KAIJU! Beer has become the first independent Australian brewery to enter into voluntary administration in 2025, marking the continuation of a worrying trend that saw more than 20 craft breweries enter into either voluntary administration or liquidation in 2024.

KAIJU!’s directors made the decision after determining voluntary administration as the best option to counter growing accumulated debt. The decision was made in spite of the fact the business is currently turning a profit.

“The current circumstances required us to make a tough but necessary decision,” said Callum Reeves, KAIJU! CEO and Co-founder and Chair of the Independent Brewers Association.

“While the business is now trading profitably, this step allows us to restructure and ensure a stronger future for KAIJU! Beer.”

KAIJU!, along with all other Australian craft breweries that have entered into voluntary administration over the past year, join the thousands of other small and medium sizes businesses that have fallen victim to accrued tax debts. Recent analysis by CreditorWatch shows that more than one third of all private businesses with ATO tax debt defaults - defined as overdue debts exceeding $100,000 - have become either insolvent or have voluntarily closed over the past 12 months.

Australian businesses currently owe $52 billion collectively in outstanding tax liabilities to the ATO, $34 billion of which is owed by SME businesses.

CreditorWatch CEO Patrick Coghlan said, “a tax debt of $100,000 or more is a substantial burden, especially for SMEs, which represent the majority of businesses with tax debt defaults and can seem overwhelming. Entering into a payment plan with the ATO is an important and necessary first step in resolving these issues.”

After adopting a lenient approach to debt enforcement during the pandemic, the ATO has since intensified its debt recovery efforts, employing measures such as disclosing business tax debts to credit reporting bureaus, issuing garnishee orders, and serving Director Penalty Notices.

“The ATO is simply trying to collect the tax that all companies are obliged to pay,” said Coghlan.

“While I sympathise with businesses grappling with such large debts, it’s crucial that businesses abide by these obligations.”

CEO of the Independent Brewers Association Kylie Lethbridge anticipates more voluntary administrations over the course of 2025.

“The cost of living crisis hasn't changed at all,” Lethbridge told Drinks Trade.

“In fact, the looming recession is [coming], and we're talking about it even more now, particularly in states like Victoria where it's just going to get tougher this year.”

When asked which independent breweries are most likely to fall victim to the current economic pressures, Lethbridge flagged larger breweries reliant on major retailers, and smaller, local breweries losing tap space to larger beer producers.

“Businesses that have relied on national ranging through major retailers: that market has changed very much. Not only are those large retailers reducing national distribution, but they're also producing more of their own beer and and that's been a real challenge for us,” she told Drinks Trade.

“[Also] the hyper-local model, where the biggest pain point is… the market dominance of the two Japanese-owned multinationals and the fact that the access to market through taps is very challenging because of the power that they have in that space. In the last 12 or 18 months - because their beer category is doing it tough as well - they've clamped down more in that space and so further reduced the market access for small indie brewery breweries to be on taps.”

Vincent de Soyres, Brewery Director at Frenchies Bistro & Barrecently told Drinks Trade that he believes there is a "sweet spot" for brewery size.

“If you get too big, you pay a lot of excise. If you stay relatively small, you don't pay much. And that's the key: to stay at that level where you don't have to pay tonnes of excise because there's a certain amount of excise per year that you don't have to pay (you declare it, but you get a rebate).”

Lethbridge is calling on increased industry support to help keep the sector alive: “The more we can have our retailers support those small independent businesses, the easier it will be for them to ride out this storm, even if it's just a local ranging option. Because seeing it on the shelf raises brand awareness if nothing else, and, ideally, one day that will translate to purchase.”

KAIJU! beer has appointed DBA Reconstruction and Advisory as administrators and has confirmed it will continue to operate as normal throughout the duration of the process.

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