Mighty Craft has seen significant growth during Q3 of the 2022 financial year, with quarterly cash receipts up by 96 per cent.
Already one of the fastest growing drinks companies in Australia, following a successful second quarter,Might Craft has also recorded triple digit revenue growth in Q3, FY 2022 when compared to the previous year.
In dollar value, revenue for the quarter reached $19.4m, an increase 105 per cent on Q3 FY 2021, the previous corresponding period (‘pcp’). Cash receipts totalled $21.3m for the quarter, although cash outflow was up to $2.9m versus 1.6m in Q2 FY22, with Mighty Craft saying this reflected the on-going impact of COVID-19 and investment of capital to support brand growth.
Mark Haysman, Mighty Craft’s Managing Director, said, “Q3 FY22 was another record sales quarter for the business, despite the ongoing COVID impacts to both our own venues.”
“Whilst this has caused a short-term impact from a profit mix perspective, we view this as temporary and expect hospitality to continue to bounce back to pre-COVID levels.”
Better Beer sees success
One brand that Mighty Craft has been keen to highlight is Better Beer, which was launched in October of 2021. This brand has recorded sales of $7.8m in dollar value, and 1.8m litres in volume. In March alone, Better Beer saw best-ever sales of $3.4m, and the brand is on-track to its target of four million litres in the 2022 financial year. Since its launch, the Better Beer has delivered $7.8m in total sales.
In addition, the initial launch of Better Beer has now been supported by release of Better Beer Ginger Beer, with early sales hitting the $500,000 mark.
Mighty Crafty does acknowledge, however, that the growth of Better Beer has required ‘ongoing investment in working capital’ and that this has impacted operating cashflow. Earnings before interest, taxes, depreciation, and amortization clocked in at $1.3m for the quarter, a fall of some 900,000 versus pcp.
The company also stated that COVID continued to affect business in the on-premise during Q3, with venue sales dropping to just a quarter of total business sales, versus 45 per cent in Q3 FY 2021, and 29 per cent in the first half of FY 2022. Mighty Craft operates cellar doors and bars at several of its distilleries and breweries, which will also have been impacted by the pandemic and lockdowns.
Sales of kegs were also down by four per cent versus pcp, despite an overall growth rate in the beer and cider category of 100 per cent versus pcp. Kegs therefore only made up 11 per cent of total beer, cider and RTD sales in the quarter.
The final cash balance for the company as for March 31 was $6.8m, compared to $10.7m on December 31, 2021 (the end of the previous quarter).
In the same announcement, Mighty Craft outlined its key focuses for the final quarter of the financial year, and beyond. In particular, the company is looking to further support the acceleration and growth of Better Beer, with ‘further innovation in the market’ in Q4.
Alongside Better Beer, Mighty Craft identified Kangaroo Island Spirits and Seven Seasons as key, growth driving brands.
The beginning of April saw the establishment of the Whisky Development Syndicate (WDS), the company states will allow it to develop and accelerate the production of whisky, without dipping into Mighty Craft’s cash reserves.
In this announcement, the company also detailed the growth of its maturing whisky stocks, with 273,548 litres in barrel as of March 2022, a growth of circa 55,000 litres on the second quarter of the financial year. This growth, however, was funded by Mighty Craft itself, with the WDS not yet operational, meaning that investment in whisky acceleration impacted operational cash flow.
Investors can also expect Mighty Craft to streamline its offering in the near future, with Haysman saying, “we will continue to simplify and focus the business, back the brand winners and divest non-core assets, which will also help us from a capital management point of view.”
Mighty Craft has indicated that it expects to ‘implement a leaner operating model heading into FY23.’
“We have a very clear set of priorities and the best portfolio of craft beverages in the country, which is incredibly exciting,” Haysman adds.
Ultimately, Haysman believes that Mighty Craft is well placed to succeed in the 2023 financial year.
“The business is in very good shape heading into FY23, and ready to deliver ongoing and sustainable profits.”