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A deal to purchase the Old Dominion Brewing Company of Ashburn, Virginia, has come undone. The deal, long assumed to be completed, would have allowed long-time employee Terry Fife, and his business partner Kip Olson, to purchase the
Washington D.C. area's first microbrewery from present owner Jerry Bailey and other private owners. The parties announced the sale of the brewery in a joint media statement back in March 2006.
The agreement provided that Fife, Old Dominion's Vice President of Marketing and Communications, and Olson, a managing partner at the Capital Grill in Tyson's Corner, Virginia, would assume management of the brewery. Bailey was to remain with the company on a part-time basis.
"We are fortunate to be purchasing a company with great products, a great reputation and tremendous brand recognition," Fife said in the statement. "We hope we can continue Jerry Bailey's amazing legacy."
News of the demise of the initial purchase agreement has been kept pretty quiet, even though the deal has been faltering for some time. In a recent email exchange, Fife confirmed that the original agreement fell through, but did not provide specific details. "There is little that I can confirm at this point," he said. "The situation has always been a bit uncertain, subject to change on any given day."
The situation at Old Dominion is certainly a complicated and confounding one. Around the time the purchase agreement was announced, local prosecutors charged the brewery's former bookkeeper with embezzling more than $100,000 from the company. The employee was terminated in early 2005, but the situation remains unstable at the brewery and pub. Bailey himself admitted as much to the local Loudon County newspaper after the announcements of the sale and the prosecution went public.
In the article, Bailey admitted that the alleged theft spread through the company, causing low employee morale and general instability. "Part of it is we still don’t know why we are not doing well,” he said.
Employees were disturbed to learn not only of the theft, but also that the books were improperly maintained. Managers at the time believed the company was in the black by $1 million, when it was actually in the hole by $1.1 million. "We went through half of 2005 not knowing exactly how bad 2004 was," Bailey said. "We had sort of declining profits through 2002 and 2003 and we thought we had straightened things out. We thought we were doing a lot better and each month that’s what the financial record would show except it was all untrue.”
Despite all of this chaos, Fife and Olson remain committed to trying to buy the brewery. They have submitted a second Letter of Intent to purchase the brewery and Bailey and the board are presently considering it. There is word that the company is also considering the hire of a new president to replace Bailey. "We have poured an incredible amount of time and resources into making this happen, and we will do what we can to see it through," Fife says. "If our proposal is accepted, we are prepared to move quickly to close the deal."
If their bid is accepted and the deal goes through, Fife and Olson will have their work laid bare before them. Old Dominion has long been a brewery adrift without a captain. Rumors of Bailey's desire to sell the brewery have been afloat for years and even Anheuser-Busch approached the brewery about an acquisition and distribution deal. Founded in 1989, the brewery mainly distributes its beers in Maryland, Virginia, and the District of Columbia, with limited sales in a handful of other states. As late as 1998, the brewery continued to enjoy solid growth. But then the bottom dropped out and Old Dominion has never really had the proper direction to grow its business since that time. The brewery sold 23,300 barrels in 1997 and 25,105 barrels in 1998. By 2005, the brewery only managed to produce a miniscule 27,517 barrels, a mere 9-percent increase over 1998 production levels. This wasn't during the doldrum years of 1995 or 1996, but amid the boom years where craft beer enjoyed nearly that much growth every year. Some of this growth also came, not in the performance of its own beers, but in the increased sales of brands Old Dominion contracts for other breweries, including for the popular Starr Hill Restaurant and Brewery in Charlottesville and Brewer's Art in Baltimore.
Fife knows the reality of the situation. He has been with Old Dominion since 1996. For Old Dominion's sake, let's hope a change in leadership, even one that continues with employees who helped lead the brewery during these less than stellar performance years, can help the company stage a comeback.
If this comes off as a bit of a rant, perhaps that is inevitable. I sit in the position of a distant admirer of Old Dominion and I'm entirely disappointed in its poor performance. Like a talented student wasting countless gifts and talents, Old Dominion is the worst kind of delinquent (or perhaps the incredibly talented band that drifts into the wilderness of complete mediocrity). Unlike many similarly situated breweries, Old Dominion isn't faltering because it makes crappy beer. Quite to the contrary, the brewery produces a remarkable, if unwieldy range of beers, including many lagers and contract products. I first visited Old Dominion in 1999 or 2000 as part of a whirlwind East Coast beer tour with my brother and another friend. While seated at the relatively new pub, I was blown away by the brewery's delectable Oak Barrel Stout and impressed by the depth of its lager offerings. Every year at the Great American Beer Festival, I make a point of stopping by Old Dominion to visit with old friends, such as Tupper's Hop Pocket (one of the first craft beers I remember trying), Dominion Ale and Lager, and the oaked stout. On trips to D.C., I sidetrack friends to the hard-to-find pub three miles shy of Dulles Airport. A few years back, I enjoyed a beautiful 2-liter growler of the brewery's delightful 2002 Millennium Barleywine with family and friends (and it remains to this day the only growler I own).
So when I hear of the brewery's woes, consider its lack of direction, see its languishing sales figures, and struggle to find its beers in bars and package stores throughout D.C. and Virginia, I take it a bit personally. On my most recent trip to the area, one which took me from the district to Maryland, Shenandoah National Park to Charlottesville, the only place I found Old Dominion was at the brewery itself. Travel around Maryland and Virginia and the anecdotal evidence of the brewery's lack of presence is disturbing.
Despite its serious troubles, legal, financial, and otherwise, Old Dominion still manages to possess a remarkably unblemished reputation. There are true opportunities for the brewery to succeed and grow, especially considering the comparatively light competition in the region. With the beers in its portfolio, distributors and the sales team should have no trouble filling niches.
I will be following the Old Dominion story as it continues to unfold and hoping that the brewery, under new ownership or new leadership of another kind, can right the ship before it sinks, either at the hands of pirating competitors or mutinous, disillusioned employees.
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