Failure of Equipment Manufacturers Puts Breweries in Disarray

Failure of Equipment Manufacturers Puts Breweries in Disarray

Owing at least $20 million to 370 businesses and banks, and an unknown amount to another 382 individuals and companies, the collapse of two prominent Canadian brewing equipment manufacturers has caused a tailspin for breweries across North America.beer brewing equipment
The financial failure of DME Brewing Solutions (DME) and Newlands Systems (NSI) has put millions of dollars of equipment into a homeless state, potentially waiting to be sold to a new company owner or put up for auction. In the meantime, deposits by Canadian and American brewers are essentially lost as creditors claw for whatever may remain or could be added to DME and NSI's accounts. The Royal Bank of Canada, which initiated the process to put the companies into receivership and recoup loans, revealed in an affidavit that it's owed about $13.5 million plus accruing interest and costs. At least 13 others are owed $100,000 or more, going as high as $364,000.

It’s kind of like ‘thoughts and prayers,’ and there’s not much I can do with it right now,” says Jason Fisher, owner of Indie Alehouse, a Toronto-based brewpub. His business lost about $600,000 of deposit payments due to DME’s closure. “Unless somebody wins the lottery, I don’t know how they can help. I can’t take that goodwill and do much with it right now.”

Fisher considers himself one of the lucky ones. After "sitting with an Excel sheet 24/7 finding ways to make this work," he believes he can keep his brewery and restaurant in business. It may impact his ability to hire new staff or source certain ingredients or equipment, and he guesses he'll carry debt from a bank loan for three extra years compared to previous estimates, but it's not as bad as it could be.

"We're all facing something very difficult, but at the same time, you have to figure it out," he says.

He's heard of fellow Canadian brewers who may lose their business before they even open. One company's owners mortgaged homes and property, he says. Two others had fully-paid equipment waiting to be shipped or in storage, and neither knows if it'll ever happen. Canadian journalist Ben Johnson wrote in his initial coverage that "multiple brewery owners who have hundreds of thousands and in some cases over a million dollars invested in future brewing equipment from DME that they are now unlikely to ever see and who are now facing the very real prospect of bankruptcy."

Speaking with Brewbound, Texas’ Big Bend Brewing vice president Mahala Guevara said that she believes reverberations will cause “a wave of breweries going out of business or financially restructuring significantly.”

In conversations with industry pros, the same question kept coming up: what the hell happened? And, perhaps most importantly, what does it mean in the broader scope of industry headwinds?