M&S own label flavoured water supplier Hydrate Drinks Group has been bought out of administration by its own directors, leaving crowd and other investors out of pocket by more than £10m.
The collapse of the company is understood to be partly down to disruption caused by the major cyber hack at M&S this year.
Formerly known as Happy Drinks before changing its name to Hydrate earlier this year, the business appointed insolvency firm Begbies Traynor as administrator on 1 December 2025.
Sky Drinks Group Ltd completed a rescue deal of the company a few days later on 11 December, saving 30 jobs as a result.
Hydrate Group founder Ian Minton and director David Salkeld set up Sky Drinks on 5 November, according to Companies House filings.
Begbies Traynor said in a statement that Hydrate collapsed despite “rapid growth” since its foundation in 2017. The business did not file full accounts, but an unaudited P&L for 2024 showed total losses had reached £7m.
The business, specialising in zero-sugar drinks made using stevia, first encountered cashflow issues stemming from a mechanical failure on its bottling line in 2024, Begbies added. Revenues were hit again when an important client experienced major operational challenges, which is understood to be a reference to this year’s cyberattack on M&S.
“After a difficult period, the sale of Hydrate Drinks Group to Sky Drinks Group is very positive news,” said Jason Greenhalgh, Begbies Traynor partner and joint administrator of Hydrate.
“The company had seen its products 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 the company and its employees can now look forward and continue to innovate in the booming zero-sugar and no-alcohol space.”
Hydrate raised large sums from crowdfunding investors over the year, including more than £6m in 2022 as it sought to expand its reach and invest in a new high-speed canning and bottling facility.
The business secured more than £10m across three rounds up to 2022, but it is not clear if further money was raised in the following years as the relevant page on Republic Europe (formerly Seedrs) has been taken down in the aftermath of the administration. Other investors in the business included WH Ireland, Harwood Capital, GPIM and the British Business Bank Future Fund.
At one point, Hydrate valued itself at £55m and set out an ambition to float on the stock market by some point in 2024.
It also secured a loan of £440k from the Liverpool City Region Combined Authority’s Flexible Growth Fund in early 2024 to create jobs and expand its manufacturing capabilities.
Begbies Traynor did not disclose the connections of Sky Drinks Group to Hydrate Drinks Group in its statement.
It also quoted “the directors” of Sky Drinks but did not name either director.
“We are very happy to have been able to acquire the business and assets of Hydrate Drinks Group,” the directors said.
“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.”
Hydrate was previously known for making Skinny Tonic, which it claimed as the first tonic water to launch in the UK without sugar or calories.
When the business rebranded as Hydrate Drinks earlier this year it set out a ‘Vision 2030’ mission statement.
“At Hydrate, we are not just making soft drinks, we are engineering the future of hydration through scientific innovation and advanced R&D,” the website said.
“Vision 2030 is our commitment to eliminating sugar, artificial sweeteners, and preservatives from soft drinks, without compromising on flavour or function.”
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