Valhalla Brewing, the Geelong-based brewing company that opened their brewery and taproom in the Federal Mills precinct last year, has become the latest indie operation to enter voluntary administration.
Owner Scott Hunt said they appointed Worrells as administrators on Monday, citing a significant drop off in patronage at their two venues as the main cause of their financial struggles. He told The Crafty Pint that takings at their original Geelong CBD venue in Union Street are down around 50 percent compared to a year ago, with visitation to the Federal Mills taproom well short of the figures they'd expected when they signed the lease and set out to build the brewery in North Geelong.
He believes the downturn is related to the legacy of the lockdown era, with many people spending more time working from home, as well as the ongoing cost-of-living crisis, but is hopeful the administrators will be able to find a solution in which he and his family are able to remain part of the business. Other issues commonly cited by brewers entering VA over the past couple of years, most notably excise tax debts to the ATO, are not a factor with Valhalla, he says.
"We'll be looking for a buyer or recapitalisation," Scott says. "Hopefully, we can find a way out.
"It's mainly the drop in numbers on the hospitality side of the business. Our business model is very much based around hospitality."
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While he says they've felt the impact of less workers coming to the city at their Union Street venue, they've experienced a similar issue at the North Geelong site too.
"It's a broader issue with a lot of offices and businesses out there," Scott says. "We banked on them coming in for a drink after work, especially on Fridays, but it's just not happening.
"It's partly cost-of-living pressures too, with people cutting back on their spending, like across the broader industry, but also that legacy of lockdowns."
He says recent weeks have "been one of the most stressful periods of my life and will be going forward", adding: "We're still staying hopeful and positive that something good will come from this."
Valhalla Brewing launched their first beer, Obsidian Black Ale, in 2016, initially operating as a brand without a home before opening the Union Street venue. Obsidian later won Best Porter at the 2021 Australian International Beer Awards – the same year Valhalla were named Champion Australian Gypsy Brewer.
They have run two crowdfunding campaigns over the years: the first with Birchal in 2022 raised more than $422,000; the second, earlier this year, raised $102,000 via OnMarket. However, Scott says neither hit the targets they'd been hoping to achieve.
"The original crowdfund a few years ago didn't reach the numbers we wanted and we had a blowout of costs to open the brewery," Scott says, adding that the second one "didn't raise near the funds we hoped to.
"Many of the other crowdfunds in the industry are struggling to raise funds. People are very cautious about our industry, and with good reason."
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Valhalla isn't the first brewery in the Geelong region to enter VA this year. Sou'West Brewery in Torquay brought in administrators in May, and has since been acquired by Great Ocean Road Brewing. Also in recent months, Scott has closed down his other beer businesses: distributor Lotus Beer Collective announced it was ceasing operations in May, with home delivery business Hops To Home following earlier this month.
"We've all been hoping [the economy] would turn," Scott says, "and that interest rates would drop, but now people are talking about them going up again so it's another 12 or 18 months until it turns around now."
As for potential outcomes, he adds: "We're still hopeful something will come up and the administrators find a way through this. We would love to stay in control of the business – that's our best scenario: find a way to recapitalise and stay in control of the business and the brand we've built over the last eight years and are extremely proud of. Then our investors keep their ownership of the business and we look after them as well.
"That's one of the hardest things to accept: that we might come out of this without that outcome."
We recently examined the spate of voluntary administrations in the local beer industry in a two-part mini-series, and also attempted to make sense of the shifting landscape across Australia in this article on the start of the new financial year.