Australian brewing sensation Better Beer says business will continue as usual, after a collapsed proposal to merge with Mighty Craft fuelled the latter venture’s decision to enter voluntary administration.
Mighty Craft, an accelerator of boutique beverage brands, on Monday tapped Liam Healey and Quentin Olde of restructuring firm Ankura to serve as its voluntary administrators.
The appointment comes in a torrid time for the craft beer sector, as outstanding debts, diminished consumer spending, and high excise payments punish bottom lines.
In a statement published through the ASX, the administrators said the company had attempted a divestment and restructuring plan to work down its debts.
Mighty Craft in April secured $7.2 million from the sale of South Australia’s Mismatch Brewing and 78 Degrees distillery, just two of the brands in its significant portfolio of craft manufacturers.
But central to Mighty Craft’s plan was the proposed merger with Better Beer, in which it holds a minority stake, along with a potential capital raise.
Better Beer, co-founded and co-owned by The Inspired Unemployed humourists Matt Ford and Jack Steele, along with publican and CEO Nick Cogger, has outperformed many other craft beer labels since its inception in 2021.
Mighty Craft’s H1 FY24 report shows Better Beer sales revenue of $26.1 million, a 32% jump from the prior corresponding period, equating to some 7 million litres of beer sold.
The brand now touts itself as Australia’s second-largest independently owned beer brand.
However, it now “appears unlikely that an agreement will be reached between [Mighty Craft]’s senior lenders, Better Beer and Mighty Craft that is acceptable to all parties,” the administrators said.
As a result, Mighty Craft’s directors entered voluntary administration to assess whether it could continue as a going concern, or if the administration would provide better returns to its creditors than an immediate wind-up.
While the future of Mighty Craft is unwritten, Better Beer co-founder and CEO Nick Cogger said the brewer will carry on as per usual.
“From a Better Beer position it is business as usual through the administration period,” Cogger told SmartCompany on Tuesday.
“At a point in the future Mighty Craft’s stake in Better Beer will be put up for sale or someone will propose a [deed of company arrangement],” he said.
A March 2023 ASX announcement put that stake at 33% of the venture, which Cogger says now rests at 25%.
Pending further updates to that stake, the Better Beer business is “just cracking on with our summer planning and some new products we are launching shortly,” Cogger added.
Other entities within the Mighty Craft portfolio will also trade as per usual through the process, the administrators confirmed.
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Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
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