Beyond the Mask: Rebuilding after COVID-19

earth covered with face mask

By: Tracey L. Kelley

  At press time, details about the future economic impact of the pandemic are in constant fluctuation. However, most forecasters are certain greater challenges loom large. 

  It’s not for a lack of effort. There were many expedient pivots in the craft beverage industry, from the much-lauded manufacturing of hand sanitizer and flipping stale beer into whiskey to crafting subscription boxes and extending off-premise sales.

So, now what? We asked business consultants to provide their perspectives, and they eagerly offered frank but encouraging relaunch and repositioning action steps we hope spark ideas. Our experts include:

  Jacob Halls, partner, and Rick Laxague, partner, Craft Beverage Consultants in Columbia, Missouri. Halls advises in areas of business strategy, compliance and marketing and distribution. Laxague provides plans for distribution, operations and sales and marketing. Laxague said, “Our experts have a combined 150 years in the alcoholic beverage industry, with deep knowledge in everything from sales and distribution, production and regulatory compliance to marketing, package design, event planning, IT, (social) media, hospitality and even values-based executive coaching.”

  Scott Schiller, managing director of Thoroughbred Spirits Group, which specializes in helping new and established spirit companies. Schiller said, “Since 2009, our Chicago-based company has helped launch more than 30 distilleries, designed over 50 spirits brands and facilitated three exits.”

  Beverage Master Magazine (BM): Right now, there’s still considerable uncertainty in the beer, cider and spirits industries. Is this a time to wait and see what happens, or an opportunity to take proactive steps?   

  Jacob Halls (JH): Be proactive—successful companies see their environment and adapt to it. Waiting to see what happens to you takes you out of an element of control of the direction of your company. See the changes in the hospitality climate and take note of how they’re not going to be going back to how they were anytime soon and adapt accordingly.

Consider:

1.  Were your on-premise sales 80% of your business? Find a way to team up with your prime on-premise accounts to set up partnered order pairs if the state allows curbside/delivery alcohol sales. For example, if you have 200 kegs, sell them directly from the taproom.

2.  Slow down production in the areas where your sales drastically diminished, and shift to areas that have picked up. 

3.  Are you currently doing curbside sales at your taproom to supplement that revenue generation? Have you created a gift card program? Have you developed an online sales system and where legal, delivery/distribution program for your products and merchandise? Have you explored every option of new streams of sales? How have you maintained connection with your customer base?

Adapt—or Get Ready to Sell Your Equipment

  Rick Laxague (RL): Be proactive now! If you’re not analyzing your business right now and what the new normal looks like for your brand post-COVID, chances are you won’t recover from this.

Scott Schiller (SS): The spirits business is recession resilient, not recession-proof. I’m not an economist, but at the time of writing this, I don’t foresee the economy recovering quickly. As such, there’s no better time for the well-prepared—whether existing or those in the wings to enter the industry.

  I take no pride in writing this, but there are many distilleries, and companies in general, at risk before COVID. Unfortunately, COVID is forcing their hand. The knowledgeable, well-financed, nimble and diversified—such as those with a healthy combination of on- and off-premise ratios and affordable price points—have the potential to flourish. For the distiller in planning, there’s likely to be less competition and a healthy offering of used equipment.

  BM: In your estimation, how much of a shift do you think the pandemic and its aftermath will make in the industry?

  JH: I don’t want to sound grim, but the taprooms, bars and restaurants will take the largest hit, which passes to the alcohol producers for a decrease in on-premises sales.  Walking around or dancing shoulder-to-shoulder in a club for three hours isn’t going to be viewed as normal for a while. If an establishment’s happy hour was its primary earnings time-of-day, and it could seat 200 people with the average space between seats being two feet, how many people concerned about this will want to sit that close to someone? 

  As businesses adapt, seating space becomes less per square foot. In order to earn the same dollars-per-hour, something has to change in the pricing or the amount of staff—both of which can drastically change customer flow and demographic of the restaurant. Service may go down with fewer staff, causing a less-positive experience and fewer return visits. 

  If the prices have to go up in order to maintain the same level of staffing, then some customers may now be priced out of the establishment, as they’re financially affected by the pandemic as well. 

  The brands of alcohol purchased by the establishment may also change: a package by the smaller craft producer that’s normally $45 per case or $200 per keg may be passed over for a cheaper $23 case and $60 keg in order for the establishment to maintain its customer service level of staffing and pricing. 

  Something will have to give. Bars, restaurants, wineries, breweries, cideries, meaderies and distilleries will suffer and, in many cases, cease doing enough business to survive their existing debt loads.

  RL: It’s obvious that all segments of the industry have seen growth from new entries—that is, companies and brands opening in the past eight or more years. Some of these segments have triple-digit growth. This caused the glass for the consumer to be overflowing with overloads in brand, flavor, style and marketing. There’s no loyalty to a brand in the new 21–28 age range due to the influx of offerings. To stop the glass from overflowing, you have the following options:

1.  Get a bigger glass.

2.  More space in retail stores, as the stores aren’t getting any bigger. B: More stores, but with the cost of real estate and larger corporate retail stores the “A locations” are gone and a “C location” won’t deliver a ROI.

3.  Turn off the faucet. Stop the “overflow abundance.” The thinning of the crowd needed to happen, but it’s unfortunate that a worldwide pandemic life scare is what it took. Think of Mother Nature and our farmers who produce ingredients to make these beverages. They burn off their fields after harvest to create new healthy growth for the coming year.

  SS: The mid-size and larger distillers will benefit from this pandemic. Part of what has hindered their typical growth patterns is the number of new entrants and the plethora of local distillers who often gain favor.

  The second tier puts an incredible focus on companies that provide their quickest pathway to recovery/profitability, which will likely cause some brands to have even less attention. I believe some brands will be delisted before that dance plays out.

  Once we reach the third tier, the on-trade will rely on brands that provide value and support. Off-trade is doing very well, but I don’t foresee these profits being poured into unsupported/unknown craft brands, as consumer confidence isn’t likely to be there to warrant the investment to carry them.

  BM: In what ways is a relaunch plan essential now, and how can a producer formulate one? What might it entail?

  JH: I tend to have three or more plans for almost every situation—you can never be too ready, but you can always be underprepared.  One may ask how to prepare as a producer. In order to plan, know your business history:

•    Where have you struggled before?

•    Where were you suffering most recently?

•    How agile is your marketing team to communicate your company’s changes, and in a tone that maintains a positive message? 

•    How agile is your production team in shifting from kegs to package? 

•    How able is your operations team to facilitate the changes that need done: ordering disposable growlers, cans, contactless delivery material, etc.

•    How able are you as the proprietor to manage the economic responsibilities needed to maintain changes in your company?

•    Are you able to make hard decisions as needed?

•    Laying off or furloughing a long-time employee is incredibly hard to do. Do you have a support system yourself for this?

  Account for everything that has happened and can happen. 

  RL: What is the saying: “You have one chance to make a good impression?” Well, now you have a second chance! Look at your original business plan and model and select all the positives—then write a new one. You can remove things you did wrong and implement those you thought of after the fact. You know more now, but not everything. So source out what you don’t know, a.k.a, “phone an expert.”

  SS: No matter how this pandemic is influencing your business, it’s vital to create a strategic plan with several pathways and outcomes, for there is only one who is all-knowing in this unknown, and that is neither you nor me.

  With plans in place, financial models need to be built to ascertain how much time you have, and along with an awareness of critical decisions and time periods. Assigning weights to the various outcomes also allows you to make a calculated risk assessment on what should even be attempted.

  BM: What top three action items do you recommend to producers right now?

JH:

1.  Don’t produce just to produce unless you need to burn through raw materials already purchased. If you can, barrel-age or delay the release dates to maintain the production/release rate to sales rates.

2.  Take a cold look at your finances. The hardest part of that is being honest with yourself. Don’t let ego make the decisions.

3.  Be as proactive in your community as possible. If you can, develop a T-shirt that’s available online or curbside with 100% of the proceeds going to support your furloughed taproom staff or a local community cause. Work with your distributors in other communities outside your own to be supportive there as well. Be part of the community, even if you’re not local—keep your face seen in a positive way.

RL:

1.   Evaluate finances. What can you afford to do, and what can you afford not to do, have or upgrade?

2.   Branding. What can you improve upon from a brand perspective—as in, how to reach the consumer and engage with them? Get them to stop scrolling, and “like” (buy) your brand. I think virtual happy hours will be a popular thing moving forward for friends and families apart.

3.   Distribution. Improve your relationship with the distributor network. This also means having adequate sales-brand representation to work with your distribution network to secure those placements.

SS:

1.  Center yourself and get extra clear on your definition of success.

2.  Develop a rock-solid strategic plan and financial model.

3.  Get your team informed and aligned, from front-line workers to investors. Prepare them mentally and emotionally for what’s at hand. Ensure that you have the right warriors, and that you have the leadership and wisdom to see them through.

  BM: In what ways can producers work within their communities and develop new marketing strategies to rebuild their businesses?

  JH:  As mentioned above, team up with distributors, businesses that supported your brand well, and charities and causes that are positively helping communities during this pandemic. 

  RL: Thank the community for the support during this crisis. If you have a loyalty program, use an email marketing platform to send a direct thank you letter to the zip codes where members reside. Make it a bounce back: “Thanks for the support, bring this letter in for a ½ off item,” or a similar promotion.

  SS: Every business is in this together, and every business is going to need help. Distilleries and other craft producers have always been important members of communities, from supporting other local businesses such as farms and utility companies; to offering dependable and well-paid jobs from production to sales to executives; and of course, providing extensive tax revenue for their municipalities and states.

  Distillers switched gears during world wars, and are doing so now during the pandemic. This is an amazing time to be a leading light in the community and an essential economic engine in a town’s rebirth. We often say “support local.” This is a two-way street and right now, distillers can lead.

  BM: Finally, “no revenue” is an obvious answer to the question, “Should I close?” But in the current over-expanded market, what other answers might a producer consider?

  JH: SKU reduction. If you have a brand that’s working and some that are lagging, but they’re being produced to fill out the portfolio to make your brand more attractive to distributors, grocery, C-store sets or franchise restaurant chain mandates—cut them! Focus on what’s working and do it well.

  RL: Be humble. It’s more admirable to ask for help than to never build a new door to walk through. Also consider:

1.   What’s your quality of life? Health, stress levels, missing kids’ activities because you must run the business and so on. This pandemic has brought families together. More meals in groups, board game conversation and outdoor life vs. a face in a phone all the time.

2.   Are you staying true to the mantra, integrity and goal of why you opened the business? Some people will say no—they’re just trying to keep up.

  SS: This pandemic will hopefully be the toughest business challenge you’ll ever face in your lifetime. As such, it presents an excellent opportunity to confirm your commitment to your business:

1.   Is it your life’s calling/purpose?

2.   Do you have the energy and resources to start back from where you were in the early years?

3.   What will your personal and financial well-being look like if it takes two years to get to where you were at the end of 2019?

  If you have the fortitude and the wisdom, you can work through this. And the field will likely be even greener if you can make it through the next 730 days.

BEER FINANCE: Covid-19 Cash Tactics & Strategies

dollar bills inside a jar

 By: Kary Shumway, Founder of Craft Brewery Finance

  The Covid-19 pandemic is wreaking havoc with our emotional and financial well-being. Now, more than ever, cash flow planning is a survival skill.  In this article, we’ll review tactics and strategies to keep more cash in your business during this crisis. And I’ll share the cash flow templates that I use to monitor cash flow in our brewery.

  We’ll also cover how to build a new financial plan for the coming weeks and months to make sure you are properly tracking revenue, expenses and cash flow. This crisis will end, but the brewery financial skills you learn today will benefit you and your business forever. Use them to survive now and thrive into the future.

Short-Term Planning: Survival Mode

  First things first, let’s focus on cash.  Financial survival requires cash on hand, access to capital, and a tool to project near-term cash flows. Start with how much cash you have on hand, and list potential sources of additional capital.

  Next, calculate expected cash flows for the upcoming week. List out expected collections from accounts receivable, and payments to employees, vendors and the bank. Use a simple tool like this to summarize the numbers.

  This cash flow tool will show you cash on hand, and upcoming flows of money in and out of the business. It’s a tracker you can update quickly and regularly to keep a close eye on short-term cash flow.

  Next, dig in a little deeper on accounts receivable (A/R). These are your uncollected payments from customers and must be monitored closely during this crisis. Use the detailed A/R aging report to monitor any overdue customer invoices. Accounts receivable represents future incoming cash flow and is critical to the financial survival of your brewery.  Communicate with any overdue customers, work out new terms if you must, and keep the cash flowing in.

  Likewise, review the details of your accounts payable (A/P). These are your unpaid invoices to vendors and suppliers. Identify those invoices that must be paid on time, and which can be pushed off. Communicate with key vendors and ask whether they will accept extended terms. For example, if a vendor offers 30-day credit terms, they may be willing to extend to 60 or 90 days. The goal is to slow down the outflow of cash, while maintaining a good relationship with key vendors. Monitor your accounts payable, communicate with vendors, and keep more cash on hand.

Change Your Cash Process

  One important skill to learn during this financial crisis is how to aggressively manage cash flow. Specifically, learn where cash leaves the brewery and how you can adjust quickly to keep more cash in your bank account.  Cash on hand means you’re in business. Running out of cash means big trouble.  To aggressively manage cash flow, I use a three-step process that looks like this:

1.   Find out how and where money leaves your business.

2.   Insert yourself into the money-out process.

3.   Review past spending … and adjust.

Step 1:  Find out how and where money leaves your business

  To start, make a list of the ways that money flows out of your brewery. The usual cash outflows are:

•    Accounts payable

•    Payroll

•    Manual checks

•    Electronic Funds Transfer (EFT)

•    Automated Clearing House (ACH)

  Pay special attention to the last two bullet points. These are deductions directly from your bank account and may go unnoticed in a time when you’re trying to turn off cash outflows.

  Which of these cash outflows apply to your business? Take your list and move on to the next step.

Step 2:  Insert yourself into the money-out process

  Put yourself directly in-between your money and the expense to be paid. In other words, sign every check that goes out through accounts payable, review every manual check before it is mailed, look over the payroll report before it is processed, and get a listing of all the EFT or ACH payments that have been processed through your bank account.

  This is the only way to slow or stop cash from flowing out of your business. You need to be directly involved, and directly in-between your money and the expense to be paid.

Step 3:  Review past spending

  One of my favorite financial reports, in good times and bad, is the general ledger (G/L). It records every transaction that flows through your business. The G/L can serve as a road map to reduce the outflows of cash in an emergency.

  Print a copy of your detailed general ledger for the past 12 months and review all the expenses. As you look over the figures, ask questions: What cash outflows are recurring? What can be shut off immediately? What upcoming payments can be delayed or deferred?

  The general ledger isn’t just for the bookkeeper, it’s a tool for brewery owners and managers to identify and shut off cash outflows.

Use these cash flow tactics

  In addition to the 3-step process, there are several specific steps you can take right now to improve cash flows during this crisis. These include communication with your beer wholesaler, bank, insurance company, key vendors, and landlord. The primary goal of this communication: Build a plan so that you don’t run out of cash.

  Market changes are happening daily, and this requires regular communication with your wholesaler partners. Ask what they are seeing for sales trends. This will help inform expected sales volume as well as production and packaging plans. Ask your wholesaler what they need, and how you can help. Your wholesaler is your biggest customer, and biggest source of cash flow. Stay close, be supportive and responsive to their needs to keep the cash coming in.

  If you have business debt, you have monthly payments of principal and interest due to the bank. In this crisis, your lender may have the ability to reduce your monthly payments to interest-only. This can be a significant cash flow savings.

  Take for example, a brewery with monthly debt payments of $10,000 per month. The loan payment schedule shows the $10,000 payment represents $8,000 of principal and $2,000 of interest. Therefore, reducing the payments to interest-only will save $8,000 per month in cash flow.

  If you have business interruption insurance, reach out to your insurance company to determine coverage. While this type of insurance usually excludes pandemics (go figure) it is still worthwhile to understand how the claim process works. Legislative rules are changing every day, and it’s possible that insurance companies will be required to cover losses. Learn about your coverage, file a claim, and you’ll be ready if the rules change.

  Your key vendors may be open to extending payment terms to 60 days, 90 days or longer. Some larger vendors may reach out to you and negotiate new terms. Other vendors you have to ask. The takeaway is to be pro-active, communicate with your vendor partners and negotiate new terms that you both can live with. Any credit extension you can get will improve short term cash flow.

  This same approach can be used with your landlord. If you have a lease, you have monthly rent that needs to be paid on time. Your landlord may be open to a rent deferral in exchange for extending the back end of the lease. For example, no rent for the next two months, in exchange for the lease end date to be extended two months. As with the other ideas in this section, this might not work. But if it does, it will help short term cash flow. 

Re-forecast Your Financials

  The cash flow tool shared earlier is useful for a quick look at short-term cash flows. The financial re-forecast tool that we will cover next provides a longer-term look at expected results.

  Thanks to the financial crisis, your original forecast for this year is no longer relevant. However, it can still be used as a starting point for the financial re-forecast. Adjust the numbers up or down depending on changes to the business, new information that arrives daily, and trends in the market.

  To start this process, take the annual plan and spread it out over the 12-months of the year. The financial re-forecast model that I use looks like this:

  On the left side of the model, summarize sales, margins and operating expenses. Across the top of sheet, list out each month in the year and whether the information is based on actual or forecasted numbers. For example, if you have January, February and March financials completed, input those actual results in the sheet. For the remainder of the months in the year, mark these as forecasted numbers.

  The financial re-forecast tool is intended to be a one-page plan that is quick and easy to update on a regular basis with new information as it becomes available.  Use this tool to combine all the information you are gathering from wholesaler partners, key vendors, and changes to legislation (such as the excise tax deferral). 

Wrap Up + Action Items

  Cash flow planning is a financial survival skill and is needed now more than ever. While we don’t know when this crisis will end or what business will look like when it does, we do know how to aggressively manage cash to keep our business going as long as possible.

  Use the cash flow template presented here to keep a close eye on cash balances, access to capital and expected money flows into and out of your brewery. Take an active role in managing this most important asset.

  Use the financial re-forecast model to build a simple, one-page plan. Keep the numbers high-level to start – sales, margins, and operating expenses.  Update the plan on a regular basis as changes happen. And changes are happening every day.

  The brewery financial skills you learn today will benefit your business forever. Build your skills to survive now and thrive into the future.

  Kary Shumway is the founder of Craft Brewery Finance, an online resource for beer industry professionals. He has worked in the beer industry for more than 20 years as a certified public accountant and a chief financial officer for a beer distributor. He currently serves as CFO for Wormtown Brewery in Worcester, Massachusetts.

  Craft Brewery Finance publishes a weekly beer industry finance newsletter, offers online training courses on topics such as cash flow planning, financial forecasting, and brewery metrics. During this crisis, Craft Brewery Finance is offering a Free 60-Day Subscription. Visit www.CraftBreweryFinance.com for details.  

SUPPORTING “TRADE” DURING COVID-19

alcohol and tobacco tax and trademark bureau seal

By: Ryan Malkin

  Does the rulebook go out the window during a pandemic? As the Alcohol and Tobacco Tax and Trade Bureau (“TTB”) and states weigh in via guidance and industry advisories, the resounding answer is no. Still, brands seek to support bartenders with, by and large, pure intentions. That is, brands have money and bartenders may not. Bartenders and brands establish important and long-term relationships over the course of, in some cases, decades. If your friend needed a meal, you’d certainly oblige. However, when the funds are coming from an upper tier (manufacturer, supplier, wholesaler) member’s pockets, we must consider whether and how funds can go towards trade. As a threshold matter, we should consider whether the bartender is employed or unemployed. If a bartender is unemployed, arguably that person is no longer considered a retailer within the meaning of the rules. If that’s the case, the rules with regards to how a brand may engage with that person may also go out the window.

  By way of very brief background, it is unlawful to induce a retailer (an on-premise or off-premise licensee) to purchase your brand to the exclusion in whole or in part of another brand’s products. In particular, the federal and most state rules note that, subject to exceptions, “the act by an industry member of furnishing, giving, renting, lending, or selling any equipment, fixtures, signs, supplies, money, services, or other things of value to a retailer constitutes a means to induce within the meaning of the Act.” In short: unless there is an exception, you may consider the giving of any “thing of value” to be impermissible.

  That means, but for exceptions, it is impermissible to acquire or hold any interest in a retail license, pay or credit a retailer for advertising, guarantee a loan to a retailer, require a retailer to purchase a certain amount of products, or provide any items that are not allowed under an exception. Those of us in the alcohol beverage industry may not realize it, but we largely play in the world of exceptions. The exceptions are where you find it permissible to offer point-of-sale materials, conduct tastings/samplings, provide displays, offer educational seminars to retailers, and stock/rotate your products.

  Federally and in many, though not all, states the providing of the “thing of value” must also lead to exclusion. Exclusion is when the practice “puts the retailer’s independence at risk.” To determine that, the TTB will look at the practice and consider, among other things, whether it required an obligation on the part of the retailer to purchase or promote the brand, and whether it resulted in discrimination among retailers. That means the brand did not offer the same thing to all retailers in the area on the same terms without business reasons for the difference in treatment.

  Now that we’re on the same page with regards to the rules, we want to consider whether the person we want to assist is employed by a retailer or unemployed. If the person is employed by retailer (remember that means on-premise or off-premise), the brand will be more limited in how it may engage with that person. In short, follow the pre COVID-19 rules. TTB’s recent guidance on this topic specifically states that “the furnishing of business meals or entertainment to a trade buyer is an inducement under the Act” if the inducement results in the full or partial exclusion of products sold by that brand in the course of interstate or foreign commerce. In other words, according to TTB, “the furnishing of business meals or entertainment to a trade buyer is not by itself a violation of the Act.” In fact, providing retailer entertainment is quite common and many states have specific regulations that permit the practice.

  Typical states rules will require that the brand’s representative be present, that the entertainment be reasonable, and not conditioned on the purchase or agreement to purchase any of the brand’s products. Retailer entertainment rules are how you often see brand’s take bartenders and liquor store owners to ballgames, concerts and dinner.

  Given the social distancing rules, it is impractical and unsafe to get together with working trade. Instead of going to dinner and discussing business, it may be worth considering whether a brand feels comfortable doing so online via, say, Zoom or FaceTime. The brand can send drinks and a meal to the bartender. When the food and drinks arrive, the brand and the bartender can hop online and eat together. The brand representative would be as present as one can reasonably during this time. Of course, the brand should analyze this against the rules in the applicable state(s) and with its own attorney.

  However, if the bartender is no longer employed, one should now consider him or her as just a regular consumer, albeit with above average mixology skills. Now the brand may feel comfortable entering into an agreement with the person to be a brand consultant to perform any number of services. For instance, to create how-to cocktail videos or conduct virtual tastings. The brand would then pay that person whatever the two agree as reasonable. The brand should consider putting an agreement in place with that out-of-work bartender. The agreement should include basic provisions, perhaps paying particular attention to intellectual property (we own it, you’re using it with our permission and we own what you create) and representations around the unemployed bartender’s status. This compliance section should require the person being hired to acknowledge that he or she does not have any direct, or indirect, ownership in any retailer, and, at minimum, that the fee being paid is not conditioned on or being used to induce any retailer to purchase the brand’s products to the exclusion of any competitive products.

  Now that you have a solution for supporting both employed, though perhaps struggling, bartenders and those out-of-work, go out there and keep your brand alive and relevant during these unprecedented times.  Be careful out there.

  Ryan Malkin is principal attorney at Malkin Law P.A., a law firm serving the alcohol beverage industry. Nothing in this article is intended to be and should not be construed as specific legal advice.

For more information contact Ryan Malkin at…

Malkin Law, P.A.

260 95th Street, Suite 206

Miami Beach, FL 33154

Office: (305) 763-8539

Mobile: (646) 345-8639

Email: ryan@malkin.law

Website: www.malkinlawfirm.com

Brewery Start-Up Tips for a Successful Launch

facade of a brewery

By: Alyssa L. Ochs

  In the United States, there are currently over 7,000 breweries, but that isn’t stopping entrepreneurs from opening even more in cities, small towns and rural areas. Fortunately, craft beer lovers are plentiful across the country, loyal to their favorite brands and curious to try new brews.

  When making plans to open a new brewery, there are a few things to keep in mind. 

Initial Considerations

  Many things go into starting a brewery, even before searching for a physical location. You’ll need to choose a business structure for your brewery to operate within, such as an LLC with an operating agreement, which is often preferable to a brewery corporation because it’s quicker, easier and more affordable. You may choose to hire an attorney to handle these matters for you or give it a try yourself with online legal resources for a DIY approach. Insurance is also an important consideration to protect the business with liability, property and casualty coverage.

  When it comes to the legalities of opening a brewery, things can get complicated quickly. Permits and licenses must be filed at the local, county, state and federal levels. Depending on where you live, regulations, licenses and permits vary, so be careful to do thorough research to eliminate surprises in this regard. Be aware of when to file permits as well. Filing permits in the wrong order can lead to delays or stymy plans altogether. State liquor licensing and a federal brewing permit from the Alcohol and Tobacco Tax and Trade Bureau can take several months to process, so file those as soon as possible.

  You must also consider if you want a simple taproom or if you will include food in the business model. Those choosing to include food will face more permitting and costs for equipment and location modifications. The overall cost of opening a brewery is often between $250,000 and $2.5 million, and much of that money goes towards equipment.

Physical Location

  The location you choose makes a huge difference in the type of customers you will attract and how your brand will grow in the future. At this stage of development, there is also the need to weigh the pros and cons of opening up on a busy street with lots of foot traffic versus opening in a more isolated industrial park with space to grow and more affordable rental prices.

  Remember that you’ll need to secure the proper zoning for your new brewery and meet all the necessary legal requirements in your jurisdiction. Zoning laws matter because you want to create a favorable community gathering space that’s welcome with local neighbors.

  While searching for a storefront, you must have at least enough funds for the first month’s rent and the security deposit for the lease. Also, consider any construction that will be needed to outfit the building for brewery purposes. For example, you will need a sturdy floor in your physical space that can withstand the beer-making process. Also, take into consideration the plumbing and electrical capacity of the building and start getting quotes from local contractors for any work that needs doing before opening.

  Space requirements for your location may be based on equipment needed, but consider whether it’s in your best interest to secure a location with space to accommodate future fermentation tanks and storage needs.

Brewing Equipment

  Equipment is, by far, one of the biggest financial hits for a new start-up brewery. Equipment costs can range from $100,000 or less for a very small-capacity brewery, to over $1 million for a brewery that uses a new 30-barrel system.

  The brewing equipment you need will primarily be based on the number, category and style of beer you plan to make. There are significant differences between a brewery that will only brew a couple of types of beer compared to one that is looking to launch eight to ten styles right away. Unless you have ample support staff and financial resources, most new breweries find it in their best interests to start small and build up their offerings and services over time.

  The list of equipment needed for a brewery can be very overwhelming at first, but do your best to take it one step at a time. Some of the equipment to start thinking about and budgeting for early-on are kettles, kegs, boilers, bottling and canning lines, conveyors, cooling systems, storage tanks, fermentation tanks, filters, labeling machines, piping and tubing, refrigeration equipment, cleaning equipment, waste treatment systems and tap handles.

  Now is also the time to learn about the differences in piping, tubing and brew pump equipment so you can make informed decisions about buying peristaltic, diaphragm or centrifugal pumps. Fermentation tanks and temperature gauges will be needed for beer storage. Meanwhile, immersion wort chillers and counter-flow chillers are essential for cooling systems, and brewing kettles and boilers are necessary for heating processes.

  Andrew Ferguson, sales manager for Codi Manufacturing, told Beverage Master Magazine that packaging is more important than ever in today’s rapidly evolving beverage market.

  “Codi manufactures complete canning systems that scale to meet the demands of our growing customers,” Ferguson said. “Codi’s counter-pressure filler allows for a high temp caustic CIP and over four CO2 vols, giving you the ability to package seltzers or other beverages.”

  Ferguson said that a common mistake among brand-new breweries in the start-up phase is buying on price and speed instead of function and quality. He recommends always finding others who own the equipment you are looking at and asking for their advice.

  “You can have the best hops, malts, yeast, water, recipe and brewer, but a bad packaging machine will ruin all your hard work,” he said.  He also recommends buying spare parts to decrease your equipment’s downtime and avoiding machinery made with aluminum and cheap plastic materials so you can CIP with caustic at 180-degrees Fahrenheit.

“Form solid relationships with suppliers and stay in touch to get the latest updates and functionality out of the equipment you purchase.”

Ergonomics

  Stocking up on all the necessary equipment is often the first goal of a start-up brewery. According to Ron Mack, the regional sales manager for Bishamon Industries Corporation, one of the most common mistakes that new breweries make is being “laser-focused on production equipment and often forgetting to consider ergonomics that increase worker safety and productivity.”

  Based in Ontario, California, Bishamon Industries Corporation specializes in quality, innovative, ergonomic products that enhance worker safety and productivity. The company offers a wide array of ergonomic assist lift equipment, including the EZ Loader Automatic Pallet Positioner, that are useful for craft breweries that hand-palletize cases of beer.

  “This product keeps the top of the pallet load at waist height, eliminating worker bending, which can lead to back injuries,” Mack said. “The EZ Loader also features an integral rotator ring like a lazy Susan that enables near-side loading and eliminates reaching, stretching and having to walk around the pallet to load or unload. For breweries that do not have access to a fork truck for loading or unloading, we offer products that are pallet jack accessible, like our Lift Pilot and EZ Off Lifter.”

  Bishamon products can significantly help reduce the risk of worker injuries related to lifting, bending, reaching and stretching while loading or unloading cases.

  “Another great benefit is that the EZ Loader also significantly increases productivity, as pallet loading and unloading can be accomplished in much less time with much less effort,” Mack said.

  Mack said breweries should “think about how to make the work environment, especially in the packaging area where the heaviest lifting is done, more ergonomic and efficient for the employees.” From ergonomics to scheduling and operations, making your employees’ needs a priority from the very beginning is a positive way to launch any type of new business.

Other Early-Stage Planning

  Once you’ve gotten a handle on these aspects of opening up a new brewery, think about the customer experience and how your staff will work onsite starting on opening day. An efficient, friendly front-of-house staff can make all the difference for a brewery’s reputation, particularly in areas with a lot of competition. Start picking out and ordering glassware and growlers that reflect the brand image you want to create. Keeping the brewery hygienic and sanitary is essential to its long-term success, so make a list of cleaning products you’ll need and narrow down your list of suppliers. Before you get too entrenched in your operations processes, invest in a POS system to track inventory, outline your staff management system and begin thinking of ideas for a loyalty reward system to entice new customers.

  Building a clear brand identity early-on to help you stay focused, and establishing a robust online presence as early as possible can spread the word about your new brewery.

  Also, consider your relationships with vendors. Ferguson from Codi told Beverage Master Magazine new breweries would be wise to support family-owned suppliers who are invested in the industry.

  “Private equity held manufacturers are lowering quality to meet your price point and are not concerned about your long term needs,” he said.

  Starting a new brewery is rarely easy, but it’s often worth it if craft beer is your passion, and you have a great business plan and support team behind you. As you prepare for your initial launch, remember some things can wait. Focus less on merchandising, loyalty programs or decorating for every event and allow the business to grow a little at a time. Once you’re established with a good reputation, those things will come naturally and pay off quickly.

Keys to Creating Effective Incentives for the Craft Beer Distribution Channel

By: By Nichole Gunn, Vice President of Marketing and Creative Services, Incentive Solutions

  When it comes to improving your go-to-market strategy, incentives can be a powerful tool that craft beer producers can use to motivate distributors and wholesalers to sell their product. Incentive programs help craft beer producers build mindshare with distributors and wholesalers, differentiate their product, provide enablement to indirect sales reps and collect important data throughout their channel.

  However, it is important to be mindful of your marketing spend and to focus on designing your program to generate a meaningful ROI. Keep in mind that an incentive program is about more than just rewards. 

Keys to Creating an Effective  Incentive Program

  While the specifics of incentive program design will be as varied and unique as the craft beer producers who use them, below are several overarching principles that can be utilized to create effective incentives for supply chain trading partners:

1.  Choose a specific, measurable goal for your program.

2.  Analyze your audience and your competitive situation.

3.  Offer rewards that are relevant to your target audience.

4.  Structure promotions to target KPIs (key performance indicators) that bring you closer to your goal.

5.  Consistently market your program to stay top of mind of with your indirect sales reps.

6.  Use digital platforms to drive your program and measure results.

  By following these six steps, craft beer producers can establish effective incentive programs that give them a sustainable competitive advantage in their channel and allow them to focus more of their attention on where it belongs – crafting great beer that their customers will love!

Choosing a Specific, Measurable Goal

  In order to achieve a meaningful ROI, it’s important to begin with the end in mind. Why do you want to launch an incentive program? What do you hope this program will accomplish? How will you measure success? The more specific you are when answering these questions, the more informed you will be when making decisions to empower your goals.

  Possible program goals craft beer producers use incentive programs to accomplish include:

•    Generating brand awareness;

•    Increasing sales for a specific product or region;

•    Driving incremental growth among supply chain trading partners;

•    Gathering data to improve partner profiles;

•    Capturing market share and gaining access to new verticals; and

•    Building loyalty with wholesale and distributor sales reps.

  While an effective channel incentive program can accomplish all of these things, it’s best to start small and narrow your focus to just one or two goals. Doing so will help you sell other members of your organization on the idea of launching an incentive program and will allow you to more effectively measure the results. Plus, you can always scale your program to accomplish additional goals once you know it’s working.

Analyzing Your Audience and Your Competitive Situation

  When building an incentive program, you have to put yourself in the shoes of the wholesale and distributor sales reps you’re attempting to motivate. What do you know about their lifestyle? What are the things that excite them? What information can you provide to make selling your products easier for them? The more you understand about your target audience, the better equipped you will be to create incentives that inspire them and align your goals with theirs. 

  In the competitive craft beer channel, each of these reps is responsible for selling multiple products from dozens of brands. The battle for mindshare is fierce. Chances are, some of your competitors are already running an incentive program or using other channel marketing promotions. It’s up to you to take a look at what your competitors are doing and to create an incentive program that is more engaging and compelling than theirs.

Offering Relevant Rewards to Your Target Audience

  According to the COLLOQUY Loyalty Census, the average American household is enrolled in more than 18 loyalty programs. Of those, they actively participate in fewer than half. In order for your incentive program to accomplish its goals, you have to stand out from the competition by offering rewards that enhance your value proposition and feel necessary to your participants.

  The more closely you can match your incentive rewards to the lifestyle and interests of your participants, the more effective your program will be. However, it’s important to choose rewards that align with varying levels of performance, while fitting into your overall budget. Luckily, there are plenty of options!

  For SPIFFs, rebates or programs with a wide range of participants, debit card and gift card rewards provide flexibility, convenience and wide appeal. Online merchandise rewards are more personalized and scalable, ranging from easily-earned “point burner” items like movie tickets for part-time customers, to exclusive, high-end merchandise and custom reward fulfillment for higher-performing supply chain partners. Group incentive travel is memorable and emotionally impactful, perfect for building loyalty with your top wholesale and distributor sales reps. Although incentive travel events are currently on hold for the foreseeable future, demand for travel rewards will be extremely high when the shutdown ends. This will not last forever, and there will be compelling bargains to be had as resorts and hotels at top destinations endeavor to resume business.

  Additionally, you can use a mix of rewards and tier them for different levels of performance or segments of your channel. For instance, it might make sense to offer an online points program for individual sales reps, while running an incentive travel promotion for the brand managers at the distributor level.

Structuring Promotions to Target Strategic KPIs

Incentives work by modifying the behaviors of your wholesale and distributor sales reps. Each step these reps take that bring you closer to your goal is also known as a KPI (key performance indicator). KPIs can be measured to predict or prove program success. For instance, the more participants that enroll in your program, the more likely they are to sell your product. Enrollment bonuses are a common incentive promotion, but you can also reward points bonuses for KPIs such as:

•    Attending tradeshows or taking online certification courses;

•    Participating in product-related trivia and quizzes;

•    Providing referrals;

•    Filling out surveys or updating their contact information; or

•    Making a first-time sale of a specific product.

  However, priorities change! For craft beer distributors, it’s important to have the ability to set multiple promotions and change reward parameters to target strategic initiatives, capitalize on analytics and respond to the tactics of the competition.

Marketing Your Program to Stay Top of Mind

  Once you have outlined your strategy and structure, the next step is to spread the word. Incentive programs create an easily communicated value proposition, but it’s necessary to consistently reach out and engage with your wholesale and distributor sales reps over a variety of channels.

  From program launch to reward redemption, you should be communicating with your supply chain trading partners across email, SMS, web platforms, direct mailers, flyers and phone calls. Get them excited about participating in your program, educate them on your brand, inform them about new promotions and remind them about the rewards they have the opportunity to earn. Your incentive program provides the chance to personalize your communication with your indirect sales reps in a way that may be otherwise difficult to achieve in the craft beer distribution channel. Additionally, you can use analytics to spot opportunities for growth or which accounts you should reengage and create targeted marketing campaigns for those accounts.

Using Digital Platforms to Drive Your Program

  Finally, you have to consider the user experience of engaging with your platform, as well as the administrative functions you need to successfully manage your program. Today’s incentive programs, like most business platforms, are software-driven. Gone are the days of analog catalogs, manual processes and investing in channel marketing strategies that don’t produce measurable results.

  When exploring potential incentive program providers, craft beer producers should ask themselves questions such as:

•    Does this incentive program software integrate with my CRM and other existing platforms?

•    How will this program software help me capture the data and analytics I need to improve my channel marketing?

•    How will this program software improve my ability to communicate with my supply chain trading partners?

•    Will my reward program website present an engaging and accessible user-experience that is a strong reflection of my brand?

•    What other features, such as gamification and sales enablement tools, does this platform include to keep participants engaged and to help them succeed?

  Luckily, these are areas where the incentive industry has made exciting strides over the last decade or so. As data, analytics, automation and providing digitally connected channel partner experiences continue to become increasingly important, incentive companies have shifted their focus from just providing reward fulfillment to offering complete channel sales and marketing solutions.

  This focus on technology has made launching and managing an incentive program less time intensive. In a 2019 survey, Incentive Solutions found that 70 percent of our clients, including several notable craft beer producers, spend less than two hours a week managing their incentive program. Additionally, some incentive companies provide the option to take full responsibility for program management to free up your resources for other priorities.

  After all, chances are you didn’t get into the craft beer industry to manage channel partners and set parameters for sales promotions. You got into it because you are passionate about brewing great beer!  

Nichole Gunn

  Nichole Gunn is the VP of Marketing and Creative Services at Incentive Solutions (www.incentivesolutions.com), an Atlanta-based incentive company that specializes in helping B2B companies improve their channel sales, build customer loyalty, and motivate their employees. Nichole Gunn can be reached at ngunn@incentivesolutions.com.

Nitrogen-Infused Beers: Just the Right Amount and Voila!

4 men beside a nitrogen infused beers
Photo Courtesy of Chart (www.chartindustries.com)

By: Cheryl Gray

  Some aficionados of nitro-infused beers liken the sensory experience to downing a rich, creamy concoction from a dessert menu. The head of a beer created from nitrogen dosing ranks right up there with whipped cream atop a hot fudge sundae. For the consumer, the reincarnation of this draft beer experience in a single-serve can—and how that beer feels on the palate—is everything.  

  James Cain knows first-hand the difference that nitro-infused beer products can make for a craft brewery. Cain co-founded Vault Brewing Company in Yardley, Pennsylvania, in 2012. His aesthetic description of a nitro-infused beer rivals any marketing campaign. 

  “There’s nothing like watching the mesmerizing and physics-defying downward cascade of nitrogen bubbles in a properly nitrogenated and properly poured nitro beer. We are visual creatures—we drink first with our eyes—and the intrinsic beauty of nitrogen as it performs its brief dance down the sides of our glass is a special moment and sets the stage for a great tasting product to follow.”

  Experts say that smoother, palate-pleasing attribute is the result of the smaller bubbles produced when infusing beer with nitrogen rather than carbon dioxide gas, which produces larger bubbles. For the craft beer maker, liquid nitrogen (LN2) plays a host of multiple roles in the industry, not the least of which is the consistency of product that cryogenic nitrogen systems can produce. 

  In addition to attracting customers who enjoy the draft beer experience of a nitrogen-infused product, LN2 also helps to protect product shelf life. Nitrogen replaces the oxygen in the headspace of the beer container. While oxygen is important to brewing beer, it only takes a small amount inside a can or bottle to ruin the finished product, destroying taste and cutting shelf life. By contrast, nitrogen extends shelf life, leading to a potential increase in sales since breweries can widen distribution and create a larger footprint in the marketplace.

  Reduced shipping costs is another benefit to nitrogen-dosed beer. Infusing nitrogen pressurizes the can, and, as a result, it is lighter, sturdier and easier to store and ship because all of the oxygen is removed.

  Vacuum Barrier Corporation is one company helping its craft brewery clients achieve both product protection and popularity. The cryogenic engineering firm, located just outside of Boston, Massachusetts, has been in business since 1958 and has a national and global presence, providing local support for its customers worldwide. VBC supplies custom-crafted cryogenic piping and machinery for its clients using nitrogen in multiple applications, including those for craft breweries.

  VBC has partnered with both large and craft breweries for more than 30 years with the aim, it says, of improving existing beverages, while at the same time, creating new beverage products.  Dana Muse is VBC’s International Technical Sales Engineer. 

  “Currently, VBC provides Nitrodoser liquid nitrogen dosing equipment to be used for three different applications: reducing oxygen levels to preserve quality and increase shelf life; pressurizing non-carb or low-carb beverages to provide strength; and stability to the package and nitrogenating beers for a smooth, creamy head,” he says. “If using an automated filler, the Nitrodoser liquid nitrogen dosing system would be installed either before the filler or between the filler and the seamer.” For smaller craft breweries or microbreweries that need a different option, the Nitrodoser can be mounted on either a can test bench or pilot line and operated by hand.    

  In its gaseous state, nitrogen is inert, colorless, odorless, non-corrosive, non-flammable and tasteless. It can also cause suffocation. That is why monitoring oxygen levels in an environment using nitrogen is essential, especially in a confined workspace. As is the case with nearly any combination of chemicals and technology, there is inherent value in knowing what safety measures to take. Introducing a cryogenic system using nitrogen into a brewery operation is no different, says Muse. 

  “The number one concern when integrating a cryogenic system is always safety, and the first risk people tend to associate with liquid nitrogen is cold burns and frostbite. Because all of our equipment is fully vacuum insulated, the outer surfaces of VBC equipment is always at room temperature, even while the internal liquid nitrogen is at minus 320 degrees Fahrenheit. Wearing the proper protective equipment will help prevent any injuries that might be caused by direct contact with liquid nitrogen. Additional risks include over-pressurization of trapped liquid nitrogen, oxygen displacement from expanding nitrogen gas and embrittlement of non-cryogenic materials.” 

  On the West Coast is Chart Industries, located near San Francisco, California, with operations across the United States and a global presence that includes Asia, Australia, Europe and Latin America. The company, with a 150-year history, is involved in virtually every industry sector of cryogenics application.   

  Juancho Tabangay is a chemical engineer with more than 25 years of experience in his field. As Director of Sales for Chart Industries’ Global LN2 Dosing, Tabangay says that the company has been working with craft breweries wanting to tap into the nitrogen-infused beer market for the past several years. He counts some 320 of Chart Industries’ LN2 dosing systems spread across North America and beyond.

  “We’ve had conversations with our customers about the difference a dose of LN2 can make to the shelf life of their products. As an example, one of our customers shared that they get an average of a two-month shelf life but, with a dose of LN2, they see that extending to six months.  Those four months can make a difference for the craft beer producers. Of course, the results vary from application to application, but the feedback from our customers proves the investment in dosers pays off quickly.”

  The CryoDoser FleX® Craft Custom LN2 Dosing System is among the company’s products and popular within the craft beer industry. Just recently launched, Vault Brewing Company’s Cain says that the product’s versatility is designed to fit the requirements of the craft breweries.

  This doser works in the same manner as Chart’s other models. It functions by delivering a small but precise amount of liquid nitrogen into a container as part of a packaging process. The doser is connected to a liquid nitrogen tank and uses one or more sensors to detect the can, bottle, or container and dose the liquid nitrogen. It has a removable arm that allows for extensions or custom dual-heads for dual-lane canning lines. It has an introductory price but can grow with the brewery as they expand. “

  This year, Cain joined Chart Industries as a liquid nitrogen dosing specialist. From what his brewery experienced, Cain sees the use of nitrogen in craft brewing as the new lifeblood for breweries and other beverage makers eager to grow. 

  “We first explored the use of liquid nitrogen technology in 2015 with the launch of the world’s first widget-less nitro beer in a can. We worked with Chart Industries in order to develop the process and have since taken the technology worldwide. Nitro beers, nitro coffee, nitro RTDs, and other nitrogen-infused products target a specific customer who is looking for something unique and may expose your brand to new markets. If a brewery is packaging a lightly carbonated beer, seltzer, tea or other product, dosing with liquid nitrogen can add rigidity to the can wall and allow the brewery or distributor to stack the cans higher, saving floor space.

  “Breweries can experiment with creating new still products such as cocktails-in-cans, hard water, or hard teas and use liquid nitrogen dosing to leverage the same filling and packaging equipment. The LN2 will expand into gas and pressurize the container, making it possible to package an uncarbonated product,” says Cain.

  Tabangay tells Beverage Master Magazine that the success of nitrogen-infused beer comes down to the basics, which he describes as the “three P’s”— preservation, pressurization and perfect pour. 

  “Craft beer brewers like to tell a story with their beer using the taste and elaborate labeling. The behind-the-scenes story is about getting the best possible product for the lowest production cost.  Discerning consumers expect a perfect pour from cans just as they’d get from a keg at a pub. They want a nice cascade with fine bubbles.”

  When asked about whether there is a downside to using nitrogen in craft brewing, Tabangay sums it up this way. “There are only pros, no cons. Not that we’re biased, but the only way to help achieve preservation, pressurization and perfect pour is through the use of nitrogen.”

  In the end, for craft brewers, it is all about pleasing the consumer, but doing so in a way that increases sales and keeps costs down.  Craft brewers are learning how to use nitrogen in developing product lines that appeal to buyers who want that “perfect pour.”

Inaugural Craft Beer Marketing Awards Competition Underway

3 statues holding a beer can

By: Jim McCune

  There are dozens of competitions that award any number of beers on their flavor. There are no competitions, however, which recognize the incredible design and marketing work that breweries do for the branding of beer.

  As Jim McCune, a longtime promoter of craft beer states: “I’ve been in the beer-marketing industry for 24 years, and attended nearly a hundred beer-tasting competitions, yet I’ve never seen anything celebrating the amazing work that designers, illustrators, branders, and marketers do for beer. In many cases, this work is being handled by the brewers themselves.”

  The concept for a nationwide marketing competition was “brewed up” in November 2018 on Long Island as the brainchild of McCune and Jackie DiBella who are, respectively, the Executive Director and Account Manager of EGC Group’s Craft Beverage Division in Melville, New York. They brought this concept to EGC CEO and Founder, Ernie Canadeo, who immediately loved the idea and agreed to help both develop and finance it.

  McCune and DiBella got right to work at building out the Craft Beer Marketing Awards (CBMAs) from scratch. They cracked open a beer and started sketching a logo. From there, they carved out the categories and rules. They started inviting judges from within the brewing and creative industries. All of this work needed to be formulated into a strategic plan, with a schedule for receiving entries, judging, awarding, and celebrating.

  Creating this new business got extremely difficult during the development of the interactive awards website. The site needed to accept calls-to-entry registrants, paid entries, but also have a sophisticated, encrypted, yet easy-to-use judges’ platform. The judging process for the CBMAs had to be robust, credible, and have transparent digital scoring.

  Everyone involved simultaneously acquired sponsors and partnerships as they developed and produced a very unique awards trophy – something they know would look cool on a winner’s desk.

  Canadeo, McCune, and DiBella gave it their all, and in less than a year had the CBMAs live and accepting entries on October 6, 2019.

  The Craft Beer Marketing Awards became the first-ever in the USA, having been developed to recognize and award the very best marketing in the brewing industry across the nation. Breweries, their agencies, designers, and marketing partners were invited to enter their top work.

  The CBMAs were excited to get immediate coverage about the marketing competition from publications that included Forbes, New School Beer, Beverage-Master Magazine, Brewpublic, Media Post, Craft Beer Austin, Beer Connoisseur, Brewbound, Pro Brewer – and Forbes again. See all media here. https://craftbeermarketingawards.com/news/

  Design and marketing of each beer has become critical to a brewery’s popularity and success. With nearly 8,000 breweries across the country, and all of them vying for the same eyeballs – it has become increasingly more difficult to stand out from the competition in this incredibly saturated marketplace.

  In the past, small breweries could rely solely on word of mouth about their beers, but the past decade has seen something of a renaissance in craft beer marketing and branding. Beer packaging and design quickly became much more sophisticated, similar to that of the wine industry, and for good reason.

  “More than ever, breweries recognize the need to prioritize their marketing strategies,” said Prabh Hans, VP Business Development & Strategy for Hillebrand, and CBMAs Presenting Sponsor. “We’ve worked closely with brewers since 1984, and know that shelves and cities are flooded with an overwhelming amount of craft beer options. The CBMAs’ team recognized how much time and money these breweries are now investing into branding efforts and created a one-of-a-kind opportunity to celebrate them.”

  While most craft beer consumers might seek out local brews or prefer a certain style, many of today’s beer shoppers between the ages of 22 and 37 (the millennial generation) are making their final purchase decision based on “cool looking labels” – and this is why beer branding, design, and packaging has become the most effective means of influencing a purchase at the decision-making moment.

  Approximately 80 percent of consumers make their final purchase decision at the retail shelf, while 64 percent of this group admitted they would change their mind if “something better” caught their eye at that moment.

  But who do brewers owe credit to when it comes to these eye-catching, decision-driving can designs?

  Beer brand identities give breweries the opportunity to share their stories and personalities outside the brewery walls via their packaging. One of the coolest parts about beer branding is who brewers choose to collaborate with. And the choices are endless.

  These artists, designers, marketers, and branders are the ones who bring the beer to life on the shelf. Each can label, logo, and beer name ignites the brand to the consumer. It’s their job to provide packaging design with stopping power to capture the eye and compel the shopper to grab a particular beer.

  Today, brewers use strong visual identity, storytelling, word of mouth, and digital media to achieve never-before seen growth that has leveled the playing field between big and small beer companies.

  The packaging and overall branding of a beer is the most effective means of influencing purchase at that decision-making moment, and the CBMAs felt the time had come to recognize the talent behind the creatives that makes the craft beer culture so rich and unique.

  “This is a great opportunity for designers like myself to show off some awesome work I’ve done for breweries,” said Ben Owens, founder of Phine Art Designs. “I’ve never witnessed an industry with such fast growth and transformation. Craft beer is constantly evolving. So is the design, marketing, and packaging of it.”

  Each category is judged by an influential and respected panel of beer, marketing, and design experts from all across the country.

Celebrity Judges Include:

•   Zane Lamprey, comedian, actor and writer known for TV show “Three Sheets” and new Adv3nture active gear.

•   Harry Schumacher, publisher and owner of Craft Business Daily.

•   Jeff Bricker, publisher, graphic designer and owner of Beverage Master Magazine and The Grapevine Magazine.

•   Jon Contino, creative director of branding agency, Contino Studio.

•   Ralph Steadman, the infamous artist and illustrator who is most well-known for his collaborations with Hunter S. Thompson and Flying Dog Brewery.

  Check out the full panel of CBMAs’ judges here. https://craftbeermarketingawards.com/judges-panel/

  The awards accept entrants in 30 categories, ranging from “Best Logo Design,” “Best Packaging Design” and “Best Can Design” to “Best Website Design,” “Best Merchandise Design,” and “Best Use of Social Media.” Both “Best Packaging Design” and “Best Can Design” feature “People’s Choice” sub-categories that will be voted on by fans.

Some of the Award Categories are:

•    “Best Can Design”

•    “Best Tap Handle Design”

•    “Best Original Video”

•    “Best Merchandise Design”

•    “Best Use of Social Media”

•    “Best Website Design”

•    “Beer Marketing Wild Cards”

  Entry is open to anyone involved in marketing within the brewing industry. To see the full list of categories, click here. https://craftbeermarketingawards.com/categories/

  “We have numerous entries in all 30 categories,” DiBella added. “This marks the beginning of what will become a long tradition of prestigious recognition and merit for brewery marketing.”

  The CBMA “Crushie” trophies were designed and manufactured by the same NYC designer awards firm that created the prestigious Emmy Award and MTV’s “Man on the Moon” statue. The Crushie Award is sculptured to depict a heavily tattooed arm crushing a beer can to symbolically represent how breweries are “crushing it” with their unique and creative beer marketing and branding.

  The Platinum Crushie is the CBMAs’ most prestigious nomination for entries demonstrating marketing and branding excellence that exceeds the defined category objectives by using strategy, creativity, and overall innovation. Only one entry – with the highest achieved ranking from each category – will receive Platinum.

  The Gold Crushie is for entries that meet or exceed the defined category objectives by using strategy, creativity, and innovative production techniques to achieve a higher level of perceived uniqueness. The CBMAs’ will award up to five Gold Crushie Awards per category.

  The “People’s Choice” Black Crushie is the most elusive of all the awards, because the CBMAs only award up to a total of five of these. Unlike Platinum and Gold, the “People’s Choice” Crushie isn’t totally reliant on the judges’ panel. Once the judging process is complete, top-ranking entries who entered the “People’s Choice” Category have an additional showdown with a public-judging panel that uses social polling to choose the final winners.

  The Crushies’ major sponsor is Hillebrand, the Germany-based freight logistics company that has a large presence in the beer, wine and spirits business. “More than ever, breweries recognize the need to prioritize their marketing strategies,” Hans added, calling the CBMAs: “…a truly unique and important event for the craft-beer industry.”

  Critical to the continued success and growth of the CBMAs’ program is the generosity and support of their sponsors and partners. The CBMAs invites you to consider supporting these great businesses:

•   Hillebrand

•   Beveraage Master Magazine

•   EGC Group

•   Brewery Branding

•   Pro Brewer

•   Don’t Panic Projects

•   KSidrane

•   DKNG

•   Hankscraft AJS Tap Handles

•   DWS Printing

•   Society Awards

•   MMX

•   Lauterbach Craft Brew Labels

•   Red Vault Productions

•   The Beer Connoisseur

  McCune and DiBella enjoyed representing the CBMAs as podcast guests on “Beer Busters,” “Tap That AZ,” “Beer-Fit–Life,” “AG Craft Beer Cast,” “Beer N Goodz,” and “Craft Beer Storm.”

CBMAs Update:

  The last couple months have brought about changes, fear, and uncertainty – especially within our beloved craft beer industry. We understand this is no time to celebrate. The Craft Beer Marketing Awards want to make sure those in our industry most affected by the COVID-19 pandemic have the opportunity to focus on their business and the comeback from this.

  Making our peers the priority, the CBMAs have decided to extend the judging window by one month to Monday, May 11. Crushie Award winners will now officially be announced on Tuesday, June 16 through industry media and our social channels.

  We hope that the decision to delay the announcement allows us all to look forward to brighter days. We are rooting for you all and can’t wait to cheer when this is behind us.

  Individuals involved in the production and/or creation of winning works can purchase their personalized trophies in our CBMAs’ Award Shop, which will launch right after the winners are announced in June. Winners will be notified by email of their win, along with further instructions.

Stay safe, stay healthy, and stay positive.

For more information, visit craftbeermarketingawards.com or email: info@craftbeermarketingawards.com

  Jim McCune is director of the Craft Beverage Division of Melville-based EGC Group. Reach him at jimm@egcgroup.com or 516.935.4944

Canadian Brewers Struggle to Survive Amid Pandemic-Related Shutdowns

beverage in front of a Canadian flag

By: Briana Tomkinson

  At the close of 2019, the Canadian beer industry was riding high. The craft beer craze showed no signs of flagging, with triple the number of breweries in operation just five years before. In 2019, Canada had more brewing facilities in operation than ever before. Then, in March, the coronavirus pandemic spread to Canada.

  Taprooms, restaurants and bars are closed, and though some parts of Canada that were less severely impacted by the virus are slowly starting to allow businesses to reopen, it’s far from business as usual.

  There will be no beer gardens and merrymaking at large summer music festivals, no big wed-dings, no corporate shindigs, no Friday night pints in busy bars. Even in places that allow ser-vice businesses to reopen at a fraction of capacity with seats six feet apart, it’s likely business won’t be booming. With an estimated two million Canadian jobs lost in April alone, many Ca-nadians will be at home counting their pennies, not out on the town quaffing beers.

  According to a survey conducted in early May by Restaurants Canada, seven in 10 of those in the foodservice business fear they will run out of money in three months or less.

  Before the start of the COVID-19 pandemic, Canada’s foodservice sector was a $93 billion in-dustry, directly employing 1.2 million people serving 22 million customers every day. The in-dustry has since lost 800,000 jobs and is on track to lose as much as $17 billion in sales over the second quarter of 2020, the industry association said.

  While the situation for Canada’s breweries is not quite so dire, many smaller breweries also say they are only months away from closing their doors.

  According to Beer Canada Interim President Luke Chapman, many Canadian breweries are under a huge amount of financial stress. A recent member survey conducted by the industry organization revealed that half of the respondents said they had only enough cash flow to sur-vive for a maximum of six more months.

  In 2019, the number of brewing facilities in Canada increased by almost 13%, from 995 in 2018 to an all-time high of 1,123. Yet, although there was an unprecedented number of beers to choose from at grocery stores and dépanneurs, beer sales in Canada have been falling: do-mestic beer sales were down almost 4% in 2019.

  With fewer sales in an increasingly competitive market, Canadian breweries were already brac-ing for more challenging times ahead, yet nothing could have prepared the industry for COVID-19, Chapman said.

  While relief programs for business owners from the federal government have provided some help to keep employees on the payroll—for now—Chapman noted that with major events can-celed and many restaurants and bars closed, breweries will miss out on the expected bump in summer season revenue.

  “This is a very difficult time, and like everyone, like a lot of other businesses, brewers are just trying to learn as they go and trying to make the best of a bad situation,” Chapman said. “No one knows what the market’s going to look like next week, let alone two to three months from now. It’s a very uncertain time, for sure.”

  Canadian breweries directly employ an estimated 15,000 people; however, Conference Board of Canada figures show beer supports 149,000 Canadian jobs, with a labor income of $5.3 bil-lion. The sector contributes $13.6 billion to Canada’s GDP, thanks to the domestic nature of the industry (in 2019, 85% of the beer consumed in Canada was brewed in Canada). The vast majority of Canadian breweries are small, local operations; 94% produce less than 15,000 hec-tolitres of beer.

  Many smaller microbreweries who primarily sold beer through on-site taprooms and local res-taurants have quickly transitioned to selling packaged beer. Expanding into home delivery has also been helpful for many smaller breweries, Chapman said. Even in provincial jurisdictions that do not permit breweries to offer home delivery service, restaurant partnerships have ena-bled some breweries to have their beer delivered with dinner orders.  

  Yet Chapman said even when these transitions have been successful, for taproom-focused breweries, which can make as much as half of their revenue from tap sales, the additional costs of packaging, distribution and delivery are eating away at their profits.

  “A couple of our breweries say they are selling a similar amount of beer, but costs are up 40 to 50%. They’re just trying to keep staff employed and keep the lights on,” he said.

  In some cases, breweries have also had difficulty sourcing cans, bottles and packaging materi-als due to pandemic-related supply chain issues.

  While closing bars, restaurants and taprooms initially resulted in a slight uptick in retail beer sales, for most craft breweries, this was not nearly enough to offset the steep decline in keg sales, Chapman said. Many shuttered bars and restaurants also returned unopened kegs, forc-ing breweries to issue refunds.

  Rather than dump all this unused product down the drain, some breweries have offered this excess beer to distilleries to produce hand sanitizer.

  “Beer is really the only perishable alcoholic beverage. Both wine and spirits last essentially for-ever, and some get better with time. That’s not the case for beer,” Chapman said. “No one wants keg beer anymore, so there are a lot of brewers left with a lot of product that’s going to go bad.”

  While some breweries have been able to sell hand sanitizer on a cost-recovery basis, most breweries are treating it as a way to give back to the community.

  “I know for a fact there are some that are doing it and losing money in the process,” Chapman said.

  Hand sanitizer has been all but impossible to find on grocery store shelves in many parts of Canada since the first wave of COVID-19 cases were discovered in March. Health Canada has since moved to expedite approvals for distilleries and other companies to start producing the product. In Canada, hand sanitizer is regulated under Health Canada’s Natural Health Product Regulations, part of Canada’s Food and Drugs Act.

  In late March, Spirits Canada, Cosmetics Alliance Canada and the Canadian Consumer Spe-cialty Products Association launched the Hand Sanitizer Manufacturing Exchange in collabora-tion with Health Canada. The Exchange provides support for firms interested in contributing to the manufacture of hand sanitizer to find the materials, services or manufacturing capacity needed for production.

  “People are coming together to do what they can in this crisis, but Canadians need access to safe products. DIY hand-sanitizers, the latest trend on social media is at best ineffective against COVID-19 and at worst potentially dangerous,” said CCSPA President, Shannon Coombs.

  On top of all the other challenges facing Canadian brewers, the federal government went ahead with a planned increase in alcohol excise duties. “We as an industry were a little bit stunned that the government decided to go ahead and raise our taxes in the midst of a pan-demic that is having huge negative impact on the industry,” Chapman said.

  Although the 1.9% increase may not seem significant, he said, for a regional brewery produc-ing 70,000 to 80,000 hectolitres of beer per year, the increase translates to about $50,000 to $60,000 in lost cash flow.

  “It is a material amount of money that’s now been taken out of the hands of the breweries and put in the hands of the government,” Chapman said. “I think from our view, and I think most brewers would agree, that money is better in their hands, at least at this point in time.”

  There is one bright spot for Canadian brewers, Chapman said. Some provincial governments have temporarily lifted some restrictions on the sale and distribution of alcohol that have lim-ited how breweries can serve their customers.

  “These are things we’ve been asking for, for quite a while,” Chapman said. “We’re hoping some of these will stick around after COVID-19 is a distant memory.”

Canadian Food and Beverage Battles COVID-19

2 beverage bottles and glass

By: Alyssa Andres

  The COVID-19 pandemic struck the entire world swiftly and harshly. In March, Canada lost over one million jobs—800,000 of which were in the food and beverage industry. It is estimated that one in 10 Canadian restaurants have already permanently shut their doors, and those numbers will continue to climb as small businesses struggle to keep up with costs without their regular revenue streams. More than ever, business owners have to find creative and alternative ways to make a living and do so while trying to maintain a safe and secure work environment for their customers and employees. As a result, large companies have started offering their support to businesses and individuals in need, and communities have started coming together in an effort to lessen the pandemic’s impact on the hospitality community. 

  The Canadian government is doing all they can to support its citizens as they battle to flatten the curve. The Canadian Emergency Response Benefit was created in March to assist those suffering from job loss. The fund offers $2000/month to any individual who has lost work since March 15, 2020. The government has also lightened restrictions surrounding the sale of alcohol, allowing food delivery services, like UberEats, to deliver alcoholic beverages to people’s homes between 9:00 a.m. and 10:30 p.m. Restaurants can also offer beer, wine and spirits with their takeout menus.

  Breweries, wineries and restaurants that have remained open have had to rework their operations entirely. Most offer free delivery and curbside pickup options for customers to avoid any contact with staff members. Many also offer discounts on their products or other incentives to generate sales. The craft brewery, Half Hours on Earth, in Seaforth, Ontario, is planting a tree for every online order they receive. Pearl Morissette Winery in the Niagara Peninsula, which normally relies on its world-class, farm-to-table restaurant to drive its business, has transformed its operation into an online country market offering curbside pickup. Patrons can purchase ethically sourced meats, eggs and dairy from local farmers as well as pick up bottles of Pearl Morissette wine, which is highly regarded in the region and usually not available for retail purchase. 

  Other initiatives that have spawned in the wake of COVID-19 include Exchange Brewery’s Virtual Ladies Happy Hour. The Niagara-on-the-Lake, Ontario brewery offers packages for sale that include several of their beers along with a link to a happy hour zoom chat. This type of virtual event allows their loyal following to come together, taste and discuss their current beers while maintaining social distancing.

  The spirits community is also using online initiatives to bring their following together during this period of social distancing. Campari Canada teamed up with Toronto-based online community, Bartender Atlas (http://www.bartenderatlas.com), to create the #camparistircrazy campaign. The campaign brings together bartenders from across Canada to develop Campari-based cocktails using common ingredients from around the home. The competition resulted in hundreds of cocktail submissions from across the country, uniting bartenders at a time when most are struggling with job loss and self-isolation. Corby Spirit and Wine, one of Canada’s leading distributors of wine and spirits, has partnered with WSET (Wine and Spirits Education Trust) to offer the Level 1 Award in Spirits course to 1,500 Canadian bartenders. The four-week online course is an introduction into the world of spirits, providing an opportunity for novice bartenders to make good use of their time off.

  Many businesses are having to use this time to develop new sales strategies. Shawn & Ed Brewing Company and Flat Rock Cellars Winery in Niagara,   Ontario, have partnered with several other local businesses to create “Bloom Boxes” that are for sale through its online shop. The gift box sets include a bottle of beer or wine, a DIY potted plant kit and a bottle of locally sourced hand sanitizer. The initiative aims to bring the community together and support local businesses in a time when they would typically be flooded with tourism.

  Restaurants Canada is also trying to bring the country together in support of hospitality. They have created the #Takeoutday initiative, encouraging people to order takeout meals every Wednesday. This effort supports restaurants and craft breweries across the country battling to stay afloat. The initiative even includes a tandem fundraising livestream event on Facebook, Canada’s Great Kitchen Party, featuring music by famous Canadian artists including Sam Roberts and Tom Cochrane, all in support of Canadian restaurants. You can join Canada’s Great Kitchen Party at Facebook.com/greatkitchenparty.

  Many large businesses in Canada have stepped forward to offer assistance in any way they can. Restaurants that remain open are preparing meals and delivering them to first responders who are working tirelessly to care for the ill. Large hotel brands whose business numbers have declined are instead offering their rooms to frontline workers, who prefer not to commute or decide not to have contact with their family members. Large scale food suppliers like Sysco are helping to support charitable endeavors by donating their excess product to food banks and shelters. 

  Many Canadian breweries and distilleries have transformed their operations into full-time alcohol antiseptic factories. Employees of Dillon’s Distillers in Grimsby, Ontario, have been working tirelessly since March 17, 2020, to provide 40,000 bottles of antiseptic at no cost to 1,300 hospitals, shelters, elderly homes and emergency response personnel. The generosity they’ve experienced from others in support of this cause has humbled the distillery employees. Many local businesses have donated materials, money and time in the effort to help with production. Once the distillery developed a system to provide the alcohol antiseptic to frontline workers, it opened up its order forms to the public to incredible response. The distillery saw over 10,000 orders for sanitizer in a matter of days, forcing it to remove the alcohol antiseptic from its online shop so workers could process the requests already received. The 10-person staff has worked from 6:00 a.m. until midnight, trying to get the orders bottled, labeled, packaged and shipped. The overwhelming number of orders will allow Dillon’s to subsidize the cost of the endeavor and rehire staff they lost due to closures during the pandemic.

  Worldwide, craft breweries have come “all together” in an initiative sparked by Brooklyn-based brewery, Other Half Brewing Company. The All Together collaboration started as a way to support local hospitality professionals by offering an open-source recipe and public label artwork for breweries to use as a starting point to create a unique beer. The concept enables breweries to produce their All Together beer at the lowest possible cost, allowing them to band together to support the hospitality workers that, in turn, support them. Blue Label Packaging Company has volunteered to print labels for the All Together line of beers at cost, and Craftpeak Multimedia has created free social media graphics for breweries to download to promote the initiative. Since launching, 718 breweries from 51 countries around the world have signed on to create an All Together IPA. Many breweries across Canada have joined forces to support the effort. Counterpart Brewery in Niagara Falls, Ontario, is one of them. The new craft brewery has continued to operate through the pandemic, stating that business has been really good, and they’ve continued to be blown away by the support from the community.

  According to SaveHospitality.ca, a coalition of over 500 independent restauranteurs and operators, many restaurants in Canada will not be able to sustain these closures for much longer. Without the proper aid, the entire industry could collapse, taking down a whole system of suppliers, purveyors and distributors with it. Restaurants need help. The coalition has formed a detailed plan for the government of Canada about what the Canadian hospitality industry needs to sustain itself moving forward. The initiative provides information about the short-term and long-term needs of restauranteurs to maintain their businesses in the future. Waiving property taxes and deferring loans are just some of the coalition’s initiatives. The full document, which has been signed by hundreds of restaurants all over the country, is available online at savehospitality.ca. The hope is that the Canadian government will respond to this crisis and support the $90 billion foodservice industry, which accounts for 7% of the country’s workforce. 

  As of now, the future of hospitality remains unclear. What is clear is that we are all connected in this pandemic and should take this opportunity to reflect on the things that really matter. Support your local businesses. Support your neighbors. Order from your local restaurants. Buy local brews from craft producers offering curbside pickup. Let’s get through this and come out on the other side, smarter and stronger.

Local B Corp Collaboration Between Hopworks and Looptworks Turns 300+ Cases of Beer Into More Than 400 Masks for Central City Concern

staff carrying a tray of beer

After releasing a variety case of beer called the “Homebound Hero 24 Pack” on April 21, Hopworks Urban Brewery has raised more than $1,500 for the Looptworks Foundation. The case sold for $40 with $5 of each sale donated to the Looptworks Foundation; the donation allowed the foundation to produce over 400 face masks for Central City Concern, a non-profit organization providing housing, health care and employment services for people experiencing homelessness in Portland.

  “It was really awesome to be able to partner withLooptworks on this program,” said Christian Ettinger, founder and co-owner of Hopworks Urban Brewery. “Our whole industry, like many others, is going through a rough time right now, so being able to give back in a meaningful way to other sectors that are hurting is super important. We couldn’t have picked a better recipient with the Looptworks Foundation and Central City Concern!”

  With the collaboration concluded, the “Homebound Hero 24 Pack” has now become the “Core Four” case, complete with the same core four beers: Golden Hammer Organic Lager, Tree Frog Organic Pale Ale, Powell IPA, and Robot Panda Hazy IPA.

  Golden Hammer Organic Lager features organic Northwest and German ingredients in a new take on Germany’s most popular beer: the Munich-style Helles. Notes of honey malt aroma and flavor greet herbaceous and floral hops at the castle door. Tree Frog Organic Pale Ale is fueled by organic Fuggle, Citra, and Mosaic hops that jump from branch to branch with juicy, floral notes that deliver the perfect amount of dank hop aroma. Powell IPA is Hopworks’ flagship IPA that celebrates its Powell Blvd. brewery, brimming with melon, tropical fruit, and a perfectly balanced bitterness. Finally, Robot Panda Hazy IPA is fruity and juicy with a fluffy mouthfeel and notes of spruce, tangerine, and papaya derived from Denali, Lemondrop, and Cascade hops.

  Keep in the know by following Hopworks social channels (everything @hopworksbeer), newsletter, and HopworksBeer.com for more details.

About Hopworks Urban Brewery

  Founded in Portland, Oregon, in 2008 by Christian and Brandie Ettinger, Hopworks Urban Brewery creates sustainable beer and food with sustainable business practices that protect the environment and support our community. Family-owned and operated, Hopworks sources thoughtfully, operates efficiently and minimizes waste in an effort to protect the planet. The company’s 20-barrel brewery produces 10,000 barrels of beer a year for Hopworks’ brewpubs and distribution throughout Cascadia. Hopworks is the first Certified B Corporation brewery in the Pacific Northwest and a proud member of 1% For The Planet.