Mighty Craft looks to “simplify” portfolio

Mighty Craft has announced that it will look at opportunities to simplify its portfolio, including offloading “non-core” assets.

“We’re always looking to find ways to simplify how we operate. We are a portfolio business and we are looking to simplify the portfolio going forward,” according to Mighty Craft managing director Mark Haysman and chief marketing officer Andrew Syme on an investor call yesterday.

In the past year, Mighty Craft has taken on 100 per cent of Jetty Road Brewery which saw the founders exit the business, as well as acquiring Mismatch Brewing Co. and its parent company the Adelaide Hills Group in July 2021. The accelerator said there was a “real opportunity to scale those beer brands in our portfolio”.

Mighty Craft also described Queensland breweries Slipstream and Ballistic Beer Co. as “key brands going forward”.

The ASX-listed business did note that while it has a non-controlling stake in both Sauce Brewing Co. in NSW and Sparkke in South Australia, the wider group no longer does sales and distribution for either as both breweries have brought those operations back in-house.

Syme also said that “we will look at those opportunities [to sell] if the opportunity is there”.

“[We] will look to exit non-core brands over time.”

Mighty Craft portfolio results

In addition to the news that Mighty Craft would consider slimming down its portfolio, Mighty Craft revealed its half-year results.

For the six months to 31st December 2021, revenues from ordinary activities rose 132.4 per cent to $26 million.

Its newly-acquired Adelaide Hills Group-related businesses contributed $2.1 million.

Overall, the accelerator made a $5.6 million loss after income tax for the period. In terms of EBITDA for the half year, it made a loss of $2.4 million. However, this was an improvement on the $4.8 million loss in the same comparable period, and the accelerator highlighted that in Q2 it made an EBITDA profit of $1.8 million.

Mighty Craft owns 45 per cent each of Slipstream Brewing and Poison Creek and 61 per cent of Torquay Beverage Company, the business behind its Better Beer brand, which rose from 50 per cent in the previous quarter.

As of 31st December 2021, the accelerator owns 25 per cent of Sauce FNQ, and 15 per cent of the Sydney-based brewery overall, as well as 34.1 per cent of Sparkke.

In addition, Better Beer returned sales of $1.8 million in the second quarter of its financial year, but it has highlighted that stock shortages have and will impact the performance of Better Beer, which is currently facing a legal battle with Brick Lane over alleged similarities to the latter’s Sidewinder beer.

Mighty Craft also said it had delivered 220,000 litres of whisky under maturation by the end of the period, following the launch of its whisky strategy last year.

Strategy shifts at Mighty Craft

In the past year it has moved away from a venue strategy initially announced in 2019, prior to the outbreak of COVID-19, which led to its acquisition of venues at Moonee Ponds and Hunter Valley.

The accelerator suggested that the “shed model” such as that used by Slipstream and Jetty Road’s Dromana site, perform very well.

“The Hunter Valley has been more challenging, to have a big venue like that, we’ll be looking to offload that down the track.

“We will look at opportunities, but at this stage nothing new to report,” they said.

As a result, the Mighty Craft team said during an investor presentation that they “certainly have a big ambition to get more tap points out there”.

Currently, wholesale sits at approximately 70 per cent of group sales, and growth was led by the spirits and RTD category which grew 54 per cent, it said

Beer and cider grew 21.9 per cent, driven by Better Beer, which reported sales of $1.8 million, and Jetty Road, which saw 22.4 per cent growth. Approximately 60 on-premise venues were secured for the brand in the first six weeks of launch, and it is targeting 1,000 taps by the end of FY22, as well as export opportunities, initially into New Zealand but potentially further afield as well.

It has full-year target of 8 million litres in the beer and cider portfolio, 4 million litres of which will be Better Beer volume.

Managing director Mark Haysman said in a statement that the first half had been “both challenging and incredibly exciting for the business”.

“Managing through lockdowns, COVID, venue staffing issues and now unpredictable consumer demand has been tough and I am incredibly proud of the resilience of our people and the drive to keep our customers and each other safe.

“I am sure we will look back on this period in a few years as one that was pivotal in setting the business up for future success,” he said.

“We have what we regard as the best portfolio of premium local craft brands in the country covering Beer, Cider, Spirits and RTDs and the growth we are seeing is only the beginning.”

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