Hydrate Drinks Group has been rescued from administration following operational issues.
Recovery specialists Begbies Traynor were appointed as administrators on 1 December 2025.
Hydrate specialises in creating zero-sugar drinks using stevia. It makes a range of its own-brand beverages alongside private label, including a range of flavoured water for M&S.
Despite ending up in administration, the business had been witnessing rapid growth since its foundation in 2017. In 2024, it was named on the UK Fast Growth Index, ranking 35 out of 50 for the North West businesses.
The business has gone by several other names previously, including Halo Drinks Company, Skinny Tonic, and Happy Drinks. Under this latter guise, the company secured several million in crowdfunding in 2022.
Hydrate first encountered cashflow issues due to a mechanical failure on its bottling line in 2024. Its revenue was hit again when a key client experienced major operational challenges.
Healthy hydration has been gaining traction for some years, with consumers looking for drinking options with less sugar, cleaner ingredient decks, and function.
As industry commentator and expert, Prof Mark Field explained, Hydrate Drinks Group has been at the forefront of this clean drinking movement for some of the UK most innovative retailers.
What went wrong?
Offering further insight, John Cullen, one of Menzies’ restructuring and insolvency partners, told Food Manufacture: “Based on the last audited accounts, Hydrate Drinks Group appears to have been a growing but financially vulnerable business. Its most significant asset, the plant and machinery, suffered a major bottling line failure recently - hitting both supply and company margins.
“On top of this, its customer recently paused trading due to a cyber-attack, an occurrence that we will see much more of in the future. Put together, both events will have eroded shareholder value quickly, and left the company exposed to significant working-capital pressures. A subsidiary write-off further reinforces this picture, indicating that not all elements of the group strategy performed as expected and that earlier investment had to be impaired.
“Taken together, the accounts show a business that was scaling but structurally cash-constrained. In this context, administration is not inconsistent with reported growth, and a pre-pack sale to a connected or industry buyer is a typical outcome where the underlying business remains strong but the balance sheet cannot support it. The test, not just for the purchaser, is how resilient your company can be in the face of unexpected disasters.”
“Fundamentally, businesses go bust for one simple reason: they run out of cash. That doesn’t mean necessarily that they are not decent businesses or not seeing sales growth or even not profitable. They just suffer cash flow issues which end up with the business being in danger of trading insolvently. It goes into administration to stave off creditors,” added industry expert, Julian Wild, director of Rollits.
“In this case the announcement appears to be: It first encountered cashflow issues due to a mechanical failure on its bottling line in 2024. Its revenue was hit again when a key client experienced major operational challenges.
“I don’t know if those things are the full reasons but it is not uncommon for a business, if undercapitalised, to be vulnerable to sidewinds which capsize it, particularly if it grows too quickly. Whether Hydrate really has got long-term staying power remains to be seen.”
It appears that it is Hydrate’s own directors Ian Minton and David Salkeld who have whisked the business out of administration. The beverage firm was promptly picked up by the duo’s other business Sky Drinks on 11 December, resulting in 30 jobs being saved as part of the deal.
Commenting, Jason Greenhalgh, partner at Begbies Traynor, who was appointed joint administrator alongside his colleague Stephen Berry, said: “After a difficult period, the sale of Hydrate Drinks Group to Sky Drinks Group is very positive news. The company had seen its products be sold overseas and on the shelves of major retailers before falling into distress.
“The factors that pushed it towards administration were often beyond its own control and so we were confident we could secure the rescue of the company. However, we needed to act quickly and we are grateful for the swift actions of the buyer and the directors at the company for making this work. We hope that the company and its employees can now look forward and continue to innovate in the booming zero-sugar and no-alcohol space.
“Unlocking additional costs savings through enhanced procurement or removing duplication would be expected to bring benefits into the new business ultimately improving lock term competitiveness.”
The directors of Sky Drinks Group Ltd, added: “We are very happy to have been able to acquire the business and assets of Hydrate Drinks Group. Its scientific approach to overcoming the challenge of creating tasty, naturally- flavoured zero-sugar drinks was something we did not want to see end. It is a fantastic company and we’re very happy to help it and its employees continue to fulfil its mission of growth.
“Begbies Traynor made this as smooth an acquisition as possible and we’re grateful to the administrators for having worked in a collaborative manner to complete the deal. We’re looking forward to taking the company forward.”