March 7, 2022Podcast
In this episode, we interview Guy Greenstone who I met over a year ago when I convinced him to start using PencilPay.
Guy gives us the Stomping Ground Story, from research trips in the USA to Large Independent Brewery of the Year in 2021.
Lastly, Guy provides great insight into the business of brewing. Hope you love the chat as much as we did.
So guys, welcome to the podcast today. We’ve got guys from stomping ground guy say hi. Hi, how are you going now? The podcast tonight, we’re going to keep it really, really casual. It’ll just be covering off a few different things regarding breweries. So anything from the business side of things we want to learn about God’s background, and we want to make sure that anyone out there can really get something out of this from an educational standpoint, but also from a business standpoint.
So guy welcome. Thank you. Great to be here. So guide, uh, tell me about, um, I saw, I saw that you were a trained chemical engineer. Is that right? That’s right. Yeah. The university of new south Wales. I, uh, that was my, uh, degree, um, back in the day. So yeah, finished, uh, what made you do that? Um, good question. I, my, my dad was really keen for me to do it and I loved science.
I loved chemistry and, um, I didn’t really know what I was in for, to be honest. Um, it was, uh, it was a pretty tough degree. It was probably one of the tougher ones you can do and I’m halfway through it. I wasn’t sure that I ever wanted to be a chemical engineer. Um, and E I mean, you know, you learn a lot, you learn how to problem solve.
You learn how to, um, you know, there’s obviously the sciences that you learn and the maths, et cetera. So it was, it, it was a fantastic degree. Um, and at some point I thought I might never use it, but I, um, turns out I have, I was going to say that the discipline will be very, very, um, you know, I would have, have plenty to do with actually, actually, actually Mike and B.
Yeah. Which is weird because my first job out of uni was actually with a big. And I was working specifically in engineering and that I did that for a year. And then I moved into the commercial side of the business. I can never do any engineering. And I thought that was it, but then it came full circle and with the brewery, et cetera, sort of starting to use all of those, um, everything I learned again.
And, um, I guess, how did you kind of get started? Um, obviously, you know, we’re in, you know, you, how long you’ve held your home. Have you had some bumpy ground for now five and a half years we’ve been up and running. Um, and, uh, yeah. And then before that was the local tap house, which is, um, you know, a bit of an institution of a.
Specialty be a venue in, see builder and then Darlinghurst. And that started back in 2008. So yeah. So you’ll kind of you’ll you’ll entry point into the industry was, was, was via the hospitality sector Fest. Yeah, kind of, I mean, I’ve worked at a brewery before a big brewery and in several different roles, uh, one was in engineering and other one was.
Corporate strategy. And then the final one was in sales. So I’d had a little bit of a look at various sides of the brewing industry, but then I left that went into finance, completely separate different kind of role together. And then, um, and then moved back into the hospital side of things. And that was when this, this particular journey began yet.
Uh, tell us about tap house. So the local tap house is a effectively a, Shaunte a bit of beer, European style Tavin, um, in St. Kilda east, um, Fitted out like a beautiful European Tavern, but it’s all about. Showcasing the best beers from Australia and around the world, we used to have a bit more of a overseas bent to it.
These days. There’s so much fantastic stuff coming out of Australia, that we tend to focus more on Australian beer and it’s much more fresh, et cetera, but we go through about 400 different bees every year. Well, we also have great food entertainment. Um, it’s just about old fashioned Naval. Um, V know, venue that people feel comfortable and at home that there’s a plug guys, local tap house in St.
Kilda in Eastern Kilda. Get there. Um, so, so I guess moving on from local tap outs, what made you kind of, um, start stomping ground? So if you can tell us about, uh, if you can tell us about the crew that you you got started with, um, and kind of where they came from in the world. And then, um, yeah, if you just tell us a little bit about, um, about how you actually got started and what it took to get.
Sure. Well, I mean, I guess it really didn’t morph out of the local tap out. So after being at the coalface of what was going on in the craft beer industry, which is really starting to take off, we understood, started having a great understanding of what consumers were looking for. And we were really excited, all of these great, fantastic beers that were coming out, and we felt that we could do a good job of producing our own beer and our own brand.
So we really want to do that. We’d already had a crack at a. Festivals. So we had festivals at the local tap house and we’d had all these fantastic festivals. They were always themed called spectacular. So we had American ones. We had Canadian ones, we had Italian, we had a New Zealand business. And one day we did an Australian themed one.
We called it the great Australian be spectacular, and that became Gabs and everybody was falling over themselves to attend. And it became so big that we had to take it off site. The Royal exhibition building in Calton. Okay. So, uh, and then it grew over the years, over the, over the following 10 years into a, you know, a multi-city festival in Brisbane, Auckland, Sydney, and Melbourne.
And, uh, and so that was at the coalface of beer as well. And it was all very much about showcasing, amazing craft beer. And we just couldn’t wait to have a stab at doing something ourselves as well. We thought we’d learnt so much as a. Consumer facing business, understanding what the consumer trends were, what consumers were looking for and all the different brands that we were exposed to.
We really wanted to have a crack at doing. Yeah. Awesome. And is it, so the same crew went from, went from taphouse across the something grand and you kind of kicked it off together. Similar. So my business partner, Steve and I started the local tap house an hour. Um, and Justin joiner was out a venue manager at the time and he became, he was much more than a venue manager.
He was an integral part of the. So when we decided to do stomping ground, uh, it was a natural fit that he became part of our shareholder group. Um, and so it was the three of us that started stomping ground. And then a lot of the crew that we had at the time. Um, stop came over with us to stomping down.
Cool. Having said that we did find a brewer. I had brew our Asher that we went and sourced and asked around, you know, who’s, who’s the best, who’s the best. Who’s the, you know, the most up-and-coming know, talented brewer and a few different people that we spoke to pointed to Asher and said, um, give this guy a call.
So we did, we spoke to him. He was keen. We took him on a trip around the U S and we visited every. Craft brewery that we could at the time. Heck is that as a job interview, it was hard work. We have to taste a lot of Vietnam over thought. So we were pretty actually, we were pretty overwhelmed by how amazing the yours and how much great variety there was in the.
But we were kind of underwhelmed at the hospitality offering and how the two, it was always sort of a bit of an afterthought. It was a taproom, but it wasn’t really given a lot of thought because Croft in the U S how many years before, before the Australian independent, independent, um, you know, brewery sane was the U S kind of up and going well, I mean, they say that it was.
The end of the seventies, that the craft beer revolution started in the states. And depending on who you ask, but the states was kind of 20 years ahead of us at some point at some point, maybe 10 years, I think we’ve kind of caught up and we’re pretty close behind maybe, maybe a few years lagging in terms of.
So w they were definitely the leader in the world in terms of the craft be assigned well up through the, you know, Oregon, California, kind of like that. That’s really where it kicked off wrong. Yes. Yes. It kicked off in California. I think they say that steam, um, anchor, anchor brewery and their steam hour was one of the first in California, also Sierra, Nevada, um, in, in north, in Chico, California.
They were kind of two of the pioneers, but also on the west coast. I’m sorry. On the east coast, there were some great breweries as well. And of course, a little bit in the middle. I mean, Colorado is kind of considered west coast, but there’s some great breweries in Colorado. Um, but Oregon huge again, and, and also the, the hop growing region of, um, the United States is that.
Um, Washington state valley. So it lends itself to, there’s a lot of great breweries in Seattle and Portland, Oregon, um, all sorts of places. Awesome. And then, so from there, you’ve gone on this overseas trip and taking you and taking your, your new head brewer ashtray. Um, what happens after that? Have you, have you, have you made plans back home to get all the equipment and get all that going or have, or did you want to just go and do a, you know, go off and do a, um, a bit of a investigative journalism piece overs overseas.
That was an investigative piece. First. We wanted to see what we loved, what people were doing well, where we thought things could improve and really kind of build a suite of ideas that we could then go and implement. So when we got back, the next step was to try and find a site so that. Pretty important.
And we wanted to find a site in a, in an area and a location and a geography in a demographic that really kind of suited our brand. We knew what our brand was going to be in terms of who it was going to appeal to kind of people that were going to, um, the, our brand was going to resonate with. And, uh, and so we wanted to find a us.
In an, in amongst that demographic. So calling one was the obvious one for us. And can you, can you, uh, can you outline all or detail exactly what that demographic is? Uh, the reason I asked. Um, you know, part of, part of every business is, is, is targeting exactly who you want to go after as a customer and Tyler and your product and Tyler and your marketing message.
So who was that, you know, that, that, that first customer that you wanted to get through the doors? Well, it’s interesting, isn’t it? Because all marketeers will tell you that you really have to know that customer. And weirdly for us, we’ve always said that we wanted to have broad appeal. We didn’t want to go super nation, super narrow.
So we’ve always gone from a wide range of, of patients. Having said that you do have to narrow down to some extent. And so as we’re, uh, in a city, uh, urban, um, people between the ages of roughly 20 to 40 was probably bang on maybe, maybe 45. Um, we wanted to be very female-friendly as well. It didn’t, we didn’t want our brand to be particularly blokey needed to be appealing a lot across the board.
So we were going for. You know, um, people who are conscious, um, there’s a, there’s a term called Neos. They’re kind of, um, sometimes early adopters and, and people who are trend-setters are not in our, Hey, I’m so cool to me, but people who are a little bit more open-minded and willing to try something different, try something new.
Yeah, exactly. But yeah, we’ve, our brand has got a bit of an urban edge to it. Yep. Having said that we, we love going hiking and we love the great outdoors as well. So it is broadly appealing, but if you had to narrow it down, that’s it. And how’d you get who came up with a nine? Well, actually we engaged somebody to help us with design and they were actually helping us brand as well.
And we actually ended up not using that person because we didn’t really like anything that they were coming up with. But at the end of the day, um, Came up with stomping down. We were, we were throwing up a whole bunch of different names throwing up. Doesn’t sound good. We were,
we were, yeah, we were, uh, we were looking at a whole bunch of different names and stomping ground when we heard it. Um, Steven, Justin certainly loved it straight away. Took me a little bit longer to come around it for some reason, but I’m absolutely in love with it now. And the reason we went, we stomping around was for a couple of reasons.
One. Collingwood once upon a time was the epicenter of brewing in the hall. Um, not only Melbourne, but the whole of Australia. And over the years, all of these breweries is had amalgamated and come together to the point where I want big monolithic green, which is it’s a big building and it’s inhabited.
And we were the first new brewery to open up in Collingwood in over a hundred years. So we felt we would bring. BIA and brewing back to its original stomping ground. Cool. The stomping ground is also a place where you feel at home and comfortable. There’s a sense of nostalgia about it kind of harks back to old fashioned values, and there’s a sense of ownership over it.
So this is my stomping ground and miles. And we want to people to connect with our brand in a way that they connect with their old stomping. Yeah, absolutely. I mean, how many, how many times have you heard a grandparent or a parent say, ah, this is miles dumping ground. It just, it just rolls off the tongue and it sits.
I might. So it makes, makes perfect sense. Absolutely. And there’s that? Yeah, that nostalgia piece. I remember when things were a bit more simple. Sure. Well, we certainly remember a time when it was a bit more simple. Um, so, so tell me about the first year in business. Sure. You know, the first year in business unit, you don’t know what you don’t know.
So you kind of, in some ways you’re always making it up as you go along and there’s no kind of amazing playbook, uh, that you kind of read and go, you know, step one and step two, you have a plan. You execute on that plan, but you learn everything along the way. So year one was really about assembling a core team.
It was about finding a site. It was about starting to put the beer out there and, you know, it was really kind of, uh, like I said, making it up as we go along Cassie. Um, for example was one of our very first, um, staff members she’d come over from the tap house. She was, she was an assistant manager there and we decided that she could be great in sales.
And so she was helping me out in sales one day. And we didn’t have packaged product or anything. So we were actually taking growlers and flasks of our B to different customers and like opening up a flask and saying Tyson, it isn’t that we’re going. Yeah, that’s good. I’ll take two games. So it was very low.
We didn’t even have any business cards. We had coasters that we produced and we were. I have a number on the back of coasters and giving them to customers. I am. I really, I think every effort, every Gregg business goes through that initial stage where they really haven’t got a product and they’re out there just testing the market and saying, what someone paid money for this with someone actually give us, give you some of the hot end for this.
And, um, yeah, I think it’s, it’s interesting. I mean, you know, Every, I think every, every good business does it. We certainly did it like every, you know, everyone does it, but you know, you, you, you guide to the market price of product, actually getting out of there. So, so you’ve, um, you’ve gone out and you’ve seen the people will actually pay for it and people will buy the beer and they have to sell it.
Yeah. So, you know, we, it was all about, first of all, we, we, we’re all, we’re all massive B offense. So we’re passionate be a fans we’ve been in the beer industry. Every single beer out there for quite a long time. Like I said, we’ve done the U S tour. Um, we, we did a European tour. We just were very obsessed with BM.
So when Asher was making these fantastic beer. It was kind of easy for us to sell because we’re pretty passionate about it. So, and passion sells. And when you really have conviction and you believe in what, you’re, what you’ve produced. Um, it kind of, I mean, I, I want to say it sells itself. I mean, it never sells itself, but, but at the same time, if it’s a good product and the brand stands for something and you’ve got people that are past.
Behind it, then it’s pretty compelling. And that’s what we found happened. We did, we decided not to go into package at all for the first year. It was, so it was king only. So we were basically just on tap in and around the brewery, keeping it pretty local as much as we possibly could. And it started really resonating with our customers.
People were loving it. Consumers were loving it. We had a lot of support from local venues that we had the odd way. That said, oh, you’re a bit close to us. You’re a competitor. Yep. But that was for every one of those, there were probably 10 others who said, oh wow. You’re around the corner. You’re local. Yes.
We’ll definitely support you. Yeah. And what was the, what was kind of the cornerstone be like obviously, um, you know, having a look at your range today, it’s huge and you’re off and you’re obviously, um, create different beers for, you know, for a different palette. What was the, what was the kind of number one beer when you were coming up when you were building that out?
Well, what was the number one? First beer we ever did from Collinwood was get straight pile out and it’s on our brewery is on GIP street in Collingwood. So the name give straight pile out. This kind of made sense, and it’s still our biggest seller. So, um, sometimes it’s about 40% of all the beer we sell is GIP straight pal out to 5.2%.
Ballsy American style Palau got a lot of great American hop character to it. So some of that sort of summer tropical fruit character that you get from those American hops, it seems like the trip over, over to the states was, was probably worth it. I mean, realistically hops is part and parcel of the whole craft beer revolution without hops.
I don’t think the revolution would have gone in the direction that it did it. It really brought hops to the fall. Um, prior to. Craft beer and this whole craft beer revolution and the hop revolution pops were really just produced for the alpha acid content. So they’d be during content ever since the birth of the cascade hop and the American style hops, um, from, from that region that I was telling you about in the Northwest of the U S that’s when craft beer really started to happen and you get really interesting characters from these different hop varieties.
So I guess in some way, We and pow-wows was super popular as well. We were really paying respect to those, uh, those styles that really took craft beer into, into the masses, which was like the Sierra Nevada power as an, also in Australia, that little creatures pile out, um, when it first started was in that sort of style.
Yeah, that’s been a, I mean, I remember going on a free trip over to Perth and, and going to little crutches in Fremantle there. And it was like, Yeah, it was an institution. What? Fifth, 12, 13 years outside. Yeah. Yeah, it was, I mean, it was one of our inspirations as well. It was a great venue and they made great beer.
Yeah. Awesome. Awesome. So, yeah. You’ve obviously got a, you know, a pretty big, um, a pretty big team now. So obviously every part of every business is building a team and making sure you can trust the team and making sure the teams motivated. And, um, obviously, you know, the initial selection is pretty important as well.
What do you look for in a team member? And, um, you know, that’s probably the most important thing. What are their attributes? And, um, and why is that successful when they actually go on there? It’s a great question. Hard to answer succinctly, but I’ll try, you mentioned the word team and I think that’s probably a really important word to use because just like a football team or a cricket team, you can’t have awful forwards, all backs, all centers, all on borders or all bowlers or all betters.
You really need different people to play different positions and you need strong people in those different positions. And it’s the same with whether it’s hospitality or. You need strong players in the various teams and some, uh, you need what you, but what you do need is some sort of cohesion and a belief in what it is that we’re all trying to achieve together.
So if you’re a football team or a cricket team, you’re trying to, you know, win a premiership or, uh, or, you know, we know we’ll capital win a series. Um, we have a really strong sense of purpose. To share our love of great beer with as many in our community as possible through consistently exceptional experiences.
And that’s what kind of gets us out of bed in the morning. So all the people that work with us, uh, really connect with that. And I really, they really understand that we’re about diversity and we’re about inclusion. So that connect to our sense of post. And then that then there’ll be strong in their various fields.
So, um, you know, we’re looking for collaborative people. We’re looking for cooperative people. We’re looking for people that are really technically good at what they do, whether that’s in the finance team, great with numbers, uh, whether it’s in brewing team really for city is cracked with cleanliness. Um, really good with process sales team, great with people, great with building relationships, great at doing what they said they’re going to do.
So you really need, uh, you know, a team of a whole bunch of different styles of people. Yeah. Awesome. Awesome. And, um, kind of moving on to, I really wanted to ask you this question. Um, you know, my background has, has never been VSO. Um, you know, this is as much for my education as, as anyone else. Um, obviously if you’re in the hospitality space, you know, they used to talk about a third, a third, a third, you know, your third cost of goods to wages and that type of thing, obviously what’s.
Um, since then and hospitality, you’d probably go probably half goes on white who’s now, and Dakota might be the quarter-inch guys on cost of goods sold. And then there might be a bit of, a bit of money with dive with the overheads and profit. Um, what’s the breakdown usually in the, in the, in the, in the brewery vertical.
So it’s different, depending on your scale. Brewing is a very, is, is completely a scale game. Unlike hospitality. Where you mentioned, you can get some benefits of scale and hospitality as well. Staffing costs can come down. The bigger you are as a percentage of turnover, cost of goods are generally caught pinned, or, um, to, to revenue for be it.
If you are a group, you can, you’ve got good buying power. You can reduce your costs a little bit with brewing. The bigger you are, the smaller your cost of production is, and the smaller your cost of goods can be. And also your variable costs associated with manufacturing or brewing come down significantly as well.
For example, if you are a relatively small brew up and you’re on a, you know, a 10 hectoliter brew kit, you still need the same amount of labor to create a brew on a 10 hectoliters. That you do to do a brew on a hundred hectoliters. So you can do 10 times the volume in one brew with the same amount of labor.
So library is completely scalable. And then when you’re talking about the big guys, you know, they’ve got massive, um, you know, massive scale and it changes the equation completely. So where we sit in that whole, um, um, that whole. Scale, what am I? What’s the word I’m looking for? The, um, uh, the picking of whatever.
No, uh, the, the, I it’ll come to me in a second. Uh, big boys are here. Everybody else is, is way over on the, on the left-hand side. And we’re, you know, so w we’re completely a sub-scale, um, producer compared to those big boys. So our cost of goods will be, and it depends on how, you know, how you define your cost of goods will be roughly around.
55 60% mark, uh, depending on whether you’ve got logistics in there, et cetera. So profit margin, gross profit margin is about 40%. And out of that 40%, we still have to take out labor utilities, rent. Yeah. You know, marketing expenses, sales expenses, all of those sorts of things. So it’s, uh, unlike cost of goods in, in hospitality, which are around about 30%, like you assign maybe 25%.
Um, it’s more like 60% cost of goods in, in, uh, in brewing, in manufacturing for us, for the big boys as much less. It’s probably that probably leads on to a leads on to, um, another area. I wanted to ask this a bit later on, but we can kind of jumble. Um, you’ve got guys like, um, you know, Balta and mountain goat and these kind of guys that, that, that salt to IB and beds, and you saw he’s, um, you know, some time ago, would they see the benefit of that scale once they fold in or would they keep operating their businesses?
Um, in, in, uh, in the same manner, um, obviously they haven’t got the volume of distribution that the others have, so they might not benefit so much from there, the scalability of the infrastructure. So, um, in your mind, would they benefit, um, from, from kind of increasing the, from, um, where they have the scale benefits that the big guys get, because they’re folding in or will they continue to run their operations as.
I think they do get the benefits of the scale. It’s not necessarily immediate. Often the smart acquisitions these days are letting them run their own race for awhile without changing too much. Certainly when it comes to sales and marketing, but there are always synergies around. Things like production, uh, buying, you know, getting grain, cheaper, getting hop sheep, or getting Ella minium, cheaper, getting glass cheaper, getting cardboard cheaper.
All of these things then brewing at a much larger scale. For instance, one of the key products or one of the, sort of the flagship products of any one of those acquired. Being taken over to larger scale, uh, would definitely create some huge benefits in terms of customers. And I’d imagine, um, you know, obviously a lot of those, um, do a lot of the, the, the majors have they got, um, have they got breweries in H H state kind of thing?
Or do they, do they all, I mean, do they all do a lot of it out of the, out of the Victoria? No, they do generally have brewers in each state. Okay. CVS got breweries in the state. Um, uh, lawns got breweries in each state, all. The breweries is in a Jalong. That’s the little creatures brewery now. And I never had a big, big brewery, but they didn’t have one in every other state.
Uh, it’s interesting because the big brewers, uh, finding that craft via an independent beers tool and strips off mainstream. So some of their big, big breweries are almost too big for craft BN. So they’ve kind of been caught that they need this kind of medium scale brewing facilities. Yeah. And the, and, uh, as in, uh, too expensive to run a big one, um, and, and kind of too expensive to run a big one and too much for a small one type of thing.
Yeah. That’s wrong. Yeah. So, but, but so the, the, you know, this modern, that they’re figuring out how to, how to right size brewing operation for the brands that they’ve acquired and, and they’ve got various different sizes. So for instance, little creatures is a perfect example. It’s, uh, it’s a big enough brewery to treat.
On something like furphy, um, and, uh, you know, and, and, and little creatures, but, uh, and really sort of, they can put other brands in there that are kind of in between the small scale production of crap. And a medium that’s the medium scout and it’s not quite ready to go to, you know, the massive sort of the implant or the, on the Abbotsford plan at CUV or anything like that.
So, yeah. All right. The, um, the side moving on from that, um, around the, um, so obviously that’s talking about kind of consolidation of some of these smaller breweries, some the independent breweries that. Um, what was saying recently, and wasn’t quite a lot of it is, you know, groups like gage roads and mighty craft and, and, and, and those other groups they’ve, um, they’ve been buying out breweries and distilleries and, and putting them into groups.
Um, do you say the market going down that kind of consolidation rep what do you say, um, that true independence kind of kicking on for the, for the foreseeable future? I think, I think I see both happening. I think there’s always going to be a place for independence and I think consumers. It resonates with consumers, that whole concept of independence.
I think there’s always going to be the emergence of new independence and the existence of independence. But I do think that there’s going to be consolidation phase as well, primarily because. No brewer, new breweries. It’s been so prolific in the space that I done know that the market can cysteine 700, 800,000 breweries.
There’s a lot of entrance like them. Obviously there’s been so many inches in the last, in the last 24 months. It was just gone, stepped up a gear again. When we started the local tap house back in 2008, I think there were about 25 different breweries in Australia. And now there’s 700. Yeah. So you can see what the trajectory is like.
Yeah. I don’t think that it is, um, you know, that it is sustainable. So I think that there’s going to be a consolidation phase. I think some, uh, players like the mighty crafts, um, and the, you know, the, um, the gage roads and perhaps, you know, some of the other ones will, um, there’s, there’s, uh, a place for some consolidation that happened in the market for sure.
And I think tribe has had a crack at it as well. Yeah. So, yeah, so we’ll probably see more of it over the next few years, Oregon. And that kind of brings me to my last question. And, um, it’s really around, um, the next generation of, of brewers and the next generation of business owners in this. What would be your advice to someone who’s thinking about entering the market?
Obviously there is, you know, it’s a, it’s a crowded market and it’s like right now, it would be no doubt. It’s pretty difficult to get moving from a standing start. Um, what would be your advice to someone who’s looking to enter the market? So when a lot of people entered the market in the very first phase, it was because they absolutely loved beer and they were right into BIA.
Believed in what they were doing. And it was kind of almost like an ethos or a, or a, um, you know, something that they really were passionate about, religion, religion, then a lot of, some of some people then, so, you know, some acquisitions happen, whether it was mountain guide or a little courageous, which was one of the first.
Um, even cricketers, arms, et cetera, and felt that, you know, there was a lot of money to be made here if you played your cards, right. And you got some smart players coming in and I reckon almost four Pines could be considered one of those. Like I reckon those guys were pretty smart and they always had a view to eventually sell.
Um, I think are passionate about beer as well. Um, but I think that they were super smart guys that, um, that did a really good job, but always had an exit. In in mind. Um, and I think that, that at that maturity level of the industry, I think there was plenty of room for those sorts of players these days, if people are jumping into the industry because they are keen on an exit or they’re keen on, you know, making shit loads of money, um, I think they’ll probably get a rude shock because it is massively competitive.
Um, there’s real downward pressure on pricing to be compared to. It’s very hard to make money out of it. Um, so if you’re going to get into it, my advice would be, get into it for the right reason, because you can’t really guarantee that you’re going to be able to exit it in, in any kind of, um, bigger and out kind of way.
So you better love what you’re doing. Yeah. It’s a tough, and it’s a long grind. Um, and, and that’s, you know, and, and, and, and that’s, I think that’s just the reality of being in a really competitive. And the other advice I would say is that manufacturing, as we’ve already discussed and therefore brewing is a real scale game.
So it’s very hard to get anywhere near profitability or certainly cashflow positive kind of territory until you get a certain scale. So the only way to. Make it work to kick things off is with hospitality. You need to be able to sell your own beer at the full hospitality margin, have venues to be able to support it and, and distributor, you know, and that’s, I think that’s, um, if you, if you don’t do that, I don’t, I think it’d be very hard to survive.
And, and these, you know, contract brewing, there are still some brands that generally our only contract was they don’t have their own bricks and mortar. We’ve seen a period of time where it’s very, very hard to survive as a pure contract brewer. If you contract brew for a period of time, while you build a brand, until you bring in some production yourself, I think that can work.
But I think being purely a contract brewer is, um, it would be pretty hard to make it work. And what I’m saying is that product, the product that you go with, if you’re a life insurance to the market, decide you entered in the last 24 months. If you want to be. Um, if you want to, if you want to kick off really, really fast and be able to distribute quite heavily, um, what, what I’m saying is a lot of.
You know, um, gluten-free for example, and thus they’ve released, some of these brands have really focused on just doing one or two beers that are slightly different. They’ve really differentiated product and taking a bit of a pump and bit of a risk. And, um, yeah, some of those guys have, you know, have seen some real scale.
Um, so I mean, would you, would you tell people just to brew what they want to Burgle? Would you, would you encourage them to try and find a nation to market that they’re passionate about? Yeah. I mean, I guess. You know, one of the things that always surprises me is the emergence of a new style. And, and, and sometimes you can’t pick it.
You just see it happen and you just, and it just, and there it is. I said, I think the same as fashions, I technologies technology was anything. It just, it just hits. Yeah. And I, I think trying to, um, figure that out, you know, and try to pick something based on what you think is gonna really go is, is a tough one.
But I think if it’s based on passion and you know, what it is that you love and you, you, you know, it’s something that excites you. Um, then I think. It’s probably likely that other people are going to feel the same way you do about it. Like for instance, we sort of sell buses, um, really kind of hit the mark in the last couple of years and go absolutely nuts.
I win, I win. I could never get excited about self as my stuff. I don’t drink them. I’m not excited by them. And I know people were making shit loads of money out of them. And I know some breweries have pivoted to the point where they’re almost two thirds of their production is. Well for us, we could just, you know, it’s all about what I love passion and I can’t, I can’t go and say Chinese seltzer.
It’s amazing because I’m not as, I just don’t like tilts. So, uh, so, and, and interestingly, I just written out. From the U S that’s saying, seltzer, go ballistic. And then it’s now dropping off a cliff. Now maybe Australia will follow as well. Tea tends to, so be interesting to see what happened, but then there’ll be something that comes and replaces that.
So it’s really, I don’t know if I’ve answered it now. You have to have it’s basically, unless you, unless you want to bro, it, unless you are passionate about it, it’s very, very difficult to make it, uh, it probably be through the goal to make it a priority on. Yeah. I mean, having said that we, we know that we can see some macro trends that are happening and some of the macro trends are, um, hyper localism that people are really getting behind local.
Um, one of the other trends is moderation. There’s a real trend towards moderation. I think, you know, when we started, everything was about big ABV beers, you know, 8% IPA’s 10%, you know, uh, Imperial, Russian stouts, um, It, you know, the last five years or four years has really been about sessionability we’ve seen a lot of, you know, um, bees come out and they’re in the 4% range, some in the mid strength range.
And now we’re seeing even more moderation type beers coming out, sub the three and a half to two and a half percent and all the . You have a look at all that. And that just, you know, 24 mile, probably 12 months. It’s just been crazy for them. So, um, yeah. And obviously they’ve been winning awards all over the shop as you guys have as well.
So it’s, uh, it’s awesome. Yeah. So I think that’s one of the trends. Uh we’ve, you know, there’s probably a couple of other trends as well that you could, um, that, you know, if you’re close to it, you can, you can pick and you can try and play in that space. And I think one of the, one of the, um, one of the things that we’re learning at the moment is to be fast, to fail.
So to really. Having like, sometimes you kind of want to watch it and say, is it really going to go? And then you can miss the boat. Yeah. So sometimes it’s worthwhile going, if you, if you believe in the product, um, actually getting out there and just doing it yourself straight away. And then if a flight is fantastic and if it does.
Who cares if you’ve got the infrastructure there and you got the ability to produce it’s, um, it’s, you know, it makes it make sense to you. You try and ride the wave again. Yeah, exactly. Yeah. Cool. Awesome, man. Thanks so much. I really appreciate you spending the time with us today. My pleasure. Yeah. Awesome.
Yeah. Fantastic. Thanks buddy. Cheers. No worries.
Awesome. That was awesome.