29/03/2019

Dear Magic Rock drinker . . .

If you’re reading this, I’m going to assume that you are looking for more information on our exciting news that Magic Rock has become part of Lion, the Australian-headquartered beer company that owns Little Creatures and Fourpure.

Obviously, this is big news for all of us at the brewery. It’s a move we haven’t taken lightly but it’s one that myself and the other shareholders believe is right for the future of the business.

Why sell?
Since starting Magic Rock in 2011 we’ve changed a lot, we’re no longer that two-man operation where Stu and I did the brewing, packaging, sales, distribution and anything else that needed doing. In those eight years we’ve come a long way. We now have 45 staff across the whole business and a responsibility to them to make the right decisions for the business.

I’m very aware that the craft beer industry continues to evolve and I believe the best way for us to establish a legacy for the brewery long term is to introduce Magic Rock beers to a much wider audience. The alternative is to stand still in an increasingly competitive and congested market. I’m proud of where we’ve got to so far but to move forward and grow, I know we need help in some areas.

This deal will give us that help. It will allow us to expand capacity and become a genuine competitor in the UK beer landscape and further afield. We’ll have the benefit of Lion’s experience in growing breweries, and their support and investment to purchase better equipment, install better infrastructure and ultimately produce better beer – in bigger quantity for our customers.

Why Lion?
As we’ve grown as a business over the last eight years we’ve both borrowed money and ploughed any profits back into production improvements to fulfil our ‘same but different’ quality promise that when you buy a Magic Rock beer, you’re getting an ‘non-compromise’ product. So far, our significant investments have been supported by our bank and their asset finance department with an increasing level of personal risk with each new agreement.

We are now close to maxing out the capacity of our current brewery. It’s clear that the next expansion will need some deep pockets to provide the equipment we need to take us to the next level. We’ve looked at different funding options including our traditional approach, as well as private equity and crowd funding but none appealed or gave us the strategic help and brewing expertise we think is necessary for the next step.

While there’s never been a plan to sell the business, we’ve had a number of approaches over the past few years, but none of them felt like a good fit until we started talking with Lion. Lion first approached us back in August 2018 and we were immediately impressed with their ambition, pedigree and approach to beer.

They are straight talkers, who put quality and people at the forefront of their approach. They also have a great track record of bringing brewers on board and growing them while maintaining their integrity. We feel both a strong resonance with our attitudes, and a level of comfort with them as people.

How will Magic Rock change?
The only changes we foresee will be for the better. I’m delighted to announce that Lion are committed to beer production in Huddersfield for the long-term and there’ll be no cost-cutting; on the contrary there’ll be an increase in our commitment to the quality and innovation characterises our beers.

As part of the deal with Lion, myself and the other shareholders are committed to the business for at least the next four years – and I expect long after that. It’s testament to Lion’s philosophy that in other breweries they’ve invested in, the founders (such as Chuck Hahn in Australia) are still involved many years later.

The production site expansion will encompass the leasing of additional units adjacent to our Huddersfield site. We’ll be installing a state of the art automated brewhouse and enough additional tank capacity to massively increase capacity. There’ll also be improvements to our infrastructure including new offices, lab, quality control and sensory departments.

With the help of our distribution partners we want to grow our local, national and international sales so hopefully you should be seeing lots more Magic Rock beers out and about. We also have long term plans for additional retail sites and will soon be announcing another Magic Rock Tap in the local area.

Of course, I realise that this news will not be universally well received but I’m also conscious that internationally renowned brewing companies don’t invest in Huddersfield every day, and I’m delighted that the journey we started eight years ago has got us to this point.

I’m proud that we continue to be a good news story in the town; the deal with Lion secures growth and longevity for Magic Rock, genuine job security for our employees and enables us to hire more people and contribute more to the economy of the local area going forward.

We very much hope you’ll join us on the next part of our journey and thank you as always for your support

Yours Sincerely

Richard Burhouse
Managing Director
Magic Rock Brewing co.

Q. What’s the value of the transaction?
A. As the deal is commercial in confidence, we are not able to share the numbers. Over time, we’re looking forward to showing you how joining Lion has helped to evolve our products, our Birkby home and our distribution – getting more great beer into the hands of more people.

Q. Who are Lion?
A. Lion is an Australian headquartered business that sits within Kirin’s global portfolio. They have a broad spectrum of beer, cider and wine brands with deep experience in brewing and a focus on quality and craftsmanship. Their brands include a significant range of much-loved craft beers from Australia and New Zealand like Little Creatures, White Rabbit, Panhead and Emerson’s. You can refer to their website www.lionco.com if you would like to explore further.

Q. Why Lion?
A. Lion is a great business with fantastic people and a vast amount of expertise we can learn from. We have a shared philosophy that craft beer is an experience that should be celebrated. We see a fantastic opportunity to work together to grow both Magic Rock and Lion’s portfolio of craft beers, ciders and fine wines.

One of the key reasons we decided to join Lion was seeing how the other breweries that have joined them have progressed. For example, if you look at Little Creatures (a brand which helped to redefine the Australian beer scene), since joining Lion in 2012, the brewery went from strength to strength – expanding nationwide and internationally – winning the hearts of people across Australia, as well as in the US, Asia and the UK. It’s clear to us that Lion provides the freedom for the brands it works with to do what they do best – focusing on making excellent beer.

Q. What’s the plan with distribution? Will more go to export?
A. Our current focus is to continue to meet rising demand in the UK market, plus we already export to more than 25 countries worldwide. Lion has a presence in Asia, the US as well as its home in Australia, so over time we see opportunities to work together to further export growth – but at this stage the focus remains on the UK market.

Q. Will you brew Lion beers at Magic Rock?
A. There are no current plans to do so. We’re focused on maximising capacity to meet growing Magic Rock demand.

Q. What’s Lion’s pedigree in supporting independent brewers?
A. Lion has been part of the craft beer journey in Australia and beyond for a long time now. Chuck Hahn started James Squire with Lion’s support and Lion was a shareholder in Little Creatures very early in its journey to become one of Australia’s most famous craft brands. Lion’s craft brewers have also created some of Australia’s most loved craft beers from scratch, such as Furphy, White Rabbit, Mad Brewers and Kosciusko.

Where they have acquired brands, such as Little Creatures in 2012, they have fully supported the team’s vision to grow. In the case of Little Creatures, they invested in its spiritual home in Fremantle, Western Australia and from there took the brand across Australia, building a second brewery on the east coast in Geelong, Victoria. Little Creatures is now one of the highest selling craft beers (top 3) in Australia, and this success has enabled Lion to take the brand to new markets overseas including the UK with Little Creatures now available in 30 cities globally.

Q. Will there be any redundancies?
A. This deal is all about creating opportunities and continuing Magic Rock’s growth and presence in Huddersfield well into the future. Currently there are no plans to change the existing team, only to add more people as we expand production and distribution.

Instagram / Magic Rock Brewing
Instagram / Magic Rock Tap