A beer fortune turnaround Broo-ing with large CUB order

Despite some struggles faced through COVID-19 shutdowns, beer producer Broo (ASX: BEE) could be on the move again having entered into a production agreement with Australia’s leading brewer Carlton and United Breweries (CUB). 

The order with CUB comes despite Broo owning and operating their own brewery facility in Mildura where they produce Broo Premium Lager and Australia Draught. 

Under the CUB agreement, Broo anticipates placing orders with CUB for a minimum of 48,000 cases of beer quarterly over the 2-year agreement. If minimum orders are met this equates to 384,000 cases of beer. 

Being based in Victoria, but with national distribution, Broo has been adversely affected by COVID-19 which has resulted in the shutdowns of their Sorrento Brewhouse and Mildura Pub, which have had a material impact on revenue. 

For the Quarter ending 30 June 2020, Broo reported $420k of revenue, which was significantly down on the $879k from the corresponding FY19 Quarter. 

While the Company has reduced its operating expenses in the tough trading conditions, their Mildura Brewery has continued to produce beer, suggesting any orders delivered by CUB of Broo Premium Lager and Australia Draught will be additional to Company-owned producing facilities. 

Having operated with a net loss of $137k for the June Quarter and $76k of cash on hand, Broo is seeking longer-term sources of capital. A major marketing push, backed up by CUB’s supply may just be what the Company needs to brew their post-COVID turnaround.