Gage Roads Secured Extension Of Existing Tender With Pinnacle Drinks For An Additional Three Years

GRB

Gage Roads Brewing Co Limited (ASX: GRB), domiciled in Australia, is a brewery company. It produces a range of ales and lagers from its facility located in an old margarine factory just outside Freo in Gage Roads. They use a lot of hops while the beer is fermented which brings the big aromas and flavours in the beers. It keeps the beer unfiltered by making the yeast and hops particles drop out of the beer naturally.

It has a portfolio of six beers, Little Dove with 6.2% alcohol content, Sleeping Giant India Pale Ale with 5.4% alcohol volume, Single Fin with 4.5% alcohol mix, Narrow Neck with 3.5% alcohol content, Break Water with 4.5% alcohol mix, and Atomic with 4.7% alcohol volume.

GRB currently holds a contract to produce several exclusive brands for Pinnacle Drinks which will expire on 30 June 2019. Today, GRB has announced that it has won a tender under which it can continue the production of exclusive brands for Pinnacle Drinks for an additional three years. The new period under this contract will be starting from 1 July 2019 and will continue through to the end of FY22. However, this is subject to the completion of formal documentation.

Pinnacle Drinks is an Australia-based company which is partnered with brewers, growers, winemakers, and distillers to supply a range of wine, beer and spirits categories.

Under the contract, GRB is currently producing a number of exclusive brands for Pinnacle Drinks. There are no minimum volume commitments to the new contract, but the expected volumes outlined in the tender are anticipated to be up to 3.6 million Litres per annum or 460,000 cases per annum.

GRB is following its 5-year proprietary brand strategy, and this contract will help in keeping with the strategy and the volumes awarded under this tender are directly aligned with GRB’s vision for FY20, FY21 and FY22.

Mr. John Hoedemaker, the Managing Director of GRB, commented that the long and successful partnership with Pinnacle Drinks along with the quality of products that GRB continues to produce had made GRB won the tender.

It recently announced its 1H19 progress updates under which it reported an increase in the sales to independent retailers by 64% on PCP and Proprietary brand sales contributed 62% of the overall sales mix with an increase of 96% PCP. Its draught sales were up by 69% on pcp.

The unaudited gross profit margin was up by 9% over pcp and was reported at 68% in 1H19. Similarly, the unaudited EBITDA was up by 59%, reported at A$2.1 million.

It also completed the first year of Optus Stadium contract under which it sold more than 1 million litres of beer.

Looking at Gage Roads Brewing Co Limited’s stock performance, it has generated a negative return of 19.17% during the past six months. It is currently trading at A$0.100 (at the close of the market on 05 February 2019) with a surge of 3.093% in the price during the day’s performance. GRB has 1.01 billion shares outstanding with a market cap of circa A$98.12 million and 52-week high and low of A$0.145 and A$0.070 respectively.


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