22 May 2008 - Pressing on with innovation and creating new business solutions for growth, Asia Pacific Breweries Limited's (APB) wholly-owned subsidiary in New Zealand, DB Breweries Limited (DB), today announced the incorporation of two new joint venture companies - Barworks Group Limited (Barworks) and Sale Street Brewery Co. Ltd (Sale Street Brewery).
Barworks is a partnership between DB and JAG Hospitality Ltd (JAG), a leading New Zealand bar operator. DB will inject approximately NZ$2.5million (S$2.65 million) for its 60% stake in Barworks while JAG will invest some NZ$1.7 million (S$1.8 million) for its 40% share in the company.
For its 60% stake in Sale Street Brewery, DB is investing NZ$528,000 (S$559,680) while its partner, Curdall Investments Ltd (Curdall) will pump in NZ$352,000 (S$373,120) for a 40% shareholding in the bar and microbrewery on-premise outlet in Auckland.
Barworks will manage several food and beverage outlets in New Zealand. At the initial stage, Barworks will be acquiring the following food and beverage entities:
1. 100% stake in Portumna Limited;
2. 100% stake in BOF Limited;
3. 100% stake in Barneydale Limited;
4. 100% stake in Tarmon Limited;
5. 75% stake in Studio 25 Limited;
6. 75% stake in George Corporation Limited; and
7. 75% stake in Clifford Pubs Limited
On the investments, Dr Les Buckley, Regional Director (Oceania), APB said, “DB’s investment in Barworks and Sale Street Brewery underlines its commitment to generate more value from its business by diversifying its revenue streams in the mature beer market of New Zealand. The moves are marked as strategic in further driving the volume of DB’s beer brands including Heineken, Monteith’s, DB Draught, Export Gold and Tiger amongst others, given the greater motivation to promote these brands now as a result of these new commercial arrangements. At the same time, DB will be able to receive a share of profits from all sales within the on-premise outlets, including those for food and other beverages.”
From a brand perspective, the business model for Barworks and Sale Street Brewery will work to benefit DB’s beer brands in the long term. While the bar operations will be managed by DB’s partners – i.e. JAG and Curdall- the bar concept themes and beers will come from DB. This means that greater emphasis will be placed on lifting the prominence of DB’s beer brands, thus boosting brand exposure and sales.
DB’s investments in Barworks and Sale Street Brewery came as a natural progression as it has had actively collaborated with some 450 local bars and pubs, offering them innovative bar concepts that deliver quality experiences of great beer and food.
Barworks and Sale Street Brewery are expected to complement DB’s brewery business and add value to the strong bottom line of DB. DB which has four breweries in New Zealand has consistently been one of APB’s best performing markets despite the challenges in the mature beer market. For the first half of the financial year ended on 31 March 2008, DB reported a stronger revenue and PBIT of S$251.2 million and S$37.7 million respectively. The investments are not expected to have any material impact on the net tangible assets per share or earnings per share of APB for the current financial year.