Draught beer sales up 199% for Gage Roads
Gage Roads Brewing Co has announced its draught sales are up 199% in Q2 FY18 compares to Q2 FY17.
Its second quarter highlights also include sales to independent retailers being up 165% compared to Q2 FY17 and total proprietary brands volume up 56% year on year.
The uplift in sales was driven by the independent retail channel, a tripling of keg sales as well as a 13% improvement in proprietary brands sales to the national retail chains when compared to Q2 FY17.
Contract brewing volumes continue to be unwound. Accordingly, sales volumes of the company’s contract-brewing division, Australian Quality Beverages (AQB), were down 11% compared with H1 FY17.
Gage Roads expects to meet its full year sales ambitions of at least 11 million litres and is on track to deliver growth in earnings and margins through the shift in sales mix towards higher-margin proprietary brands.
New products launched
During Q2 Gage Roads successfully launched a number of products into the market, including ALBY Draught (4.2%) and ALBY Crisp (3.5%), classic lagers with a strong focus on locally sourced ingredients.
Hello Sunshine is an apple cider extension to the Gage Roads Craft Range that has been developed in collaboration with Fringe World. Part proceeds of the sale of every litre of Hello Sunshine will go back to funding grassroots arts development in Western Australia.
All of these products will be available in retail and on-premise and will be cornerstone offerings at Optus Stadium. According to Gage Roads "Initial sales results have exceeded expectations and consumer feedback has been overwhelmingly positive."
Rugby 7s sponsorship on track
Gage Roads has signed a two-year partnership with Rugby Australia to become one of the official beer partners for the HSBC Sydney 7s event, which kicked off on Australia Day.
Gage Roads Single Fin Summer Ale was available at bars around Allianz Stadium, while guests enjoying Rugby Australia functions and hospitality packages had access to a broader selection of Gage Roads beers.
"Having craft beer at the HSBC Sydney 7s is a shift from the traditional lager-style offerings common to sporting events and reflects the broader shift in tastes among Australian beer drinkers," the company noted.
Earnings down in H1 FY18
The company recorded an unaudited EBITDA result of $1.3 million for H1 FY18 (down $1.5 million from H1 FY17: $2.8 million).
Gage Roads said: "This result is in keeping with the company’s expectations. In comparing the two results,
we note that the prior year result included $0.9 million in non-recurring other income relating to a settlement with an equipment supplier and a tax refund.
"In keeping with the strategic plan to increase marketing activities and improve gross profit margins, the Company invested $1.1 million (unaudited) more in sales and marketing in H1 FY18 than the previous half-year and delivered an incremental $0.5 million in earnings (unaudited) as a result of improved gross profit margins.
Predicted cash flow impact in Q3
The company noted that cashflows pertaining to the supply contract with Optus Stadium will start to have an impact in Q3. An annual rights fee is paid up front in January each year and is expected to be recouped through earnings from the stadium over the year. The timing of these payments and revenues will have cash flow impacts from quarter to quarter and are expected to be cashflow neutral on a calendar year basis.
Managing Director John Hoedemaker said that the partnerships with Optus Stadium and Rugby Australia are an important part of the company’s 5-year strategy.
“Our aim is to work with sporting, entertainment and event organisations who have a ‘consumer first’ approach and provide our consumer a fantastic experience while they trial our range of beers and ciders," he explained.
“The East Coast of Australia is a key focus and the Rugby Australia partnership will get the Single Fin product in the hands of thousands of Australian rugby fans. We expect this to have a positive effect on our retail
partners particularly in NSW, but also in other states as rugby fans return home after the event.
“I am very excited to see the positive consumer response to the ALBY and Hello Sunshine brands as they were launched this month into the retail market and during the first few events at Optus Stadium.”