Paul Brown (left) and Jarred Maclachlan said it was "a sad day" for the Deep Creek team.
Paul Brown (left) and Jarred Maclachlan said it was "a sad day" for the Deep Creek team.
Craft beer brewer Deep Creek ran into financial difficulty after a problem with exporting its cans into China left a big hole in its accounts.
Paul Vlasic and Derek Ah Sam from Rodgers Reidy were appointed liquidators this morning , according to Companies Office records.
Ah Sam said the company’s demise was due to a shipment failure.
It wasn’t just any failure - but an estimated $450,000 hole to business cashflow after an exciting initiative for exports to China went wrong.
“It was a failure of a piece of product in the plant that actually seals the lids on the cans. That wasn’t up to spec when the shipment left,” Ah Sam told the Herald.
Make it your business to know
Start your day with the latest business headlines straight to your inbox.
“We’ve been advised by the director that the insurer won’t cover that, but we haven’t gone to the insurer. We don’t have the full picture on that yet.”
Deep Creek on its Instagram profile today said a physical problem with some cans caused the recall.
Deep Creek Brewery began in the garage of one of its founders in 2011.
Ah Sam said the company had been trying to raise capital to plug that estimated $450,000 hole.
“Without that, cashflow dried up.”
Deep Creek’s troubles followed years of frequently tough conditions during the Covid-19 pandemic.
“The hospitality industry, in general they’re suffering, so if they’re suffering, your supplies into those industries start to suffer,” Ah Sam added.
“I think there’s a lot of pain out there and it really depends on how you’ve structured your business.”
“Over the weekend they’ve decided to place the company into liquidation. I think the staff knew the situation,” Ah Sam added.
Deep Creek was founded by Jarred Maclachlan, Paul Brown and Scott Taylor in 2011.
Interests associated with Maclachlan own at least 26 per cent of Deep Creek, while Brown owns 9.5 per cent.
Ah Sam understood Maclachlan lived in South America and was there now.
It was a tough time for the founders, the liquidator said.
“He’s struggling, it’s these guys’ passion, years of hard work,” Ah Sam said about Brown. “He’s absolutely gutted.”
Some assets were still left though, the liquidator said.
“There are some potential pieces of plant there. [The] bank does have security over them. We do have accounts receivable that we’re trying to collect, we think about $300,000-$400,000.”
But the timing was terrible, he said.
“It is sad, just before Christmas. It’s a very sad situation. Speaking to other players in the industry, they’re not interested in taking it over as a business. So it will get broken down.”
Ah Sam said there had been some calls with small expressions of interest.
“Of course, everybody wants it for free.”
Maclachlan and Brown voiced thanks in their Instagram story today to the company’s customers and fans, and to staff.
Even before the North Shore company’s problems, the broader sector had been in some turmoil.
Pursuit of Hoppiness publisher and editor Michael Donaldson in September outlined the craft beer sector’s big players and said a 10-year boom cycle had reached a plateau in a tightening economy, with a subsequent spate of liquidations, closures and sales.
A PwC voluntary administrators’ report said Brothers Beer Ltd and Brothers Wholesale Ltd suffered from Covid-era hospitality restrictions and subsequent inflationary pressures.
