How voluntary administration became Liquor Loot’s best business decision

A subscription drinks business was heading for “last orders” after it experienced troubling trading conditions. But when Jirsch Sutherland was appointed as Voluntary Administrators, a viable solution was found to keep the drinks coming.

Background

Founded in 2016, craft-spirit subscription service Liquor Loot is known for its unique business model whereby customers can sample spirits in a small-bottle format before committing to purchasing a full bottle. More than 61,000 customers have placed orders since its inception, highlighting the success of the model.

However, the business found itself facing tough trading conditions, which adversely affected its cash flow. Seeing no way out from its financial challenges, it made a decision to enter into voluntary administration in March this year. After Andrew Spring from Jirsch Sutherland was appointed as Voluntary Administrator, a solution was found – a sale to Sydney-based Just Wines.

Solution

Spring says he was confident from the start that a viable solution would be found, especially considering Jirsch Sutherland last year arranged the sale of another drinks company to Just Wines – the non-alcoholic business Sans Drinks. “We have acted like a matchmaker in a way, in that we have brought two synergistic businesses together and helped effect a sale,” he says.

Being acquired by Just Wines is a strategic decision for Liquor Loot, as it provides the means to utilise Just Wines’ extensive warehouse facilities, leverage its logistics capabilities and benefit from its experienced staff and shared overheads. The two businesses will work closely together to optimise operations and Liquor Loot Founder and Director Joel Hauer will stay on to guide the brand through the transition while researching new business opportunities. He will also leverage his extensive experience to ensure Liquor Loot’s continued growth.

Hauer says the decision to enter into voluntary administration was a tough but necessary step that needed to be done to secure the future of the company and to ensure the best outcome for all stakeholders. The process involved several challenges. “Two of the main ones were maintaining business operations while engaging with potential buyers to ensure they had the necessary context to make an informed decision,” Hauer says. “Jirsch Sutherland was able to provide clarity and support throughout the process and guided the team through some challenging circumstances.”

Results

The acquisition by Just Wines is expected to fast-track Liquor Loot’s path to profitability while maintaining its brand. The business is also expected to grow beyond its current boundaries, while new collaborations – including those with the wider Just Wines group of businesses – and product categories will be explored.

“The best possible outcome was achieved for our business,” Hauer says, adding the sale marks an exciting new era for the company. “This synergy between the two businesses creates a right-sized platform for success in a competitive market.”

Just Wines founder Nitesh Bhatia agrees. “Liquor Loot has established a compelling brand and its unique business model has proven successful,” he says. “Adding spirits to our portfolio marks a new category for us and positions us as a comprehensive liquor and beverage company.”

Meanwhile, Spring calls the result, “another great example of how voluntary administration can be used to save businesses”. “The speed of the VA process enables administrators like us to focus on the best solution to preserve value for creditors and to save jobs,” he says. “The VA process takes the pressure off directors and gives the business the best chance of survival. In the case of Liquor Loot, partnering with an established and experienced online retailer will help take the business to the next level.”