With $464 Million Investor Payment Looming, Stone Has Considered Selling, CEO Testifies
Stone CEO Maria Stipp revealed that her company owes its investor, VMG/Hillhouse, $464 million and has considered selling, according to a report in Courthouse News Service.
Stipp took the stand yesterday in the ongoing trial between the San Diego craft brewery and Molson Coors. Stone alleges that its business has declined 20% in the wake of Molson Coors revamping the branding of its economy line Keystone Light in 2017 to feature the word “stone” more prominently, causing confusion among drinkers.
The combination of the downturn in Stone’s sales – which Stone attributes partly to Keystone’s marketing – and the looming June 2023 repayment date to investor VMG/Hillhouse has forced the brewery to consider selling, Stipp testified when questioned by Stone attorney Jeffrey Theodore. She added that VMG/Hillhouse has given the company wiggle room on repayment.
“I was given no timeline. I knew it would take time to build back the company and [VMG/Hillhouse] was giving me some time,” Stipp said Thursday during questioning.
Stone raised the price of flagship Stone IPA to fund a marketing campaign and developed incentives, but nothing has helped pull the beer out of a downward spiral, Stipp said.
“We tried price, a marketing campaign, incentives — everything we could think of to do to change from negative to positive and it’s not making a difference,” Stipp said according to Courthouse News. “I’m frankly not sure what else we can do.”
Attorneys for Molson Coors pointed to internal documents from Stone that showed “Stone IPA was not competing” in the craft segment in 2016 and that the company noted the “craft slowdown is real” in July 2017. Stone filed the lawsuit in February 2018.
Boston Beer Moves to Dismiss Investor Lawsuit
Boston Beer Company has filed a motion to dismiss the lawsuit investors have brought against it alleging the company and its executives made false statements and failed to disclose material facts about the performance of its Truly Hard Seltzer brand.
In a memorandum filed to the U.S. District Court Southern District of New York on Wednesday, Boston Beer argued that claims made by the plaintiff, investor Joseph Siegel, are an “allegation of ‘fraud by hindsight,’ not a well-pleaded claim” under the Securities Exchange Act of 1934. Siegel filed the lawsuit against the company as well as CEO Dave Burwick, CFO Frank Small and founder and chairman Jim Koch in September after Truly’s performance fell far below expectations.
The company argued that Siegel’s complaint does not plead that any statements “were false of misleading when made,” asserts that statements “fall within a safe harbor for forward-looking statements created by the Private Securities Litigation Reform Act of 1995,” and “fails to plead specific facts mandating a strong inference of scienter (i.e., that any putatively false or misleading statements were made with knowledge of their falsity).”
Following Boston Beer’s first quarter earnings results on April 22, Siegel purchased three shares of Boston Beer stock on May 18 for $1,063 each, and then bought an additional share on July 6 for $927.85 and another share on August 20 for $588.06.
Boston Beer’s second quarter earnings results on July 22 reflected a slowdown in the hard seltzer segment, and the company revised its financial guidance downward, shifting expected earnings per share from between $22 and $26 to between $18 and $22. On September 8, the company withdrew its guidance and said it would likely miss the expected $18-$22 per share earnings.
In its memo, Boston Beer asserted the “far more likely and compelling inference” is that the company and its officers believed the veracity of any forecasts at the time they were made, which should be considered within the context of the beer industry’s pandemic-driven volatility.
“Indeed, the forecasts were made during a time of unprecedented uncertainty, in the midst of a global pandemic, which made forecasting particularly difficult,” the company wrote.
BrewDog CEO James Watt Hired Private Investigators to Identify Individuals in Alleged ‘Smear Campaign’
BrewDog co-founder and CEO James Watt allegedly hired private investigators to gather evidence on former employees and associates who were speaking out against him, the Guardian reported Monday.
The Guardian cited “multiple sources and evidence” that suggested Watt’s and his legal team hired members of Integritas Investigative Solutions and approached people criticizing Watt and his conduct. Additionally, Watt allegedly messaged an anonymous woman accusing her of participating in a smear campaign against him, and warned her of legal action, the Guardian reported.
Watt confirmed in a LinkedIn post Monday that he had “engaged the services of digital investigative specialists” to identify individuals who he said were sharing “damaging and false allegations” and attempting to defraud him.
“I have been subject to a 2 year-long coordinated criminal campaign of online harassment, defamation, blackmail, significant fraud, and malicious communications,” Watt wrote. “This campaign began when appalling lies about me were sent by third parties, operating through troll accounts, to a large number of my social media connections. In their own words they have been working together on ‘a plot to bring James down.’
“I have a duty to act in the best interests of the company, our employees and investors: this duty extends to protecting the business from malicious individuals who wish to cause us harm,” he continued. “The objective of our enquiries was to understand the extent of the campaign against us and to take appropriate legal action to bring it to an end.”
Watt added that a “criminal prosecution for serious fraud and malicious communications” is underway in London, as well as several civil proceedings in Scotland.
The news follows a tumultuous year for Watt and BrewDog. In March 2021, BrewDog faced backlash after four employees and members of the LGBTQ commmunity were terminated from their positions at the company’s Indianapolis Taproom. BrewDog USA CEO Jason Block cited “prior performance issues” for the firings, rather than discrimination.
A month later, more than 75 former Brewdog employees and 45 anonymous employees – under the name “Punks with Purpose” – published an open letter, which described BrewDog as a company with a “culture of fear,” and that “being treated like a human being was sadly not always a given.”
Watt responded to the letter on Twitter, stating the company “always tried to do the best by our team,” but that its focus now was to “listen, learn and act” rather than contradict claims. In Monday’s LinkedIn post, Watt said a police complaint has been filed against Punks with Purpose’s founder for blackmail.
In January, BBC aired an expose on Brewdog, which accused Watt of inappropriate behavior towards employees and guests, which was well-known across the company. Allegations that Brewdog provided falsified information to the TTB, misused funds from a charitable beer meant for tree planting, and misled consumers on Watt’s Heineken stock share were also reported.
Watt said the claims are “totally false” and that he would be seeking legal action against the BBC.
NBWA: Draft Claims 8% Volume Share of Beer For First Time in 105 Weeks
Draft beer (kegs) had a 8% share of beer volume for St. Patrick’s Day this year — the first time draft has reached 8% in more than 105 weeks, according to Lester Jones, chief economist for the National Beer Wholesalers Association.
Jones shared the news on LinkedIn Thursday, citing NBWA and Fintech data.
Draft share fell for the week of St. Patrick’s Day (week 11) from 8% in 2020 (the week of the first widespread COVID-19-related, on-premise shutdowns in the U.S.) to 5.6% in 2021. The same week in 2019, draft held a 9.2% share of beer.