As Rumors of Financial Woes Persist, Celis Brewery’s Future Remains Uncertain

Rumors of financial troubles, layoffs and a possible bankruptcy filing have swirled around the Celis Brewery in Austin, Texas, for the better part of 2019, and more information about the company’s future could be revealed in the coming days.

A new investor group led by a beer industry outsider is reportedly considering a deal to acquire the distressed brewery, Brewbound has learned.

Multiple sources familiar with the Celis business have said a decision regarding the brewery’s future could come as early as Friday.

Possible outcomes include a sale to the investor group, which includes John Nelson, the owner of an Austin-based construction business, or a formal bankruptcy filing.

The new investor group has tapped former Big Bend Brewing Company vice president of operations Mahala Guevara and brewmaster Jan Matysiak as consultants to assess the viability of an acquisition. Recall that Big Bend, also based in Texas, suspended operations after six years at the end of 2018, citing market headwinds and the collapse of Canadian equipment manufacturer Diversified Metal Engineering.

Christine Celis, who resurrected her late father Pierre Celis’ long-shuttered brewery in 2017, did not return multiple requests for comment.

Sources who spoke to Brewbound said the Celis operation was in trouble soon after opening in 2017. The company reportedly overspent on a 50,000-barrel brewery in northwest Austin and built financial models that required high double-digit, year-over-year growth in order to service debt.

Celis products sold well in Texas, according to sources, and the company produced approximately 12,000 barrels in 2018, up from an estimated 4,000 barrels in 2017. In order to begin turning a profit, however, the company needed to produce upwards of 20,000 barrels.

As a result, several executives have departed Celis and the company has cut sales and production staff. In February, sales director Brad Foster left the company after two years to start a beverage consultancy, Texas Libations, with his wife, Lori.

Celis president and COO Bill Mulroy, who had been with the company for about 18 months, was let go within the last two weeks, sources said. (UPDATE: Mulroy told Brewbound that while he is no longer involved in the business’ daily operations, he remains “a partner and a board member.”)

And Friday is the last day for the company’s packaging staff, one source added.

In the meantime, Celis’ taproom has remained open, advertising events for this weekend, including a May 4 “Barks for Beers” Star Wars-themed, dog-friendly event.

The unclear nature of Celis’ future has also left at least two companies that have contract brewing arrangements with the brewery in limbo.

Over the last two years, longtime beer industry veteran Bob Leggett, who owns the Uncle Billy’s, Pedernales and Robert Earl Keen beer labels, and also leads Artisanal Imports, transferred production of those beers to Celis. According to Leggett, the last batches were brewed at Celis in January.

“We’re just selling through the inventory that we’ve had,” he said.

Compounding the troubles for Leggett, Celis had also taken over sales of the three brands last October. When Foster departed Celis, Leggett reclaimed wholesaler management of those brands.

“When Brad left, and some of the other salespeople at Celis left, everything went into limbo,” he said.

Leggett said no decisions have been made about the future of his brands, but options include finding a new contract partner, or selling them altogether. Leggett added that he’s contacted a few Austin breweries about contract opportunities, but has yet to identify a solution. He expects to make a final decision later this month.

“It’s hard for me to see what the future is going to be right now,” he said.

Nevertheless, Leggett said there are “no hard feelings on either side.”

Lake Austin Ales, which produced beer under contract at the Celis Brewery, is also said to be on the hunt for a new partner.

Meanwhile, the owner of a PR agency that had been representing Celis told Brewbound that it was no longer working full-time with the beer company.

The situation at Celis is far from unique, however. After six consecutive years of double-digit growth between 2010 and 2015, volume sales of craft beer slowed to single digits over the last three years. And with more than 7,400 U.S. breweries now in operation, the fight for consumer attention has heightened. Several high-profile craft breweries have struggled to grow over the last two years, and many have been forced to make drastic moves to stay in business.

Months after pulling distribution from 32 states, cutting 15 percent of its workforce and shuttering an East Coast production facility, San Diego’s Green Flash was sold via a foreclosure sale to a new investor group last year.

New Hampshire’s Smuttynose Brewing was sold to a VC Firm in early 2018, after it was revealed that mounting debt and missed growth projections had forced the company’s lender to sell the business at a public auction.

This past March, the founder of Michigan’s Arcadia Brewing Company signed the brewery property over to its mortgage lender in lieu of foreclosure.

Meanwhile, large and small breweries alike have laid off workers over the last two years, including Anheuser-Busch, MillerCoors, Constellation Brands, Heineken, Pabst Brewing, Lagunitas, Deschutes, and New Belgium, among others.

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