Murky Waters

Distilling Truth from Fiction in the Faubourg Brewing Debacle

For Brian Ivey, life was all rainbows and beer. He managed to get his foot in the door of the craft beer industry, landing a part-time bartending gig for Catawba Brewing Company in their South Slope brewing district location in Asheville, North Carolina in 2015. In less than a year, he’d worked his way up to running the company’s taproom in Biltmore Village, a picturesque, old English-style village shrouded in the cool mist of the Blue Ridge Mountains. With patches of gray in his beard and a Dickies work shirt, Ivey looked the part of a mountain-range brewery manager.

Founded by Billy and Jetta Pyatt after Jetta gave Billy a homebrewing kit as a Christmas gift in 1994, Catawba made a name for itself at a time when craft beer was exploding. Breweries were popping up all over the place. Beer lovers were looking for quality, innovative, and unique beers, and they were willing to seek them out from smaller, independent breweries.

Catawba’s flagship brew, White Zombie, a Belgian witbier with hints of coriander and orange peel, fit the bill perfectly and took off. Its success allowed the company to gain an early foothold in the Western North Carolina beer scene and make its way into taps across the region through self-distribution to the brewery’s closest cities.

By 2016, the company had grown enough to allow for a budget to create a small marketing department—and they tapped Ivey to serve as director. He loved everything about working for the Pyatts. “Any time you can make a living doing something you enjoy, that makes it easy to go to the office every day,” Ivey said. “It’s cliché to say your coworkers are a family but it was true at Catawba.”

But it all began to crumble in September 2021, when Ivey got a call from Billy Pyatt saying that he and Jetta were ready to retire and sell Catawba. They held a meeting with the company directors to introduce them to the prospective buyers, a company called Made By The Water, which is backed by the Montgomery, Alabama-based private equity investment firm Wiregrass Equity Partners. Made By The Water runs a portfolio of southeast beer companies including Palmetto Brewing Company out of South Carolina, and Oyster City Brewing Company, founded in Apalachicola, Florida.

Ivey did some quick searches into Wiregrass Equity and found a one-page website with very little information. Even that website has now disappeared. “So you wonder why they have virtually no online presence. What do they have to hide? That was the first red flag,” Ivey said. He then started looking into online beer forums and read about other craft breweries being bought up by private equity companies.

“There are a lot of horror stories out there, so that Google search wasn’t exactly reassuring either,” Ivey said. “Another red flag.”

Before they met with the team from Wiregrass and Made By The Water, Ivey and the other directors were given the chance to talk with the Pyatts alone in the conference room. Despite his apprehension from the “red flags” he found online, he remembers feeling hopeful, reassured. “Billy stressed that our jobs were 100% safe, and said, ‘But don’t take my word for it, ask [Wiregrass] when they get here,’” Ivey said. “We did. And they made the same assurances: None of us should be concerned about job security.”

In a company-wide town hall meeting on October 8, 2021, all of Catawba’s employees met their new boss, Made By The Water CEO Alexi Sekmakas. The son of one of Wiregrass’ founders and chief investors, Viktoras Sekmakas, Alexi was a smooth-talking 28-year-old with shoulder-length hair, often tucked beneath a snapback ball cap, looking like he’d be more at home at a dubstep show in Colorado’s Red Rocks Amphitheatre than in a boardroom.

Alexi Sekmakas didn’t make the best first impression. He arrived late and disheveled. “I think we were all wondering whether this guy is just some trust-fund failson who’s getting to play CEO with tens of millions of daddy’s dollars,” Ivey said. “Another huge red flag.”

Regardless, Sekmakas told them there was nothing to worry about. “Everyone in the company who attended the introductory town hall meeting witnessed Alexi Sekmakas promise that all of our jobs were safe,” Ivey said.

The deal closed on November 1, 2021, and by November 12, three of the six people from the leadership group, including Ivey, had been fired, along with several other employees. “I think it’s safe to say that virtually everything that was said in that first meeting was a lie,” Ivey said. “The employees learned the word of their new boss cannot be trusted, there is no loyalty within the new company, and years of dedicated service meant absolutely nothing.”

The misleading statements about job security from Made By The Water and Sekmakas fit into a larger pattern. Former employees and business partners, city and utility officials, industry insiders, and other brewers say the company and its leader have a history of making false or misleading statements. They’ve also faced accusations of failing to pay their debts, and blame the results of poor management and business practices (as well as changing markets and demand) on the communities that supported the breweries they acquire, leaving behind a trail of shuttered establishments—often fixtures of those communities—in their wake.

Since the merger with Made By The Water, Catawba’s taproom and restaurant in Wilmington closed. Charlotte’s pilot brewery, taproom, and event space closed. The Asheville Biltmore Village taproom closed. Staffing has been reduced at both Asheville’s South Slope location and the Palmetto brewery in Charleston. “Catawba-Palmetto had about 135 employees at its peak,” Ivey said. “Now I expect it’s no more than 20% of [those] who are still employed by MBTW in the Carolinas.” Even Billy Pyatt’s brother and co-founder, Scott Pyatt, was fired.

But the biggest blow to Catawba came in October 2022, when Made By The Water shut down the production brewery in Morganton, North Carolina, a small town of just over 17,000. Catawba was the lifeblood of Morganton—it’s where the brewery was started. The facility’s 30 production workers and taproom staff weren’t given any notice.

“Made By The Water is definitely now a name that anyone associated with Catawba in the Carolinas hates,” said Nicole Solnes, a resident of Morganton who was a regular at the original Catawba taproom. Solnes and other residents started a petition to try to save the brewery. It garnered more than 1,700 signatures, but ultimately was unsuccessful. “The brewery was the center of our economy and brought people into our little town. After they shut it down, everything just kind of died for a while. It was our community center basically, so entire groups of people just fell apart.”

Down in New Orleans

In a interview, Sekmakas said the decision to shut down production in Morganton was made because demand for their beers had outgrown the small-town brewery’s production capacity. Instead, the company would move production to New Orleans, where Made By The Water had just inked a deal in September 2022, merging with Gayle Benson’s Faubourg Brewing Co.

Founded in 1907 as Dixie Beer, Faubourg is the oldest brewing company in New Orleans. The company managed to survive Prohibition and the waves of massive consolidations in the beer industry. When the levees failed during Hurricane Katrina in 2005, the Mid-City brewery was flooded and forced to close. Dixie Beer was then contract brewed in Wisconsin for years.

In 2017, New Orleans Saints owner Tom Benson bought a majority stake in the company with the dream of bringing the beer back to being brewed in New Orleans. After Benson died, his wife, Gayle, took over and opened a new Dixie brewery in New Orleans East. The building was designed to look just like the original brewery on Tulane Avenue, with a replica of the brick tower and even the metal letters that were removed from the outside of the original brewery.

When the deal with Made By The Water was announced, many at the company’s other breweries hadn’t heard of Faubourg before. That’s partly because the brewery primarily produced Dixie Beer’s signature brew, a traditional lager, and hadn’t really broken into the regional craft beer scene with its pungent IPAs, sours, and other specialty beers. It’s also because, in large part, many outside of New Orleans and Louisiana weren’t aware of the name change from the iconic Dixie Beer brand.

That decision came after the murder of George Floyd in May 2020 and the national reckoning with symbols connected to the antebellum South and the era of chattel slavery, a time when human beings were tortured, abused, and considered property by their white enslavers. Product names like Dixie Beer were seen as racist relics that romanticized an “Old South” that was in reality built upon and around this system of violence.

In November 2020, Benson announced the name change from Dixie Beer to Faubourg Brewing Co., a name chosen from the old French term for areas settled outside of a city. When colonial New Orleans was expanding from its original small settlement in the French Quarter, the new neighborhoods were called faubourgs. Many still carry the name today, such as Faubourg Marigny and Faubourg Treme.

When Faubourg merged with Made By The Water in September 2022, it was seen as a sign of growth and progress. Company representatives and City officials lauded the deal and had visions of turning the New Orleans East facility into a regional beer-making hub. Faubourg would expand their craft beer brands, Made By The Water would bring with them their own successful brands and established distribution networks, production would increase with the new facility, and more jobs would be created.

It seemed like everyone would win with the realization of the late Tom Benson’s dream. As one source familiar with the deal put it, beer would be “raining down from the ceilings.”

Numbers Don’t Lie

But that dream would be deferred. Just over a year later, in November 2023, Made By The Water announced they were scrapping those plans and shutting down production at the New Orleans East brewhouse. In statements to the press, Sekmakas cited multiple reasons for the closure, including crime concerns, utility issues, and the facility’s failure to meet production demands.

However, critics say Made By The Water’s claims just don’t hold water. For starters, the numbers in their year-to-date sales distribution figures don’t add up. An internal industry report of the company’s sales and distribution figures shows the company’s sales were down more than 96,000 cases of beer in their network in 2023.

“That’s beer that Made By The Water is not producing, it’s beer they’re losing, that they lost,” said Eric Watts. “This equates to a 23% decline in volume. So their whole idea of ‘we don’t have enough production capacity,’ this blows that narrative completely out of the water because their sales are so poor.” Watts is currently vice president of sales and marketing at Olde Mecklenburg Brewery in Charlotte, North Carolina. But before that, he worked at Faubourg for the Bensons. He’s intimately familiar with the facility’s production capabilities and said the brewhouse could more than meet demand.

In 2021, Watts had just taken a job at Catawba about six months before it was acquired by Made By The Water. Like Ivey and other Catawba employees, he was told his job was secure before being fired shortly after.

“It’s like they’re saying their sales are so good that they can’t keep up with production in New Orleans, but now we’re shutting down. That makes no sense at all,” Watts said. “And here’s what would basically negate that,” he said, looking at the industry report. “This illustrates how poor their sales are, out in the beer world.”

Watts said what’s likely primarily driving Made By The Water’s sale depletions is their beers being “out of stock.” He said being out of stock for a long period of time is like a “death sentence” for a brand. Eventually, grocery stores, bars, and other places where beer is sold give your space to somebody else. And once that happens, it’s really difficult to get it back.

“What this illustrates to me, as somebody who’s been in it for a while, is really significant out of stocks and, really, poor management,” Watts said. “I mean, you don’t just lose 100,000 cases of beer.”

Easy Targets

Sekmakas also cited utility issues as a reason for stopping production at the New Orleans East brewhouse. In a interview, he said the facility “frequently” loses power, which resulted in at least 10 production dumps, costing “around $30,000 each time when machines had to be reset.”

Watts said these “dumps” wouldn’t account for the sheer volume of beer sales the company has lost, and Entergy officials say the company should have installed the recommended protective equipment that’s designed to help prevent major outages.

In the same article, Faubourg’s master brewer and head of operations said that “they found other ways to deal with surge issues without spending $100,000 on new equipment.” Using Sekmakas’ figures—which some local brewers question the validity of, but former employees say could be an accurate estimate—with 10 lost batches at $30,000 a pop, it would appear to be cheaper to install the recommended protective equipment than continue to lose batches because of its absence.

In an official statement, a spokesperson for Entergy New Orleans said, “A facility of this size normally utilizes specialized equipment on their end which the operators chose not to install. We believe this contributed significantly to outages.”

A senior official at Entergy said the protective equipment, which essentially amounts to a giant surge protector, is standard equipment and generally considered to be a best practice. The official said Entergy told Made By The Water multiple times that in order to operate at a large scale, they need this specialized protective equipment.

The official also said Entergy is an easy target for the company to blame because of the utility provider’s history of outages. They said it is likely that there were some outages, but Entergy did not cause enough bad batches for Made By The Water to go under. Sekmakas is not acting in good faith, according to the official, and the City has bent over backwards to accommodate them in the hopes of making the venture successful.

Made By The Water also cited a $540,000 tax bill and a $300,000 water bill from the New Orleans Sewerage and Water Board (S&WB), which was far greater than the company expected after operating for eight months. S&WB charges a premium for waste water that doesn’t meet certain environmental standards. Made By The Water said its bill was 10 to 15 times higher than breweries in other states.

In May 2023, City officials held a meeting with Made By The Water to try to resolve their issues. Jeff Schwartz, Mayor Cantrell’s director of economic development, was committed to doing anything it took for the company. That included an abatement to help out with the high tax bill, despite City Hall having nothing to do with the brewery’s property assessment that led to the amount.

City Councilmember Oliver Thomas, who represents New Orleans East (District E), was also at the meeting in May. “My job was to broker the meeting,” Thomas said. “I can’t make any of those administrative decisions. I was advocating for a business that was in our area.”

Thomas said the City made commitments to help Made By The Water work through their issues and help the company and the location be successful. Thomas said City officials told Made By The Water they would do whatever it takes to help them overcome any obstacles. But it wasn’t enough. The announcement that they would be stopping production at the brewery came just a few months later.

Despite the company’s announcement, Schwartz said the door is always open for them to return. “We remain here as partners who would love to support them or any other business growth in the city, so if there’s an opportunity to come back to the table, we are eagerly awaiting that,” Schwartz said. “Otherwise, it’s just disappointing to see them still make the decision to leave the market.”

A senior City official said there were multiple meetings with Made By The Water last summer, followed by months of radio silence until the company announced it would be stopping production at the facility. The official believes that given all of the options and commitments the City offered, the only explanation for the departure—and the company casting blame on the City and utility providers—is Made By The Water covering up for lost profits.

Looking back, Thomas said the problems they were having weren’t really the city’s fault. “The biggest thing for me was, what was their business model? Did their business model work in terms of how much it would cost and how it would cost to use water to brew?” Thomas said. “That wasn’t a legislative or an administrative or political decision. That had to do with them in terms of their operation.”

Thomas also took exception to Sekmakas blaming crime in New Orleans East as a contributing factor. Sekmakas said the company was unable to hire employees for a late-night third shift because prospective employees were too concerned about their safety. “One just got up and walked out of the interview when we said it was for the night shift,” Sekmakas said in a interview. (For this story, Sekmakas did not respond to multiple requests for an interview.)

Thomas said it’s a “totally unfair” characterization from the company and part of a harmful stereotype of New Orleans East. Violent crime has been dropping across the city, including the East. Thomas said the French Quarter doesn’t get branded with similar stereotypes despite frequent and often random shootings. “It’s that kind of cliché that’s being like, ‘Oh, man, but what about the East?’” Thomas said. “That lends to what we’re trying to overcome, what we’ve been trying to change about the way people view the eastern part of New Orleans.”

Solvable Problems

Others are also skeptical about Sekmakas’ claims about crime impacting Faubourg’s employees. “We hired a former employee from there and we’ve talked to former employees. I don’t think crime was an issue,” said Jacob Landry, founder and president of Urban South Brewery. “The brewer that we hired who used to work there, he doesn’t seem to think that was an actual problem. I think that was more of a perception but not an actual crime problem.”

Landry said there’s a street leading to the Faubourg brewery that has very little lighting and that crime might be a concern for people visiting the brewery at night in a poorly lit area. But like Made By The Water’s utility issues, he said these are solvable problems. “I’d say crime is probably only an after-dark issue, which is legit, but it’s not something you close down over, it’s something you try to mitigate,” Landry said. “And then the utility problems, again, are something that you try to mitigate.”

Landry was echoing sentiments that Eric Watts also expressed: The problems Made By The Water has cited for closing the Faubourg brewhouse are all solvable.

“There’s no situation that exists for that facility, whether it’s Sewerage and Water Board, power, crime, that could not be worked around to make it work, like there’s no situation that that exists,” Watts said. “It’s secure enough. The production facility is new enough. All you need to do is do what you said you’re going to do and take all these beer brands and bring them together and scale them up. But the reality is, they’re just not the operators to do it.”

For Watts, in addition to management issues and unsavory business practices, Made By The Water simply may not have seen the returns they expected based on their investments. The craft beer market just isn’t what it once was. Forbes reported that over the first half of 2023 craft beer sales numbers declined by 2%—the first time the industry has seen a decline outside of 2020.

If you’re a private equity investment firm looking to turn a major profit, craft beer isn’t as lucrative as it was a decade ago. “They bought all these beer brands at a terrible time, and they thought that craft beer was going to keep growing,” Watts said. “And now it’s down significantly.”

Money Problems

Former staff and business partners also say that Made By The Water and Sekmakas have issues with paying their debts. The owner of a North Carolina-based trucking company said Made By The Water owes him more than $100,000. An event planner in Charlotte says she was stiffed more than $11,000.

In both instances, the business owners had worked with Catawba before it was bought by Made By The Water. They only started having payment issues when Sekmakas took over. Other former business partners say it’s part of the way Sekmakas manages the operation.

An apt, but peculiar case-in-point lies in the example of a reality TV star. Austen Kroll is a personality featured on Bravo’s Southern Charm, which follows the lives of wealthy socialites in Charleston, South Carolina. One of Kroll’s businesses, which is a major focal point of his working life on the show, is a brewing company called Kings Calling Brewing Co. which produces a beer called Trop Hop, an IPA with notes of grapefruit and passionfruit.

Kroll originally started contract brewing Trop Hop out of a brewery in Greenville, South Carolina, paying for each batch and then selling it through his own brand. But he met with Palmetto Brewing Co. in Charleston, and felt like they took him seriously and shared his vision. “They saw the bigger picture and wanted to bring me under the umbrella of Palmetto and push Trop Hop as one of their own beers,” Kroll said.

Kroll signed a licensing agreement with Palmetto, but a few months later, the company was acquired by Made By The Water. He wasn’t sure what to expect, but when he first met with Alexi Sekmakas, Kroll said he was surprised by his enthusiasm. “I sit down with Alexi, and he asks me what I want. He asks if I want to be part of Made By The Water,” Kroll said.

Sekmakas talked about expanding Trop Hop’s distribution into all of their markets. Kroll said he was feeling excited. “From the beginning, he made it seem like the bigger picture was becoming part of Made By The Water,” Kroll said. “I’m thinking this is good, life is awesome. For me, it was very exciting to see my beer being sold in other states.”

Eventually, all of Kroll’s contacts at Palmetto were fired. For nearly a year, he had trouble getting in touch with anybody at Made By The Water. And then he started hearing from distributors that Trop Hop was out of stock and was being discontinued. He reached out to Sekmakas, who assured him that his beer was being brewed and sold by the company.

Then came what Kroll called “the official, boilerplate email” saying it had been a pleasure working with Trop Hop, but that Made By The Water was parting ways. Kroll said they’d started the process of discontinuing his beer without telling him and then lied to him when he asked about it.

After his experience with Sekmakas, Kroll said what’s happening with Faubourg in New Orleans—where Made By The Water is assigning blame to the brewery and the city—comes as no surprise. “That is classic Alexi,” Kroll said. “They are terrible businessmen. They are hatchet men, is what they are. They only look at numbers, and they have left a trail of bloodshed everywhere they have gone and pissed off every single person. And I’m pretty sure everyone that they’ve ever tried to do business with, including me, is attempting to sue them.”

Kroll said after his beer was discontinued, his payments stopped. He estimates he’s owed about a year and a half’s worth of payments from Made By The Water for Trop Hop sales. “Private equity dudes don’t know their ass from their elbows. They just look at numbers and they just cut, hatchet, cut,” Kroll said. “And they don’t realize what a brewery might mean to a community.”

Fleeing the Scene

In the end, Made By The Water’s withdrawal from New Orleans is less of a tactical retreat and more of a tucking tail and running. The company and its leader are obfuscating the fact that they’re throwing an entire city under the bus by exploiting longstanding, harmful stereotypes about a majority-Black urban center in the midst of a concerted effort to improve its image—a fine thanks for all the political support and tax breaks—and pinning the blame on utility providers Entergy and S&WB in the hopes that these easy scapegoats won’t be questioned.

For people like Brian Ivey and the residents of Morganton, North Carolina, Sekmakas and Made By The Water’s business decisions hold real implications for real lives. And the company and its CEO are willing to come up with a whole host of reasons to explain their actions.

But Made By The Water’s failures appear to be their own doing. Changing market landscapes indicate craft beer may not be an industry that’s especially conducive to private equity companies like Wiregrass and Made By The Water looking to turn a buck. Arrogance and ignorance and greed are not the ingredients of a successful craft beer company, as Ivey put it.

“Where is White Zombie brewed today? I have no idea,” Ivey said. “The previous incarnation of Catawba Brewing is dead and gone, so I suppose there’s now some irony in the name of their flagship beer.” Craft beer drinkers care about where their pint is brewed, Ivey said—and they care about who makes it.

This story was published in partnership with the Louisiana Illuminator.

Photos by Dan Fox

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