Speakeasy Signs Exclusive Brewing Contract with Shmaltz

In an effort to keep beer in the marketplace while a court-appointed receiver solicits bids for the Speakeasy Ales & Lagers brand and brewing assets, the San Francisco craft brewery has signed an exclusive contract brewing agreement with New York’s Shmaltz Brewing, Brewbound has learned.

The decision to outsource at least some of its production comes just two weeks after the company said it would resume manufacturing at its San Francisco brewing facility.

The arrangement with Shmaltz will include production of Speakeasy’s Big Daddy IPA, Prohibition Ale and Baby Daddy Session IPA, Brian Stechschulte, a Speakeasy spokesman told Brewbound.

Speakeasy, which has plenty of production capacity at its own brewery and a skeleton crew in place to make beer, still needs contract brewing services in place for the company’s next owner.

“When a sale takes place, all of the licensing will need to change to the new ownership,” Stechschulte said. “Having someone setup in a contract relationship will allow beer to flow during the transition.”

The process of transferring federal and state brewing permits could take as long as six months, according to Shmaltz founder Jeremy Cowan, who said the 90-day contract, signed in mid-March, would automatically renew after June.

“My goal is to participate in the production of Speakeasy beer moving forward and for the foreseeable future,” Cowan told Brewbound.

The agreement grants Shmaltz the exclusive right to produce beer on behalf of Speakeasy while a sale of the brewery is finalized, he added.

“The value of the brand will plummet the minute they run out of beer,” Cowan said. “Making sure there is beer in the pipeline for their wholesalers is absolutely crucial. The last thing anybody wants is for the brand to get more damaged.”

Shmaltz was in the perfect position to help Speakeasy with production while an ownership transition takes place — the upstate New York beermaker had produced beer for Speakeasy in 2015 while it was undergoing a facility expansion.

“Because we were already brewing for them, we have all of the recipes, and we have access to core ingredients through our suppliers,” Cowan said.

Shmaltz might also consider submitting a bid for the Speakeasy brand, Cowan added.

“I would love to be involved in the ownership and stewardship of the brand — whether that is part of a group, or potentially on my own,” he said, adding that Shmaltz would continue manufacturing Speakeasy product no matter who ends up controlling the brand.

“I am eager and enthusiastic and just want to participate in the evolution of Speakeasy,” he said.

Shmaltz will begin brewing Speakeasy products next week, a relationship Cowan expects to continue for at least six months.

On March 10, Speakeasy announced plans to indefinitely cease brewing, packaging and taproom operations. The company agreed to enter receivership on March 13 and Jigsaw Advisors was appointed to run the failing brewery after it neglected to make payments to Union Bank, its primary creditor, and other vendors.

Jigsaw, now tasked with overseeing all of the company’s operations, instructed Speakeasy’s eight remaining employees (48 were terminated) to recommence brewing and packaging in mid March. Shortly thereafter, a second financial firm, Business Capital, began accepting bids for the Speakeasy brand and its brewing assets.

Winning bidders are expected to be notified on April 18 and “everything is on the table,” according to Stechschulte.

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