GDA - Good Drinks Australia

[Ves]

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.

Exactly. And there is very little they can do about it whilst operating at their current scale.

Another turn-off is that businesses like this aren't exactly scalable. You want to expand, you foot the capex bill.

 

[skc]

Maybe not a brewer though!

There's minimal additional cost based on my research.

 

[McLovin]

There's minimal additional cost based on my research.

View attachment 50471

I prefer Fudd (the stuff they drink in Shelbyville).

 

[Vader]

Exactly. And there is very little they can do about it whilst operating at their current scale.

Another turn-off is that businesses like this aren't exactly scalable. You want to expand, you foot the capex bill.

That's exactly what they're doing - they are already half way through that capex expenditure (full WOW contract comes online 2015), hence the additional capacity they presently have resulting in the contracts announced yesterday.

They have stated quite openly the strategy to move away from high margin sales to be a high volume / low margin contact brewer... yes WOW will make a lot of money out of it if it is successful, but there is no reason why Gage won't too.

From what I can see, WOW's strategy seems to be make 50 of those 101 beers on the shelf variations of their private label brands, promote those that sell the most, cut the ones that don't, rotate in some more private label brands, squeeze the margins of the other 51 beers on the shelf... as they start to disappear, more shelf space gets devoted to the successful private label brands... rinse and repeat.

It's an interesting strategy... I'd be more worried about the brewers of the non private label brands on the shelves that are about to get their margins squeezed like they've never had them squeezed before.

...I'm not so sure it'll be great for beer drinkers either once that happens (50 variations of essentially the same cheap beer), but WOW seem to be set on disruption of the liquor industry and I think GRB are going to get pulled along with them... at least for awhile.

 

[clowboy]

Trading halt for a share placement......

Utilising the high price perhaps?

 

[VSntchr]

Trading halt for a share placement......

Utilising the high price perhaps?

Perhaps the recent run has affected the timimg of the placement, but if you followed the accounts of this one you could see it coming miles away.

Debt was 136% of equity and fully drawn with an equipment payment due later this year. They have begun to generate much more cash now - but obviously not quick enough and the timing has forced this raising.

Woolies will get 25% of whatever the issue is to maintain their stake and i doubt that retail investors will be left with much if anything.

Will have to wait and see for the exact use oft he funding, but my guess is they will want to lower that debt to a more reasonable level...

 

[clowboy]

Well, you were right about retail investors getting nothing.

Capped at 500,000, even if people only apply for the minimum $2000 only 250 shareholders will get a piece of the pie.

Seems to me like you will be lucky to pick up $100 worth of stock under the offer.

 

[mr. jeff]

Is anyone watching this stock ?
Capital raising at 15 cps and currently at 18cps and it does not close for another week.
I am concerned about entering due to stag-ers, but if the institutional placement is taken up by insto's then it looks like buying now wouldn't be dangerous.
Thoughts on this ?

 

[clowboy]

Is anyone watching this stock ?
Capital raising at 15 cps and currently at 18cps and it does not close for another week.
I am concerned about entering due to stag-ers, but if the institutional placement is taken up by insto's then it looks like buying now wouldn't be dangerous.
Thoughts on this ?

See above about and read the offer document, perhaps I am wrong but as I read it, there is basically no stock on offer under the placement.

If I thought there was any chance of getting a decent parcel, say the full 15k I would offload my holdings and buy back at the 15cps, but as it stands and appears I will just add the couple of 100 dollars worth of stock I pick up in the placement to my current holdings

 

[mr. jeff]

See above about and read the offer document, perhaps I am wrong but as I read it, there is basically no stock on offer under the placement.

If I thought there was any chance of getting a decent parcel, say the full 15k I would offload my holdings and buy back at the 15cps, but as it stands and appears I will just add the couple of 100 dollars worth of stock I pick up in the placement to my current holdings

Then I will start looking for an entry. I think GRB looks attractive right now with fresh capital and just starting up with spare capacity. I know very little about their chances at growth though - what worries me is that their product sales seem to be very dependent on one customer who will of course continually push them around and with a 25% share of the company, have essentially blocked any other interested parties.

The other thing that worries me is that if their customer decides they don't want increased volume, are they limited in producing and supplying other customers - I need to do some reading before I buy. Let me know thoughts.

 

[clowboy]

Then I will start looking for an entry. I think GRB looks attractive right now with fresh capital and just starting up with spare capacity. I know very little about their chances at growth though - what worries me is that their product sales seem to be very dependent on one customer who will of course continually push them around and with a 25% share of the company, have essentially blocked any other interested parties.

The other thing that worries me is that if their customer decides they don't want increased volume, are they limited in producing and supplying other customers - I need to do some reading before I buy. Let me know thoughts.

From the above quote I am assuming that you read the document and are in agreance with me that very little stock is on offer through the share offer?

It is a valid point that if woolworths reduce demand then perhaps they may have spare capacity, however, I really don't think that woolworths will ever be reducing demand, rather reshuffling what they demand. Own label products are a major conponent of supermarkets these days, to have monopoly supply of one of there products could be great, however I do not know how long they are contracted for. I think that woolworths major ownership is more aimed long term to prevent a Major from buying the company out. Ie Little creatures.

I cant remember where I read it but I am sure I read somewhere that craft beer has a 46% per annum growth. I never bought into little creatures because I always thought that they were expensive but yet they continued to go up. I was a follower of little creatures before anyone knew who they were, I loved (love) there beer and slowly watched as they went from a no one to a someone in WA to a well known micro beer on the east coast.

Which isnt to say Gage road will follow the same path, but it isnt to say they wont. Beer also tends to have a shield in down economies.

also, at least in WA (where they r from) there beer is growing in popularity.

who knows, it might not eventuate to anything but I like the stock and I like the industry and I like beer...so for now will hold and await how things go for them.

One thing, they seem to always jump between litres and cases of production PA, makes it a bit hard to guestimate there future revenues and profit.

 

[VSntchr]

Gage is becoming popular on the east coast too.

I quite like their ATOMIC product and everyone I've given one to seems to think the same.
They are diversifying their revenue base by contracting brews from other companies such as san miguel etc (see announcements for others).

One issue that I'm currently contemplating which could be an issue is the consolidation going on within the craft brewery sector. With all the big guys buying the smaller guys (see Asahi takeover recently) - it leaves less and less companies for GRB to brew for. This could become a limiting factor for GRB growth in the future, will have to see how the situation plays out..

The price is reflecting a large amount of growth at the moment, but the company is positioned to achieve this. They are now less financially leveraged and have the plant and equipment in place to succeed in their plans - the only question is, will everything go to plan and will management deliver on growth!!

Watching with interest!

 

[mr. jeff]

From the above quote I am assuming that you read the document and are in agreance with me that very little stock is on offer through the share offer?
-------
It is a valid point that if woolworths reduce demand then perhaps they may have spare capacity, however, I really don't think that woolworths will ever be reducing demand, rather reshuffling what they demand. Own label products are a major conponent of supermarkets these days, to have monopoly supply of one of there products could be great, however I do not know how long they are contracted for. I think that woolworths major ownership is more aimed long term to prevent a Major from buying the company out. Ie Little creatures.

Yes there is a $500k cap on the private investor placement - they probably couldn't be bothered.

Looks like any down days that get near 15c would be a possible buy opportunity as there won't likely be much profit taking. After reviewing the little information provided, it appears that the company has the capacity to sell to anyone, based on the premise that WOW will have proprietary products brewed for them specifically.
I also agree with the blocking stake theory mentioned above.
Further to all that, I guess it is just down to selling the remaining capacity and reducing costs. Unfortunately there won't be a takeover premium, but perhaps we could hope for a spin off of the separate entities in 5 years time. I will be looking for more information before getting too heavily into GRB, but so far looking OK.

 

[mr. jeff]

Made a small entry today at 18c and looking for it to hold above that level based on the chart.



From this chart the distinctive levels are 14c and 18c. Today was also a low volume down day on the market, with very little selling evident, suggesting strength in the demand for the stock. At this stage it is a low risk trade in my eyes and I am looking for it to maintain that steady climb of around 10% per month. I was looking for a pullback to 15c but as this has not eventuated and has now moved above that 15-18c range, it may not revisit the range before moving up.

Now watching more closely and holding a few.

 

[clowboy]

Yes there is a $500k cap on the private investor placement - they probably couldn't be bothered.

Perhaps they just don't want the hassel of having to sell more stock to WOW. WOW is entitled to maintain it's 25% stake so if they issue to much they will have to reissue to WOW again

 

[clowboy]

Anyone have any thoughts on the qrtly anouncement today?
Would have liked to have seen a bit more growth in revenue, its up less than 10% on the last half

 

[Miner]

Made a small entry today at 18c and looking for it to hold above that level based on the chart.

View attachment 52061

From this chart the distinctive levels are 14c and 18c. Today was also a low volume down day on the market, with very little selling evident, suggesting strength in the demand for the stock. At this stage it is a low risk trade in my eyes and I am looking for it to maintain that steady climb of around 10% per month. I was looking for a pullback to 15c but as this has not eventuated and has now moved above that 15-18c range, it may not revisit the range before moving up.

Now watching more closely and holding a few.

Mr Jeff et al

Any update on GRB since about a year passed on this thread with no posting ?
Net Profit was down by more than 100% even with increased revenue. The share price ironically did not tumble.
see attached
Any thoughts ?

Cheers

 

[Huskar]

Poor result in my opinion. Fall in revenue and huge blowout in receivables indicates quality of earnings poor. Of course, the market has already seen it coming..

 

[greggles]

Gage Roads Brewing Co have announced a good quarter of growth in Q3 FY18.

• $2.1 million in cash generated from operations
• Sales to independent retailers up 183% compared to Q3 FY17
• Gage Roads draught sales up 445% compared to Q3 FY17
• Total proprietary brands volume up 153% compared to Q3 FY17

Share price is up 15.49% to 8.2c so far today and it looks like it may be heading back to 10c in the near future.

 

[greggles]

Nice gap up by Gage Roads Brewing today after announcing that they have raised $10 million by issuing 117,647,058 shares to institutional investors at an issue price of 8.5c per share. The company plans to raise a further $2 million via a Shareholder Share Purchase Plan in which shareholders, irrespective of the size of their shareholding, can purchase up to $15,000 worth of shares at an issue price of 8.5c per share.