Mendocino and Olde Saratoga Shutter As Owner Faces Financial and Legal Woes

California’s Mendocino Brewing Co. and New York’s Olde Saratoga Brewing Co. have shuttered, impacting the operations of several other small companies who also produced beer at those facilities.

The shutdown comes as the Indian government moves to extradite billionaire Vijay Mallya, who owns the two breweries, from London on fraud and money laundering charges in excess of $1 billion.

Mallya, who leads United Breweries Holdings of India, the parent company of Mendocino and Olde Saratoga, will reportedly go before a Westminster Magistrate Court next week as his attorneys continue to defend accusations that he defrauded a government-owned bank relating to the 2012 collapse of his Kingfisher Airlines company, the Economic Times reported.

Over the years, Mallya’s brewing operations have had run into a litany of financial issues. According to the Press Democrat, Mendocino received millions of dollars in loans for debt financing from Delaware-based Catamaran Services Inc. and United Breweries. According to the report, U.S Securities and Exchange Commission filings showed that Mendocino was to pay Catamaran a $500,000 promissory note and interest by January 17.

Last weekend, the breweries’ financial issues came to a head as the 35-year-old Mendocino Brewing Co. shuttered its Ale House in Ukiah — California’s first brewpub — and production ceased at Mendocino’s New York subsidiary, Olde Saratoga Brewing Co. (Releta Brewing Company LLC), which Mallya acquired alongside Mendocino in 1997.

According to Brewers Association (BA) data, production at the Mendocino and Olde Saratoga breweries has declined since 2012, when the two breweries produced a combined 84,000 barrels of beer. In 2016, production dropped 9 percent, to about 66,100 barrels, the BA reported.

The Olde Saratoga facility had produced Mendocino products for the East Coast and served as the U.S. manufacturer of Kingfisher Premium Lager, which Mendocino’s website called “the largest selling lager in Indian restaurants” in the U.S.

The future of the U.S. Kingfisher’s business is unclear in the wake of the closures.

Mendocino and Olde Saratoga had also served as contract brewing outposts for a handful of brands, who were in some cases left scrambling. Others weren’t surprised.

“It’s been going on for a long time, so I won’t say that it was a surprise,” Jim Woods, the founder of San Francisco’s Wood Beer, told Brewbound. “It’s sad to see such an important legacy brand cease to exist, and I’m hopeful that the owners and shareholders are able to find a way to bring it back.”

Woods Beer had been contract brewing about 500 barrels annually at Mendocino, but was on the verge of ending its arrangement with the Ukiah-based company as it prepares for the imminent launch of its own 30-barrel brewery on Treasure Island. In fact, Woods said Mendocino’s instability pushed him to open the production facility, which, along with his 3-barrel Oakland brewpub, will supply Woods’ five taproom locations.

“We had the goal probably about a year ago to bring all of our production in-house,” he said. “We’ve been making moves to be more self-sufficient in the current landscape.”

Canoga Park, California-headquartered Fireman’s Brew had also contract brewed its products with Mendocino in the past. Fireman’s COO David Johnson, through a spokesperson, declined to comment.

The closing of Olde Saratoga Brewing, which had its own dedicated line of beers and previously produced for Shmaltz Brewing until 2013, left Brooklyn’s Braven Brewing with 72 hours to retrieve 800 kegs of beer along with $60,000 of packaging material. According to Braven’s founders, the company was able to secure two tanker trucks of beers, 60 pallets of kegs and packaging, and $3,000 worth of hops.

“It was definitely an adventure,” Braven co-founder Eric Feldman told Brewbound.

Braven had contract produced with Saratoga since December 2014. Last year, the company brewed about 3,200 barrels of beer via contract, Feldman said.

“We had a great working relationship with them for a little over three years,” Braven co-founder Marshall Thompson added.

Thompson added that Braven has “a good amount of stock” after brewing in December, so a temporary pause in production shouldn’t hurt the brand too much before it resumes brewing with Ipswich Ale Brewery in Massachusetts starting at the end of February. Braven also plans to open a small-batch brewery and taproom in Brooklyn this summer, while continuing to produce under contract.

Another New York brewery is still waiting to receive $85,000 from Olde Saratoga, after suing the company following a mishap in the brewhouse that resulted in a bad batch of beer.

On January 4, the New York Supreme Court ruled in favor of New Buffalo Brewing Company after Olde Saratoga failed to pay a previously agreed upon settlement of $65,000 in December 2017.

New Buffalo owner Bill Campbell told Brewbound that he contract produced about 1,000 barrels with Old Saratoga in 2014, but an infected batch of a brown ale caused a 220-barrel recall.

“They took all my money from being in the military,” he said.

New Buffalo hasn’t produced beer since, but should the $85,000 come through, Campbell said he’ll begin producing with West Shore Brewing.

Despite a bevy of blunders, the Mendocino brand may still have a chance of being resurrected. Mendocino co-founder and board member Michael Laybourn told the Press Democrat that management has been in talks with a Northern California investor to save the business.

“If it happens in the right way, he will save the company,” he told the outlet.

Laybourn did not return a Facebook message from Brewbound.

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