Once feted as one of the most successful pitches ever to grace the Dragons’ Den studio floor, Craft Gin Club is now staring down the barrel of administration, having warned its lenders that the business cannot continue without a sweeping financial restructuring that will strip bondholders of the free gin deliveries they were promised.
The subscription drinks specialist, which dispatches small-batch gins to households the length and breadth of the country, has called in restructuring practitioners at Leonard Curtis to engineer a Company Voluntary Arrangement (CVA). Under the proposals, roughly £4.2 million of debt would be extinguished in exchange for 18.3 per cent of the company’s equity, according to documents circulated to creditors.
Should the plan fail to secure the support of 75 per cent of voting lenders, directors have made plain that administration is the most likely outcome, an eventuality that would leave bondholders with next to nothing. The board has, the documents state, “reached the conclusion that the company is insolvent and unable to pay its debts as and when they fall due”.
The reversal is a chastening one for a business that, only a few short years ago, was held up as a poster child for Britain’s craft drinks revival. Founded in 2015 by Jon Hulme and John Burke, Craft Gin Club rode the crest of a wave that saw the number of UK distilleries multiply at remarkable speed. The pair walked away from the BBC programme in 2016 with £75,000 from former Red Hot World Buffet boss Sarah Willingham in return for a 12.5 per cent stake.
What followed was a textbook case of capitalising on a moment. The pandemic proved a particular boon: with the nation confined to its sofas, subscription drinks proliferated, and Craft Gin Club was among the most enthusiastic beneficiaries. Plans for a stock market flotation were even mooted in 2021, before being quietly shelved.
The fundraising machine, however, never stopped whirring. A 2019 round brought in £1.5 million, with investors offered a choice between conventional cash bonds carrying 8 per cent annual interest or the now-infamous “gin bonds”, which entitled holders to a regular drop of free product. A £1,666 outlay secured four boxes a year; £2,500 bought six; £5,000 yielded monthly deliveries; and those parting with more than £10,000 received an “exclusive” Black Card promising VIP treatment, complimentary delivery, double loyalty points and an annual bottle of limited-edition gin. A second bond round in 2022 raised £3.1 million, and an equity crowdfunding push the following year added a further £700,000 to the kitty.
It is precisely those gin bonds that now sit at the heart of bondholder discontent. The CVA would bring the perks to an abrupt halt, leaving long-standing supporters of the business with little more than a sliver of equity in a company they had funded with the expectation of receiving regular tipple. “I don’t really want equity. I’d much rather keep my gin,” one bondholder told The Sunday Times, suggesting that the current settlement does scant justice to those who put their own money on the line and that directors ought to surrender more of their own holdings.
The figures tell a sobering tale. Accounts for the year to 31 January 2025 reveal turnover slumped 17 per cent to £15.8 million. Pre-tax losses did narrow, from £1.3 million to £698,730, but Hulme attributed the broader decline to a “challenging macroeconomic climate and a maturing gin market”.
Compounding the commercial headwinds was a protracted skirmish with HM Revenue & Customs, which in 2023 issued a VAT assessment of £5.2 million on the basis that subscription boxes containing items with mixed VAT rates had been incorrectly accounted for. Craft Gin Club ultimately prevailed on appeal, but the two-year stand-off proved, in the company’s own words, a “significant barrier” to securing fresh debt or equity finance, an obstacle from which the balance sheet appears never to have fully recovered.
If the debt-for-equity swap is waved through, management envisages a strategic pivot away from the spirit that built the brand, with rum and ready-to-drink categories earmarked as the new growth engines. The directors profess themselves “confident that the Craft Group will be well-positioned to achieve a return to sustainable growth” once relieved of its debts.
The wider backdrop, however, will give few in the trade reason for cheer. Britons are drinking less than at any point on record, with the cost-of-living squeeze taking a particular toll on premium spirits, the very category in which Craft Gin Club staked its colours. The boom that lifted dozens of artisanal distilleries to prominence has, in many quarters, given way to a far more sober reckoning.
Craft Gin Club, Sarah Willingham and Leonard Curtis were approached for comment.
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Craft Gin Club teeters on brink as Dragons’ Den darling pleads with bondholders