Melbourne-based Deeds Brewing is the latest brewery to enter voluntary administration, continuing the now well-established trend.
The news applies to all four registered companies owned by the business, including Deeds Group Pty Ltd, Deeds Taproom Pty Ltd (trading as Deeds Taproom and Kitchen), Deeds Brewing Company Pty Ltd, and Future Proof Distilling Pty Ltd.
The administration process will be performed by Glen Kanevsky and David Orr from Deloitte Financial Advisory.
“It’s very early days in this process as we take over management of the business and commence a review of its financial position,” said Mr Kanevsky to media.
“For now, it is a case of business as usual and continuing to trade while we explore urgent sale or recapitalisation options.”
As has been the case with the other independent breweries that have entered into voluntary administration over recent months, Deeds’ current financial struggle is largely the result of debt to the ATO accrued during the pandemic. Deeds has been forced to enter into administration due to being unable to negotiate an extended payment plan to pay off its government debt.
Drinks Trade recently conducted an interview with Kylie Lethbridge, CEO at the Independent Brewers Association, in which she explained in detail what is causing these problems between the ATO and independent breweries.
“One of the things that the federal government could do [to help alleviate COVID pressures] was to be able to allow businesses to defer some of their tax obligations,” she said.
“And so for us, that’s the excise tax and it meant that breweries could defer; and when it was first announced there was no end date.
“Then at some point in 2022 it was ‘okay the holiday’s over you’ve got to start paying your obligations now’ and we’ve all got to work on a payment plan.
“Not everybody did defer that debt but for us the vast majority did, and so when it came to ‘okay we’ve got to pay it back’ that was based on the negotiation with the ATO.
“And so the challenge that we see and that we’ve identified and we can’t quite understand is why the ATO would not say ‘yes you can have a two year extension because we’ve seen you’ve met all your payment milestones.’
“But then in other instances I’ve been told that they have extended them by 12 months or two years, and so what we can’t work out is any rhyme or reason as to why one brewery will get an extension and one won’t.”
Since January 2023, the list of independent breweries that has been forced into voluntary administration includes Ballistic, Dainton, Bad Shepherd, Wayward, Hawkers, Big Shed, and Golden West. Kylie Lethbridge has indicated that she believes more will follow suit if no changes are made.
“Unless we get some relief from the federal government then we will see more businesses close and we will see more voluntary administrations and we will see more redundancies,” she said.
The IBA recently presented a series of six proposals to the Federal Government that hope to provide greater support to the currently suffering industry.
“If excise is supposed to be a tool for harm minimisation – then the Federal Government really needs to take a look at its own data and create an equal playing field that meets its own policy objectives,” said Lethbridge.
