THREE GRADUATES, TWO BREWERIES, ONE DREAM
Parrotdog is a tale of three uni graduates named Matt – Matt Kristofski, Matt Warner and Matt Stevens – who pursued their passion for brewing beer and are today backed by a community of loyal supporters.
Parrotdog is a tale of three uni graduates named Matt – Matt Kristofski, Matt Warner and Matt Stevens – who pursued their passion for brewing beer and are today backed by a community of loyal supporters. Glenn Baker has their story.
Many people might think you’d have a screw loose to pass up a perfectly good career in accounting or law to chase a dream of establishing and owning a beer brewery.
Parrotdog’s three Matts – Kristofski, Warner and Stevens – certainly had their share of doubters, but that’s exactly what they ended up doing.
When Stevens met Kristofski and Warner, he was a chartered accountant working for Deloittes and they were studying law and commerce at Wellington’s Victoria University, as well as turning out a very cheeky home brew.
They jokingly called each other ‘dog’; and yes, there was a pet parrot.
Kristofski and Warner held “parrotdog home brew tea parties” in their flat and asked Stevens to help them form a company.
The brand name stuck – Parrotdog Brewing Limited was formed in 2011 and the three graduates found themselves in business together. Six months of contract brewing followed.
Winning the People’s Choice Award at Beervana catapulted Parrotdog’s now flagship ‘Bitterbitch’ brew onto the market. It was time for the three Matts to make the hard decision on whether to make brewing their life or just a hobby.
As it turned out, the decision wasn’t that hard. Things were already on a roll – a 290 square metre shed was rented in Wellington’s Vivian Street and a loan was raised.
Stevens quit his job and on February 1st, 2012, the three eager grads all turned up for work at their very own brewing company.
They didn’t waste time getting product to market – and with output running at around 2000 litres per week Parrotdog was earning enough to pay the Matts a modest income from day one.
For the next four years the company grew quickly on retained earnings and bank debt – tripling fermentation capability and growing to ten staff, often working double shifts on bottling days.
But the site was far from ideal and it became obvious that to up-scale the business and become a nationwide, successful brand they would have to shift to a new site.
A search for new premises in Wellington spanned 18 months and they looked as far away as Upper Hutt. The plan was to include an on-site bar and takeaway.
They also knew that to provide enough scale they would require fresh equity, and they began weighing up the benefits of crowdfunding against private investment.
“We realised that our consumer product was so relatable, and knew that crowdfunding would work so well,” recalls Stevens. “We knew that people were so passionate about our product and would want to come on board.”
The site they settled on is located just one building off the beachfront at Lyall Bay, and it includes a large bar that overlooks the brewery (plus attached smaller garden bar area), a takeaway and admin accommodation.
“We knew it would be the home of Parrotdog for many years to come and provide a great lifestyle environment for the whole team.”
PledgeMe was the equity crowdfunding platform that resonated the most, says Stevens (the word ‘equity’ meaning investors actually own a small share of the company). What followed was a truly remarkable fund raising effort. The goal was to raise $1.2 million – enough to finance the brewery move and buy some upgraded brewing equipment. But $2 million, the maximum allowed under crowdfunding legislation, would buy completely new equipment.
There were already 4000 people following the PledgeMe sales campaign before it launched in August 2016 – and such was the demand when the green button was pushed, that the website initially crashed.
“We raised half a million in half an hour and a day later we had our $1.2 million,” recalls Stevens. “We partied hard that night, and after 48 hours we’d raised the full $2 million. At the time it was the fastest, largest crowdfunding equity raise in New Zealand.”
The successful fundraising triggered a crazy two year whirlwind of projects to develop the business, he says, including a new 5,000-litre brewhouse, new larger fermentation vessels and a European bottling line.
A second equity raise in December 2017 raised an additional $1 million for building the bar with a commercial kitchen and installing a new canning line.
“There has been a huge export demand for cans,” says Stevens, “particularly through Coles in Australia.”
He remembers Parrotdog’s shareholder bar opening night on April 12th 2018 – after which he drove home to his pregnant partner, who proceeded to go into labour the next day and give birth to their first child at two am the following morning! “It really has been a crazy ride!” Stevens describes Parrotdog as a “widely held private company”, and the three directors work hard to keep shareholders rewarded with ‘perks’ and discounts and up to date with developments. This commitment is perhaps best illustrated by an entire wall of ‘personalised beer handles’ that greets patrons in the bar.
They’re also grateful for the services of the lawyer they engaged who was a pioneer in the crowdfunding space and knew how to incentivise shareholders to be an active part of the brand and the company.
Matt Stevens admits that sales and distribution has caused a headache or two along the way. Switching from a third party distributor back to managing their own sales team proved to be the right decision, although a degree of sales momentum was lost heading into last summer after making the switch.
Now having their own passionate team of reps out on the road providing direct access with buyers is proving to be a winning strategy, he says.
Other business challenges include the usual constant grind of managing cashflow and balancing inventory levels, as well as planning a steady supply of raw materials in what can be a volatile market sector.
“We’ve also gone from an industry that had just three breweries 20 years ago to one with 150 breweries today,” says Stevens. “Trying to attract and retain talent experienced in this industry is very difficult. The number of canning and bottling lines in the country has exploded over the past five years, and there’re not enough skilled people to run all the new specialised equipment out there.”
Winning Champion Brewery Awards at the Australian International Beer Awards (AIBA) helped build Parrotdog’s relationship with the Coles supermarket group, and create awareness across the ditch. There has been a New Zealand Brewer’s Guild 2018 Champion Brewery award too – and Stevens says all their awards serve to affirm that the quality aspect of their brewing and packaging is on point.
Winning three gold medals and two trophies in the New World Beer and Cider Awards also had a positive impact on distribution reach within the trade – especially New World distribution.
Succeeding in awards such as the Malthouse West Coast IPA Challenge, which attracted entries from 27 breweries this year, was especially satisfying and helped garner respect and ‘kudos’ from peers within the brewing community, says Stevens.
Meanwhile New Zealand’s beer industry continues to mature. Stevens doesn’t believe the sector has reached “peak good beer”, and there is more potential for growth.
He personally believes the market will split into two distinct packs: • Those that will increase their economy of scale, but with a quality
product. The barriers to entry will get increasingly higher and it will require infrastructure, the right equipment and skills. Parrotdog is well-spec’d in this space, he believes, and well positioned to expand production on a lower capital expenditure. • Those smaller breweries that come under the banner of ‘hyperlocal’ or ‘micro’ – small provincial breweries that distribute locally and offer a degree of lifestyle living, but have low overheads and/or full retail margin on less sales volume. Operating in the middle ground between the two packs would be a scary place to be, he says. “That’s why we made the investment to operate at the higher level and play with the bigger brands.”
It’s not necessary to reinvent a product or industry to become a successful entrepreneur, believes Stevens. “Just do something really well (in an industry you’re passionate about) and focus on quality,” he says.
“What we’ve learnt at Parrotdog is to just be genuine in all that you do. “A little bit of our naivety has just been in fronting up and saying we don’t know everything (on distribution), but we’re keen to learn. We’ve had a lot of high-level buyer support as a result of that attitude,” he says.
“Then there’s the age-old advice around surrounding yourself with good people and empowering everyone around you by passing down responsibility.
“Realise too, that you can’t make everyone happy. And it’s better to prioritise your immediate issues rather than waste your time trying to please all people.”
Stevens is grateful for the support they’ve had from family, partners, shareholders, staff, and “everybody who drinks our beer”.
It’s fair to say Parrotdog had two attempts to crack the Aussie market. The first attempt while still at the old brewery failed due to limited capacity and lack of resources. However, in pulling back out of the market, they did retain their Coles contract (now two years old).
Now with everything under the one roof at the Lyall Bay premises and its new canning line putting out three brand new SKUs, they’re much better set up to succeed in the Australian market. The Coles partnership now represents a large chunk of Parrotdog’s business.
The relationship with the supermarket network has succeeded without the need for on-the-ground representation, and it goes without saying that the beer has been well-received by Aussies.
Parrotdog’s future is looking exciting, with local sales expected to build over summer and stronger export sales predicted (they’ve just pushed the ‘Go’ button on a ‘trial’ entry into the UK, through the NZ Beer Collective and are conducting due diligence on a key Asian market). The business is no longer exposed in any one area of its operations.
Kristofski, Warner and Stevens all feel the brand is now in a unique and stabilised position – being, as Stevens puts it, “the only independently-owned brewery with significant scalability under their roof”.
With no contract brewing involved they have absolute control over quality, scalability-speed and product consistency in the market. Having their own sales team also means greater control over distribution, with a lot of product now delivered direct.
Staff numbers now total around 28. They’re a long way from their home brewing days.
Looking back – yes, there have been lessons for the three Matts, not least of which those around distribution in the early days before they took control back. But there have been great times, and fun times, too.
“The milestones have been absolutely constant,” says Stevens. “Building both breweries, turning on the canning line, opening the bar. There have been a lot of happy times.
“My advice to any young entrepreneur who’s about to launch a business venture just like we did is to surround yourself with business partners who love what you do just as much as you do every day. And make sure every day you have a laugh.”
And getting back to Parrotdog’s future, Stevens refers to 2018 as a “reset year”, with the sales-team fully mobilised from March, a ton of product development carried out over Winter, and the bulk of the hard work behind them.
Now they’re looking forward to a “peak summer” and they’ve never been better organised or capitalised.
“The goal is to grow the business in a sustainable and profitable way, achieve wider distribution and increase exports,” says Stevens.