Production is 80 per cent higher than usual at Gage Roads Brewing Co as it ramps up capacity to meet a surge in demand for packaged beer.
“The Prime Minister has urged us all to “keep the economy going” and we intend to do our bit by maintaining production and supply,” the publicly-listed brewery said in a statement to the ASX.
Gage’s announcement follows predictions by the American Brewers Association that suggested packaged beer could be a lifeline for breweries who have previously been reliant on venue revenues.
In the COVID-19 update to the market, Gage said that all its brewery and supply chains were operational, including a 400 can-per-minute canning line and 400 bottle-per minute filler.
It said that its WA cold store facilities hold several months of stock, and in the near term it is looking at adjusting production to lower draught sales.
Managing director John Hoedemaker said that Gage was focused on the safety of its customers and staff, as well as doing its bit to keep the economy going.
“We’ve been investing in high quality, high volume brewing and packaging capabilities for some time now. This scale and capability positions us well to support the craft category better than most,” Hoedemaker said.
“Our intention is to use it and bottle off every last drop in the brewery. If consumers want our beers during these extraordinary times then we’ll be ready to supply.”
Effects on the business
Despite a positive outlook for packaged beer sales, Gage was under no illusion that it would come out unscathed from the COVID-19 pandemic.
Gage’s Sydney venue, its first foray into the east coast under its Atomic Beer Project brand will not be opening until August, it said.
While construction is due to complete in mid-April, Gage said it has taken the decision to delay its opening and minimise operating expenditure, as there is no clear view on when the hospitality sector will be permitted to reopen.
Sales to the Optus Stadium are on hold, and Gage acknowledged the current strain on the hospitality and ‘empathised’ with their situation.
In its response to the pandemic, it has formulated contingency plans and said it will be utilising the stimulus programs provided by the ATO as well as relying on cash flows from ongoing sales and credit facilities with its bank.
Like many other breweries, it has implemented stringent hygiene and sanitation measures, encouraging remote working where possible and upping hygiene practices in production operations.
It said it had also engaged with key suppliers to bring forward “critical supplies” of brewing and packaging materials to secure production capabilities for the next two to three months.
Despite making headway in contingency planning, Gage said the COVID-19 situation and its impact on the business is uncertain.
However Gage Roads said that as a business it can expect continued demand and it has the ability to service it.
Gage Roads share price is currently $0.043, up 19 per on the day, but down from a 3 month high of $0.091.