Better Beer only bright spot for Mighty Craft

Better Beer’s sales continue to be the only bright spot for beleaguered ASX-listed drinks business Mighty Craft, as it released its first quarter update for the financial year.

Revenue from continuing operations totalled $19.2 million, an 8.5 percent increase over the previous corresponding period, due exclusively to continued growth for its Better Beer unicorn.

Better Beer sold 2.2 million litres across Australia and New Zealand, an increase of 53 percent over the previous corresponding period.

Notable was that this was its lowest sales quarter of the last four, with the previous three showing sales of 2.6, 3.1 and 3.2 million litres respectively.

The company noted the June and September quarters are seasonally quieter for the company so, with Better Beer so important to the company’s fortunes the brand’s fortunes in the next quarter will be closely watched.

Better Beer’s growth in New Zealand was reportedly strong, with the launch of 12-packs “driving significant increase in distribution and velocity per outlet (VPO)”.

The beer brand’s capital raise,  announced in March, is yet to be finalised, however Mighty Craft said “it has observed interest from multiple parties” for the sale of its equity stake in the business.

Better Beer’s growth was offset in the results by market-exceeding falls across the rest of Mighty Craft’s portfolio, including 78 Degrees (-10%), Seven Season (-15%), Kangaroo Island Spirits (-22%), Mismatch Brewing (-18%) and Hills Cider (-10%).

The company noted that growth was impacted “by softening consumer demand across premium segments during the quarter”.

“In particular, this continued to impact premium spirit categories as consumers continue to shift spend towards value-based brands.”

Might Craft said while it expected an eventual return to premiumisation, its short-term outlook was for the business’ premium products to be hit by cost-of-living pressures, noting it would look to ‘price and marketing investment’ in the next quarter to drive demand.

“The Company will continue to balance short-term tactical drivers – including price and promotion – versus longer-term brand building investment throughout its upcoming peak trading period.”

Its divestment strategy, needed to reduce its significant debt, continues to proceed slowly.

The sale of Jetty Road for approximately $3 million, announced in July, is appparently close to completion and expected to settle in early November.

The results noted for the first time a non-binding indicative offer for the sale of Hills Cider has been signed, valuing the business at approximately $3 million and expected to settle in the second quarter next year.

The sale of Mighty Moonee Ponds has been completed netting $350,000.

No mention was made about the present state of the non-binding agreement to sell its Foghon Brewery in Newcastle, announced in July.

The company’s shares closed down, trading at $0.021 giving the business, including Better Beer, a market cap of  $7.653 million.

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