A North East brewery behind a club which aimed to capitalise on the popularity of craft beers and real ales has ceased trading, leaving five people out of work.
The Journal told in January how Delavals Brewers has launched a fundraising campaign via a crowdfunding platform to raise cash it required to support its future plans for The National Trust Beer Club.
The club was a membership organisation through which beers from smaller regional brewers across the UK were sold.
It had been soft-launched by brother John and David Gilfillan almost two years ago as an extension of its partnership with the National Trust, where as an official licensee it had previously launched beers in collaboration with four North East National Trust properties.
Directors worked with NEL Fund Managers to secure a six-figure investment from the Finance For Business North East Growth Fund, and then invited new investors to become part of the firm and planned to use the funds to support a marketing campaign for the Beer Club, to boost membership and sales.
However, Delaval Brewery Limited has now ceased trading and Greg Whitehead of Northpoint Insolvency Practitioners has been appointed as liquidator.
Mr Whitehead, of Northpoint Insolvency Practitioners, is dealing with the Liquidation and said: “The company has been exploring fund raising and sale options for some time but these have not ultimately proved successful.
“Five employees have been made redundant as a result of the closure and it is expected that creditors will receive no return.”
The directors issued a statement, reflecting on the reasons why they believe the business failed, citing insufficient marketing support and monthly costs that left no funds spare to carry out campaigns among the reasons for the downfall.
The statement said: “The company was not able to attract enough members to the Beer Club in order to be self-sufficient. The traction rate was simply too low.
“Reasons for this include insufficient marketing support and marketing campaigns and a lack of dedicated sales staff .
“Sales of standalone bottles of beer were also insufficient; pricing was extremely competitive and the market was becoming saturated with providers of beer.
“On reflection, the company should have raised a higher amount at the outset. This would have allowed for a far greater level of sales and marketing activities.
“The company’s monthly burn rate was in the order of £15,000pcm, of which staff costs account for circa £10,000, loan stock and NED fees account for £3,000, rent and incidentals £1,500.
“It is clear from these numbers alone that no real marketing budget exists and that, in our opinion, is reflected in the sales and member numbers to date.
“Was the market ready for this type of offering? The directors believe that in time, craft beer purchased online or via mail order will increase in volume in much the same way that the wine club market has developed.
“However, the directors believe that any such type of operation would require a sizeable marketing budget, perhaps even in the millions of pounds.
“In the meantime, a simple conclusion to draw would be that consumers are content with buying cheap beer from the supermarkets despite their relative limited range.”