In the craft beer industry, you still don’t hear a lot of stories that publicly pit one craft brewery against another. Sam Calagione of Dogfish Head famously called the industry “99% asshole free,” once upon a time, but subsequent years have shown that as the size of that industry continues to swell, the idea of a space without “assholes” is nothing more than wishful thinking. Like it or not, breweries are going to have bad blood with another once in a while, but still—this is an odd story, right here.
Last week, the CEO of The Saint Louis Brewery, better known by the name of its primary brand, Schlafly, resigned. It wasn’t known exactly why CEO James Pendegraft had stepped down, but things seemed a little odd. In their statement to the St. Louis Post Dispatch, the brewery confirmed Pendegraft’s departure, but didn’t offer any details—or any well-wishes, for that matter. Now, it’s become much more clear as to why that would be.
As Friday came to a close, Schlafly issued a public apology to 4 Hands Brewing Co., another St. Louis brewery located only a couple miles from the original Schlafly Taproom. The apology states that “a former Schlafly executive made secretive attempts to sabotage the reputation of 4 Hands,” in the words of Good Beer Hunting.
This sabotage was apparently carried out via an anonymous newsletter that was sent to bars and restaurants throughout St. Louis, entitled “Brew IQ in the Lou.” The Schlafly statement stops short of actually saying that Pendegraft was behind it, but given the sequence of events, we can only assume this was the case. In the newsletter, the author subtly promotes Schlafly throughout, while casting shade upon other St. Louis breweries, and 4 Hands in particular. It even implies that the “4 Hands” name was inspired by sex acts performed “at a massage parlor,” and suggests that the brewery is struggling with how to respond to public outrage in the #MeToo era. It should go without saying, but the 4-Hands name is in no way meant to evoke clandestine sex acts. The newsletter also references 4 Hands’ development of a new line of craft spirits with the passage below:
“Leave glamorizing a pimp’s wad of dollars to The Deuce. 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.”
The leadership of Schlafly, to their credit, dismissed Pendegraft from his position before the story ever publicly broke. They issued the following statement, from chairman Tom Schlafly:
“We were embarrassed to learn of these actions and sincerely apologize to 4 Hands Brewing Company. 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.”
You may well be asking yourself now why a CEO would try something so strange and underhanded, but a look into Schlafly’s sales figures in the last few years makes potential motives considerably more clear. The brewery’s overall production declined 13% in both 2016 and 2017, bringing them way down from a high of 60,000 barrels in 2015 to only 45,000 in 2017. Sales are likewise still down in 2018, in what has become a very common story—the well-liked regional brewery struggling to maintain market share in an industry that has become so much more crowded. 4 Hands, meanwhile, has been growing during the same period, rising from 13,500 barrels in 2015 to 24,500 in 2017. Perhaps most concerning to Schlafly, the vast majority of those sales (83 percent according to Good Beer Hunting ) are in the state of Missouri. In short: Breweries like 4 Hands are in the process of replacing Schlafly as “local favorite,” and it’s hard for an older brewery to know what to do about it.
I think it’s safe to say that “anonymous, disparaging newsletters” probably wasn’t the right choice, though.
Regardless, this will go down as one of 2018’s stranger beer industry tiffs, while sadly illustrating the compounding effects of the industry-wide slowdown.