From Brewery to Brand

Canadian Breweries Are Crafting More Than Just Beer

By: Alyssa Andres

These days, it’s not enough for Canadian breweries to just produce great beer. Canada’s craft beer industry is growing rapidly, with over 1000 craft breweries nationwide and more opening their doors each month. It is crucial that each of these breweries attempt to set themselves apart from the competition in order to establish a following and draw customers into their tasting rooms. From logos, slogans, packaging and merchandising to marketing, advertising and social media, each decision a brewery makes impacts how the public identifies with their business. Some of Canada’s most successful breweries have taken this notion and created their own personalized brands that extend way beyond beer and allow them to garner more interest in their businesses.

  Many of these breweries use original artwork to create more exciting brands and produce merchandise that sells out just as quickly as their beer. Some breweries use their brand identity to create a voice and speak to an important cause or issue. Others organize festivals, concerts or charitable events. Many incorporate local ingredients or use their unique location as inspiration for their brands.

The Grizzly Paw Brewing Company

  The Grizzly Paw Brewing Company in Canmore, Alberta, uses its unique Rocky Mountain location to create a diverse brand that appeals to locals and tourists alike. Established in 1996, Grizzly Paw has grown from a brewing company to a brand that extends from sodas and hot sauces to clothing, housewares and even soap. The brewery recognized the potential for a successful retail business early on, especially being a tourist destination, and started creating an array of branded merchandise to sell in their taproom.

  After launching The Grizzly Paw retail store, the brewery continued to expand its offerings. They added a line of handcrafted sodas to their repertoire in 2006, made with fresh water from the streams of the Canmore reservoir. This move allowed the brewery to expand its brand to include children’s clothing and goods. Sales and Marketing Manager, Kristina Cardinale, said the brewery developed a second logo to use for the sodas and used that logo to establish their children’s brand.

  “When it comes to the kid’s side, we’re not promoting kids wearing beer brands,” she said. “We always put the soda logo on the kid’s merchandise, so now we can hit all the demographics and age groups.”

  The brewery finds that many of its visitors want to take memorabilia and souvenirs home as a memory of their time in the mountains and aren’t necessarily just looking for a beer tasting when they visit The Grizzly Paw Brew House.

  The Grizzly Paw retail shop releases a new line of merchandise seasonally that includes lots of plaids, branded toques, hockey jerseys and even collector’s items like their Grizzly Paw “Thumberjack Throw,” a fleece-lined, red and black sherpa throw that retails at $75.00 CAD. Cardinale said they are looking to add floaties to the list of Grizzly Paw merchandise this summer. While brewing great beer remains their focus, their retail shop continues to be an important part of their business.

Blood Brothers Brewing

  Many Canadian breweries choose to expand their brands to include more retail offerings as the interest in craft beer continues to grow across the country. True beer drinkers love to sport their favorite beer brands, and they’re not just pulling these T-shirts out of a case of beer anymore. Consumers are willing to pay good money to showcase their favorite breweries, which creates a real opportunity for brewers to allow their following to promote their brand for them.

  Blood Brothers Brewing in downtown Toronto is an example of a brewery that has taken its business and developed a recognizable brand of street-style that can be seen all over the city. Owners and real-life brothers, Dustin and Brayden Jones, started with a simple logo designed by artist and close friend Meghan Kramer. They then started commissioning Kramer to illustrate all of their beer labels, using her unique style of artwork that is now easily recognizable as the Blood Brothers brand. The Jones come up with the name for the beer and share the backstory behind why they chose it, and from there, Kramer has complete creative freedom to interpret. These labels are then transformed into T-shirts, hoodies, posters and other merchandise to sell in the brewery taproom.

  The Jones brothers had no idea what the demand for merchandise would become. The glassware sales initially tipped them off to the importance of having a retail shop when they opened their taproom in 2016. Today, this paraphernalia is so highly sought after that it’s hard to get your hands on.

  Blood Brothers continues to expand its offerings, and today, their shop includes not only clothing and glassware but also pins, patches and playing cards. There’s even a bottle opener resembling a folding butterfly knife that the brewery can’t keep on the shelves. The brand appeals to a specific sort of hipster beer-lover and has become a signature look amongst Torontonians. Each new beer is an opportunity for a new piece of art and more merchandise in the Blood Brothers retail shop.

Collective Arts Brewing

  The idea of original artwork is pushed one step further by Collective Arts Brewing in Hamilton, Ontario. This one-of-a-kind brewery “fuses the creativity of craft beverages with the inspired talents of artists from around the world,” using a different artist for each piece of art that goes on their cans. Today, the brewery has commissioned over 1000 artists, showcasing each of them in their taproom in a gallery-style display of tall cans.

  Collective Arts also promotes musicians, not only on their cans but through live festivals and events. In 2019, Collective Arts released their first Audio/Visual Lager: a music-inspired beer featuring a record label, four bands and one visual artist on each can. The brewery threw a week of free concerts in Toronto to celebrate the launch. They also organize the annual “Liquid Arts Festival” to celebrate beer, art and music, featuring bands, live art installations, food and, of course, Collective Arts beverages.

  Recently, Collective Arts expanded its platform and now uses its brand to promote larger issues, such as tolerance and equality. They released their “Amplified Voices” series in 2020, using limited-edition artwork aimed at “provoking challenging topics and creating space for groups that are too often left in the margins.” The brewery raises money for various causes through their Collective More. charitable initiative, aimed at supporting community, creativity and equality. Their goal is to financially assist charities that do work “to bring more equality and better the well-being of people in their communities.” The Collective More. initiative continues to sell merchandise, screen prints and limited-release beers, with proceeds funneling back into their charitable initiative.

  For International Women’s Day, they celebrated by teaming up with the Pink Boots Society, an organization created to assist, inspire and encourage women in the beer industry, to create a grapefruit-elderflower IPA.

  Collective Arts believes that making beer is a platform, and they take it upon themselves to speak out about issues that matter.

Beyond the Beer

  These days, people are paying attention. Social media and the internet have changed the way that consumers interact with brands. Beer companies have a real opportunity to make a statement and engage with their audiences. They can speak directly to their consumers, something that wasn’t possible even a decade ago. Every new post is an opportunity to share a message, draw attention to their company and build anticipation for upcoming products and release dates.

  Craft beer is a thriving online community, and new breweries are joining daily. Brewing companies must not only consider the beer they are producing but also their overall brand and demographic. The most successful beer brands in Canada have a recognizable aesthetic that appeals to a specific demographic. Many have eye-catching logos and beer cans that border on fine art. These breweries bridge the gap between beer and brand by developing merchandise and apparel, funding live and online events and using their platform to deliver a message beyond “let’s party.”

  As social media and online communities continue to grow, breweries must understand the power of their brand and the voice that comes along with it. Beyond the beer, clothing and accessories, breweries have the opportunity to share a message, often to a large audience. It’s important to take this opportunity and use it to create positive change.

  As the world continues to evolve through a global pandemic, enormous human rights movements and an onslaught of technological advances, it is more important than ever to create brands that inspire good. Whether they source local ingredients, support struggling artists, collaborate with other small businesses or donate to charitable causes, giving back is an integral part of creating a successful brand, and as consumers, it is a crucial thing to consider when choosing which brands to support.

Breweries: How to Price your Beer

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I recently bought a book called Priceless, The Myth of Fair Value. The book is 300+ pages long and provides great information about pricing and the role of human psychology in how purchasing decisions are made.

While the book contains a lot of interesting stories, studies, and research, it doesn’t do much to help with the fundamental question: How should you price your products?

Ideally, to price your beer, you would determine the costs, add a healthy markup, and sell it to your wholesaler (or retailer) at a fat profit. Unfortunately, the market forces and your competitors have some influence here.

So, how do you price your products?

You can look at what everyone else is charging and follow suit. You can take a wild guess and hope it will work out profitably in the end. Or you can go along with what your beer wholesaler suggests for pricing.

Regardless of how you may have priced your beer in the past, today we’re going to talk about how you can price your products profitably for the future. To make the concepts easier to understand, we’ll use hypothetical pricing numbers and examples. And we’ll walk through a template you can use to make pricing easy. Best of all, you don’t have to read a 300-page book to find the answers.

Disclaimer: Since we are talking pricing, all examples listed are hypothetical only and used for illustrative and informational purposes. Prices, costs, and margins will vary widely based on market conditions and other factors.

How to Price Your Products

  • Pricing Terms: PTC, PTR, PTW
  • How Pricing Works in the Real World: Margin needed by the brewery, wholesaler, and retailer
  • Use the Pricing Model: Plug n’ play Pricing tool for your Beer

Pricing Terms

The typical beer sales cycle looks like this: the brewery sells to the wholesaler, who then sells to the retailer, who then sells to the end consumer.

At each stage in the sales cycle, there are different prices and markups that are charged. The Price to Wholesaler, or PTW, is the amount the brewery charges to the wholesaler. The Price to Retailer, or PTR, is the price the wholesaler charges to the retailer. Lastly, the Price to Consumer, or PTC, is the amount charged to the consumer. This is the amount listed on the store shelf for your beer.

You won’t be surprised to hear that the price the consumer pays for your beer is significantly higher than what you sold it to the wholesaler for. The reason, of course, is that each stakeholder in the sales cycle needs to make money. The brewery, the wholesaler and the retailer all have margins that they need on the sale of the beer in order to run their business profitably.

Those terms again…

  • PTW = Price to wholesaler
  • PTR = Price to retailer
  • PTC = Price to consumer

How Prices Work in the Real World

To properly price your beer, it may be useful to work backwards from the Price to Consumer. This is the price of the beer on the shelf at the retail account. If your competitor’s brand is selling for a hypothetical $12.99 a six-pack, you may want to price your beer accordingly.

The challenge is to figure out how much to charge your wholesaler, who then will charge the retailer, who then will price the beer at the $12.99 price point. How does all that math work? We’ll take this in small steps.

Here’s a hypothetical example. Let’s say you charge the wholesaler $25 for a case of beer. The wholesaler needs to make, for example, a 30% margin when they sell it to the retailer. To get a 30% margin, the wholesaler then charges the retailer $36 for the beer.

The math: $36 minus $25 = $11 Margin for the wholesaler. $11 divided by $36 = 30.5% Margin percentage.

Continuing the example, let’s say the retailer also needs to make 30% on the beer. Since they will sell it in six-packs, they markup the beer and charge the customer $12.99 per six-pack.

The math: 4 six-packs times $12.99 = $51.96 total sales to consumer for the case of beer. $51.96 minus $36 cost of beer = $15.96 margin.  $15.96 margin divided by $51.96 sales price = 30.7% margin percentage.

Each stakeholder needs to make their margins at each point in the sales cycle. This is what keeps the world going round, and the beer being sold. The numbers can get confusing fast. Thank goodness we have a Pricing Model that will do the math for you.

Use the Pricing Model: Plug n’ play Pricing for your Beer

There are many variables to consider when pricing your beer. You can break out the calculator, pen, and pencil, or you can use this Pricing Model spreadsheet. Below is a snapshot:

The first step is to determine what your beer costs to make. These costs include direct labor, direct material, and overhead. Next, determine the margin that your brewery needs to cover operating costs and realize a net profit.

In the example above, the total costs of the package are $14.80. The PTW, price to wholesaler is $25, and the brewery margin is 40.8%.

The next step is to understand the required margins for the wholesaler and retailer and expected price to consumer.

In the example above, the wholesaler sells to the retailer at $36 per case. The retailer then sells the case in four units (four six-packs) at $12.99 each. This is the price to consumer. 

The pricing model takes all the variables involved in setting the price and combines them into an easy-to-use spreadsheet. Simply enter a few numbers and you’ll have the information to get your beer on the shelf at a competitive price.

Wrap Up + Action Items
Read and understand the pricing terms – Price to Wholesaler (PTD), Price to Retailer (PTR) and Price to Consumer (PTC). Know that everyone needs to make money at each step in the sales cycle. The wholesaler needs to make their margin, and so does the retailer. Most importantly, so do you, the brewery owner.

Don’t guess or follow the herd when it comes to pricing. Use the pricing model to properly price your beer and achieve profitability. Your income statement will thank you.

You can download a copy of the pricing model at www.CraftBreweryFinancialTraining.com.

How to Improve SKU Management

Beer Business Finance

Financial Intel for Beer Distributors

“The more inventory a company has, the less likely they have what they need.” Taiichi Ohno

Inventory is the life blood of a wholesaler. Brands and products help define your identity as a business. However, if not properly managed, these same brands can bury you in expenses.

Purchasing inventory is the single biggest outlay of cash that your company incurs each year. In a $50 million company, more than $35 million is spent on inventory.

That is big dough. It’s also a big opportunity to enhance company financial performance by improving your portfolio management and SKU review process.

Managing inventory is a mixture of art and science. It’s a blend of subjective and objective information. There are the numbers (the objective information, the science) and then there’s your gut (the subjective information, the art) The idea is to combine the two and make the best decisions possible for your inventory portfolio and your bottom line.

The New SKU Management Course and this article will provide guidance and strategy on how to manage your inventory portfolio, monitor your key metrics and trim your un-profitable SKUs so that you can improve profit and cash flow.

The road to better SKU Management is just ahead. Let’s go.

SKU Management: Overview

  1. SKU Landscape – Then and Now
  2. Total inventory carrying costs, quantify the problem, fixed + variable, template to capture your costs
  3. The Inventory Scoreboard, Key Metrics
  4. SKU Management Fundamentals: Philosophy + Process
  5. How to identify under-performing SKUs and Fix, Sell or Close

SKU Management: Then and Now

It used to be a lot simpler. Just a few decades ago, beer wholesalers carried 100 SKUs on average. Today, the average is well over 1,000. A ten-fold increase in a short period of time.

In addition to SKU count growth, the number of craft breweries has increased five-fold in the last ten years from 1,500 to over 7,000.

The growth in both areas has created a phenomenon called SKU ‘intensity’ – the increase in package types per brand. In the past, a beer brand might be available in half-barrels and 4/6 pack bottles.

Today, beer is being packaged in 12oz cans, 16oz cans, 6packs, 12packs, 15packs, and so on. You might have five or ten different packages for the same beer. Now, that’s intense.

Non-beer SKUs are also being added to the mix: Wine, Non-Alcohol, and snacks for example. These fill up the delivery truck and can help get you more profitable stops. They also fill up the warehouse and create additional challenges to manage the inventory.

How did this happen?

You know how it happened…

Consumers demand a wide variety of choices. They want what’s new and what’s different.In order to keep up with ‘new and different’ you have to carry new breweries, new packages, and new styles.

New and different drives the growth of SKU’s in your portfolio. The simpler times of consumer brand loyalty is on a hiatus.

Distributors and retailers scrambling to meet the demands, sometimes managing by FOMO – Fear of Missing Out on the next big thing. As a result, distributors take on more brands, the SKU count goes up, and your cash flow goes down.

Distributor Evolution

In response to all this change, distributors have needed to evolve.

Specialized sales teams have been added to focus on craft. Sophisticated warehouse and inventory systems have been installed to keep track of all the new SKUs. And higher skills and new training for employees has been needed to keep pace with these new systems.

Change is nothing new for distributors, and the evolution of the business has been constant. The SKU challenge is just one more in a series of changes.

SKU Carrying Costs

So, let’s get into the nitty gritty: What is the cost to your business of these SKU increases?

In other words, how much more does it cost if you have 500 SKUs or 1,000? How about 1,500 SKUs or 5,000?

To answer the question, we’ll begin an assessment and calculation of Cost to Carry. This metric captures all costs that are included in managing, maintaining and holding your inventory.

Interestingly, studies show that 65% of companies don’t calculate carrying costs. If you don’t know your costs it is difficult to manage and improve them.

The main purpose of calculating your Cost to Carry is to identify controllable costs, and use this information as a basis for making decisions on managing breweries, brands and SKUs.

SKU Carrying Costs: Rules of Thumb

The average cost to carry inventory is 25% of inventory value. The number varies greatly from company to company, with percentages ranging from 18 to 75%.

The calculation works like this:

Add up all the expenses to manage, maintain and hold your inventory, then divide by the average on-hand inventory value.

Total Costs to Carry $500,000 divided by Inventory Value of $2,000,000 = 25%

SKU Carrying Costs: What’s Included

Below is a listing of costs that are typically included in the calculation:

  • Rent / Lease expense
  • Utilities
  • Wages: Operations Team
  • Wages: Admin Team
  • Breakage, Out of Code, Shrinkage
  • Destruction Costs
  • Insurance
  • Depreciation
  • Cost of capital (interest)
  • Transportation / Handling
  • Taxes

SKU Carrying Cost Template

To create your schedule of carrying costs, follow the steps below:

  1. List out costs associated with holding inventory. Use the list above, add/subtract based on the specifics of your beer business.
  2. Identify the basis for the cost – those factors that drive the cost. For example, hours and labor rates drive the wages, and square footage drives lease costs.
  3. Quantify the total annual cost for each item.
  4. Identify fixed costs and variable costs. Fixed costs are those that stay the same if you have 100 SKUs or 1,000.Variable costs will increase or decrease depending on the amount of inventory.
  5. Highlight those costs you can control/reduce.
  6. Calculate and input your average on-hand inventory value.

SKU Carrying Costs: Hard Costs vs Soft Costs

The items above are the Hard Costs, the actual dollars, spent on carrying inventory. There are soft costs to consider as well.

Soft Costs:

  • Opportunity costs: ‘the loss of potential gain when one alternative is chosen over another’. We have finite resources, so when dollars are invested in one brand or one SKU they aren’t available to invest in something else (other brands, other business opportunities, etc.)
  • Focus costs: The sales team can only handle so much, overload, distraction, and confusion costs money. Too many SKU’s and brands can become too much to focus on.

Soft costs are difficult to quantify, and don’t show up clearly on the income statement. But they do affect the price you pay to manage inventory.

SKU Inventory Metrics

Management of inventory can become a game of don’t run out, but don’t have too much on hand. Set proper expectations and use numbers to measure those expectations.

SKU Inventory Metrics help quantify what good inventory management looks like.

The Four Key Metrics of Inventory Management

  1. Days on Hand. Measures “Don’t have too much.”
  2. Out of Stocks. Measures “Don’t run out.”
  3. Out of Code. Watch and manage code dates.
  4. Inventory Variances. Count and safeguard your inventory.

Sign up for the New SKU Management course to get the presentation video, full Guide book, and spreadsheet templates. Your cash flow will thank you.

Yours in SKU Management,

Kary

How Your Intellectual Property Can Make or Break a Merger

By: Ashley Earle, Attorney, Dinsmore & Shohl

Like a good recipe, a good brand name for a beer, wine, or other beverage can drive sales. That recipe, distilling process, bottle design, or logo is all a form of intellectual property that helps define who you are in the industry. It can also be a defining and important part of any transaction.

  In today’s COVID world, breweries, wineries and distilleries of all types are doing what they have to in order to survive and one day thrive. Some are turning to mergers and acquisitions as potential strategies for survival and success. It’s important to know how your intellectual property (IP) can make a difference, good and bad, to a potential deal. Below are the five things you need to know about IP in a merger or acquisition. 

What Is IP?

  Before we get there, it’s important to quickly define the different types of IP that exist:

•    Trademarks: A trademark is the most common form of IP protection in the alcoholic beverage industry. It protects anything that functions as a source identifier, (product names, company names, logos like the NBC peacock, bottle or can designs like the Coca-Cola bottle, or even sounds like the ESPN tones). Trademarks can be registered and unregistered, though unregistered marks are limited in geographic scope.

•    Patents: This protects a unique invention (a brewing process, a novel distillation column), a unique design (bottle designs), or a unique plant (strains of yeast or grapes). Patents must be registered and issued to be enforceable, though pending applications will be relevant in an M&A deal.

•    Copyrights: Copyright protection arises automatically as soon as an original work of authorship is “fixed” into something tangible. Basically, once you draw the artwork for your bottle or can, write the code for your website, or draft up a piece of marketing material, it is protected by copyright. Registration affords several key benefits but is not required to claim ownership in a work.

•    Trade secrets: A trade secret is something that gives you value because it is secret. Examples include customer or vendor lists and recipes.

  Additionally, when you go through a merger or acquisition, you will often be asked to list out all of your domain names, social media, and in some cases, any software that is material to your business. It is important to make sure you keep a list of these assets in case an opportunity arises.

  Now that we’ve covered the basics, let’s dive into the top five things you need to know in a merger and acquisition when it comes to your IP.

What IP Do I (and They) Have?

  Start by taking an inventory of everything you have that is protectable – beer names, wine names, logos, artwork, packaging, unique brewing processes or recipes, social media accounts, and domain names – to name a few. This should include anything you registered, anything you are trying to register (like pending applications), and anything unregistered but material to your business. Disclosure schedules are used to list all of the IP and what is to be transferred in the transaction (if not everything). Be clear to fully disclose what you have without overstating.

  The same should be true of the other side. You should ask them to disclose all of their IP assets that will be a part of the deal, all the way down to their social media accounts and domain names.

  As you and the other side are pulling this together, you also want to collect all of your documentation to evidence the IP. This could include trademark applications and registrations, copyright registrations, patent applications, patents, email accounts, and social media accounts. You will also want to pull any licenses you have to use IP, independent contractor agreements regarding creation of IP, liens on IP (if applicable), and any documentation relating to disputes or claims of infringement involving your IP (if applicable). Make sure you have clear documentation of the chain of title (meaning who owned it at each point) from origination to present day.

Do Both Sides Actually Own Their IP?

  The next question you need to ask yourself in any deal is: Do we actually own that IP? The answer may not be as simple as you think. You need to be sure that all assets are owned by the company and not an employee, owner, or even a third party. A lot of companies don’t realize that if they hire an independent contractor to make something, whether a website, logo, or marketing materials, unless they have the contractor expressly assign the finished product to their organization, the contractor owns it. Employee-created works should automatically transfer to the employer, but it is still good practice to include an assignment in your employment agreements. 

  Ownership issues can derail or even terminate what would otherwise be a great deal. Make sure that the ownership of IP on both sides is clearly documented and validated as you move forward.

What Are We Agreeing to In the Deal Terms?

  Within the deal documentation, there will be a number of representations and warranties and indemnity provisions that relate solely to IP and the disclosures and transfers being made in the deal. This is why it’s so important to make sure you have your ducks in a row with your IP as you move forward.

  These reps and warranties will range from confirming ownership of the IP to promising your IP does not infringe the rights of others. You can also see reps and warranties that ask you to declare that your employees have not created any IP that is not owned by the company. Your legal counsel can help to finesse the reps and warranties to match your circumstances and protect you as best they can, but it’s important you ensure everything stated is accurate. A broken rep and warranty in a transaction can be expensive and arise after the deal is done.

  You may also be asked to indemnify the other side for any claims of infringement of the IP, even if you are selling your business to them and walking away. Typically, indemnity provisions should only last for a particular time period following the sale and have a few caveats of what does and does not trigger indemnity. It’s important to make sure you understand them and how they may impact you in the future.

  It’s also important that you understand what will happen to your IP or the other side’s IP after the deal is done. Who will end up as the owner? Who has control? Will any IP be left behind with either party? Are there any pitfalls with the IP that need to be addressed (like prior enforcement matters that resulted in Coexistence Agreements or liens)? Given the importance of IP to any business, it’s doubly important to understand what happens to the IP in the deal as you look to the future.

Were Things Done Right with the IP by Both Sides?

  While you want to believe all assurances a party makes in fostering the deal, both sides must do their due diligence. Did an employee copy and paste images from Google that are infringing someone’s copyright? Did you use unauthorized background music in a promotional video or advertisement? Did you see a great idea at a trade show and implement something similar, not realizing it was patented or trademarked? As the brewery, distillery, or winery grows and expands, so do the footprint and the risk for claims against you.

  Similarly, data privacy can be another pitfall. If any customer information is kept, such as names, birthdays, addresses, or credit card information, (or more abstract information such as IP address or use of cookies, beacons, and pixels), you have to be sure that this information is kept safe and confidential. Ensure there are no data breaches and never have been any breaches.

Likewise, if you are keeping any data, a clear privacy policy must be in place. Do not be tempted to copy and paste a privacy policy found online. The Federal Trade Commission (FTC) often comes down hard on businesses for having a policy that does not match what they are actually doing. Copying and pasting can lead to a policy that misleads consumers as to how you handle their data – and that’s a big problem.

A privacy policy can be fairly simple and straight forward: Explain what information you collect, where you keep it, how long you keep it, and how it is stored, and provide an option for customers to opt out (such as an email address to contact). The more information (and the clearer the information) the better – and when in doubt, ask for affirmative consent.

  With these five things in mind, you can approach a deal with confidence and find the perfect fit to expand and secure your brewery, distillery, or winery. When in doubt, consult your attorney – we’re here to help!

  Ashley Earle is an attorney at Dinsmore & Shohl who focuses on branding protection through trademark and copyright law. Dinsmore represents breweries, distilleries, wineries, cider companies and other alcoholic beverage producers in business, regulatory, intellectual property and litigation matters. Dinsmore attorney represent these entities in every stage of their business, from formation to operation to final sale or closure.  Ashley can be contacted at…513-977-8522 or ashley.earle@dinsmore.com

Brewing Social Media Success:

How to Use the ‘Gram to Maximize Your Craft Beverage Brand  

By: Chris Mulvaney, President (CMDS)

What three things do Tito’s, Blue Chair Bay Rum and Trillium Brewing Company have in common?  All three have mastered the ‘gram game and have boosted their brand success by putting out a consistent cross-formula of brand content, brand awareness and maximizing audience engagement across the ever-growing social media platform.

  Whether you are a craft brewer, startup spirit producer or global drinks company, your social media presence should be at the top of your priority list. But how exactly can crafters use Instagram to grow their business?

  Instagram is a visually appealing social media platform. In recent years, it has started to dominate Facebook in that it is not as overcrowded and expensive. The beauty of Instagram is that brands can still establish an organic relationship with their followers and can develop brand personas, becoming known for a certain tone, content and style. They can build their brand immensely just by being an active user. Also, the influencer market has never been so powerful for brand awareness.

Instagram Strategy

  Once you get a grasp of the platform, then you must define your social media strategy to gain the right followers and maximize engagement.

   This should include:

•   Increasing brand awareness.

•   Driving website traffic.

•   Increasing website engagement to generate leads and drive sales.

•   Increasing customer retention, engagement, and followers.

  How can a brand stand out in an increasingly competitive market?

•   Quality products, first and foremost.

•   Great marketing.

  After that, tell your brand story through photos, partnerships, video and human interaction. Think about what separates your product from others in the market. This isn’t something that’s achieved by one post, but over time, and means connecting your product to something much wider than the drink itself.

  For example, Mexican brand, Corona, understands the appeal of their beverage isn’t just the beer itself. A Corona and lime brings to mind vacations, beaches, relaxation and sun.

  They’ve fully embraced this as their brand, tying the image of plunging a fresh lime into a cold Corona to diving headfirst into the waters of a clear blue ocean.

Organic Media vs. Paid Media

  In the past, the goal of most marketers on Instagram tended towards growing a big following, then continuously publishing content that’s relevant to their brand and audience. One important point to realize, however, is that just because you have 1000 followers doesn’t mean every time you post all 1000 of them will see that post.

  In fact, the reality is a much smaller percentage of them will ever see your post and that’s where the term “organic reach” comes in.

Organic

  One of the most important things to understand about social media marketing is that the way companies can succeed on social media will be entirely dependent on whether they can create an organic experience for users.

  Organic reach determines how many of your followers will see your post without you paying.

This concept of organic reach is prevalent on Instagram since the algorithms used to determine who will see your content at any given time are based primarily on engagement.

  Tips to Get More Organic Reach:

•    Feed your audience with more value.

•    Upload at least two posts a day.

•    Make use of all the features (posts, stories, comments, hashtags).

•    Use attention-grabbing headlines.

•    Use paid sites like Sprout Social to understand the industry atmosphere and create an ongoing dialogue with your audience.

Paid Distribution

  Due to changes in organic reach over the years, companies have been forced to rethink their social media strategies, and in many cases begin exploring other avenues to reach their users on social media, specifically through paid distribution.

  Utilizing paid channels has a number of benefits because it can target users based on demographic information, behavior and interests. Because of this, marketers are able to drill down to specific audiences.

Seven Steps to Success

  Gaining followers and engagement isn’t about simply posting once a week and hoping for the best. In fact, a successful strategy on Instagram should include concrete goals, an ongoing content calendar, a scientific approach to who you’re trying to reach and how many people you expect to interact with.

  The following are seven important steps to grow your brand on Instagram.

1.  Be consistent:   It’s important to define a core strategy for your brand. It should be consistent across all channels and the narrative should be easy to follow. You’ll need to balance product content, campaign content and brand content to be most effective.

       How to maximize consistency on the Instagram platform:

•   Post stories often.

•   Like and comment on posts.

•   Run a contest.

•   Post engaging captions.

•   Offer free advice or information.

•   Post during active hours.

•   Use Instagram ads (paid distribution).

•   Have a strong visual brand strategy.

2.  Use clever alcohol hashtags:  Using clever alcohol-related hashtags can help get your brand trending online or inspire a sense of community with your customers.

        Studies have shown the optimal number of hashtags to use in Instagram consistently is seven. However, even more important is to define your hashtags, include them on packaging and don’t change them too often to make sure fans can refer to you easily.

3.  Use Influencers:   The influencer market has never been so powerful. There are hiring sites for influencers that will allow you to enhance your brand and vision through them. It’s a great way to promote engagement because it boosts brand awareness fast and increases your potential to go viral.

4.  Keep the “social” in social media:  A great way to inspire your fans is to use social media to inspire real world engagement. Your brand will get the most out of social media by catering to the interactive experience. It’s important to be part of the conversation around social events which will resonate with your market – both in terms of pre-planned campaigns and via reactive content.

       Just having a social media account is not enough. Successful brewing and spirit brands actively encourage their fans to engage with their accounts. Many have received some serious engagement by re-posting user generated photos.

       Whether you’re sponsoring a national event, or you can be reactive in a more local way, providing up-to-date content and being part of the conversation will help to keep your brand relevant.

5.  Offer a Backstage Pass:  Take your followers behind the scenes. Let your audience peek behind the curtain and see how their favorite drinks are made. Post photos of the start-up days, of the staff living life and having real experiences.

6.  Connect to a Cause:  Just as social media users don’t only care about likes and clicks, drinkers don’t care solely about their alcohol. More and more, consumers care about the ethics behind the products they’re buying. Remember, they are buying a brand.

       For example, New Belgium Brewing Company put meaning behind their message with their #FindingCommonGround campaign, which not only connects their outdoorsy aesthetic brand to a public land cause, but raised over $250,000 for charity.

        It’s worth the investment, on multiple levels, to put some of your efforts into giving back.

7.  Partner with other brands:   A drink is better with friends. Likewise, a brand is better in a partnership.

       Consider doubling up your power for promotions with a complimentary brand. Partnerships are especially good on Instagram for giveaways, allowing you to expand your offer and reach two different audiences.

       Make sure to find a brand aligned with your goals, and of similar size to get maximum value from a partnership.

Don’t Make These Common Instagram Mistakes

  Common mistakes brands can make on Instagram can hurt them exponentially. Here are some important ones to avoid:

•    Sharing more reposts than original content.

•    Taking too long to respond to comments.

•    Favoring quantity over quality.

•    Misusing hashtags.

•    Buying likes and fake followers.

•    Not paying attention to analytics.

Recap

Craft beverage companies have a product that is in demand, but they are working in an increasingly competitive market. Digital marketing allows them to stay ahead of the game through creative branding and audience engagement.

As a recap, here are some main social media tips as discussed above:

•    Get to know how the Instagram platform works.

•    Define your social media strategy.

•    Tell your brand story.

•    Utilize organic search and paid distribution.

•    Be consistent.

•    Use hashtags.

•    Use influencers.

•    Inspire real world engagement.

•    Take your followers behind the scenes.

•    Connect to a cause.

•    Partner with other brands.

•    Keep it going; don’t stop!

The Last Gulp

  If craft beverage companies hope to engage consumers and boost their sales in this competitive market, they have to adopt a social media strategy that ensures success. While there is no cookie-cutter formula to success on Instagram, there is a pattern that works across the platform if utilized properly.

  The realness is in the engagement and knowing how to maximize your followers and their engagement. So keep thinking: just how can you brew up a social media campaign as unique as your beverage?

Chris Mulvaney is a business developer, entrepreneur, and an award-winning creative marketing strategist. His extensive professional background includes working with some of the world’s leading brands – and personally helping clients refine their corporate vision and generate the kind of eye-popping results that too many companies only dream about. Visit… cmdsonline.com

Enhanced Yeast Strains Follow Distilleries’ Desires for New & Unique Profiles

By: Gerald Dlubala

The world of yeast strains is large, diverse and ever-changing. Used in commonly recognized applications, including baking, brewing, wine production, plant care, cosmetics and dedicated spirits production, the strains can contain similar attributes. The differences come in how they react under varying conditions and temperatures, and those are both noticeable and noteworthy.

Experimentation and Exploration Contribute to New and Enhanced Choices

  “These days, craft distillers are experimenting with virtually everything to provide differentiation in their spirit, and that means with yeast strains, too,” said Denise Jones, Technical Sales Support Manager with a focus in fermentation for distilling for Fermentis, experts in the fermented beverages industry.

  “If it converts starch into sugar, any yeast can theoretically be used to make a wash that can become distillable alcohol. Variations in yeast strains produce varied metabolic byproducts that translate into different congeners in the fermentation and final spirit post-maturation. Some distillers are trying different individual or combinations of yeasts, including Belgian ale yeasts, traditional American ale yeasts, or even Champagne yeasts to ferment their mashes. Individual fermentations can be distilled as a blend or be distilled individually and blended later. When you consider how these then respond to different process conditions, temperature conditions, the initial sugar concentration, inoculation rates, nutrition values and more, either individually or in combinations, you can significantly affect the behavior of some yeasts and, consequently, their flavor profile.”

  Jones said that distillers play a crucial role in yeast strain development by selecting and successfully using strains adapted for the products they want to manufacture. Yeast strains prove to be successful and reliable by distillers regularly practicing their craft while continuing on their quest to manufacture a product that offers unique characteristics, including sensory values, fermentation speeds, efficiency in sugar conversion and more.

  “Distilling yeasts do possess similarities to those commonly used for wine, beer and cider. But many of the distilling strains have properties that keep the fermentation progressing in the more stressful and challenging sugar substrates present in distillers mashes and musts. Distiller’s yeasts are more efficient in converting sugar into alcohol, meaning the final fermentation is faster and drier with fewer residual unfermented dextrins left over. These strains work at a higher temperature and ferment more quickly, typically within 72 hours versus a beer fermentation that can last up to 14 days,” said Jones. “Additionally, yeasts that work quickly are advantageous to distilleries that look towards higher efficiency to maximize production and capacity within the shortest timeframe. Some strains address the need for greater heat tolerance, furfural tolerance, or the need to adhere to enzyme use regulations. Genetic compositions allow these strains to ferment larger sugar molecules and increase congener development that translates into more desirable aromas and flavors in the final product.”

  “For example,” she said, “to produce whiskey in Scotland, the use of enzymes is not allowed, so strains that can ferment complex sugars are required. Whiskey also requires an aging process in barrels and some specific congeners produced by yeasts. Rum uses different types of cane sugar substrates, ranging from exhausted molasses with a high non-fermentable solid content to juice directly extracted from the cane. They are different worlds in terms of substrates, requiring strains that resist specific conditions. In short, we cannot pretend that a strain selected for wine and that has evolved in that environment can efficiently ferment a rum or whiskey. Likewise, a strain used to ferment sugar cane juice cannot properly ferment exhausted molasses. But cross-functionality is often possible and encouraged as an important tool for innovation.”

  “Our distiller’s strains have been selected for their tendency to be robust in high-stress situations that can alter and restrain sugar metabolism of the cells. The distiller’s choice of strain can depend on different conditions related to heat development, fermentation substrate conditions, or desired production efficiencies. Fermentis yeasts are adaptable to various substrates under different conditions and can ferment in multiple mediums. In many cases, multiple strains offer the right characteristics to ferment a specific wash for a spirit. We also offer strains that demonstrate the ability to ferment just about any sugar they encounter. Having choices helps distillers by offering a wide range of possibilities when selecting a yeast for their unique facility and specific type of fermentable sugar substrate. Some distillers will use the same strain on many different products helping them streamline their protocol systems and manage their supply purchases.”

  Included in those strain choices are the SafSpirit and SafTeq lines. SafSpirit yeast strains are selected to give a range of choice for an array of different sugar substrates to help the distiller more easily reach their goals. SafTeq yeasts are primarily chosen to ferment agave-based musts, which are very rich in fructose and can have larger amounts of furfural and saponin, both considered toxins and inhibitors of the fermentation process. Providing strains that tolerate these toxins helps the distiller achieve complete fermentation of the agave sugars.

  “Fermentis offers a wide range of yeast strains for the distilled spirits world,” said Jones. “Our yeast’s ease of use and directed capacity to ferment various sugar substrates give distillers many choices with regards to their fermentation challenges while keeping the process as simple as possible. Understanding that no facility or situation is the same offers Fermentis an opportunity to assist the distiller in finding the best yeast and protocol to reach their goals. Every distillery has different equipment and support services for fermentation, so each producer must consider fermenter size, shape, cooling capacity, desired alcohol targets, intended flavors and desired aroma. Then, having a yeast supplier that can successfully assist you using these parameters ensures that your production expectations are met while saving time and money.”

  Jones said that many distillers come to Fermentis aware of their production capacities and are absolute in what they want as far as fermentation goals. Others will have a general idea but are searching for the right product to develop new functionality and flavor ideals. Most want to find a way to differentiate their product from others by choosing a strain and protocol that provides uniqueness. All of these methods are successful and can result in a significantly different product from other market offerings.

  “Fermentis will always be there to offer help, advice and information to steer a distillery towards a successful product delivery,” said Jones. “We are finding that many fermentations still won’t have the complete nutrition needed to have proper growth and metabolism. Finding the yeast strains and derivatives that work well with nutritionally deficient sugar substrates seems to be a general need within the industry. Fermentis has taken the lead in producing yeast-derived products that enhance those sugar substrates lacking the necessary nutrients needed for optimal yeast performance. Then, once a distiller becomes accomplished in fermentation, they’ll usually begin to consider flavors and aromas. The aroma of spirits consists of several hundreds of flavor active compounds produced at every stage of the process. Most of these substances are yeast metabolites produced during the fermentation process. Favorably enhancing the development of these metabolites seems to be the trend in spirit designed fermentations.”

  Jones told Beverage Master Magazine that Fermentis adds incredible value to each of their customer’s fermentation needs by consistently providing their technical and sales managers with the latest research information from their France-based research and development facility, including intuitive conclusions and details about each strain within a variety of different fermentation situations. With this information, distillers can make the right choices in yeast strains to reach their fermentation goals.

Experience and Expertise Lead to New and Successful Adaptations

  Reaching fermentation goals is also a priority of Maryse Bolzon, Global Craft Distilling Manager of Lallemand Biofuels & Distilled Spirits, a global leader in the development, production and marketing of yeast, bacteria and specialty ingredients.

  “In a distillery, whatever the size, the only way to produce ethanol and get that desired distinctive and unique aromatic profile is to choose the right yeast strain and use it in the correct conditions during fermentation,” said Bolzon. “One of the magical qualities of yeast is that you can make changes within the conditions of fermentation while using the same yeast and get noticeably different results. Subjecting the same yeast strain to different temperatures or different feedstocks will give similar yet distinctively different aromatic profiles to your spirits. Distilling yeast uses various types of sugar depending on the raw materials used and can reach higher ethanol content, ferment in stressful conditions, and develop deep aromas and flavors. Ultimately, the strain you choose should be aligned with the substrates used and under what conditions your fermentation occurs.”

  For example, Bolzon said that in the production of whiskey, scotch and bourbon, selected yeasts should work well on grain under a wide range of temperatures, and as long as the substrates are similar, you can use the same strain of yeast with all of them. Conversely, different substrates, like those in rum, produce different sugars, requiring different yeast strains. If you work with 100% malted grain at 34 degrees Celsius throughout the fermentation process, you couldn’t use the same yeast strain when working with molasses under the same conditions. Rum uses glucose, fructose and sucrose, while whiskey will have glucose and maltose.

  “Saying that, we understand how important it is to take the time to research and choose the correct yeast strains by researching and matching them with the types of sugars that they ferment,” said Bolzon. “Some ferment glucose and fructose, others fructose, maltose and maltotriose. Some will never ferment fructose under any conditions. There are a lot of choices, so consideration is always given to the spirit being crafted and the substrate in use, whether it’s grain, molasses, agave, syrup, fresh juice or something else, and we always look at the distillery’s fermentation and distillation conditions.”

  A yeast supplier should be both a partner and assistant in the craft distiller’s process. They should understand the distiller’s identity and branding needs as much as the fermentation process and distillation conditions to provide the appropriate yeast strains to fit the distiller’s needs.

  “Of course, choose a supplier that will provide dedicated technical support,” said Bolzon. “Within LBDS, our technical support is the cornerstone of our identity, with all team members having practical backgrounds in fermentation and distillation. We work closely with craft distillers to ensure that the yeast, nutrients, enzymes and bacteria chosen will provide the desired results. Our yeasts are stored in warehouses under optimal conditions, meaning no heat or direct sunlight. Our yeast is distributed in a dried state, meaning that we have removed the water, including the membrane. The membrane is critical to where the sugars, vitamins and minerals enter and the ethanol and other metabolites exit. If these exchanges do not work optimally, the yeast will not work properly and cause weak, sluggish or stuck fermentation. Making your yeast happy is always the key to successful fermentation, so if you’re working under potentially stressful conditions and want higher ethanol content, we recommend rehydrating the yeast before adding it to the fermenter. After purchase, the yeast should be stored in dry areas away from heat or direct sunlight. Because our yeast is sparged with inert gas and vacuum packed, you have up to three years shelf-life storage capability as long as the vacuum packaging remains intact.”

  Bolzon said that LBDS is always happy to work with the distillers and assist them with producing dedicated spirits. Some distillers know exactly what they want in a yeast strain, others ask for help and support in developing their spirits, and others already have the knowledge but prefer to collaborate.

  “I think as an industry, we cover the basic needs of distillers, meaning good fermentation kinetics, quality stress resistance and exceptional aromatic profiles,” said Bolzon. “But within LBDS, we believe that a distinctive spirit needs more than the basics. Perfection comes in the details, so we are constantly working to make improvements and offer new and stronger yeast strains that bump up bacteria synergy, impact nutrition and deliver more distinctive profiles. Every day, we have new questions about fermentation on specific substrates like coconut juice, exotic fruits, various syrups and more. These types of questions push us to a better understanding of raw material characteristics, leading to better yeasts, processes and partnerships with distillers.”

  “To me, the most important thing is to make sure that the craft distiller receives quality technical support when needed to assist not only in yeast choices but also on processes like fermentation times, temperatures, nutrition information, and distillation procedures,” said Bolzon. “Within LBDS, we have Research & Development labs in the United States and Canada. We focus on the kinetics and aromatic profiles of our current strains. We work on adapting new strains to be successful under stressful conditions, and we work on providing strains that work under higher temperatures, benefitting the craft distiller that finds the cost of fermenter cooling prohibitive. We follow current trends, including the development of strains that enhance the aromas of distilled spirits.”

  “In the end, the most important thing for us as a yeast supplier is to understand what the distiller is looking to accomplish with their product,” said Bolzon. “After all, that spirit will reflect their personality, brand and identity, so we must do all we can to help them with their goal of distilling a distinctive, unique product.”

Freeland Spirits:

Women-Inspired, Women-Owned, Women-Centric

By: Becky Garrison 

Upon stepping into Freeland Spirits’ northwest Portland distillery, I feel like I’m walking in a spring meadow even during these gray Portland days. I’ve entered into a space that has a different feel than your typical distillery. Freeland’s medium blue exterior and eggshell interior lift my spirits and give me a serene vibe, as though I’m in a yoga studio. Their signature teardrop glass bottles contribute to this warm and relaxing feel. The comforts extended to the restrooms, which are stocked with feminine hygiene products and offer changing tables, items seldom found in the distilleries I’ve frequented.

  As Freeland Spirits founder Jill Kuehler reflected, these design aesthetics symbolize the women-centric nature of this distillery. “We worked with a team of female designers to take the aesthetic of our model and the values we represent and turn it into physical spaces. I feel like every com-ponent really matches who we are.”

  Take, for example, that teardrop bottle design. Obviously, Kuehler cannot be present in a liquor store to explain the distillery’s unique attributes whenever a customer peruses bottles of spirits. Hence, she wanted to design a bottle that could tell the distillery’s story for them. Kuehler worked with a designer in Brooklyn to create the design she feels pays homage to Oregon agriculture, born from months of Pacific Northwest raindrops. She also wanted to recognize the Teardrop Lounge in northwest Portland because the owner was very helpful when they first started out.

  Prior to founding Freeland, Kuehler ran Zenger Farm, an educational farm in east Portland that teaches approximately 10,000 kids annually where good food comes from. From this experience, she dreamt of launching a distillery with a focus on producing spirits using the best Oregonian products while also celebrating the women pioneers who make this region unique. While drink-ing Kentucky Bourbon with her friend Cory Carmen, owner of eastern Oregon-based Carmen Ranch, Carmen expressed an interest in incorporating small scale grain production at her ranch along with beef and chickens. She offered to grow the rye if Kuehler made Bourbon from it.

  Thus, Freeland Spirits was born in 2017. Kuehler chose the name Freeland because it’s her mother’s and grandmother Meemaw’s last name. She grew up in Meemaw’s garden and observed how, as the family’s primary breadwinner, Meemaw broke through many boundaries. A “good Christian woman,” Meemaw never touched alcohol. So, when asked how Meemaw would respond to having a distillery named after her, Kuehler laughed. “I think she’d roll over in her grave, but she would secretly be proud.”

  From its inception, the distillery highlighted women producers and distillers. For example, Kuehler brought on board women like Molly Troupe, who has the distinction of being the youngest master distiller in the United States. According to Kuehler, “Molly’s Master’s in distilling from Scotland is worth noting. At the end of the day, it was her credentials, creativity and desire to create the very best spirits, not just her gender, that drew me to her. She was the very best person for the job.”

  All other key staffers are women, though they occasionally hire men. “Our founding story is launched by women, but we’re for everyone,” Kuehler said.

  Launching a women-owned and operated distillery proved to be brutal in terms of securing financing. Only 2% of venture capital funding gets invested in women-owned businesses. Also, the commercial real estate market remains dominated by men.

  “You’ve got a lot stacked against you, particularly when trying to do something so capital intensive,” Kuehler said.

  Initially, Kuehler set up shop in space offered by Aria Gin. Since Ryan Csanky distilled his ini-tial batches of gin in space provided by Bull Run Distillery, he delighted in helping another local distillery by doing likewise. Since opening Freeland Spirits in 2018, Kuehler continues this tradition by helping other distillers launch their own small-batch craft spirits.

  While waiting for its first batch of Bourbon to mature, Freeland Spirits distilled and marketed Freeland Gin, which is crafted by hand in small batches. Kuehler found herself drawn to gin due to the infinite number of botanicals one can play with to develop a unique spin on a classic spirit. She sourced fresh botanicals from local farmers’ markets and area farms, such as Vibrant Valley Farms, based in nearby Sauvie Island.

  “For us, it was creating a gin that reflects what Meemaw’s garden gin would taste like,” she said.

  Freeland Gin uses 19 botanicals distilled using two different techniques. Fourteen botanicals are traditionally distilled using a copper pot column still, nicknamed Hell Bitch, while the remaining botanicals are cold distilled. This difference allows for the preservation of delicate fresh ingredi-ents like cucumber, rosemary, mint and thyme. These fresh ingredients are still macerated in high proof alcohol before being distilled in small batches using a Roto Vap.

  In November 2018, the distillery launched Freeland Bourbon, a spirit that pays homage to the South, and Meemaw, in particular. Charred American oak barrels produce notes of caramel, va-nilla and spice. Then, the Bourbon is finished for five months in Elk Cove Pinot Noir barrels, which adds an element of the Pacific Northwest terroir to the whiskey.

  Next, Kuehler added Freeland’s Geneva to the lineup, a spirit inspired by genever, gin’s Dutch grandmother. The geneva showcases Oregon rye with an array of savory botanicals and hints of Willamette Valley hazelnuts, along with citrus-forward products designed to bring out some of the rye flavors.

  Freeland’s newest offering is Freeland Dry Gin, a navy-strength London Dry gin, which Kuehler made for “those strong gals who desire an equally strong gin.” Its concentrated and bold taste leads with juniper followed by a hint of citrus and notes of green olive, Pacific Northwest pine forest and mulled spices.

  The distillery recently joined the canned cocktail craze with its Gin & Tonic canned cocktail. Freeland Gin is paired with Portland Syrups Rose Tonic for a bright citrus sensation along with fresh herbs like juniper and roses. This cocktail was developed in collaboration with Freeland’s bar manager and bartending team and became a local favorite, receiving high marks from The Portland Mercury and other outlets. In 2020, another canned cocktail became available – a French 75 made using Freeland’s flagship gin and Chehalem Chardonnay wine.

As Freeland expanded, it continued with a womencentric focus. In 2019, Lee Hedgmon came on board. Hedgmon is a native Oregonian and woman of color who began brewing in 2004 with a focus on fermented beverages such as beer, mead, wine and cider. She also founded The Barreled Bee, a fermented honey, which is sold in the Freeland Spirits bottle shop.

  The distillery also launched Freeland Free Spirits, a celebration of female-identified Oregonians who are breaking the glass ceiling. Each month, they choose a person who works with Freeland’s tasting room manager to design a specialty cocktail for that month. All proceeds from the cock-tail go towards the person’s charity of choice. Currently, portions of this program have been put on hold due to Covid-19.

  Another women-centric collaboration is the bestselling cocktail kit Queen RBG (rose, bergamot, ginger), a tribute to the late U.S. Supreme Court Justice Ruth Bader Ginsburg, which benefits Planned Parenthood Advocates of Oregon. Other local collaborations include partnerships with Kate’s Ice Cream, Portland Bloody Mary, Portland Soda Works and Pie Spot.

  For whiskey connoisseurs, Freeland Spirits launched a private barrel program where someone can pay for a barrel, and when it’s is ready, they get the first 24 bottles that come off that barrel. Other offerings have included whiskey making and cocktail classes.

  While the physical distillery remains closed to the public due to the global pandemic, Freeland Spirits continues to offer curbside pickup of spirits and cocktail kits in Portland, along with ship-ping throughout Oregon. Freeland Spirits can also be found in select stores in Washington State, California, New York and Illinois.

For more information, go to their website…http://www.freelandspirits.com

Brewery Financial Resolutions for the New Year

As we turn the calendar to 2021, it’s time to make financial New Year’s resolutions for your brewery. Financial resolutions may include sales growth, margin improvement, or expense reductions, to name a few.

  However, during the Covid-19 pandemic your most important resolution may be to improve cash flow. During a crisis, the most essential asset is cash, and access to capital. Simply put, when you have access to capital you can stay in business and ride out the financial turmoil.

  Therefore, in the new year, resolve to build a financing plan for your brewery so that you always have access to capital when you need it.

  In this article, we’ll review tactics and strategies to build your brewery financing plan. We’ll cover loan terms, common brewery loan structures, and the details of what a bank will need from you in order to get funding. A complete and well-thought-out financing plan lets you develop alternate sources of cash and capital when emergencies happen. Like right now.

Brewery Loan Terms and Types

  One of the keys to success in business is to have a financing plan in place before you need the money. The financing plan may include a working capital line of credit, equipment line of credit, and commercial term loans. Each loan serves a specific purpose in funding your brewery business.

Here’s a summary of each loan type:

  Working capital line of credit. This is used for short term funding needs, seasonal, or temporary cash shortfalls. It may be open ended, or there may be requirements for re-payment at certain time intervals. For example, the line may need to be paid down to zero on an annual basis. This type of loan is generally secured by assets, such as accounts receivable and inventory, and may require a personal guaranty.

  Equipment line of credit. This line of credit is for specific asset purchases like a canning line, tanks, or warehouse equipment. The line provides for a pre-approved buying ability so that you can act fast if there is an auction on used equipment, for example. The line is open ended, available when you need it, and converts to a term loan which is paid down in monthly installments. This is a useful part of a financing plan as it provides flexibility, ability to act quickly, pre-planning for brewery equipment.

   Term Loan: This loan is secured by the equipment purchased and is paid down in monthly installments of principal and interest. Unlike the equipment line of credit, this type of loan needs to be reviewed and approved prior to funding, so it takes longer to get access to the funds.

A Typical Brewery Loan Structure Might Look Like This…

  In this example, the business has a working capital line of credit of $250,000 and has used (borrowed) $50,000 of this amount. Therefore, $200,000 remains available if future cash needs arise.

The equipment line of credit in the amount of $100,000 has been pre-approved and is available should the business need to purchase brewery equipment quickly. 

  Equipment Term Loans of $100,000 have been borrowed and are related to past purchases. This loan is being paid down, or amortized, on a monthly basis with principal and interest payments.

The working capital and equipment lines of credit can provide access to capital when you need it most. However, your financing requirements may vary, so be thoughtful about what you need now, and may need in the future.

What the Bank will Need from You

  At the heart of any good financing plan is a good financial pro forma. This document will demonstrate your funding needs and ability to re-pay the loans. Moreover, the pro forma shows your lender that you understand what they require to approve the loan. This provides credibility for you and makes the lender’s job easier.

  A typical financial pro forma will present three to five years of projected results. The information is presented in summary form, and shows sales, margins, operating expenses, net income, and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization). The expected financial results are then compared to the projected payments on the requested loans. This comparison establishes the ability to make the required payments.

  Here’s an example of a summary financial pro forma:

  In this example, the financial pro forma shows a summary of annual sales, margins, operating expenses, net income and EBITDA. The EBITDA is then compared to the expected loan payment to show the ability to re-pay the loan.

Loan Covenants are Promises

You Make to the Bank

  The financial pro forma presents expected financial results and demonstrates your ability to re-pay the debt. In addition, the bank will require regular financial updates to ensure the expected results are being achieved. This is typically done by sending monthly or quarterly financial reporting.

  Further, the bank will require that loan covenants be met. Loan covenants are additional financial promises that you make to the bank. Examples include the debt service coverage ratio and the debt to net worth ratio.  

  The debt service coverage ratio measures how well cash flow covers debt payments. Here’s an example:

• Debt Service (payments on the loan) = $100,000

• Coverage (cash flow or EBITDA) = $150,000

• Debt service coverage ratio = 1.5x

  n this example, the EBITDA of $150,000 is divided by the debt service of $100,000 and yields a ratio of 1.5 times. In other words, EBITDA (cash in) is greater than debt service (cash out) by 1.5x.

  A second loan covenant that is often required is the debt to net worth ratio. As the name implies, this ratio compares the total debt of the brewery to the net worth. Here’s an example:

• Debt = $150,000

• Net Worth = $300,000

• Ratio = 0.5x

  In this example, total brewery debt is $150,000 and net worth is $300,000. For the calculation, debt is divided by net worth, and the result is a debt to net worth ratio of 0.5x.

  The covenant requirements for each ratio will be set by your lender and spelled out in your loan documents. It’s important to understand how the calculations work and measure actual results against the financial promises (covenants) that have been made.

Wrap Up & Action Items

  In the middle of the Covid-19 pandemic your most important asset is cash and access to capital. The working capital and equipment line of credit provide access to cash when you need it most. The financial pro forma demonstrates your cash needs and ability to make loan re-payments.

  A financing plan provides access to capital so that you can stay in business and ride out the financial turmoil. As you set your New Year’s resolutions, consider resolving to create a solid financing plan for your brewery.

For more information, visit: http://www.craftbreweryfinancialtraining.com/

Tanks & Tank Cleaning Equipment

Global Companies and Smaller Firms Handle the Universal Needs of Craft Brewers

By: Cheryl Gray

All craft beer must include two key ingredients that no brewery can do without – the perfect tank and the pristine cleaning of it. 

Companies making tanks and tank cleaning equipment know that cutting corners on these important steps can not only ruin a batch of beer but could also ruin a brewery’s relationship with its customers.  

  Helping breweries stay on top of sanitizing tanks and related equipment is the specialty of Butterworth, Inc., a global industry leader with representatives and supply depots in more than 25 countries, including beverage installations in the United States, Canada, Mexico, United Kingdom, Brazil, Belgium, Venezuela, Japan and China. 

  When Arthur Butterworth founded the Houston, Texas-based firm in 1925, company archives record how he invented and patented the process for tank cleaning and received a patent for the first automated tank cleaning machine. Started initially to address the needs of ocean vessels requiring improved safety measures to tackle the dangerous job of manually cleaning cargo tanks, breweries are among its 21st-century food and beverage industry customers.  

  Mark E. Murphy is Global Industrial Sales Manager for Butterworth, with a degree in Petroleum Engineering and more than 34 years of industry experience. Murphy provided an overview of Butterworth products for Beverage Master Magazine as well as innovations that the company has introduced to the market.

  “Stream impingement technology, a method by which a contiguous stream is delivered to the wall of the vessel being cleaned, such that upon contact, it shears to clean a larger area than just the stream. Our LTFT product in a 10 mm nozzle configuration is by far our best seller. We offer static spray balls, dynamic reaction drive rotating nozzles and our premium line of high-impact auto-indexing tank cleaning machines. We also build custom CIP solutions to our customer’s specifications.”

  A single Butterworth machine, Murphy said, can clean up to a 230-foot diameter tank. After point-of-sale, Butterworth provides custom on-site maintenance training, technical support by telephone, email or video, as well as start-up assistance and factory repair.  Butterworth products, Murphy said, are virtually maintenance-free.

  “Typically, little maintenance is required, given proper upfront preventative maintenance, such as filters and soft start systems on the CIP pumps. The high impact line will have seals that need to be replaced at 300 to 500 hours – about one and a half to two years for the average brewery,” he said. “The aforementioned filtration and soft start on the CIP pumps ensure longevity and productivity. As far as cleaning and sanitizing, our designs are self-draining, so as CIP chemicals are run through the devices, they are cleaned and sanitized. Our spray nozzles and CIP equipment are made of 316 stainless steel or higher metallurgy. “

  Breweries, large and small, have to make important decisions about what equipment they choose to keep their tanks and related equipment clean. Murphy told Beverage Master Magazine that Butterworth offers many options, including those that accommodate a brewery’s growth.

  “Smaller craft breweries will typically use static spray balls. As your equipment becomes larger, you start moving up the food chain of function. At 50 to 100 barrels, you start looking at more dynamic reaction drive rotating nozzles. Above 100 barrels, the high impact auto-indexing machines start to outperform everything else.”

  Ecolab is another global frontrunner with nearly a century of industry experience. Its focus is on maintaining clean and safe environments while, at the same time, optimizing water and energy use. The Minnesota-based conglomerate boasts nearly three million customer locations in more than 170 countries. That business portfolio includes craft brewery clients benefitting from an integrated brewery cleaning and sanitation project called the Ecolab Craft Brewery Program.  The program guides brewers on best practices for achieving product quality, flavor, operational efficiency, budget management, team building and safety.

  CraftMaster Stainless, based in California with clients in the U.S. and Canada, produces tanks using the material that its name implies. Owner and operator David Silva said that his company has invested a decade into providing a variety of stainless steel tanks, not just for breweries but also for winery and distilling operations. Silva told Beverage Master Magazine that CraftMaster Stainless has a roster of products to accommodate multiple equipment needs for breweries of all sizes.

  “We offer all sorts of equipment, from complete brewhouses, uni-tanks, brite tanks, lagering tanks, serving tanks, mixing tanks, mash tuns, cold and hot water, to keg washers, yeast brinks, brew hoses, down to just some basic hardware. If you need a custom tank designed, that’s no problem. We have our engineers design to your specifications to fit our customer needs.”

  Whether it is a first-time client or a returning one, Silva said that his company prides itself on a personalized customer experience from point-of-sale and beyond.

  “We also love to educate our customers when they call in to ensure they are getting the correct size, correct equipment, and just steer them in the right direction. There is nothing better than talking and educating our customers!”

  CraftMaster Stainless offers its customers a 10-year warranty and lifetime customer service on its tanks, made of 304 stainless steel. Silva said that it is good to periodically passivate all stainless-steel equipment with an acid-based solution to establish a uniform passive oxide layer that will maximize corrosion resistance.

  While stainless steel is tough, Silva warns that it is not invulnerable, which is why proper cleaning is a must. He considers heat as the best sanitizer but also recommends commonly used over-the-counter products for general cleaning and heavy-duty sanitizing. The exception is any product with chlorine bleach.

  Silva and other experts agree that using chlorine bleach on stainless steel is a recipe for disaster. Not only is its use potentially dangerous to the health of workers, but chlorine bleach can also damage the invisible chromium oxide layer that protects stainless steel from stains and rust.  If the layer is breached, rust can form on the surface, making way for what the industry calls pitting corrosion. Instead, proper cleaning with the right products can benefit the stainless steel tank and its invisible protection shield, that all-important chromium oxide layer.

  CraftMaster Stainless has created some innovative products for craft brewers. “We have a very unique ½ barrel yeast brink (shown above). We designed it to be user friendly by adding rolling casters, an oversized yeast outlet, large 6-foot manway opening [and] CIP ball for easy cleaning,” Silva said. “[There’s] also a unique stir paddle to agitate your yeast without having to expose the yeast to extra oxygen, or lifting the bring to shake the yeast to keep it activated.”

  A brewery’s size dictates what tanks and tank systems it should use in its operations. Growth has a lot to do with the clients’ equipment choices.  “Most systems in breweries range from three and a half barrels to 30 barrels,” said Silva. “For instance, if you have a five-barrel brewhouse system, you would yield five barrels of beer. As the brewery starts to grow or gain more popularity, the brewery might start looking into doubling the size of [its] tank by going to a 10 barrel. Then, on brew days, the brewer will brew the same recipe twice, usually the more popular recipe, making 10 barrels of product and storing it in the bigger vessel for fermentation, streamlining their process. This is called double-batching. Most breweries will double the size of the tank to the size of their brewhouse.”

  Experts say that brewers need to factor in the initial capital costs and maintenance expenses when selecting tanks and tank cleaning equipment. Additional costs include water and chemical consumption needs. As with any industrial process, safety precautions should be exercised when cleaning and sanitizing tanks and using tank cleaning equipment. One of those precautions includes using standard PPE when using chemicals or when using water at high temperatures. 

  Shared information about tanks and tank cleaning equipment is helpful to craft brewers looking for affirmation on how some products and methods have worked for others.

  Additional resources are available through the Master Brewers Association of America, a nonprofit organization with more than 4,000 members in 25 regions from more than 50 countries. The organization offers many professional development opportunities and technical information, including safety in cleaning and sanitizing tanks.  Here is their website link…https://www.mbaa.com/Pages/default.aspx

https://www.mbaa.com/Pages/default.aspx

All About Hoses, Tubes, Clamps and Connections

By: Alyssa l. Ochs

In the brewing industry, many different small parts play a significant role in producing beer. While hoses, tubes, clamps and connections are often overlooked, it is never a good idea to use worn-down or ill-fitting parts that could compromise the product’s quality. Brewers can benefit from learning about different types of hoses, tubes, clamps and connections to determine whether an upgrade is needed now or in the near future.

Types of Brewery Connection Products

  There are various hose types and sizes that breweries use for different purposes. Commonly used hoses for beer operations include beer transfer hoses, washdown hoses, crush-proof hoses and general-purpose hoses. Hose widths are often between 1 and 4 inches, while hose lengths can be anywhere from 5 to 50 feet.

  Meanwhile, tubes connect pieces of brewhouse equipment and work in conjunction with various piping components. Black pipes carry water into the brewhouse and out into the wastewater system, while stainless-steel pipes are used for many parts of the brewing process. Galvanized pipes coated with zinc are important for corrosion resistance. Copper pipes, ABS plastic pipes and polypropylene-R pipes are all common in breweries. For tubing, thick-walled vinyl tubing is the top choice of many brewers because of its kink-resistance, taste protection and flexibility even while cold.

  One-inch crimped stainless-steel tri-clamp ends are useful in breweries, with typical sizes being a quarter-, three-eighths-, one-half-, five-eighths- and three-quarter-inch. Both plastic and metal clamps are used in breweries with cutter and crimping tools to ensure a good fit. Worm clamps are easy to find in hardware stores and operate with a screw mechanism and metal strap with slots cut into the strap. Easy to use and reusable, snap rings are clamps made with semi-rigid plastic that utilize pressure to tighten. Single- and double-eared clamps are circular and have ears that hold the strap in an open position until closed with pliers and cannot reopen. Meanwhile, stepless clamps apply equal pressure and require a tool to apply and remove, making them non-reusable.

  Connections include basic hose connectors called barb fittings and easy-to-clean sanitary connectors called tri-clamps. Camlocks and stainless sleeve QD connectors allow a brewer to make connections without swapping hoses or removing or installing clamps on hoses.

  James Lutgring, head brewer for Bayou Teche Brewing in Arnaudville, Louisiana, told Beverage Master Magazine that his team uses 1.5-inch tubing with 1.5-inch tri-clamp fittings for nearly everything in their brewery.

  “These hoses are used for transferring wort and beer, cleaning, sanitizing and moving water around to where we need it,” Lutgring said. “We also use ½ inch silicon tubing when transferring beer to kegs.”

  Rob Williams, sales manager for Alliance Hose & Rubber Co., said the company’s most popular products are custom length transfer hoses and specialty tri-clamp fittings.

  “We offer several types, each having a unique advantage,” Williams said. “For example, there are hoses that are kink- and crush-resistant for higher traffic areas, while extreme-flex corrugated covers offer higher flexibility and allow the water to pass through the corrugations to prevent water damming.”

  Also popular, he said, is Alliance’s washdown hose. “We offer hoses that have a high standard when it comes to cleaning and sanitizing. Our washdown hoses have the Microban cover, which does not allow bacteria to form on the cover, as well as FDA rated tubes. Finally, there are one-piece tri-clamp crimp elbows to reduce hose trip hazards and end damage to hoses used on manifolds. With the level of safety concerns and cleaning processes being updated daily, providing safe assemblies and best practices to help the brewing community meet or exceed their safety requirements is our goal.”

When to use Different Types of Connections

  Experienced brewers know the best parts and accessories for different purposes, such as brewery suction and discharge applications. Concerning hoses, vinyl hoses are easy to obtain and use, but they can curl easily and accumulate residue inside. Reinforced vinyl hoses are stiffer but aren’t the best at handling high temperatures. For less curling and high-temperature resistance, many prefer silicone hoses. Good qualities in a brewery hose include flexibility, lightweight design, durability, ability to easily bend around brewing equipment, purity so that smells and tastes aren’t affected and a smooth structure that’s easy to clean.

  For tubing, transparent tubes are good choices for seeing what is collecting inside the tube and perhaps even causing contamination. Tubes should withstand high temperatures and have thick walls for high pressure. Beverage-specific tubing is also designed to prevent curling.

  Brewers often use tri-clamp fittings to move unprocessed beer from one place to another, leading to many variations being sold on the market today. Tri-clover, Camlock, Blichmann NPT and Quick Connect are the most commonly used connection types. Tri-clover fittings are sanitary, have a separate silicone seal and a tri-clamp that holds the pieces together. Blichmann NPT connectors require screwing in with each use, so they aren’t as quick to use, but they have a plastic sleeve that allows brewers to connect it without gloves, even when hot, and to connect and disconnect without leaks. Meanwhile, Camlocks are made from stainless steel, have a water-tight seal and are quick to connect and disconnect.

The Importance of Hoses, Tubes, Clamps and Connections

  These small details add up when operating complex brewing machines and trying to make the best beer possible for consumers with minimal hassles for staff. Hoses, tubes, clamps and connections are all important because, when working correctly, they help preserve the intended taste and smell of the beer. The right parts also help staff work in confined spaces without feeling cramped or frustrated. Having working parts will also help maintain overall equipment investment. When these products aren’t checked and maintained regularly, serious leaks in the brewing space or tainted beer that is not safe or desirable to drink could result.

  Williams from Alliance Hose & Rubber Co. said that the use of various hose and fittings is crucial since not all hose and fittings can handle the temperatures, pressures and chemicals present in the brewing process.

  “There are many safety issues concerning the proper attachment methods – i.e., crimping, bands and clamps – used with the brewery hoses as well,” Williams said. “Brewers suffer a great deal of product loss and also personal injury every year due to the misapplication of hoses, tubes and fittings. Some stages of the brewing process can use the same type of hoses, such as the transfer of beer from one vessel to another in either the heating stage or to the kegging process. However, brewers who are also making sours, distilled liquors or seltzers will need to use specific hoses for these processes.”

  For example, Williams said that brewers tend to use a different cover color and fitting when making sour beers.

  “This ensures that the same hose is not used in the regular brewing process and that sour hoses are only used for sour beers,” he said. “When distilling or making seltzers, it is highly recommended that brewers use a higher-proof-capable FDA hose with a wire reinforcement so that the hose can be grounded to the system and not cause a potential fire hazard.”

  Finally, Williams said that proper tubing and fittings should be used when higher concentrations of cleaning chemicals are in the brewing system or when transferring flavorings into the brewing process. Alliance Hose offers phone consultations – as well as on-site visits for breweries in the Elmhurst, Illinois area – to assist in selecting hoses and their safe use.

Choosing the Right Product

  Some of the most common mistakes and oversights that breweries make regarding these products are over-use and not regularly checking on them. Other common errors are settling for the cheapest option and making do with multipurpose parts that don’t best serve specific needs. It’s also vital to remember that brewers will need tools to cut tubing and hoses and crimp clamps. Cutters and pincers are available in different sizes and should factor into a brewery’s overall equipment budget.

  Lutgring from Bayou Teche Brewing said, “The hoses need to be able to withstand temperatures of 220 degrees Fahrenheit, caustics, acids and pressures of up to 200 psi, while also being durable enough to last.”

  “Cost is also a big factor when we are shopping for new hoses,” Lutgring said. “The tri-clamp fittings are just about the same wherever you get them, so it usually comes down to price and convenience. Some of the valves may last longer than others, but you just have to learn that from experience with the vendor.”

  Williams from Alliance Hose & Rubber Co. said breweries should get their S.T.A.M.P.E.D information to the hose and fitting supplier. “S.T.A.M.P.E.D. is an acronym used to get all the correct details of the application so that the safest and most proper hose and tubing system can be provided,” he said.

  Here’s what the acronym stands for to help breweries be as safe as possible while using these products:

S = Size (i.d. and o.d.) and length.

T = Temperature (product transferred & atmosphere).

A = Application (what is the hose being used for).

M = Media (what is being transferred).

P = Pressure.

E = Ends (fitting type).

D = Delivery (how soon the product is needed).

  Regarding safety, another resource is the Master Brewers Association of the Americas’ Safety Toolbox Talk that discusses hose fitting attachment methods in practical terms with helpful visual depictions.