Brewbound Podcast: A Look at Uncle Nearest’s Fight to Retain Control of Operations

[00:00:00] Justin Kendall: Heading to CBC? Kick things off the day before at Brewbound's meetup at Love City Brewing in Philly, Sunday, April 19th from 5 to 7 p.m. Connect with beer industry leaders, grab a drink, and catch up with the Brewbound team. It's free to attend and walking distance from the convention center. Head to Brewbound.com slash lovecity.rsvp. And don't forget to catch the Brewbound team at booth 956 during CBC. Hello and welcome to the Brewbound Podcast. I'm Justin Kendall. I'm Jessica Infante.

[00:00:45] Zoe Licata: And I'm Zoe Licata.

[00:00:46] Justin Kendall: And we have a special guest joining us. We have Ferron Salniker, the editor for Spirits at BedNet. Thanks for being here, Farron.

[00:00:54] Sam Hendler: Hi, thanks for having me.

[00:00:56] Justin Kendall: So how are we all doing? Zoe, you're fresh from the day off. Jess, you're mourning not having a beach day. And Farron, you've been mired in lawsuits. Not your own.

[00:01:08] Sam Hendler: Not my own.

[00:01:10] Zoe Licata: but definitely mired. I mean, this is what happens when our team goes down for the count for a little bit. I need to take a beach day.

[00:01:18] Hendler Family: Well-deserved. There's been a lot going on in the beer world. Yeah, you've had a rough couple of weeks. Yeah, I'm going to need a beach day. Karen, you definitely need a beach day. Yeah, you do. And I mean, not work related, not to brag, but I've been awake since four a.m. and it's noon. So I too could use a beach day. I'm going to do mandatory beach days for everybody. Except for me. Justin, you should not go to the beach.

[00:01:45] Zoe Licata: Yeah, I don't think a beach day is as relaxing for you and your fair skin.

[00:01:49] Justin Kendall: No, it's mostly hiding from the sun, which is my enemy. We've got a lot to talk about this week. First, we need to plug Brewbound Live. It's taking place December 10th and 11th in Marina del Rey, California. We have information at brewboundlive.com, but we just added a speaker. I think this is going to be news to Zoe, slightly. We are going to be joined by Sam Hendler Family Hendler Family Brewing Company. We're gonna be talking about building platforms and what's going on there because we've seen that in New England specifically with Hendler and Mass Bay Brewing. We've seen it with Wilding Brands in Colorado and we've seen it with Left Hand as well. So lots of people are building families of brands Sam Hendler has done it, I would say, pretty well within the Massachusetts, New England area.

[00:02:40] Hendler Family: Yeah, I would definitely agree with that. But another thing that Handler has been doing that I think is quite interesting is there's like a mix of business models going on. You know, in some instances, there have been straight acquisitions like Wormtown and Night Shift, but they recently announced earlier this summer, a strategic sales and marketing partnership with Sloop. So two different ways of doing it, and they happen to be doing both of them. three different ways of doing it if you include their pretty extensive contract brewing services. So Sam is always a delight to talk to. Sam, I always appreciate interviewing because I feel like he always keeps it real. Yes. And he does not hold back. And I don't know, I just, I enjoy Sam as a person very much. So I'm excited to bring that not holding backness to the Brewbound Live stage in December.

[00:03:30] Justin Kendall: Couldn't agree more. Very excited Sam is joining us. You can get your tickets now at brewboundlive.com. So let's hop into the news of the week, then we're going to play Another Round or Tabbing Out, and then we're going to kick Farron out and we're going to come back and talk about more news. So we're going to format bust a little bit this week. We wanted to bring you in, Farron, because the big news of the last couple of weeks in Bev-Alk has been an attempt by Farm Credit Mid-America, a lender for Uncle Nearest, to get a receiver appointed to take over operations at Uncle Nearest after the whiskey brand failed to meet its financial obligations, allegedly, for more than a year, resulting in debts of more than $100 million. That's the quick recap of what's going on there. But last week there was a hearing and you wrote about what came out of that. So can you take us through a little bit about what came out of that hearing?

[00:04:32] Sam Hendler: Yeah, absolutely. And, you know, there's a lot of allegations. We don't know exactly what's true and we don't know every detail about what led to the lender filing this complaint or this motion. But we do know that both parties argued their sides. And Keith Weaver, who is the CEO's husband of Uncle Nearest and a co-founder of Uncle Nearest, he took the stand and he didn't deny that the company is $108 million in loans in default and that they are not going to be able to make an upcoming payment of $10 million. Their defense is really relying on what they claim to be a CFO, a former CFO who was terminated, who committed fraudulent activity and basically overestimated their barrel inventory by about 21 million. So a lot of their defense rests on the activity by this person that they were unaware of. When I say they, I mean the Weavers. And that, you know, they're having a cash flow problem and that they're still a fast-growing whiskey company. They claim to be the fastest-growing whiskey company in American history. Yeah, and that they just need time to essentially get it together. The lender, on the other hand, has alleged that Uncle Nearest has been unable to even show basic financial documents, that they're behind on payments, among a number of other allegations. So at the hearing, the judge basically said that they are putting a gag order on both parties, so we won't be able to hear more from Uncle Nearest or the lender. And that's in terms of talking to the press or being on social media. And then the judge is taking some time to review the case, said that they would be offering an order quickly. I don't know what that means in terms of the actual time frame. And that's what we know so far.

[00:06:41] Justin Kendall: What it means is daily visits to Pacer to see if that order is on there, I think.

[00:06:46] Sam Hendler: I didn't check this morning, actually, and I was like, oh, no, shoot, I haven't had time. The other thing that I should mention is that the judge also ordered to preserve the collateral in question, which is mostly whiskey barrels.

[00:06:59] Zoe Licata: Can you dive into more of what that collateral is that we're talking about? Because I know we've been mentioning whiskey barrels, but what exactly is being argued right now when it comes to those?

[00:07:09] Sam Hendler: Well, that's a good question. I think the question around inventory is a big one. So according to Uncle Nearest, the CFO, as I mentioned, made an overstated value of its inventory and borrowing base reports, which is basically their whiskey collateral. So we haven't really seen what is actually at stake. Essentially, like when a lender goes to get receivership, they are worried about their interests being at risk. And so there are a number of loans involved in this, including for the distillery itself, including a Martha's Vineyard home that was used as like a marketing home. And then, yeah, barrels of whiskey. What the value is in those is unclear.

[00:07:59] Hendler Family: Uncle Nearest is so not alone in having a lot of debt right now. That's just like across the industry and that's unfortunately super common. But I think there's a lot of different things about this story that have made it interesting to people, particularly like, like I know here in New England, like the Martha's Vineyard House really popped and broke through to like regular media. My only question was that I saw they bought it for $2.2 million and I would like to know how one can find such a quote unquote affordable house on the vineyard.

[00:08:26] Justin Kendall: And there's another report out there that's, I want to say a year or two old where some of the neighbors were upset about parties that were happening at that house. And they said it's a residential area and they were fighting permits that the Weavers were trying to get to throw parties at the house.

[00:08:46] Sam Hendler: Yeah, I think the house has been like the more salacious allegation that is getting quite a bit of attention. And I think the Weavers responded to that in their written defense by showing that the lender was aware of this house, that they had visited the house. That doesn't really have anything to do with the legality of what the lender is claiming. But Uncle Nearest, I think, was trying to show that the lender should have been paying more attention if this asset was so important to them.

[00:09:17] Justin Kendall: One of the arguments, too, that Keith Weaver made in court was that the appointment of a receiver would be, I think he said, catastrophic for the Uncle Nearest brand, which has really been led by Fawn Weaver. She's the face of the brand. She spoke at the Craft Brewers Conference a couple of years ago as the keynote speaker, and she was very out front as the, like I said, face of this brand.

[00:09:45] Sam Hendler: Absolutely. And I think we can see that in the defense. So yes, Keith Weaver argued that a receiver would be catastrophic for the brand, particularly because Fawn Weaver is the face of it. And so what happens when the face of a company is no longer involved? And I think part of that argument is because that's true. Fawn Weaver is like an amazing PR machine for Uncle Nearest and for herself. And another part of that is that, as I understand from talking to attorneys, Uncle Nearest doesn't have a really technical legal defense in this case. They are at default. They have, even in their forbearance documents, waived consent to fight a receiver in terms of certain assets. And so the legal defense is trying to paint a picture that I think hopefully will aid them in negotiating once a receiver and if a receiver is in place. to keep the weavers involved. So they're essentially trying to separate the weavers from the CFO and show that they did not commit fraud, it was him, they were victims of fraud, and they are so important to the brand that a receiver would not be able to get the company back on its feet without them helping to, or at least Vaughn, helping to sell the brand.

[00:11:14] Hendler Family: Do you know if there is any legal action that they've taken against this former CFO?

[00:11:18] Sam Hendler: I didn't see any legal action. I know he was terminated and there's a third party investigation into his actions.

[00:11:27] Hendler Family: That would probably strengthen any argument they had that it's not us, it's him.

[00:11:30] Sam Hendler: That's true, but the judge in the hearing didn't seem to really buy that this whole thing was the CFO's problem. The judge said that the CFO was essentially still within the Weaver's house and within the Weaver's responsibility. The lender has also argued that the CFO was terminated in 2024. I can't remember exactly when. And since then, the Weavers still haven't been able to provide basic financial documents. So something is not necessarily adding up if we're putting it all on the CFO.

[00:12:09] Hendler Family: Yeah, and receivership doesn't necessarily mean the death of a brand. You know, like we've seen this happen before in Bevallica, happened with Modern Times and a lot of other things happen with Modern Times, but I don't think you could pin a lot of what went down there on the receiver necessarily. You know, in that case, a receiver stepped in and steered that company through an auction and a sale, which then it was later kind of sold again. A lot of other things were wrong there, but you know, it's not totally uncharted territory.

[00:12:37] Sam Hendler: Right. And a receiver's job, as I understand, is to go in and assess the situation. And that is, from what I understand, why this lender is, to say it casually, freaking out. Because they haven't gotten documents that they need. They don't understand what's happening. Over at Uncle Nearest, as an attorney told me, once you stop communicating with your lender, That's when they get worried. And so, yeah, the goal of a receiver, at least initially, is to assess what's actually happening inside the business.

[00:13:11] Justin Kendall: Well, this is something that we'll be watching and waiting to hear how the judge's order comes out in this one. And I'm sure you'll be on top of this.

[00:13:21] Sam Hendler: I hope so. You have been.

[00:13:23] Justin Kendall: Get to pay, sir.

[00:13:24] Sam Hendler: Yeah. Yeah.

[00:13:27] Brewing Company: This episode is brought to you by the Craft Brewers Conference, where big ideas, bold beers, and brutally honest shop talk collide. Join thousands of industry pros leveling up their game. Don't miss it. Register now at CraftBrewersConference.com.

[00:13:47] Justin Kendall: All right, well, let's play a quick round of Another Round or Tabbing Out. And since we have you here, we'll have you jump in too, Farron. Over the last month, we've seen stories such as this business insider story calling spaghet the drink of the summer and a recessionary sign. A spaghet is cheap beer and Aperol and maybe some lemon juice mixed in. I think that one is optional. We've seen this with Miller High Life as the cheap beer in question. In fact, I want to say that Molson Coors has pushed this too and has done their own version that they've sold through their website. Anyway, I am not as in tune with a spaghetti. I've not seen this on menus before. It's not something I've looked for. Is this something that you all are seeing out there on bar menus? And if so, are you buying around to this? Are you Tabbing Out?

[00:14:45] Hendler Family: Do I need to go first as the person who has seen on a menu and ordered? Yeah. Yeah. I think it's almost exclusively Miller High Life, but I have had a spaghet. It was on the menu at the, I don't know, a new place opened up down the street from me a couple of years ago. It used to be our like beloved local dive bar, was like everything you would want from a dive bar. And now it is a trendy cocktails and upscale sandwiches place. And it's fine. We don't go there nearly as much as we did when it was the dive bar. And they had a spaghetti on their menu. I think it was last spring. I remember we went and sat on side of their patio like the first day that you could ostensibly do that. And it's fine. It's a fine drink. They've got high life on their menu. I just checked for five bucks a bottle, which in this economy is a steal. But I am not buying Another Round on this being the drink of the summer. I think this is being driven by internal forces at a company involved in the making of this cocktail. And I don't want to steal someone else's line because I didn't say this before we started recording, but they are trying to make fetch happen. And it's not going to happen.

[00:15:52] Zoe Licata: Nicole Korsakis Yeah. I have not seen it out on menus in the wild. I thought this was mostly just like an at-home hack, basically, like a cocktail thing where you take a sip of your Miller High Life and then you can pour some Aperol in the empty space. And there you go, you got a brand new drink. And everyone had a bunch of Aperol because Aperol spritzes were a thing a couple of years ago. What do you do with that extra aperol? Make a beer cocktail, I guess. So I'm going to tab out on ordering it out in the wild, just because that seems... If I'm going to get a cocktail, I'm going to get something that takes a little bit more effort, I think, than putting a spaghetti together. But it's not the cocktail of the summer. I have not seen a single person drinking one either. And I feel like you have to at least see one person to at least be in contention to be the drink of the summer.

[00:16:40] Sam Hendler: I agree. And I will say that I live in LA and LA loves a trend. And when Aperol spritzes were popping, I walked into a bar in Hollywood once and I swear every single person had an Aperol spritz. Like it was just orange hued glasses all around. I have not seen that with this drink. I also think it's probably an at-home hack. It reminds me of when I moved to Chile when I was 16 and I had grown up drinking like old English and like cheap malt liquor. And the kids there were combining Fanta with beer. So also an orange flavored thing and beer. And it was just like, yeah, how you make your beer a little more fancy.

[00:17:27] Hendler Family: Farron, thank God you're here. Just class it up, this whole, this whole organization.

[00:17:35] Zoe Licata: Now I kind of want to try mixing a Fanta with a beer and see what it tastes like.

[00:17:40] Sam Hendler: It ain't bad. I'm going to be real. I mean, it beats Old English. So that was my standard at the time.

[00:17:48] Hendler Family: Isn't like red wine and Coke a thing?

[00:17:51] Zoe Licata: That is also a thing. I think it was like Another Round of those at home hacks of like making cheap red wine taste better. Yeah.

[00:18:01] Hendler Family: I mean, look, I got nothing against the spaghetti. I have questions about its name as I was conversing with Dave Infante, who found that Business Insider piece, Justin, that you referenced a couple of weeks ago and sent it to me for discussion. And so you know how like in fake Italian American, Italian speak words, lose their last syllable and sometimes their whole letters get changed, but like calamari. In my family, we would call that galamad. Is that what's up here with the spaghetti? Because we wouldn't say that. We would say spaghetti. I'm confused. And also you would think this is like a decades old thing, but it's not really. It like barely predates COVID. So weird to me that now we're like, this is the drink of the summer. It's like, you're not even like a decade old. You can't be retro.

[00:18:50] Zoe Licata: It's not allowed. Yeah, I would like to know the name Origins. It's also not helping them that if you just do a quick Google search of spaghet, it is also the name of a meme-y horror game. It's creepy and it's a little perverse, but it's basically just like keeping a plate of spaghetti hot, and if you don't, then some monsters will come after you. But it's called Spaghet. People who want this to be the drink of the summer are also going to have to compete in the Google searches with Spaghet, the horror game. My God. The internet man.

[00:19:28] Justin Kendall: Well, if this is taking off at home, it's not showing up in Miller High Life sales because the brand's dollars are down around 5% and volume is down 7.7% year-to-date through mid-July. Those trends are even worse in the last four weeks, down 7% in dollars, a little more than 7%, and down around 8.7% it looks like in volume. So not taking off at home if this is accurate. So, I mean, we are talking about this from an on-premise perspective, but if you're doing it at home, it's not showing up in the numbers yet. They fought the good fight.

[00:20:12] Zoe Licata: Yeah. You did say this could be a recession indicator. So maybe those trends will turn just on nothing to do with the spaghet and just the current times, people turning to a Miller High life.

[00:20:25] Justin Kendall: Well, Farron, thanks for joining us and playing Another Round or Tabbing Out and guiding us through the Uncle Nearest receivership lawsuit.

[00:20:35] Sam Hendler: Thanks for having me, guys. It's a great balance of hard and ridiculous news.

[00:20:40] Hendler Family: And you say the word. If you need boots on Another Round on Martha's Vineyard, Zoe and I will go check out the Influencer House anytime.

[00:20:48] Ferron Salniker: I'll let you know when it gets to that point. Thanks, Farron.

[00:20:52] Justin Kendall: Thanks, Farron.

[00:20:52] Ferron Salniker: Thanks, guys.

[00:20:55] Justin Kendall: All right, let's get back into the news. And last week was Ball's latest earnings call. And the news sort of coming out of that that was interesting to me was that Daniel Fisher, the CEO of the company, said that they are cutting back on beer, less beer in their mix. And their goal is to go from around 40% to 30%. of their mix being beer. And this is on the heels of several earnings calls, which we've reported on, where Dan Fisher has basically begged beer companies to do promotions to lower price and push volume. And instead, now the company seems to be, as Jess put it earlier, taking their ball and going home, and they are going home to carbonated soft drinks and energy drinks.

[00:21:46] Hendler Family: I was going to say you have artfully stepped around not using my bad joke because you're a professional, but you did it.

[00:21:52] Justin Kendall: I did it anyway. I couldn't resist.

[00:21:55] Hendler Family: They are taking their proverbial ball and going home, you know, like, and Dan's been complaining about beer sales for years now. So this shouldn't really be a surprise. But I don't know, I was recapping all of this to my husband the other day, who is not David Fonte and does not work as a beverage journalist. And he was like, can they even do that? Saying how I was like, yeah, you know, like Ball has been complaining that beer prices are too high. So while beer companies are probably feeling somewhat okay by the increase in dollar sales, Ball is being heard on the back end because the volume's not there. And he is just generally flummoxed by capitalism all the time. So he didn't really appreciate that. And they're not giving up on beer completely. Like you said, Justin, they were going to go from like 40% to 30%. But when you think about 10% in terms of the largest can manufacturer in the world, we're talking about a lot of cans.

[00:22:47] Zoe Licata: Yeah. I'm just curious about what they were factoring in to be like, yeah, if you drop price, that's going to basically solve our problems. Like, I don't think even if beer did make significant price cuts, it was going to be enough of an impact on volume would ball would be like, all right, we'll stick to this same 40% mix. Beer still has a lot of problems that go beyond price.

[00:23:12] Hendler Family: Exactly. Beer's got a lot of problems at play here. And this time last year, I mean, it couldn't have been this time last year because we were still waiting for it to play out, but we saw it in the numbers over this winter. The numbers of last summer when beer volumes took a turn was also when beer inflation happened faster than any other category across beverage alcohol. So beer clearly wasn't helping itself. but just adjusting for price is not going to solve some of the broader problems at play here.

[00:23:40] Zoe Licata: Yeah. And the other factor here is the other beverages that are doing really well, like energy drinks. There are brands there that are having such big growth right now. I feel like even if beer was just kind of neutral, Bob would probably be putting more priority on those other beverages.

[00:23:58] Hendler Family: This is one of those things where it's like, I don't know, did you really have to say this out loud?

[00:24:03] Justin Kendall: They also talked about tariffs and one of their customers is Constellation Brands and clearly Constellation is feeling that. And one of the things that Fisher said was, quote, they're certainly challenged and they're one of our partners. And so we're challenged along with them. And although he didn't name them, I think it's pretty easy to assume or point to constellation given that he also mentioned quote it was choppy in North America but largely because we weren't able to use Monterey to its full extent in Mexico because tariffs and then just acceleration in a couple of areas and blah blah blah anyway draw your own conclusions hmm easily Well, I think we can move on to some other news, and this is another bulk customer, Boston Beer Company, but we're gonna talk about their on-premise locations, because a truly taproom, or do they even call it a taproom?

[00:25:06] Zoe Licata: Truly L.A., yeah. I think they call it a tap room. But yes, truly L.A.

[00:25:10] Justin Kendall: Tap room, tasting room. And experience. Salseria.

[00:25:13] Hendler Family: Yeah. Salseria. Said somebody else has definitely used that. Not them, though.

[00:25:19] Justin Kendall: Yeah, somebody has definitely used that, but...

[00:25:21] Zoe Licata: I mean, Zoe, you've been there. I have not been to Trulia. Lawrence went to Trulia LA on his own accord and enjoyed himself.

[00:25:30] Hendler Family: I was going to say, I know I've seen firsthand taken pictures from Trulia LA that were connected to you, but...

[00:25:35] Zoe Licata: I think it was one of his excursions while we were busy doing Brute Bound Live.

[00:25:39] Hendler Family: While we were a little busy. Yeah. I hope he had fun.

[00:25:42] Zoe Licata: Yeah. So I do know someone who has gone there and had a solid time, but that will not be happening anymore.

[00:25:49] Hendler Family: No, we should also explain what is happening. Zoe, you wrote the bulk of this story. Tell the people what's going on in Los Angeles.

[00:25:56] Zoe Licata: Yeah. So Boston Beer announced internally and then in turn externally last week that they are going to wind down operations at Truly LA. Their lease is going to be up. So they're going to kind of by the end of the year be more in just a Friday, Saturday schedule and then eventually move any staff there to their Angel City taproom. Truly LA will close completely. And then Angel City itself is kind of winding down operations and will eventually, if nothing else changes, close by the end of their lease, which is early 2026. The plan is to potentially sell Angel City to somebody else so people can continue to enjoy that brand and that brand can live on, but they don't have an actual concrete plan of that right now. That's just their hope and intent is to somehow sell off Angel City. And Jim Cook in his letter to employees was saying, you know, this is something that we just had to do with, it was a mix of rent increases and just those locations were not doing really well, truly LAs. operational costs and performance were not doing good. So it was just, it was a whole mix of things. They finally decided like, this is not going to be worth it to, you know, renew a lease and continue to operate both of these facilities.

[00:27:13] Hendler Family: I mean, this is the same playbook we've seen them use with a couple other closings across their local brands portfolio, which started with the closing of Concrete Beach, which was a brewery they opened in Miami. years ago, and then Concrete Beach itself as a taproom was converted into a dogfish head pop-up, which lasted a couple years, and then that closed. And then they tried to keep the Concrete Beach flagship Havana Lager in the market in South Florida, but that eventually went away. Fast forward to I think last year was when they were facing a steep rent hike in Coney Island, where they closed that tap room. But they do still sell Coney Island beers in the New York metro, and I hear they do really well. So it's interesting to me that they're willing to keep those brands going, but not Angel City. It's interesting because I mean, Angel City is the same situation as Coney Island. It was an existing brand that Boston Beer bought back when they had the alchemy and science incubator run by Alan Newman. And they had a few of these across the country, biggest ones we've just discussed. And I know the Angel City Taproom is a cool spot I had visited. I have a picture of me against the Angel Wings mural, which I'm sure you have seen replicated many other places. And I'm sure it was not an original idea, but it was the whole thing that we were doing in the end of the last decade.

[00:28:36] Zoe Licata: To answer the taproom question, they did call it a taproom for Truly LA, according to the announcement of its opening. It was a quote, fully immersive seltzer taproom. Yeah, but they, yeah, they really, they want to sell off the Angel City's brands and just completely kind of cut off ties with it. I mean, we saw it, it was a few quarters ago now. So last year they officially wrote down Angel City to a value of nothing along with Coney Island, and that was the same time they announced that really big dogfish head impairment charge. So the writing was kind of on the wall that that brand really was not going to continue for much longer, but it could. It potentially could if somebody would like to pick it up and, you know, mend its wings and things.

[00:29:25] Justin Kendall: Makes negotiations really interesting when you've already written down the value of the brand to zero. Yeah, that's tough. Cool spot, good beers. If you're interested in Angel City, Godspeed. Godspeed and give Jim a call.

[00:29:40] Hendler Family: Yes, future CEO. Incoming.

[00:29:43] Justin Kendall: Later this week, right?

[00:29:45] Hendler Family: Yeah.

[00:29:47] Justin Kendall: Wow. This industry comes at you fast.

[00:29:49] Zoe Licata: Yeah.

[00:29:50] Justin Kendall: Thanks for tuning in. Thanks to Jess and Zoe for co-hosting. Thanks to Farron for jumping on with us. Thanks to our AV team for putting this together. And thanks to all of you for listening. We'll be back next week.