Keytone Dairy (ASX: KTD) has collared a distribution licencing agreement with global Baileys alcohol brand owners to distribute Baileys’ flavoured non-alcoholic coffee milk drinks and powdered beverages.
The initial distribution licence with owner R & A Bailey and Co extends to the end of 2022 and covers Australia, New Zealand, Hong Kong and Taiwan markets.
In exchange for the licence, Keytone will pay a minimum royalty of $280,000, but anticipates the sales for the period will be “magnitudes higher”.
Under the deal, Keytone will manufacture the drinks in-house at its Melbourne facilities, which the company expects will boost its profit margins further.
“The licencing deal with a global company such as R & A Bailey and Co and the Baileys brand validates the credentials of Keytone, positioning the company for further distribution channel wins for the full proprietary product suite and provides a stepping stone for licencing of further global brands,” Keytone chief executive officer Danny Rotman said.
“This is a valuable contract win for the sales opportunity directly attributed to the Baileys-branded products, and the significant upside this brings across the company’s proprietary products,” Mr Rotman added.
Baileys drinks range
The licenced range will start with three Baileys flavoured coffee milk drinks including: Original Irish Cream Iced Coffee, Iced Mochaccino, and Iced Butter Caramel and Sea Salt.
Keytone noted that new product development was “well-advanced” to bring additional ready-to-drink flavours to the market in the “near future”.
The Baileys powdered flavoured drinks are expected to be introduced to the market from 1 August this year.
According to Keytone, the initial three flavours are already available through Australia at Caltex petrol stations, and will soon be available at Woolworths’ 1,352 Beer Wine Spirits (BSW) stores nation-wide.
In addition to Caltex and BWS, Keytone will look to roll-out the range through its own distribution network in Australia and is looking into opportunities within New Zealand, Hong Kong and Taiwan, with it describes as “promising” markets.