Independent Liquor NZ, which owns alcohol brands such as Woodstock Bourbon and Boundary Road beer, returned to profit in 2016 as the country's biggest RTD maker fattened its margins and slashed its marketing spend in the face of shrinking revenue.
The Papakura-based company posted a profit of $15.4 million in calendar 2016, turning around a loss of $727,000 a year earlier when the Asahi Group owned liquor company wrote down the value of its assets. Revenue shrank 11 percent to $351.9m, however a bigger decline in the cost of sales helped fatten gross margins to 30.2 per cent from 27.2 per cent a year earlier.
Independent Liquor, founded by the late Michael Erceg, is the country's third-biggest beer brewer having launched its Boundary Road range in 2011, and like its bigger rivals - DB Breweries and Lion - Beer, Spirits & Wine (NZ) - has had to contend with a growing appetite for craft beer which has siphoned off demand for mainstream products.
DB and Lion have gone down the route of buying smaller niche rivals, and while DB managed to widen gross margins to 43 percent in calendar 2016 from 42.1 per cent, Lion's margins shrank to 36.9 per cent in the September 2016 year from 38.8 per cent.
The wider margins helped Independent Liquor keep gross profit flat at $106.2m, and the company eked out savings in sales and marketing, where it cut costs 32 per cent to $29.2m having ditched a retail network, The Mill discount liquor chain, a year earlier.
Independent Liquor paid $10.6m in interest on loans in the year. It has an outstanding loan from Asahi's Australian arm of $149.9m, on which it is paying 7 per cent interest, greater than its current assets of $121m. The notes to the accounts state that Asahi Holdings (Australia) has confirmed it will not call in the loan over the next 18 months.
