Next on the Probound Podcast, know your rights when your distributor sells, consolidates, or leaves California. (upbeat music) Welcome to the Probound Podcast. I'm Justin Kendall. - And I'm Zoe Lakata. - And Jess is out this week on vacation, so it's just me and you Zoe. It's the Justin and Zoe show. But once again this week, Jess will be appearing in the interview portion of this week. - How exciting. - Yes. Our featured interview will be with the Bevalk Regoatory practice team at law firm, Aaron Foxhiff, partner Nicole Schusterck, and senior associate Isabel Cunningham will be joining us. You may have heard them in previous conversations that we've had on legal news and tapping into their legal expertise. Stay tuned for that, but we're really gonna dial into distributor consolidation as well as how intoxicating hemp products are coming to market. We got a few plugs this week. We got a plug brew bound insider. All of these stories that we're talking about, you can go deeper on with our insider product, become a subscriber today. We've got a job board too. I know a lot of folks out there are looking for jobs, and we run this job board. We've done it for several years, and there are a lot of great jobs on there. If you're looking for work, give it a look. And finally, we got a plug brew bound live, which is coming up December 9th and 10th, which I say is coming up. And it is, I mean, it's what, nine months away, 10 months? - Yeah, still worth plugging because you know, you can usually get a discount if you sign up early. So anybody who came just a couple of months ago, if you really enjoyed your time, highly recommends getting your tickets for that now. Also, it's a reminder that we start planning this super early. So if you are somebody who wanted to, you know, you had a pitch for someone you wanted to see speak. If you are someone who wants to speak, if you have a topic you think would be really interesting for us to cover, let us know because that stuff gets planned way in advance. So the earlier the better. - Glad you mentioned that because that is something that we are fielding at the moment. So hit us up,
[email protected]. It would probably be the easiest way to get to us right now. We've got a lot of news to cover. So let's just dive in and there is a new beverage platform that has formed in Oregon. - Yes, the latest craft beverage platform, I won't say just entirely craft beer, but the latest beverage platform is the Oregon beverage collective. So this is the combination of crux fermentation project, cascade likes brewing, silver moon brewing, good life brewing and tumolo cider company, apologies if I mispronounced that, but they're all kind of bend area based companies that have formed this collective. It is a mix of ownership, so they're not all merging into a modern company. Silver moon, good life and tumolo are all still independently owned. Cascade lakes and crux fermentation are now owned by the same people but are still operating as separate companies. So along with this collective announcement, the news was shared that the Ryan family, which are also the folks that own cascade lakes have now acquired crux fermentation from their founders. So a lot of news going on there, all the actual nitty gritty details are in our coverage. We're also going to be speaking with Andy Ryan. He's one of the owners of crux fermentation and cascade lakes and he is now the president of this Oregon beverage collective. He's going to be joined the podcast shortly. So look out for that episode, which will have a lot more details on how this came to be. - I have been to three of these five companies. - That's very good. - Yeah, that's not too bad. Crux, beautiful space, silver moon, very cool space and the cascade lakes at the time, they owned a lodge. So you would go into basically a ski lodge and hang out and drink beer and that was kind of fun. - Yeah. We estimate the total production for all these folks is going to be just over 40,000 barrels. That's just based on the Burr's Association's 2024 data, which of course we know isn't updated for the past year and it doesn't include cider or any other beyond beer data. So that number may be slightly off, but that's our current estimate. And the majority of that production is going to be moving to crux fermentation's facility. So yeah, wait for further details on what that means, how that transition is happening, how teams are affected, all that stuff. - Yeah, and this collective trend continues. You've listed a handful and that's not even all of them that we've seen so far. - Yeah, trying to dig and see what ones we've covered and I definitely missed a bunch, but you know, we've had handler family brewing, wilding brands, barrel one collective, great frontier collective, finicity beverages, most of those are very regional based platforms. They're sticking to one state or even smaller and this one again is basically just in the bend area. The Oregon beverage collective, it's been evaluated that this wasn't because necessarily any of these beverages were in a terrible place and were super struggling, this just made the most sense for the greatest opportunities to grow these brands. So there's always different reasons for these platforms coming together and we've seen different results. So it's gonna continue to be a trend that we're gonna have to watch and see. - Well, congratulations to Larry and Paul too on their exit from Crocs after what, 13 years. - Yeah, long time. - Well, let's talk about shipment data, oh boy. So, you know, how I like to spend a Friday night, I like to dive into domestic tax paid shipments. That's actually what I did because I'm a psychopath and I was just curious, I was like, how far can I go back if I dig into the BID data? And I know domestic tax pates are always volatile because they're always getting updated. So I can look at an old press release and it'll be outdated, of course, but looking at 2025 and the numbers just hit last Friday, this was a historically bad year for US beer shipments which is something I feel like I've written a few times in these like year in recaps of shipments. For 2025 shipments topped 139 million barrels that was down from 147.76 million barrels in 2024, there's still a chance that these numbers will be revised but when you go month to month, every month in the red. And then when I say it's a historically bad year, this was a new low total for barrel shipped in the last 14 years. I think we've shed around 30 million barrels since 2021 and if you go back to 2012, it's 41 million barrels total across all those years. And this is just as far back as the BIs domestic tax paid data goes. So going back to 2012 when Lester Jones was still working there. Yeah, the reason why you've kind of had to write this similar headline a couple times is because it's kind of been steadily declining almost every year for a good number of years. So that's why we're kind of at a new low for multiple years in a row, but this one was extra low. And this is looking at that monthly data really, really points that out where usually you see at least a couple months where shipment growth happened and that did not happen this year. And even over the course of reporting on these monthly numbers over the last year, there were a couple months that seemed at first like they were going to be up. I feel like March was one of those and maybe sometime around the summer, but as more data comes in and these continue to be updated, it ended up everything was down year over year. In the States, every state in the red as well. And I laugh only because of the absurdity of all 50 states being down as well. And when the BIs reports to on total supply, that was also down 5.6%. So that encompasses state level data as well as imports. Yeah, we thought that imports was going to be like the big drag with everything they went on last year, but having it be every single state as well. We are hearing positive stories of folks, you know, expanding into states and positive things happening in other states, but there's apparently some things that no one is immune to. And if you want to put a positive spin on this, we got some easy comps here in 2026. That will be fun for all of us to track. And then let's talk about something also not so fun. And that's a brood dog. Brood dog is up for sale. That was reported over the weekend by Sky News. And they have tapped a restructuring from, called Alex Partners to gauge interest from prospective buyers on quote unquote, a quickfire deadline for indicative offers, meaning they're trying to sell this off very quickly. Yeah, we'll see what happens, but it's another, there've been rumors of things happening at brood dog for a couple of months now. And this was kind of the first real concrete thing saying, oh, no, they are really making some significant changes. Also rumors that some of their ownership may be returning,
but all- - One in particular? - Yes, yeah. One in particular, so you can read all the details on that in our coverage, but it is still yet to be confirmed by folks, but it seems pretty much that they are going to be separating some things. - A decade of hops, hustle and community. Join us on March the 6th for the 10th anniversary New England Craft Brew Summit in Portland, Maine. Get inspired, sharpen your skills, and connect with fellow brewers, while hearing from Russian River Brewing's Natalie Chalurzo. Save your spot at mainbrewersgild.org. - Let's move on and really quickly talk about constellation brands. Apparently they've been plotting a succession plan for several years, they said, but came to news, I think to a lot of folks, including us and analysts out there, and if you were to tell me that they were gonna pick Nicholas Fink as the successor to Bill Nulens, I would have been like, who? And I think a lot of analysts also had that reaction. - Yeah, so late last Thursday, constellation announced that Bill Nulens will be resigning, and as of mid-April, the CEO's spot will be going to Nicholas Fink. So he is a current board member for constellation brands. Otherwise, not super into this beer world. He is the CEO of Fortune Brands, Home and Security. But what is particularly interesting and what analysts pointed out is that he is super familiar with M&A. And so this could potentially signal some things to come for constellation brands. What really, I think is significant is this is just another CEO change for a major international beer company. We saw Mulsing Corps recently made there switch a much different process. They kind of announced a long time ago that they were looking for a new CEO and that Gavin Hattersley would be retiring at the end of 2025. Then it took a while and they finally announced that their chief strategy officer, I will go ill, would be taking the spot. So he's had that and has been a very outspoken new leader for that company. And then also just a month ago, we heard that Hinington CEO and board chairman Dolph Van and Brink would be stepping away after six years. So there's been a lot of changes. That's just the CEO changes Boston beer. That's another one we recently saw with Jim Cook taking that spot again. And let's see if the CMO is departing from Boston beer as well. Yeah, so that's just the CEO stuff. And then there's been lots of other C-suite changes across various companies like Las Vegas, a bunch at Hinington. So there's tons of movement happening when it comes to beer leadership. One of the things you brought up was M&A. And I think that constellation has a very checkered history of deal making, whether it's ballast point or canopy growth. And I think that Nicholas has probably been around for most of that or at least has seen the fallout for most of that. So I wonder how gun shy he may be about deal making there. Who you will see. We will see. And lastly, we're going to end and talk a little bit about Hinington. And they plan to lay off around 6,000 people over the next two years. And a lot of it's due to AI apparently. Yeah, I was surprised to see this was at least within the beer world. This was the first thing I've seen where a company has straight up said that they are eliminating jobs because of AI efficiencies or changes to their systems due to AI, which is a bold thing to stay. But it's the truth. They have been very outspoken about their plans to be a more efficient company, whether that is being more eco-friendly in those sort of efficiencies or just bottom line more efficient. And this is one of those steps. So those job cuts will be happening sporadically over the next couple of years, affecting a couple of different areas. But AI job replacement is a real thing that is happening right now. Dave and Fontzi over at Fingers runs the buzz words of the week. And Dolf over at Hinington is definitely in the running there after a quote that says something to the effect of. And this is the first operationalization of that debt commitment. And if you can tell me what that means, I appreciate it. That's a little over my head. They have to have a class for speak like that, right? I think it's a requirement to be in any sort of company leadership role as you have to learn a few corporate non-word vocab. Well, before we get operationalized, let's get to this week's featured interview with Nicole Schusterck and Isabelle Cunningham from Aaron Foxh. What do brewers and Bev Alk brand leaders need to know about the legal landscape now that we're in 2026 here to discuss some of the latest additions to the Bev Alk regulatory practice team at law firm, Aaron Foxh. We have partner Nicole Schusterck. Hi, Nicole. How you doing? Hi, Jess. Hi, Justin. Great to be here. So glad to have you. And senior associate Isabelle Cunningham, Izzy. How are you? I'm good. How are you guys? Happy to be here. We're so glad you guys are here. As always, before we start the conversation, just a quick note that Nicole and Izzy are lawyers and they are sharing wisdom and insight, but this does not constitute legal advice. Consult your own legal team for any pressing matters. If you don't have a legal team, why not these two? Right? [LAUGHTER] Well, Nicole and Izzy, you guys are no strangers to the Brewerbound podcast. We are thrilled to have you. The bulk of our conversation today is going to center in middle-tier consolidation, which shows absolutely no signs of slowing down. So coming up at this from the mindset of a supplier, we really are hearing all sorts of different situations happening out there. But let's say you're a supplier, and you're reading a new story-- oh, I don't know-- on Brewerbound.com-- that one of your wholesalers has just been acquired. What are some of the first steps a savvy supplier would take? It's a great question, Justin. I think it's something that most suppliers obviously will encounter at some point, but probably especially in 2026. I think given the consolidation we've seen in the back half of 2025, and just the environment for a lot of wholesalers and given where the industry is, we're expecting to see some additional consolidation in the market across the whole. So it's a pretty timely question. The first thing to do is take a step back and really understand what your rights are as it relates to the proposed transaction. When you're reviewing what your rights are, you have to look at it from two main perspectives. First is from a franchise perspective, because we're in beer world. There are franchise laws, and the vast majority of states almost all states have some form of franchise rules. And that dictates surprisingly in some wholesaler transactions, what your rights are related to approving that transaction, or disproving that transaction, or what you can do with your brands in that situation. So the first thing to do is do a basic search or have an understanding from a franchise perspective what your options are. The second is to turn to your distribution agreement if you have it. And to understand if in the lack of franchise rules dictating what you can and can't do, the next kind of stop is to obviously turn to that contract and understand what is in your contract as it relates to this contemplated transaction. And as a first step, it's always kind of a good idea to have a basis of what your legal options are. And then in the meantime, while you're figuring all of that out, we highly recommend sending your wholesaler a basic, hey, we got your notification. Here's some information that would be really helpful to us to evaluate what the market looks like in this for our brands, right? What does your market plan post transaction? What does this transaction look like? What's the closing date? Kind of simple information. And it doesn't have to be overly formal. It doesn't have to be some legal instrument. But just kind of a, hey, what's up with this transaction? What information do you need to actually really do diligence and really understand the market? And what wholesaler would be best for your brands? And then you can work backwards from there. But is it what did I guess? I mean, the one thing I would flag is that if you're reading about a transaction in Sabrebound, for example, for the first time, and you've not heard about it from your wholesaler directly, that's something to think about. That's the time to usually turn to the contract and see what were their obligations to notify us about this transaction. Were they supposed to tell us a certain amount of time in advance? If you find out that it's closed and you didn't know, then the wheel should be turning. And you should definitely be reaching out to your lawyer to figure out what that means for you and your brand, what that means under your contract, what that means under franchise law. So typically, most wholesalers are pretty adept to notifying their suppliers and something like this is going on, but we have had clients coming to us saying, hey, I saw this in Newt. It's closing in a week. What do I do? And so that's something that we're helping our supplier clients work through. Yeah. Isri and I used to always say,
that when you're notified about transaction, you should look at that as an opportunity. It's an opportunity to evaluate the market. It's an opportunity to maybe get a new contract in place. It's an opportunity to maybe get some additional market commitments. You have leverage and there's not a lot of time in a supplier wholesale relationship where you have leverage. And this is one of the few times that you do. So you want to make sure that you're thinking about it early. Is he pointed out with a notice provision and make sure you have the adequate time to really understand what the options are and what's best for your brand. But to also realize that even if you ultimately approve the transaction, because you might have some approval rights, via Frances Law or contracts, you might be able to have some leverage and get yourself in your brand position in a better place than it was previously. So you have to think about these as opportunities, right? An opportunity to evaluate and an opportunity to make sure that you're with the best wholesaler and an opportunity to make sure that they're contributing in your aligned on what the commitments are from a wholesaler. All of that is great stuff to think about you guys. But what can you do to protect your leverage in these situations? That initial first step is huge. It's basically notifying the wholesaler that you're not just sort of going to let the slide through. It's that initial notice that says, "Hey, we know about this transaction, but we're really reviewing it. We're going to do our diligence. We're going to review both how our brands are going to move, what that means from a even warehouse perspective, what it means contractually, what it means in the market, just basically laying the groundwork for the fact that you are going to be really digging into the transaction and not just letting your brand freely move from one wholesaler to another based on their own business considerations. They have decisions that they've made in the background that weren't right for their business about why your brand might be changing houses. But I think that first step of sending the notice, letting them know that you need information from them, our standard form letter essentially says, "We take these things seriously and we withhold our consent and tell you here from us otherwise that we have specifically provided it." So I think that's number one in maintaining your leverage is making it clear that you do have the ability to provide consent and not just sort of offering it up. That's something that they can take for granted, essentially. Setting precedent is really important and to like boil this down, I think, treating all wholesaler transactions in the exact same manner, is always recommended. Regardless of kind of even legal aspects, even if you don't know what legal ground you stand on, like you don't know what franchise law says, what your options are, you don't have a distribution agreement, maybe. You should still treat every transaction in kind of a similar manner, right? To ensure that you have leverage for this transaction, but also future transactions. Set a precedent, treat everyone exactly the same. Ask for the same information. Set a little bit of a cadence of how you treat these things and ensure that you're getting the information you actually need to make an informed decision. Don't just let this opportunity again, like kind of slip by. It's important because even if you don't utilize leverage that you might have from a legal perspective, you can again still utilize that leverage to maybe get some other things. And a seat at the table. If you don't have a manual business plan, like set scheduled annual business plan every year. And so some important elements, like you have the option again to have some asks. And it's important not to not just treat this and robotically just sign an approval right on the spot, go through the process, it's worth it. Because it sets you up not just for this transaction, but for kind of future transactions and the event, unfortunately, that you ever have to disprove one, right? You're going to have that's all going to come into play. And so you want to make sure that you kind of treat them with some uniformity. From a franchise perspective, your ability to withhold consent to a transaction is usually limited to a situation where you have pretty strong evidence to suggest that the both of you are taking on your brands is an equipped handle it. And the way that those restrictions are written is different in every state. There's some consistency thematically, but the specifics kind of very state-by-state, but building that concrete case by requesting all that information just as Nicole spelled out is really critical. So if you do all that diligence, that would be the type of situation where you may have a case to say, you know, this company, this business, these officer's directors owners aren't equipped. They don't have the skill set, they don't have the financing, whatever it might be. But to get to that place, you have to have done all that diligence. So you can't sort of sit around and wait and say, you know, oh, I have a preferable sailor, where my brand is going is not that, but having not done all of those sort of interim things and taking all those interim steps, you're going to have a really hard time proving that you meet the very high threshold to sort of withhold your consent for a transaction and to direct your brand where you want it to go, even under the clock, so forth. - So for suppliers who do withhold consent or who are cut by the merged entity or the acquiring distributor, what should they be thinking about as they figure out what's next? - So first and foremost, you have to have a home unless you withdraw from the market, right? And typically a brand doesn't want to withdraw from the market for a variety of reasons, but the obvious ones because you might have some mandates or you might, you know, you just don't want to pull out of a market that you've already spent some capital getting into and getting established. But, you know, in the event that you decide that you're not going to approve a transaction and or, you know, there's risk that the new acquiring wholesaler is and going to pick up your brands, you have to have a backup option. So go out into the market, know your options, what wholesalers cover that territory, who is willing to pick up brands and have the meetings. As soon as you notify, you get notification of this, whether it's from an article in Burbound or you actually get a formal notification, that should immediately make you reach out to wholesalers and understand who your options are because even if you don't want to approve a transaction, if your options are, you're with this wholesaler that you may not, you know, is not preferred or you have to withdraw from the market, right? You may make a different decision. So you just have to have kind of a backup wholesaler is first and foremost. And then when you have that, again, you should be asking similar questions to those other wholesalers or the other potential wholesalers that you're asking of the selling wholesaler and the by the potential buying wholesaler. What does my market plan look like? What does the brand plan, you know, as it pertains to my brands moving forward? These are questions that you should ask other wholesalers in the market. So you truly have the information at your fingertips to do the analysis that you need in order to really approve a transaction. So you have to reach out and understand your options. If you do have an option and you identify, we always call them preferred wholesalers, right? You're not going to, you know, A is selling to B and you want to go with C because they're your preferred wholesaler. There's many different steps you have to take, you know, into consideration to make that. First and foremost, what are your franchise rights? In many, many states, there's a threshold where you may have approval rights on the face, but you can't un reasonably withhold your consent to a transaction, which is a fancy legal way of saying that if the wholesaler that's buying your brand rights can perform kind of the basic functions of a wholesaler, you have to kind of approve and go with it unless you can prove that that wholesaler can't support your brands for whatever reason. And there's lots of other reasons why they, you know, wholesaler, it doesn't make sense, right? Maybe they have your biggest competitor brand, but you have to kind of know the market position again and kind of that specific market to be able to make those determinations. Rarely, does the state give you just like cart block ability to just disprove of transaction without any kind of basis? So you have to at least know a basis and to build a basis, you have to have some precedent information like about how your brands are performing in the market and kind of make sure that you quite frankly have evidence to not approve of a transaction. - You'd be surprised to learn how many times a transaction, a wholesaler transaction sort of results in a supplier changing wholesalers in a way that maybe the transaction didn't contemplate, but that it wasn't actually as a result of that supplier withholding consent. So typically what happens is that you identify the preferred wholesaler, or I say typically, ideally what happens is that you identify or prefer a wholesaler in the market and the wholesalers amongst themselves are able to work out something that results in that supplier's brands moving to the wholesaler that they want. So like Nicole just spelled out it, it's difficult from a legal perspective to withhold consent because of how high that threshold is in order to withhold it. So oftentimes what you're trying to facilitate is a transaction that's more favorable to your brand as opposed to having to say, hey no, I'm withholding my consent to this transaction and I'm actually gonna go with the C wholesaler. What actually you want to occur to limit your legal risk is to try to facilitate a sort of willing buyer willing seller arrangement between the parties that are more favorable to you so that you don't have to go into that and really difficult sometimes legal exercise of demonstrating it both contractually and under the law, you have the ability to prevent your brand from moving. When typically one brand is part of a much larger transaction and a much bigger portfolio of brands moving, sometimes a wholesaler of closing all together. So that's typically what we're like fighting for in the background when a supplier isn't so sure [BLANK_AUDIO]
want to go with the wholesaler that their prior wholesaler has designated their brands to move to. So let's say this wholesaler acquisition does happen, but you have been informed that your brand is not being considered to go along with the acquirer. One, does that situation ever happen in two? What recourse do you have here? It does. And unfortunately with the way franchise laws are set up, they are predominantly set up for protections on behalf of the wholesaler, right, against a supplier, not the other way around. So typically, unless your contract spells out otherwise, that you have some kind of notice provision, or there's some kind of requirement, or something that the wholesaler owes you, they can terminate you, usually without a penalty. And so it does end up kind of putting you in a situation where you could be stranded, right, without a wholesaler or without a partner. In that case, you don't have a lot of options. Unfortunately, what is important, if that does happen to your brands, right, is to ensure you are left with kind of the maximum of leverage if you ever have to reenter into a market. So I would ensure that you get a release, for example, from the selling brand, right, and a termination of that contract, and just send an actual formal termination of that contract, even if your brands are being transferred, right, to kind of cut ties and sever, and to ensure that somehow your brands are assigned to this new wholesaler. And then if you ever reenter the market down the road, that there's some kind of existing, you know, franchise protection there. So you have to be a little bit careful. You have to formalize that a little bit more than you, you would think you would have to in a situation like that. It's important to send them like a formal termination canceling your contract. And unfortunately, you know, if there isn't another wholesaler at least immediately that you can identify, it likely means you're going to have to withdraw from the market. And say the other thing too, you know, to the extent that you have the desire to stay in the market, and you are actively seeking, you know, other wholesalers to carry out your brand trying to to extract as much information out of your outgoing wholesalers you can, customer lists. Who are they talking to at these accounts that carry your product to the extent that you can get that information and hold on to it, and to be able to sort of pitch that to a wholesaler that, you know, maybe they're kind of lukewarm on your brand now, and it's not that, you know, there might be a kind of gap in the middle between when this transaction closes, and when you can get into a new wholesaler, having that data ready to go, so whatever you can extract from the wholesaler that might be dropping you, it's going to be to your benefit to be able to give you the best case possible to get into a new distributor's hands and give them at least some tools and say, you know, we're not starting from scratch here, here are all these contacts, here are all these connections. There are avenues for you to explore. We can make this lucrative in this market, you know, that kind of thing. Craft beer may be cooling and home brewing slowing. So why is Pinter exploding with growth? Stay tuned till the end of this episode for a bonus interview with Paul Benner, the USCEO of Pinter, who talks about how this all-in-one brewing system is turning living rooms into tap rooms and partnering with brands like Guinness and Laganitas to reinvent beer at home. Something we may not have considered recently was a wholesaler leaving a market or filing for bankruptcy or just outright going out of business. So how did the steps change in those scenarios? It's a great question. So typically that's, especially if there's a bankruptcy situation, right, or they're withdrawing from a market, that's obviously a four-cause termination. And why that's important is that typically a four-cause termination doesn't require you to pay any multiple for the brands. And so you kind of get your brands back for free, if you will. And it's important to kind of memorialize that Justin because in other situations, right, there's a value associated with your brands, right? Which in any other type of situation, kind of it affixed to the brands, right? And you'd have to pay that to release your brand rights. In a situation like bankruptcy or withdraw from the market from your wholesaler, the nice thing, if there is one, right, is that you get your brand rights back kind of for free. So the approach is slightly different, again, in that there, you know, typically you have a little bit more leverage. And what the outgoing wholesale likely do, right, is sell those brand rights before, you know, they leave a market. But, you know, bankruptcy again is usually under a franchise law and under your most distribution agreements. It's a four-cause termination event, which again means you get your brand rights for free, which gives you a little bit more flexibility because then another wholesaler can theoretically pick them up for free. But the process is still the same. You should still formalize it. In your conversation with your preferred wholesalers are a lot cleaner in that situation. You know, a lot of times whenever we're talking about a preferred wholesaler, you have to be very careful about how you're communicating with them, what you're sharing about your current contract and your current relationship. Obviously, if a wholesaler is going out of business or leaving a market, you can be much more robust in your conversations with the other distributors in a network, and you can be much more forthcoming about, you know, what you need, what you've had, all those sorts of things. So it's much more difficult in some ways and it can also be a little bit more streamlined in others. Let's shift gears and move over to intoxicating hemp, which is kind of certainly hot topic these days. It's in a bit of a holding pattern, there's Congress tries to figure it out. We've got some bills that would extend the deadline, you know, the current permissions are set to expire next November, but there's a bill in play that would push it out three years. There's also bills in existence that making their way through the pipeline that could potentially set up a regulatory framework. So lots of ins, outs, what have used, but what we're hearing from producers in the space is that they're not deterred and they are feeling very bullish on the future of intoxicating hemp. But what about brands that haven't launched yet? How much appetite for risk does one need to have in order to get off the sidelines in this burgeoning segment? Yeah, so I think we're seeing this a lot more and as things kind of play out, you know, it gives brands a little bit of a whiplash because it's, you know, when you think you're making some progress or you get some good news, it seems like, you know, you take one step forward and two steps back kind of situation, right? And so it can be really daunting to think about this, but I think what you have to be very mindful of, if you're especially an alcohol company, you're dabbling in the TFC space, it's being very mindful that things are going to be rocky. There's going to be states that change that are unexpected, and you have to be nimble. In order to be nimble, you have to think about this when you're structuring your company. And this is daunting. There's certain things from a corporate entity structure perspective that you need to be very aware of and need to do kind of in the exception of building out these brands to create some separateness, right, from your core brand to protect your core business, especially for brands that are, again, releasing this as, you know, part of the an overall portfolio, what we've seen from an enforcement perspective is state regulators for the most part have come down from an enforcement perspective a little bit harder on alcohol companies because they have a hook in them because there's licenses that are issued as it relates to their products, right? And so it's easier basically to have that as a leverage point than, you know, just some anonymous company. Now how to mitigate that is careful corporate structuring where, you know, there's some separateness between your core business and the hemp business. And that gives you both flexibility on lots of different fronts. It certainly mitigates your risk from regulatory standpoint. It helps in financing or raising funds for these separate entities. It helps in the event you have to pivot really quickly, right? And maybe spin that off or do something with it, right? It's already kind of separate and kind of lives apart from your core business. But that's the biggest piece of advice. If you're thinking about getting into this space and it seems really daunting and, you know, impossible, think about it almost as a separate business. The more separate it is, the less risky it is inherently from regulatory perspective. So that's the number one thing is be very mindful all the way down to your corporate structure, right? Be very, very mindful of of how you're setting this up. Are you seeing brands and distributors do that set up that sort of firewall to protect themselves? Yes, to a certain extent, all different levels. But yes, universally, that is kind of the recommendation is to kind of keep these at least now, especially because, you know, specifically because the the regulatory and start entity right now and then I'm not just on a federal level, right? We're I know we started this conversation focusing on federally how this is going to be treated, but on a state level too. States are moving back and forth on this issue constantly and there's, you know, times-apending legislation across the nation on how to treat these products and you want to create, you know, the key to all of this is to be as nimble as possible, to be able to turn on, turn off DTC, right? If you need to or pull out of a state and, you know, in order to do that, the number one recommendation again is to kind of create this, you know, the separateness between the two companies to keep it kind of again, separate them apart. And, and optically, the distributor tier has shown the least amount of separation. We haven't advised, obviously, for conflicts purposes. We don't advise a lot of distributors, but optically, I think the distribution tier
seems to be sort of the lines are blurred a little bit in terms of where their hint beverage distribution business ends and where their alcohol or non-alcohol beverage distribution businesses begin. So that's in the conversation that we've sort of had internally amongst ourselves saying, you know, we're doing all of this work to ensure this really clear separation from an operational and a financial perspective and a corporate perspective for supplier clients. And then all of it's flowing into the middle tier and it's all sort of hitting the warehouse floor and getting distributed out by the same folks. So, you know, I don't know that there's necessarily any rhyme or reason behind that necessarily, but I just think that it's sort of an interesting layer that we're doing a lot of work at the top tier to make sure that these things are except are entirely distinct and obviously can't say from an internal perspective how it's structured for distributors. And so, practically, it certainly seems like they're very comfortable sort of presenting it as a total portfolio and just sort of a new addition to what they already offer. We talked a lot about bevalks supplier contracts with their distributors, but when we have these types of contracts between intoxicating hemp producers and distributors, how are those contracts being structured? I think I've heard a little bit about where sometimes they act as the non-alcohol contracts and sometimes they've been treated as the bevalk beer franchise protected contracts. So, obviously, it's in the wholesalers interest to kind of get to treat each see products more akin to beer because beer contracts usually have certain provisions of beer franchise kind of built into it, right? And that doesn't exist for THC beverages, at least in the vast majority of situations. So, we're seeing now that beer wholesalers are getting into the business, the contracts that we're seeing are more akin to beer, but that doesn't necessarily mean you have to go with that form of contract. You should be aware that you have a little bit more flexibility and there's certain specific things as it relates to THC that you need in your contract that will not be in the beer contract, right? Or the form contract. First and foremost, you need a carve out that if something changes in that state from a regulatory perspective, you can pull out and withdraw from the market without a penalty. So, if the state decides, you know, Texas has a total change of heart, right? And says, nope, it's illegal that you can pull out of Texas without penalty because it's a regulatory or legal change. That is a big provision that's not going to be inherently in distribution agreements, right? That's set up for alcohol because that's not going to be an issue. But it's kind of a unique thing that you have to be really mindful of with this agreement. Another classic thing is what, as he said before, how the product is actually marketed and treated and how it's sold in the state is inherently likely going to be different than alcohol. So, you have options. In many states, you can duel the product, right? You can give two wholesalers in the same territory where you can't with beer. So, understand your, again, understand what your options are and your leverage. You're not going to be able to get all of these things in every situation, right? Because you might just need to get your product in with the wholesaler and kind of, you know, you're at their mercy. But it's important to understand, you know, what your actual legal options are as it relates to the product in that particular state, because again, that gives you at least a little little leverage. If you're going to give on something, you want to get something. So, it's kind of one of those things where you should be pretty mindful. It shouldn't look exactly like your beer contract. It should have nuances and it should be, you know, the basis could be the same. But it's got to have special provisions as it relates to the product. I want to go back to something that Izzy mentioned and I should probably know this, but I don't and I realize that a lot of the way that these frameworks for THC beverages and other products have come to be your little bit outside the norm of what we have seen in Bevalk for decades and decades, but can THC infuse beverages, pay slotting fees. I would say it depends who's selling them and it really depends on the state. It depends on the state. It depends on who's distributing it. It depends on who the supplier is. It depends how the supplier structure their business. If they're selling the entity that's selling the THC beverage is a licensed alcohol supplier. And you're in a state that says your trade practice rules apply regardless of what you're selling and applies because you are a licensee. The answer will be no, it will probably be no. If you have an entirely separate business, if you are a supplier out there that only makes THC beverages, you don't touch alcohol at all. And you have a distributor or you're selling direct to retail arguably should be able to pay a slotting fee. So there are lots of wheels turning on this and folks thinking about it and whether you are a alcohol supplier that's dabbling in THC will really, really impact that conversation. And even if you arguably are allowed to, I think that would be a pretty, if we heard our client was ready to pay a slotting fee and they had a really lucrative alcohol business that was sort of the core driver and the revenue maker for them. We would be a little hesitant to say, yeah, green go low risk, but it's a very nuanced and a state by state analysis and something that I'm sure the big players are considering and thinking through. The reality is like slotting fees in that prohibition is only for alcohol, you know, water and every energy drink and every, you know, anything else on the market. Like that's like a commonplace that's built into budgets. And so it's so unique and how that's going to play out when states set up their regulations as it pertains these products is going to be really interesting, especially if you kind of make them available in non traditional alcohol like most alcohol retailers right are used to those rules. But if you're selling these products right in a bodega or something that doesn't sell alcohol traditionally like they're going to expect slotting fees and how that actually plays out is going to be really interesting and how regulators deal with that. You know, that's all still pretty far ahead it's it's much like is he mentioned with an a bar of our jazz right and how they fit in same issue and even how franchise law applies to those right to the wholesaler and the supplier as it as it relates to them right or does you know franchise protections go down to the actual product and the commodity that you're selling or the brand rights associated with it right to get even more complicated. It kind of is a it's an evolving thing that's going to be really interesting because it's really putting a strain on kind of the existing trade practice you know rules as it relates to alcohol and how that's going to impact you know the regulations as it pertains to T.H.C. I think the quick way to offend all your alcohol suppliers that you'd like to get on your side if you're a T.H.C. beverage only brand is to be out there paying massive slotting fees to retailers even if it's from a place of you know jealousy that they themselves can't do it but I think in terms of lobbying for support of what was once itself a prohibited industry I would say just as a brand trying to find your way. Maybe doing it might offend some other folks in the alcohol case whether that's enough to prevent them from doing it or I don't know. Being in Massachusetts where we we do have a legal cannabis market and anything with T.H.C. and it has to be sold through dispensaries this industry I'm almost embarrassed to snuck up on me because it's just not here you know like if I go to a liquor store I don't see these drinks whereas Justin goes to the grocery store in Iowa and he does. It's really shocking because as a consumer right like putting all our consumer hats on we're all set in different markets because he's in Rhode Island just the semesthesets just since when I like I'm in PA and it's like a total mixed bag it's wild how different everybody's experience with these products is on a state by state basis like there isn't really another commodity like that usually your experiences universal like where you can buy a product right where at least there's a norm for it in your state. It might not look exactly the same state by state but there's like kind of a precedent it's not it's in random places here right makes no sense you can DTC you know ship it I should say brands do ship it into the state not that it's it's permissible but friends that we know of exactly but it's it is kind of wild that that's mind blowing so for there's certain people within this country who have very little exposure to these products and there's other people who are in the state. And there's others who see it every single day like when they go to their special grocery store they don't even see alcohol. The CKHC buffer tips which kind of wild. Not to go all Calche or prediction market here but and not as legal advice but where do you think this goes do you think that we get a regulatory framework by the time we reach November or do you think it gets kicked down the road or do you think this goes into effect. Kick the can is my vote kick the can I think eventually someday will end up with a regulatory framework for it just because of the demand and the money but I just don't see especially coming into a midterm election here I do not see anyone taking this up in earnest but I I don't see them letting the band go into a back to their so feels like a perfect chance for them to put. Yeah I agree I think it's a delay tactic I think they're going to they're going to kick the can as is he said I think it's really interesting because it is such a complex issue we have a hard time getting the federal government.
right to update our alcohol laws, right? They haven't been updated a really long time, at least, you know, from a legislative standpoint, certainly. And to think about setting up an entire regulatory schematic, right? And like all of the things that would have to go into that in consideration, even from a jurisdictional perspective, like what the FDA or potentially the TTV's role is in these products is, it's really daunting. It's an undertaking. And I just don't see how they could put all of that in place before, you know, a successful regulatory kind of scheme in place, you know, before November. And so I think it's, I strongly think, and it seems like this bipartisan bill to kick it to 2020 has like a lot of support. I also think there's something to say that the federal government recognizes that there's a lot of states like Minnesota that have actually set up regulatory schemes that are relatively successful. And I think they might give the opportunity to as many states as possible to kind of figure at all on a state level before they kind of come in and do it for anyone. - Okay, well, Nicole and Izzy, this has been so insightful and a really great conversation. I learned something new every time we talk to you guys. So thank you so much for taking the time. Congrats on your new firm. If people want to reach out to you for more, where can they find you? - Great question. They could email us and we can drop our email addresses or go to errantfoxshift.com and that will direct you to the alcohol page to the Food and Beverage page. And ultimately the alcohol page to find our information about us and our team, but we're super excited to join such an esteemed group of colleagues in the Food and Beverage space. We really made the move intentionally to join kind of a group of people who are situated in the Food and Beverage space for generally, which is awesome and it's been a great transition. But thank you so much for having us. We'd love to come on and chitchat about all the legal things. - Like I said, it is always a delight and thank you so much for all the time and all your wisdom. - Thanks, Jess. - Thanks, Jess. - Thanks, Jess. - And that's our show for this week. Thank you for listening. The Brewbound podcast is a production of BevNet CPG. Our audio engineer for the Brewbound podcast is Joe Cratchy. Our technical director is Joshua Pratt and our video editor is Ryan Golan. Our social marketing manager is Amanda Smirlinsky, our designer is Amanda Huang. If you enjoyed this episode, please share it with your colleagues and friends and review us on your listening platform of choice. You can find our work at brewbound.com and we also welcome feedback and suggestions at
[email protected]. On behalf of the entire Brewbound podcast team, thank you for listening. We'll be back next week. (upbeat music) (soft music) - Hey folks, it's Ray Lissy for the Brewbound podcast. Right now I'm honored to be sitting down with Paul Benner, the USCEO of Pinter. Paul's great to see you. - Ray, I really appreciate you having me on here. Excited to talk about the company. - Absolutely. I'm excited to talk about Home Beer and you're building a fast growing Home Beer company. At a time when craft beer and home brewing seem to be slowing, why is Pinter growing? And more specifically, what is it? - Yeah, no, that's right. And we're incredibly excited about bringing people back into this wonderful hobby of making beer at home in a unique way. So Pinter is, I like to say, it's one of the most unique beer experiences that a customer can have at home. So the machine itself is, was originally started as a British company. We launched in the US less than two years ago and since launching, it's just the growth as exponential compared to where we were in the UK market a few years ago. The machine is in all and one beer making and tapping system. So think about the traditional home brew experience where there are some certain barriers. I think that have prevented new people from getting into the hobby and also prevented people from just sticking with the hobby. And some of those are, you know, the price, just the expense of getting started and then, you know, home brewing is something like getting hobby you invest in, you know, to get better product. The other is the space that it takes up in somebody's house. Equipment requires somewhere to store all that. The time commitment, so a traditional, you know, home brewing session could take somewhere between four and five hours on a weekend, which is not always extra time that folks have to commit to this. And finally, it's just the quality of the product. Typically, especially early on in your beer making experience is not great and it's not up to probably the expectations that you have. So planter is essentially engineered out all of those barriers in this device. So we have simplified the brewing process. I could talk a little bit more about how the machine works in a bit, but the idea is that we have simplified it in a way that can bring people back into the home brewing hobby. But they don't have to pay a lot for it. It doesn't take up a lot of space. It doesn't take up a lot of time. And the quality is going to be at par with what you're expecting from craft beer. How exactly does a pointer work? So pointer is, it's a pretty engineered device, but from a customer perspective, it's just very simple. OK, there's two components to a pointer. There's the body of it, which is actually where the fermentation will happen, and eventually where the beer will be poured from. And then there's a dock. We call it a dock that during the fermentation phase is used. So we actually will source liquid extract, malt extract, from companies like Byramins or Mutton's. And blend those together. We get different varieties from light to dark. Blend those together for an appropriate beer style. So let's say we're making a paleoil. We go for the color, the right gravity. And then we also can use hop technology that's evolved over the last 10 years in the form of hop oils. So hop oils would then also be put into the liquid extract. So it's already pre-hopped. And let's say, again, we're making that paleoil. In your kit that you receive, we'll have the extract perfectly blended each time. And also the hops that are appropriate for that beer. It could be many varieties of hops as well. And then the yeast that's appropriate for that style. We also throw in a packet for sanitation each time. So literally each kit that you get has everything you need from a consumable perspective to go into your pinter. And in 10 to 14 days, you're drinking fresh, consistent beer every time that is on drafts in your home. Now, 15, 16 years ago, it felt like everyone wanted to be a home brewer. Today, a little surprise that Pinter is doing as well as it is because it feels like that hobby has waned a little bit for a lot of folks. But what are you seeing in consumer behavior that others might be missing? Now, I would say there's really three trends in the United States in particular that Pinter fits perfectly into. And those are people investing in their at-home experiences. So think about investing in patio. It was a second fridge, smoking meat, grill setups, having more experiences at home versus out at tap rooms, maybe then that people did five years ago, pre-COVID. The second trend is just investing and doing hobbies at home that are DIY. Again, falling into that smoking meets or having a wood shop in your garage or some type of DIY process that's done at home. And then finally, it's direct to consumer or e-commerce purchases. Pinter's perfect for that. It's a crafty thing that you can do at home yourself. It only enhances your at-home entertainment and experiences because you have draft beer at home. And then finally, we're a completely direct to consumer business. So we don't sell in retail. We sell directly online. And that means your beer kits are delivered directly to your door. Do you see Pinter competing as much with home brewing kits as beer brands in the aisle versus restaurant stores? Or liquor stores? Yeah, I would say going back to this fact regarding how many of our customers have actually home brewing in the past, I would say we actually do not compete directly with other home brewing options. And probably Pinter is not a great option for somebody who is a die-hard home brewer, who is invested a lot of time in energy and this hobby. And they have equipment that produces great beer from their further taste. Pinter probably isn't the best option for them. I would say we do compete probably more with brands on shelves. And I think something that is evidence to that is the partnerships that we've done in the past and are doing in the future with big and even small brands in the beer space. I could talk a little bit about that partnership program if we want, but I will say generally, this is a machine that I think replaces some of the consumption habits that customers have at home, rather than being a full-scale hobby and replacement of all of your beer consumption. Yeah, let's talk about your partnerships with these crappieries, which feels a little counterintuitive, but also a really attractive for some consumers. Yeah, so our partnerships are really important piece of how we want to grow as a company. For us, we see Pinter as an opportunity to be a platform for brands to have new interactions with customers. So I talk about beer experience a lot because it's really important to us as a company and to our consumers. And that's something that every beer brand is trying to have more. It's just like a unique experience with customers, especially at home, because once somebody buys a six-pack of beer and brings it home, that opportunity has kind of passed for a beer brand. And even with less consumption in the on-premise, even that interaction with tap handles and menus and all that kind of goes away.
as well. So for us, partner with brands is, it's really beneficial for both of us. For us, we get to leverage the reputation and the years in the industry for some of these big players. And for them, they get that opportunity to have a unique experience for customers. In the past, like I mentioned, we were a UK-based company. Some of our big partnerships in the UK included a release with Guinness, which was a really incredible opportunity for us to get the blessing from a company that's so respected from a quality perspective like Guinness. We did that last year. Rudolph released the number of beers. We have had a cool partnership with Iron Maiden to release their Trooper beer that they've been doing for years. And then in the US, 2026 is going to be a great year for us for partnerships. One that we've already have in planning are releases from Lagannitas, from Great Lakes Brewing Company. Our first one will be in March. That's Hopewell, which is a local Chicago brand that many folks who live in that region may be aware of. And then we have some more exciting ones that'll be releasing in a second half that just keep under wraps for now. But the idea is that we are building this platform literally where our customers can choose from brands from not only regional or beers that we make ourselves, but from literally all over the world and have this new experience with a brand maybe that they normally wouldn't get a chance to consume product from. Well, Paul, I imagine a lot of our listeners are going to want to get in touch with you in the team at Pine Turr. What's the best way to do so? Well, our platform is as evolved to a subscription business. So what we're able to do for customers to onboard them is actually provide a machine or two machines for free to customers. In exchange, they sign up for subscription and then we send them any number of beers that's based on the subscription that they sign up for. Whether it's one or two a month or one every few months, customers have the flexibility to choose that. But it's a way for us to get pineters into homes and start creating those rituals and habits. And our retention is incredibly sticky. So like when customers start using the pineter on a regular basis, they stay on the platform. They continue to consume beers and we offer somewhere between 20 and 25 beers as well as cells are insider that they can choose from. A convenient way to make beer in a convenient website to pineter.com, P-I-N-T-E-R. And if someone wants to reach out to you, Paul, directly, what's the best email address for you? So I would say if it's a partner. So like I had mentioned in our brewing partners, it's
[email protected]. Something I also didn't mention is there is also a royalty component. So we're giving back to the breweries that are partners with us. But probably the best way is to just go to pineter.com and see some videos of how the machine works, see some testimonials and you know, hopefully it's something that customers are into. I'm already into it and I'm really excited for the future of pineter. Paul, thank you so much for taking the time to speak and let's definitely stay in touch. Thanks, Ray. Appreciate your time.
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