Woolworths continues on expansion trail with private label beer to get a lift

Posted by Daniel Palmer on 15th May 2009

Woolworths has entered an agreement to acquire a 25 per cent stake in WA craft brewer Gage Roads Brewing as they look to enhance their private label beer options.

The $1.9 million deal, Woolworths’ second acquisition in a week following the purchase of Macro Wholefoods, remains subject to Gage shareholder approval.

Gage reported that a supply agreement had been reached, which would see the WA company contract brew 350,000 cases of beer per year for Woolworths.

beer deal

Last year, Woolworths entered the beer sector for the first time with private label offering Platinum Blonde and they are keen to expand their range after reporting it “performed very well” in the first six months of the financial year.

Independent Distillers currently brew the Platinum Blonde product for Woolworths, while Coles contracts Boag’s for their two private label brands.

“This Supply Agreement provides Gages Roads with the opportunity to substantially grow its current production volume and realise a greater economy of scale,” Gage advised in a statement.

Following the purchase of the minority stake, Woolworths will also have an appointee on the Gage Roads board with Steven Greentree, General Manager Woolworths Liquor Group, becoming a Non-Executive Director.

Gage Roads’ Chief Executive Nick Hayler said the Company was excited to welcome Woolworths as a major shareholder and customer.

“We are very pleased to have attracted the interest and support of such a well recognised company in Woolworths,” he proclaimed. “This is a win-win situation for all parties.”

A General Meeting will be held in late June 2009 at which Gage shareholder approval for the placement will be sought.