small-batch contract brewing orders.

“The plan was always to fill gaps, and being in the middle of winter and suddenly having double capacity, we’ve reached out to people to see if there’s anyone we can help get started,” he said.

“But the long-term plan is to fill it with our stuff, it will be full pretty quickly. Which raises the question, where to next?”

Next phase

As Dainton looks set to reach that symbolic 1-million-litre mark and beyond, the struggles only increase, as other brewers well know.

To expand past this point while maintaining profit margins requires extensive investment, usually from the outside, but Dainton explained they had made enough in terms of revenues and profits to cover the expansion costs, although as of yet its more recent accounts are not available on ASIC.

“Ideally, a brewery would make enough profit to pay for the next [phase of growth],” he said.

“To be honest that’s pretty much what we’ve done with this one, we’ve doubled our revenue in the last year and we’ve opened a number of export markets,” Dainton explained.

Dainton beers have also returned to a number of Coles-owned bottleshops after a hiatus following changes in the brewery’s sales models.

“Off the back of changing to direct distribution, there just wasn’t the volume there for them or us, but the timing is right now off the back of Champion Large Brewery [at the Indies] last year.

“You start to get to that point where you’re getting noticed more and more, and we had excellent relationships with them and the timing is right so we’re excited to be working with those guys.”

The big piece of the expansion puzzle is distribution, and having enough sales orders in to justify the investment.

“The big part was the distribution and opening that up, we’ve done the organic growth,” Dan explained.

“The beer sells itself to a point because of the quality, on the back of winning some awards. But it comes to a point where we really need to push this.”

The Dainton team winning Large Champion Brewery Indies 2020

The future of local?

Dainton has also been dipping its toe into export markets.

“We’re in Japan and China which has been very good for us, there’s lots of stuff going over there. Singapore is new and we’re looking at Malaysia as well, we’re just dabbling,” he said.

While some breweries that espouse buying local have no qualms in sending their beers across the world, Dainton takes a more pragmatic approach.

“Time will tell on [local]. It really comes down to quality and consistency. Buying local is fantastic and I love that idea, buying from your local brewery.

“However history does often repeat and I’m just thinking about what people in Pilsen did, there was a stupid amount of breweries in the town, and they consolidated into one brewery.

“They did that because most of the beer was shit. They thought if we pool our resources and get a really good brewer in, and made this style of pilsner, it can become something bigger than all of them individually.

“Buying local is great but if I go to the local brewery and the beer was shit, what’s the point?”

Customers want a level of certainty, he said.

“They might want to explore new fancy beers and get behind that, however if their quality isn’t there I can’t see it happening. It will always be challenging, though because smaller breweries just don’t have the capital to invest in equipment that will get them consistency.

“That being said there are some people brewing on small kits that are doing really good consistent beers.”

Dainton itself is focusing on its core range, he explained.

“We aren’t brewing as many beers as we were even last year. We’ve consolidated our core range a fair bit more.”

Plans are already underway for summer with pack changes happening to adapt to customer demands.

“We’re actually going to relaunch Flamingo Sour in printed cans into 16 packs come summer.

“We’re just trying to look at ways to differentiate ourselves and hit certain price points, it’s expensive to buy a case of craft beer, but people still like to go buy a six-pack of their favourite, and one or two weird ones, we want to be that six-pack buy, so it does have to be price point driven to a point.”

Funding for growth

Dainton completed an equity crowdfund in 2019, but as it looks to professionalise and mature as a business, crowd-sourced funding will not be the way forward for the business, Dan explained.

“We loved the idea of doing it at the start, we created a lot of wonderful shareholders and hopefully they are happy with what we’ve done, we’ve grown the company a lot since then, however a big part of that was that it was a marketing exercise as well,” he explained.

“I’m still fine with that, but if we were to raise capital again, there are other ways to do it. We’re at that point where we would consider either raising it ourselves or some other option.”

Dainton said the business is at a pivotal moment where it needs more than just capital.

“If we did want more investors it would be investors who have the experience we’re after, not just bringing the funds but someone who can help us grow,” he explained.

“We need help at the board level, we’ve made some big waves but we want to get a clearer picture of what will work for us and what works for people, where is this world going, and how does that look for us?”

To manage this, Dan and his dad, co-owner Kevin, have brought in independent directors and advisors to help the business upscale efficiently.

“We’ve got a new independent director, it was probably at that point where we’d done extremely well with our revenue and growth was fantastic, but we just weren’t convinced, dad and I, exactly which way we were going from here on out.

“We were going into a territory none of us had experience in. We got to a size that was reasonably large, and we need people who have been there and dealt with these issues before to help.

“There are points along the timeline where there are big leaps, going from a gypsy brewer to building your own brewery, firstly, and this is another big jump.”

Dan and Kevin Dainton

At the end of the day, it’s about the team you put in place, said Dainton.

“That’s why we’ve got the people in that we do. Our general manager [Will Smith] and sales manager [Todd Barac], our head brewer [Cam Turner] and everyone else. They are the guys here every day slaving away.

“Without them we wouldn’t have made it through COVID. It hasn’t been easy but hopefully there is a new shiny light out there at the end of this.”