Breweries that received subpar equipment from CBS—or didn’t receive any equipment at all—say they’re frustrated at having to deal with another financial setback during the pandemic. Some were planning to use that equipment to expand their brewing capacity; others needed it to simply start their operations. Business owners in either scenario face lost revenue.
“Since CBS hasn’t filed bankruptcy as far as we’re aware, there doesn’t seem to be much recourse that we have at this point,” says Brian Quinn, director of brewing operations for Town Brewing Co. in Charlotte, North Carolina. Town Brewing purchased two 4-barrel tanks from CBS that arrived in February, two-and-a-half months after the quoted delivery date. Quinn says both had missing parts and poor construction. “Getting your money back six months later can be crippling or fatal to small businesses. It’s unfortunate that we just have to work with what we got.”
WHY IT MATTERS
Colorado Brewing Systems sold equipment for nanobreweries or small breweries (its largest brewhouse system was 10 barrels), meaning its customers are primarily small, taproom-focused breweries or brewpubs hit hardest by COVID’s on-premise closures. With no communication from CBS, breweries are unclear whether they’ll be able to recoup the money they spent.
“We’re in dire straits,” says Dennis Kaleta, brewer and co-founder of Lost Mined Brewing Co. in Shamokin, Pennsylvania. Lost Mined paid CBS $5,580 for a keg washer in August, with a quoted delivery date in October. It hasn’t yet been delivered. The company stopped responding to his communication more than a month ago. Kaleta says he can’t afford to buy another keg washer elsewhere.
“So we got a lawyer, and the next thing you know they had a post up on their website [saying they’re ceasing operations],” he says. Kaleta says his lawyer contacted CBS on Feb. 16 or 17; the announcement on CBS website was posted Feb. 17.
Town Brewing’s Quinn says he considers himself lucky to have received his order at all—even given the delay and the tanks’ poor craftsmanship. Quinn says the tanks were missing spray balls (part of the equipment necessary to clean them); one was missing a pressure-release valve; and neither had the racking arm modifications (which aid in drawing clear wort off sediment in the tank) that he’d paid for. Most concerning, he says the welding “looks like my eight-month-old daughter had done it.” He describes sloppy, rough welding, when welds should be smooth and seamless to allow for proper antimicrobial cleaning.
Quinn estimates the brewery will need to spend an additional $2,000-$3,000 to re-weld the tanks, on top of the nearly $10,000 cost of the tanks and shipping.
“I feel a lot worse for the breweries that put down deposits they’ll never receive back and probably some people paid in full and will never receive their equipment,” he says. “If something takes three-to-five months to receive, and all of a sudden your equipment manufacturer folds, you might be dead in the water.”
CBS’ closure calls to mind the 2018 collapse of two Canadian brewing equipment manufacturers: DME Brewing Solutions (DME) and Newlands Systems (NSI). The pair of companies owed $20 million to 370 businesses and banks, and an unknown amount to another 382 individuals and companies. (In 2019, DME and its affiliated NSI brand were purchased out of receivership by a company called CIMC Enric Tank & Process, a subsidiary of CIMC ENRIC Holdings Ltd., itself a subsidiary of China International Marine Containers Group Co., Ltd.)
Colorado Brewing Systems’ announcement of its closure cites COVID-related difficulties for the business’ demise: “Despite our best efforts, the loss of revenue from the COVID-19 pandemic over the past year as well as supply chain delays and disruption, skyrocketing material and transportation costs, and other factors beyond our control, have made our efforts to continue any longer impossible as all available resources have been exhausted. … We truly regret not being able to weather the past year as well as service our customers.”
According to a 2017 profile on CompanyWeek, a manufacturing and supply chain news website, CBS was founded in 2015 by Tim Moore, who had previously owned Freedom’s Edge Brewing Company in Cheyenne, Wyoming. The profile says the company had six employees and at the time had sold 200 brewing systems in seven countries.
“Our core customer is the little guy opening up a neighborhood brewery,” Moore told CompanyWeek.
Breweries that spoke to GBH say communication from Colorado Brewing Systems began to lag around December. Emails went unreturned. Phone calls went unanswered. Quoted delivery times came and went.
Emails between Kaleta and CBS shared with GBH show that CBS provided numerous COVID-related reasons for the delays in equipment production and shipping. Between September and January, CBS’ emails blamed the lag in order delivery on delayed equipment component deliveries, “messed up schedules,” employee quarantines, and a house fire. One of the emails was sent by Moore; the others were sent by Adam Niebling, a CBS employee and, according to The Cheyenne Post, Moore’s son-in-law.
Business owners who spoke to GBH say they weren’t aware of any red flags with CBS before they placed their orders. All of them said the low prices for CBS equipment were a factor in their decision.
“We paid $6,370 for a double keg washer, which is significantly cheaper than the other ones we saw,” says Kristin Cagney, founder of Summit Seltzer in Charlotte, North Carolina, who ordered the equipment in late July. “That’s why we went with them. A lot of others were around $10,000.”
She says CBS was also the only company she’d found that offered to accept 70% of the order price as a deposit, with the remaining 30% to be paid upon delivery. (A deposit of half the total price, with the other half to be paid before shipping, is more standard.) Other business owners also describe feeling reassured by CBS’ seven-year warranty, which they describe as much better than the typical one- or two-year warranty other manufacturers generally offer. When Cagney complained to CBS in mid-November about the three-month delay in receiving her keg washer, the company offered her an extended warranty rather than reimburse her for shipping or a portion of the sales price.
“It’s just kind of comical, because now they’re going under, so it’s worthless,” she says of the warranty.
During the months without a keg washer, Summit Seltzer’s head brewer manually loaded 50 kegs into a U-Haul, then drove them to nearby Town Brewing for cleaning. Cagney says each of those trips required Summit to rent a truck, and took up about a full day of the brewer’s time. At first, she says, she tried to cut Colorado Brewing Systems some slack because she knew how difficult it was to operate a business during the pandemic. But her patience waned with each week the keg washer was delayed. When it finally arrived in January—six months after Summit had ordered it—the keg washer didn’t fully drain all its water and sanitizer.
“We opened [Summit] up during COVID, so it was just another thing. I thought if we can get through this, we’ll be pretty resilient to anything else that happens to our business,” she says.
But for new, small businesses trying to stay afloat during the pandemic, the loss of several thousand dollars—or a three-month delay in receiving equipment—could be fatal, similarly to situations from years past.
“Bankruptcy filings from equipment manufacturers can really have some devastating, long-lasting effects to small and mid-size breweries and other craft producers,” says Jon Carpenter, founder of Openso Consulting. “I work with some companies today who are still trying to catch up from both capital and production commitment losses associated with one of these instances dating back to late 2018.”
The delays and defects with Town Brewing’s two tanks won’t put the brewery under, Quinn says, because they were intended to create small-batch, taproom-exclusive beers. Town Brewing already has larger tanks for its packaged, distributed beers. But not being able to brew those taproom-exclusive beers cuts to the quick of what his business wants to be.
“I was looking forward to receiving these tanks for months and filling them with beers that speak to our core values and what we want to produce as a brewery,” he says. “It’s really upsetting.”
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