Pandemic-era debts force Melbourne craft brewer into administration

Melbourne craft beer stalwart Bad Shepherd Brewing Co. has called in the administrators for a financial restructure, owing to legacy debts incurred through the COVID-19 pandemic.

Documents listed by the Australian Securities and Investments Commission (ASIC) on Tuesday show Atle Crowe-Maxwell of DBA Advisory was appointed as the sole administrator of the popular brewery and brewpub venue.

DBA Advisory continues to trade the business as it pursues a Deed of Company Arrangement proposal mapping out the restructuring process.

No staff have been laid off as a result of the voluntary administration.

In a statement, Bad Shepherd Brewing Co. said employees and customers should consider the situation as “business as usual” while restructuring efforts take place.

“There will be no impact to ongoing production and hospitality operations as a result of this appointment,” the statement said.

Founded by husband and wife duo Dereck and Diti Hales in 2015, Bad Shepherd launched as a brewpub in the bayside suburb of Cheltenham.

The venue adapted American-style BBQ cuisine for the Australian palate, and this year used Vegemite as the inspiration for a yellow-and-black menu update.

Capitalising on a growing Australian thirst for craft beer, Bad Shepherd has also delved into national distribution.

Selections from its extensive range are available in independent bottleshops nationwide, along with retail titans like Dan Murphy’s, BWS, and Vintage Cellars.

However, the business’ trajectory was disrupted by the COVID-19 pandemic, which saw the Victorian government impose strict lockdown conditions on hospitality venues for much of 2020 and 2021.

Bad Shepherd Brewing Co. also suffered from lower-than-usual patronage in early 2022, as fears over COVID-19 transmission kept punters from their favourite venues.

The business incurred considerable debts as it maintained its brewing operations.

Victorian bars are now well and truly open for business, but a softening economy has seen craft beer aficionados turn to cheaper alternatives in 2023, further softening the thirst for boutique options.

Even so, Hale maintains Bad Shepherd is now running profitably and is close to pre-COVID revenue levels.

Predictions of a warm summer, and the potential that interest rates have peaked, could also benefit the craft brewing sector — and the many businesses nationwide nursing debts sustained through the pandemic.

“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,” Hales said.