New Zealand: Renaissance Brewing up for sale after cash flow difficulties

Renaissance Brewing from Blenheim, New Zealand is up for sale after struggling with financial problems. The award winning company, situated in the heart of Marlborough wine country at the top of New Zealand's south island, went into voluntary administration after struggling with financial and management problems.

The brewery was established in 2005 by brewers Andy Deuchars and Brian Thiel, both natives of Southern California. It was the first local company to raise capital through equity crowdfunding in August 2014, securing its $700,000 target in just a week and a half, a quarter of the time the offer was open.

In a note to investors, Shephard Dunphy, the commissioned liquidation company said the firm had struggled to generate sufficient margins on sales and that, coupled with reduced turnover, had placed a "significant strain on cash flow".  The brewery had “just put in a new bottling line” but has “struggled a bit … with distribution," he said.

According to the voluntary administrator the company's seven staff had been retained and "the business is trading as normal today. We are brewing and all customers' orders are getting fulfilled."

The situation comes in times, when New Zealand’s beer market shows signs of maturity. There are about 194 craft breweries in the country with a population of 4.8 million people, colloquially known as Kiwis. Two thirds of the craft breweries are deemed to be small operations.

The two largest breweries in New Zealand, Lion and DB Breweries, control almost 90% of sales by volume and have recently made some inroads into the still growing craft beer market.

Lion, the local unit of Japanese brewer Kirin Holdings, agreed to buy Wellington based brewery Panhead in May last year from the family of founder Mike Neilson. The brewer paid $15.1 million in cash upfront for Brand Strong, the Panhead holding company, and will pay a further $10 million based on earnings over the next four years. In 2012, Lion already bought Dunedin-based Emerson's Brewing Co. for $8 million.

In January, Lion’s arch rival DB Breweries, owned by Heineken Asia Pacific, followed suit in buying Tuatara Brewing located in Paraparaumu on the Kapiti Coast and its pilot brewery - The Third Eye, in Wellington. Although the purchasing price was officially not disclosed industry analysts estimated a business value of about $10 million at the time of purchase. Tuatara founder and master brewer Carl Vasta, who started the business in 2000, said he "continues to be passionate about the New Zealand craft beer industry and is committed to being part of Tuatara and its future growth."

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