[00:00:00] Justin Kendall: Next on the Brewbound podcast, we chat with Jester King's, Jeffrey Stuffings. Hello and welcome to the Brewbound podcast. I'm Justin Kendall.
[00:00:20] Jessica Infante: I'm Jessica Infante,
[00:00:21] Zoe Locata: and I'm Zoe Licata.
[00:00:23] Justin Kendall: And this week, we're going to catch up with Jeffrey Stuffings over at Jester King, as I mentioned, and There's a lot of reasons to catch up with them, but they posted an Instagram message about looking for investors or buyers, and we're going to have one of the most transparent conversations I think we've ever had on this podcast.
[00:00:42] Jessica Infante: Yeah, it was a really great chat with Jeff, and I mean, you'll hear it all, but it's really, I find commendable the way that they've handled all of this because, you know, the three of us get rumblings from the rumor mill all the time, and it's always like, well, so and so is for sale and so and so is filing for bankruptcy and blah, blah, blah.
[00:00:59] Justin Kendall: And we like to hear that. So don't stop telling us those things.
[00:01:03] Jessica Infante: Yeah, that is true. But you know I think that's probably a little nerve-wracking for the employees at those breweries. It was really refreshing to see how upfront Jeff was about everything.
[00:01:15] Justin Kendall: And he will get into all of that. So stay tuned, well worth a listen. We also got to plug Brewbound Live. It's coming up December 9th and 10th, and the full agenda is out now. You can see that at Brewbound.com. It was in the newsletter last week, one of the days, I don't remember, they've all blended together because we are barreling now toward Brewbound Live. We're having all the prep sessions, they're going on, awards, pitch slam. One on ones, it's all coming together and hopefully it all goes seamless by the time we get to December 9 and 10, but get your tickets now. So, I think we just jump into it and we get into the news of the last week, and there had to be one of the strangest weeks in the beer industry because there was a lot going on. And we'll just top it off with Anheuser-Busch CEO Brandon Whitworth is leaving the company later this month. He's headed to an upscale gym chain called Equinox, same role, and I got a lot of questions about his departure. You always wonder in these situations, how much of this is them moving to the next thing or them being encouraged to move to the next thing. And I'm not saying that like we know anything as far as his reasons why, and, you know, everybody was thanking everybody in, in the messages on the way out. Obviously, Anheuser-Busch has had its issues over the years. They had barrel losses before Brendan. They continued to have major barrel losses after him as well. I mean, his tenure is going to be remembered for what went on with Bud Light, and the partnership, the one-off partnership I should say, they had with the social media influencer, Dylan Mulvaney, that led to a conservative boycott of the brand and the numbers tanking. I think the words Black Swan event have been used for that over and over again. Bud Light hasn't recovered, but Michelob Ultra is doing just fine, and it has become the lead horse, and in some ways, that's not a bad trade-off from a dollar standpoint if they traded those customers there. And the other part of Brendan's tenure is really the acceleration of its Beyond Beer portfolio, which is still a very, very small part of its business, but now they have 3 strong pillars with cut water, neutral, and beatbox.
[00:03:52] Jessica Infante: Yeah, it's all really interesting, and I don't want to assign any meaning to this that might not be there, but everything you just said, like it's been some real highs and lows for AB's US operations. I mean, he's been at the company a long time before he had this role, and he's had this role for quite a few years now.
[00:04:11] Justin Kendall: Yeah, he was the chief sales officer before this when Michelle Duaris was promoted to AB InBev CEO overall, he replaced Michelle in the US operations.
[00:04:24] Zoe Locata: Yeah. I was looking forward to hearing what he was gonna say at the Beer Institute's meeting, which is this week or currently happening as you are listening to this episode, because he was supposed to be the BI's chairman. And, you know, they typically give the speech of what they're looking forward to or what they'll be championing in their role, and he will obviously no longer be there. He's officially removed from the agenda now.
[00:04:51] Justin Kendall: Who'd they replace him with?
[00:04:53] Zoe Locata: I don't see any replacements, at least on the site agenda as of right now. Hm, I will make sure to talk to the BI and and see what their plan is for that role. But yeah, as of this moment, there's nothing on the agenda to replace it.
[00:05:12] Justin Kendall: I think the real question next is in a similar vein, you know, who's going to replace him speaking at BI, but who's going to replace him, period. I mean, there are a couple of candidates that our friends at Insight sort of floated that they had heard might be good candidates, and that's, uh, Chief Commercial Officer Kyle Norrington and Chief Sales Officer Simon Westenberg. But I also wonder if they look outside the business. You just never know in these type of situations where this will go, and do they look to big CPG? Do they look at somebody who comes from the wholesaler tier? Where might the next AB CEO come from? Do they have that deep of a bench that they can pull from?
[00:05:56] Jessica Infante: In my experience covering the industry for God, like 7 years as of last month. Wow, look at that. To me, they always seem like a promote from within kind of place, but who knows? I mean, they're in a weird spot where if they really want to bring Bud Light back to, I wouldn't say growth, but health. Maybe it does take some off the wall thinking and a fresh set of eyes. So maybe this is the time for that.
[00:06:22] Zoe Locata: Maybe. I'm not sure where that falls on the priority list. Bud Light is still a huge brand, so obviously they don't want to continue to bleed from that, but every call we've heard from them, like in earnings, is focused primarily on things like Michelob Ultra, which has a bit of growth driver, and their RTDs, which have also been a growth driver. So we'll see under new leadership, is that gonna be something that continues to happen, or is there gonna be more emphasis put on Bud Light?
[00:06:52] Jessica Infante: I also think that in all their statements, they don't sound like they're in a hurry.
[00:06:57] Justin Kendall: Yeah. Maybe that speaks to having that deep bench. Maybe the real question that I should have teed up was, you know, who do the wholesalers want? Um,
[00:07:05] Jessica Infante: that's definitely the question.
[00:07:08] Justin Kendall: Well, we're gonna be watching it, and if you're a wholesaler and you have thoughts, let us know, but, uh, let's talk a little bit about, I mentioned it was a very strange week in the beer business and I didn't have Sazerac acquiring Full Sail Brewing in the tarot cards, you know, taking over the Mount Hood, Oregon facility, but, uh, it's not because they want Full Sail, I'm sorry.
[00:07:33] Jessica Infante: No, and I think we're gonna see more of this. How many large scale brewing facilities are up for auction, and how many random RTD brands need a home? Yeah, but it seems like that came as a surprise to the workers.
[00:07:51] Justin Kendall: Definitely did to the workers, and from the looks of it in their social media pages, they were posting about, you know, eating at the pub and going out to the pub. And the next day, everybody found out that they were unfortunately without jobs there, as far as like the hospitality staff. Full sale has really ramped up contract production, so that's why this is happening.
[00:08:15] Jessica Infante: This story broke while I was out on Tuesday for mom duty. So can you give me the TikTok a little bit? How did this happen? Like they knew, hey, Sazra's going to buy us, and they were excited, and then the next day it was like, oh no.
[00:08:27] Justin Kendall: Well, I think this really broke because one of the shift brewers put out there, basically everything that was happening with this, that Employees came in and found out he was off that day, went down there. Sazak employees were there, letting everybody know, and it sounds like they're going to be a 100% contract going forward, at least that's the word on the street there. Hm.
[00:08:51] Jessica Infante: You mean like the Full Sail brand will be contracted elsewhere?
[00:08:55] Justin Kendall: No, they will still take contract brewing for their clients up until those contracts expire and maybe after, but it sounds like they want to make RTDs at this place. So
[00:09:08] Jessica Infante: basically it was like, hey, why are pallet loads of empty orbs shaped containers showing up?
[00:09:13] Justin Kendall: That was the first sign.
[00:09:15] Zoe Locata: That's a pretty significant tell.
[00:09:18] Justin Kendall: Yeah, once those start showing up, you really got to wonder,
[00:09:21] Jessica Infante: get your resume together.
[00:09:23] Justin Kendall: Are you making a light bulb shaped products at this point?
[00:09:28] Jessica Infante: Yeah, I mean, that's tough for everybody. Like you hate to hear when people lose their jobs, that really, really sucks, particularly in the economy the way that it is right now.
[00:09:37] Justin Kendall: Mhm. And the other thing is Hazarak has just been on a tear as far as acquisitions go. It is built as broad of a RTD portfolio as you can, and it's got a flagship in Buzzballs. Another one to watch, and I guess we'll be watching who else ends up in a similar position, because there are several legacy craft breweries out there who have gone this route.
[00:10:02] Zoe Locata: Yeah, I mean, when you have the asset of a production space, and you're not necessarily using it for your own business anymore, your own brewery isn't in the best position, sometimes the best case sounds like, hey, let me At least be able to offload this asset while it still has value and move on to the next chapter.
[00:10:24] Justin Kendall: And I believe they were private equity owned for what seemed like a decade or so. So, again, another sort of not so surprising thing, although when you see Sazarak acquires full sale, it's definitely like, what?
[00:10:40] Zoe Locata: Yeah. I think we were like, that can't be real. And it was.
[00:10:46] Speaker 4: Yeah. Hey, listeners, the November 10th roundup brings a wave of fresh beer jobs to CPGjobs.com, including from Laquinta Brewing and Three's Brewing. Victory Brewing, Owl's Brew, and Crafthouse Brewery are firing up more strong opportunities. Beer people, make your move now. Every listener. Runs on Brewbound, the beer industry's daily read. If you're hiring, post today at CPGjobs.com to reach brewers, beer sales, distributor people, and passive candidates already reading Brewbound news. Post the job at CPGjobs.com. Use code brewbound 26 and save on your listing.
[00:11:20] Speaker 5: Quick break from the Brewbound podcast. Beer and beverage alcohol have never been harder to navigate. So who's figuring it out? Leaders from Sierra Nevada, Allagash, Firestone Walker, and New Belgium for starters. They're speaking at Brewbound Live, December 9th and 10th in LA, and teams from Athletic Brewing, Deschutes, Russian River, and Whole Foods Market are already registered. Register at Brewboundlive.com.
[00:11:47] Justin Kendall: Very briefly, we should touch on the situation with Coors Distributing and Constellation Brands and Mark Anthony, and the update there is that they're heading to arbitration.
[00:11:58] Jessica Infante: Yeah, they are all heading to arbitration and I guess that means that we are going to hear a lot less about whatever is proceeding. So the TLDR, both Constellation and Mark Anthony terminated their relationship with Coors Distributing in the Denver area and Coors Distributing fought back with separate lawsuits for both and In the case of Constellation, that that judge ordered them to arbitration. They had tried a mediation in Chicago and that didn't work out. Mediation would have been non-binding, but now they're going to binding arbitration. And then in the case of Mark Anthony, both companies said, Hey, we move that we hold off on this lawsuit in which CDC was seeking an injunction against Mark Anthony and said, we'd like to go to arbitration. And It's kind of, I think, a little bit of a bummer for nerds who watch this stuff because I think what this case would have done, should it have played out in trial was really nailed down and defined franchise law in Colorado. Yeah,
[00:13:03] Justin Kendall: would have been helpful.
[00:13:05] Jessica Infante: Would have been helpful. So you covered the Molson Coors earnings call, and I think this got brought up a little bit. What did you hear?
[00:13:10] Zoe Locata: Yeah, so it got brought up very briefly and mainly in the context of, OK, what is the financial implication for Molson Coors, and what they're saying is, at least for 2026 wise, despite added legal fees, this isn't going to have any significant impact. The 2027 effect is going to depend on the results of this arbitration. So they are calling the arbitration itself a win. There are specific words for a win, but the end outcome still remains to be seen. And so that will then impact if it has any other greater financial strain on Molson Coors, which is already in a bit of a tough financial situation. They, you know, are admitting that they're dealing with costs that are way more significant than they even thought they were going to be. Internal costs and just the cost of being able to do their business. They've been hedging a lot. They continue to say the Midwest premium is taking a huge hit on them, which is aluminum costs. That has been their narrative for a long time.
[00:14:09] Justin Kendall: How many times did they say Midwest premium?
[00:14:12] Zoe Locata: At least 5 or 6 minimum, but it was a lot.
[00:14:16] Justin Kendall: Do you think that they drill new hires, like they make them. Explain what the Midwest premium is or like give them like a tutorial.
[00:14:25] Zoe Locata: Yes, I think absolutely that is, that's certainly a part of the the onboarding process.
[00:14:31] Jessica Infante: Have you guys both gotten the Midwest premium phone call or am I the only chump that fell for that?
[00:14:35] Zoe Locata: No, I have not. I think my phone robot automatically declines them. I think
[00:14:41] Justin Kendall: I got an email on
[00:14:42] Zoe Locata: it. Yeah, so this continues to be one of their biggest, you know, promotions is anti-Midwest premium. But yeah, so they're dealing with a lot of internal costs and this whole Horizon 2030 program that they announced at the beginning of this year is supposed to help with that and just kind of creating a more efficient internal process. Whether that's with their production, whether it's where they're getting their supplies, whether it's their team, they've done a handful of restructurings over the past couple of years. So, that's all happening. But even though those changes have started, they have not been enough to combat just their added costs right now. That's expected to continue for a little bit. And so, yeah, depending on what happens with the Colorado stuff, we'll see if that gets exacerbated at all.
[00:15:25] Justin Kendall: Let me ask you this, do you think that they can succeed in repositioning Blue Moon away from craft? Because they've been trying to figure it out for a long, long time.
[00:15:38] Zoe Locata: Yeah, that was a fun snippet they just slipped in the other day, and this is what they've been kind of doing for a minute, but they are repositioning Blue Moon as more of a premium product rather than promoting the narrative of being a craft beer. Which, you know, understandable craft beer is in an interesting spot right now. Maybe saying you have a craft product isn't the way to go, and it's part of their total overall strategy, which has been leading a lot into the premiumization of their portfolio. I'm curious to see what it really looks like in practice and how people respond to it, cause Blue Moon, I wouldn't say it necessarily. Is your first thought when you think of a premium beer experience, not like a, a knack against the liquid itself, but just that it's Blue Moon, it still has that craftness, I think, to it. And so, yeah, I'm very fascinated to see how their marketing and all of that shifts to lean more into that premiumization. We will see.
[00:16:34] Justin Kendall: We shall see, and it's not the first time that we've seen brewers do this. I mean, the way Firestone Walker has positioned 805, the way I think Maui has tried to more position itself as a lifestyle brand. I'm sure there are others I'm not even thinking of. I mean, we just talked about Voodoo Ranger and how they're saying they're bigger than Kraft. So
[00:16:56] Jessica Infante: yeah, I, like a decade ago, was in all sorts of meetings and brainstorms and strategy sessions about what to do with Sam Adams and could it be stylized more as though it's the American like Stella Artois.
[00:17:09] Zoe Locata: Yeah, interesting you bring that up, cause I was thinking a lot when writing about Molson Coors that there's a lot of similarities, I think, between some of their talking points and what Boston Beer has said lately with just their internal cleanups and their craft products, and I think that difference is they are kind of doing the opposite with Sam Adams now of leaning even heavier into its craft roots and bringing back old advertising for Sam Adams, and being like, this is the craft beer. Very different from was a year or two ago when they were doing Sam Adams Light and making it more like this broad kind of targeting that domestic beer consumer.
[00:17:47] Jessica Infante: And it felt like they were trying to go like this gritty Boston route for a while. Is the cousin still around?
[00:17:53] Zoe Locata: Cousin is still around, but I haven't seen him in advertising at all. It's all been very gem facing.
[00:18:00] Jessica Infante: Yeah, I mean, that's what they were airing when things were going really well. So it makes sense. Jim brought it up at their GABF brunch. And in the last Circano Weekly report I wrote up, Sam Adams was growing by mid-single digits on dollars and volume.
[00:18:18] Justin Kendall: Is that winter seasonal just driving it, or
[00:18:21] Jessica Infante: this is like the weird in between transition time.
[00:18:26] Justin Kendall: Oktoberfest.
[00:18:27] Jessica Infante: Yeah, I mean, yeah, it's probably, it depends on where you are. Maybe some places still have OFest, but maybe some places transition faster, and I really don't know what that is. Could it be the light? Don't know. Is it Boston Lager? We'll find that out in the next Cira monthly report.
[00:18:43] Justin Kendall: The non- Oktoberfest, pretty good.
[00:18:46] Jessica Infante: That was not the feeling that I had in Denver. I'm glad that you like it. That's
[00:18:50] Zoe Locata: the first I've heard someone say that. OK.
[00:18:53] Justin Kendall: Well, maybe it hit me at the right time, so. It was a long day. Anyway, let's bring it back and let's talk a little bit about what's going on at Wilding Brands in Colorado because we've talked about this, what was once like a very mysterious platform out there, and now it's, you know, we know what it is, and it's acquired quite a bit of things, and it's also making a lot of moves.
[00:19:22] Jessica Infante: Yeah, so wilding Brands, which. You probably know, but I'll just give you the quick one too on it. They formed in 2024 through the merger of Denver Beer Co, Stem Cider, Funkworks got in the mix, and then in 2025 was really when their M&A took off and they picked up Great Divide, Station 26, Upslope. They've also added a bunch of other brands on, plus like the three founding brands all kind of had some offshoots of their own. So it's this massive platform with like, God, I don't know, like 20 brands. And as they were adding on all of these other like Great Divide and Station 26, as they were adding on those craft breweries, they were shutting down production at those breweries' own locations to centralize it at their big facility in Denver in the Sunnyside neighborhood, a building they call Cam Works, which was started its life as a Denver Beer Co brewery. And they have shut that down. The equipment is all listed for auction, and they are taking all of their production to an unnamed contract partner. But I mean, they've looked, you've got a lot of options in that part of the country. You've got Sleeping Giant, you've got Prost. They could go a lot of different ways here and hopefully we'll get some confirmation soon. Business then had a story up about it and they were able to talk to Charlie Berger, who was the chief development officer at Wilding, also a founder of Denver Beer Co. He said that their production last year was about 80,000 barrels, and the BA has them for 25 or maybe 80,000 was their production in 26. The BA has them at 25 being just over 40,000 barrels, but the BA is not including non-beer volume. So. They've got stem cider. I think they've got a couple RTDs and some hot water brands. Charlie was not sure how much they'd be producing under contract because stem will still be produced at its own facility in Lafayette, Colorado. I didn't see a war notice. The business den story said that they own the building, they bought it in 2016 for like $2.5 million so they're hoping to find a tenant. And auction off all of their equipment. It's just interesting to me that these platforms keep coming together where you know brewers say, Hey, we can get to economies of scale, we can share costs and services, and isn't this all going to be great? And then they end up farming out to contract production for somebody else anyway. We saw this happen earlier this year out here on the East Coast with Lord Hobo and Lone Pine. They were going to be produced all their beers at Lord Hobo's really big brewery in in Woburn, Mass, and then they Shut all of that down to produce at Isle Brewers Guild in Rhode Island, which is a big contract brewer out here. So, I don't know, man. I think it's kind of a sign of the times that the money is going to be made in hospitality and anything you can do to lower your costs outside of that is what you got to do.
[00:22:14] Justin Kendall: I was looking at their website, they still have up the contract brewing page, and I kind of wonder like how many people still were contracting with Denver beer.
[00:22:24] Jessica Infante: I mean, the auction starts on Tuesday,
[00:22:27] Justin Kendall: so. Right. And that was the other kind of surprising thing on this was that auction listing coming through so quickly after the story.
[00:22:36] Zoe Locata: Yeah, it's fascinating cause, like, we saw so many, like, contract brewing was almost the first step before we saw some of these platforms happen. Like, we've seen numerous times where brands contracted with somebody, and then that contractor picked that brand up afterwards. So happening after the fact, I just said is is notable. Also, I think Wilding Brands is unique in that all these brands are Colorado-focused. They have very limited distribution outside of Colorado. And so the beer that they're contracting out, it's not like they're trying to meet some sort of distribution demand. They're still trying to focus on the one state.
[00:23:14] Jessica Infante: Right. And I don't even know if some of these taprooms still have even smaller pilot systems in them. That I'd be interested to know because you could probably supply your own taproom pretty decently that way, but you obviously can't fulfill a whole craft platform's worth of brands. But I mean, for a while they were at a till ray pace for M&A deals. Yeah.
[00:23:38] Justin Kendall: Why don't we talk about one last thing before we get to this interview and brighten things up. I am so stoked for stubby bottles of Belle's Two-hearted Ale.
[00:23:47] Jessica Infante: I'm stoked for you.
[00:23:48] Justin Kendall: I love stubby bottles.
[00:23:50] Jessica Infante: I also enjoy a stubby bottle. We've talked about this. Reminds me of drinking Red Stripe on spring break in college.
[00:23:57] Zoe Locata: Yeah. I'm sure all the glass people are very
[00:24:00] Justin Kendall: excited. That's what I was just gonna say. You just came from the glass conference, you know, and this is like an example of a bottle specifically built for them, like created for them. It's got the embossed trout. I dig it. Like it makes you want to go to the, the tavern, play some keno.
[00:24:17] Zoe Locata: Yeah, I don't know if it's. A positive or a negative sign just socially that bottles are kind of having a moment again. I don't know if that's just people need something to make them feel a little like happy and nostalgic, but it is definitely a thing that is happening. I've just observed way more people around me have been picking up bottles. We've seen some other folks like garage beer did their stubby bottles. Both the older, like classic craft and some of these newer brands are embracing that experience of having a bottle and going beyond just the canned product. It's become like a distinguishing factor again.
[00:24:57] Justin Kendall: I love the bottle of Banquet.
[00:25:00] Jessica Infante: Yeah, the bottles and the buckets, you bring up garage beers is what made me think about this. I think dad inspired drinking vessels are having a moment. Are dads cool right now? Maybe.
[00:25:13] Justin Kendall: No, no, we're not. No way. Yeah, we're cool. We're, we've always been cool. What are you talking about?
[00:25:24] Jessica Infante: There's a band that plays events locally where I live. They do like covers of 90s stuff, but they were playing at a thing we were at called Dad Bod and the Father Figures. And they're very good.
[00:25:36] Justin Kendall: It's a good name.
[00:25:38] Jessica Infante: Yeah. So I mean maybe look like Bells if you want to sponsor a band. They'll drink your stubby bottles on stage, I'm sure.
[00:25:47] Justin Kendall: That's a dad's drink brand if I've ever heard of one.
[00:25:51] Jessica Infante: No, they could diversify. You can play like Salem Common kids gathering in the morning and play at like a bar in the late afternoon, and you know Dad Strength can sponsor the morning. Bells can take the afternoon shift. Done. Dad bought in the father figures. Do you need a manager? I am available
[00:26:13] Justin Kendall: Uh, maybe you can get a discount on Cora's next birthday.
[00:26:17] Jessica Infante: Yeah. Honestly, she loves them.
[00:26:21] Justin Kendall: Well, we should get to the featured interview with Jeffrey Stuffings from Jester King.
[00:26:27] Jessica Infante: Our guest today is Jeff Stuffings, co-founder of Austin, Texas is Jester King. Jeff, welcome back to the Brewbound podcast. Thanks for joining us. How are you doing? Doing
[00:26:36] Speaker 6: well, yeah. Thank you for having me. It's good to be
[00:26:38] Jessica Infante: back. Yeah, no, we're thrilled to have you. You guys made a bit of news, what was that? Last week or the week before, that you are looking for somebody to help Jester King get to its next phase, and I got a lot of comments on that Instagram post, but I'm really excited to, to talk to you about what that's going to look like, where we're going, what it all means, because I am sure there are a lot of other craft owners that are in the same space. So, I mean, let's just kind of start with the timeline. When did you realize that it was time to begin looking for a buyer or investors?
[00:27:12] Speaker 6: Sure, and uh just in general, you know, I'll certainly cover some, some negatives for, for Jester King, and I suspect for other people in the industry. I'll, I'll try to focus on some positives too, cause there are plenty of them. Yeah, specifically for us, you know, within the last few months coming through, you know, the Texas summer, which in Many ways it's like, you know, our winter business slows down pretty heavily during the hottest months here. It kind of became evident that we're falling behind in certain areas with our just overhead and debt and kind of seeing like a negative glide scope that uh really needs to be fixed and corrected in a fairly major way, and I'm, you know, I'm pretty much an open book, so I'm happy to go into details with that, but really just within the last few months.
[00:27:59] Justin Kendall: Let's dive a little deeper there because I read through some of the Culture map Austin story to prep for this, and they had mentioned that you all had purchased some property and had built out an inn there and had sold that off, but really things sort of seemed to shift during the pandemic and some of the loans that were taken out there proved challenging. So can you take us through a little bit of, you know. How things got to this point, and even personally, you know, where you all decided that it was time to look for an investor or a buyer.
[00:28:35] Speaker 6: Yeah. So, where things kind of shifted, I kind of put my finger on, you know, 2022. Obviously, 2020 and 2021 were, you know, very turbulent times for all of the beer industry. 2022 is when we kind of specifically saw a pretty substantial Decrease in sales of farmhouse ales, as I think, you know, you and a lot of our, a lot of the listeners know, is that we've specialized and focused on small scale, small batch, barrel aged, wild and spontaneous beers and have done so since 2010. And around like late 2022, we started to get some pretty significant pushback from our distributors. Uh, you know, historically, we've had a very wide distribution footprint with about 30 states and about a dozen countries. You know, originally, if you remember back, we were really plugged into the Shelton Brothers network. That's really where we kind of came on the, the scene as far as our beer getting, you know, beyond the Austin area. And so all of a sudden, you know, 30 barrel batches of farmhouse beers that we're requiring anywhere from like, 30 to 60 days to sell through, really hit a wall, and that actually translated into us brewing a very, very small amount of farmhouse beers from kind of late 2022 on, even to today, you know, 2000 barrels of largely mixed firm is what we've we've done historically from like 10 to 2022. And now, you know, this year we're on pace for about 400 because of some of the cash constraints we've had, that's a little artificially soft. We think we could sell a little bit more than 400 barrels, but our core product has really taken a massive decline in terms of sales volume. We've pivoted pretty substantially, you know, I say somewhat jokingly that, you know, we're a 16-year-old company that's about a 3-year-old startup, because in 2023, we changed the varieties and styles of beer we make really quite dramatically, where today we're about, you know, 80% lager and IPA, you know, we'll do somewhere around 3000 barrels this year. We started our own in-house distribution arm of the company to get the beer to market ourselves. Texas allows self-distribution, so we're a pretty radically different company than we were. And to get kind of back to the point of your, your question, Justin, is we Accumulated kind of a lot of debt, some of it good, some of it bad over the last four-ish years. And so, as far as our future success as I see it, we'll probably need to restructure some of that debt and require a pretty, I think, significant influx of capital into the company to kind of take advantage of, I think, the demand that we, we've generated and still, still have.
[00:31:11] Jessica Infante: So those pivots to self-distro, but also, you know, loggers and IPAs, I wouldn't expect your consumers to have any thoughts on self-distribution, but how do they feel about the change to your portfolio? Because that's pretty significant from what we were doing before, but also that tends to be what the people want. So how was that received?
[00:31:29] Speaker 6: Yeah, so I think kind of somewhat apprehensively at first, you know, kind of like what is this wild and spontaneous brewer doing, making, you know, peer culture bloggers and IPAs and whatnot, and I think just some of our general reputation of being a quality producer over the years led people to at least give us a chance with that. But I think You know, really to this day we've kind of had to like earn that trust in other styles, and from a brewing team perspective, we really had to retool, you know, a lot of our hiring was based on passion and creative bona fides in, in, in the beer industry and pulling a lot from the, the homebrewer ranks to that end, where our hiring over the last, uh, you know, couple of years has been more focused on people coming from. Other production brewery backgrounds with, you know, really, you know, established pedigrees and making thousands of barrels a year of pure culture fermentation. So, I would say over the last, somewhat ironically, because, you know, this is a time when we're actively seeking some, you know, help, if you will, through restructuring and, you know, a new influx of capital. Ironically, I would say we've over the last twelve-ish months probably received more kind of acceptance, I think, as a producer of a wide. Range of styles. So, you know, whether you judge that by just direct consumer feedback, distributor orders, sell through on the shelf, untapped, you know, and so on down the list. I don't think I'm overstating it when, like, you know, people around our greater broader markets here in Texas look at us as a pretty solid producer of pure culture styles.
[00:33:04] Justin Kendall: Absolutely, yeah. So when we dig into it, what does the ideal next chapter look like for Jester King, as well as you and Michael?
[00:33:16] Speaker 6: So we have a strong brand, a good reputation, you know, a great space and a great team, and now, I would argue, you know, a strong array of beers across a multitude of styles. We're still hampered a lot by a pretty burdened balance sheet that we've accumulated over the last 4 or so years, and so, That balance sheet needs help, and I keep using the polite word of restructuring, but we'll probably have to go through some type of uh of chapter 11 just to be transparent. I mean, I've told our team all of this, so it's just no secret, but we do have, you know, some confidential information that is being shared with potential investors. I'm not really trying to hide or gloss over the larger points. So I've been talking to a lot of, uh, or not a lot, but I've been talking to, you know, a handful of peers in the industry who have gone through similar things in the not too distant past and have emerged on the other side of it, you know, apparently, you know, in pretty good shape. So that'll be kind of a key piece of it. And then, Not having to just struggle to kind of service the debt that we've acquired will be a big breath of fresh air. And then I think that'll be a key piece in being able to not really like reinvent the wheel, like that kind of already happened, like we did really do a massive reimagining of our business model, like 3 years ago. And so, you know, we've built a really strong distribution team for locally here in. In, in Texas. And then, like I mentioned, we retooled our entire production to be focused on a multitude of styles. So, being able to just free up more cash to basically make the entire, you know, range of beers. I'll give you an example, like, you know, for instance, this summer, because of cash flow constraints, we didn't even make our most popular beer, which is called atrial rubicite. It's a fair-laced wild ale refermented with raspberries and You know, just the burden of not being able to really invest like 6 to 12 months into a fermentation when converting cogs into cash through, you know, 3 to 4 week beers has been the name of the game. That's kind of artificially restrained some of our ability to make money in this climate, and post- restructuring, I think we'll be in pretty good shape to do those things again. Oh, and what does that mean for Michael and I? Well, I mean, the reality is we're probably going to be, you know, assuming we're successful in restructuring and attracting new new capital or new ownership, probably means that Michael and I are taking more of a backseat in terms of running the day to day of the, the company. That's just my kind of blunt expectation about it. But I mean, the reality is, not to speak for Michael, but speaking for myself, you know, I love this industry and love craft beer and I love this company, and it's, you know, I was 28 when I started it, and I'm 47, so it's been, you know, it counts the startup phase, so it's been, you know, like 19 years or so, so it's a big part of my professional identity, so, you know, I still wanna be as involved as I will be able to.
[00:36:01] Jessica Infante: Jeff, I don't think I said this at the top, and I don't know if anyone has said this to you, but Justin and I hear whispers of breweries for sales and Chapter 11 filings. We hear all this all the time. I love how upfront and frank you guys are being about this. This is really, to me, it's super commendable because you don't hear about it at all. And I think it says a lot about you, that as a business owner that you know, hey, we've gotten into this spot and we need a little help. And I love that you're just putting it out there because sometimes that doesn't happen and things go sideways and then consumers are left with questions. Employees are left fretting, and I think what you've done is really brave, and I really appreciate that you've done it this way. Well, thanks,
[00:36:42] Speaker 6: Jess. I appreciate that.
[00:36:44] Jessica Infante: So in doing this in such a public way, I really want to know how many inquiries you've gotten since announcing and what has been the most interesting and what has been the most like absolutely not. That is crazy and we are not selling our company to, who knows? You don't have to give me names, but is there anything that you've heard that's been like hard pass? No.
[00:37:03] Speaker 6: You know, we've had about 25 to 30 inquiries. I mean, there's been a lot of just people uh kind of just asking, you know, but thus far, even though it's been, you know, less than a week, kind of, um, you know, more, what appeared to be more serious inquiries, about roughly 2 dozen or so. And, you know, nothing, actually nothing really like off the wall, you know, kind of a mix of, without naming names, like breweries, brewery groups, individuals, nothing that that just like, wow, this is really weird, or all that unusual, so I wish I had more to kind of offer there, but uh, but pretty straightforward.
[00:37:36] Jessica Infante: We did notice in the comments on Instagram, a lot of people were concerned about private equity being part of it, but I assume that's something that's kind of going to have to stay on the table just in this climate.
[00:37:47] Speaker 6: Right? I mean, my, my priorities are, you know, the brand and our team, you know, reaching a point where they're both, our team's great, but I mean, the brand, you know, being in the company being, you know, fully healthy and being able to Really capitalize upon so many of the positive changes we've made to adapt to the beer industry over the last, you know, again, kind of four-ish years. So, to be straightforward with you, I wouldn't rule out anyone or any entity that I think can, you know, carry on what we've created and, you know, keep the company headed in the right direction in a, in a good place. The team really is what's most critical to me, like we've built a really good one, and I understand. You know, change is inevitable. For instance, our, you know, last employee who had been with us, uh, over a decade, you know, left this year. So, John, I don't mind mentioning my name, you know, John Laffler, um, told me a long time ago from Off-color Brewing in Chicago, and he told me a long time, this is like when we're like 2 or 3 years old. I don't know what prompted him to say this. Maybe we're, we're just talking at a, at an event in, in, uh, in Nashville, of all places I remember, and He told me, uh, you know, Jeff, besides your brother, everyone in this company is going to leave you. You just need to know that. And that took like 12 or 15 years, but what, you know, John said ultimately proved to be true. But that's not the point of what I'm saying. I mean, really, what's motivating me to be, you know, very transparent and public about this process is, you know, I really love my team. Uh, I love getting to work with them. They're really a super talented group of people, and I want to see, you know, them set up for success, uh, even though change is inevitable. So that's, that's a huge part of what's, what's, you know, driving both the moves you're making and, and doing so in a, you know, in a way that's just, you know, out there, and I think that would, you know, may give us the best chance for success.
[00:39:26] Justin Kendall: How big is the team at this point?
[00:39:29] Speaker 6: About 35, and that's spread across, uh, you know, brewing, a restaurant, and a farm, and then our in-house distribution. Sort
[00:39:37] Justin Kendall: of building off that and everybody, you know, eventually leaving other than your brother. How many breweries have started from people who have come through Jester King? That's a great question.
[00:39:49] Speaker 6: Oh gosh, yeah. Well, uh, let's see, Garden Path out in Seattle, keeping together, so you know, Garden Path with Ron Extract, keeping together with Avery Swanson, Yo Fellow with Garrett Crowe. I think those are the three founders of breweries, and then, you know, of course we've had a lot of folks go work at other breweries as well.
[00:40:09] Jessica Infante: Do you feel like a proud brewery, dad? Because
[00:40:12] Speaker 6: you should. Yeah, I thank you. I mean, I, it's like
[00:40:15] Justin Kendall: the coaching tree.
[00:40:17] Speaker 6: Absolutely, I, I I'm I'm a sports fan, so like whenever they, uh, you know, mention that when I'm watching a game, like I would, yeah, I feel a little, little twinge of pride in that, and I think we've had a, you know, a good, a good coaching tree in, in the beer
[00:40:27] Jessica Infante: world. What does Jester King need to be successful as you enter this next phase? What are your absolute must-haves?
[00:40:35] Speaker 6: Yeah, and, and not to sound redundant, but like shoring up some of the just bad debt and overhead we've acquired coming out of COVID, uh, which is really hamstrung us in terms of moving forward, and then You know, some recapitalization. We've been too hand to mouth with our finances, and that's impacted us, for instance, you know, I mentioned the example of not being able to brew the full range of beers that we normally make. You know, we've left demand on the table out in the field with our ability to hire, you know, new reps. Our marketing game or activities, you know, traditionally a strong suit of of Jester King has been kind of back burnered some during this period, and then, Uh, as well as kind of our team being stretched thin on like the event side where our manager Bobby Bans has been, you know, just a, you know, superhero managing the entire like event and restaurant business altogether. So that's been kind of one of the negatives of being, you know, relatively tight is, you know, uh, haven't been able to really do all the things we've historically done to the extent we know we're capable of them. So, Yeah, I mean, from, uh, if we're successful in, in, you know, restructuring and getting to a better financial place, I don't think it'll look radically different from the outside. It just means that we get to really, you know, continue to do the things we've, we've really tried to focus on doing well, but do so in a much more financially sustainable way.
[00:41:53] Justin Kendall: One of the things that Jester King was a major advocate for was direct to consumer shipping. Did that ever get across the finish line and how big of a game changer would that have been for the business?
[00:42:07] Speaker 6: I think it'd be fair to say we, we've really, uh, you know, pushed for taproom sales. You know, we were part of a group that was, um, you know, led by my friend, you know, Scott Metzger at the time. He was at a retail brewing. In San Antonio to allow sales at the taproom. So, I mean, that was, that was, you know, 2013 was our big legislative push to allow brew pubs to sell beer to go. Then we were successful, and, you know, that really, that moment in time when we achieved that economic right allowed us to do practically everything we've done since. And so, you know, specifically selling through the mail, that's a right we still don't have in Texas. Although, you know, uh, it's kind of anecdotal, but like, you know, I've talked to some other brewers. Other states, and they're like, yeah, it's, it's a helpful thing, but online sales haven't been like just a game changer for us. So, back during like the beer release era, we would do more like, you know, you, you'd make a purchase in advance and then come out to the brewery and pick it up, or we used to allow, you know, like proxies and stuff like that. Although that's kind of more from the, the bottle release and, and, you know, long queue era than, than today. So it's a little more, you know, show up and maybe take a 4-pack home type of era for us.
[00:43:18] Jessica Infante: I think it was before we hit record, but we were talking about, you know, how are things in Texas, and you said that you're just coming out of summer, which is actually more like your winter. What's the taproom business like in general throughout the year? Has it changed since, you know, I don't want to say has it changed since COVID, that's obvious, but in the last, let's say 2 years, how have taproom sales changed in your market?
[00:43:38] Speaker 6: Yeah, they've been a little soft, to be honest about it. I mean, um, you know, we've, um, whether that's due to Inflationary pressures from consumers, or just the proliferation of not just your breweries, destination breweries, cool bars that aren't brewing beer, but still have a lot of cool amenities for kind of enjoying, you know, nice indoor slash outdoor places. So I think the competition has been very, very stiff, and not that that's a bad thing. I think in Jester King's case, and this isn't to really You know, like, point fingers. I, I really look a lot of, you know, look internally at our own performance whenever, you know, there may be struggles. Um, with that said, I mean, we've been kind of cut off from the city of Austin from Uh, about 2021 through, I shouldn't say cut off, but like there was a major, it was called the Oak Hill expansion Project where, uh, there's been kind of an artificial moat that was created, uh, with major road construction between Austin proper and Jester King, and I mean, that's back open now, fairly recently, within the last, you know, 4 or 5 months. And, uh, now it's like you can time it, you can get from like our major artery called MAC here in Austin, you know, to Jester King and 18 minutes. So it's, it's, it's quite nice now, but I think, you know, that, that kind of impact or that moat, if you will, kind of, I think changed some consumer behaviors. So, um, yeah, and then, you know, anecdotally talking to some of the other, uh, brewery owners, they're like, yeah, our taprooms have been a little, a little slow relative to where we've been over the last, you know, 12 to 24 months. So, it's probably not true of, of, of everyone, but, you know, just talking locally, I think it's, you know, our peers are still feeling a, a squeeze.
[00:45:12] Jessica Infante: Well, it sounds like you guys have handled a really tough situation with a lot of grace. What advice would you give to fellow craft brewers who are finding themselves in the same boat, because I know there are a lot of them. What would you tell people who are considering making a similar announcement?
[00:45:25] Speaker 6: As a starting place, I mean, this is something that we've tried to be a lot better at, you know, over the last several years, and that is really like Drilling down into your, your cost centers, essentially just like isolating, you know, every piece of the business, assigning its proportion of costs and expenses to it, and really trying to single out like what is making money and and what isn't, and then. You know, we've had to get way more invested into key performance indicators over the last 3 to 4 years, and, you know, every department has, you know, like 2 to 3 numbers that are just really critical, and we, you know, have to, have to hit them consistently. I think in general, you know, breweries and brewery owners have gotten a lot more sophisticated over the last 7 or 8 years, I think. You know, obviously the, the days of just, you know, make good or even, you know, passable beer and still have a very robust following are, are long gone. So, you know, strong numbers, strong kind of understanding of the economics behind your business, and then the willingness to, I think, you know, shake things up and try new things. I mean, again, we totally reinvented ourselves in, you know, 2023, you know, I, I'm confident in saying that had we not done that, we wouldn't be sitting here right now. We'd, we'd have, you know, just given the major decline we saw in farmhouse sales and You know, I think the taproom model is, is still a viable one. I mean, you know, we've seen friends do, you know, up to like 1000 barrels of, you know, over the, over the bar sales here in, in the local area, and so I think that's been a really strong thing for some of our peers. But yeah, I think that's the gist of it for me.
[00:47:00] Jessica Infante: Awesome. I mean, I feel like in the beginning, probably the era when you guys opened, the thing that always got said about like if you want to get into craft brewing, like, just know quality is number one, the first thing you need to do, and you just need to like keep a really clean house, like brewing is 90% cleaning and like 10% cool beer shit. And today I think we've gotten that part of it down just about, and now it's more of like The business nuts and bolts of everything, like everything you just laid out. Like now that's the other, like, hey, if you want to be a craft brewer, here's the other thing you're going to have to do and know because it's not just all cold beer shit. So thank you for laying it out so cleanly and clearly.
[00:47:41] Speaker 6: Oh, thanks, Jess. I appreciate that.
[00:47:43] Jessica Infante: Jeff, this has been an awesome conversation, so I'm really glad you joined us and thank you for always being so transparent about everything. I think it's great and people really need to take notes.
[00:47:53] Speaker 6: Well, well, thanks, Jess, thanks, Justin. Uh, I really enjoy your content. Um, yeah, the, the feed every day is super insightful and y'all do a, a great job, so we
[00:48:02] Jessica Infante: didn't even tell you to say that.
[00:48:04] Justin Kendall: Amazing. We do really appreciate it and good luck and definitely keep us posted on what's next.
[00:48:11] Speaker 6: Absolutely, yeah, I certainly will.
[00:48:14] Jessica Infante: And that's our show for this week. Thank you for listening. The Brewbound podcast is a production of Bevnet CPG. Our audio engineer for the Brewbound podcast is Joe Cratci. Our technical director is Joshua Pratt, and our video editor is Ryan Gilang. Our social marketing manager is Amanda Smerlinsky. Our designer is Amanda Huang. If you enjoyed this episode, please share it with your colleagues and friends and review us on your listening platform of choice. You can find our work at brewbound.com. And we also welcome feedback and suggestions at podcast@brewbound.com. On behalf of the entire Brewbound podcast team, thank you for listening. We'll be back next week.
