Craft beer and spirits group Mighty Craft (ASX: MCL) has made a strategic move by offloading its Mismatch and 78 Degrees brands for $7.2 million as part of a plan to streamline its operations and reduce debt.
The assets of Mismatch Brewing Company and The Hills Distillery, which produces 78 Degrees gin, have been acquired by a consortium of Australian publicans. The deal includes the brands, intellectual property, trading names, inventory, plant and equipment, and licences for each of the Adelaide-based businesses.
The sale also involves the assignment of leases for the Mismatch Brewhouse venue and the production facility in South Australia. Mighty Craft has set a deadline of 31 May 2024 to finalize the sale, with plans to use half of the proceeds to pay off outstanding debt and the remainder for working capital.
This move comes after Mighty Craft reported a net loss of $51.19 million in the December half, prompting the company to announce plans to sell assets to reduce debt and cut costs. The sale of Mismatch and The Hills Distillery is part of a larger rationalization strategy that includes selling other businesses like Slipstream Brewing, Kangaroo Valley Spirits, and the Lot 100 venue.
Despite the challenges faced by the craft brewing sector in Australia, Mighty Craft managed a marginal improvement in its underlying performance with an EBITDA loss of $1.5 million reported for the first half. The company’s future direction will be determined by the outcome of these asset sales, according to Mighty Craft chair Grant Peck.
In related news, Gold Coast-based Black Hops Brewing has appointed voluntary administrators, highlighting the tough market conditions faced by craft brewers in Australia. Deloitte Turnaround & Restructuring partners have been appointed as administrators, with urgent sale options being explored for the business. The first meeting of creditors is expected to be held on 11 April.