How two damaged cans of seltzer almost cost this small Sydney brewer $12,000

A Sydney-based boutique seltzer brewer almost lost $12,000 in sales and stock after a shipment of 2,400 cans of vodka-distilled seltzer went missing on its way to a Melbourne customer – and it was all because just two of the cans had been damaged during the journey and halted delivery.

The 200 cases of MODE’s hard seltzer beverages were meant to go to Melbourne wine store Blackhearts & Sparrows, to sell over the recent long weekend after being packaged and shipped from the brewer’s warehouse in Sydney.

Michael Clifford, who founded MODE in mid-2022, told SmartCompany it was his biggest, single order to date.

Following emails advising him that an investigation was underway and confirmation that two cans of his stock had been damaged and delivery stopped, Clifford decided to ship another 2,400 cans to his customer.

He had to pay an out-of-pocket cost of $500, plus $12,000 worth of product, but the second shipment arrived at Blackhearts & Sparrows.

While the first shipment was eventually found on Friday, just over a week after it vanished, Clifford discovered that it was actually more than two cans that had been damaged and some cases destroyed.

Clifford said MODE is a small business that is run by a one-man team: himself.

“We try to be hugely responsive to customers to get their product as quickly as we can, in the best state that we can get it to them,” he says. 

“Because we recognise that our customers are on-selling that and need cans that aren’t dented and boxes that aren’t scuffed and wrecked. 

“We spend a lot of time and effort with how our cans and our products look. It’s really disappointing when you see product on shelves and it’s got dents in it. 

“That’s from the process of transporting. I know they can’t wrap it in cotton wool, but it’s a pretty significant and frustrating component of the business dealing with the vagaries of transport and logistics.

While he doesn’t only blame the courier companies, the founder has now been left even more frustrated by the Australian government’s excise tax on alcohol and the alcopops tax.

He believes both are outdated and redundant, especially as the excise tax was introduced when there was not a boutique brewing industry in Australia. It was meant for big businesses.

“Australia has the third highest excise in the world that’s levied by the government,” Clifford says. 

“The excise is changed twice a year, so twice a year the excise goes up. We currently pay the third highest amount of excise in the world which is just crazy.” 

Excise duty is a commodity-based tax on alcohol, fuel and tobacco, with beer, spirits and other excisable alcohol products generally subjected to excise duty if they are manufactured or produced in Australia.

In April 2008, a national tax increase, which became known as the ‘alcopops tax’, was also introduced in Australia. It applies to ready-to-drink alcoholic beverages, predominantly consumed by young people.

Clifford told SmartCompany his recent experience was a frustrating one as a business owner, and adds to the challenges of operating a boutique operation. 

“I care deeply about this product, I care deeply about the state in which it gets to our customers and I care deeply about how it looks in their fridges,” he says. 

“We pack it, wrap it a certain way and protect the edges. We do as much as we can to make sure customers receive the product because it’s not cheap. 

“MODE is an expensive product because the ingredients that go into it are expensive, the process is expensive and the excise is expensive, so I want to make sure that customers are happy with what they receive.

“I know transport is going to hubs and it’s not wrapped in bubble wrap, so I understand that there’s going to be a little bit of wear and tear.

“But it’s difficult when you’ve got a product like this and you send it out into the world and you basically (have your) fingers crossed each time that stuff is going to turn up in a good state.”

Government “not meant to make it incredibly difficult” to run a business

MODE’s range of seltzers includes unique flavours, like mango and pomegranate, Davidson plum and forest berry, Tasmanian pepper berry, ginger and lime and yuzu, cucumber and basil.

The brand has 100 stockists, but Clifford says he is focused on scaling the business in Australia, with many opportunities for growth and many challenges on the horizon.

“We’ve been growing steadily since our launch and we’re moving into South Australia, Victoria and Queensland,” he says. 

“We’ve got a sales team that started two weeks ago and the response we’re getting from those markets is that it’s a great product, which is really pleasing.”

But establishing a business this MODE is not easy, says Clifford.

“It’s not up to the government to save a business or make life easy, but it’s also not meant to make it incredibly difficult,” he says.

“How I look at it: you throw a lot of time, effort and money. You put your life on hold, you have to roll the dice, and this has been a huge investment in time and money for me. A massive investment.

“The expectation is that the government doesn’t make it unnecessarily difficult for you and certainly with the excise it increases into a rate that is unsustainable.

“It’s staggering that nothing’s been done about it.”