SARANAC LAKE - A battle over licensing fees may lead to Saranac Lake 6er beer no longer being brewed in the village.
The village has decided to seek bids from other breweries to license an official beer named for its new hiking program. That's after failing to reach an agreement with Mark Gillis of Blue Line Brewery, who has been making and selling Saranac Lake 6er Pale Ale since mid April.
At its meeting Monday night, the village Board of Trustees voted 4-0 to issue a request for proposals "from breweries wishing to utilize the Saranac Lake 6er trademark through an exclusive licensing agreement."
Village of Saranac Lake Mayor Clyde Rabideau, right, and Trustee Paul Van Cott, center, sample beers at Blue Line Brewery in Saranac Lake, owned by Mark Gillis, left, following a village board meeting in May. Board members were there to pick an official beer for the Saranac Lake 6er hiking program, but a deal with Gillis fell through amid license fee negotiations.
(Enterprise photo — Chris Knight)
The move opens up the possibility that an outside-the-village brewery could get the license. Gillis, whose nascent microbrewery is the only one in Saranac Lake, could still submit a bid, but he said Friday he's not going to because he's been so frustrated by the negotiations with the village.
"There's a better chance of me running up and down Broadway in my boxers and a (New York) Yankee shirt on than submitting another proposal," said Gillis, a Massachusetts native and avid Boston Red Sox fan.
The Saranac Lake 6er program, unveiled in February, encourages hikers to climb six mountains in the Saranac Lake area. Since it was officially launched on May 25, more than 200 people have registered their hikes with the village and become 6ers. As part of the initiative, the village trademarked its Saranac Lake 6er logo and said it would license it to local vendors of beer, food, apparel and gear.
Following a March village board meeting, the village board visited Gillis' Lake Flower Avenue brewery, sampled four of his brews, and picked what was then called "Pisgah Pale Ale" as the official 6er beer. It was subsequently renamed "Saranac Lake 6er Pale Ale."
"At that point, Mark Gillis was given the go-ahead to sponsor, promote and use the 6er logo," Trustee Allie Pelletieri said Monday. "Then the licensing part came up, and I guess there was a breakdown in the negotiations."
Gillis, in a June 30 letter to the village, said he was told in March that there would be a licensing fee but it wouldn't be significant. He said he didn't get a licensing agreement from the village until mid June, three months after he started selling 6er Pale Ale in one-gallon growlers at the brewery and in kegs to local bars and restaurants, and talking up the 6er program in establishments he visited around the North Country.
The village, in its proposed agreement, asked for 10 percent of all sales of 6er brew, Gillis wrote in his letter. Since he was charging $10 per growler and $50 per keg, the village's cut would have been $1 per growler and $5 per keg.
"I quickly responded that this was not possible," Gillis wrote. "This very well could be a $3-5,000 number over the first 12 months, and I did not think it was reasonable."
Village officials then asked for a $1,000 one-time fee for a one-year license. Gillis said the village also gave him a June 30 deadline to agree to that fee or it would solicit other regional microbreweries for proposals.
Gillis wrote back saying he thought the $1,000 was still a little high. He was also worried about the license term being so short.
"How can I continue to promote a brand name not knowing what my fee is going to be after May 31, 2014," Gillis wrote. "You simply cannot try to build a brand name/business under this scenario."
During the negotiations, Gillis wrote that he heard from the village that he was "hampering the success of the licensing" because he doesn't have a bottling or canning line, which means his beer can't be sold in grocery and convenience stores. He said in the letter that he plans to have a canning line at some point.
"Wouldn't the village want to grow with their very own brewery vs. going to XYZ brewery in Albany to have them can it?" Gillis wrote.
At a meeting in early July, the village board tabled a resolution to seek bids from other breweries for the 6er license. Mayor Clyde Rabideau told the Enterprise then that Pelletieri had asked for more time so he could negotiate personally with Gillis.
"He's the only brewery in town," Rabideau said at the time. "If we can make a fair deal with him, that's good. If his business is too new and he's not able to do that, then we're going to go out to RFP and solicit others. But first and foremost we want village businesses to prosper."
Over the last few weeks, Pelletieri said he's tried to reach a settlement with Gillis, whose most recent proposal was for a three-year licensing fee of $500 to the village in the first year and $1,000 in years two and three. Pelletieri noted Monday night that the amount is within $500 of what the village is asking for in the current RFP: $1,000 a year over three years.
"I think we owe him at least the courtesy to listen to his proposal since we did start with him," Pelletieri said. "This probably should have went out to a request for proposals way in the beginning. I'd like to see us rescind this motion and at least consider his proposal."
Trustee Tom Catillaz said Gillis would be able to submit a proposal when the RFP is distributed.
"He'll be able to chime in at that point," Catillaz said. "He may be the only one we get. Who knows?"
There was no other discussion before the board unanimously agreed to issue the RFP.
Gillis said Friday that he isn't planning to submit a bid because he felt he made "an offer that was fair." He admits it was a mistake to not get the licensing terms settled in the beginning. He also said he's sold 1,000 to 1,500 growlers of beer with the 6er logo since mid-April.
In addition to the $1,000 annual fee over three years, the village's RFP says priority will be given to bids from village breweries, followed by those in the Adirondack Park, followed by those in New York state. Priority will also be given to "breweries that offer innovative marketing plans for the 6er products."
The village has one other licensing agreement for its 6er program, with Bear Essentials, a clothing design and retail store on Main Street with a second location in downtown Lake Placid. Rabideau said the village gets roughly a dollar or two for every Saranac Lake 6er hat or T-shirt sold at the business.
Contact Chris Knight at 891-2600 ext. 24 or firstname.lastname@example.org.