A year after opening, controversial Norfolk brewery closes
When Norfolk's City Council approved the permit for the controversial Armed Forces Brewing Company over some neighborhood objections, several members said let the marketplace decide its fate.
It didn't take long.
A year after opening its doors, Armed Forces is closing, after a raucous launch when hundreds of community members opposed what they said was a divisive business whose marketing glorified violence, threatened LGBTQ people and said those with different views don't love America.
A military-themed brewery sparks a fight in a Virginia military city
Early Thursday afternoon, Nicole Couch, the taproom manager, got a call from Alan Beal, the company's chief executive officer, with the news employees had been expecting. The company had been bleeding red ink for years. A reconfigured board had met that morning and told Beal to 'lock it up' and close the Norfolk facility after only 13 months.
Couch, a local beer industry veteran who had worked to revitalize what she called grim taproom attendance after being hired in June, realized she couldn't tell her staff the news by text. She sent an emergency message saying the taproom would not open that day. Minutes later, they agreed to meet at Smartmouth Brewing in Norfolk that night.
There, she told them they had lost their jobs. She'd hoped Beal would issue an official statement after their phone call, as he'd told her he would in 30 minutes. He didn't. Employees discovered the news and his statement by checking Facebook during the meeting. They were appalled that Beal was blaming Norfolk residents for the failure.
'There was no thank you (to the staff). It was all woe is me,' she said.
'Our ability to profitably operate in Norfolk was severely affected by the local woke mob – a few individuals in the area who have no love for the traditional American values we hold as a company,' Beal wrote, concluding that the taproom and brewery would go up for sale. 'These people spread outright lies about our company, our employees and our shareholders before we even opened our doors.'
But interviews with nine former employees and contractors for Armed Forces suggest that local opposition played a smaller part than Beal's claims. They said the Norfolk taproom, where customers ebbed and flowed depending upon events, did not reach its revenue potential partly because of the controversy. But Armed Forces ultimately suffered setbacks selling beer, notably losing market share after failing last year to pay Brew Hub, a Florida contract brewery it had been using since before the Norfolk purchase.
'The closing of AFBC had nothing to do with a 'woke mob,' former mid-Atlantic sales manager Tim Labbe wrote on Facebook, saying he was part of a team growing sales in seven states. 'We had great relationships with the major chain grocery stores in those states as well as big distributors. When Alan (Beal) stopped paying bills and stopped complying with the agreements in place that all dried up.'
The stories from former employees are strikingly similar. They joined Armed Forces believing in the mission to support veterans and first responders. They stayed even though paychecks occasionally were late, their suggestions to improve the business were ignored, bills were not paid, some charitable obligations were not met, and key repairs and improvements to the brewing operation languished for weeks because Beal said there was no money. The few employees covered by health insurance paid by the company learned in November it would be canceled on Feb. 1.
Beal, they said, focused more on marketing and luring investors than making the brewery profitable, funding promotions with NASCAR, the Norfolk Tides and numerous other events while improvements and repairs to the brewery languished.
Beal did not respond to a voicemail message or messages sent to two of his Facebook profiles requesting comment.
Gov. Glenn Youngkin announced Armed Forces' move to Virginia in July 2023, touting $300,000 in incentives. A spokesman for the Virginia Economic Development Partnership said Armed Forces qualified for $24,500 in hiring support, but did not apply for it. It's not clear if any other incentives were paid. Sean Washington, Norfolk's head of economic development, said the city did not provide any funding to the company.
Norfolk City Council OKs controversial military-themed brewery
As it ramped up the Norfolk operation, the company raised about $8.5 million from more than 10,000 investors who ponied up a minimum of $200 in what was essentially a crowdfunding campaign. Contributors got rewards ranging from stickers to hats, although some former employees who invested said they never arrived. Those investors have no voting rights, and the company says it is uncertain if it will ever issue dividends. The stock cannot be sold on the open market.
Armed Forces suffered a net loss of $1.76 million for the first six months of 2024, according to a recent Securities and Exchange filing. The company lost $2.4 million in 2023. According to the filing, the company had net cash of $12,239 on June 30, 2024, down from an originally unaudited reporting of $381,370 and down from $282,549 on Dec. 31, 2023.
It appears from SEC filings that Armed Forces burned through the majority of cash from investors over two years to cover operating losses.
John Galanti, who has worked in beer sales for nearly four decades, came aboard Armed Forces in March 2022 as national sales director. Galanti left the company in July 2024 after learning it pulled back from pricing and promotional agreements with Publix, a chain of 900 stores in Florida, and had failed to pay Brew Hub, a contracting brewery in the state.
'You can't survive in Florida without having Publix,' he added.
Galanti said he'd heard rumors about the failure to pay and the refusal of Brew Hub to release beer to distributors but there always were excuses. When he confirmed that was the case, he gave notice.
'I didn't want any part of anything like that,' he said.
He advised the company against purchasing the former O'Connor Brewing facility for $3 million in 2023, far above the $1.86 million assessed value, according to city records.
'I would have gotten something a lot smaller,' Galanti said. 'I've been doing this 37 years, so my advice was find some small locations of some brewers that were looking to sell. It would have probably been about a quarter of the price of what they paid (for O'Connor). But again, I stayed out of that because they were just like, 'We'll handle this part.''
Armed Forces Brewing does not own the former O'Connor property, according to SEC filings. It is owned 72% by a third party, Ironbound AFBC Properties, LLC. Armed Forces has a 10-year lease and an option to purchase after the first year.
The third-party owners include Evan Almeida, listed as a principal in Ironbound. He has a property investment firm in New Jersey and is also an owner of EmpireATM, a company with multimillion-dollar revenues. He and his brother, Michael, are listed as $50,000 to $99,000 investors on the Armed Forces site.
Ironbound, according to city records, is overdue on a $4,600 tax bill and owes nearly $13,000 overall.
According to the SEC filing, Armed Forces' lease with Ironbound calls for $549,600 payments in 2024 and 2025 with increases after that. Galanti called that rent 'an insane amount of money.'
Galanti thinks the company could have been successful by dominating a few grocery store markets rather than opening a taproom and focusing on attracting investors.
'It's great if you're trying to get investors, but the bottom line is you have to sell beer because investors can come and go,' he added.
Beal is paid an $87,000 salary. The rent on his Norfolk apartment is covered by the company. He uses a leased company vehicle. He now owns 7% of the voting stock, down from 27.5% according to SEC filings, including an amended one that appeared on Monday reporting the Norfolk closure. He said in his announcement the company would relocate to friendlier territory, but Galanti and others formerly involved with the company said that's unlikely.
Civil actions filed in Norfolk, Portsmouth and Henrico seek payment of bills, but the brewery's former employees say the problem is much deeper. A hops provider from the Midwest posted that the company owes him $2,600. Allen Fabijan, who runs an advertising and marketing company, connected with the company following the initial controversy when Armed Forces' impending arrival in Virginia was announced.
The controversy centered on social media posts by Robert O'Neill, a former board member and brand ambassador, which criticized the Navy for using a drag queen in a recruitment ad, mocked transgender people and refused to wear a mask on an airplane during the COVID-19 pandemic. Shortly after the company's purchase, he was arrested in a Dallas suburb for public intoxication and misdemeanor assault after a security guard who attempted to help him from a bar to his room told police he called him a racial slur. O'Neill was removed from the company's website, but later reinstalled.
Fabijan said he often works supporting veterans and first responders so he was eager to partner with Armed Forces.
'I was like, wow, what a great partner this will be for the community because they're going to give back to the causes that I feel matter,' he said. He orchestrated their opening and did other work, but was only paid a deposit.
'It was always an excuse, another excuse, another excuse. 'Oh, we'll get it taken care of,'' Fabijan added. He estimated that Armed Forces owes him about $20,000.
In a March 2024 press release, Armed Forces reported that a portion of sales were distributed through the AFBC Veterans' Foundation to organizations 'that help homeless veterans, combat PTSD, and address the veteran suicide crisis.'
Beal told Fox Business host Maria Bartiromo about the foundation. But the IRS revoked its tax-exempt status for failing to file tax returns for three consecutive years. During the interview, he also cited donations to Code of Vets, organized by Gretchen Smith, an investor. That charity's nonprofit status also has been revoked by the IRS and its site is dark.
The latest SEC filing reports that Armed Forces made $176 in charitable donations during the first six months of 2024.
When charity events he proposed began to fall apart, Fabijan started recommending other veteran-owned breweries in the area (Beal is not a veteran).
'I'm one person of many that they screwed over,' Fabijan added. 'Do I understand the pushback that was coming from certain members of the community that didn't want to support the brand? Do I think that it was slightly over the top? Sure. But overall, the issue there wasn't the community. The issue was that he (Beal) burned the bridges of the people that could help.'
Galanti is a religious man and a veteran who is on the board of DDSVets, a nonprofit that provides service dogs to veterans, active-duty military and first responders. He thought Armed Forces handled the LGBTQ+ controversy poorly.
'I'm a big, firm believer in God,' he said. 'You accept everybody.'
He saw Armed Forces as a way to merge his passion for beer and helping veterans.
'They actually had a great concept,' he said. 'It really is a shame, because it could have really benefited a lot of people, a lot of veterans.'
Couch, a military spouse, stayed through delayed paychecks and denials to fund little things like a $200 bingo set that might improve taproom attendance. She believed the narrative with the neighborhood could be changed by talking face to face and revising the tenor on social media. She grew protective of her team and thought the taproom was turning a corner. The first few days of March yielded revenue equal to the first half of February. She had events – retirements, fundraisers, celebrations of life – scheduled for March and April.
Taproom employees, including her, have been told they will not receive their final paychecks. They have not heard directly from Beal and they have not been let into the brewery to get their personal items.
They deserved better, she said. 'We had a really cool team,' Couch added. 'We had a really great team.'
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