One of Australia’s most well-known craft breweries, Wayward Brewing, has gone into voluntary administration with around $2 million in debts, as the Independent Brewers Association calls for federal government action to support the industry.
DBA Reconstruction & Advisory has been appointed administrator and is supporting the continued operation of Wayward and LDC.
DBA said employees and customers should consider it business as usual with no impact to ongoing production, distribution, and taproom operations.
Local Drinks Collective was a distribution company formed by Wayward and Batch Brewing in 2022. Batch Brewing is not involved in the voluntary administration.
Wayward founder and sole director, Peter Philip, said he is working with DBA on a Deed of Company Arrangement (DOCA) proposal to provide the framework for restructuring the businesses. Located in Camperdown in Sydney’s inner west, Philip founded the brewery in 2012.
DBA said the move was due to financial losses accrued due to declining consumer demand across the craft beer market and significant increases in production costs.
Philip said, “The last few years have been an extremely challenging time across our industry and for the wider economy. However, we are confident that the restructuring will ensure the business is on firm footing and we can look ahead with confidence.”
The second creditors meeting is today (24 January) at 12pm.
Industry calls for recognition and relief
IBA CEO Kylie Lethbridge said the challenges facing the craft brewing industry are far greater in that unlike wine and spirits, it doesn’t get any federal government support, policy recognition or funding programs.
“We have done a lot of work with state governments, but we are nowhere when it comes to the federal government. Beer is Australia’s national drink and a part of its culture, but we have no recognition whatsoever,” Lethbridge said.
She said the association was finalising its budget submission, due tomorrow (Thursday, 25 Jan). It’s asking for recognition and relief for what is an “overburdened and over regulated” industry, because “they are the only ones that can help us out of this really challenging time”.
Beer in Australia is the third highest tax beer in the world, and as with spirits, the tax is indexed twice a year.
Meanwhile, a $350,000 rebate introduced in 2021 has remained static. If it was indexed, it would now be around $390,000.
“That’s the salary of your junior brewer,” she said.
Lethbridge explained that the costs of excise are compounded by a number of other factors.
“We have a premium product, so it is challenging to raise the price of your beer in accordance with the tax regime.
“In the last 12 months, the sector has seen the cost of raw materials increase by 37 to 40 per cent. Freight is killing any manufacturing industry including ours and packaging costs has increased exponentially.
“We’ve also had a CO2 gas shortage and as we’re high-end users of energy, some have seen the price of that gas rise by 51 per cent,” she said.
The two major beer suppliers – Lion and CUB – have more than 80 per cent of taps in Australian pubs that also have rebates, making it difficult for smaller independent craft brewers to access a bigger market.
“It is the perfect storm of issues making it incredibly difficult to operate, which is more frustrating because a lot of those factors are outside of our control – except for the federal government, which can help us,” she said.
Lethbridge said another big issue for the craft brewers is many are carrying large taxation debts from the pandemic.
“We’re seeing breweries go into voluntary administration because they owe the Australian Tax Office millions of dollars of excise tax, they were allowed to defer during Covid. It forces them into that position and then the ATO only gets seven cents in the dollar.
“We’re saying to the ATO if it was more flexible and gave companies an extra 24 months to pay it off, then it would be more likely to get the full amount paid, which is surely a better outcome for everyone.
“A freeze on excise rises would also have an impact.
“The federal government has the power here. We know budget submissions are due tomorrow and the budget will be handed down in May with the focus on cost of living, but a tweak here would have little impact on the budget and a big impact on the industry. It may get these small manufacturers, producers, and businesses employing locals and through to the other side,” she said.
