Why Mike’s Failed

Michael Donaldson sheds light on why White Cliffs Organic Brewery Ltd went into receivership.

Reading through the liquidator’s report on why White Cliffs Organic Brewery Ltd went into receivership offers an insight into the perils of the beer business.

White Cliffs Organic Brewery – which trades as Mike’s Organic Brewery – started in 1989 but has been run by Ron Trigg and his family since they bought the business in May 2007.

Trigg hopes a new company he’s formed, Mike’s Holding’s Ltd, of which he is the majority shareholder, can buy some of White Cliffs’ assets in order to allow the continuing production of Mike’s beer.

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Ron Trigg, of Mike’s Organic Brewing, is hoping his new company can buy the assets of the liquidated business.

For now the company will continue to trade while the liquidator, John Scutter, goes through the process of trying to repay 70 creditors.

So what led to one of New Zealand’s oldest craft breweries into insolvency?

According to Scutter’s report – for which Trigg, as director, provided most of the information – the main factors can be summed up as follows:

  • The company had ongoing debt problems stemming from unpaid excise duties to customs as well as repayment of a loan to the BNZ.
  • The company couldn’t raise enough money, either through refinancing or increased sales, to trade its way out of trouble.

Apart from the unpaid excise duties it appears the company made a bad investment in a 10-litre keg system which was imported in 2009. It was a pricey way to serve beer and was soon overtaken by demand for 50-litre kegs.

An investment in creating an onsite café in 2011 took the focus away from the core business and also put a further financial strain on the operation as a result of “poor performance” the report said.

On top of these fiscal pressures, the company couldn’t trade its way out of trouble because of:

  • Increased competition
  • Poor distribution which impacted sales
  • Older inefficient equipment
  • The beer was priced too high to be competitive

Back to The Pursuit of Hoppiness: Spring 2016

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