The media has dubbed it a "beerpocalypse," but it really goes beyond just beer. A number of well-known (and lesser-known) beverage brands, breweries, coffee companies, and cafes have filed for Chapter 11 bankruptcy.
Beer has been the focus of the coverage because some big names have fallen. Anchor Brewing, a huge name in the craft beer industry with a national footprint was one of the first beer brands to file Chapter 11 bankruptcy and then go out of business.
Related: Struggling restaurant chain hits Chapter 11 bankruptcy problem
It was followed by regional favorites, including Chicago’s Metropolitan Brewing, New Jersey’s Flying Fish, Denver’s Joyride Brewing, Tampa’s Zydeco Brew Werks, and Cleveland’s Terrestrial Brewing. Some of the blame for these failures goes to younger people drinking less beer, but that's not the core root of the problem.
The reality is that the Covid pandemic cost many beverage companies — not just breweries and beer brands — sales while costs also increased. Many of the impacted companies had to borrow many at unfavorable rates to stay alive. When business did not return to pre-pandemic levels, they were unable to service that debt.
It's a vicious cycle where the original business may remain viable, but the added cost of debt service and, in many cases, higher labor and raw material costs put firms in a situation where they can't operate viably.
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A popular wine company struggles
Wine brands have not been immune from the financial problems that have sent dozens of beverage brands into Chapter 11 reorganizations or even Chapter 7 liquidations. Boisson, a retailer focused on non-alcoholic wine, beer, and spirits, filed for Chapter 11 bankruptcy as has Frinj, an organic coffee bean company.
Now, Vintage Wine Estates (VWE) has filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Delaware
ALSO READ: Struggling fast-food chain operator files Chapter 11 bankruptcy
"Vintage Wine Estates is a family of wineries, wines, and cider with a focus on exceptional quality and incredible customer experiences. With wineries throughout Napa, Sonoma, California’s Central Coast, Oregon, and Washington State, we welcome you to our storied properties. And we cordially invite you to experience our products, wherever you are, to enjoy with family and friends," the company shared on its website.
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Vintage Wine Estates files Chapter 11 bankruptcy
VWE has a plan for how its Chapter 11 bankruptcy will go.
"This process is intended to establish a fair, structured process for VWE to address outstanding debt obligations while the business pursues the sale of its assets," the company shared in a press release.
VWE does have a plan for its continued operations and next steps.
"Subject to approval of the bankruptcy court, the company intends to enter into a debtor-in-possession financing facility with the prepetition lenders under the credit agreement, pursuant to which the lenders will make available to the company a credit facility in the amount of $60.5 million. The DIP Facility, along with the company's existing liquidity and cash generated from ongoing operations, will be used to support the company's business during the restructuring process," it shared.
Related: Struggling restaurant chain learns its Chapter 11 bankruptcy fate
VWE also tried to explain the reason for its filing.
"Over the preceding months, the Company experienced negative financial headwinds that severely impacted its liquidity position. In response, the company explored several solutions to overcome these challenges, with the monetization of all assets being the most viable path forward to maximize value," according to the press release.
More bankruptcy:
- Tinker Toy, Tonka toymaker files Chapter 11 bankruptcy
- Another coffee and cafe company files Chapter 11 bankruptcy
- Distressed home improvement retailer plans Chapter 11 bankruptcy
The company has a deep history that it intends to preserve despite its current financial woes.
"Vintage Wine Estates was built on a commitment to preserve the essential wineries of the past and create the breakthrough wines of the future. Like a vineyard where every block is mindfully planting to achieve the best expression in the wines, Vintage thoughtfully stewards each of its heritage wines and innovative brands to reach their highest potential," it shared on its website.
