E-Malt.com News article: US, MA: FDA ban of caffeine beer forces New Century Brewing to shut down

Having entered in the beer industry in 1984 by helping Jim Koch with Boston Beer become publicly-traded and Samuel Adams become a national powerhouse among craft brewers, Rhonda Kallman started her own beer company in 2001, Wicked Local Dedham reported on June, 29.

Kallman also knew all the hurdles - or at least she thought she did: landing shelf space at distributors and retailers, here and in other major metro markets; maintaining quality when the beer is made at an out-of-state brewery, by a separate company; finding the financial backing to get the products in front of a wide audience.

But Kallman didn't count on what would be her biggest obstacle: The Food and Drug Administration.

Kallman is shutting down New Century Brewing for good this month, and preparing for the next challenge. The decision follows a move last fall by the FDA that essentially banned New Century's Moonshot beer because it contained caffeine.

Kallman, who ran New Century out of her Cohasset home, puts most of the blame for New Century's demise on the FDA. The decision to label the caffeine in the beer as a dangerous substance took the fizz out of her expansion plans. She said it didn't make sense to reformulate Moonshot one more time, especially without its signature ingredient. Her other product - Edison Light - had a following, but it wasn't doing well enough to sustain New Century on its own.

Moonshot's trajectory since its launch in 2004 hasn't always been a steady, upward flight. But it seemed Kallman found a way to give the brand the national recognition it needed when she was featured in Anat Baron's 2009 documentary "Beer Wars." After the movie became widely available, Kallman said, consumers started deluging her with requests. Finally, she had a way to get the Moonshot name out there on her shoestring marketing budget.

Timing is everything when it comes to launching a brand. And, in this case, the timing wasn't good. Moonshot's rise in prominence coincided with a national crackdown on caffeine-infused drinks. The FDA and various attorneys general were already investigating the consequences of mixing caffeine and alcohol by the time Four Loko became a hit on college campuses last year.

Both drinks had caffeine. But they were quite different, in meaningful ways. Moonshot, like many pilsner beers, had a 5 percent alcohol content by volume. Four Loko's was closer to 12 percent. Moonshot came in standard 12-ounce bottles, Four Loko in those jumbo 23.5-ounce cans. As far as Kallman sees it, she made every effort to market her beer to adults, while Four Loko was aimed at a younger crowd.

None of that seemed to matter to the FDA when the agency lumped together Four Loko, Moonshot and two other caffeinated drinks in November. All four were determined to be unsafe because straight caffeine was added to them during the manufacturing process (alcoholic beverages containing tea or coffee, including Boston Beer's Twisted Tea, were left untouched).

Kallman didn't get any favorable treatment in her home state - far from it. Almost immediately after the FDA made its declaration about Moonshot's dangers, the state Alcoholic Beverages Control Commission put an emergency ban in place. In a matter of days, Moonshot was declared illegal in Massachusetts and yanked off the shelves.

Kallman said she tried to persuade the FDA to keep Moonshot in flight, partly by attracting more than 5,000 fans to leave online signatures on her website to protest the federal agency's action. But after unsuccessfully going to Maryland to plead her case to the FDA, Kallman knew there would be no room for flexibility.

The truth is a national launch of Moonshot would have been a tough manoeuvre even without the FDA's interference. While she had two unusual products, she certainly was entering a crowded field. At the time of Boston Beer's inception, Kallman said there were probably something like 35 breweries across the country. By the time she launched New Century, there were more than 1,200.

The three-tier system for beer distribution - a system that requires a middleman between the brewer and the retailer - makes it tough for small companies to break into the business, especially if they don't run their own breweries. Kallman didn't just need to convince merchants to order Moonshot for their shops. She also needed to persuade wholesalers to pick it up. She says she had no way of selling her beer directly to the consumers who contacted her on a daily basis after the release of "Beer Wars."

Baron knew Kallman faced an uphill battle. In fact, that's one of the elements of Kallman's story that Baron thought made her a compelling character for her documentary (Kallman shared screen time with Dogfish Head founder Sam Calagione).

Baron said Kallman proved to be a polarizing figure in the industry. Plenty of purists scoffed at her inclusion in the movie, dismissing caffeinated beer as a gimmick that was flatter than a can of Bud left in the sun. Kallman, Baron said, really needed these craft beer tastemakers to get behind her and request distributors and stores to carry the beer. The wholesalers are often looking for the next big thing, Baron says, and it can be tough in an increasingly crowded field to stick with slow-growing brands and allow their audiences to gain some critical mass.

Baron points to other factors that were working against Kallman. She had no full-time staff to provide support during the tough times. No requisite war chest for ads and promotions. No legal team who could come to her defence when the FDA knocked on her door.

Kallman wouldn't say the FDA is the sole reason behind her decision to close New Century. But she said it became almost impossible to find distributors to pick her up once the federal agency began scrutinizing caffeinated drinks. By the time the FDA issued its decision in November, its review had already been well-known within the industry for a year.

Some entrepreneurs' dreams die from inadequate financing, commitment or energy. Others are pushed to the side to make room for a new priority. And some dreams, like Rhonda Kallman's, just get ground down by the merciless wheels of a government bureaucracy.



01 July, 2011