Tough times in the drinks business in Australia

Two Australian drinks producers that launched projects using crowdfunding have this week gone into administration - a sign of tough times in the beverage business.

Sobah Beverages, a non-alcoholic craft beer company based on the Gold Coast, has entered voluntary administration after eight years of operations.

Australian Distilling Ltd, the parent company of Old Young’s, Juniper Society, and Gingin Gin this week also appointed voluntary administrators.

That came just under one year after the business launched a public crowdfunding campaign to support the Cathedral of Gin venue, in the Swan Valley, Western Australia.

This raised over $1.36 million from 392 investors in additional crowdfunding, adding to $2.7 million raised March 2023 raise.

The dual crashes came one month after Australian spirits business Top Shelf International also went into administration.

James Young, who founded Old Young’s in 2016, is expected to put forward a restructuring proposal.

Old Young’s Kitchen, the restaurant attached to the distillery, has closed, but the venue continues to operate as an events space.

Sobah Beverages cited the economic downturn and broader challenges in the beer industry as reasons for their decision.

Sobah was founded in 2017 by Dr Clinton Schultz and Lozen McDiarmid-Schultz, making it Australia’s first dedicated non-alcoholic beer brand.

In a media statement, Sobah said all its products are still available.

Image: Yuliia Moreva, Scop.io   

Rex gets a government lifeline

Struggling airline Rex will continue to provide flight services to regional Australian destinations after government intervention.

Rex went into voluntary administration in July and its management was handed to administrators EY Australia (formerly Ernst and Young).

Transport minister Catherine King and workplace minister Murray Watt today announced the government would provide up to $80 million in support and grant early access to entitlements for Rex’s former employees.

Rex’s administrators plan to apply to the federal court to extend the voluntary administration to June 30, 2025. If the application is granted the government will continue to guarantee ticket sales made throughout the administration period to that date.

The ministers said the guarantee has been effective so far, “and has yet to be used with flight bookings holding up well”.

More than 600 workers were made redundant when it was revealed Rex was struggling under the weight of $500 million of debt. In August, the government stepped in to guarantee bookings on regional flights, but resisted calls for a bailout.

The administration process for Rex was progressing, the government said as it noted the recent sale of its Pel Air Aviation business to Helicorp Pty Ltd, which is part of Toll Aviation. The sale proceeds will be used to repay secured creditors.

"This Federal Government financing facility will enable us to continue to support regional communities through an extension of the voluntary administration," EY spokesman Samuel Freeman said.