ASX-listed craft drinks company, Mighty Craft, has purchased the Adelaide Hills Group (AHG) in a deal worth $47m and includes Adelaide Hills Distillery, Mismatch Brewing and Hills Cider.
The deal also includes 75 per cent ownership of the LOT.100 venue, which is a destination distillery, cellar door, restaurant, and function centre located on an 84-hectare property in the Adelaide Hills.
CEO Mark Haysman told The Shout what attracted Mighty Craft to AHG, and how they will look to grow the business.
“I’m an Adelaide boy originally so I’m very fond of the brands and have been admiring what they’ve been doing for some time. We managed to get connected and it evolved from there.
“Their beer product, Mismatch, is fabulous and has a great position in the market and Hills Cider is very well regarded in SA and beyond, and 78 Degrees is a great range of brands.
“We thought if we can work with great people and help these great beers, great brands and take them even further than South Australia, take them national etcetera, then let’s have a go at it, so it’s worked really well.”
He added: “I think there are opportunities where the combination of their team with our team will help take them to the next level, and I also think that them working with us will help us be better in a lot of areas as well.
“Some of the everyday challenges that we’re solving as a relatively new business they’ve already solved, so I think that’s why it’s such a nice combination.”
Haysman told The Shout: “I think there are some real opportunities to keep growing the brands and make them more available, take them overseas, particularly the spirits and for these to be part of an even bigger business and to grow, develop and add value to the broader Mighty Craft family is something they are really engaged with as well.
“The 78 Degrees brand plays in all the hot categories really with gin, vodka and whisky and Sacha is a great distiller. We can help them to grow the brand further and Sacha can help us with our broader distilling network as well.”
Adelaide Hills Distillery’s Founder and Head Distiller Sacha La Forgia said he was equally excited by the opportunities for growth and profitability: “We’re thrilled to be part of an incredible team that champions the growth of the Australian craft beverage industry.
“Their knowledge and team will give us a unique position to grow; not only with our current portfolio but also our emerging whisky offer that will now be part of one Australia’s largest craft spirit producers.”
Toby Kline, Co-founder of Hills Cider, and Ewan Brewerton, Co-founder of Mismatch Brewing Co. & LOT.100, agree, adding: “This next chapter marks our ability to supercharge our growth and better support our customers. The integration of our teams is exciting and between Mighty Craft and our business, we will be stronger together in growing the Australian craft industry.”
Haysman also said he was excited by the cross-market opportunities that will be created by the enlarged craft beverage portfolio, bringing the required scale, synergies, and profitability to the Mighty Craft business.
“The combination of the two businesses will mean Mighty Craft’s revenue is forecast to grow by 57 per cent in FY22 with forecast EBITDA in FY22 to be $6m, bringing immediate profitability to the Mighty Craft model,” he said.
“This increased scale and the opportunity to realise significant efficiencies will truly leverage our operating platform and enhance Mighty Craft’s ability to accelerate growth of new and existing craft businesses, as well as consolidating our market position, and making us a real competitor in the craft beverage industry.”
Previous company acquisitions and consolidations have raise consumer concerns around ownership and brand integrity, but Haysman told The Shout that Mighty Craft was “fiercely independent as a business and we definitely want to maintain that as best we possibly can into the future”.
He added: “We want the brewers and distillers that we work with to continue to pave the way for independent craft, big time. We are sitting behind the guys where we can, but we’re a proud Australian company trying to build great Australian independent brands and keeping them owned by Australian businesses.
“We really want to guys who started these businesses to keep being the hero and do well out of it along the way.”
As part of the transaction, AHG’s co-founders La Forgia, Brewerton, Kline and Steve Dorman will be retained as they continue to drive growth for the brands.
Haysman said: “They are taking 40 per cent of the purchase price effectively as shares in Mighty Craft so they are helping to create an amazing craft category across beer, cider and spirits and that’s exactly what we’re trying to do as well, and now we can do that together.”