Better Beer drives Mighty Craft half year result
ASX-listed drinks company Mighty Craft has released its first-half results for the 2022-23 financial year, showing revenue growth again driven by Better Beer.
The company reported revenue of $45 million, an increase of 89 per cent over the prior corresponding period, saying it was on track for full-year group revenues of $100 million.
Better Beer accounted for almost half of the group’s revenue, with more than 4.7 million litres sold generating revenue of $19.3 million for the company. Mighty Craft owns 37 per cent of the Better Beer business, but through its sales and distribution agreement with Mighty Craft earns more than 50 per cent of the brand’s profits*.
The company said that other focus brands, Jetty Road and Mismatch, also saw wholesale growth of 18 per cent for the half year, though off much smaller bases.
Managing Director Mark Haysman told Brews News that he expected Mismatch and Hills Cider to sell ‘a tad’ over a million litres into wholesale for the full year, with Jetty Road expected to sell 600,000 litres.
He said this growth came at a time when Mighty Craft’s internal figures showed the craft beer category declined by approximately 12 per cent in the half. He said that this market analysis was calculated internally as a weighted average from major scan data.
In its results, Good Drinks Australia noted the beer market had declined by 5 per cent.
Mighty Craft said it was on track to meet its ambition of producing 14 million litres of beer and cider across its businesses for the full year, though has scaled back its volumes for spirits and whisky under maturation by 50,000 and 85,000 litres respectively to 350,000 and 450,000 litres respectively.
The half-year results showed that the group’s venues generated revenues of $7.1 million, up from the COVID-affected FY22 results of $5.1 million. The company reported positive EBITDA across its venues of $1.4 million. It noted that venues “as a group” were profitable during the half.
Mighty Craft has announced that it has again changed its venue plans with the currently closed Jetty Road Lorne venue to be rebranded Better Beer.
The Jetty Road Lorne venue was conceived after Mighty Craft ditched plans for $3.5 million gastropub in South Melbourne, incurring a lease termination fee of more than $300,000, and development costs of $165,000 at the Lorne venue.
Haysman said at that time the venue was important to broaden Jetty Road’s appeal.
“Particularly over the next few years, we see Aussies supporting local, not just craft, but travelling locally over holiday periods,” he said.
This week he told Brews News that the Lorne venue would be better as a Better Beer venue.
“[It would be good for] Better Beer to have a home on the Surf Coast. With Jetty Road we want to focus in and around Mornington Peninsula and bring it up into the city,” he said.
“It’s just a bit hard to service both sides of the peninsula, it was tricky and spread the Jetty Road team a little thin.”
The half-year update noted that the results did not include the impacts of Ballistic Beer entering voluntary administration. Mighty Craft’s 10 per cent shareholding in the company has been written down by $2.03 million to $400,000.
An administrator’s report to creditors seen by Brews News shows Ballistic went into administration with debts totalling more than $5.8 million. Mighty Craft is listed as the largest trade creditor, owed more than $641,000.
A creditors meeting will this week vote on proposed Deeds of Company Arrangement for Ballistics’ Salisbury and Springfield-based businesses which will determine their future.
Haysman told an investor’s call that the company was still looking to divest itself of its share of “non-core” brands to release capital to fuel the growth of its focus brands.
“We are clearly focused on further simplification going forward, really analysing those brands who are going to be part of the future value creation,” he said.
“Then trying to work hard to make sure that we can potentially then divest on the brands that don’t fit that and bring that money back in overall to invest behind that the brands that remain a focus going forward.”
He said that the company was “very close” to finalising a number of sales, though the sales were taking longer than expected.
“But we’re confident we’re going to get a couple away very, very soon. And we look forward to sharing more news on that, over the coming weeks and months.”
“It’s just probably in the current environment, where we’re seeing, even in the last three months, people being a little bit more careful than there were in the three months prior to that.
“We have some very good businesses, and we’re looking forward to – if they’re in better off in someone else’s hands – enabling that transition.”
The company’s results noted it had forgiven a $1.5 million convertible note and its 32 per cent shareholding in Sparkke in return for acquiring the lease over the Whitmore Hotel in Adelaide, which it has since rebranded as a Mismatch venue.
Might Craft’s (MCL) shares are currently trading at $0.185.
*This article has been corrected. It originally stated that Mighty Craft earns more than 50 per cent of the brand’s revenues.