East 9th buys failed Sample Brew

Drinks marketing company East 9th Brewing has emerged as the buyer of contract brand Sample Brew which went into administration in May.

Sample, which launched in 2015, went into administration after failing to achieve a hoped-for sale.

East 9th Brewing was founded in 2010 , launching with Dos Blockos pale lager. It has since produced alcoholic ginger beer, Lick Pier, and alcoholic root beer, Future Memoirs Of A Root Beer.

East 9th Brewing’s Benjamin Cairns announced in a media release that his company will be taking over the Sample portfolio immediately, as well as re-employing a number of the Sample sales team who lost their jobs in the collapse.

“The Sample brand was always one that we admired from afar…the previous team have done an amazing job building the brand over the last five years and we plan to continue to build on that,” he said.

East 9th commercial director Stephen Wools said this was the first of “many planned moves” for East 9th.

“East 9th Brewing has plans for a collection of hero partner venues to call home as well as an appetite for further acquisitions,” he said.

“In line with our vision to have Australia’s largest independent cross-category portfolio, we have an exciting NPD pipeline that extends on our current range of beer and near-beer products and will include some new huge growth areas such as craft wine.”

The sale price was not disclosed.

Administrator recommended sale

In a report published in June by administrators from Rodgers Reidy, creditors were advised that Sample had liabilities of $866,000 and assets of $314,000, including what it was owed by trade creditors. Liabilities to unsecured creditors, including CEO Vedad Huric, totalled more than $540,000.

The administrator recommended that the company be wound up and the assets sold. In May expressions of interest were sought which resulted in six offers being received. The June report estimated that between existing assets and sale proceeds, priority creditors should receive between 35-100 cents in the dollar.

The report revealed that the company had attributed the failure of the business to increased competition in the craft beer industry, low margins on product and insufficient sales.

Perils of crowd funding disclosure requirements

In late 2017 Sample launched a crowdfunding expression of interest on funding platform Birchal, which, at the time, was celebrated as an Australian first. Sample subsequently discontinued the process.

As part of its Birchal offer, the company said that its “business model is structured for fast, accelerated growth through a four-tier strategy of superior production, sales, marketing and brand experience.”

At the time of its crowd funding campaign, the company claimed sales of $2.3 million for 2016 and to be “well on track to turnover more than $4 million” in 2017.

However, the administrator’s report indicated the business had revenues of $558,284 in the year to 30 June 2017, $2.7 million in 2018 and $2.2 million to 14 May 2019. The report said the company had “traded at a loss since at least March 2017”.

After expressions of interest closed with Birchal in late December 2017, founder Vedad Huric told the Sydney Morning Herald in January 2018 that he had been “overwhelmed by the response”, with close to $2 million in potential investment promised. No announcement was made at the time that the crowdfunding had been discontinued.

In a media release announcing its purchase of Sample Brew, East 9th Brewing advised that the crowdfunding plans were pulled due to reported outside investor interest, which ultimately fell through and led to the eventual voluntary administration of the company.

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