Gage Roads continues strong growth

Western Australia’s Gage Roads Brewery is delivering on its “Returning to Craft” strategy with a 28% increase in production of its proprietary brands in the past year.

The ASX-listed brewer is two years into a five-year proprietary brands strategy begun when it announced plans to buy-back Woolworths 25% share in the business.

In its annual report released today, the brewer revealed that its total production has grown 20% to 12.8 million litres, with its own-brand portion of total volumes growing from 25% to 35% since 2016.

Production of Gage Roads branded beers has grown to 4.2 million litres from 2.8-million litres over that period. The brewery has a target of producing 8-million litres of its proprietary brands by 2021.

“Our expanded energetic and talented sales and marketing team helped deliver a 28% uplift in sales of Gage Roads proprietary products, delivering a shift in sales mix improving underlying gross profit margins to 60% (FY17: 58%),” the Annual Reports says.

“These results validate our 5-year strategy of targeting increasing profitability via a shift in our sales mix towards proprietary brands and other higher margin products.”

“We are extremely pleased with the momentum of Gage Roads’ brands 2 years into the 5-year Proprietary Brand Strategy.

“Strong growth across all channels resulted in a 47% increase of total Gage Roads brands sales to 5.0 million litres. Underlying sales, which exclude 0.8 million litres of draught sales to Optus Stadium and other marketing events under our “brand-in-hand” strategy, represent 4.2 million litres, up 28% in comparison to FY17 (3.4 million Litres).”

“The combined Gage Roads brand sales and contract brewing volumes resulted in a total throughput of 12.8 million litres (underlying: 11.9 million litres), revenues of $33.2 million (FY17: $27.2 million) and generated an EBITDA of $4.5 million for FY18.”

Excluding one-off non-trading income in FY17, the result represents a 28 per cent increase in EBITDA.

Sales of the brewery’s Single Fin Summer Ale have grown 123% over the year to become the Company’shighest selling individual brand while the Western Australian ALBY range, launched at Optus Stadium, comprises 18% of the GageRoads portfolio.

Sales to national independent retailers were up 181% over FY17 and the brewer.

“FY18 sales of Gage Roads brands to the national chains were in line with those achieved in FY17. We arepleased to see that the sales growth in new independent channels to market has not come at the expenseof our existing channels, but rather, the increased consumer awareness has supported Gage Roads’brands in all markets,” the report said.

Gage Roads share price was down slightly today to $0.13, but still close to a 12-month high up from $0.053 12 months ago.

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