We’ve all heard of green-washing, but how about craft-beer washing?

The phenomenon of Big Brewing hiding behind hip boutique brands has been evident for some time.

Owned by Japan’s Kirin, Lion Nathan took over Little Creatures while Japan’s Asahi owns Mountain Goat, the erstwhile go-to pour for inner-city bearded flannel-shirted types.

That said, there are thousands of brewers (and distillers) and the market for genuinely boutique lagers seems unquenchable. A hard-earned thirst used to deserve a big cold Vic Bitter, but now it’s a hoppy pale ale with fruity overtones brewed in a former bearing factory in Footscray or Fremantle.

Having listed in December 2019, Mighty Craft (ASX:MCL) is tackling the sector with a multi-pronged strategy of co-investing in breweries and distilleries and operating branded venues. Its operations include Better Beer, Jetty Road Brewery, Ballistic Beer, Foghorn Brewery, gin distiller Seven Seas and Kangaroo Island Spirits.

CEO Mark Haysman describes Mighty Craft as the “fastest growing booze company on the ASX” – and a proven recession-proof play.

In the 2021–22 year, Mighty Craft aimed to brew eight million litres of beer cider and ready-to-drinks, 250,000 bottles of spirits and 300,000 litres of whisky. The company hit the first target and outperformed the next two, churning out 264,000 bottles of spirits and laid down 334,000 litres of whisky for maturation.

This year’s targets, respectively, are 14 million litres, 400,000 bottles and 535,000 litres of firewater.

Mighty Craft turned over $62.5 million in the 2021-22 year, up 206 per cent, with the net loss extending to $20 million from $15m previously.

In a seasonally subdued September quarter, the company recorded $20.7 million of receipts and lost $2.7m. However, October sales are at record levels ($9 million) and the November numbers are expected to be better than that.

Formerly Gage Roads and a white-label brewer for Woolworths, the Fremantle based Good Drinks Australia (GDA) is slightly bigger in terms of revenue and market capitalisation ($90 million compared with Mighty Craft’s $69m).

Good Drinks’ orbit includes the Broome based Matso’s (Broome), Taphouse in Melbourne and Atomic Brewing Project in Sydney’s gritty but gentrifying Redfern.

Under a recently signed compact, the company is also a local distributor for Canadian brewer Molson Coors.

Good Drinks posted revenue last year of $70.1 million, up 30 per cent and a $1.98m net profit (down 54 per cent) with underlying earnings sliding 22 per cent to $8.4m. Management targets ‘own beer’ output of 16 million litres this year, with plans afoot to expand capacity to 30 million litres annually by 2025.

At Tuesday’s AGM, management also targeted underlying earnings of $25-30 million by 2025 – which sounds ambitious but achievable.

As a turnaround ‘tipple’, investors might want to try the $1 billion market cap United Malt Group (ASX:UMG) which is directly exposed to the boutique brewing sector.

The company’s performance has left a flat and sour taste since demerging from GrainCorp, but it remains one of North America’s biggest malt producers.

Last year’s 20 per cent fall in net profit to $11.6 million reflected poor Canadian barley crop quality, as well as the usual woes of input costs and supply chain difficulties.

Management expects an earnings turnaround this year and with revenue of $1.4 billion (14 per cent higher), there’s plenty of top line to play with. High debt levels remain an issue, though.

While beer imbibers are spoiled for choice, brewing is a hard slog and it’s difficult to stand out on the shelves above the hundreds of other boutique brands.

In August Good Drinks acquired the Victorian brewer and venue operator Stomping Ground for circa $10 million in cash and scrip and we suspect there will be many more such deals.

This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.