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GDA - Good Drinks Australia

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adobee

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Gage Roads Brewing Co Limited (GRB) is a Western Australian-based craft brewery, with an existing brewing capacity approximately 3.5 million litres per annum, scalable to 7 million litres. The companys current products include Gage Roads Premium Lager, Gage Roads PILS and Gage Roads India Pale Ale.

http://www.gageroads.com.au

I have just drunk a few Wahoo beers and been quite impressed thus I am starting a thread on the brewer GRB ... At a glance Woolworths acquired 25% in May 2009, they arent running a profit but have a great product and marketing.. Will be investigating further and looks at the accounts..
 
Yeh these guys and Little World (Littles Creatures) are the only 2 micro breweries listed.

From a beer perspective i prefer Little Creatures, but having said that i wouldnt actually invest in either. Its a very tough market, fickle consumer tastes, and big mainstream competition with huge marketing budgets. Yes micro breweries can turn a proift, but the can also go out of business easily and thier growth is very limited imho.
 
I'm with Prawn...great beers, but the market is very crowed with little gourmet beers and the majors are all powerful, hard to like the micro brewers as anything other than a takeover target.
 
With WOW having over a qtr of all liqour sales in OZ the early signs of the relationship with them look promising. Just check out the improved availability of India Pale Ale, Premium and Wahoo at your local Woolies liquor store.

GRB reported sales of its exisiting lines doubling and sales of the new "Sail & Anchor Dry Dock Premium" are better than expected. SP responded accordingly.

With Woolies holding 25% of GRB and committing to at least 350,000 case p.a.- Company has been transformed from a 50,000 to 400,000 case brewer overnight.

Agree - Wahoo is a beauty.. I'm in!!
 
I read this thread and was instantly interested (because it has something to do with beer).

I was reading the annual report and noticed they made a loss of -$2m and so far their equity base has fallen from $15m to just under $4m. Taking a look at the balance sheet I also wonder if their non-tangible assets PPE you could actually realise $2.5m in a sale. Does anyone know when they are likely to become profitable? Based on the current price the market cap for the company is around $32m.

Just by fluke today I was reading a berkshire report from 1991 and noticed this segment and based on the market cap etc I thought it was an interesting comparison to Gage Roads. I highlighted the parts in bold which mainly relate to it

Twenty Years in a Candy Store

We've just passed a milestone: Twenty years ago, on January 3,
1972, Blue Chip Stamps (then an affiliate of Berkshire and later
merged into it) bought control of See's Candy Shops, a West Coast
manufacturer and retailer of boxed-chocolates. The nominal price
that the sellers were asking - calculated on the 100% ownership we
ultimately attained - was $40 million. But the company had $10
million of excess cash, and therefore the true offering price was
$30 million. Charlie and I, not yet fully appreciative of the value
of an economic franchise, looked at the company's mere $7 million
of tangible net worth and said $25 million was as high as we would
go (and we meant it). Fortunately, the sellers accepted our offer.

The sales of trading stamps by Blue Chip thereafter declined
from $102.5 million in 1972 to $1.2 million in 1991. But See's
candy sales in the same period increased from $29 million to $196
million. Moreover, profits at See's grew even faster than sales,
from $4.2 million pre-tax in 1972 to $42.4 million last year.

I thought it was an interesting comparison just based on the market cap considering Gage Roads has $4m tangible assets and negative sales yet is worth $31m in the market. I am assuming though the market is expecting it to be profitable with the new alliance with Woolworths. I am not trying to say the stock is bad I am just interested on what people think of its current prospects and if they are already factored into the price.

Let me know what you think and good work if you got in at 1-2c
 
I was looking at these guys for a long time but decided against investing in them for a couple of reasons:

1. Hard for companies to secure good market share in the industry. Market is dominated by fosters and lion nathan.

2. GRB niche market is already occupied by Little creatures.

3. Poorly marketed

4. Not popular amongst young adults. Being 19 I think I have a pretty good idea of what beers are popular among my demographic. I have never seen any GRB beers sold at pubs/clubs nor have I seen anyone drinking GRB beers.

The great thing about the negatives I have listed is that they can all be turned around if GRB improves their marketing. It doesn't take much advertising I believe to encourage someone to try a new beer (well for me anyway). I will keep a close eye on GRB anyway.
 

Very good points all raised.
I wonder the market key players must have studied the points discussed so far in this thread on GRB.
  • Why then the price shot up ?
  • Why Woolies want it ?
  • Why Speculator recommended and the price shot up land they got a speeding ticket ?
    The volume of transaction - that was too high as well

Date Last % Change High Low Vol *
13 Nov 2009 0.115 9.52% 0.115 0.105 425,023
12 Nov 2009 0.105 -4.55% 0.110 0.105 660,194
11 Nov 2009 0.110 -4.35% 0.115 0.100 706,094
10 Nov 2009 0.115 17.35% 0.115 0.100 1,282,954 09 Nov 2009 0.098 2.08% 0.115 0.098 2,166,978
 
Something has lit a fire under this one - Up to 15c today. ASX equiry coming?

Next update will be interesting.

* Will sales momentum continue
* Will they be increasing capacity further
* If so how will they fund it.

Didn't get in at 1-2 cents but I'm in for the ride. You don't get companies increasing sales volume 8 fold every day - from 50,000 cases to 400,000.
 
damb.. i felt good about it after drinking a case of wahoo but didnt buy in .. what a shame.. The wahoo design is great.. you dont see people drinking it cause its not that available yet ... I love this beer.. i will be buying in shortly ..
 
Wahoo was a bit disappointing for me actually. Easy to drink but no major 'notes' or flavours in it, just a bit plain for my liking.
 
damn it! i was in this one for months at 5c and it wasnt doing anything... even started drinking the beer... one night i got one of the whole range and sat on the lounge watching the cricket drinking my beer... after a few months i sold at 6c because i thought there were better opportunities around... had always planned to get back into this later on
 
prawn_86 said:
Wahoo was a bit disappointing for me actually. Easy to drink but no major 'notes' or flavours in it, just a bit plain for my liking.
Click to expand...

Yeah I tend to agree, not a bad beer but there are definately better beers out there for $50 a slab...
 
Tastes vary and one would be hard pressed to see this stock going backwards with a $720K equipment grant from WOW, plus 1M cartons per annum....gar sales with good margins...

Huge upside potential with WOW backing it....as long as mgmt can grow without imploding, diluting too much or sing rediculous debt , all seems great...

Disc - may or may not own this stock
 
Just been in my local Dan Murphy's seems to have alot of new drops from GRB - Clipper Light (full pallet), Atomic Pale Ale, Sleeping Giant IPA, Pils 3.5, Blue Angel and Castaway Cidar.

Will be interesting to see how these products and the relaunch of Wahoo in March go and the impact on the stock price.

Clipper and Castaway are badged under Sail and Anchor, so they might even give Dry Dock sales a bit of a push too. Figures crossed.
 
Sitting at a 1 year low.
Quarterly out and the company pulled in 500k cash after capex.
Market cap 20m and the co is pulling in 2m a year at current rates which makes it look tempting.
The co seems to have decent levels of growth ahead of it, through sales of their own brands which should be given some extra help through additional availability through all the woolworths stores and then through production of the woolworths brands.


I think the game plan is eventually eastcoast expansion but this is sometime off.
But if/when this happens im sure the margins have to be better than trucking beer 1000km+

Anyone else have an opinion??

MMMM beer!
 
This stock is starting to get very interesting IMO.

Currently expanding their production capacity based on forward contracts with Woolies and an announcement overnight that they have two new contract brewers in place to fill some of the extra capacity that expansion currently gives them.

New 3-year supply contract signed with Woolies in November... and interestingly, Woolies strategy here seems to be to replicate what they have done in the grocery stores pushing private lable products (home brand / woolworths select)... not sure whether that'll be as successful with beer as it has been with food products, but as far as GRB is concerned it'll mean a big push from woolies to generate the required high volume / low margin sales.

http://www.smh.com.au/business/woolies-signs-new-deal-with-wa-brewer-20121118-29k64.html

Still a lot of unknowns in there, but it's an interesting strategy and one that could grow quite quickly if they can pull it off (could also just as quickly fall flat on it's face). Price is up nearly 20% today on the news released yesterday, on top of the already 20% gain this month (and nearly 200% jump since mid last year).

...put it on your watch lists.
 
I did the maths on this one at about 7.5c. It didn't look super cheap to me at that point. Although a few things have changed the price is almost double that now, so it's definitely still not cheap.

I'm not really interested in earnings re-adjustment plays though, so it could be me. There is nothing compelling about their long-term competitive position that I can see. Lots of things that could go wrong, though.

I will however say, that there is a small group of investors who took a large stake in this company at about 7c (look at the volume chart, you will see where they bought) and they've been ramping it on Hotcopper and facebook ever since. They have a fairly large following all of a sudden. I'd be careful for that reason alone.
 
I walk into a bottle-O these days and there seems to be 1001 different beers, how do they all make money? Just the marketing they need to spend to get someone to try their beer makes me shudder. Now these guys are getting into bed with Woolies, care to take a guess who will make more money out of this?

WOW will get into bed with these guys then start marketing their own home brands and in the end GRB will become a contract manufacturer for WOW, earning returns commensurate with that position. If they're doing it to multinational food manufacturers, then they'll do it to a microbrewery.
 
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