Record revenue growth for Mighty Craft
Craft accelerator Mighty Craft reported record quarterly revenue growth yesterday, saying that its RTD and Spirits segments had been key drivers for overall growth.
The venue operator and craft drinks business investor delivered record receipts of $10.8 million for the three months to March 2021, according to a statement to the ASX. In comparison, in the same period last year, receipts reached $2.4 million.
Overall sales revenue grew 277 per cent for the quarter, it said.
Wholesale growth continued ahead of the market with beer delivering growth of 74 per cent, compared to estimated industry growth of 7 per cent.
However, as Mighty Craft is still in a period of expansion, it made a loss of $1.4 million in operating activities for the quarter, bringing the year-to-date loss to $9.0 million, with the majority spent on staffing costs and product manufacturing costs.
Managing director of Mighty Craft, Mark Haysman, said that the growth was “very pleasing” and a testament to the strength of its new distribution model implemented earlier in the financial year.
“We have to give credit to the quality of our premium craft beverage portfolio, with our spirits/RTD brands capturing significant market share in a rapidly growing market, underpinned by market outperforming growth across both our beer and spirit portfolios. “
Mighty Craft recognised that spirits and RTDs had experienced ‘exponential’ growth over the past quarter.
Combined, the two now represent 34 per cent of wholesale sales compared to 23 per cent of sales in the prior quarter, and this is expected to lead growth over the coming quarters, the company said.
During the period it launched Seven Seasons, a spirits brand backed by Indigenous Larrakia Australian rules footballer Daniel Motlop, after Mighty Craft acquired Motlop’s own gin brand Green Ant Gin last year. The accelerator also commenced work on the $3.5 million development of the Kangaroo Island distillery, with the help of a $500,000 SA Tourism commission grant.
Torquay Beverage Company, Mighty Craft’s incubator business, produced the ‘NoSH Boozy Seltzer’, which the company said was a ‘standout performer’ despite having only launched last quarter, with sales of $500,000 in four months.
However, it has not been without its challenges. The seltzer brand faced an ABAC adjudication decision for its social media marketing, and a panel found that the company had breached its regulations. Nosh accepted the breach and took down the offending posts.
As a result of this success, Mighty Craft suggested that there would be a continual shift in sales mix, towards the “higher margin, higher growth spirits/RTD category” as it aims to break even in the second half of its 2022 financial year.
Despite this focus on spirits and RTDs, beer was not neglected. During the period, Mighty Craft took a greater share in Sparkke owning 32 per cent of the business, and it will underwrite $500,000 of the Sparkke Rights Issue of up to $3 million.
Mighty Craft also gave a nod to the acceleration in wholesale beer driven by Ballistic, Jetty Road and Slipstream over the period, and said that its “disciplined acquisition approach” would focus on the geographical spread of beer brands.
Venue growth is bouncing back according to the latest report with Mighty Craft’s retail venues including Brisbane’s Slipstream, Jetty Road in Dromana and Lorne, and Foghorn in Newcastle, performing well and back to pre-COVID trading levels.
Slipstream, which opened its new and improved venue earlier this year, is already off to a strong start, reported Mighty Craft, with trading at close to full capacity and the venue turning a profit.
In contrast, the two Mighty Craft-branded venues are operating at 70 per cent of optimal trading levels. However, management said it believed that they will strengthen their brand identities and contribute to a direct uplift in wholesale sales growth.
Overall, venues contributed $4.5. million in sales in the quarter, an incline of 151 per cent compared to the same quarter last year.
Cash in hand at the end of the quarter of $11.7 million, putting the company “in good stead” to continue to fund its growth strategy.