MUCH ADO ABOUT AUSSIE BEER'S BROO

November 28, 2016

Broo has gone boo in Australian brewing.

 

Most in the industry are startled whenever the company is mentioned. It is if they have been scared by a ghost. After all, the beer brethren think they can hear and feel Broo creeping up behind them but when they turn and look nothing is there.

 

The spectre emerged again today when Broo, via the national bourse, declared major Chinese brewer, Jinxing Beer Group, had added the “kangaroo” to its national portfolio.

 

Drinkers should have been cracking cans in the street with joy at the prospect of such a significant deal in the local brewing caper.

 

But there is such mystery over everything Broo do, even if those with supposed smart money back the company with gusto on the sharemarket.

 

Throw in a low-detail arrangement with a private Chinese company - which isn’t much of a publicity seeker either - for a beer maker that few have enjoyed and there are pangs of suspicion.

 

However, if the stock brokers have backed a winner then it could be a case of Broo haha and the start of a trend for the Australian beer industry.

For those late into the episode here is the background. And it is very important to note Broo’s logo when following the script.

 

You might have spotted the national icon on a carton in a bottleshop somewhere. Then, again, you probably haven’t. A search of major WA retailers Dan Murphys, First Choice, BWS, Harry Brown, Cooper and Oak and the International Beer Shop drew a blank.

 

There have been confirmed sightings of Broo’s Australia Draft at Beer Deluxe in Melbourne (Hawthorn) and the Premium Lager label has been blown-up to decorate the Birdsville pub but let’s just settle on the line that the brewery’s distribution is limited. Yet could that all be about the change?

 

Certainly some seasoned brewers were stunned when Broo got a public relations company to spruik it was seeking $10.5 million in subscriptions to lodge on the ASX. The same were almost apoplectic when the cash came in and Broo boss Kent Grogan rang the bell to announce their listing last month. 

 

Suddenly Broo valued itself at $120 million.

 

Who is Broo again?

 

Something didn’t sound right.

 

Indeed, a leading stock analyst told Australian Brews News the valuation was “ludicrous”. You could hear brewers around the country cry into their beers at the thought of such money for an operation they would consider inferior.

 

Surely it is a boo-boo about Broo brews?

 

Maybe Grogan is on a beer winner. He might have tapped into a key source of growth for the local industry.

 

Those on the west coast of Australia see Asia in far stronger economic terms, mainly due to the geographical proximity.

Sandgropers can also see agriculture as being an important economic driver. China needs to feed almost 1.5 billion people and they’re going to rely on Australian primary industry to help them. A run on local baby formula from visiting Chinese is an indicator of things to come with food and beverage.

 

Already the emerging middle class in China has a fondness for more luxurious goods. Australian wineries have enjoyed outstanding returns in the region over the past five years. The Chinese beer market already stretches to 5 billion cases. While Broo isn't from Perth (it's based in Sorrento, Victoria) it might have seen the trail.

 

Shipping Australian beers to Asia is expensive and can be cost prohibitive, even though there are Government incentives.

 

However, if the Broo beers are brewed in China then the middle man is lost.

 

Now Jinxing claim to deliver 200 million of those cases each year.

Jinxing Beer Group products. Soon Broo will join the Chinese brewer's stable.

 

“It provides Broo with enormous reach and platform to compete with the largest international brands currently available in China,” Grogan said today.

 

We have to believe the number because there is little evidence to dispute it. Jinxing live up to the title of private company because there isn’t much around about its financials. Throw in the secrecy of just being in China and another cloak of mystery envelopes the Broo tale.

 

The Sip has uncovered Jinxing’s plans in 2011 to “invest in a wheat production base in Australia in order to fulfill (sic) the expectations of domestic market”.

 

So maybe Jinxing have had their eye on an Aussie brewer for a while. And again, what better way at identifying one of our beers than with a hopping kangaroo and outback road sign?

 

Could it be the first blow in a major push by Australian beer makers to get a stronger foothold in Asia? Or is the whole arrangement too heavy on the carbonation and light on the taste?

 

Last month Broo listed at 20 cents. Today the figure is 40 cents. So someone’s buying potential is far greater.

 

Whether the Broo deal passes the test of the ultimate judges, the Chinese drinker, is the $120 million question. And the company's Asia sortie still leaves well established brewers in bewilderment.

 

If the proof of the pudding is in the eating, then the strength of the Broo enigma will be when pictures from Shanghai, Guangdong, Nanyang and Beijing of cans featuring Big Red and red dust flood Facebook (albeit not on one owned by Jinxing who like many in the communist country has shunned the social media platform).

 

The true taste of the deal is in the drinking.

 

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