The Gage Roads Brewing Co’s ‘Returning to Craft’ strategy, which has seen the brewer move away from its ties to Woolworths and contract brewing, has brought huge increases in earnings and sales to national independent retailers.
In its 2017 financial year results Gage Roads reported a 63 per cent increase in earnings, up to $4.4m, thanks to a 23 per cent increase in sales of Gage Roads’ proprietary craft beer brands, which included a 270 per cent increase in sales to national independent retailers and a 172 per cent uplift of on-premise draught sales.
Managing Director, John Hoedemaker, told TheShout that the result shows that the company is delivering on its five-year plan of moving towards craft beer and away from contract brewing.
“The result really supports our Returning to Craft strategy, in October we regained our independence when we bought back the Woolworths shares,” Hoedemaker said.
“The strategy was to create a sales and marketing capability and with us bringing on Scott Player, our National Sales Manager, we’ve brought the sales and marketing headcount up from five to about 20 people now.
“A lot of those are working hard across the east coast and WA in representing our brand to the independent trade in both the off-premise and the on-premise and that’s been really well received. So those results have been fantastic in helping to generate some good profit and some good cash flow.”
Gage Roads’ earnings for the year were $4.4m, up from $2.7m last year and the company ended the year with record cash reserves of $7m and in a strong net cash position of $5m.
Hoedemaker said the strong position is where the company was hoping to be after one year of its new strategy and gives it the strength to look forward to the next four years.
“It is pretty much where we were expecting to be within the Returning to Craft strategy. We were expecting the proportion of the Gage Road brand sales to grow, and they have. The Gage Roads brands now represent 32 per cent of our sales volume at the moment, up from 25 per cent this time last year. So we are shifting towards our own brands and in four years’ time we would like to see that at 70 per cent.
“We’ll do that by continuing with the strategy of applying sales and marketing capability nationally and providing our customers – the bottleshops and the bars – with the margins and the accessibility that they are looking for.”
Speaking about how the brewer has seen 270 per cent growth across independent retailers, Hoedemaker told TheShout: “I think it’s because we’ve got a really credible range of craft beer and we have a philosophy that we want to see our beer in every person’s fridge. We don’t brew craft beer for a select few, we brew craft beer for everyone and I think that is where the market is going.
“We do want to brew beer that everyone will enjoy, you look at our Little Dove beer, it was named the Best Beer at the 2016 Australian International Beer Awards. But the standout for Little Dove is that I get all sorts of people coming to tell me that they love it. Whether they are really into their craft beers, or just entering the market, it is a very accessible beer and it wins Best Beer of Show, because it’s a genuine, good quality craft beer.”
In terms of looking to the future Hoedemaker told TheShout that the brewer is proud to be independent again and that the company is aiming to continue working with the trade.
“The key message to our customers in the independent trade is that we are independent now and we are really looking forward to introducing our brand to their businesses and seeing if we can form a meaningful part of the result that they get from their business.”