Gage Roads reports strong growth

Gage Roads Brewing Company’s ‘returning to craft’ strategy appears to be paying dividends with the brewer reporting continued strong growth of its proprietary brands.

In its fourth quarter progress update to the ASX, the Western Australian brewer reported sales of its own products, including Single Fin and Alby, had increased by 28 per cent over FY17 to 4.2 million litres.

If the 800,000 litres sold through promotional deals such as the Optus Stadium contract is included, the brewer’s branded sales are 5 million litres, a rise of 47 percent over the previous year.

“We continue to see success in our cost-neutral “brand-in-hand” marketing strategy, achieving increased sales through greater brand awareness,” the brewer advised.

“Sales to Optus Stadium, Fringe World, Rugby 7s and other events are on track to deliver earnings that fully offset the costs of the strategy.”

Gage Roads branded draught sales were up 218 per cent over FY17.

The ASX-listed brewer also reported strong growth in sales to independent retailers of 181 per cent over FY17, and solid growth in the mix between its branded products and its contract business.

“Gage Roads’ own brand portion of the total sales mix has grown from 32% in FY17 to 39% in FY18 (underlying 35%). This shift is sales mix towards Gage Roads own brands has improved total gross profit from 58% in FY17 to 62% in FY18.”

The brewer reported a total production of 12.8 million litres for the year, with an unaudited EBITDA of $4.5 million.

“Accordingly, we are on track to deliver growth in earnings and margins through the shift in sales mix towards higher-margin Gage Roads brands as the management team delivered on year 2 of our 5-year strategy.”

The report said Gage Roads was looking to focus on distribution and sales growth opportunities, including a focus on east coast partnerships and events to complement growing east coat distributions.

Gage Roads shares were up on the news, trading at $0.125 at 11.15am, up from an overnight close of $0.11.

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