Jack’s Abby Craft Lagers and sister brand Springdale Beer Company have signed with Sheehan Family Companies to distribute its offerings statewide in Massachusetts, the company announced today.
Sheehan subsidiaries Craft Massachusetts (Boston, central and western Massachusetts), L. Knife & Son (southeastern Massachusetts), and Seaboard Products (northeastern Massachusetts) will begin distributing Jack’s Abby products starting today.
“We are incredibly excited to be working with the Sheehan Family Companies to bring our brands to our home state of Massachusetts,” Jack’s Abby co-owner Sam Hendler said in a press release. “Today, almost precisely 10 years after the first brew day at our original location, marks a new beginning for our company and our family, setting the stage for great things for the next 10 years and beyond.”
The move comes after a tense legal standoff between the Framingham, Massachusetts-based craft brewery and its previous Massachusetts wholesaler, Atlantic Beverage Distributors. And that divorce isn’t over just yet.
On January 14, two days after franchise law reform was enacted in the state, Jack’s Abby provided Atlantic with notice of its intent to terminate their relationship. The Holliston-based distributor fought back and filed a 25E petition with the Massachusetts Alcoholic Beverages Control Commission.
The companies then went into arbitration, and Jack’s Abby “conveyed payment as dictated by the arbitrators and the law,” the brewery said in its press release. The unwinding of Jack’s Abby and Atlantic’s working relationship marks one of the first uses of Massachusetts’ revised franchise law, which went into effect in early January, and was negotiated by Hendler in his role as president of the Massachusetts Brewers Guild.
“While we have moved on, and we followed the law to the T, I think there’s still a lot of work we’ve got to do to make sure the right precedents are set here, and that brewers in the future can go through this process hopefully even more efficiently, with a clear eye on what they will need to do to extricate themselves from a distribution relationship,” Hendler told Brewbound.
Sheehan Family Companies, which operates beer wholesalers in 13 states and Washington, D.C., is one of the largest distributors of craft beer brands in the U.S.
“The Sheehan Family Companies are extremely excited to expand our existing partnership with Jack’s Abby here in their home market of Massachusetts,” Mike Brazel, VP of sales and marketing for the Sheehan Family Companies, said in the release. ‘Our mission is to partner with world class people, who produce world class products with world class potential. Jack’s Abby checks all the boxes.”
Sheehan Family Companies’ Craft Connecticut distributes Jack’s Abby in that state, and that relationship gave Hendler the confidence to sign with Sheehan in the brewery’s home market.
“We’ve been exposed to what that organization can do, and we just felt like it was the right fit for our brand in Massachusetts,” he said. “They have very, very strong distribution; they have a very clear go-to-market strategy, and we felt like we fit really, really well into that strategy and into that portfolio.”
When Jack’s Abby first notified Atlantic of its intent to terminate, it named itself as a successor wholesaler, which its farmer brewer license would have allowed it to do up to 50,000 gallons, or about 1,612 barrels. However, the brewery did not dabble in self-distribution, and Atlantic was selling its products up until yesterday.
“The process took a little bit longer than expected on our end,” Hendler said. “Conversations with the Sheehans went in a really, really positive direction.”
Among its reasons for termination, Jack’s Abby named Atlantic’s conversion of about 1,000 accounts from in-person to online service, which it said jeopardized 20% of the brewery’s overall volume. Jack’s Abby was rebuffed when it asked for a conversation with Atlantic’s leadership over those changes, which also included the termination of “a significant portion of its sales staff” in June 2020.
“I don’t think the biggest issue in the end is the service levels as much as it is just the deterioration of a relationship,” Hendler told Brewbound in March. “The thing that really puts it over the edge for us is that we couldn’t have a conversation about what is the plan.
We weren’t given the opportunity to even have that conversation.”
In February, Atlantic shopped the Jack’s Abby and Springdale brands to other Massachusetts wholesalers, including Sheehan, Burke Distributing and Horizon Beverage, according to an April 5 affidavit.
Atlantic filed a lawsuit against Jack’s Abby in Suffolk Superior Court on March 29 that sought a permanent injunction against arbitration between the two parties, which was denied, and challenged the constitutionality of Massachusetts revised franchise law, 25E ½.
The wholesaler argued that Jack’s Abby’s termination attempt was “defective” because the brewery named itself as a successor wholesaler and that 25E ½ is unconstitutional because it denies Atlantic its right to a jury trial by using an arbitrator to determine fair market value of the beer company’s brand rights.
“I don’t think this whole saga is necessarily over for us and Atlantic,” Hendler said. “They seem to desire to continue to press on their lawsuit. They’re still challenging the constitutionality of this law.”
Looking ahead, Hendler said his company’s first goal is to “stabilize Massachusetts,” which accounts for about 70% of the brewery’s revenue.
“There’s a lot of work to do,” he said. “As the on-premise comes flying back online, we need to get out there and re-establish that segment of the business that just disappeared, and now it’s all rushing back and there’s a lot of work to do to ensure we’re in the right places.”
In 2020, Jack’s Abby’s volume declined -3%, to 40,800 barrels according to the May/June edition of the Brewers Association’s New Brewer magazine. Hendler described the company’s current sales as “very moderately negative trends compared to last year.”
“All things taken into consideration, we’re pretty happy with where we are,” he said. “In some markets, we are seeing green numbers, especially the last eight weeks as on-premise comes back online.”
Update (1:25 p.m. ET): Atlantic’s attorney, J. Mark Dickison Esq. of Lawson & Weitzen, LLP, shared the following statement with Brewbound.
The arbitration process initiated by Jack’s Abby concluded on Monday, June 28 with the issuance of a final award. The next day Jack’s Abby appointed a new wholesaler without Atlantic’s knowledge or consent. Jack’s Abby is insisting that the award be kept confidential, so at this time Atlantic is not able to speak about the award. However, at this point, there are several significant issues still unresolved and there are pending matters before both the ABCC and the Courts. Further, Atlantic is in the process of seeking further relief from the Courts as it continues to maintain that the new law, G.L. c. 138, § 25E½, is unconstitutional, that Jack’s Abby’s purported termination notice was defective as it was based on the false premise that it would or could self-distribute the brands, and it is pursuing claims that Jack’s Abby has breached its marketing agreement appointing Atlantic as its exclusive distributor.