Epic Brewing Company: Three reasons it failed - liquidators

Liquidators are trying to find buyers for Epic.

Three reasons have been given for the financial failure of a Kiwi craft beer business whose owners called in insolvency specialists when they realised they couldn’t continue, even after receiving $200,000-plus in government money via Covid cash to pay staff during lockdowns.

Rising prices, the pandemic and the recession meant the business couldn’t recoup costs.

The first liquidators’ report of the Epic Brewing Company, incorporated in 2007, cited those for the financial failure of the business which manufactured and sold its own brand nationally.

“We have been advised the company experienced financial difficulties due to poor economic conditions caused by Covid-19 and increased costs placed pressure on margins that could not be recouped in an increasingly tight consumer market,” wrote Waterstone’s Damien Grant and Adam Botterill, who are joint liquidators.

Shareholders are Luke, Wendy and Anne Nicholas, Judith Roswell, Eleanor Tocker and Linda and Sten Hansen. Grant and Botterill’s report said it was the shareholders who contacted Waterstone.

Epic Brewing got an initial $57,000 Covid cash for nine employees, Work & Income’s database showed. The brewing business got a further $32,800 for seven employees then a top-up wage subsidy extension in 2021 of $121,000 when it appeared to nearly double in size and employed 14 staff at that point.

But all that government money wasn’t enough to keep it going.

Trade creditors are owed $514,000, a statement of financial position out today showed, and known creditors’ names are listed. The ANZ Bank is the first ranking general security holder but how much it is owed is withheld.

However employees are owed $63,000 in unpaid wages and holiday pay.

On the plus side, the company’s bank balance is $17,000.

The liquidators are now contacting trading banks to identify a bank account associated with the company and preparing an information memorandum.

They are running a process to sell the business, securing records including extracting information from Xero and other sources and trying to preserve value for a potential sale.

Last month, the Herald reported Botterill saying Epic was still running: “We are running the business as a going concern at the moment. We’re still trading. We’ve engaged staff on a short-term basis to keep the business running so we can run a sale process. We think there is a lot of value in the company in terms of the brand. It’s a really well-known beer brand sold in supermarkets and [has] quite a lot of distribution. It’s got a big market presence.”

The sale process had opened on July 27, he said.

A schedule of financing statements lodged against the company lists many businesses.

Hancocks Wine, Spirit and Beer Merchants, Portacom, Visy Glass Operations (NZ), Boc, Charta Packaging, Custom Fleet NZ, Graphic Packaging International, New Zealand Hops, Dominion Constructors and others are listed.

A long list of creditors named Government entities as well as businesses involved in alcohol sales, distribution, packaging and manufacturing.

New Zealand Customs, OfficeMax, Pak’nSave Palmerston North, AJ Park, the ANZ Bank, Cryer Malt, Liquorland, Service Foods, Owens Transport, RealBeer, New Zealand Couriers and many others were named there.

Epic founder and director Luke Nicholas, who started the craft beer brand in 2007 and now runs it with wife and co-owner Wendy, told the Pursuit of Hoppiness the decision was a sudden one after a deal with an investment partner fell through without notice.

Nicholas said that deal was to build their own brewery and taproom in Mt Wellington as its current business model - which sees Epic brewed under contract at Steam Brewing in Ōtāhuhu - was not viable long-term.

The liquidators will say more if they are able to sell the business.

“It is currently unknown whether Inland Revenue is a preferential creditor and the extent of any debt. The liquidators have withheld the secured balances for ANZ and other secured creditors as this may prejudice their sale process,” they said.

Anne Gibson has been the Herald’s property editor for 23 years, has won many awards, written books and covered property extensively here and overseas.