THE GIST
In a surprise announcement late Friday, The Saint Louis Brewery—the parent company that produces the Schlafly line of beers—issued a public apology to fellow St. Louis business 4 Hands Brewing. The apology was released in a press release that also revealed a former Schlafly executive made secretive attempts to sabotage the reputation of 4 Hands.
While not confirmed as the specific source of a print newsletter called Brew IQ in the Lou, James Pendegraft resigned as CEO on Wednesday, two days before the apology was issued. In a statement to the St. Louis Post-Dispatch, the company confirmed Pendegraft’s departure, but offered no additional information. In its public apology, Saint Louis Brewery wrote that the executive responsible had resigned, but didn’t name the person.
The anonymous newsletter was mailed to an unknown number of bars and restaurants and also included “deceptive online postings and a phone survey to local bars and restaurants in the first half of the year,” according to the statement.
In a column that has been identified by media outlets as specifically meant to call out 4 Hands, an anonymous Brew IQ writer tries to connect the brewery to the Me Too movement in a derogatory way, claiming with no evidence that “a certain large brewery’s dilemma of how to reposition itself continues to grow” because “[n]aming your brewery after a sex act provided at a massage parlor no longer feels as good.” It also claims that a beer made by the then-mystery company, now recognized as 4 Hands, was named “after the lube needed for such a service.”
“Leave glamorizing a pimp's wad of dollars to The Deuce,” the column reads, referencing the hit HBO series. “Maybe it was all that gin? The ladies are becoming woke and are starting to ask questions. We'd like to give them a hand, but think the four are proving to be too many.”
These kinds of innuendos are not new to the beer industry, but still present an unfortunate side that is continuously being addressed by the Brewers Association and private companies alike.
“We were embarrassed to learn of these actions and sincerely apologize to 4 Hands Brewing Company,” Tom Schlafly, chairman of Saint Louis Brewery, said in a statement. “Such actions are inconsistent with the core values on which we were founded and which have defined Schlafly for 27 years. The craft brewing industry in St. Louis was built by a closely-knit group of breweries that mutually respect one another. There’s no question that 4 Hands has earned its reputation for community involvement, civic pride, corporate responsibility, and inclusiveness.”
In a response that was also included in the same press release, 4 Hands president and co-owner Kevin Lemp said that he was “grateful to have this behind us” and that he accepted the apology.
“We have always run our business with an emphasis on family; even the 4 Hands name and trademark design are a reference to the intertwining of my hand with those of my wife and two young boys,” Lemp says in the remarks. “Given our City Wide charitable program, community engagement, and focus on inclusiveness, the false information that was circulated about us was all the more hurtful, inflammatory and confusing.”
An attempt to contact the publisher of Brew IQ via an email listed in its newsletter was unsuccessful.
WHY IT MATTERS
The direct effort of one Brewers Association designated “small and independent” craft brewery to torpedo the business of another competitor in its shared market is an unexpected salvo in an unassumed war. The idea that the beer industry is “99% asshole free” may find truth in the countless examples of congeniality and relationships between companies, but in this case, it looks like at least one former executive of Schlafly represents an unpleasant 1%.
In addition to the column that seems to specifically call out 4 Hands, the Brew IQ newsletter has subtle references that also push a broader narrative that could be seen as benefiting Schlafly. In one portion titled “Saturation” that is meant to have polled St. Louis bartenders, nearly all comments continually reference too many breweries existing in the market and that "[t]here's a big difference between a brewer and a brewpub" depending on whether a quality control lab exists.
The newsletter also writes a column titled "Pale Ale - A Profile in Style," which shares insight into the English version of the style, which is called "the gateway beer for so many into the world of craft beers." Schlafly, perhaps unsurprisingly, sells their Pale Ale as a "traditional English-style Pale Ale brewed with ingredients from the Old Country to deliver an authentic, satisfying beer."
"In St. Louis, there are a few breweries offering a version of what an English Pale Ale should be," the column reads. "No pub can be seriously respected that doesn't offer a classic English-style Pale Ale."
Lastly, in an effort to promote the “next edition” of Brew IQ, the newsletter asks “What's the deal with breweries naming themselves after feelings, body parts, numbers or nature?” It’s another potential callout to 4 Hands, which goes on to question whether “fanciful names” should be used for beers. Schlafly's lineup of beers, most notably, does not use names in lieu of labeling a brand by its beer style only.
So, why is this happening now? Things have not been good for Schlalfy, which had declines in barrel production of 13% in both 2016 and 2017, according to estimates by the Brewers Association. After reaching a high of 60,000 barrels three years ago, it was down to 45,000 last year. In fact, 2018 will be a third straight year of declines in IRI-tracked off-premise sales for the brewery. Through Nov. 25, Schlalfy had sold only 73% of the volume it moved in all of 2017.
4 Hands, meanwhile, has been a business on the rise, adding 11,000 BBLs of volume from 2015-2017, from 13,500 three years ago to 24,500 last year. Through Nov. 25, 4 Hands had easily surpassed 2017’s IRI sales in grocery, convenience, and other channels by almost 450 BBLs.
There’s also the threat to Schlafly that comes from 4 Hands’ focus on remaining hyper-local. According to Brewbound, 83% of the brewery’s volume is sold in Missouri, with about 87% of that in-state volume bought in St. Louis. Lemp told the outlet last year that his hope was to grow St. Louis to be 90% of its in-state sales by 2022. An upgraded brewing system has pushed 4 Hands’ capacity to 32,000 BBLs, and the company has even expanded into spirits, launching 1220 Artisan Spirits to make seasonal gins, a liquor called out in the Brew IQ column that not-so-subtly references 4 Hands.
The alleged decision made by Pendegraft to try and discredit a main competitor oddly runs parallel to a similar situation from 22 years ago, when another St. Louis brewery worked to elbow a company out of the way. In that case, it was a 1996 segment of NBC's Dateline, where reporter Chris Hansen told a story of how Jim Koch and his Boston Beer Co. weren't actually making beer at a brewery in Boston, but actually contracted production to other locations in Pennsylvania and New York. Writer and historian Tom Acitelli notes that the segment "painted Anheuser-Busch as an aggrieved party," with one AB exec decrying the idea of "honesty and truth in labeling."
These two instances that are two decades apart are a longstanding reminder that the beer business is, in fact, a business. Moreover, it’s one where emotions and expectations can create an awkward reality that counters a prevalent myth of unabashed camaraderie and appreciation for one another.
“This is awful,” Michael Sweeney, operations manager at St. Louis’ 2nd Shift Brewing, wrote on his personal Facebook page in November when rumors of Pendegraft’s efforts began circulating locally. He was among many St. Louis brewing professionals who took to social media at the time to cry foul and discuss Pendegraft as the likely source of the issue.
“We don't all have to like each other,” he continued, “but we also don't need to spend money to spread complete bullshit and baseless rumors.”
—Bryan Roth