Online alcohol retailer BoozeBud has entered administration as cost-of-living pressures alter consumer behaviour in the Australian drinks market.
According to the Australian Securities and Investments Commission website Pocko Pty Ltd, trading as BoozeBud, appointed Michael Brereton and Sean Wengel of William Buck as joint administrators on Tuesday. The company has also announced it is no longer taking orders on its website.
Brereton told news.com.au: “We have made the difficult decision that the company has insufficient funds to continue operating. We have accordingly been forced to stop taking future orders via the online portal … We have also, made the difficult decision to lay off staff.”
The administrators are urgently exploring a sale of the business and assets or are seeking an investment of funds for the brand with expressions of interest sought by May 9.
Customers favour shopping in store
The news follows Endeavour Group CEO Steve Donohue revealing this week that its Jimmy Brings delivery service was “becoming less popular”.
Following the announcement of the company’s Q3 FY23 results, hours before the Reserve Bank of Australia lifted the official cash rate from 3.6% to 3.8%, Donohue said customer behaviour was changing.
Donohue told the Australian Financial Review that customers were driving to bricks and mortar liquor stores to make purchases rather than buying online to ensure they secured the best bargains.
He noted there had been an increase across the industry in liquor retail promotions and discounts, particularly online.
Donohue said there had been a pullback in areas such as the Jimmy Brings on-demand service for people who wanted liquor orders filled quickly but at a higher cost.
“They are the most expensive way to buy something and they are becoming less popular,” he said.
Boozebud’s rise and fall
BoozeBud was founded as BeerBud in 2014 by Alex Gale, Andy Williamson and Mark Woollcott. It changed its name and focus to include wine and spirits in late 2015.
It was acquired by Carlton and United Breweries in 2017, however Asahi Beverages sold BoozeBud back to its founders in 2020.
Asahi Beverages made the decision to sell BoozeBud following a review of the CUB eCommerce participation strategy, which was developed before Asahi Beverages purchased CUB.
“The new strategy will focussing on selling its products through its retail customers, securing visibility for its brands on customers’ digital channels and working with other customers, including on-premise, to develop their online presence,” Asahi said.
Asahi Beverages undertook the review of CUB’s current eCommerce participation strategy after CUB was acquired.
Under CUB’s ownership of BoozeBud, the site grew to over 250,000 customers and revenue grew more than 500%.
BoozeBud Founder Andy Williamson (above, second from right) said at the time: “We’re delighted to own BoozeBud once again. Over the last two and a half years the business has grown more than six times and is now the leading pure-play online alcohol retailer in the country.”
“We always ran the business under CUB ownership so nothing will change for our suppliers and customers who are now preferring to shop online more than ever before.”
Asahi Beverages Group CEO Robert Iervasi said: “While our broader eCommerce participation strategy continues to evolve, it was decided that now was the right time to sell BoozeBud. We look forward to working and winning together with all our customers, including in the online space.”
BoozeBud acquired Get Wines Direct in December 2021 in a deal that gave it access around 200,000 active customers and $80 million in combined annual revenue.
According to news.com.au, Get Wines Direct operates as an independent business outside of Boozebud and is not believed to be impacted.
Boozebud joins a slew of victims of the downtown that have closed in recent months, including Providoor, Send, Voly, Deliveroo, CoLab and Milkrun.
The Sydney Morning Herald notes: “The number of failing businesses has nearly doubled in a year due to tough economic conditions and the withdrawal of government pandemic support, with some experts describing the situation as ‘insolvency armageddon‘.”