Introduction
This news comes amidst a series of challenges faced by the sector, including declining demand, rising costs, and high taxes. I believe this development serves as a wake-up call for the industry and highlights the need for proactive measures to navigate these difficult times.
Industry overview
The Australian craft beer industry has been experiencing a significant decline in recent years, with overall volumes dropping by 100 million litres since 2019.
This trend is part of a long-term decline in beer consumption, which has been exacerbated by the ongoing cost of living pressures that have reduced discretionary spending.
Additionally, the industry has been grappling with increasing costs related to energy, labour, ingredients, and government excise, which is now the third-highest in the world.
Case study
Malt Shovel Brewery, established by Chuck Hahn in 1988 and later sold to Lion Nathan in 1993, has been a pioneer in the Australian craft beer movement.
The brewery has played a crucial role in introducing consumers to a diverse range of beer styles and has been the birthplace of iconic brands like James Squire and Hahn.
However, despite its strong legacy and lineage, Malt Shovel Brewery has not been immune to the challenges faced by the industry.
The decision to close the brewery by the end of August 2023 will impact nine staff members and serves as a sobering reminder of the difficult times faced by the sector.
Analysis
The closure of Malt Shovel Brewery is not an isolated incident, but rather a symptom of the broader issues plaguing the Australian craft beer industry.
The combination of declining demand, rising costs, and high taxes has created a perfect storm that has forced many breweries to their knees.
As Nick Boots, an industry consultant from The Business of Beer Consulting and Advisory, warned, the recent collapse of Deeds Brewery in Melbourne is unlikely to be the last.
To address these challenges, it is crucial for craft breweries to adopt a proactive approach to managing their finances and operations.
This may involve implementing cost-saving measures, diversifying revenue streams, and seeking professional advice to navigate the complex landscape of debt, restructuring, and turnaround.
Closing thoughts
As an owner or director of a small or medium business in the Australian FMCG industry, it is essential for you to act now to protect your business and ensure its long-term viability. The time to act is now – don’t wait until it’s too late to safeguard the future of your business.
At AVA Advisory, we understand the unique challenges faced by the industry and are committed to providing expert guidance and support to help you weather the storm.
By working with our team of experienced insolvency practitioners and debt advisors, you can benefit from tailored strategies designed to address your specific needs and circumstances. Whether you require assistance with debt restructuring, turnaround planning, or navigating the complex world of ATO debt, we are here to help.
The closure of Malt Shovel Brewery is a stark reminder of the challenges faced by the Australian craft beer industry. As the sector continues to grapple with declining demand, rising costs, and high taxes, it is crucial for business owners and directors to take proactive measures to protect their businesses.
By seeking professional advice and support from small business debt advisory firms like AVA Advisory, you can position your business for long-term success and resilience in the face of adversity.
Contact us today on 1300 181 220 for a confidential, obligation-free consultation or book online today – AVA Advisory, safeguarding owners and directors from the impacts of insolvency is our #1 priority
