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Lessons From A Decade Building A Brewery
778 Plays1 month ago
“This country has been crippled in the way politicians handle affairs … Well, someone needs to step up at some point and have the courage to recognise that we are now at a breaking point.”
Anyone paying attention to craft beer in Australia over the past decade will be aware of two things. One, that Hawkers have consistently put out some of the best beers of any brewery in the country over that period. And, two, that founder and outgoing CEO Mazen Hajjar is one of the sharpest and most outspoken commentators on the industry.
Both were among the reasons we invited him to be a guest on the podcast: Hawkers turn ten this month while the beer and hospitality worlds are experiencing existential threats from multiple directions. Since we extended that invite late last year, he’s found himself in the eye of the news too after merging his brewery with White Bay in Sydney to form Social Drinks Group.
The move provided more ammunition for what was always going to be a fascinating, wide-ranging, and occasionally fiery chat – one in which we addressed the issue of excise tax and a lack of support from the Federal Government just days before it blew up again on the back of the latest bi-annual tax hike and accompanying comments and directives from the Treasurer and ACCC respectively.
The latter part of the interview is where Mazen really builds up a head of steam, taking on not just excise tax but other hot topics, including the abandonment of indie brewers by the homebrand-hawking retail duopoly, tap contracts, the inequities of the country’s various container deposit schemes, and the lack of support for local producers from the government.
He also expresses hope, however, even as he acknowledges that much of the industry is at breaking point, while reflecting on his decade at the helm of Hawkers, lessons he brought with him from his home country of Lebanon, and educating drinkers through experimentation.
He also takes us inside the merger with White Bay – how it came aboutand is their attempt to carve out a future in a much-changed landscape – while sharing his experience of going through voluntary administration, as well as his future plans.
Prior to joining Mazen, there’s a longer-than-usual intro as Will and James discuss the fallout from the most recent rise in excise tax, its coverage in the media, and how the calls for change seem to be coming from more quarters and getting ever louder in this election year.
Hendo is back with more tips on brewing efficiently, and we look ahead to the reopening of Tiny Mountain in Townsville after the brewery was bought from Lion by a Queensland-based hospo group.
Start of segments:
- 22:27 – Mazen Hajjar Part 1
- 50:00 – Rockstar Brewer Academy
- 55:34 – Mazen Hajjar Part 2
Relevant links:
- Hawkers & White Bay Merge
- The Exploding Cost Of Brewing Beer
- IBA response to the Treasurer's comments on excise tax
- IBA's Save Indie Beer Campaign
- Tiny Mountain To Reopen
- The Crafty Pint's Brewery & Venue Directory
- Rockstar Brewer Academy
To find out more about supporting the show or otherwise partnering with The Crafty Pint, contact craig@craftypint.com.
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Transcript
Introduction to Crafty Point Podcast
00:00:05
Speaker
Hello and welcome to the Crafty Point Podcast. I'm Will. I'm James and welcome back to yet another show. um We've got a pretty lively guest later on today and a pretty lively discussion. am yeah i think I think you used the word... Mouthey at one point. Mouthey, yes, Mouthey to describe him. But I think a pretty lively chat to have before we get to that point as well.
Rising Beer Prices and Industry Challenges
00:00:27
Speaker
There's um there's been, yeah as as we discussed a number of times last year and certainly the end of year podcasts,
00:00:32
Speaker
um the issues of the industry have been gathering a lot more coverage in the mainstream media and that really seems to have come to a head in the last few days. Yeah a couple of weeks sort of um I mean because it's yeah it's exercise increased time it happens twice a year and has done since the early 80s. And there's been a lot of coverage around it in the mainstream media about how the price of beer is going up. Obviously the price of beer is expensive in a pub. um ah People really do notice it. It's the number one question I get asked by my friends like, why is a beer so expensive?
00:01:05
Speaker
Fruit and veg are expensive as well, unfortunately. The cost of living is expensive at the moment. But it's really, it's come up a lot. There's been a lot of attention from it. And the IBA, I think have done a really good job. They have, Kylie Leftridge CEO of the IBA has been pretty omnipresent, I think, in the media. And Cal, who was the chair until recently because of um what happened with Kaiju, they've really um pushed hard and really, I think, gotten the word out about how prices are going up again and how the excise system does need to change yeah and and it it does feel like i mean i think generally this story comes up in the you know all of the mainstream media every time it happens twice a year we don't tend to focus on every time because it's an ongoing issue that has been there like you know saying to you before and the first meeting ever went to the victorian microbrewer's association back in buddy two thousand and eight whatever wonderful it was it was on the agenda there,
00:01:56
Speaker
And things have sort of changed since, however, you know, election year, the fact things have been so tough, the fact that I guess the industry has had a lot more coverage in the media, they've probably got more contacts now. This does seem to be more awareness. I guess it must be a good, it must be a story that's getting traction yeah for the for the you know the TV news and for media, otherwise they wouldn't keep running the story. So I think there is that, you know, it increased attention and interest in in in the topic. And now it just really seems to have yeah come
Impact of Regulatory Changes and Ownership
00:02:25
Speaker
to a head.
00:02:25
Speaker
And I think importantly, there there's been a lot of focus on being in the business of beer and in hospitality at the moment is so hard. yeah And excise is just another thing that's hitting the industry. Kylie, um I was about to say, loves saying it. I don't think she enjoys saying it, but as as she often says, and as she said in our chat with us last year, it's a death by a thousand cuts. Everything is hitting the industry at once. whether it's more regulation consumer demand going down excise cost of goods going up yeah everything is really hurting at the moment and we are seeing a lot of brews fail it failed some are going to va some going straight into liquidation some are closing some have been for sale for a very long time as well it's obviously a really
00:03:07
Speaker
Bad time to be in business or sometimes we're finding out about change of ownership with businesses we work from because we get yeah um our bookkeeper gets a note. Can you change the details on the on the invoice? You know, there is a lot of stuff that's happening that is happening under the radar. And I think one thing you mentioned before that's worth, I guess, emphasizing as well is it's not just I guess we we we focus a lot on breweries that have been closing or breweries in trouble.
00:03:30
Speaker
but a lot of pubs and not just you know craft beer venues but pubs across the board are closing or struggling and they're starting to make a noise and even pubs that don't go anywhere near independent beer or craft beer they're saying it's getting too expensive for us to buy beer or you know or for our customers to to buy beer from us and I think once it sort just spreads and becomes a bigger issue and you have this sort of I guess it's almost every tranche of the industry talking about it now from the brewers, big and small, the the publicans, the bars, and now consumers going, you know, well, it's too expensive, so we're not going to go out. And it it feels like you get into a situation where, you know, are you just driving people to go and buy, you know, the cheapest beer they can and drink it at home and not go out and not have that, you know, I guess, quintessential like yeah yeah Australian, but also, I guess, you know,
00:04:17
Speaker
important social experience. yes you know what risking Yeah, go going out to people going to inns and taverns a thousand plus years ago, you know what I mean? It's always been part of a, you know, the the the social and fabric of um of life, you know, for many people. And it just feels like that at the minute is just being undermined. And it does feel like there's just this sort of building momentum. um You know, we've we've seen stuff, I guess, messaging not just from the sort of the top of the IBA. And there's something I saw that came up yesterday from your mates in Queensland, they posted something on their Instagram page, can of Larry and just, you know, our mate Larry tells the ATO to piss off with a very clear image of 40% of your Larry goes to taxes. yeah And I think that sort of stuff we're seeing more often, obviously, the IBA is pushing all of its members and supporters to contact their local, their local members, you know, yeah you know, at the head of election time. um And yet,
00:05:09
Speaker
You know, you kind of think, well, this is kind of good, as we said last year, you know, it might not be positive coverage all the time, but at least it's coverage. yeah And hopefully it leads to something positive, you know, on a macro level that needs to happen, you know, to sort of help the industry. However, at the minute, they' they're not sort of getting the response they want from government.
00:05:28
Speaker
Well, not necessarily. um Yeah, there was an interesting um letter sent out by the ACCC
Election Year and Brewery Regulations
00:05:33
Speaker
that ah the RBA shared with its members sort of reminding breweries to be careful, I guess you could say, to make sure the statements they're saying about price increases are true and for a bit of context around that. It's not uncommon for this time of year. And the second time this happens later in the year for breweries to send out to say pubs and bottle shops and say you know this this core range beer is going up um exercise has gone up this beer is going up and they do sort of roll in um increases is is one so that's potentially what the ACCC is sort of focused on at the moment i've um we might have more on this by the time the podcast comes out i've i've sent some questions to the ACCC but but essentially the warning letter is kind of saying if if we find that you know brewers or other businesses are
00:06:21
Speaker
I guess misspeaking yeah and allocating more of the increase than is actually true to um you know the to the tax element then they could be punished and interestingly therefore the ah the letter says that if you're a business you could be fined 50 million dollars for misspeaking yeah and individuals 2.5 million I spoke to one brewer yesterday goes Why not make it a billion? Why not make it 10 billion? Like it does seem such a ridiculous figure, but at the end of the day, I guess that, you know, the messaging is, you know, I guess the industry has been petitioning the ACCC for years to have a look at other issues affecting the industry, such as tap contracts. That's not happening. And now in the other direction, they're coming back going, you know. Yeah, yeah exactly. Yeah. So it's interesting timing. I think the important things to find out, which
00:07:06
Speaker
vast the ACCC I haven't heard back yet but it hasn't been at the time of recording hasn't been very long since I reached out to them but whether or not this is a common thing for them if they've sent it before or if they often remind breweries of this or any anyone of this if they've sent it to other groups like the hotel association or the bigger breweries represented by the brewers association things like that just to sort of get some clarity and also just why like I think it would be good to have some clear examples of what exactly they're talking about here What warrants a $50 million fine? Exactly. And we can't, we can't spit, you know, I don't know how every single brewery in the country messages, but I would say certainly the IBA messaging has been around. Again, to use college terminology, Deaf by a thousand cards. It's everything impacting the industry. It's not just excise, but Australia is the third highest beer tax, beer tax nation in the world. If that makes sense. And eyeing up
00:08:03
Speaker
position two on the podium as well. Yeah. In the near future, the way things are going. And and it is a it's very old legislation we're dealing with. There's also the wet tax with wine deals with which is very different and makes makes wine taxed at a much lower rate. So there's all these kinds of things. And that's what I think the media commentary has been around. Yeah.
00:08:23
Speaker
Prior to the ACCC as well the treasurer Jim Chalmers did say basically he was quoted in the daily tergraph telegraph was saying the extra excise on a schooner next week is less than one cent and don't believe anyone who tries to tell you otherwise drinkers are doing it tough enough without being ripped off or lied to so he's gone pretty hard at the increase in prices again I i struggled to see hospitality businesses that are doing well. And if they are doing well, they're very large groups yeah potentially. And I would say that very large hospitality groups are sort of a consequence and a symptom of having these kinds of regulations that's allowed mammoth hospitality groups to grow. And also businesses that maybe they're not making that much money off beer. Maybe they're actually making a huge amount of money off poker machines as well, which breweries don't. You can't be an RBA member.
00:09:14
Speaker
yeah and makes said and make all that money off Prokey Machines as well. So yeah, it's pretty disingenuous thing. I think it's fair to say the treasurer, um again, it's an election year, not going to tell you to vote for, but I know the IBA is planning some um campaigning around this.
00:09:32
Speaker
talking to members i think it's a really going to be a really important time for people to speak to their local member of parliament i live in a marginal seat it's looking like it'll be a pretty close battle between labor and the greens in in a city dude that i am and i think um you know there's there's got door knockings going to start soon so i think it's really important that people take that time to sort of if you can inform yourself about it and explain it and i'm sure breweries will and the RBA are doing a really important education base, making sure brewery owners understand exactly how to talk to politicians. Politicians, they they love hosting things in breweries and then they love, um you know, I've seen plenty of campaign launches take place in breweries so hopefully it's a, they sort of understand and are willing to listen to brewery owners as well about what's going on. Yeah, well we saw Albo Rock up to the launch of the Inner West yet brewery trail and you know he's represents you know the you know that merit villain the inner west with all these breweries there he's had a beer named after him for years by willy the boatman going in and saying i've been a pro you know prime minister for craft beer and there's no evidence to back that up you know talking of disingenuous and i don't know it seems interesting that you know you wonder what labors
00:10:44
Speaker
policy is coming into the election in that, you know, no one on the right is going to vote for them. They've been pushing people further to the left, you know, that you think they might look for some sort of, you know, popular um you know policies to take into the campaign, into the into the campaign, into the next election.
00:11:00
Speaker
And yet it seems that they're doing you know they're they're doing everything they can to be against what could be a potentially very positive thing for you know people and the hospitality industry and the brewing industry, these small producers that employ so many people. yeah um it just yeah you kind of I wonder if they're just trying to sort of you know blow themselves up and yeah guarantee they won't be in government for
Economic Impact of Craft Breweries
00:11:21
Speaker
a while afterwards. I think if there's going to be a change now is a very good time for it to happen. there's i'm I'm a bit of a political nerd and there's just so many close battles in seats this election. There's going to be so many face-offs between Labor and the Green, Labor and Liberals, Liberals and the Tears, yeah Nationals and into but other independents. It's going to be
00:11:42
Speaker
a lot of my adrenal seats. I think there's going to be fewer and fewer safe seats in the country as well, which is a good thing for democracy, which is a good thing for getting people's voices ah across. So it would be a really good time for um some messaging to really get across and people to talk about that. Those are numbers of people that craft breweries employ, the the close relationship they have with agriculture and all those kinds of things. The fact that it is manufacturing, modern manufacturing in a country that used to be very good at manufacturing and where a lot of that has disappeared. Like these are all important things that I think it's a really great story to tell. It it just needs to happen.
00:12:19
Speaker
Well, I think that conversation is happening on certain stories that we publish, for example, paul the story with Kaiju coming out of an administration with the founders still in control. Obviously, all those stories lead to a bit of sort of, I guess, similar debates in comments on Facebook or Instagram. And ah and this is yeah part of it was tired to oh the taxpayers paying the bill, well you know, if they if they're going to pay 15 cents on the dollar to the ATO, what happened? It's like, well, you can't sort of sort of be upset about that at the same time, upset that the excise tax is so high. And I think what you often find as those dot conversations go in the comments is people jumping in going, well, if you care, then, you know, this is what you can do. And so, you know, consumers having that awareness that, okay, it isn't necessarily, you know, brewers or pubs or whatever trying to rip people off, they're dealing with
00:13:08
Speaker
this very challenging situation and if you care enough to read about stuff and to comment online or whatever, then perhaps you can be part of, you know, petitioning the change. Yeah, and the IBA, whenever they share a story like this, there's a lot of people jumping in the comments saying, what do we do? How do we help? um Hawkers but last year, they also pushed people. We'll put how you can get involved with the IBA stuff in the show notes.
00:13:32
Speaker
But yeah, people are jumping up and down to do it and I think it's a really good thing. It's just about um making sure there's some kind of momentum about it. Again, who knows when the election will be. If it's the increase rate interest rates go down, it could be quite soon because Labor Party might take the opportunity while things are looking a bit better.
00:13:50
Speaker
It has to be May or before, so it um hopefully something happens quite soon. And I think, you know, these sort of and discussions have been happening. we've We've run stories two years ago with, you know, Hawker's talking about, you know, the increased costs of goods and tax and, you know, reduced profitability. And around about the same time, Way would put out their recession ale, which, you know, listed so some of the key inputs and highlighted how much they were paying in tax on their beer.
00:14:15
Speaker
And I think, you know, it was sort of happening every now and now it's, it is happening more and more people are putting out that same messaging and sort of singing from the same hymn sheet. And I do think, um you know, but much as we operate in the sort of more in this of the craft beer, so the indie sector, the fact that bigger pub, you know, publicans, you know, are getting on board.
00:14:33
Speaker
and sort of sharing the same messaging saying yeah it's getting really hard. yeah I mean there's there's a great line from Maz and sort of later on in the show the main interview where he talks about you know you know they're almost trying to destroy or part of what makes Australia an Australian Australian.
00:14:49
Speaker
you know take take away this this whole thing that has been very central to the I guess the the you know modern Australian psyche and and and you know society but um yeah it's definitely you know long story short it's really interesting to see how much is happening, you know, yeah you know we know the excise taxes are going to come around twice a year and it is noticeably much more of a discussion point now, much more. easier And while the most recent, I guess, responses from the ACCC and Jim Chalmers seem to be going in one direction, you know, I guess that might even help the IBA and the industry in its cause to be able to say, hey, look, this is what we're up against. Yeah, yeah, absolutely. I think so. Yeah, for sure.
00:15:33
Speaker
um I guess other news before we get to Mazin. just quickly another story um that we ran on the site this week. Interesting, Tiny Mountain will soon be back, which is Townsville Brewery that was started by Lion that they looked to get rid of along with a lot of their other sort of smaller breweries over the last few years.
00:15:55
Speaker
They sold it, it's been bought by the Catazina group, I believe is how you pronounce it, who also own Valley Hops in Fort Jude Valley. Yeah, but so they've bunched, they had a bunch of the hospital venues, but yeah, Valley Hops was their first brewery venture, um which I think has been going well for them. um Yeah, I mean, so Tiny Mountain wasn't even open too long ago, but you know, Lion did go through a phase with their Bevy Brewing in WA, and w a um they're involved with obviously getting Humundi Brewery off the ground, they they sort of relaunched the mulch shovel brewers idea from camp and i know all of those have sort of been um you know sold off or or closed or you know with the bevy brewing venues now a little creatures venue um but yeah the the new team have gone in they've sort of refered the place they're going to keep a lot of things the same they've still got their head brewer that was there before they've expanded capacity um and yeah just
00:16:46
Speaker
I guess it's another example of yes there are closer there's are changes but there are people who still see you know a future or still see you know opportunity out there to to bring small-scale local brewing to parts of the country. Yeah the fact that they've looked at the Catasina group have looked at it and gone this was already a popular venue and and why I did say that at the time it was more that there the sort of beer they wanted to be the flagship and a regional player didn't really take off. yeah um The fact that the new owners have looked at it they've said it's a popular hospitality venue it was at work and we're actually expanding that side of it I think tells you a lot about where the industry is tracking as well, that that people do love drinking in breweries. There's still a lot of opportunity there and there's still a lot of excitement there and and sort of businesses that can work around that as well. Yeah, yeah. yeah And I think something else I've mentioned since the start of the year, which hopefully is a bit of a positive, is that we've actually added a number of new listings to our brewery and venue directory, um which is is always great. and
00:17:49
Speaker
So we'll include the show nights from these, but like Sealegg Brewing, they're approaching their sixth birthday. They rebranded the end and of last year. um Brisbane Brewery at Kangaroo Point near the Brisbane River.
Industry Growth and New Ventures
00:17:58
Speaker
um The new, I guess, venture from Brewski and the alfred Alfred Street Bar and Bottalo, or part of their my beer dealer group. We posted about that on social the other day and people who've been in there are like, it is just like like a great evolution of what Brewski was already such a popular place.
00:18:14
Speaker
We've got Depot Brewing in um Sydney, and coming onto the site soon, Broken Bay Brewing, another one up in the Northern Beaches. Obviously, Bendigo Brewing, we talked about the other day you went to visit recently. and So, I mean, yeah, with the previous couple of years, we've been sort of potentially lose it losing, you know, business for understandable reasons for people, you know, either reassessing their, the way they spend their money or just you know shutting down changing ownership. So it's been nice to have that that that sort of happening at the start of the year. um Long may it continue. Yes, yes, hopefully. Yeah.
Insights from Mazin on Mergers and Tax Issues
00:18:47
Speaker
And and I guess onto this week's guest, one of the um
00:18:53
Speaker
uh unsurprisingly one of the more sort of uh i guess broad ranging and an interesting conversation i think we probably asked about four questions over the space of an hour and just let the man roll uh we we could have left the room at a few times potentially but yeah uh obviously we've alluded to him he's in the show title but yeah maz and jah great to have a lot of So obviously there's a huge movement in the Hawker's business out there. Merger's White Bay to form the Social Drinks Group but it's also their 10 year anniversary. Well that was originally when we approached Mazin last year. and Oh your 10th birthday's coming up where you come on the show and then it became a discussion about the merger which which is at the start of the show and then obviously even before this sort of latest I guess
00:19:37
Speaker
turns in the the wider excise tax and sort of see the S kind of issues recently. We were discussing all that with him when he came into the studio a few days ago and he's yeah he's always been very outspoken, very strong on these topics and he is there. um if youre If you're interested in that stuff, jump to the second half of the yeah second half of the chat after the break we were you know we we certainly um when we were looking for the the reels to you know the the cuts to put out on reels on instagram and tick tock it's like you get to the end of the show it's like my god you could use every every single part of what he's saying here ah he really sort of you know builds to a crescendo um and in between the two parts of the chat with Mazin we'll also be hearing again from Steve Hendo Henderson and his rockstar brewing academy some examples of how they're helping brewers save time and make money through
00:20:23
Speaker
more efficient brewing um but yeah yeah um ah we wouldn't normally shout out jobs on the podcast as well you're not always fun on the craft about job board though but he's uh hiring for brownstone microbrewery again at the moment i love everything about that it's a tiny little brew pub in uh melbourne's out of southeast near danny nong it's a actually i've never heard of the suburb and don't know how to pronounce it so i won't try but it's sort of this great opportunity where it's not really a full-time job, but you you sort of get to be trained under Hendo as well. And a lot of um really experienced brewers now and have come through that brewery owners as well. So yeah it's been a pretty handy little conveyor belt for the for the industry for sure. Yeah. um So yeah, so a bit of an extended intro this week. We have plenty to talk about. As we've said, and there may be an update on the ACCC side of things, but either time you you watch or listen to this, if so, we'll include something in the show notes so you get the latest. Yeah, well, enjoy the chat and also make sure you like and subscribe. Cheers.
00:21:30
Speaker
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00:21:50
Speaker
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00:22:15
Speaker
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00:22:29
Speaker
Mazen, thank you for joining us. Thank you for having me. Now, I guess before we get to the 10 years of Hawkers and the Mazzen story, which I guess was our plan when we first invited you on the show a few months ago, I guess we should talk about the big news, the merger. Do you want to tell us how and why that's all come about?
00:22:49
Speaker
ah That is actually a very good question. I guess just just to summarize, people who might have seen it, we will include this in the show notes, you ah basically merged hawkers with White Bay in sydney um and yourself and the founders of White Bay are going to take a step back and you CEO coming in and yeah, I guess sort of, yeah, how and why has that all happened.
00:23:09
Speaker
that No one starts a brewery thinking, when we mature, we're going to merge and create this bigger drinks company. But it's the nature of the landscape in Australian beer over the last 10 years and how the goalposts have continuously changed um due to external factors, primarily government policy, COVID,
00:23:32
Speaker
um floods, bushfires, all these kinds of international wars, international wars, Ukraine specifically driving prices up off grain, shipping, all these, all these kinds of things. um And an ever changing environment where the goalposts keep shifting. The question then beckons. Well, what do you do? How do you, how do you remain independent first?
00:24:00
Speaker
um and and how do you transform your business back to sustainability. So for the first eight years of Hawker's life, it was a very profitable venture. um and then post COVID with the rises and exiles, the stupidity of CDS, container deposit schemes for anyone playing at home. um and And just the the sheer crunch on the consumer purchasing power meant that it's it's become challenging. I mean, over the last two years, we've lost, I think, 175 breweries of quietly shut down, 50 have gone into administration or the likes. So the question amongst the brewers is, it's a circle of what do we do? um And one of the interesting things that came out of COVID is this new focus on parochialism, local, is is way more important.
00:24:57
Speaker
and And me and Adam and me and Tim as well, we've been friends for a long time, especially me and Adam. We have a lot of respect for what each of us has done. I mean, Adam has a long history in beer as well.
00:25:11
Speaker
um And we were just having a chat one day and just it just made sense. It made sense that we would combine, the two companies combined are complimenting portfolios of beer and are complimenting skills and
Challenges of Voluntary Administration
00:25:28
Speaker
what we bring to the table are very complimenting. It took a while because as everyone knows, we went through voluntary administration so we had to clear that mess up and and really come out the other end before we could do something sustainable. And just on that note as well I remember talking to you around about the time the hawkers went through VA and then came out the other side and you were very clear that that wasn't like the silver bullet and you know it was something that you sort of had been forced into for various reasons mainly this trying to negotiate with the ATO but that
00:26:02
Speaker
it wasn't necessarily going to make things easier. I think some people think that when businesses go through VA, it's like, okay, clean slate, start again. But obviously that was, you know, it it does fix certain things, but you were you were still in ah in a situation that's led to this. You know, it wasn't like, okay, everything's hunky-dory again. I know how sort of yeahve stressed you've been at times since then and and looking for, I guess, a solution that was more sustainable. It actually VA makes things much worse on many fronts.
00:26:32
Speaker
So the fact that you know you've been trading with suppliers for eight, nine, 10 years, and you go into VA through basically no fault of your own ah many times. not them not i'm general I'm not generalizing for old brewers, but a lot of brewers end up in VA because the environment is so dramatically changed in the last two years. i mean The pattern of voluntary administrations in beer is an indication that there is something structurally wrong with where the market is today. You can't dismiss someone mismanaging or being an idiot or taking bad business decisions when it's this vast number of people struggling in the industry. And VA is not a silver bullet. It does wipe away a lot of your debt, but it creates a new hurdle and a new problem
00:27:25
Speaker
vis-a-vis the suppliers who all of a sudden can't get insurance on their trade debt that they're giving you because you've been in administration. So a lot of your trading terms move to either cash on on delivery or prepayments or and you slowly begin to build up that credit again. um Luckily we've now rebuilt credit with 99% of our suppliers.
00:27:52
Speaker
ah But the first hit is you know normally you would buy malt and bulk. We buy 27 tons of malt at any one time, which is a lot of malt for anyone playing at home. But that's how we drive our costs down right by having one big delivery in bulk into silo malt.
00:28:11
Speaker
small bags as and when we need them. So because we buy in bulk, we have long trading terms, so we pay 60, 90, 120 days sometimes, which means that malt can sit in our silo, will produce the beer, which would take two weeks to ferment, another week to ship it out into the market, and then maybe two, three weeks to sell that beer if it's a limited release and to get rid of it, or if it's a core range beer, it'll sit in warehouses for for a bit longer than that, sometimes much longer than that. And so that's money that we could pay 90 days or 120 days later, which now we have to pay upfront. And we're not going to collect that market from that money from the market in the opposite way.
00:29:05
Speaker
so we used to Buy the ingredients, make the beer, collect the money, pay the suppliers. Now we have to pay in advance. So yes, VA is not a silver bullet. People think, oh yeah, you're working away your debt. You're kind of screwing over the suppliers.
00:29:23
Speaker
It's very funny when people don't understand the VA process. They can almost be more royal than the royalists, right? Everyone's so anxious about defending the suppliers. We've worked with these suppliers for 10 years. We've had a very open conversation with them about it. The suppliers in the VA process are the ones who actually vote whether to shut you down or or allow you to come back. The VA process takes the control away from management, away from the shareholders.
00:29:52
Speaker
and puts it in the hands of the creditor of the administrator whose sole task is to ensure the best outcome for the suppliers and the creditors. And then once they propose a plan, the deed of company arrangement, if they get to that point where they they discover that there has not been insolvent trading and there's nothing fishy going around and the business is viable, they will put that plan to the creditors who then vote to allow the company back to trading or not. yeah And a lot of the times during that process, like at Hawker's, the company was put up for sale to see if they get any offers.
00:30:31
Speaker
that will give a better return to the creditors, not the shareholders. So when you hand over the keys to the administrator, you effectively are out of control. There's a risk that one, they might find that you've been trading insolvent and shut you down, or that you don't have a viable business and shut you down, or that you have a viable business and someone on the outside is willing to pay a little bit more than you can afford and the creditors will have a better outcome. And certainly we've seen some cases which have gone in that direction rather than going every direction at this point. Correct. Because companies that enter VA have a variety of reasons they enter VA. Some are badly managed, some are just Ponzi schemes and some are
00:31:19
Speaker
managed really well but the environment and the goals have shifted so much that it's become impossible to surface the problems that they have. yeah And having made it out the other side and then had these long conversations with ATS and and Tim at White Bay and for the merger you said before about how you sort of going to bring together the the complementary parts of the business. I guess that's what people on the outside are Keen to see what that means, you know, sort of, do you obviously you're going to be so taking a bit of a backseat the new CEO judge coming in but you know, you must have had some long discussions about what that actually means I mean, can you give us some sort of practical examples about how you say that sort of physically like logistically working for the two businesses.
Post-Merger Strategies and Brand Identity
00:31:59
Speaker
So, we have.
00:32:01
Speaker
ah As a lot of people know, the Hawker's Brewery is capable of producing seven million litres of beer. Last year we produced three and a half million litres of beer. Probably the vast majority of the revenue is coming from the Hawker's brand, right?
00:32:19
Speaker
And we have, White Bay have a brewery in in Sydney that's capable of producing 2 million litres of beer. Funnily enough, they have 20-21 tanks, something like that, 22 tanks. We have 20-21 tanks too. The difference is our smallest tank is bigger than their biggest tank. So in terms of what we can produce,
00:32:41
Speaker
Our minimum batch sizes for our internal consumption were 4,000 liters. Whereas the minimum batch size that we can do at White Bay is 1,800 liters. So all of a sudden we can produce a range of beers.
00:32:56
Speaker
and have a lot of tanks that we can hold beers in for a longer period. can That's why White Bay, for example, does amazing lagers because they really lager their beers away in tank. you know Their Pilsner is held in tank for three months. like We couldn't afford to do that at Walker's.
00:33:13
Speaker
um So there's there's a range of complementary abilities in terms of size and breweries. um We can produce beers very efficiently and of very high quality at Hawkers while keeping the costs down because we produce en masse. White Bay can't do that because it's a much more smaller scale brewery.
00:33:39
Speaker
Um, the, the synergies extend even further. I mean, you know, hawkers is a, is a, is a rather established brand in Victoria. It's so it's one of the. I don't want to say dominant because that sounds a bit condescending and and arrogant, but it's it's one of the essential brands of Victoria. And it's got national distribution, whereas White Bay is a new brand that has a lot of headroom that they can grow into. um They are still at the infancy stage of the the brand launch, so you know they can benefit a lot from the Hawker's network.
00:34:19
Speaker
by just sticking the White Bay brand on, we're able to very quickly double if not triple the White Bay volume through the Hawkers network. They have no presence in Victoria, so imagine if we're able to just stick that down there. You know, then comes the back end of things, so being able to process
00:34:41
Speaker
payments, invoices, statements, logistics, um all of these things on the back end, jump onto our distribution, make it more efficient, jump onto their distribution, make it more efficient.
00:34:55
Speaker
There's just a lot of synergy. Do you think it's important to keep them distinct to a degree as well? Like I imagine a problem is sort of, you know, if you have a lot of, I know White Bay focus on lagers and you you might do more with hop forward business or something like that, but you still have to, how do you know what to sell and where and how do you make sure you're building both brands, I guess, rather than cannibalizing?
00:35:18
Speaker
them, which arguably is what potentially happened to say Mighty Craft or someone like that. Yeah, I say i think that the the Mighty Craft model for me from day one, I think one of the earlier conversations that we had was I couldn't really understand what they were trying to do. The Mighty Craft model just seemed Driven by a lot of people that were experienced in big beer and they picked up small regional unknown brands and they tried to push them onto the national front without really building the the underlying equity of the brand.
00:35:52
Speaker
um That's not what we're trying to do at hawker at Hawkers and Whiteway, at Social Drinks, such I say. I need to get over that. I need to remember this is Social Drinks now. um So what we're trying to do at Social Drinks is definitely maintain the independence and the and the identity of each brand, also recognizing the parochialism.
00:36:12
Speaker
Right. So now we have a New South Wales focus and a Victorian focus without them being competing with each other. They're complementing each other. Right. So we can, we can collab with a pub group in Victoria now for the first time, because we can produce 1800 litres of beer. yeah And and um the guys at White Bay can produce kegs at a much more efficient price if we wanted to. But that doesn't eat into the separate identities of each. um they'll They'll be run separately. They'll have their own brewing teams individually. The sales teams will be unified. And the question of what do we sell and to which place?
00:36:55
Speaker
I don't think it really matters. What matters is we need to change the mindset a bit of how we approach our venue and our retail customers in the sense that we need to figure out how it's a win-win. We need to identify what is the business issue that we are tackling and what is the best beer and best tool to tackle that. So it may be we are in a venue in Sydney that has enough beers from from New South Wales and hawkers might be the best beer to sell into that venue or we might be in a venue that already has hawkers on and a whiteberry beer might be the best beer to sell on that.
00:37:39
Speaker
um Both you and ATS taught when I spoke to you and on the day of this day the merger was announced about the potential for more and brands but to join the join social drinks, maybe within B and&A, maybe without. You talked about prokinism being important.
00:37:56
Speaker
could you see, you know, part of the discussion sort of focused on the approach that CB Asahi, whether delivery or not, took and sort of, you know, ring of brands around the country, you know, with, you know, looking for a Queensland brewery potentially, or a WA brewery, is is that part of the mindset? Or is it more a case of who's interested? That is absolutely part of the mindset. I mean, there is a realization that, first of all, we need to respond to the big multinationals.
00:38:23
Speaker
And and and beer local independent beer is struggling to find an answer to that right and and so this is a kind of a collaborative model this is a genuine full merger. Both shareholders now own both companies completely so it's not.
Global Strategies vs. Australian Beer Industry
00:38:44
Speaker
half split or it's a... And was that always the plan or did that sort of evolve over time because you know I know the conversations you were saying when we spoke that went on a long time because it does feel like more of a merge than any of the other sort of consolidations or collaborations we've we've seen in recent years. it It developed into that. Yeah. The the original conversation started off with How can we keep doing what we do, but somehow strengthen our position in the market? And the only way you could strengthen your position is somehow to reduce your cost, which in this market is extremely difficult when everything's going up. And there's a misconception that to you know if interest rates come down, then prices will come down. The reality is,
00:39:30
Speaker
This is the new price. And we all must accept that our purchasing power is vastly diminished and will be diminished for the foreseeable future until we see real income growth again. I mean, I don't blame people when they go and buy beer from the discount bin at Dan Murphy's because they've got to pay rent. It's very difficult for someone whose rent has gone up exponentially over the last few years, to go and justify 20, $30 more to support independence sometimes. It's difficult. That's the reality of where it's not they don't want to, it's they can't.
00:40:09
Speaker
I mean, during COVID, you could put out a stupid beer at any price and people were happy because they were getting paid and sitting at home and had nothing to spend on. The glory days of COVID. The glory days of COVID, good Lord. They never come back. So in a space where it's difficult to sell more,
00:40:29
Speaker
And it's difficult to control your costs. So the one way to control your costs, like we said, this is to increase your volume, increase your efficiency. And the way to sell more is to jump onto new distribution points. So jump, White Bay jumping on the Hoecker's distribution point and Victoria will immediately increase the volume of White Bay. Hoecker's jumping on the White Bay will increase the volume. So That is how the model came about into a full merger. And we are looking at other potential partners that will come into this venture, but not also, not purely beer. This could very much become a multi-bev company.
00:41:08
Speaker
um Did I get into business? Did I get into the beer world in 2014 when we first talked in that, um in the Lindrum hotel when you brought me that oyster stuff. That is a fucking beer. but When we were sitting there, was that my dream to ultimately end up in in a multi-bev national beer national drink company? Probably not. But the I'm still very passionate about beer and I'm just not willing to give up the fight this easily to the big multinationals. You feel like you're sort of a bit sort of reinvigorated. um yeah you but I've spoken to you a few times, I'm like,
00:41:53
Speaker
God, the guy just sounds drained, you know, and and done with it. But you seem sort of reinvigorated by what's happened. And I guess I wonder, do you feel sort of of maybe a new excitement and or pressure? Because there's going to be a lot of other people out there now looking at social drinks and going, OK, how are they going to do this? Is this a viable option for us, whether it's?
00:42:13
Speaker
you know having a conversation with yourself or with Judd or whether it's then accelerating conversations they might already be having with other breweries that is like, are you now the new case study, the new test you know for people out there that might have looked at Mighty Craft or other other you know local drinks collective and gone, okay, if these guys can make it work, maybe this is something we look at. I think i think the problem is um we we shouldn't be meopic. You know, you bring up, there's always a tendency in Australia, we live in our own little bubble, right? And we but we all revert back to the same experiences that were either successful or unsuccessful in our own little market. And we need to see what's happening globally. um So this model's already proven very successful um when Canarchy came together.
00:43:01
Speaker
Eventually, Canarchy got sold to Monster, but that's for a different reason in the way they structured their that shareholding. But the purpose of the business plan in the beginning was to strengthen the individual breweries worked very well. um They failed in the way they structured their shareholding because they gave preferential shares to private equity funds that came in and yada, yada, yada. So we took A lot of that operating model from there and wrote it back here, avoiding the pitfalls of bringing private equity. There's no new private equity into this company. This is basically up the last captive race we did was internally from the existing shareholders and a few friends and family that we know. Is this the new model?
Survival and Future Plans for Mid-Sized Breweries
00:43:51
Speaker
I think
00:43:53
Speaker
There are very few breweries that will be able to survive the next period if they don't seriously think about it. Of a certain size, I guess. I mean, yeah, so brew pub operations. Correct. If you're a brew pub, you're not paying tax, you don't really, you don't, CVS doesn't affect you, excise doesn't affect you. So when you're talking breweries, you're talking those that are above the excise, you know, they're selling regionally away. Yeah. Anyone, anyone who, I mean, you need to think if you're selling 150,000 litres of beer a year, you basically pay zero excess.
00:44:24
Speaker
So even if you sell 300,000 litres of beer a year, you're paying half the excise bill. When you consider that's 55, 60% of your total cost of a brewery our size, then you know if you're down to zero, you're already at a price advantage to what we are able to produce. It's so bizarre, it's so skewed and it's so screwed that the Australian system, ah tax system means that the bigger you get,
00:44:53
Speaker
the less efficient you become because you suddenly have to pay stupid tax, it's it just doesn't make sense. So the the system is is skewed to protect the big guys and nothing in between. So that that that valley between the where you can survive as a brew pub and where you're actually viable as a big brewery,
00:45:16
Speaker
It's become so huge. And, um you know, what about you personally, Mazin? What's next? You go too much into your personal life, but what's the what's the plan for the future? Because it has been, as you said, like a stressful...
00:45:30
Speaker
several years, five years or however many years we're into this now. It has been quite stressful. um Look, i for the last 10 years, I can't remember a single time taking any vacation time off. I've been traveling to see my son, which anyone who has a 10-year-old will know. And prior to that, before 10-year-old, it was a full-time job, even more more than running a brewery, just running behind a child. What I'd like to do is I'd like to we' so I'm stepping back from the day-to-day management, but I'm not stepping back from the company. So I'll still sit on the board of directors. um I will be involved a bit and in supporting the new CEO in terms of operations.
00:46:16
Speaker
I'll still be here for events. I'm still an Australian citizen. You can't get rid of me that easily. Deportation is not an option. Even if Trump was to be voted in Australia, he still couldn't deport me. So that's a good thing, I guess.
00:46:31
Speaker
um but But I want to take just a bit of time to breathe and then decide what's next for Mazen. Still, Hawkers and White Bay and social drinks will be a very big part of my life. I'm very excited um to now have another baby called White Bay, not just Hawkers.
00:46:56
Speaker
um I don't know, it's it's it's weird because it's been so stressful for so long. Having a partner in crime which is White Bay has says kind of lifted the weight of my shoulders. I no longer have to carry that weight alone and I think it's the same on the other side as well.
00:47:17
Speaker
um and And for once I'm excited about the business. I'm thinking about really cool ideas. Look for us at Gabs this year. You know, I'm um one of those people that never got excited by Gabs because I thought it was too commercialized. And then we've come up with a really cool concept for Gabs. I'm revitalized, but I do want to take some time to have a think about what I want to do.
00:47:45
Speaker
And do you see a medium to long term future of Mazin in Australia? I mean, um I would have spoken to you very early on back in the the hotel when when you were first discussing the ideas for Hawkers. You know, do you see that was what, 11 years ago now? yeah um Or do you think that the next big adventure, while why you're still maintaining interest in social drinks and Hawkers and White Bay, do you think the next big adventure may take you ah elsewhere again? Look, I um I keep telling people, and this is genuine, I'm a very proud Australian. I love this country. I specifically love Melbourne. um this I feel genuinely at home here. Whenever the plane is landing into Melbourne airport, I feel this sense of relief that i've I'm coming back home. This is all. So Australia will always be a big part of me.
00:48:39
Speaker
I need to be a bit closer to my son who's now 11 and he's he's he maturing to be a very fine young man. I would like to spend more time with my son and with my mom who was seen the last 11 years away from her son. But that doesn't take away from my passion for Australia. um I don't know what the next part is, but definitely Australia will be a part of that. Global global citizen, Mazin. Global citizen. Now, proudly Lebanese, proudly Australian, not only to be a citizen of everywhere. I'm very proud of my Lebanese heritage and I'm very proud of my Australian citizenship.
00:49:22
Speaker
Um, I, I consider myself to be a Lebanese Australian and I love this place. Like I was having conversations with people back home, just being able to jump on my bicycle and, and ride the many, uh, cycling routes around Melbourne is just, it, it gives you so much energy. It gives me so much energy.
00:49:42
Speaker
Yeah well as you're about to take your breather and maybe we'll take a quick breather now and then we we'll come back for a chat about the 10-year anniversary of Hawkers and looking back you know the highlights of that decade as well so see you after the break. Cheers!
00:50:01
Speaker
Hey guys, we're back with Hendo who runs the Rockstar Brewer Academy. Guys, as many of you would know after years of honing his skills and expertise with many of Australia's leading craft breweries, Hendo is now helping brewers all over the world ah improve their skills, save time and money. Brew better be with Rockstar Brewer Academy. Mate, welcome back. Thank you for joining us yet again. It's good to see you, Craig. How you doing, mate?
00:50:25
Speaker
Very good, mate. Now, um today we we touched on last week a little bit about ah just how people how the system works and people get started, but I want to get a little bit more into the detail. Describe that journey of a brewer. You know, they've had that call with you. They feel they're a good fit. They want to improve. They want to save time and money and so on. um what What does that journey look like ah through the academy?
00:50:49
Speaker
Yeah so probably a good story is um to talk about Brinton from Kickback Brewing down in Aldinga in South Australia. So Brinton approached me when he was building his brewery so he had just ordered his stainless steel and was waiting for the fabricators in China to put his brewery plant equipment together And we started working with each other. We put him through Beer Quality Bootcamp, which is my foundation beer quality and consistency program. And he basically was doing pilot brewing at the time. We worked on things like water chemistry, defining quality, CIP, consistent brewing, carbonation, dissolved oxygen, packaging, all that sort of thing.
00:51:34
Speaker
And he was he went through that program and then he kind of disappeared when his brewing equipment arrived and he went and commissioned his brewery. And then a few weeks later he reached out via the community and he said, um I've got a problem. I said, what's the problem? He goes, I've run out of beer. And I'm like, well, that's a pretty good problem to have, mate.
00:51:54
Speaker
And he said, with a few swear words involved, he said, no, no, I need to put money in the till. And I'm like, OK, what's the problem? And it turns out that the problem that he had was his lager, which is which Munich Helles was his biggest selling beer. And it was taking six to eight weeks of residence time. Right. So he couldn't produce the beer fast enough with the number of tanks that he had.
00:52:17
Speaker
So we worked with each other and we turned out turned out there was a really simple fix just around water chemistry um and a little bit with fermentation. And we have now pretty much shortened that that residence time up to about three to four weeks. You'll have to ask him for the exact number. um And basically that got the ball rolling. In addition to that, but you know,
00:52:42
Speaker
Brenton works really hard on his beer quality all the time and he's won many awards at the AIBAs, at the Royal Adelaide Beer Insider Awards. I think the first time that he entered the AIBAs, he entered 10 beers and he got two gold, seven silver and one bronze.
00:53:01
Speaker
so that just goes to show that the the sort of the the outcomes that we achieve at the Rockstar Brewer Academy. It's fascinating because I think you know a lot of brewers in that same situation, their first response might be, we need to go out and buy another $15,000 fermentation tank or something like that. but just with those simple steps, you're able to you know use what they've got to solve a problem. So someone's come through the program, they've they're a graduate of the Rockstar Brewer Academy. what What does success look like at the end of that journey? Yeah, so success for for a member of the Rockstar Brewer Academy. So the the thing that I need to stress is there's not a course and there are no graduates. okay it's it it's it's a membership It's a membership community, basically, where
00:53:48
Speaker
we're always I'm always putting new um new knowledge into the into the program. It's constantly growing and we're constantly helping each other wherever each individual brewer happens to be you know during their professional brewing journey. What does success look like? Great question.
00:54:05
Speaker
um I would say that success would be, I would say someone like Chris De La Rue down at Eclectic Brewing in South Australia. He's done an amazing job. He's a home brewer turned pro brewer.
00:54:19
Speaker
and he won, he was within two months of joining the Rockstar Brewer Academy. um He had won one or two trophies at the Royal Adelaide Beer and Cider Awards. He's just sent me some beers last week and they are phenomenal. And he's this tiny little brewery and he's maxed out his sales and he can't make any more.
00:54:46
Speaker
he's He's making as much beer as he can, as best as he can, as efficiently as he can, whilst applying all that passion that that he's got within him. It's really cool to watch.
00:54:58
Speaker
living the dream right there Hendo I love it and um so guys yeah there you have it if you want to brew better beer do book in for a free 15 minute calibration call with Hendo it's not a sales thing it's more just to see if you're a good fit together and what the opportunities might be so visit rockstarbrewer.com forward slash Calibration, pick a time that works best for you. Hendo, I'm sure you'll look forward to talking to many new bros. Sure do. And look forward to meeting you. Cheers, guys. See you next time, Hendo. Cheers, mate.
Celebrating Hawkers' Milestones and Success
00:55:35
Speaker
So, Mazzen, 10 years of Hawkers. Tell us a little bit about how how you're celebrating it. 10 years of Hawkers, my God. The bus, just like that, with a wink of an eye.
00:55:48
Speaker
um Yeah, well we've got a lot on. um So on the 22nd of February, ah we have a big party at the brewery. It's a collab with a record label that will be bands. Actually, youll people can start to see details of this on our socials. um We've got some special beers coming out.
00:56:14
Speaker
um There's a re-brew of one of our original beers that was very popular. That is not the Cezanne. Not the Cezanne. Which everyone says, ah, you should brew a Cezanne. Every time we make a Cezanne, we can't sell it. so not known but Unfortunately, because I love Cezanne. No, it's not the Cezanne. We'll see one of our original Beers come back. ah We'll see a 10th anniversary special.
00:56:51
Speaker
imperial style, the beer as we tend to do. um We'll see a new take on our favorite beer, which is our West Coast IPA, my favorite beer, which is our West Coast IPA. And the Australian Body Publix favorite beer of yours as well. Well, it's it's it's remarkable because this this beer started off at 96 and then went to McConnel. This year it's number 20.
00:57:17
Speaker
um It's very funny. I was on a bicycle. I don't really follow the popularity vote. I don't really care. It's my favorite beer. And, uh, someone texted me, congratulations. And I'm like, on what they're like 20 should have been higher. And I'm like, 20 white, 20 West coast, 20 West coast white. And they're like, I've been drinking 20 West coast. Yeah. So it's a 7.2% IPA. That's, you know, not, not ah very.
00:57:48
Speaker
common style and for it to be in the top 20s is quite remarkable on its own without any money behind it, without any push and advertising and then marketing. I know a lot of breweries take this very seriously and put a lot of energy into them. We don't, we don't really care. um But you're still happy enough that you broke the top 20. It's, you know what, I keep saying this is my, if I end up on a desert island, this would be my desert island. yeah And I'm genuine about that. It's not because we make it. um This is the beer that I'm most passionate about and the beer that I would drink for the rest of my life happily, not complain. And I say that and it's it's nice to see that other people feel that without being marketed to to feel that.
00:58:37
Speaker
Yeah. And I guess maybe that is your favorite, all the Hawker's beers. But if you would look back over the the first decade of the brewery, any sort of highlight beers, any highlight moments, any moments you look back and go, that's what it was all about. You know, that that that that was really special for me. Yeah, there's there' there's quite a few. I mean, we started our barrel aging program with John Selton, who's now at Brick Lane.
00:59:00
Speaker
um And to see our first beers come out of our barrels was remarkable because I had never personally barrel aged beers. And I always wanted to delve into that. So that was very exciting. um You know, Alex, who is our head brewer, when he came up with ah with the West Coast IPA, it was just an eye opening moment for me. I wish I could claim credit to that beer, but it's all Alex.
00:59:30
Speaker
And he said he uses an atypical hop as well. it's not yeah It doesn't use one of the the big hitters. No, really annoying as well. He uses Southern Cross, which when we first started using the people, it's a New Zealand hop, which for a while was dying off. It's it's it's a bit of a it's not a super pride of of New Zealand because it's not that trashy, but it's it's not a hop that had a cult following and now it seems to have gotten so much following that it's being, more acreage is being put down of Southern Cross. It's not just us that recognize the this this hidden gem. You know, sometimes it's nice to see all the new experimental hops coming out, but to revisit some of the forgotten classics is very interesting. So that that that that was a beautiful moment for us, um for me personally,
01:00:23
Speaker
Art Pilsner is always a beautiful moment for me. As I get older, I drink more and more Pilsners. Not so much lagers, but Pilsners specifically. And I think Art Pilsner is an excellent example of of a German Southpils. It's right on the edge of German and Czech.
01:00:42
Speaker
And you can't really call it either because it has some New Zealand hops as well. But yeah, I'm really passionate about that. Some of the moments, you know, we won a lot of trophies for a lot of other brewers when we were contract, we still contract proof for a lot of brewers. But to see us win champion, large champion Victorian at the ARBAs, that's a special moment.
01:01:05
Speaker
ah For me, those kinds of trophies and medals at the AIBAs and previously the Indies, despite what everyone knows, I disagree with the judging in the Indies and the last year we pulled out of the Indies altogether because I don't agree with the the scoring methodology that they used.
01:01:22
Speaker
um To be recognized like that, those kinds of awards mean more to me than a popularity contest because these are blind tastings by beer judges who are certified to pick out the faults in each beer. You know, our barley wine has won four gold medals four years in a row. So we've had two consistency of excellence awards. Our West Coast IPA has won four out of the last five years a gold medal and one year a silver medal.
01:01:50
Speaker
because someone completely screwed up in the back and sent a 10-month retention case rather than send a fresh case of silver. It's pretty good for a pretty albeit. Yeah, and and to be honest, silver medal for a 10-month-old West Coast IPA is is is is just telling of the quality of of the process that we have at Hawker's. But hopefully,
01:02:15
Speaker
will get that back on onto track. But I mean, four out of five is is not bad. And one of the things that we've enjoyed, I guess, drinking and observing, especially in recent years, has been some of the series you've done, especially around, you know, the seasonal beers where you'll take the, you know, a group of ingredients, hops, malts, whatever, use them in different volumes to make vastly different beers throughout the year. You've done the... The Dora season, personally. The last couple of years have been, yeah, really exciting for me. Yeah. And is that, do they come from you? Do they come from the brewers that, you know, to sort of, you know, let's use different blocks or different times in the, you know, the hop crop season or what have you, the harvest?
01:02:56
Speaker
um that those The experimental series I will claim credit for, for sure, because I grew up in a country which is old world wine producing. And by old world for me, ter I love wine. I'm not just a beer fanatic. I love wine. I love fine wines. And I find a lot of the new world wines are very two-dimensional, one-dimensional even, because they're single grape varietals.
01:03:26
Speaker
doesn't take away from the great wine making skills and traditions that are coming out, but the problem with having you know, a focus on Shiraz or Pinot Gris or Chardonnay or whatever. It seems odd in the old world because that grape will some years be good, some years be bad, and it's about the blending and the multi. It's it's adding layers of complexity and like that. And so you you begin to understand terroir as you grow up in that environment and the impact of the soil and the sun and the rain and all these the farming techniques.
01:04:05
Speaker
And i what I saw in Australia when I came here was that the conversations were more about brands. I love a Mosaic. What do you love about Mosaic? We're not using the right language, the right descriptors. um I find it much more useful to use palette descriptors. I love grapefruit, pine, tropical, mango, whatever in the flavor descriptors rather than use brand names that don't mean anything.
01:04:33
Speaker
so The experimental series originated from the fact that I wanted to actually push the consumer's education about these things away from, you know, we we did an early harvest versus a late harvest from the same hop in the same plot in the same farm to show the difference that even the window of harvest in the year will affect the flavor of what you get in the hops.
01:05:00
Speaker
um We did an experimental series where we took the same hop from the same country, three different farms in three different states. We could have taken three different plots in the same farm and probably had a similar result, just to show people that, you know, you love Citra, what's Citra? What are you talking about? Use proper language. yeah And I suppose that also shows the skill in brewers when there can be such variation in the same hop from the same grower in the same season.
01:05:30
Speaker
But if it's picked at different times or in different crops, in different lots, or it could be vastly different. So to produce the same core range beer consistently. Yeah, exactly.
01:05:42
Speaker
yeah exactly And that's the biggest challenge, right? and In wine making, you have one big harvest, you juice, ferment, age in battles, and that's it. In beer, you produce the beer time and time again, but we have we still have one harvest. So we're still picking the grain at the beginning, picking the hops at the beginning and we're storing them and they age and their characteristics change and we're using um different terroirs. When we talk about Pale malt, from which farm? Who was the maltster? What batch was it? Because these are not uniform things, not one juicing. And then you know exactly what you're going to get, and it ages away. It's not the same grape. It's a continuously adjusted recipe to maintain that flavor profile. So there's a lot of credit to the brewers at Walker's. The team there are just remarkable. They have a great sensory panel.
01:06:38
Speaker
And it's, to your point, it's it's so much more difficult to make a core range beer that tastes consistently the same than it is to constantly keep coming up with new beers. Because really, if you're coming up with new beers, there's no benchmark.
01:06:54
Speaker
There's no skill set to demonstrate your ability to produce time and time again. The beer might be great, but it's show me that beer again and again and again and again and show me that beer after 10 months when it's aged and it's still able to walk away with a silver medal.
01:07:13
Speaker
Now, we know you've been sort of very outspoken on a number of issues issues over the years, and we've already touched upon excise tax earlier, and we'll come to some of those in a bit, but I guess if we're talking about the 10 years of hawkers, and I guess with a pretty big new chapter ahead for you, if you were to step back sort of you know and look at hawkers from the outside, you know what would you like to think, what would you say would be the impact that hawkers or Mazin has made in you know in the 10 years, up until this big change with the merger recently?
01:07:43
Speaker
It's it's. Yeah, that's a trap, isn't it? No, no, no, no, it's a it's a because because it's it's. It's very tempting to look back. When we started our conversations in 2000, even before, was it 2014? I think I thirteen first interviewed interviewed you when you came over with 961. Yeah. um Just, we were at Rumi and we had a chat for about 45 minutes. I ended up with a 2000 word article out of it about, you know, starting airlines and being a war reporter. It's just like, who is this guy? And then next, probably not long after that, I guess you came back and yeah we did meet up and you know we went out for
01:08:25
Speaker
I went out for dinner and you were like, here's my idea for Australia. I'm like, sounds great. Just come and do it. Don't come and tell people what you're going to do. it Yeah. and and And the conversation at the time was after being out to Australia multiple times, it just struck me how inconsistent the beer quality was at that time. um You would have a great beer from brewery and come back a few days later, have another one and it would gush out of the bottle.
01:08:53
Speaker
Back then we were still drinking out of bottles. Imagine that. um Well, I think there was there was that part of the discussion and also maybe sort of the the the network, the distribution that smaller brewers had as well, like, you know, the scale and and I guess the approach they were taking to accessing the market. That was the thing that really stuck to me. It struck me about what you talked about early on going. I envisaged that it needs to be more like this, like there has to be a grander ambition or a bigger scale to how you. I remember one of one of the breweries that was the incubator for maybe 10 other brands that came about later when they all split up. There was one tiny little brewery that couldn't produce a million liters altogether if they tried. And I was like, there's no way that it would this industry is ever going to survive and mature without proper quality controls, without people knowing what they're doing, without a professionalism. there's ah There's a lot of passion in beer, which sometimes can overshadow the
01:09:48
Speaker
we are dealing with a very sensitive product. you know One bacterial cell can can completely screw up a batch. And it struck me how, although it's been around for at that time, what, 15, 20 years, how infant the industry seemed to be. And i want and our conversations where I wanted to come in and and do something very professional. And in retrospect, I mean, I was having a conversation with Jane from Two Birds.
01:10:20
Speaker
few days ago and she said it's remarkable the impact that hawkers had on the industry which at the time also had you know within a week there was pirate life yeah i remember at the time thinking when you launched and pirate life launched within a week or 10 days i think we wrote something at time again it feels like this will be a bit of a seismic moment like to businesses launching so close together, who've got experience overseas and have this bigger picture. And I think whilst they've got in different directions, I think that has proven to be the case. And maybe the industry was already growing fast at that stage, but then it started growing fast in a different way.
01:11:01
Speaker
Yeah, I think, I mean, the biggest debate I had when we started was what size of brew house to have. And the prevailing logic was we should have something that is a thousand liters per batch, 10 heck. And I wanted to do a hundred heck. And finally out of compromises, we ended up at 4,000 liter batches.
01:11:23
Speaker
And the the we rented this massive space in Reservoir, which I didn't know back then was where you either went to get shot or get drugs. um It's now been gentrified and it's now the coolest neighborhood um with all sorts of cool things happening around. But back then, when we first signed the lease, people were like, what the hell are you doing? Who sets up in Reservoir?
01:11:47
Speaker
Uh, and we, we took a 1200 square meter warehouse that people were like, you're mad. What are you going to do with this? Like can have kids play football in here. who Who builds a brewery at that scale? Your smallest batch is 8,000 liters. Our smallest fermenter was 8,000 liters. And it was designed with a side port. So we had to recycle a recirculate, sorry, the hops through it. So we couldn't brew a 4,000 liter of a beer, even though the brew house was 4,000 liters, it had to be 8,000 liters.
01:12:17
Speaker
So literally our pilot system was 8,000 liters. And the you know we started off with four people and the potential to brew, if we had really brewed hard, maybe 600,000 liters a year. We're now 40 people at Hawkers and we do three and a half million liters a year. So in our first year, we did not sell beer south of the river. We didn't cross the river south, the Yarra River.
01:12:47
Speaker
Pilot Life went all ballistic all across the country and they built a brand really quickly and we all know where that ended. um We were focused on community, on really being involved in the community, becoming local to where we are. We came into a city that had a deep food culture, a deep drink culture, lots of breweries around. you know our Our first off-premise sales rep focused for the first three months on just the suburbs around reservoir, Preston and Coburg, nowhere else.
01:13:21
Speaker
And he was only allowed to visit bottle shops. And back then in those areas, and you know, you had you and that many bottle posts there weren't that many bottle shops and the bottle shops that were there were basically, you know, run by immigrants who were probably watching YouTube and watching a Lebanese newscast, not really never heard of k craft beer, didn't really care. They were more interested in selling Jack and Coke than than craft beer. And it's it's very funny. he's He spent a month.
01:13:52
Speaker
Sampling these guys talking to them and he couldn't get a single account and one day he walked into a bottle shop where there was a Chinese guy behind the counter who He walked up to him and he said here's some beers. They're cold. They're fresh um Do you want to give them a crack? And the guy said not come back next week. I'll try them and you can come back next week and and Tony Lost his cool start screaming What the fuck? Try them now. Just fucking try them. They're here. I'm here. Just fucking try them. The guy cracked open a pale ale and ordered four cartons. And that was his first sale. And we quickly moved from one to 150 bottle shops in six months. And that was all Tony's work. There was a big advantage to being the first craft beer in in these bottle shops.
01:14:43
Speaker
Mazen, you've been a pretty outspoken ah critic. That's a very polite way of putting it. A very mouthy person when it comes to the industry and problems within the market and and the challenges. um Do you see a sort of way forward or where what do you think the kind of big issues are and and is there a solution to them?
Advocacy for Excise Reform in Australia
01:15:08
Speaker
There always is a solution when there's a will, there's a way for sure. This isn't rocket science ultimately, right? um The frustration that I have is Australia Part of the DNA of being Australian is being able to go to the pub and share a pint with your mates. and And one of the main reasons that attracted me to move here and become an Australian is this is a country that is all about a fair go for everybody, a fair go for all. And it's, all you know, I was taught the tall puppy syndrome when I came here. um And it seems like
01:15:51
Speaker
We've done everything to cripple the very fabric of what makes an Australian an Australian. The government through this archaic law of excise, which ironically under Bob Hawke became indexed to CPI, it was never indexed to CPI, has led us over the years to become the third highest alcohol tax in the world. And through the years, wine which has been much smarter than beer and more organized in the in the sense of how they lobby the government, have managed to diverge away from this excise law, that which is supposed to be an alcohol tax, and they have the wine equalization tax, which is 80% cheaper than beer. I have never been to a country, including France and Italy, that are big wine producers, where people downgrade from beer to wine.
01:16:45
Speaker
It's always more expensive to buy wine by the very nature of it, right? um This country is crippled in the way politicians handle affairs. You'll talk to governments and they will go, yeah, yeah, we'll look at it, but it's not our fault. It's the last government. Well, someone needs to step up at some point and have the courage to recognize that we are now at a breaking point.
01:17:11
Speaker
We're either going to wipe out all the medium-sized brewers and shrink back to just brew pubs and have two multinationals that don't pay any corporate tax that control the market and bully everyone around. Or we're going to have to structurally do something to improve the environment. The government has indexed excise, which ironically One of the components of the basket of goods where they calculate consumer price index is beverages. So the fact is they're increasing the price of beverages, which then increases inflation on top of it. And bear in mind in this environment, Canada has
01:17:59
Speaker
listed the the minimum lifted the maximum volume you can produce to protect small producers so that you don't pay excise on your first million and a half liters in Canada. I think i think it's a million and a half liters now.
01:18:15
Speaker
In Britain, they halved excise for small producers. In Australia, we moved from $50 per litre of pure alcohol to $52 per litre of pure alcohol from 2016 to July 2022. And then from July 2022, we moved up from $52 to $61.5.
01:18:40
Speaker
And the treasure, we are in a positive budget where we have money. The Australian government spent billions trying to support a ridiculous industry called Dakar industry. We have a viable industry that spreads into agriculture, into hospitality. We're exporting. Hawkers has become the biggest craft beer import into Thailand.
01:19:02
Speaker
But what's happening now is the government not only is killing our exports, it's stifling an industry in its infancy that's finally starting to groom. It's going to affect the agricultural sector around us. They can avoid these things right now because because of the Ukraine war, there's a growing demand for grain and they say, OK, you don't want to use the grain. We can ship it off to.
01:19:24
Speaker
whatever country and and sell it there. But they're killing an industry that has the potential to do something. We can see the impact on tourism in regional areas, the local impact on historical pubs that are going out of business ah because of all this stupidity. So can we do something to fix this? Absolutely. We are doing our best from our end, not counting on the government by doing this merger that we have done.
01:19:53
Speaker
The government needs to step up and tackle excise once and for all. And i it baffles me that they don't understand how popular something like that would be. It's not just popular to the beer industry. It's popular to the venues that can't sell more beer because the pint is going up. The pint is going up. They're killing off all the hospitality venues. And it's popular with the consumers because every time when the when the report is of increasing taxes, people lose their crap because it's part of our DNA to drink beer.
01:20:24
Speaker
If I was Albo and I have an election in a year, the easiest way to win votes is, guys, we're gonna reduce alcohol and beer, tax on beer. And do you know what? If it c creates an imbalance in the budget, then maybe I'm not gonna spend $98 billion dollars on nuclear submarines that we moved from the French and lost 9 billion on the first deal. I mean, the government does so many stupid things. It's penny pinching on local producers that employ 70% of the people in the beer industry.
01:20:52
Speaker
and wasting money on stupid projects pretending that it can fight China in a nuclear war. Come on. Yeah. Get your shit together. Yeah. And I guess that's it, isn't it? that We're at this stage now where there's been so many things that have gone wrong one after the other. I think we had a conversation probably two years ago, maybe it was a year ago, we said it's not so much like death by a thousand cuts as like sort of, you know, sort of taking a blow to the face. And when you try and block that, someone kicks you in the, you know, yeah and then you go to block that and someone else comes in from the side. It's like it's actual body blow has been raining in from all directions and it needs
01:21:26
Speaker
the industry can do what it can to try and cut costs, it can try, you know, q cubes instead of keton cartons, all these kind of ways to try and sort of find a way to still sort of reach a price point for consumers, but ultimately macro decisions need to be made to actually help support producers. Feels like like a scene in one of those cartoons where there's a hole in the in the dam and someone puts their finger in and then there's another hole in then and then you end up plugging holes. So the goalposts have shifted over the years, right? When I came to Australia and people say, well, excise was always there. Sure. It was a reasonable level. I mean, it was still high, yeah but but it could be managed. It didn't go from 50 to 61.
01:22:09
Speaker
in a sprint, right? when When real incomes of people actually went down. If everyone was getting richer, sure, charge a hundred bucks. Who cares? But everyone's facing a crunch. And on top of it, people underestimate the container deposit scheme. That on its own is three and a half dollars per carton.
01:22:32
Speaker
That is a new tax introduced. So to put things into perspective, two years ago, hawkers would have paid $4 million dollars in tax to the ATO on $11 million dollars of sales. Last year we paid $5.4 million, dollars an increase of $1.4 million. dollars Where do I pull this money out of? I can't sell more beer because people are are handcuffed by their living costs.
01:22:58
Speaker
um I'm not allowed to sell more beer because tap contracts and the ACCC has done nothing to help, which are illegal everywhere else in the world. I have the two big ah retailers that control 65, 70% of the liquor retail market, Kohl's and Endeavor Group, pulling all the small craft breweries back to regional. And you'll see people like Black Ops and Kaidru recently massively suffering from this because, well, our West Coast IPA is number 20 on the Gabs Hot 100.
01:23:36
Speaker
It's probably the most popular IPA in Australia of its class in West Coast, right? It also has won more trophies and more gold
Challenges in Selling Craft Beer Nationally
01:23:45
Speaker
medals. It's won the champion IPA. I can't sell it outside of Victoria and any of the national retailers. Why? Because they've now introduced all these fake brands, their home brands. So if I can't sell into retail and I can't sell on tap and the government is increasing my tax irrationally,
01:24:07
Speaker
Something has to give. but We're smothering the the goose that lays the golden egg. And just so people understand, CDS in particular, it's craft beers uniquely impacted by it because wine's not included. And also the industry is so, limited releases are such a big part of the industry. So you have so many more SKUs coming out all the time. No one else Really? Unless there's more soda producers that have been just as impacted, they wouldn't be releasing that many but like different kinds of soda. Correct. and a bery so the the the big problem that we have with nuts, right? So the CDS was originally introduced in South Australia 30, 40 years ago when no one was recycling to spur people to recycle.
01:24:55
Speaker
Get it, bribe people to bring their cans to recycle. Today, Victoria has one of the highest recycling, not only in Australia, but also in the world. Fine. All the other states in the middle of COVID, in the middle of a living crisis, decided to implement CDS and then marketing it to the consumer, collect as a collectant earn, right?
01:25:19
Speaker
or collect and save or whatever the hell they call it these days, right? So they return a nerve, whatever the, collect your cans and collect 10 cents per can. First of all, the logistics of collecting cans and then driving them out, already the impact on the environment is crazy, right? And then you find a machine that isn't working. And then you find a machine that's not working. Correct. And you get frustrated, you chuck them in the bin.
01:25:45
Speaker
That says that the collect and earn in New South Wales cost $405 million last year, of which $166 million dollars went into administration administrative costs.
01:25:58
Speaker
I guarantee you if we spent 400 million dollars on educating the consumer and putting some yellow bins out in the street and frequently or adding another bin on top of the yellow bin at home to segregate glass in cans and collecting them that way, people would be more than happy to do that. And we would have saved 300 million from that. It does feel like one of the things that people have always recycled correctly and not put in their waste bin is cans.
01:26:26
Speaker
and then And then the irony of the whole thing is they actually don't mean to recycle because they demand that we register each label um before they allow us to recycle. So you show up to one of these machines, you scan the label, if if the barcode is not registered, it'll reject it. Are we here to check the labels or are we here to recycle?
01:26:50
Speaker
the The recycling should be, it doesn't matter, you've given me this weight of metal, here's your 10 cents, done. I don't care what brand it comes from. But the implications of this label registration that we have forced on on onto the brewers is we have to pay every CDS separate authority around the country a registration fee. And it can go from $270 a label to $17 per label, per state, multiplied by six. So every time I ship 10 cartons of a limited release to South Australia, that's $270 that I have to pay. Plus the administration, plus the stupidity of this government that forces us to issue them um a report at the end of the month of how much we sold, so they charge us the money.
01:27:46
Speaker
And then at the end of the year, we have to take a step back to justice of the peace, to certify that what we have told them before is true. Like if I lied to you before, taking me to someone to certify that I promise, here's my hand on the Bible, I hereby swear to tell the truth, the whole truth, I'm nothing but the truth, is really gonna make a difference. Like it's just bureaucracy over bureaucracy over bureaucracy, takes away from our time and energy,
01:28:14
Speaker
steals the money out of the brewers at a time when we can't afford it. We can't pass that three and a half dollars.
Optimism for Industry Change
01:28:21
Speaker
And that's just the cost of the can, not the registration. You know, someone like Coca-Cola, they have two, three, ten SKUs that they produce a hundred million cartons of.
01:28:32
Speaker
What's 270 bucks? Zero. You just need to start selling 100 million litres of beer, Mads, and then you'll be fine. Well, if people drink 100 million... If the government gives us enough tax breaks so that people can afford the 100 million... Cartons of beer, sure. Yeah. Yeah. And also in short, there's you know there's a lot of major structural issues that I guess you've been vocal about for a long time. CDS has now added to those as well. And I guess Do you see hope that those things might change it anytime soon or even in the you know the short to medium? I think it's coming to a breaking point. I think the you know this can't continue forever. I sure as hell wouldn't want to be Albo in this environment. I don't want to be the guy whose legacy is they've destroyed the beer industry and the alcohol industry in Australia, especially when there's so much artisanal passion and love behind what's being done.
01:29:28
Speaker
I think there's a lot more awareness amongst the consumers. um it's it's ah and Do I have hope? Absolutely.
Conclusion and Gratitude
01:29:37
Speaker
i mean I'm an eternal optimist, so to speak. I'm very passionate about beer. I'm very passionate about the beer community and about what we do. I do think things have to change.
01:29:54
Speaker
Well, I think on that note, i said yeah it's always nice to finish on a note of hope and optimism, no matter how far reaching that might be. So it's been great to have you in for a chat again. you know We've had so many great conversations over the years. Don't be a stranger, whatever whatever happens in the future. um And yeah, enjoy the 10th anniversary celebrations. Thank you. It's going to be fun. you see so Everyone should come. Yeah, I can't wait. Cheers. Cheers. Cheers.
01:30:22
Speaker
Hey sales reps, have you ever thought about how much time you spend on admin? Entering orders that come in over email, SMS, phone or even Instagram messages? Could that time be better spent on the road, meeting new customers, running tastings and building the brand? That's what it's all about right?
01:30:40
Speaker
Well, that's where Phobo can help. Developed by people who are far smarter than I am, Phobo have created an AI platform that can read and process all of your customer orders instantaneously, no matter how they come in. Maybe Bill's bottle shop have sent you a text message saying, same as last week mate, or Ted's Tavern with an email, give me a keg of pale. No matter how casual the message, Phobo's AI has been taught to speak the language of beer ordering.
01:31:10
Speaker
Give the team at Phobo a call and let them help you get back to what you do best. Meeting new customers and looking after your existing ones. Visit phobo.com and complete the brief form to find out more. And now back to the podcast.
01:31:36
Speaker
The Crafty Pint Podcast is produced and edited by Matt Hoffman. You can get all your beer related news and reviews on the Crafty Pint website craftypint.com and can stay up to date on future podcast episodes via our socials.
01:31:50
Speaker
We wouldn't be able to produce the podcast or the website, events or festivals we run without the support of the beer industry. Whether that's suppliers, bars, breweries or bottle shops. If you'd like to support the show or partner with the Crafty Pine in other ways, please reach out to Craig via the details in the show notes. And if you're a beer lover who'd like to support what we do, you can join our exclusive club for beer