The company will pay a minimum royalty of $280,000 for the license through to the end of the initial license period, December 31, 2022.
Keytone said sales through this period are expected to be magnitudes higher than the license cost and the range is manufactured in-house at Keytone’s Melbourne facilities.
The range under license will commence with three flavor SKUs, Original Irish Cream Iced Coffee, Iced Mochaccino and Iced Butter Caramel & Sea Salt with new product development to bring additional ready-to-drink flavors to market in the near future. Baileys powdered flavor products will also be introduced to market from August 1, 2020.
The products are currently distributed nationally throughout Australia at Caltex Petroleum Stations, with further national ranging at Beer Wine Spirits (BWS) (Woolworths Australian retail chain of 1,352 liquor stores), expected imminently.
Keytone will also look to roll-out the licensed Baileys range through its existing national distribution footprint. Initial indications for distribution opportunities in New Zealand, Hong Kong and Taiwan are promising in these markets, Keytone said, with strong demand and upside expected over the short to medium term.
These distribution channels are new channels to Keytone and offer further upside for Keytone’s proprietary product branded suite, including its KeyDairy, Tonik and SuperCubes brands.
Keytone CEO Danny Rotman said, “The licensing deal with a global company such as R & A Bailey & 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 licensing of further global brands. 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.”