The Craft Gin Club, once hailed as one of the most successful pitches ever from the Dragons’ Den studio, is now facing bankruptcy after warning its lenders that the business cannot continue to operate without a major financial restructuring that will deprive bondholders of promised free supplies of gin.
The subscription drinks specialist, which supplies small batches of gin to homes across the country, has brought in restructuring experts at Leonard Curtis to draft a company voluntary arrangement (CVA). Under the proposals, around £4.2 million of debt would be wiped out in exchange for 18.3 percent of the company’s equity, according to documents distributed to creditors.
Should the plan fail to receive the support of 75 percent of voting lenders, directors have made clear that administration is the most likely outcome, a possibility that would leave bondholders with next to nothing. The board “concluded that the company was insolvent and unable to pay its debts as they fell due,” the documents said.
For a company that just a few years ago was seen as a poster child for the revival of British craft drinks, this setback is sobering. Founded in 2015 by Jon Hulme and John Burke, the Craft Gin Club experienced a wave that saw the number of British distilleries multiply at a remarkable rate. The couple left the BBC show 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 prime example of capitalizing on a moment. The pandemic proved a particular blessing: as the nation sat on its sofas, subscription drinks proliferated, and the Craft Gin Club was among the most enthusiastic beneficiaries. In 2021, plans for an IPO were even discussed before being quietly shelved.
However, the fundraising machine never stopped whirring. A round in 2019 raised £1.5 million, with investors offered the choice of traditional cash bonds with 8 percent annual interest or the now infamous “gin bonds,” which entitled holders to a regular discount on free products. Four boxes per year could be secured at an expense of £1,666; £2,500 bought six; £5,000 gave monthly supplies; and those who parted with more than £10,000 received an “exclusive” Black Card, promising VIP treatment, free delivery, double loyalty points and an annual bottle of limited edition gin. A second round of bonds in 2022 raised £3.1 million, and a share crowdfunding drive the following year added another £700,000 to the coffers.
It is precisely these gin bonds that are now at the core of bondholders’ dissatisfaction. The CVA would bring benefits to an abrupt halt, leaving long-time supporters of the company with little more than a fractional share in a company they had funded with the expectation of receiving regular tips. “I don’t really want any equity. I’d rather keep my gin,” one bondholder told the Sunday Times, suggesting that the current deal does little justice to those putting their own money at risk and that directors should offload more of their own shares.
The numbers tell a sobering story. The annual accounts to January 31, 2025 show that sales fell by 17 percent to £15.8 million. While pre-tax losses narrowed from £1.3m to £698,730, Hulme attributed the overall decline to a “challenging macroeconomic climate and a maturing gin market”.
Compounding the commercial headwinds was a protracted battle with HM Revenue & Customs, which issued a £5.2 million VAT notice in 2023 for incorrectly accounting for subscription boxes containing items with different VAT rates. Craft Gin Club ultimately prevailed on appeal, but the two-year stalemate proved, in the company’s own words, to be a “significant obstacle” to securing new debt or equity financing, an obstacle from which the balance sheet appears never to have fully recovered.
If the debt-to-equity swap goes through, management expects a strategic pivot away from the spirit that built the brand, with the rum and ready-to-drink categories earmarked as new growth engines. Directors are “confident that Craft Group will be well placed to deliver a return to sustainable growth” once it is free of its debt.
However, the broader backdrop will give few in the industry cause for celebration. Brits are drinking less than ever before, with cost of living pressures particularly hitting premium spirits, the very category in which the Craft Gin Club has excelled. The boom that brought fame to dozens of craft distilleries has given way to a much more sober conclusion in many areas.
Craft Gin Club, Sarah Willingham and Leonard Curtis have been contacted for comment.
