Ostra Distillers in administration, in talks with investors to save the business from collapse

Administrators have taken control of Victorian whiskey maker Ostra Distillers, amid talks with investors to save the business from collapse.

Ostra Distillers founder Dawid Ostrowski at the company's facility in Robinvale, Victoria. Picture: Simon Shiff

Administrators have taken control of Victorian whiskey maker Ostra Distillers, amid talks with investors for a multimillion-dollar capital injection to save the business from collapse.

The company, which operates as a contract manufacturer from its distillery in Robinvale, 90km southeast of Mildura, had planned to launch its own brand next year but those plans are on hold as the company seeks a lifeline from investors.

Ostra Distillers founder Dawid Ostrowski said a combination of higher business costs, interest rate hikes, and cost of living pressures that had crimped demand for its high-end whiskeys, had eaten into the company’s cashflow, just as it took on more debt to fund the acquisition of a huge brewhouse at the start of 2022.

The company acquired the brewhouse - which previously produced beer at the iconic West End brewery site in Adelaide - from drinks giant Lion, with plans to create Australia’s largest malt and grain whiskey distillery.

Mr Ostrowski said new investment was needed to commission the brewhouse, and to revive the company’s fortunes after a difficult period.

“Obviously purchasing the West End brewhouse - there was a large capex that went out, and that contributed to the position that we’re in at the moment of reduced working capital, along with higher costs and low margins,” he said.

“Our bottle costs went really high at periods, and also import costs, so transport, international logistics and shipping. Over time those have reduced, so the margins were coming back to us, but obviously we had more creditors and so it was a catch up game from then on.

“It’s put the business in a precarious position.”

Mr Ostrowski said the company had been looking to raise $3m from investors before administrators were appointed, and those talks were continuing in a last-ditch attempt to save the company from being wound up.

“We’re still confident that a deal can be accomplished, so that we can continue supplying great whiskey and vodka to the Australian market and beyond.”

Administrator Shane Cremin from Rodgers Reidy has been contacted for further details about the company’s creditors and outstanding debts.

Mr Ostrowski said the challenges facing his company were common across the industry, with distillers feeling the pinch from higher costs as consumers scaled down their discretionary spending, particularly on luxury items.

“As a contract manufacturer we’ve seen a major slowdown from other distillers buying from us, and we’ve attributed that to discretional spending dropping significantly in the marketplace,” he said.

“We’ve noticed that people want to drink well. They are drinking less, but we’ve noticed that the higher end of the market hasn’t moved greatly.

“But we’ve noticed that consumers who are buying $100 bottles of products are moving south to $50, $60 bottles of product, and so their expectation is to retain the quality but to buy at a lower price point.”

Ostra Distillers acquired the former West End brewing equipment, including a 500 hectolitre German-made Steinecker brewhouse, last year following the closure of the brewery in 2021.