Amid a difficult post-Covid operating environment, two more breweries, Hawkers Beer and Big Shed Brewing, have entered voluntary administration and are pursuing financial restructuring.
Hawkers Beer has appointed DBA Reconstruction & Advisory as administrator to facilitate a financial restructuring of the business. Drewery operations will be continuing as usual and there will be no impact on production and distribution due to the appointment.
Founder and Managing Director Mazen Hajjar told Beer & Brewer that the decision to enter administration was made due to financial losses, restricted market access, increased production costs and legacy tax debt.
“The cost of energy went up 90 per cent, barley went up 22 per cent, cans have gone up more than 20 per cent. We had to update our pregnancy warning logos with a third colour, which doesn’t seem like a big thing, but updating the plates cost us $50,000 on top of a very hostile trading environment.
“For the last several years, we’ve been talking about market access and restricted ability to sell our beers at bars because of competition for tap contracts. All of this is compounded by the cost-of-living crisis where people have the inability to pay for their increasing mortgages,” he said.
In particular, legacy tax debt has been a significant pressure on Hawkers, which was accrued during the pandemic when the ATO allowed brewers to defer excise tax payment.
“So far, we have been able to restructure and fix ourselves so that we have a more sustainable, profitable position. We’re up to date with all our suppliers and all of our taxes are up to date, except the excise tax. The ATO wants us to come to a payment agreement, and it is just unwilling to give us the space and time to pay back the debt,” Hajjar said.
Hawkers is confident that the implementation of a Deed of Company Arrangement proposal will result in a stronger and more resilient business moving forward.
Big Shed Brewing entered voluntary administration yesterday, appointing Mark Lieberenz and Anthony Phillips of specialist insolvency and restructuring firm Heard Phillips Lieberenz as administrators. The brewery will continue to trade as normal during the restructuring period.
“We are delighted to be working with a staff and management team who feel as passionate about their business as they are about their products,” Lieberenz said.
Co-Founder Craig Basford said that trading disruptions during Covid had a significant impact on the business.
“While no-one ever wants to be in this situation, we know that it’s necessary for our staff and business. We invested heavily in our business expansion up to December 2019 only for the world to shut down in March 2020. It is fighting that ongoing battle that has us where we are today.
“We appreciate this comes as cold comfort but we will be doing everything we can to get the best possible outcome for our creditors too. We want them to see the light at the end of the tunnel as much as we do. What we need now more than ever is the support of our community of beer drinkers, those who want see Big Shed around for the long haul,” he said.
Lieberenz and Phillips will meet with Big Shed’s owners next week, at which time the administrators will outline the financial circumstances of the business.