24/03/2020 - 14:51

Gage Roads increases packaged beer production

24/03/2020 - 14:51

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Gage Roads Brewing Company has increased its weekly production of packaged products by 80 per cent to meet a recent surge in demand but has cut production of draught beer and withdrawn its earnings guidance because of the uncertain outlook.

Gage Roads increases packaged beer production
John Hoedemaker says the company is focused on the health and safety of its employees, while supporting customers and contributing to the economy. Photo: Attila Csaszar

Gage Roads Brewing Company has increased its weekly production of packaged products by 80 per cent to meet a recent surge in demand but has cut production of draught beer and withdrawn its earnings guidance because of the uncertain outlook.

In a market update posted to the ASX, the company said its brewery and supply chains remained fully operational and it was working to ensure supply continued to meet the increased demand.

Earlier this year, Gage Roads established a 3,500 square metre cold storage facility, which it said was currently storing several months of stock.

The company said it had engaged with suppliers to bring forward deliveries of brewing and packaging materials to secure production capabilities for the next two to three months, and was prioritising the delivery of extra stock to retail outlets.

The company’s new 400-cans-per-minute line and 400 bottles-per-minute filler were also fully operational.

However, due to the closure of bars, pubs and restaurants, Gage Roads has cut its production of draught beer.

As sales to Optus Stadium are on hold, Gage Roads and the stadium have agreed to an in-principle agreement on a pro-rata reduction in fee structure, to minimise the impact on the business.

The company is building a hospitality venue in Redfern in Sydney that is on track to be completed by mid-April, but said it had decided to delay the opening, which has now been tentatively flagged for August 2020.

Gage Roads managing director John Hoedemaker said as the spread of COVID-19 continued, the company was focused on the health and safety of its employees, while supporting customers and contributing to the economy.

“We’ve been investing in high-quality, high-volume brewing and packaging capabilities for some time now,” Mr Hoedemaker said.

“This scale and capability positions us well to support the craft category better than most.

“Our intention is to use it and bottle off every last drop in the brewery.

“If consumers want our beers during these extraordinary times then we’ll be ready to supply.”

Looking forward, the company said although the future was uncertain, it was fortunate to be experiencing continuing demand in its packaged products.

Gage Roads highlighted a number of levers it had to ensure the business maintained capital flexibility including cash flows from ongoing sales, pre-existing flexible credit facilities with Commonwealth Bank of Australia, the unwinding of seasonably high inventory balances, using stimulus programs provided by the ATO, and adjustments to the cost base of the business.

 

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