Aussie liquor business' (yet) untapped opportunity in Better Beer

Big beer, akin to its pharmaceutical counterpart, is growing overly fond of swooping in and buying out smaller operators in the industry; particularly in Australia where, as at February 2022, the craft beer segment was growing at 10% compound annual growth rate (CAGR) amounting to a near billion-dollar market.

Beloved Aussie craft beer brands including surfing champ Mike Fanning’s Balter and Byron Bay’s own Stone and Wood were recently acquired by the likes of Carlton United Breweries and Lion who were, in turn, previously acquired by beverage conglomerates Asahi and Kirin. Fundie Graeme Carson suggested this could be how Might Craft’s story plays out.

Speaking on Reach Markets’ ongoing The Insider: Meet the Fund Manager series in February 2023, the co-founder and co-owner of the award-winning Cyan Investment Management company touted ‘craft beverage accelerator’ Mighty Craft Limited (ASX: MCL) as one of his favourite stocks. Watch the full The Insider: Meet the Fund Manager session.

Mr Carson described the business as a boutique liquor company with a portfolio of boutique beers, alcoholic ciders and Australian spirits. “It’s actually the fastest growing boutique liquor company in the country, certainly in the listed space anyway,” he said, adding that the company was in the process of optimising its portfolio of assets by “investing heavily in those that have proven to be winners.”

“The jewel-in-the-crown asset is certainly Better Beer which is an emerging boutique beer company that’s the fastest growing beer certainly over the last decade in Australia, if not, in history in the Australian beer sector,” Mr Carson said before outlining why he thought Mighty Craft’s then 35% ownership of the brand demonstrated the company’s investment potential.

In essence Mr. Carson, highlighted Better Beer’s growing production capacity, comparing it favourably against that of other craft beers that had been bought by larger industry players, and how it could culminate into Might Craft being worth more than the sum of its parts.

“You’re getting an asset in Better Beer that’s worth more, we think, than the overall company and you’re getting everything else for free with some cashback,” he said. “We think it is a very interesting opportunity.”

Aside from its production assets, Might Craft also owns ~14 venues across Australia which the fundie had stated were recovering from being shut down during COVID and are moving back to profitability. Mr Carson also indicated the potential sale of some of these venues to fund Mighty Craft’s other growth initiatives.

“We think there will be corporate interest in Better Beer, so we think there’s a pretty comfortable upside even up to 100% and on a pretty conservative basis for this one,” Mr Carson concluded.

Click here to view more videos from Graeme Carson’s The Insider: Meet the Fund Manager session.

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