Good Drinks Australia’s hospitality revenues boom even as overall beer market softens

By 2027, Australia’s beer market is set to be worth $25.11 billion, but with growing competition, it’s not enough to just sell great beer; companies must now sell an experience. That’s why Australian brewing company Good Drinks Australia (ASX: GDA) has left behind its pokies days to focus on more beer. 

In Q1 FY24, the brand behind Gage Roads, Matso’s, Hello Sunshine, Alby and San Miguel reported total revenue growth of 6% on Q1 FY23. Good Drinks Australia’s brands and partner brands outperformed the retail beer market, marking an increase of 9% despite challenging market conditions.

 The Company continued investing in its sales capability and marketing, up 8% to $4.73 million. 

Plus, it got former CUB (Carlton and United Breweries) general manager/sales director, Queensland, Mick McKeown, on board as the head of sales and marketing for Good Drinks Australia. 

GDA’s partner brands’ volumes stay strong in a highly competitive segment at 2.5m litres. While the overall beer market has reduced 8.2% in volume, and craft beer declined 4.2%, GDA’s hospitality revenues were $5.7 million, with earnings growing 6.4%. 

The Company has also established long-term tap agreements with national pubs to boost draught sales. Plus, Gage Roads Fremantle, its flagship venue, achieved its highest trading days in Q1 FY24, surpassing its first-year results.

Good Drinks Australia’s approach of investing in branding, sales, marketing, and expanding distribution and revenue is creating major value for the brand and its shareholders.

With regard to creating an experience, Matso’s Sunshine Coast project is nearly finished within its $5.5 million budget, with an anticipated opening in December 2023. In May 2023, Good Drinks Australia sold 15 gaming licenses linked to its pokies arm, generating $4.9 million in cash. These licenses were acquired as part of the $5.3 million purchase of “Joe’s Waterhole” in November 2021, and their sale is primarily funding the Sunshine Coast development. 

The development is progressing well, with all necessary approvals and construction underway. Matso’s Sunshine Coast will serve as the brand’s home and deliver an authentic consumer experience in Queensland.

Good Drinks Australia is also considering adding another venue on the east coast to support the Gage Roads brand, which will be financed through a combination of debt and operating cashflows. Throughout the year, the Company discontinued most low-margin contract brewing services, resulting in a 5.7 million-liter reduction in annual volume. This has freed up existing capacity to grow high-margin Good Drinks proprietary brands.

While the cost-of-living and discretionary spending pressures keep making things complicated, the Company is counting on growing beer consumption to keep it in the cash.

As of June, Good Drinks Australia maintains a strong cash position with $15.5 million in closing cash.