Independent Liquor puts Mill on the block to focus on brands

Mill Retail Holdings goes on the market.

Independent Liquor (NZ) has put its Mill Retail Holdings chain of liquor stores up for sale after just two years to focus on building its beverage brands business.

Since buying the retail network for $18.2 million in 2013, Papakura-based Independent Liquor has transformed it from a discount liquor group to a mainstream retailer. With the store transformation underway, Independent Liquor has put the Mill business up for sale to focus on its branded beverages, such as Boundary Road beer and pre-mixes, including Woodstock Bourbon and Vodka Cruisers.

"While no decision regarding a sale of The Mill has been made at this point, discussions are underway and Independent Liquor has received keen interest from a number of potential buyers," Asahi Beverages chief commercial officer alcohol for Australia and New Zealand Scott Hadley says. Asahi owns Independent Liquor.

Independent Liquor wrote down the value of The Mill's goodwill by $6.2 million and its brands by $2 million in the 2014 financial year, leaving the unit with assets worth $15.1 million and liabilities of $9.2 million. Financial statements lodged with the Companies Office indicate Independent Liquor's management decided to sell the unit in December last year, with a sale expected by September.

The liquor group's Boundary Road brand claims 11% of pack beer sales, while its suite of ready-to-drink beverages hold 60% of that market.

Independent Liquor reported a loss of $52.6 million in 2014, widening from a loss of $41.6 million a year earlier, as $255.1 million of impairment charges offset a $208.6 million gain from former owners Pacific Equity Partners and Unitas Capital to settle Asahi's claim that it overpaid for the business.

Independent Liquor boosted revenue 5.8% to $378.3 million, a slower pace of growth than its cost of sales, meaning gross margins shrank to 24.2% from 24.7% in 2013.

Independent cut its sales and marketing spend by 16% to $33.9 million, while ramping up spending on administration by 34% to 30.1 million. Finance costs, which are largely to related parties, edged up 1.6% to $19.6 million.