A mighty transformational partnership

It is a $47 million acquisition that will double the size of Mighty Craft and accelerate the business into profit.

Australia’s independent craft drinks collective has acquired three of South Australia’s most loved craft beverage brands: Adelaide Hills Distillery, Mismatch Brewing Co and Hills Cider, as well as a 75% stake in the venue, LOT 100 in the Adelaide Hills.

CEO Mark Haysman said: “The combination of the two businesses will mean Mighty Craft’s revenue is forecast to grow by 57% in FY22 with forecast EBITDA in FY22 to be $6 million, bringing immediate profitability to the Mighty Craft model.  

“This increased scale and the opportunity to realise significant efficiencies will truly leverage our operating platform and enhance Mighty Craft’s ability to accelerate growth of new and existing craft businesses, as well as consolidating our market position, and making us a real competitor in the craft beverage industry.”

The co-founders of all three businesses will be retained as they continue to drive growth for the brands. Mighty Craft has paid $27m in cash and $20m in Mighty Craft shares at 0.35c per new share.

Steve Dorman and Toby Kline established Adelaide Hills Cider together in 2010 and each had stakes in Mismatch Brewing Co along with Ewan Brewerton and Adelaide Hills Distilling with Sacha La Forgia (pictured below). LaForgia was named Distiller of the Year at the international Icons of Gin 2020 awards and the Adelaide Hills Distillery 2020 Native Grain Weeping Grass Whiskey was awarded best grain whiskey at the World Whiskies Award in London earlier this year.

All three businesses owned a 25 per cent stake in Adelaide Hills venue Lot 100, hence Mighty Craft’s 75 per cent ownership.

The acquisition doubles the size of the company and lifts it from ‘a start up’ to one of Australia’s leading producers of spirits, it increases their production capacity and, it brings a team of expert talent to Mighty Craft. The products from all three businesses significantly bolster Mighty Craft’s portfolio of craft beers, ciders and spirits, particularly attractive given Mighty Craft’s whisky accelerator program.

Projections to shareholders are that with AHG on board, by FY25, Mighty Craft will be producing 12m litres of beer (up from 5m in FY22), 500K bottles of spirits (up from 220K in FY22) and a huge 2,000 barrels of aged whisky stock (up from 750 bottles in FY22).

Adelaide locals who ‘met back in the day’, discussions between Mighty Craft and the Adelaide Hills Group had been ongoing for close to nine months.

 “They were looking for the opportunity to scale up and considering whether they should list. It made more sense to run with a listed company and for them to run as part of a bigger business. But there are two teams here and we are truly stronger together,” he said.

Haysman says that retaining the highly specialised production and management from the Adelaide Hills based businesses was an essential component of the deal to help integrate the brands, from a production, distribution, and sales and marketing perspective.

“This merger wouldn’t have been possible without the support of Sacha, Ewan, Steve and Toby and we warmly welcome them to the Mighty Craft team. They will guide us through this transition, ensure alignment of both our interests and people, and drive growth for all our brands,” he said.

Adelaide Hills Distilling produces gin and whisky - a priority for Mighty Craft in growing its portfolio. The distillery’s award-winning 78 Degrees range means Mighty Craft can offer a diversified portfolio of whisky at differing price points, taste profiles and maturity. Vodka is next to come.

Mismatch Brewing is the number one independent craft beer brand in Adelaide. The acquisition brings significant economies of scale and increased geographic coverage to Mighty Craft’s beer portfolio. 

For all the Adelaide Hills brands, Mighty Craft is focused on growth and taking those loved products out of Adelaide to the eastern seabord of Australia as well as exporting them internationally and “getting them into more people’s hands,” says Haysman.