Good Drinks Australia’s Managing Director John Hoedemaker has spoken to shareholders about the positive position of the business through FY23 and plans to continue this in FY24.
Speaking at the company’s AGM, Hoedemaker said he was proud of the “good people here at Good Drinks” and how the business has worked through some of the challenges of 2023.
“[The team] have overcome softer trading conditions and unforeseen challenges last year while still growing revenues and market share at an impressive rate compared to our competitors. With longer term planning we successfully mitigated the risks involved with a reduction of production volumes with the introduction of two new revenue streams being hospitality and partner brands,” he said.
Hoedemaker detailed the company’s results, explaining that the hospitality side of the business was a significant driver in the FY23 earnings, delivering $6.2m EBITDA for the year.
“We were excited to see the performance of our hospitality segment, specifically with the Gage Roads, Fremantle jumping so quickly to success along with the solid operations of Atomic in NSW and our newly acquired venue in Eumundi Queensland,” Hoedemaker said.
This result was buoyed by the sale of 15 gaming licenses, resulting in a $1.6m one off gain in earnings for FY23.
Good Drinks Australia faced a number of challenges throughout FY23, including a reduction contract brewing.
“This transition was undertaken to create the headroom in our manufacturing capability to accommodate the anticipated growth of our own brands at no further significant capital investment,” Hoedemaker said.
Key milestones include the appointment of Mick McKeown as Head of Sales and Marketing.
“Mick has extraordinary experience in both sales and marketing leadership in the beer industry. Having 12 years’ experience with CUB including as General Manager of sales in QLD, we look forward to working with Mick to supercharge our national and QLD sales and brand strategies,” Hoedemaker said.
Good Drinks Australia also launched the new label, Rider Lite.
“It is our first exploration into the massive contemporary beer category. The largest beer segment in Australia with 1 in every 3 beers consumed in Australia coming from the contemporary beer category. Our ambition with Rider is to take a smaller slice of a very large pie and if we get it right we have the opportunity to fill two million litres of our latent capacity with this owned brand,” Hoedemaker said.
FY24 Projections: Products
With selling price, net sales revenue per litre, and freight costs all stabilising, Hoedemaker is positive that the business will continue to perform well throughout the rest of FY24.
“This year so far, we have resolved a number of these challenges and we are already seeing, and we look forward to delivering for the full year, an improved earnings result from our core branded business,” he said.
This year has seen positive sales already, with Rider Light available in approximately 2,800 retail outlets from its launch, and Magner’s Cider products returning to Coles Liquor Group shelves for the first time in six years. Ranging of Good Drinks Australia products in the on-premise have been improving as well.
“Already our approach to develop our on-premise key account capabilities has led to a number of long-term strategic tap agreements with national pub groups helping to lift draught sales by 29 per cent last year and 10 per cent year to date. One project, which has come to fruition early this year, has been the creation of a National Call Centre. Targeted with increasing distributions of key brands Miller Chill, Gage Roads Single Fin and Matso’s Ginger Beer in regional areas we have already seen immediate success with approximately 17 per cent uplift in sales in these regional areas and we expect to expand this capability over the next few years,” said Hoedemaker.
Hoedemaker spoke to the flexibility of Good Drinks Australia’s offerings.
“Good Drinks Australia is providing good solutions for our customers. We are not a one trick pony, our broad portfolio approach allows us to be diversified and stratify multiple consumer trends at multiple price points. As one category starts to accelerate, we are nimble and have the opportunity to allocate resources appropriately to drive total revenues,” he said.
The low cost of manufacturing, now at 35c per litre, is also a benefit as cost of living pressures begin to affect customer spending.
“For example, the Gage Roads range is positioned at the lower end of the higher value beer segment. As discretionary spending tightens, we are seeing people trade down from higher priced craft participants into Single Fin, Sidetrack and Hazy As, driving the growth of the Gage Roads range,” said Hoedemaker.
Hoedemaker does not anticipate launching any new brands under the Good Drinks Australia umbrella for the remainder of FY24.
“At current prices we feel our equity capital is precious, we don’t feel the need to acquire brands to achieve our growth ambitions and all of our current capital projects are fully funded by our existing debt facilities and operating cash flows. We will continue to prioritise the growth in volumes and market share of our total portfolio,” he said.
FY24 Projections: Hospitality
The hospitality side of the business looks promising, with the new Matso’s Sunshine Coast venue, located in Eumundi Queensland, expected to open prior to Christmas this year.
“We are certainly at the pointy end of this construction project and as you can imagine, the whole Good Drinks Eumundi team and our project partners are working very hard to complete that project on time. I thank them for the hard work and the long hours, and I feel the venue will deliver a wonderful brand experience for Queensland consumers and help us accelerate that brand on the eastern seaboard,” said Hoedemaker.
Gage Roads Fremantle is also seeing positive results, proving that last year’s earnings were not the result of the new venue’s “honeymoon period”.
“Just last month the venue generated the best EBITDA result as a percentage of revenues since its opening. With a super-hot summer expected and an energetic hospitality team providing great customer service and executing some amazing events we are confident that Gage Roads Freo is on track to deliver improved earnings over last year,” said Hoedemaker.
However, Hoedemaker does not expect hospitality earnings to match those of FY23.
“Although Gage Roads Freo and Atomic in Redfern are operating as before, in FY24 we won’t have the benefit of the $1.6m gain on the sale of the gaming licences, and Masto’s Sunshine Coast earnings for the full year, net of pre-opening costs and non-optimal operations during the construction period is expected to be similar earnings we achieved from Joe’s Waterhole last year,” he said.
Hoedemaker finds the brand to be in a good position overall, and is confident of the brand’s success over the remainder of FY24.
“In summation, Good Drinks is well positioned for growth. Although we continue to expect softer trading conditions and restricted consumer spending, we are nimble, well-resourced and better placed to out compete our competitors in these market conditions,” he said.