Mighty Craft has provided a business update for the quarter ended 30 June 2023 that flags it has sold several brands and is considering the sale of its stake in the Better Beer brand.
The company has executed a binding agreement for the sale of 100% of Jetty Road; and entered into a non-binding agreement for the sale of 100% of Foghorn Breweries, which is expected to become binding in Q1 FY24.
Mighty Craft acquired 100% of the shares in Jetty Road last year.
At the time, former managing director Mark Haysman said: “This is a great outcome for Mighty Craft, Jetty Road Brewery and of course each of the Jetty Road Brewery shareholders who accepted the Offer. The shareholders are now in alignment with the Mighty Craft ambition. They have seen that Jetty Road is one of many great brands and businesses within the Mighty Craft stable, and they have chosen to invest to get behind our aspiration to become Australia’s leading premium craft beverage company.”
Foghorn is a multi-award winning craft brewery in Newcastle that has been brewing on-site since 2015.
The divestment program is expected to return $3.5 million of capital into the company.
Through the Better Beer capital raise process, Mighty Craft said it had received inbound interest for its equity stake. In
light of this interest, the company said it is considering whether a full or partial equity sale is in the best interests of Mighty Craft shareholders.
The Inspired Unemployed comedians Matt Ford and Jack Steele each hold a 21% stake in the company, while Torquay Beverages Co’s Nick Cogger owns just under 20% and Mighty Craft holds 37%.
The company said Better Beer continues to resonate with younger consumers seeking a “better for you” alternative, as well as a disruptive brand.
Scan performance (below) reflects sales out of Endeavour Group (Dan Murphy’s and BWS) and reflects significant ongoing
weekly growth. During Q4 FY23, scan growth was ~50% higher than Q4 FY22 – which Mighty Craft said was a “very pleasing result, particularly when considering seasonality trends”.
“The Company continues to believe this reflects significant opportunity and potential heading into FY24 and beyond. On-premise sales continue to grow year-on-year, averaging 40% growth across Q4 FY23,” Mighty Craft said.
The current state of play
Mighty Craft’s unaudited group revenue was $21.51 million, down 7% versus prior corresponding period. However there was like-for-like revenue growth of 5%.
Wholesale performance was steady across beer and cider, with 3.2 million litres sold (up 8%); while 61,000 bottles of spirits were sold (-1%), including first shipments of Agave and Mount Uncle Rum.
There were Better Beer sales of 2.6 million litres for Q4 FY24 and 10.4 million litres for FY23 (+138% growth versus FY22)
Full year FY23 performance reveals LFL wholesale revenue was up 54% with beer and cider up 73% and spirits up 7%.
Mighty Craft said growth across the second half of the financial year was impacted by a softening in the overall market as cost-of-living pressures and inflation continued to impact consumer spend.
Growth across craft beer and gin slowed and while overall spirits growth was steady, there was an increasing shift in consumer preference observed to value-based brands.
Growth was strong in 78 degrees and Seven Seasons while Kangaroo Island Spirits was described as remaining a core
brand for both gin, tourism on the Island and importantly the release of KI whisky towards the end of FY24.
Whisky under maturation increased to 459k litres (from 417k litres in Q3 FY23), which was slightly ahead of the target of 450k litres outlined to the market in February 2022.
Mismatch maintained growth in line with the market for the full year but had a difficult final quarter due to consumers preferring value brands over premium craft. To this end, Mighty Craft said it has a great value NPD launch for Mismatch in the pipeline to address this issue.