Is it all doom and gloom for small brewers?
Recent reports are flagging that things are getting a lot harder and there is no doubt that there is a rapid rise of insolvencies in the space.
Is it a reality?
Yes, unfortunately the brewing industry is struggling through a perfect storm of higher input costs, higher levels of competition and a reduction in the marketplace. Transport costs are through the roof and things are no doubt getting harder.
What are the options?
First up review your business, understand what the costs are, what can be done to turn things around or what are your options to get out of the business intact (or as much intact as possible). Insolvency is one of a few options that are available for brewers that are in trouble.
What are some of the signs?
Payment terms are a big indicator and it may sound stupid but are you juggling your cash. In any business cash flow is king and without clear funding it is a good sign that things are going to get harder.
If your revenue is down but the costs are going up, it is time to have a good look at your business and make some changes. It might be necessary to rapidly reduce overhead to bring the business back to viability.
Orders or people through the door, if you are running a venue, are your patronage numbers down, this is happening across the board, but is it materially impacting your business. Are you running a high cost venue without the requisite income.
What can you change?
To get through the difficult times everything needs to be on the table.
It’s time to take a step back from your business and understanding where it actually stands, what is on the horizon and how you are going to trade through.
What has gone wrong?
We all know that brewing requires a lot of capital investment to not just start but continue to running in a profitable way.
One thing we saw was businesses getting too big too fast and not having the business structures, cash flow planning or business planning to handle the growth. It has been unfortunate to see some solid brands fall over through substantial growing pains.
Unfortunately on top of increased operating costs, the capital invested to grow is often expensive money.
What’s the crystal ball?
There is a reality that things are going to get a lot harder, there will continue to be rationalisation (which is code for brewers shutting the door). If you have some issues now, chances are things are going to get a lot harder before they get better.
Need help?
We are working with several brewers to understand their businesses and work through their trade out options. We offer a complimentary business review, and a follow up strategic planning meeting to help you understand the options that you have available.
