Reasons behind collapse of historic Victorian brewery Billson’s

The reasons behind the failure of the Beechworth-based beverage company Billson’s have been revealed in a new report after the beloved regional drink maker collapsed owing nearly $22m.

The reasons behind the failure of the Beechworth-based beverage company Billson’s have been revealed.

An overambitious sales drive, overspend on marketing, leaking cans, a breakdown in a production line and the cost-of-living crisis caused the collapse of beloved regional Victorian drink makers Billson’s.

The deep dive into the failure of the Beechworth-based beverage company is revealed in a new report which warns unsecured creditors may have to settle for just seven cents on the dollar while a major bank will get paid out its debt in full.

The deep dive into the failure of the Beechworth-based beverage company is revealed in a new report. Picture: Supplied

Billson’s Beverages, which was put into voluntary administration by husband-and-wife owners Felicity and Nathan Cowan in July this year, entered insolvency with debts of up to $21.3m.

This includes more than $1m owed to employees, $5.5m to 141 unsecured creditors, and $12.3m to banking giant National Australia Bank, a report by McGrathNicol administrator Robert Smith notes.

Billson’s, which operates from a historic brewery in Beechworth in eastern Victoria, is best known for their ready-to-drink vodka, craft beer and cordial, commonly sold at Dan Murphy’s, BWS and Coles.

Billson’s Beverages was put into voluntary administration in July this year. Picture: Supplied

Billson’s operates from a historic brewery in Beechworth in eastern Victoria. Picture: Supplied

The McGrathNicol report details how the business came unstuck as the Cowans, who bought the historic drinker maker in 2017, set about to massively expand its sales.

The duo found early success as sales skyrocketed from $400,000 to a staggering $105m by the middle of 2023, largely driven by an alcoholic ready-to-drink range.

Billson’s set a $150m revenue target for the 2024 financial year and invested heavily in sales, marketing, new product development and inventory build.

“This investment depleted cash reserves in anticipation of significant sales increase,” Mr Smith said.

But from November last year sales declined dramatically and unsold inventory swelled as Billson’s was battered by intense competition from new brands and its higher price point in a market under cost-of-living pressures.

Nathan and Felicity Cowan. Picture: Billson's Beverages.

The business was also hit with inventory quality issues from August last year, caused by mechanical failures in the production process at a co-packer, as well as a separate can leak issue.

“This caused various issues, including destruction costs which contributed to the liquidity challenges,” Mr Smith said.

Management responded by sacking half of its workforce – cutting headcount from 200 to 99 – lowering its prices, ceasing almost all production, winding back the number of outlets where they sold their goods and entering into payment plans with major creditors.

NAB provided $7m in additional funding from February this year as the business spiralled into a loss, with a $15.8m profit in 2022-23 becoming a $9.5m loss in 2023-24.

The business was also hit with inventory quality issues from August last year. Picture: Supplied

Creditors will vote on Thursday on a settlement made by current owners which will see them continue to trade the business under a new corporate structure if accepted.

The deal, detailed in the report, outlines all outstanding employee entitlements including $438,000 in redundancy payments and $330,000 in leave entitlements will be paid, while unsecured creditors will get between seven to 10 cents on the dollar.

As a secured creditor, NAB’s $12.2m debt will be paid off in full.

The deed also proposes all 42 remaining staff will remain employed by Billson’s.

Originally published as Reasons behind collapse of historic Victorian brewery Billson’s