The new year has not got off to a great start for Australia’s craft brewing industry, with the news that South East Brewing Company, trading as Kaiju! Beer, has appointed DBA Reconstruction and Advisory as voluntary administrators to assist in a financial restructuring of the business.
The company will continue operating as usual during this process, with no disruption to production or distribution. Employees, customers, and suppliers can expect operations to continue without interruption.
A statement about the voluntary administration said: “This decision was made by the directors, Callum, Nat and Leigh Reeves, after considering options to address the financial challenges stemming from an accumulation of debt. The directors believe this course of action will deliver the best outcome to the company’s employees, customers, and creditors.”
A Facebook post on the Kaiju Beer page this afternoon said: “Hey KAIJU! Family – We obviously had some pretty big news drop yesterday and we want to thank you for the outpouring of support – it means the world to us.
“We’re still brewing, packing, and delivering the beers you love. Business as usual. Cheers, Legends!”
Kaiju has been a popular Australian craft beer for many years, which saw strong growth between 2017 and 2021. The challenge of meeting the high demand for Kaiju saw the business make significant investment to expand production capacity, which was financed through accrued earning and secured bank finance.
The market has changed drastically since the pandemic with factors including the deferral of ATO Excise during the pandemic, the rising cost of living seen over the last 18 months and a drop in beer consumption many brewers have found it hard to continue to operate.
The statement said: “Unforeseen market conditions — including rising excise tariffs, the introduction of container deposit schemes, and declining consumer confidence — resulted in a challenging environment for the business.”
CEO and Co-founder, Callum Reeves said: “The current circumstances required us to make a tough but necessary decision.
“While the business is now trading profitably, this step allows us to restructure and ensure a stronger future for Kaiju! Beer.”
As with many other brewers Kaiju! Has tried a number of ways to reduce costs including staff redundancies, launching more entry-level products and director pay-cuts. In addition the business has stabilised sales to major retailers and driven growth in key markets, but the burden of debt, particularly the deferred excise payments has proven unsustainable.
The directors said they are “working closely with DBA Reconstruction and Advisory on a Deed of Company Arrangement (DOCA) to deliver the best outcome for all stakeholders and ensure the company emerges stronger and more resilient from this process”.