Gage Roads taps bank to make more beer
Food & Agriculture
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Beer maker Gage Roads Brewing (ASX:GRB) says you boozers are drinking all of its beer, so it’s hit up the banks for extra cash to make more.
The brewer has refinanced and collected an extra $12m in debt funding from Commonwealth Bank (ASX:CBA).
The company says the money is to fund production as it seeks funds to keep up with demand for its in-house drinks. It has a goal of selling 10 million litres a year of its own branded drinks.
At the end of 2019, Gage Roads was carrying $2m of debt.
However, in the half-year accounts it posted a $1.1m loss, a 180 degree turn from the $1.1m profit it made in the same period a year earlier, as revenue increases couldn’t keep up with expenses.
Earlier this month the company reported a strong sales recovery in May and June thanks to competitor complacency.
Keg sales to bars, restaurants and sports arenas suffered in April and May, but on-premise restrictions eased faster than expected and Gage Roads capitalised on demand from bars as competitors failed to supply enough beer.
Australians bulk-bought beer in March but had run out by May, when sales began to pick up again.
Some studies have suggested that Australians reduced their drinking during the worst of the COVID-19 lockdown — an ANU study suggested 27 per cent claimed to have reduced their drinking compared with 20 per cent who said their drinking had lifted — and others such as the Australian Bureau of Statistics say the vast majority of us carried on as normal.
The pressure for companies like Gage Roads has come from the shutdown of licensed premises.
“Beer, wine and spirit producers are reporting volume declines of between 10 per cent and 35 per cent, which has clearly translated into Australians drinking less overall, and the sad reality of close to half a million jobs being lost in hospitality,” Alcohol Beverages Australia CEO Andrew Wilsmore said in a statement.