Mighty Craft has established a partnership with a fund to raise $10m in capital to accelerate the realisation of its whisky and spirits ambitions.
A key driver of its Whisky Acceleration Program, the Whisky Development Syndicate will support the “capital challenge” inherent to whisky production, a significant portion of which entails a three to five year maturation period before the product is released to market. The WDS will also allow Mighty Craft to increase its asset utilisation, recover overheads and build its whisky bank.
Mighty Craft’s Managing Director, Mark Haysman, said: “This collaboration will allow Mighty Craft to build its whisky inventory without using current cash reserves whilst retaining a significant portion of the value created through the cycle for MCL shareholders.
“Whilst this is a proven funding mechanism globally, to our knowledge this is the first time this has been used at this scale in whisky in Australia and represents an efficient way to build value for MCL while utilising its world class capability and production capacity”.
The WDS fund will be able to release capital “to accelerate whisky production, build brand awareness and retain a significant amount of the value created for Mighty Craft shareholders”. It will also provide WDS investors with the opportunity to invest in a tangible, globally recognised and appreciating asset class and will facilitate Mighty Craft’s ambition to achieve 1.5 million litres of whisky under maturation by 2025.
Mighty Craft’s Chairman of the Spirits Advisory Board, Chris Malcolm is leading the team of international and local team experts, providing extensive and diverse distiller and innovation expertise. All whisky funded and produced by funds drawn from the WDS will be on sold to Mighty Craft.
The Whisky Picture
Whisky is a significant category globally and the #1 spirits category in Australia, representing 43 per cent of total value share, with domestic growth of 6.9%[1]. Australian produced whisky currently represents a relatively insignificant portion of the category, which is where Mighty Craft perceives the opportunity for growth.
This and the trend to premiumisation, with ‘premium plus’ priced whisky growing ahead of the category average[2], have informed Mighty Craft’s strategic decision to capitalise on this market opportunity with brands, including 78 Degrees, Kangaroo Island Spirits, and the soon to be launched ultra-premium Hidden Lake brand.
- [1] Past 5 year compound annual growth rate (CAGR) 2016 to 2020, Source: IWSR Drinks Market Analysis 2021 Release
- [2] The ‘Premium plus’ priced whisky segment grew 8.7% CAGR in the past 5 years 2016 to 2020 inclusive compared with 6.9% CAGAR (for the same period) for the total whisky category In Australia. ‘Premium plus’ priced whisky has a price point of $47++ per bottle. Source: IWSR Drinks Market Analysis 2021 Release. 3 43% alcohol by volume equivalent.
