Reality sunk in for the owners of the Faubourg Brewing Co. at a July board meeting.

Earlier in the year, everything seemed on track to turn their New Orleans East facility into a regional beermaking hub. Demand for their slate of craft beer brands from around the Southeast was seeing double-digit annual growth, especially for top seller White Zombie, and production at Faubourg needed to grow.

In May, Alexi Sekmakas, the 30-year-old CEO of Made by the Water, told his partners at Saints owner Gayle Benson’s investment company that they were starting to hire for a third shift. That would allow them to produce round-the-clock and make good on a plan to push output at Faubourg  toward its capacity of 1.4 million cases of beer a year.

But by July, Sekmakas had bad news. Nobody would work the night production shift, he told the board. Would-be hires were too worried about security.

“He told us, ‘There is no dollar amount we could pay employees to show up at midnight and leave early the next morning. It’s not going to happen,'” said a board member who wasn’t authorized to be quoted by name.

Bills and taxes

A lack of overnight workers was one of several issues in recent months that led to Faubourg’s surprise announcement that it was scrapping plans to expand the facility into a regional beer production powerhouse, according to interviews with company executives, board members, public officials and civic leaders.

As well as the hiring trouble, Faubourg was struggling to cope with a series of power outages, big water charges from the Sewerage & Water Board and a half-million-dollar tax bill.

The news of the closure came as a blow to local leaders who hoped Faubourg would show that businesses could have success expanding in New Orleans East. It was also a blow to Benson. While the brewery is a tiny fraction of her late-husband Tom’s business empire that she now oversees, it had been their dream to try and bring high-volume beermaking back to New Orleans.

Made by the Water said it will keep its headquarters and the tap room and event space at Jourdan Road, accounting for about two dozen jobs.

But major brewing has been contracted to several out-of-state brewers and it’s not clear yet what will happen to another two dozen production and distribution jobs.

Greg Bensel, spokesperson for Benson’s Saints and Pelicans organizations, said Monday that they are keeping options open for Faubourg’s future.

“Despite the challenges the brewery has faced, we remain committed to economic development and building commerce for our city,” he said.

A grand plan 

Faubourg’s story began in 2017 when Tom and Gayle Benson bought the century-old Dixie Brewery operations and pledged to bring production back to New Orleans.

After her husband died a year later, Gayle Benson began to build a $30 million state-of-the-art facility at the current site, which includes a replica of the old Tulane Avenue brewery tower, a new tap room and live music stages.

In early 2021, Benson completed a rebranding effort, opting for the new Faubourg name to shed the company of any perceived links to the Confederacy.

By late 2022, production of Faubourg brands was at 4,000 barrels, or 56,000 cases a year, with some contract brewing pushing output to 12,000 barrels, just a fraction of its overall capacity.

Then last year, Benson merged with Made by the Water, a six-year-old fast-growing craft brewing company owned by Sekmakas, his father Viktoras, a former top executive at paints-maker PPG, and Alabama-based investor Darin Phillips. Benson took a 49.99% stake in the company and handed operational control of the Faubourg facility to her partners, with the plan to move all of their regional production—even if it meant closing some long-established operations—to New Orleans East.

Sekmakas said in an interview Thursday that while he had committed to making things work, the writing was on the wall for Faubourg when they started trying to recruit workers.

Though there have been no violent incidents against employees since Made by the Water took over last September, parts of New Orleans East near the brewery suffer from some of the highest crime rates in the city. Several Faubourg employees had their cars broken into earlier this year while they were parked in the brewery’s lot.

“One just got up and walked out of the interview when we said it was for the night shift,” he said.

“We also lost internet service for four days because someone shot out the internet box,” said Sekmakas, who is in a dispute with Faubourg’s former private security firm. “That definitely affects the day-to-day.”

Massive costs

The security and hiring issue was just one of several concerns that Sekmakas and Benson executives took to Mayor LaToya Cantrell and other officials earlier this year.

“We frequently lose power, ” Sekmakas said. “Even on days with blue sunny skies it can happen.” He said that over the past eight months they have had 10 production dumps costing around $30,000 each time when machines had to be reset.

Entergy spokesperson Beau Tidwell said the utility regretted any interruptions to service, but that Faubourg’s problems were partly because they hadn’t bought equipment that many large users install to prevent power surges.

Dan Griffin, Faubourg’s master brewer and head of operations, said they found other ways to deal with surge issues without spending $100,000 on new equipment. “The real issue was the power service and all the batches we lost this year were due to outages,” Griffin said.

The S&WB bill was another issue. It had climbed to more than $300,000 after eight months of operations, far above what Faubourg had expected. 

Brewery company executives provided S&WB with data showing that Faubourg’s water bill is 10-to-15 times higher than comparable brewers in other cities in Ohio, Georgia, Florida and South Carolina. But they said they were told that the high bills were because they had a lot of waste water, for which S&WB charges a premium.

Grace Birch, a S&WB spokesperson, said the utility doesn’t discuss individual customers’ bills.

“As a water utility, we don’t have any brewery-specific information of other similar-sized businesses across the country — only comparable water and sewer rates,” she added, referring to a brochure with water and sewerage rates for various U.S. cities.

Sekmakas and Benson executives huddled in several meetings over months with S&WB officials, including Executive Director Ghassan Korban. They also met with politicians, city officials and others who were responsive and helpful in meetings. But they couldn’t fix the core issues, they said.

“We had an all-hands-on-deck meeting at the end of May when we first got word of these headwinds,” Jeff Schwartz, Cantrell’s director of economic development said Friday. He said the mayor and a group of senior city officials, as well as City Council member Oliver Thomas, who represents New Orleans East, immediately went to visit the brewery.

“We went out and heard all the challenges and went through it and we were working through each one of them,” Schwartz said. “Frankly, we were surprised at the announcement.”

Oliver Thomas, the City Council member for New Orleans East, said he thought things were improving.

“Things like speeding, drag racing on Almonaster, illegal dumping; they were not happy,” he said. “The mayor was in those meetings and we were making progress.”

The city hasn’t given up hope of convincing Made by the Water to reverse course at Faubourg, Schwartz said.

Also hanging over Faubourg is a $540,000 tax bill, and while there is little City Hall can do about the property assessment, which is a matter for the independent Orleans Parish Assessor, Schwartz said they have started talks with Made by the Water over a Payment in Lieu of Taxes, or PILOT, which could reduce future tax bills.

Schwartz said he hopes to gather parties together after Thanksgiving to see what might be done.

“We’re going to mobilize our resources and do everything we can to reverse that decision,” he said.

Staff writer Stephanie Riegel contributed to this report.