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Saturday 25 June 2022

Pals packs a punch in Australia

17th May 2021 By Monique Steele | | @foodtickernz

New Zealand drinks business Pals expands its push into Australia after rapid growth in New Zealand for the young beverage maker.

Pals is targeting international revenue to become 25% of income

The company, which was founded by four friends in late 2019, is on track to have four of its alcoholic seltzer drinks sold in more than 1,500 liquor stores across the ditch after expanding its deal with distributor, Woolworths-owned Endeavour Group.

In November last year, Endeavour picked up its first Pals vodka RTD – watermelon, mint and soda – which saw it put the 330ml pastel cans on shelves at its Dan Murphy and BWS stores across the country. The deal meant Pals’ stocklist rocketed from 800 outlets solely in New Zealand to more than 2000 stores – and caused corresponding pressure on the supply chain.

In February, Endeavour added Pals’ peach flavoured vodka seltzer, which had been released in New Zealand in October and is now its Kiwi bestseller, in a portfolio that currently included three premixed vodkas, a gin and an American whiskey.

“Twelve months ago everything was frantic. It was, ‘make as much as we can’ to meet all this demand,” co-founder Mat Croad told the Ticker.

“It’s been tough and we’ve had some massive growing pains. In those early days, it was borrowing and stealing, begging those suppliers to be more flexible to meet demand in production. Businesses involved had to grow with us.”

With Endeavour handling the distribution and importation of Pals’ Australia-bound stock, Croad said it was a great opportunity for the company. And the Aussies want more, he added.

“I don’t think anyone knew the growth was going to be so strong,” Croad said.

“Over the last couple of weeks, Woolworths agreed to stock two more drinks into market – a new product and our gin [with Hawke’s Bay lemon, cucumber and soda].”

Croad declined to comment further on the details of a new drink product to be released in New Zealand and Australia later this year. But the goal was to have 25% of sales come from export markets, and Pals was investigating other international markets.

“We are currently exploring numerous markets and now shortlisting. But you’ve got to crawl before you can walk,” he said.

Pals directors Nick Marshall and Mat Croad.

This successful entry into Australia – and strong sales in New Zealand through liquor stores and online channels such as The Market and Vineoline which enabled customers to order cases and get them delivered to their front door – meant Pals saw its revenue climb 250% in the 2021 financial year, Croad said.

He put the company’s success down to a high quality product with high consumer connectivity.

“We are the originators,” he said. “We’re not copying anyone else. It’s the Pals persona to be ahead of the field.”

He added that after a “testing six months”, the company was now better positioned to meet demand with improved systems in place, including more accurate forecasting and sell-through rates projections.

It now had time to “focus on the brand and the points of difference which were crucial in the competitive, global alcoholic seltzer RTDs market,” Croad said.

Looking ahead although there were more products and growth in the pipeline, the company would not be seeking investment and wanted to remain independent of New Zealand’s big liquor players DB Breweries, Lion or Asahi Beverages, Croad said.

“We have flexibility. We’re in a good space right now. We’re really enjoying the ride.”



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