South Ave enters voluntary administration after $13 million excise tax dispute

South St Liquor Pty Ltd, trading as South Ave, has entered voluntary administration after a dispute with the Australian Taxation Office (ATO) over approximately $13 million in unpaid excise duties left the South Australian alcoholic beverage producer unable to meet an accelerated repayment schedule.

Nathan Karl Schwarz and Daniel Lopresti of Clifton Hall have been appointed voluntary administrators of the company, which produces alcoholic seltzers, vodka sodas and other ready-to-drink beverages. The business is continuing to trade under the administrators' control while its founders pursue a restructuring through a deed of company arrangement (DOCA).

Founded in 2021 by Reno Marrasso, Scott Grieve and Sophie Sexton, South Ave has grown into a nationally distributed beverage brand, generating approximately $19 million in annual revenue. Its products are sold through pubs, clubs, bottle shops and entertainment venues, with a significant presence in South Australia, Victoria, Queensland and Western Australia.

The company's financial difficulties stem from an excise liability identified following a voluntary tax audit undertaken last year. According to chief executive Reno Marrasso, the company initiated the review after repeatedly being advised that it held an excise credit with the ATO, a position management believed was inconsistent with its operations. The audit instead identified approximately $13 million in outstanding excise duties.

South Ave subsequently negotiated a three-year repayment arrangement with the ATO and had made substantial payments against the liability over the preceding 12 months. However, Marrasso said the ATO subsequently reduced the repayment period to 12 months, creating an obligation that the business could not satisfy while continuing to fund its operations and meet excise liabilities on new production. The company reportedly owed approximately $11 million to the ATO at the time of the administrators' appointment. Marrasso said the accelerated repayment timetable would have required payments approaching $1 million per month, placing unsustainable pressure on the company's cash flow despite continued revenue growth.

The founders are now developing a DOCA proposal intended to restructure the company's liabilities, introduce additional capital and return control of the business to management. Marrasso has indicated that the administration is intended to facilitate a recapitalisation rather than a cessation of operations.

South Ave employs approximately 18 staff, all of whom are expected to remain employed during the administration. The company has also indicated that production and distribution will continue while the administrators assess its financial position and the proposed restructuring.