Are you no longer reaching out for pints when you head out? You’re not alone.

The cost-of-living crisis has hit the beer, and companies like independent brewers Good Drinks Australia (ASX: GDA) are having to navigate the new consumer sentiment.

In fact, reports suggest that Aussies are slowing down their alcohol intake altogether, with more opting for non-alcoholic options. In March 2023, less than one-third of Australians drank beer in a typical four-week period, down from over 37% before the pandemic. As a result, GDA saw largely flat growth, prompting it to shift gears and focus on experiential marketing.

In the first half of FY24, Good Drinks Australia reported an unaudited EBITDA of $5.3 million, with the core business accounting for $3.2 million and the hospitality sector contributing $2.1 million. Total revenue for GDA experienced a modest increase of 2% compared to H1 FY23, amounting to $58.1 million. 

This growth in market share was achieved while maintaining investments in sales and marketing. Notably, net sales revenues per litre rose by $0.04 compared to FY23, successfully preserving margins, while the cost of goods sold per litre decreased by $0.02. There was an improvement in trading performance in the hospitality segment compared to H1 FY23, with the opening of Matso’s Sunshine Coast in December 2023 contributing to the unit’s strong performance.

During the reporting period, Good Drinks Australia’s own brands demonstrated significant market gains, with volumes increasing by 10% to reach 8.1 million litres, driven by a remarkable uptick in both pack and draught categories by 11% and 9% respectively. 

Conversely, partner brand volumes remained relatively stable in a fiercely competitive environment, standing at 6.2 million litres, reflecting a slight decline of 3% in line with trends in the broader beer market. There was an overall decline in the retail beer market by 3.1% and the craft beer market by 0.7% by volume.

Good Drinks Australia’s own brands like Single Fin and Matso’s Beer maintained their dominance, with Single Fin ranking sixth in Australia’s hottest 100 beer countdown and both brands claiming the top spots in their categories. Rider, a newer brand, showed strong momentum, while the events team enhanced brand awareness through partnerships and events. 

Partner brands like Coors and Miller Chill thrived, with Coors dominating the Superbowl season and Miller Chill reclaiming its position as the top-flavored beer brand in Australia. Magners (cider) also experienced significant growth, achieving its highest volume in five years. These achievements highlight GDA’s effective brand strategies and partnerships across various market segments. 

Good Drinks managed to reduce production costs from 45 cents per litre in FY23 to 38 cents per litre, a remarkable feat amidst inflationary pressures and reduced contract brewing volumes. Plus, the Company’s strategic initiatives, such as securing long-term tap agreements with pub groups for 7.1 million litres over the next 24 months and establishing a national call centre, have expanded its reach to a wider customer base. Additionally, the opening of a Queensland office, team expansion, and the establishment of a cold freight distribution hub have contributed to growth in the priority state, further strengthening Good Drinks’ market presence and operational capabilities.

In H1, Good Drinks’ hospitality sector generated $13.4 million in revenue with an EBITDA of $2.1 million, down by $0.3 million compared to H1 FY23. While Gage Roads Fremantle achieved record trading, earning $0.5 million more than the previous year, reduced operations at Matso’s Sunshine Coast led to a $0.6 million decrease in EBITDA. 

Despite this, the successful opening of Matso’s Sunshine Coast in December 2023 provides optimism for meeting FY24 earnings expectations. Plans to explore an additional east coast venue for the Gage Roads brand are underway, to be funded through debt and operating cash flows.