Western Australia’s largest brewer has expanded its presence in Victoria and doubled the number of venues it owns with the purchase of Stomping Ground in a deal valued at around $10 million.
Western Australia’s largest brewer has expanded its presence in Victoria and doubled the number of venues it owns with the purchase of Stomping Ground in a deal valued at around $10 million.
Good Drinks is paying $7 million upfront for the company, along with 4,500,000 ordinary shares, worth about $3.4 million at the time of writing.
The deal includes further payments to Stomping Ground’s owners, depending on the volume of beer sold and venue performance.
In a statement posted to the ASX, Good Drinks said it was funding the acquisition by increasing its debt facility from $12.5 million to $20 million.
Founded in 2016, Stomping Ground has grown to establish its flagship brewery in Collingwood, a venue at Melbourne Airport and a site in Moorabbin.
The Collingwood facility has 2.1 million litres capacity, which can extend to 2.8 million litres with the purchase of more fermentation vessels, and Moorabbin and Melbourne Airport can brew up to 0.2 million litres.
Good Drinks said it expected Stomping Ground would contribute $1.5 million to its earnings in the first year.
The three venues join Good Drinks’ existing three hospitality sites situated in Fremantle, Redfern in Sydney and Eumundi in Queensland.
Good Drinks Australia managing director John Hoedemaker said the acquisition grew Good Drinks’ presence in Victoria and aligned with its venue strategy.
“For us, it was a strategic move to accelerate our brands on the east coast and especially build more relevance in the Victorian market,” Mr Hoedemaker told Business News.
He said the way the deal was structured, Stomping Ground founders Steve Jeffares, Guy Greenstone and Justin Joiner, would continue to run the business and be incentivised to grow the brand.
The founders will remain business leaders and will be significant shareholders in Good Drinks.
Mr Jeffares, who will sit on Good Drinks’ executive team, said the deal would make both businesses even stronger.
Shares in Good Drinks Australia were up 1.3 per cent to 76 cents each on the news of the acquisition.
The announcement came a fortnight after Good Drinks released its unaudited financials.
The presentation showed earnings had fallen from $10.7 million in 2021 to $8.4 million in 2022.
At the time, it said this was due to fewer drinking occasions in December and on-premise sales in the second half of the financial year being impacted by density limits, mask mandates, staff shortages and reduced overall trade.
Despite softer earnings, total revenue was up 30 per cent to hit $70.7 million.
