An Australian beer company just announced a major deal with China and its shares are going nuts

The Qingdao International Beer Festival in China’s Shandong Province. TPG/Getty Images

Shares in Broo Limited soared after announcing a $120 million distribution partnership for its premium lager beer in China.

A short time ago, the shares were 35% higher at $0.40.

The seven-year deal is with Beijing Jihua Information Consultant which will exclusively market and distribute the Broo Premium Lager beer products in China.

The agreement effectively forward sells 1.5 billion litres of Broo Premium Lager beer products over the seven years with Jihua paying a fixed rate.

Revenue generated over the full seven years would be RMB602 million, or about $A120 million.

China’s beer market is the largest in the world with sales of more than five billion cases of beer a year.

“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,” says Kent Grogan, founder and CEO of Broo.

“Our focus is now on continuing discussions we are having in other international markets and expansion domestically.”

Broo, which produces Broo Premium Lager and Australia Draught, raised $10.5 million at 20 cents a share when it listed on the ASX in October last year.

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