27/08/2008 - 22:00

Microbrewers plan as market shifts

27/08/2008 - 22:00

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The recent decision by two of Western Australia's microbrewers to sell up could present growth opportunities for the industry's remaining players, according to Gage Roads CEO Nick Hayler.

Microbrewers plan as market shifts

The recent decision by two of Western Australia's microbrewers to sell up could present growth opportunities for the industry's remaining players, according to Gage Roads CEO Nick Hayler.

Empire Beer Group Ltd and Oz Brewing Ltd both announced the sale of their brewing facilities and restaurants this month.

While some might suggest this indicates a level of uncertainty about the micro brewing sector's future in WA, Mr Hayler believes it will free some precious capital to help finance the growth of Palmyra-based Gage Roads.

Empire sold the Royal on the Waterfront in East Perth and the Colonial Brewing Co in Margaret River to Colonial Leisure Group Pty Ltd for $4.5 million.

Chairman Mel Ashton said in an announcement that Empire failed to create economies of scale through a multi-venue hospitality operation.

Last May, the company flagged a successful $600,000 capital raising aimed at funding brand development and maintaining the two venues.

Mount Pleasant-based Oz Brewing Ltd sold 49 per cent interest in the Fremantle-based brewery and restaurant, Mad Monk, for $515,000 with an option to acquire 100 per cent of the asset, to Emem Management Pty Ltd.

In June 2008, the company terminated the share sale agreement to purchase Portable Building Solutions Ltd, eight months after it said it would branch out in the shed and housing business.

While Gage Roads posted a net loss after tax of $3.62 million compared with $3.07 million in 2007, the brewer believes it is well positioned for the future thanks to reduced capital markets competition in the craft brewing sector, and from changing its distribution agent from Constellation Wines to privately owned VOK Beverages.

Among the state's other microbrewers, Little World Beverages Ltd stood out from the competition with a net profit for the year to June 30 of $3.41 million, up 14 per cent from the previous year.

Little World and Gage Roads are both looking at launching new product in the upcoming financial year.

Mr Hayler told WA Business News the company was looking to launch two new high-volume products in the new financial year, including a low-carbohydrate beer to be released in October 2008.

Little World director Howard Cearns said the construction of a new brewing facility in the Yarra Valley in Victoria would be used to develop a new brand.

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