THE GIST
After 24 years, Shelton Brothers, America’s most influential importer of Belgian and European beers, will soon cease operations.
The Belchertown, Massachusetts-based importer of renowned brands that include Cantillon, Drie Fonteinen, Fantôme, De La Senne, and others says it has been forced into liquidation by its bank.
The company was founded in 1996 by brothers Dan, Joel, and Will Shelton and has served as an importer of more than 150 of the world’s best breweries, as well as a distribution partner for American breweries, cideries, and meaderies including Jolly Pumpkin Artisan Ales, Anchorage Brewing Company, and Saint Somewhere. The company’s annual beer event, The Festival, is considered one of the most prestigious global beer events and is attended by some of the most revered brewers in the world.
Dan Shelton says the company owes money to Berkshire Bank, to breweries, and vendors. He says Shelton Brothers has shed 25 staff from its payroll, and that the bank will likely seize its assets—including beer and wine. Shelton declined to share how much he currently owes and how much his remaining assets are worth.
“Basically they have rights to every last paper clip that belongs to Shelton Brothers,” Shelton says. “They’re going to take that and they’re going to sell it. We’re trying to get them to sell it to people who will treat it right, buy the assets—the beer we have in the warehouse—and continue the business.”
Right now, though, it’s unclear who, if anyone, would take over importation of the brands currently in Shelton Brothers’ portfolio. The company wants a say in who does, but it’s not certain whether it has authority to influence the bank’s decision.
WHY IT MATTERS
Shelton Brothers has been the premier importer of beer in the U.S., and the American availability of some of the world’s most respected beers is now in question. Dan Shelton says it’s the company’s hope that the “people we know will take on our assets” to ensure the portfolio continues to be sold stateside, referencing his preference that he have a say in who takes over importation of those brands. But that’s far from certain.
Shelton cites the economic upheaval caused by COVID-19 as the primary cause of the company’s insolvency. Bars and restaurants were responsible for 50% of Shelton Brothers’ sales, he says, and when most were forced to close in March as a result of the pandemic, revenues dried up. Then, in May, court records show Shelton Brothers was ordered to pay $2.1 million to Chicago-area beer distributor River North to resolve a lawsuit over distribution rights dating back to 2011; Shelton says he continued to dispute this judgment until August 2020.
The two factors—the legal judgment and the loss of on-premise sales—were too much for the company to survive.
“Our [sales] numbers from February to March went to shit. I mean really shit. In March, we did 15 percent of what we’d done the previous year,” he says.
Shelton says on-premise sales have improved as bars and restaurants have been able to reopen, but the bank that controls the company’s $3.5 million line of credit was not willing to wait any longer for loan repayment. Earlier this year, Shelton Brothers was in the process of moving its business to another bank that it perceived as more understanding of its debts, but that fell through in the economic turbulence following the coronavirus outbreak.
“The virus completely killed the on-premise business, which is where people were more willing to try our huge range of beers,” he says. “It’s picking up now, but not enough for the bank. And we can’t find another bank.”
Shelton notes these negotiations with his bank come with immense personal stress to him and his family. He says that as part of his agreement with the bank to obtain a line of credit for Shelton Brothers, he signed a personal guarantee making him responsible for any disparity between what the bank gets from the sale of Shelton Brothers' assets and the current amount advanced on the line of credit. Shelton says there’s likely to be at least a $1 million discrepancy, and he expects to file personal bankruptcy and potentially lose his family’s home in Massachusetts, which has served as the company’s offices for more than a decade. Shelton and his family have been living in Germany since the late summer.
While COVID-19 was an unforeseen blow, Shelton dates the company’s cash-flow problems back to 2018. Prior to that, Shelton asserts business was good with annual revenue in excess of $10 million. But those revenues were heavily dependent on selling products from two beer companies: Copenhagen-based Mikkeller and McAlester, Oklahoma-based Prairie Artisan Ales. Together, Shelton says, sales of the two beer brands made up half of Shelton Brothers’ revenue.
Then in 2018, Shelton says, both Mikkeller and Prairie decided to no longer do business with Shelton Brothers. The way Shelton describes it, the companies “decided they were so big, they didn’t need us any more.” Prairie owner Zach Prichard doesn’t dispute this, saying that by 2018, the model of having a broker in the U.S. didn’t fit the brewery’s business model.
Shelton says Mikkeller’s decision to sever the business relationship left Shelton Brothers with between $1.5 million-$2 million of Mikkeller beer in inventory. He says the beer was difficult to sell because Mikkeller had opened a San Diego brewery, selling that beer for half the price of its imported beer. (Mikkeller did not dispute these assertions, and a representative for the brewery says there is no conflict between the two parties.) After two years, Mikkeller bought back most of the beer inventory from Shelton Brothers, but in the meantime, that inventory dragged down the importer’s balance sheets.
“The bank noticed and started complaining and decided that we were goners and have been trying to push us out for two years,” he says.
While lawsuits, soured business deals, and COVID-19 all came to a head for Shelton Brothers this year, some people see the changing nature of the American beer industry as a factor in its declining fortunes, too.
“Fundamentally, part of Shelton’s problem is that some of the older brands might be offering a product that’s also brewed domestically,” says Paul Jones, co-founder of Cloudwater Brew Co. in Manchester, England, which exports its beer to the U.S. through Shelton Brothers. “You can get beautiful Saison made in America and it doesn’t come with all the prestige or mystique of Belgian-produced Saison, but it’s just as interesting to the modern consumer, maybe more interesting.”
Michael Roper, owner of Hopleaf, a Belgian beer bar and restaurant in Chicago, says he’s seen these changing consumer preferences first-hand. He says drinkers’ interest in American breweries has come at the expense of European imports.
“If you’re selling mostly very esoteric, expensive import brands, you probably have been struggling for some time,” Roper says.
But he also cites problems specific to Shelton Brothers, including its legal battle with River North. The company is as well known for its beer portfolio as for its lawsuits and “brash public persona,” as writer Andy Crouch put it in a 2017 BeerAdvocate article about the company. “In a trade built on collegiality, Dan developed a reputation for trashing his competitors,” Crouch wrote.
“Why do things have to be so unfriendly and so controversial?” Roper says. “It’s always been more pleasant to deal with other importers. […] Why don’t [Shelton Brothers] just go into a market and sell beer like everybody else does? Enough of the intrigue.”
Roper hopes that the breweries in Shelton Brothers’ portfolio end up with a new importer so Hopleaf can continue selling them. He says it’s likely another importer would want to bring beer from darling brands like Cantillon and Dieu du Ciel to the United States, but is less certain about the fate of obscure brands from countries like Norway or Finland.
The American future for brands in the portfolio is also top of mind for Paul Jones. He hopes he can find a way to continue selling his beer in the U.S., and hopes the same for the other breweries the company imports. He says Shelton Brothers has owed money to Cloudwater for a year, but despite that debt, he still has “warm feelings” toward the company, its staff, and its legacy.
“There’s something in that Shelton catalogue that feels timeless,” he says. “Through these beers, you have an opportunity to experience not just a different flavor or presentation of beer, but something of a timeless and prevailing culture of beer.”
In Jones’ mind, that part of Shelton Brothers’ decades-long legacy—regardless of what comes next—is solidified.
“Shelton gave American consumers a chance to experience what beer has always been. The saddest thing in my mind is that if that link to beer’s entire history is severed by Shelton ceasing to exist.”
Words by Kate Bernot