By James Atkinson
New Zealand craft brewer, Moa Group, has announced it will increase its focus on the Australian market after revealing an expected loss of up to $NZ6 million ($5.23 million) in the 2014 financial year.
Moa this morning announced the predicted loss after having earlier warned that it expected to fall short of its sales volume target for the financial year ended March 31, 2014 by approximately 30 per cent (approximately 60,000 9 litre equivalent cases), largely due to an anticipated sales shortfall in the New Zealand market.
The brewer today confirmed it had brought its NZ distribution in-house, after previously claiming former NZ distributor Treasury Wine Estates was to blame for disappointing sales in that market.
Moa said the sales mix in New Zealand had been adversely impacted by a lack of focus and targeting on the higher margin Reserve and Estate ranges and there had also been a range of promotional activities to achieve volumes.
“We recently were confronted with a revision to their original forecasts, for the FY14 year. We believe this was unacceptable and incongruent with the trajectory of the brand,” CEO Geoff Ross said of the TWE deal in August.
Moa today said it had experienced encouraging NZ sales volume for October, which was the first month under the new in-house distribution model.
And the company said it is gaining confidence that the Australian market offers greater opportunity than previously foreseen, following its launch into this market last year.
“An increased focus on Australia will be developed over the next 6-12 months. Previously the company has seen Australia as a neighbouring but less important export market but this market is starting to look more promising than first thought.”
Similarly to NZ, Moa has recently concluded its agency agreement in Australia, where it is currently establishing its own sales force.
“We have gained distribution via ALM, Australia’s biggest liquor distributor, which will give us the reach. We now ensure we make the sales ourselves with our own people. We have focused efforts on New South Wales and will build this state up first,” Ross said in August.
Moa said that despite a level of confidence that its revised sales volume targets can be achieved, it will be difficult to limit the FY14 loss to $4.5m, as predicted in October.
“Given the adverse circumstances of the first half result the FY14 loss could be between $5.0-$6.0m,” the company said.
“The board and management note the pressures prevailing on the Moa business and outlook and will be considering a range of strategic initiatives to improve the overall profitability and viability of the business model.”
Australia contributed $NZ 460,000 to Moa’s total FY13 revenue of $NZ 4.38 million, with the NZ market the company’s biggest ($NZ 3.1 million).