Moa Brewing chief Stephen Smith on split from NZX-listed Savor, turning around unprofitable business

Moa Brewing chief executive Stephen Smith was approached by the board of the then-listed entity about a management buyout in November last year.

The former hospitality and brewing group had explored other avenues to sell the brewing business without luck, before settling on management buyout as the most practical solution.

Unprofitable, the business was already operating separately to the hospitality arm so the change in ownership structure since had not changed drastically, new owner Smith told the Herald.

“That is in some ways what made [the acquisition] attractive as it was a relatively seamless transition into our ownership,” says Smith, who has been chief executive of Moa since May 2019.

Smith and his father Mike are 50 per cent shareholders in Mallbeca Limited, which acquired the business for $1.9 million. The transaction was completed at the end of February, making it a private organisation.

NZX-listed Moa has since changed its name to Savour and Lucien Law has been appointed managing director and group chief executive.

Marlborough-based Moa was established in 2003 and has grown to become the country’s largest independent brewery. However, in recent years it has struggled with profitability.

Mike Smith is a director and has been charged with managing the financials of the business, along with helping Moa secure more deals. He previously spent 30 years working with beverage giant Lion and Sir Douglas Myers, and has held directorships on the boards of Auckland Airport and Fonterra.

“He’s been in brewing, I’ve been in brewing, and so what better partnership could you have than having someone like your father with that amount of experience to be your business partner. For us it is a really special time,” says Smith.

He says he had not thought about taking over Moa prior to being approached by the board, but thought the move to sell the business “was courageous”.

“When they spoke to me about it I was immediately enthusiastic about it.

“If it had stayed where it was it may have withered on the vine whereas under private ownership we now get to run it at a cadence that we want to run at.”

He is open about the company’s poor financial track record, but says he has plans to turn it around and forecasts that its accounts will be in the black from July.

It has already changed the business model, dealing directly with its customers, which has enabled it to remove a significant amount of cost out of the business, says Smith.

“We’ve allowed for a lot of simplification across the business. Assuming the revenue line delivers, we will move this business into being profitable.”

Moa is now focused on a single customer – its exclusive partnership with Foodstuffs, which sees its craft beer sold in almost 800 stores across its New World, Pak’nSave, Four Square, Henry’s Beer, Wine and Spirits, Liquorland, Gilmours, Trents, On The Spot, and Raeward Fresh retail chains nationwide.

It is also currently in talks for a brewing partnership with an undisclosed brewery in Australia, which will also take care of local distribution. Detailed discussions around brewing Moa’s beer will start in April with plans for its beer to be sold across the Tasman in July-August.

“This agreement with Foodstuffs allows us to remove our sales force, that’s a big benefit to our PNL. By going into this arrangement with Foodstuffs it simplifies the financial and admin side of our business because there is less processing of invoices and chasing money every month for us, and the third piece around logistics and warehousing means because we’re putting much more stock into less locations our distribution costs have reduced.”

Longer term, Moa has plans to expand international operations further a field. It already exports to Hong Kong, Singapore, China and Taiwan.

Smith says he is confident about the outlook for Moa under new ownership and operating model.

“We’re going to continue to innovate and leverage the trademark of Moa. We’re also going to develop new brands and categories outside of brewing. We’re working on an RTD range at the moment in the seltzer world that has become very popular.”

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