Moa Group sells unprofitable brewing company for $1.9m

Friday, 19 February 2021

Mat Jorgensen says only about $1 of a $10 beer is profit.

Moa Group is selling Moa Brewing Company for $1.9 million to focus on its hospitality businesses, where it sees greater profit potential.

The brewing company will be sold at the end of February to Mallbeca, a company linked to chief executive Stephen Smith and his family interests, the group said in a statement.

Moa Group posted a loss of $4m in the year to the end of March, and hasn’t turned a profit since listing in late 2012 as a pure play brewing business. The unprofitable Moa Brewing Company which was its original investment last year reported an operating loss of $1.4m on revenue of $14.2m.

Chairman Geoff Ross said the board and management had been mulling the future of the brewer for the past six months and decided the best result outcome for shareholders was to allocate capital and management attention to the areas of the business with the greatest growth and earnings potential.

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“This has been a difficult decision for the board, however, we know that this is the best outcome for all shareholders,” Ross said.

“Some of the original investors will be a little bit disappointed,” said Grant Davies, an investment adviser at Hamilton Hindin Greene.

“Lots of people invested because they liked the idea of investing in a brewery but by the same token, you have to trust the board and the management team to be making the right decision by shareholders.”

Craft brewing was a tough industry because many do it for love rather than money, making it harder for rivals to compete and turn a profit, Davies said.

“It’s an incredibly competitive industry and Moa never really managed to find that profitable niche,” he said.

“At this stage, they have decided their energies are better spent elsewhere. Time will tell as to whether it’s positive for shareholders.”

Moa group’s hospitality businesses, which include bars and restaurants under the brand of Savor Group, had performed above expectations since being bought in April 2019, and the subsequent purchase of Non Solo Pizza and development of new venues has shifted the group’s focus to hospitality, Ross said.

The hospitality businesses accounted for two thirds of revenue and all of the group’s profits last year. The unit reported an operating profit of $2.5m on revenue of $24.1m.

As a result of the sale, the group will change its name to Savor from March, and Savor Group founder Lucien Law will take over as managing director. Ross will relinquish his executive role and remain as chairman.

Shares in Moa Group rose 8.8 per cent to 21 cents in midday trading on Friday. The shares have lost 16 per cent of their value this year. They were sold at $1.25 each when the company listed.