Lotus Beer Co, the Geelong craft beer company behind Valhalla Taproom and Valhalla Brewhall, has entered voluntary administration.
Company founder Scott Hunt said skyrocketing operational costs and a dramatic down-tick in demand were behind the move.
Scott Andersen and Matthew Kucianski from insolvency firm Worrells were appointed as the administrators on Monday.
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They will join creditors in a meeting to discuss business viability and the future of the company next Wednesday.
“We understand Lotus entered voluntary administration due to rising cost-of-living pressures, which ultimately led to a reduced demand for the company’s products,” Andersen said in a statement.
“It was also experiencing increased costs of production in operating its businesses.”
The businesses are still operational at this stage and Anderson said the administrators are “hopeful that we can find the right buyer or investor to keep the business moving into the future”.
Hunt founded Valhalla in 2016 and opened Valhalla Taproom on Union St, Geelong in 2018.
The Valhalla beer range grew but its first brew, Obsidian, remained one of its most popular, winning the 2021 Australian International Beer Awards best stout.
Industry in turmoil
Valhalla Brewing and Brewhall opened in North Geelong in 2023, but the team said sales at the new Brewhall are half of what they expected when they signed the lease.
“In the past two years we have seen almost every aspect of running a small business become more expensive — in particular ongoing increases in rent, insurance premiums, and essential expenses such as fuel, electricity, ingredients, and freight,” Hunt said.
“Then on the other side of the ledger we have a massive decline in spending at our hospitality venues over the past 12 months.
“Sales at our original Union St taproom in the Geelong CBD are down 50 per cent on the same time last year and sales at the new brewhall at the Federal Mills are less than 50 per cent of what we believed was easily achievable when we signed the lease two years ago.”
Hunt told industry publication The Crafty Pint he expected people to come in for a drink after work, but “it’s just not happening”.
He echoed this sentiment to 7NEWS, saying: “Since the end of lockdowns in 2021, many people have not returned from working from home. Or if they have, it is only for two or three days a week.”
Hunt acknowledged cost-of-living pressures as well, saying consumers in general are cutting back on spending.
Valhalla is not alone in feeling the lethal legacy of the pandemic — Sydney’s Malt Shovel Brewery, where popular beers by James Squire and Little Creatures are produced, revealed it would shut down in August due to cost-of-living pressures.
Sou’West Brewery in Torquay, on Victoria’s Surf Coast, entered administration in May, the same month Melbourne craft brewery Deeds Brewery closed its doors after failing to find a buyer during its own two-month-long administration.
Several other Victorian breweries have entered administration, including Hawkers — which has since successfully emerged after approving a financial restructuring — Deeds Brewing and Dainton Brewery.
Queensland brewer Black Hops, with several venues, also entered voluntary administration in March, following close behind Perth’s Golden West Brewing Co which closed its doors in late-February, and Sydney beer company Wayward Brewing Co which entered administration in January.
