Bad Shepherd Brewing Co, based in the Melbourne Bayside suburb of Cheltenham, have this week entered voluntary administration as they seek "to facilitate a financial restructuring of the business".
Founders Dereck and Diti Hales (pictured above) said they had taken the decision to enter voluntary administration to deal with the financial losses the business has faced over the last few years from the COVID-19 pandemic and lockdowns. Their intention is to retain ownership of the brewing company, as they explained it was very much business as usual as they seek a way forward.
Diti told The Crafty Pint: "It's probably the same story a lot of SMEs have. We took on debt positions to get through the COVID pandemic and our issue is that legacy COVID debt, and the softening and downturn in the market and the cost of living pressures.
"We've never been able to get ahead of that legacy debt; if it was gone, we actually run a profitable business. The challenge is that, looking at everything in the industry and projecting for the next 18 months to two years, it's not looking great for a while.
"In the current climate, we will never get ahead of that debt position and that becomes an unmanageable burden."
Bad Shepherd appointed Sydney-based DBA Reconstruction and Advisory yesterday, as per a notice filed with the Australian Securities & Investments Commission (ASIC).
Dereck says: "We've made the very tough decision to enter this as a means to address the fact that our debt position is inconsistent with the profit level that we generate. We are profitable and are in a strong position moving forward.
"We just need to go through the next three-and-a-half weeks with the intention that the business will be returned to us.
"We feel that it's very different to other VAs and consolidations that we've seen. This is our dream and our business. We've no intention of going anywhere. There's no change to our business. We opened the doors to our brewpub last night and will open them today. We're still servicing customers and making beer."
Their brewery becomes the latest local operation to go into administration in the past 13 months, at a time when the industry has been facing significant financial and economic challenges, which have followed on from the turbulence of the COVID pandemic.
In 2023 alone, Brisbane-based brewing companies Ballistic Beer Co and Parched Brewery have both gone into voluntary administration, the former now part of a consortium led by Catchment Brewing, the latter sold. Also this year, Tribe Breweries in Goulburn, NSW, and Running With Thieves in Fremantle have followed similar paths, with drinks marketplace Kaddy also entering administration in May.
In the case of Running With Thieves, the brewery told The Crafty Pint the decision was made to refinance debt built up due to the difficult trading conditions caused by COVID and the impacts of inflation. The management team remains at the helm as they continue operating as normal, while their administrators have received a proposal for the brewery's future to take to creditors.
Over the past 12 months, other brewing companies have ceased operations, among them Exit Brewing and Fury & Son in Melbourne, who both decided to call it a day earlier in the year; Pioneer Brewing in country NSW and Burleigh Barrels on the Gold Coast announced they were closing on the same day in August.
In August, we spoke to Dereck for an article about breweries changing their focus and direction to survive in the current economic climate.
At the time, he said they were training their focus on hyperlocal: "Rather than compete with white label or big breweries, I think it's more important to focus on your reason for being, which is for us for a brewpub, and it's about the community around us."
Speaking today, Diti said: "It's business as usual: our doors are open; we're cooking BBQ and brewing beer; our production schedule is full and our tanks are full. We've got a really strong team in place.
"This is a chance for us to reset and then move forward positively."
Bad Shepherd's Media Release
Bad Shepherd Brewing Co. enters voluntary administration to facilitate a financial restructuring of the business
Bad Shepherd Brewing Co., Cheltenham based craft brewery and brewpub operator, has announced their decision to appoint an administrator to help facilitate a financial restructuring of the business.
DBA Advisory as Administrator is supporting the continued operation of the business, so Bad Shepherd’s employees and customers should consider it business as usual. There will be no impact to ongoing production and hospitality operations as a result of this appointment.
Business owners Dereck and Diti Hales have taken this step to deal with the financial losses the business has faced over the last few years from the COVID-19 pandemic and lockdowns. Dereck and Diti are working with the Administrator on a Deed of Company Arrangement (DOCA) proposal, which will provide the framework for the restructuring of the business. They are confident the financial restructuring will result in a stronger and more resilient business emerging from administration.
Dereck said “This has been a difficult period for the business, but we see this as an opportunity to reset and look forward to better times ahead.”
Bad Shepherd Brewing Co. remains committed to maintaining a high standard of service and open communication with all stakeholders during this restructuring process.
James Smith launched The Crafty Pint in 2010, two years after moving to Australia from the UK. He was taken to Mountain Goat within weeks of landing in Melbourne, joined their indoor cricket team, and is still navigating the rabbit hole that is craft beer to this day.
The beers that turned you on to good beer:
- Watching pints of McEwan's 80 Shilling settle when visiting family in Edinburgh.
- Pints of flat Bass from the jug at the Cap & Stocking in Kegworth.
- A first Paulaner Hefeweizen when working in Munich in 1998: “This smells of bananas!”
- Castle Rock Harvest Pale – how could a 3.8 percent ABV beer be so good? (It turns out it was an early example of the three Cs – Cascade, Centennial and Columbus – in an English bitter).
- Dogfish Head 90 Minute IPA poured through hops at the Sunset Grill in Cambridge, MA, in the company of a man who turned out to be the Beer Nut (while we were both covering a double murder case at the time).
- Ordering a Mountain Goat Hightail on my first day as an Aussie resident as it was local and I’d never heard of it; “A dark Australian beer; well I never…”
- Murray’s Icon 2IPA at Beer DeLuxe Fed Square, recommended by a guy I’d not long known who's now the main man at Fixation, served by Mik Halse, now head of sales at Hawkers. How could an Australian beer smell as good as that?!?
You've got three beers to turn someone else on to good beer; what are they and why?
- Any really good, fresh and balanced West Coast style IPA. Punchy hop aromatics are the most obvious way to capture someone's attention and these IPAs, done well, present the key components in beer (if you're sticking to just water, malt, hops and yeast) in harmony yet with the volume turned up.
- Saison Dupont. Arguably a selfish choice here as I bloody love the broad saison style and dearly hope it will finally take hold in Australia one day. Given a choice, I'd probably crack one enlivened with Brettanomyces like Molly Rose Matilde for myself but, when it comes to turning on someone new, you've got to go with the classic.
- Rodenbach Caractère Rouge. Because if you don't enjoy or can't appreciate this beer, I'll never win you over. And because Filip, the fruit and wood specialist at Rodenbach that designed it, is a beautiful human.
The last beer you enjoyed:
Fixation IPA at The Incubator.
Three things that represent you:
- The Soft Bulletin by The Flaming Lips
- Catch-22 by Joseph Heller
- Golden Plains
NB All articles written by James in the first eight years of the site appear as By Crafty Pint. Today, that's used for collaborative efforts by the wider team.
