Start-up brand Badass Beverages is shutting up the shop with the brand for sale.
On face value it’s a sad day because Badass did some cool things — and they were good people too. But, as co-founder Dave Pearce told me, he’s not “sad” it’s over, and he makes some pertinent observations about the beer industry in this “exit” interview.
For those who don’t know Dave, he was formerly with Lion where he was GM of craft. When he left Lion, he had a notebook of great beer ideas and Badass was the vehicle for their implementation.
The brand is now for sale and Dave says there are plenty of ways it can work for the right person.
“We’ve made the hard, but correct, call to wind things up over the next couple of months. We’re really proud of having given it a go, and of the beers and brand we created, but in the current market at our scale and with our business model, it’s just not viable to keep going – and we don’t have the money, time, or energy to make any major changes.
“We reckon there’s potential for someone to make a go of Badass Beverages with a different operating model, with at least one of brewing, logistics, or sales in-house. We think it would suit either someone entering the industry with a brewpub or small production model, an established brewery looking to bolt on an additional brand, or a contract brewing/logistics/sales company looking to move into brand ownership.
“We’d be open to a sale of the business as a going concern, a sale of the IP of the whole business, a sale of the IP of individual brands, licencing arrangements, or other options. We’d also be happy to stay involved in some capacity if a new owner wished.
“We’re very realistic on expectations of what the business is worth —essentially just the intellectual property of the Badass Beverages name and the sub-brands, designs, and recipes. But with a different model that takes out some of the costs that have killed us, I definitely think beers like Hefe Metal, Disko Inferno, and Sloth (especially in its cool new 4-pack, at a cheaper RRP than we could afford to get to) could have a happy future in the market.”
The height of Badass success came when Hefe Metal won a trophy at the New Zealand Beer Awards in 2022 and Dave said that was a thrill for him and his recipe designer Alex Biedermann.
“That’s 100 percent the best moment of it all. It was particularly gratifying for Alex because it’s a beer that’s dear to his heart, being from Bavaria, and satisfying for Craft Brewing Co, as it’s the first trophy they won as a contract brewer.
“In a few years’ time I’ll tell my grandkids, ‘we had a brewery once and we won a trophy’ — that’s more important to me … and that’s why I’m not sad, we did it in a way I’m proud of and it was OK and we gave it a go.”
The state of the beer economy
The main problem for Badass is that they entered the industry “at the worst possible time — in the middle of the pandemic and before the economy fell to bits and then with a whole lot of other cultural-social beverage trends probably going in the wrong direction for craft beer — the move to people drinking less, RTDs getting interesting again and spirits having a moment. It was unfavourable in hindsight.”
And that is as a good a summary of the broad trajectory as any.
Their contract brewing model could have worked, but the rampant inflation of the past two to three years meant any fiscal planning was proved optimistic.
“Most elements of our business model cost slightly more than my initial business plan and those costs went up more than I thought they would.”
And on the revenue side, he acknowledged he was more “aggressive than the way it played out.
“The cost of freight and storing beer went up a shit-ton in three years. All ingredients, particularly anything imported from Europe, went up ridiculously over that period. It wasn’t one specific thing but a combination of 10 things not quite working.”
In another reflection of modern times, he said they could make money selling 440ml cans, admittedly on lower volumes, but that keg sales were a “break even” and what didn’t work for them was multi-packs. “We couldn’t make money at the price point where people would buy.”
And this is a point I’ve talked about before: the four-, six- and 12-pack market will increasingly become the domain of bigger breweries who can do the volumes at the right price with those single 440ml sales the icing. For smaller breweries, it’s going to be singles and on-premise sales, preferably at your own brewpub with a local/regional customer base.
Dave also believes a co-op or collective model remains a possible answer for struggling smaller brands.
“Lots of people in the industry — and I was one of them — were hoping for some kind of magical solution like co-op or collective or a joining of forces but that kind of rabbit didn’t pop out of the hat.”
On the upside, the contract brewing model allowed them to launch a business “that was de-risked with low fixed assets.” It was a side hustle rather than a day job.
“We knew that if we couldn’t make it work, we’d still be able to feed our kids, which is an interesting question in itself because it doesn’t make you hustle as hard … there are lots of bad things happening in the industry that’s having a real impact people’s livelihoods and families.”
The other thing Badass tried to do was hit a niche with reimagined German styles. Was it a good idea?
“I think it was. We were like, here’s a bunch of cool styles that we love but hardly anyone does them. Realistically, that limits your appeal because some people aren’t interested in those styles, don’t know what they’re about, or find them a bit scary.
“But rather than being the 199th brewery in New Zealand to put out a hazy, it feels slightly more adventurous to have done those styles. And we tried to do it in a fun way, with the packaging and branding, to present them to people differently.
“Sloth, our Kölsch was the one most likely to accidentally get massive.”
He pointed out that the massively successful Little Creatures beer, Furphy, is a Kölsch. “They don’t tell you it is, but it is.
“Kölsch fits in trends around low alcohol but flavourful and interesting. Of the packaging, brands and stories we did, that’s the one I like the most which is why we tried to make it work in a 4-pack. There was an outside chance a Kölsch in a 4-pack could have worked but it didn’t. We liked the fact we were doing something that felt different. We were proud to have a crack. We couldn’t play a volume game and we couldn’t out-hazy anyone so we needed an angle that was slightly different.”
So, if you love classic German styles, cool branding and you want to get into the beer business, get in touch with me and I’ll hook you up with Dave.