Craft brews coming to a country town near you
If you’re travelling through regional Australia and it seems like there’s a craft brewery around every corner, you’re about right.
Before COVID shuttered the hospitality industry, a new craft brewery opened its doors somewhere in Australia every six days, according to the Independent Brewers Association.
And it’s country and coastal towns, not the cities, that have attracted most of the business. Today, of the 650 independent craft breweries nationally, two-thirds are located in the regions according to IBA data.
REA Group economist Paul Ryan said the growth in the number of regional breweries is the result of the “astronomical” growth of the craft beer industry and the resurgence of regional Australia.
“The confluence of those two factors means that there has been strong price growth and yield compressions for industrial commercial property in regional areas,” he said.
“Brewers have specific needs. One of them is they want cheaper rent, but they also need a location where they are going to get foot traffic, because selling their wares on premises provides a much higher margin than their wholesale business.
“So with both locals and tourists, as well as well-positioned industrial space where you can get foot traffic, regional areas have provided really good conditions for start-up breweries,” Mr Ryan said.
Next week’s federal budget will include $255 million in tax relief for small brewers and distillers in the form of an increased excise refund from July 2021, with the aim of encouraging them to grow their businesses.
Disused warehouses and abandoned heritage buildings in regional towns have been a lightning rod for reinvention in recent years.
A dilapidated butter factory in Orbost, East Gippsland, is now home to Sailors Grave brewery; a deserted general store has been transformed into a destination brewery in Forrest; Bridge Brewer in Beechworth can be found in historic stables; and a former furniture store in Mudgee’s main street welcomed Nomad Brewing’s latest venture Three Tails Brewery last month.
Across the country brewery and distillery ventures have not only quenched the thirst for revitalisation in suburbs and regional towns, but sparked the transformation of traditional commercial sites.
Marrickville, in Sydney’s inner west, is a great example of how transformative a reinvigorated commercial heart can be.
Once a blue-collar suburb that hummed to the sound of small manufacturing, today it has more craft breweries than any other suburb in Australia. One of the five breweries operates out of an old paint factory, another out of a bottle shop and the largest, out of a former industrial-scale drycleaner.
“It used to be dead in the afternoon and evening when tradespeople went home, but now the area has been rejuvenated because there are these production breweries and production bakeries that also have a retail side,” said Mr Ryan.
“The whole area has changed with increased foot traffic and each business has benefitted from each other.”
One of the flow-on effects has been a rise in the suburb’s residential property prices. The median house price in Marrickville increased 6.3% in the past four years to $1.425 million, according to realestate.com.au.
The IBA’s Research and Economic Impact Assessment report released in January reveals the impact brewers have had on regional economies. While the national economic impact of the sector was $1.93 billion in 2019-20, independent breweries contributed $795 million to regional economies in that period.
Kylie Lethbridge, the general manager of the IBA, describes the growth of the regional brewing sector as “exponential” and said while it remains on an “upward trajectory”, one of the market sectors yet to be fully realised is the traditional country pubs that can be revitalised by installing a microbrewery.
Brewpubs, said Ms Lethbridge, are highly attractive to consumers.
“It’s about getting really hands-on and in touch with what you’re consuming,” she explained. “We want to know what’s in it, to know that the local down the road made it; we want to be able to go into a distillery or a brewery and taste and talk to the brewer and understand how it all works.”
The opportunity to buy a country pub, improve the business by both brewing and retailing on site, and re-establishing the property as a local meeting place and a tourist destination is a popular path for ambitious home brewers seeking a lifestyle change.
Spark Breweries & Distilleries, led by Julian Sanders, recently collaborated with property firm Savills to produce a white paper Trend for Pubs and Hotels in the 2020s. It concluded while all pubs were different, all styles could benefit financially from a brew and serve on-site model.
“In simple terms, if you can own your retailing business and you can own a brewing business together on the same site, you get a big value capture of both those slices of the value chain,” Mr Sanders explained.
Mr Sanders said breweries and distilleries can be “very profitable” but a critical decision comes early on in the venture – finding the right commercial property.
“People starting craft breweries are often used to viewing industrial or commercial properties in the same way they do residential property, and that can be passion-driven, it’s not rational or logical,” he warned.
“Far too many look at a site and try and imagine what they’d like to do, and then try and shoehorn a business plan into a site.”
Mr Sanders said prospective brewery owners should start with a business plan, driving directly to profitability and financial security, and then select a site that suits and can deliver that plan.
But as any craft beer fan can tell you, many of Australia’s successful brewing entrepreneurs have been inspired by the possibilities of a site.
For Renn and Jess Blackman, the operators of Blackman’s Brewery, it was an old restaurant with a big games room in the heart of Torquay that captured their hearts. Six years on, they have outgrown the site and opened a second brewery on an industrial site in suburban Grovedale, 15 minutes from Torquay.
“Once you throw in the shiny brewery equipment, which looks amazing, you can make a plain old warehouse look pretty good,” Mr Blackman said.
Mr Blackman’s advice to new brewers is to “try and get the biggest space you can get in the best area”.
Six craft breweries for sale around Australia
Here’s a look at some of the craft breweries currently for sale around the nation.
1. Bullant Brewery, Bruthen VIC
Bruthen’s landmark Bullant Brewery and restaurant is on the market for the first time since its owners Neil and Lois Triggs opened its doors in 2011.
The licensed restaurant looks over the Tambo Valley and can seat 60 guests inside and 99 outside. The copper brewhouse operates with a bottling room that produces 700 bottles of the Bullant Brewery range in an hour.
The property is for sale for $850,000.
2. Stein’s Taphouse, Nuriootpa SA
Stein’s Taphouse and Wine Bar in Nuriootpa is described as “a craft beer lovers’ paradise”. It has 15 taps of continuously rotating Australian craft beer, 60 more available in cans or bottles, and the state’s largest Australian whisky selection.
A lively tourist spot in the town’s main street, the business has a commercial kitchen, outdoor alfresco area and a bar set in the old Penfolds Laboratory.
The business is for sale through Grant Clarke of McGees Properties for $330,000.
3. Stonehouse Brew Cafe, Maroota NSW
A landmark in Sydney’s Hills District, the Stonehouse Brew Café offers an opportunity to buy a business and property in a strong growth area and live on-site.
A café, pizza shop and craft beer brewery operate out of the sandstone building on the 0.4ha site.
There is also a separate house on the property.
The business and freehold are for sale for $1.8 million through No Agent Property.
4. Cavalier Brewing, Melbourne
The leasehold of one of Melbourne’s prominent craft beer breweries is on the market for $1.25 million. The sale of Cavalier Brewing’s fully-operation turnkey brewery in Derrimut includes the brand, all plant and equipment and a new function space that has capacity for 90-100 guests.
The brewery operates over two warehouses, on a 900sqm site in one of the fastest growing industrial and residential estates in Victoria.
Cavalier Brewery was custom-built by the founders and can produce up to one million litres of beer per year.
5. Archive Beer Boutique, Brisbane
The head lease of Brisbane’s first and largest craft beer bar, the Archive Beer Boutique in Brisbane’s West End, has been listed for sale.
Recently renovated, the two-level venue spans 1419sqm and includes food and beverage operations as well as the Loft Bar, a function-based business.
The asset comes with a full commercial late trading liquor licence (until 2am) and the ability to have three detached bottle shops within 10km.
Expressions of interest close on May 27, unless sold prior.
6. Red Baron Brewery, Tamborine Mountains QLD
Located in Queensland’s Tamborine Mountains, the Bavarian Grill Haus and Red Baron Brewery has been placed on the market due to the owner’s ill health.
The 2.08ha property hosts a Bavarian beer hall and a beautiful wedding chapel, in addition to a five-bedroom house and a self-contained unit.
The boutique brewery produces a range of craft beer and includes vats, a cool room and a kegging and bottling system.
It is being sold through expressions of interest.