Mighty Craft to become Australia’s largest craft spirit producer following 3 major acquisitions

AUSTRALIAMighty Craft, a craft drinks accelerator, is on its way to becoming Australia’s largest craft spirit producer, following the acquisition of three south Australian craft beverage businesses – Adelaide Hills Distillery, Mismatch Brewing, and Hills Cider.

Mighty Craft is reported to have spent AUD 47 million (approx. US$36 million) in the venture which it says will enable it to transform into a scaled alcohol producer, wholesaler and retailer.

Apart from the distilleries, the deal also includes a 75% ownership stake in the Lot 100 venue – a destination distillery, cellar door, restaurant, and function center located on the property.

Adelaide Hills Distillery’s portfolio includes a collection of gins and Australian whisky under its 78 Degrees brand name, as well as a range of vermouths and aperitifs.

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The Hills Cider distillery on the other hand, produces a range of apple cider, pear cider and apple ginger hybrid.

Mismatch Brewing’s integration into Mighty Craft’s portfolio will increase the geographic reach of Mighty Craft’s craft beer portfolio particularly to the eastern states; as well as scale its brewing capabilities.

“The combination of the two businesses will mean Mighty Craft’s revenue is forecast to grow by 57% in FY22 with forecast EBITDA in FY22 to be $6 million, bringing immediate profitability to the Mighty Craft model,” said Mighty Craft managing director, Mark Haysman.

“This increased scale and the opportunity to realise significant efficiencies will truly leverage our operating platform and enhance Mighty Craft’s ability to accelerate growth of new and existing craft businesses, as well as consolidate our market position, and make us a real competitor in the craft beverage industry.”

Co-founders Sacha La Forgia, Ewan Brewerton, Steve Dorman and Toby Kline will remain with their businesses and together with their teams help integrate the brands from a production, distribution and sales perspective.

 “We’re thrilled to be part of an incredible team that champions the growth of the Australian craft beverage industry,” said Adelaide Hills Distillery’s founder and head distiller, Sacha La Forgia.

“Their knowledge and the team will give us a unique position to grow; not only with our current portfolio but also our emerging whisky offer that will now be part of one Australia’s largest craft spirit producers.”

The acquisition comes even as Mighty Craft’s Investors ponder on when the alcoholic beverage company will make a profit.

The latest financial year loss of AU$8.5m (US$6.44m) and a trailing-twelve-month loss of AU$11m (US$8.33m), cast doubt on any chance that the AU$48m (US$36.35m) market-cap company will make a profit soon.

Australian Hospitality analysts are however optimistic about the company’s future. They expect the company to post a final loss in 2022, before turning a profit of AU$2.2m (US$1.67m) in 2023.

Therefore, the company is expected to breakeven roughly 2 years from now. Using a line of best fit, analysts at Simply Wall St, calculated an average annual growth rate of 67%, which signals high confidence from analysts.

If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

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