Mighty Craft (ASX:MCL) is trading strong. Here’s why

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Mighty Craft (ASX:MCL) is trading strong. Here’s why

SouthTrade, Mighty Craft, Adelaide Hills Distillery, transformational acquisition
Image source: © Wisconsinart | Megapixl.com

Highlights

  • Mighty Craft announced that SouthTrade and Mighty Craft have entered into a confidential deed of settlement.
  • According to the Company, SouthTrade will transfer the distribution of Adelaide Hills Distillery (AHD) products to Mighty Craft from 10 November 2021.
  • MCL believes that the 78 Degrees brands have significant further growth potential, both in Australia and globally.

ASX-listed manufacturer of alcoholic beverage Mighty Craft Limited (ASX:MCL) shared via an announcement on Monday an update on its announcement dated 10 June 2021, which detailed its transformational acquisition of the Adelaide Hills Group.

The Company revealed that SouthTrade International (SouthTrade) has agreed to transfer the distribution of Adelaide Hills Distillery (AHD) products to Mighty Craft from 10 November 2021.  

Today, the Company stated that SouthTrade and Mighty Craft have entered into a confidential deed of settlement, which includes arrangements for the purchase of any 78 Degrees stock that may remain as of mid-November 2021 when the transition occurs.

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SouthTrade has been a valued and trusted partner for the Adelaide Hills Distillery since 2018, exclusively distributing all products, including 78 Degrees Gin, 78 Degrees RTD mixer range, and 78 Degrees Whiskey. The business has enjoyed impressive growth during this period and is currently selling ~150,000 bottles per year.

As per the firm, SouthTrade has played a significant role in driving the growth of the AHD business over the last three years, and the businesses have built solid industry relationships. 

Today, the stock MCL was spotted trading over 6% higher at AU$0.320 per share on ASX at 12:24 PM AEDT.

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Bottom Line:

Given Mighty Craft has an existing in-house sales and distribution capability, strategically, it makes sense to bring distribution back in-house soon after the acquisition to maximise the available synergies and accelerate growth.

The Company believes that the 78 Degrees brands have significant further growth potential, both in Australia and internationally, and is an integral part of the overall product portfolio and a key pillar of Mighty Craft’s growth ambition over the coming years.

78 Degrees will now form part of Mighty Craft’s portfolio with huge potential both in Australia and overseas. The spirits portfolio now contains 78 Degrees, Kangaroo Island Spirits, Seven Seasons, Brogans Way, and the soon-to-be-launched premium Hidden Lake Tasmanian Whisky brand.

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