Doug Haines explains the winning formula that took Upper Hutt’s Panhead Brewery from start-up to major sale in just three years.
By Glenn Baker.
While there’s no one winning formula for brewing a great beer, as with growing a great business there are some fundamentals that really matter.
One business that’s got those fundamentals down perfectly is Upper Hutt-based Panhead Brewery, which has been so successful that it attracted the interest of international brewing giant Lion Group.
The sale to Lion, announced in May this year, has freed up founder Mike Neilson and his team to get on with what they love most: brewing great beer. And for Mike, to spend more time with his wife Anna and their children.
So what’s behind the success of Mike and his team, growing a tiny start-up in 2013 into a phenomenally successful brewery with a range of award-winning beers, which the market can’t get enough of?
Working alongside Panhead from the early days as their accountant and advisor, I’ve observed that Mike struck his own winning formula – not just in terms of high-rev branding, hops and malt but in having the right mix of positive attitude, leading from the front by working hard, and having the right advisors on tap.
It’s a mix that can work well for any new business owner, especially when navigating the challenges of rapid growth where massive demand can be overwhelming – particularly in the exciting boutique brewing industry.
From my experience working with a range of great businesses like Panhead, there are some common features that other businesses can learn from. They are:
Keep it simple – Having the right financial tools for your business and industry is critical – but they don’t have to be complex. What they do need to be is designed for the business you operate and you need to understand what they are for – and critically, to use them for that purpose.
Keep at it – Information and systems are one thing, but attitude and application are what make things buzz. While some business owners implement systems, they don’t necessarily understand them or their purpose. But Mike understands his systems and uses them for what they were designed to do, so that he can make good decisions quickly.
Keep in touch – With cloud accounting you’ve got up-to-date financial information at your fingertips, removing reliance on historical financial data and allowing you to plan for the future; to respond more effectively and efficiently to the here and now. There’s also nothing like a chat with a safe pair of hands to validate your decision making process.
Team – Another component to Panhead’s success is that Mike hired a great support team who believed in the product and understood the nature of the industry. The team included his wife, father and best mate from school (who was also an integral part of the transaction, and is now the company’s general manager). I had also been involved in the industry for a number of years before meeting Mike, so could bring that experience to the table.
Backing your business – Helping grow a business to the level of success of Panhead is a two-way partnership that extends beyond just delivering accounting advice and systems. One of the first actions we took was to align the company with a bank that was prepared to support a growing business, using a product that enabled expansion through working capital funding. This was a major change for Mike and Panhead, and we provided them with the advice and support to make the transition work well.
Frugality – One of the challenges of operating a growing business is managing cashflow. Mike and I communicated a lot on this matter and he took a very frugal, very smart ‘grow-a-bit-to-buy-a-bit’ approach, injecting capital back into the business to buy one new piece of equipment at a time. We also talked a lot about alternative funding options for Panhead ranging from direct investment to crowd-funding, but this would have meant a dilution of control.
Exit: a solution to growth
By 2016, Panhead Brewery had won the coveted Society of Beer Advocates beer of the year award in two consecutive years for two different beers. Panhead was now one of the country’s best-known and loved boutique beer brands and it was looking at how to upscale to meet the continual growing demand.
Lion’s investment provided an excellent solution and while it initially seemed a very big call, the international company’s stewardship over its other acquisitions (Emerson’s and Mac’s ranges) gave Mike confidence that his interests, and that of the brand, would be protected in the long term.