By Andy Young, TheShout
Broo Limited has revealed that its wholly owned subsidiary, Broo Export Pty Ltd, has entered into a binding agreement with Beijing Jihua Information Consultant Ltd, to exclusively market and distribute the Broo Premium Lager beer products in China for a period of seven years.
Jihua will pay a fixed rate per litre over the seven years of the deal for 1.5 billion litres of Broo Premium Lager products, on a ‘Take or Pay’ basis. Based on the full seven year term of the distribution arrangement, the aggregate distribution revenue generated for Broo is approximately $120m.
Kent Grogan, Founder and CEO of Broo, who was recently present at Jihua’s head office in Beijing to finalise the terms of the binding agreement with Jihua, said: “After an extensive period of product assessment and negotiation I am delighted to have reached an agreement with such a high-calibre Chinese distribution partner.
“Jihua’s distribution reach in China will see Broo Premium Lager penetrate the Chinese beer market and expand into a major brand over the coming years.
“Our focus is now on continuing discussions in other international markets and domestic expansion.”
As part of the seven year Agreement, Jihua will purchase the Broo Premium Lager beer products that are manufactured in China, directly from Broo’s approved Chinese manufacturers.
Jihua’s extensive distribution network in China will expand Broo Premium Lager beer products offering not only into supermarkets and retail chains, but also into the hospitality industry in China, and will enable Broo to compete with the other major international beer brands currently available in China.
Jihua have committed significant upfront marketing and advertising funds to expedite the growth volume of Broo in the first three years of the distribution and Broo has agreed revenue payments for that term can be accrued and paid upon completion of the third year, with payments continuing on a six monthly basis thereafter.