In a surprise announcement, Western Australian beverage company, Good Drinks Australia (GDA), and Victorian brewery Stomping Ground have jointly decided not to proceed with GDA’s planned purchase.

An ASX announcement from GDA stated that ‘conditions have changed’ since the organisation first revealed its intention to purchase the brewing company in August of last year.

John Hoedemaker, GDA Managing Director, stressed that this decision was not a reflection of the strength of Stomping Ground.

“Stomping Ground is a great business and their management team have done an excellent job of creating a relevant Victorian beer business and brand.

“Unfortunately, recent conditions have challenged GDA’s underlying business case for the acquisition and would require more resources than initially anticipated to create meaningful value for GDA shareholders.”

Stomping Ground’s founder, Steve Jeffares, also commented on the decision.

“With softer trading conditions in the last few months, the benefits of joining forces unfortunately became less compelling. We felt it was a smarter option for us both to focus our efforts and resources on consolidating in the markets we know and understand best, our own.

“We’re incredibly proud of our award-winning team, beers, brand and venues, and, along with our committed shareholders, remain excited and energised about our strategic plans for Stomping Ground in Victoria. We wish the Good Drinks team all the best in the years ahead.”

For both parties, the decision appears to have been arrived at amicably, with Hoedemaker saying: “We know Stomping Ground will continue to be a great craft beer brand and wish the team all the best for the future.”

Good Drinks announces strong half year results

The Stomping Ground announcement followed shortly upon GDA’s half year results announcement, placed on 8 February.

According to an ASX statement, GDA doubled its retail market share to 2.6 per cent of the total beer market. This was accompanied by unaudited group revenue of $59.2m, an increase of 80 per cent. The group also enjoyed an unaudited EBITDA of $6.1m. Total volume sold hit 14.1m litres for the half year, an improvement of 35 per cent, with GDA own-brand volume coming in at 7.6m litres – an increase of 12 per cent. It appears that contract brewing is less of a focus for the company, with a volume of only 200,000 litres (a decline of 94 per cent).

Brands owned by the business also performed strongly, posting a 12 per cent growth. Draught beer sales grew particularly well, increasing by a quarter in the last half-year.

GDA increased its revenue and distribution in all states when compared with the first half of FY22, with particularly impressive results seen on the East Coast, where each state reported triple digit percentage growth in distributions. In Victoria and Tasmania (reported jointly), revenue increased by 113 per cent to $6m, while distributions saw an increase of 178 per cent (6,497 in total).

It was a similar story in NSW / ACT, where revenue increased to $2.6m, a growth of 115 per cent, and distributions by 160 per cent, to 4,682. Queensland revenue was up by 75 per cent to $8.7m, while distributions increased by 144 per cent to 4,280.

GDA’s home state of WA remains its strongest region, bringing in $24.2m in revenue (an increase of 23 per cent), and seeing more than 10,000 distributions. GDA believe that distribution growth is a key aspect of the company’s strategy, with the results report reading: “Distribution growth is a leading indicator for revenue growth.”

Tellingly, GDA’s own brands are considerably outperforming the general beer and craft beer categories. While these categories saw a decline of 7.9 and 1.7 per cent MAT (moving annual total) respectively, GDA’s own-brand pack grew at 6.5 per cent.

Key promotions made

A day before these results were announced, on 7 February, GDA revealed two new significant appointments, with Aaron Heary promoted to become Executive Director responsible for Strategy, Brand and Hospitality. Phil McClintock has also been promoted to COO, taking over from Heary.

Heary has worked for GDA since 2004, holding positions as COO and Chief Strategy Officer since 2014. Alongside Hoedemaker, Heary was credited with the successful introduction of the ‘Return to Craft’ strategy.

“Over the last 19 years, I’ve been privileged to work with some incredibly talented people across all aspects of our business. It’s our tenacious and entrepreneurial culture that has allowed us to outperform the Australian beer market for such a long time,” Heary commented.

“I look forward to working with the Board and broader team to continue delivering our solid growth trajectory and maximise earnings for our shareholders in coming years.”

Company chairman, Ian Olson, also commented on the appointment.

“Aaron has been integral to the Company’s growth since 2004, having previously worked with leading liquor sector businesses including Southcorp Wines and Little Creatures Brewing. It is a natural progression to see Aaron now appointed as an Executive Director of the Company and on behalf of the Board we welcome Aaron to the team.”

McClintock joined the company in 2013, initially as Financial Controller, before coming Head of Commercial in 2019. Hoedemaker spoke glowingly of his contribution.

“Phil has been one of the company’s top performers since his first day on the job, both culturally and technically,” the Managing Director said.

“He has driven the improvement of commercial rigour, data-based decision making and revenue management across the business and most recently Phil was central to the negotiation and integration of our partnership brands Millers, Coors and Magners,” he concluded.

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