The Holiday Season is a perfect time to measure and improve business value. Value equates to strength and strength provides you with more business options.
These options may include selling your business at a higher price or being in a stronger position to buy another wholesaler business.
When you focus on creating value, there is an immediate improvement in business results: Profits, cash flows and business systems benefit from the attention to value creation.
In normal times, it’s a challenge to manage
brewery operations, and stay on top of the finances. There’s a lot to juggle,
and never enough time to get it all done. In these abnormal times, these tasks become
even more difficult.
However, one way to manage your brewery business differently, and more
effectively, is with open book management. Open book management (OBM) is a
system in which employees are provided with financial information so that they can
make better business decisions.
The
idea is that employees are more motivated, engaged, and productive when they
are treated as business partners (who commonly have access to financial data)
instead of employees. In these uncertain times, more information can provide
employees with more certainty to make better decisions.
Open Book Management has four basic elements:
• Train
employees in financial literacy so they can read and understand financial
statements.
• Empower
employees to use financial information when making business decisions.
• Trust
employees as business partners with proprietary company information
• Reward
employees fairly for the brewery’s success
Train
employees in Financial Literacy
Financial literacy is the ability to read and understand the numbers of
your brewery business so that you can improve financial results. Improving
financial results may include growing sales, strengthening gross margins, or
increasing cash flow. In today’s uncertain times, financial literacy is more
important than ever.
The
numbers of your brewery business are reported on the financial statements – the
income statement, balance sheet and statement of cash flows. Each of these
reports provides vital financial information to understand what’s going on in
your business
The
financial statements are the scoreboard for your brewery and the numbers show
whether you are winning or losing. The financials show you where you are in
relation to your goals and how much harder you must push to hit the targets.
Open book management requires that you train
employees in financial literacy so that they can know the score, and help the
brewery win the financial game.
Empower
Employees to Make Decisions
In most
organizations there is a decision-making hierarchy. Owners or managers make the
decisions, and employees carry out the directives. With open book management,
everyone is responsible for making decisions and has the authority to do so.
If a
problem needs to be fixed, employees are empowered to fix it. If an opportunity
needs to be seized upon, employees are obliged to act. There is no waiting
around for a manager to make these decisions. The move lies squarely on the
shoulders of employees.
With
open book management, employees use their understanding of the numbers –
financial literacy – to inform their decisions. For example, suppose a brewery
uses a mobile canning company to package beer. The packaging manager
understands the costs associated with this service and can make an informed
decision about whether the purchase of canning line would benefit the company
financially. The packaging manager understands how to build a return on
investment calculation and is empowered to make a purchase recommendation based
on the numbers.
Trust Employees with Proprietary Financial Information
Open
book management centers around trust. Do you trust your employees with
sensitive financial information? What if confidential information is shared
with competitors? What if it’s leaked out on social media? Sharing information
requires trust.
OBM
requires that we trust employees to handle sensitive information with
professionalism and confidentiality. The best way to earn the trust of
employees is to be trustworthy yourself. Be transparent, share the information
that will help them do their job better, or have a better understanding of the
business. When you call upon the highest level of thinking from your employees,
you get the highest level of results.
Reward
Employees for Brewery Success
In an
open book management system, employees are asked to learn new things in
addition to their core job. Brewers are asked to understand the costs that go
into making the beer. Brewery salespeople are asked to understand product
margins for each brand in the portfolio. Taproom staff are asked to learn the
average order per customer, for example. Everyone in the organization needs to
learn something new to make the open book management system work properly.
The
goal of open book management is to create a culture of business owners. OBM
teaches employees to think of themselves as businesspeople instead of workers.
To make this real, businesspeople need a stake in the outcome – a reward for
brewery success. As such, part of what they earn should be tied to company
financial performance.
A stake
in the outcome gives employees a vested interest in improving financial
results. The brewer learns about the costs that go into making the beer so that
she can find ways to be more efficient. The salesperson learns about product
margins so that he understands the importance of proper pricing. The taproom
server learns about the average order per customer to find ways to increase
customer sales.
Learning about the financial aspects of the business that are within the
employee’s area of control moves the brewery towards the goal of improving
overall financial results. And towards the reward of having employee
businesspeople share in the success.
Wrap Up and
Action Items
Open
book management is a system where financial information is shared with
employees so that they can make better decisions. Better decisions lead to
better financial outcomes, and better financial outcomes lead to a stronger
brewery business for everyone.
OBM
requires that you train, empower, trust and reward employees. Train employees
in financial literacy so they understand the finances of the business. Empower
employees to make decisions and encourage them to do so. Trust employees with
sensitive information and reward them when brewery financial success is
achieved.
In
these uncertain times, open book management provides a way to manage your
business more effectively and to reward your employees for a job well done.
I’d like to offer your readers a $50 discount off of the Craft Brewery Financial Training annual subscription. Visithttp://www.craftbreweryfinance.com – Use the discount code beveragemaster at checkout to claim savings.
Since its founding in 2013, Seattle-based Copperworks Distilling
Company developed an award-winning portfolio of spirits with accolades such as
the 2018 Best Distillery of the Year award from the American Distillery
Institute. Yet, according to Jason Parker, Co-Founder and Presi-dent, they
found themselves at a crossroads in growing their distillery last year. Even
though they had more than 260 barrels of whiskey aging in inventory, the
current demand for their American Single Malt whiskey exceeded their supply of
mature whiskey.
“The only way to win sales
in the whiskey market is to have whiskey to sell,” Parker told Beverage Master Magazine. “If we are only growing through cash flow generated by vodka,
gin and a little bit of whiskey sales, we won’t have the whiskey to compete in
the market against those businesses who received capital investments to produce
whiskey. In essence, we must produce whiskey faster than our current cash flow
will allow.”
Rather than resort to
traditional ways of generating capital, they wanted to explore a way to ex-pand
their business that would get their friends, family, customers and other
supporters involved as brand ambassadors. “We wanted to give them an
opportunity to own a little piece of the work and be with us as we grow,” said
Parker.
Choosing Equity Crowdfunding
Copperworks decided to
raise money via equity crowdfunding through the WeFunder website. In
Copperworks’ estimation, this approach enables individuals to become
part-owners of a privately held company by trading capital for equity shares.
This method of generating capital became available in 2016 with the passage of
a new law called “Regulation Crowdfunding.” This shift made it legal for anyone
to invest small amounts of money in startups.
Copperworks chose equity
crowdfunding over more established crowdfunding platforms like Kickstarter,
Indigogo or GoFundMe because, with equity crowdfunding, a company issues
equi-ty, such as shares of company stock, to participating investors. A company
like Copperworks may also choose to offer perks, but the major incentive is the
opportunity to become shareholders in the company.
In comparison, traditional
crowdfunding is more rewardsbased, whereby those who contribute to the campaign
receive a perk, such as a discount or an advance copy of the product, but they
have no equity in the company. Furthermore, a traditional crowdfunding campaign
often offers their products at a discount to generate interest. Should the
campaign take off, companies can find themselves unable to meet market demand
at this low price point.
According to Parker, a key
advantage of equity crowdfunding is the company’s opportunity to utilize its
investors as brand ambassadors. While this component of Copperworks’ strategy
has been put on hold due to COVID-19, they are currently in the process of
building a brand ambas-sador kit for their investors. In this kit, investors
will be given the details of how to approach a restaurant, bar, grocery store
or liquor store on behalf of Copperworks.
Challenges of Using Equity
Crowdfunding
Parker acknowledges the
need for a distillery to ascertain if equity crowdfunding is the right
ap-proach. For example, this approach to raising funds may not work for a
business that has only been around for a year or less and has yet to build up a
loyal following. “Equity fundraising is a good thing when you’re mature enough
for the company to attract the appropriate investors for the valuation,” he
said.
From a company’s point of
view, equity crowdfunding requires more upfront costs and financial discipline.
The company’s records need to be reviewed professionally, an expensive process
that took Copperworks three months to complete. In addition, WeFunder takes 7%
of the funds raised, unlike a bank loan where one receives the entire amount
upfront and then pays interest over time. Depending on the terms of a loan, a
company may pay more in interest through a traditional loan. However, for those
companies needing the full amount upfront, a bank loan may be their best
option.
Also, with equity
crowdfunding, Copperworks had to be totally transparent with their financials,
a process that included having this information readily available for public
viewing. For Parker, this transparency fits in with their business model. “We
believe transparency is one of the things missing in businesses today, so we
want to model that behavior.” In the issue of transparency, they chose to share
with their investors why they needed to raise money and how they intended to
use these funds.
Promoting and Implementing the Equity Fundraising Campaign
Copperworks promoted their
campaign through their mailing list of 12,000 individuals. In addi-tion, they
reached out to the 3,600 folks who liked their Facebook page because they had a
high rate of customer engagement on this platform. They were also featured for
five weeks in the American Distilling Institute newsletter. Their campaign,
which ran from the end of February to April 2020, netted a total of 409
investors and $776,480 in funds.
Parker admits to the
challenges of raising funds right as COVID-19 began impacting the econo-my
starting in mid-February. “It’s not very easy to ask people to spend money on a
company when they may not have a job, their life savings may be losing 30% of
its value, and they don’t know who around them is even going to be alive in a
few months.”
However, he said that
since Copperworks had been around for a long time, many people emerged who
really liked the company and their products and were looking to support
something they cared about.
Regardless of the amount
of their investment, each investor receives an annual report along with an
invitation to every quarterly meeting. For those who invested $1,000, they get
10% off all Copperworks goods for life. Other perks were offered to those
investing at higher increments, such as an offer to pick a single cask whiskey,
a free event rental or an invitation to be on the board of directors.
As per the SEC
regulations, Copperworks disclosed to their investors the risks associated with
capital works. While some of the risks noted are associated with investing in
any company, others are specific to the distilled spirits market or Copperworks
in particular. For example, the cur-rent distilled spirits market growth could
slow or stop in the future. Along those lines, due to the threetier
distribution system in the alcohol industry mandated by U.S. law, Copperworks
is reli-ant on distribution companies. The distribution system has experienced
consolidation in recent years, and should this consolidation continue,
distilleries may face difficulty in expanding the distribution of their
products.
Outcome of Equity Fundraising
Campaign
Copperworks successfully
raised enough money to continue production during the COVID-19 shutdown and
produce whiskey at their all-time maximum rate. All employees kept full-time
hours, even though the tasting room was (and remains) closed. Therefore, the
distillery could de-vote some of its resources to producing hand sanitizer, a
product badly needed at the start of the pandemic.
Even better than simply
raising money, which a bank loan could have accomplished, Copper-works was able
to fully engage the support of their loyal fans. Customer engagement through
social media, email and quarterly calls increased the opportunity for
Copperworks to share their story and their customers to become brand
ambassadors. New customer acquisition, which is much more difficult while the
Copperworks tasting room is closed, increased through word-of-mouth, and online
sales increased due to these outreach efforts.
As Copperworks looks to expand their
production area and event space, they have solicited their new investors’
network to help them find even more opportunities to grow their business.
Copperworks is truly building an army of brand ambassadors and getting new
talent and ideas through the use of regulation crowdfunding.
The Boelter Wire is an episodic podcast that focuses on
conversations with industry experts and established partners, and is designed
to help listeners evolve their business, stay competitive and pursue their
passions. Recorded earlier in 2020, Lance Taylor, field sales manager with
Boelter’s Beverage Division, speaks with Nick Reistad, co-owner of Raised Grain
Brewing Company in Waukesha, Wisconsin to discuss some of the brewery’s more
infamous beer naming conventions and their new taproom.
An Origin Story
Lance
Taylor (LT): This is a great opportunity to dive into the
brewing industry, which is one of the major industries that we serve, and what
better brewery to work with than the one just down the road from us. So, thank
you. How did you guys start? If you don’t mind sharing the origin story?
Nick Reistad (NR): Raised Grain started
probably in the back of my mind when I was a professional cyclist in a past
life. I got to travel around the world racing bicycles, doing races over in
Europe. I was on the national team for three years. That was based out of a
tiny house in a small village in Belgium, and the only thing to do at the end
of the day was to head down to the square and have a nice Belgium beer.
That was in 2005 or 2006.
Then I raced stateside for a year as well. And that was right when the craft
scene was just starting to take off. I started to notice that there were other
really delicious, very different beers that were all over the U.S. I would
travel out to California or somewhere in the Northeast and try all of these
different beers from breweries that, in some cases, had been around for a long
time and other cases were just starting up and getting things figured out.
Then, in 2009, I ended up
having a career change when I was 27. I got into advertising and I guess the
excitement that I had become accustomed to wasn’t really there, even though I
really like advertising and marketing. So, I started thinking, what am I going
to do with my life, and wrote a business plan for a brewery because it seemed
like it would be fun to do and it entertained me. And what I really liked about
beer is that it’s something that brings people together. I started working on a
business plan and connected with a neighbor of mine from when I was growing up
and he knew two guys that are still doctors to this day, but they’re also
brewers. So, he brought us together on September 19th, 2014.
(LT): That’s definitely a unique story. Do any
breweries in particular inspire you?
(NR): It’s hard to say. I think
they each have their own little impact. I mean, you’re drinking west coast IPAs
when you’re out in California. And I spent the better portion of the beginning
of the year out in California. That’s where the races were. That’s where the
scene was.
(LT): And that lends itself to a lot of the styles
that you guys brew now. I’m curious, when you first sat down with the doctors
and you guys were having some of those beers, are any of those the flagships of
today still, like the Naked Threesome or Paradocs Red?
(NR): Naked Threesome didn’t
come around until later and I don’t think that style had even been invented yet
in 2014, the hazy IPA, maybe it had. But, Paradocs Red was one that we were
drinking that night and they named it after themselves, a pair of doctors.
Scott and Jimmy started brewing, I think it was about five years before I came
along. They started brewing together and Paradocs was the, I think it was the
third beer that they brewed together, and it was the first all-grain recipe
that they brewed on the system that was in Scott’s basement.
And then fast forward a
couple of years, that won a gold medal at the Great American Beer Festival. And
we’ve just been in growth mode ever since we opened our doors in 2015. I think
it was 2016 we won that, and we were building out a food truck. I was heading
off to an Octoberfest then. So, we had about five minutes to high five each
other and celebrate and then it was back to work.
(LT): People take pride in their city’s brewery
quite a bit, especially when people come into town.
(NR): Yeah, when we first opened up, just this tiny
little brewery out in the burbs outside of Milwaukee, we had so many people
come in and say, thank you for choosing Waukesha. We want to have something
like this out here and your beer is awesome and you guys are nice people, so
thank you so much.
The Intricacies of Naming Your
Beer
(LT): When
I go to a bar, it’s fun ordering a Naked Threesome and it always raises an
eyebrow, that’s for sure. I’m talking about some of the naming conventions, how
did you come up with some of them? What’s that like with your team? When
somebody comes up with it, do you let the brewer come up with the name? Is it
more on your end with the marketing side?
(NR): Throwing a lot out there that have either
been taken already, which is most likely the case, and then something that
conveys the experience that you want the customer to have when they’re drinking
that beer.
Naked Threesome is a
little bit of a unique story because that one came out of a series we were
doing when we wanted to play around with a single hops. We started a series off
that we brewed three single hop beers and then we wanted to combine those three
hops at the end into the culmination of the series. We started calling it the
Naked Hop series, a really clean malt beer, showcasing the hops that we were
using.
And then, we’re kind of a
ready, fire, aim type group, or at least we were in the beginning, when we
rolled out the series. We didn’t really think what the final beer was going to
be. I wasn’t really coming up with any good ideas. And our bar manager at the
time came up with a name and said, what if we called it the Naked Threesome?
We both looked at each
other and said, well, we’ll need to check with our wives on that one. And they
laughed and said, sure, do whatever you want to.
We ran that series for a couple of years and then we brewed the
series or the beer that it is now. It was a huge hit. People loved it. They
couldn’t get enough of it and we couldn’t brew it fast enough. So, we ended up
killing the series that it evolved out of and just kept the Naked Threesome as
it is today.
A Social Experience
(LT): What
are some of the ways that you bring people into the tap room? What kind of
activities or events do you host?
(NR): We
designed the space so that we can host any number of events, whether it’s just
a Friday night and we’re busy and we want to make a comfortable environment for
the people. We specifically sized our beer hall so you can set up bags, sets of
cornhole, whatever you want to call it, so that you have enough length to have
an official court. When we got the plans back from our architect, we had her
elongate the room a little bit so we could fit in bags.
It’s everything from
corporate events to birthday parties, all sorts of events that are coming in to
use the space we have. But, then we wanted to create different experiences
within the tap room. So, if you come in and you want more of a traditional
dining opportunity, we have that. If you want super casual at the bar, we’ve
got that. And then we’re sitting in the brewer’s lounge right now.
(LT): It’s like a speakeasy.
(NR): It’s
very casual. You can sit back and have some private conversations with your
friends or coworkers and just feel really comfortable. So, whatever you want.
You could come in on different nights and have different experiences all within
the same tap room. And that was something that we wanted to create because it
isn’t a relatively new building. And when we first walked in, it was just wide
open. So, we didn’t want to have people walk into a warehouse and feel like
there’s just gusting wind. That was something we wanted to avoid. And I think
we’ve done a pretty good job of breaking up the space and making a cool spot
for people to come and hang out.
Premiumization
(LT):One
thing that Boelter talks about is the concept of premiumization. What steps do
you take to make sure your customers have a premium experience and is that
something that crosses your mind?
(NR): I would say it’s the only
thing that crosses our mind. We have expensive-to-produce beers, so you have to
charge what you need to charge to make it work on the backend, on the
production side. But, then outside of the beer, you’ve got to have a premium
experience when you come in.
We have an awesome staff
behind the bar. A lot of our bartenders are just really well educated on beer and
they work here because they want to work here and they have fun working here.
So, that really shines through when a customer walks in, they have an awesome
experience because the person on the other side of the bar wants to tell them
about the beer that they’re drinking and wants to make sure that they’re just
having an awesome time.
I think that really helps
beyond the physical side of things because we just have awesome people shining
through and every time you come in you’re going to have that interaction that
elevates what you’re doing, and it provides a fun time.
(LT): Just
knowing from my experience and being able to label some of the glassware that
we’ve been able to do for you guys, obviously you have very specific glassware
chosen, which on my end, being a glass geek, it makes a huge difference. If
you’re drinking out of a stemmed glass and it’s a higher ABV, then you’re
sitting in this brewers’ lounge, you can swirl it around and really enjoy it. I
would say that absolutely adds to it as well.
(NR): We’re
just excited to be in craft beer when it’s growing and it’s fun and exciting
for not only us but for our customers as well. It’s a cool time and it’s been a
cool project to work on and we’re looking forward to five more years, and five
beyond that.
You can catch up on all of the episodes and be notified when new podcasts are available by subscribing to The Boelter Wire at https://podcasts.apple.com/us/podcast/the-boelter-wire/, Apple Podcast, Google Podcast, Spotify and Amazon Music.
By:
Nichole Gunn, Vice President of Marketing
& Creative Services, Incentive Solutions
The first years after launching an incentive program are an
exciting time for craft beer producers: supply chain trading partners, drawn by
the excitement of new promotions and an improved channel partner experience,
are more responsive, more motivated and more likely to recommend the brand’s
products to restaurants and retailers. During this time, craft beer producers
often experience a period of rapid sales growth or improvement in other KPIs
the program was designed to target, such as improved partner data profiles or
increased referral business. The incentive program’s ROI grows exponentially.
However, often after 12-30
months, growth begins to stagnate and the ROI curve starts to flatten. If left
unaddressed once an incentive program’s novelty starts wearing off and supply
chain trading partners become habituated to the program’s value proposition,
the incentive program’s ROI may start to decline, leaving craft beer producers
scrambling to find ways to replicate the program’s success.
The good news is that by
planning ahead, craft beer producers can anticipate this drop off in interest
level and continuously improve their incentive program in order to sustain a
competitive advantage in their channel.
Keeping Incentive Programs Fresh
(and Profitable!)
In order to stay relevant,
a channel incentive program has to be able to evolve with the interests of its
participants, scale its value proposition over time and respond rapidly to the
tactics of the competition. Below are several factors that craft beer producers
can focus on in order to continue to drive ROI once program growth begins to
stagnate:
• Personalizing brand
interactions to build loyalty.
• Re-launching the program
with updated features and branding.
Ideally¬, these are all
elements that craft beer producers will consider from the inception of the
program, with plans for program expansion at certain intervals. However, these
factors can also be incorporated to bring new life to existing programs.
Evolving Incentive Program
Technology
Today, incentive programs
are a technology platform, and craft beer producers should be as mindful in
selecting incentive program technology as they are in selecting any B2B
software platform. From an administrative standpoint, this means choosing an
incentive platform that integrates with existing CRMs and other business
software and provides streamlined admin tools and generates detailed reports on
engagement and ROI.
However, perhaps more
importantly, craft beer producers should focus on selecting incentive software
that is fully supported and will be continuously updated to improve the user
experience for their supply chain trading partners. More and more, B2B
customers expect a seamless B2C-style user experience. Partners will be less
likely to engage with a rewards program that uses stale, outdated software, no
matter how exciting the reward offering.
Additionally, agility is
key. Craft beer producers should look for incentive software that allows them
to quickly go to market, adapt to the tactics of the competition and launch new
promotions. These factors will offer an edge when it comes to maintaining
engagement throughout the lifetime of their program.
Incorporating Elements of
Gamification
Gamification is the use of
game-like elements – such as points-scoring, interactive leaderboards and other
competitive components – to increase engagement with a web-based application,
such as an incentive program. Gamification is a powerful tool that supply chain
trading partners already seek out in their day-to-day lives, from collecting
likes on their Facebook page to scoring achievements on Peloton bikes.
When interest in the
program begins to stagnate several years after launch, adding gamification
features can give the program new life. Interactive trivia, spin-to-wins,
badges and achievements, personalized leaderboards and limited-time point
bonuses make the program more compelling and can give a sustainable boost to
the program’s effectiveness over time. Additionally, by not relying strictly on
reward value to drive engagement, craft beer producers can help lower program
costs to increase their ROI.
Adding New, Richer
Reward-Earning Opportunities
As mentioned earlier, one
of the reasons an incentive program can lose its effectiveness overtime is that
participants become habituated to the program’s value proposition. Top
performing supply chain trading partners may have already redeemed for their
most coveted rewards and find themselves with more points than they know what
to do with. The competition may have launched their own reward program with
comparable, or even more compelling, rewards.
It’s up to craft beer
producers to constantly up the ante with their program’s value proposition. For
instance, launching a points-based merchandise reward program alongside an
existing debit or gift card program will offer new value for participants.
Elevate a points-based program by offering top performers a concierge service
to redeem for custom rewards – using their points to buy a new truck, renovate
their home or pay for their child’s college tuition will personalize the reward
experience and boost the program’s value proposition in a way the competition
will struggle to match.
Additionally, incentive
travel promotions can be added onto any program type, giving craft beer
producers an opportunity to connect with their supply chain trading partners on
a deeply personal level. Given recent restrictions, the demand for incentive
travel is projected to be particularly high once it is deemed safer.
If minimizing rewards cost
is a concern, try setting higher qualification thresholds for these more
exclusive reward opportunities. Doing so can also help tap into supply chain
trading partners’ competitive drive, keeping them more engaged as they compete
for a limited number of higher tier rewards.
Personalizing Brand Interactions
to Build Loyalty
In their early stages,
incentive programs are typically geared toward growth. However, if well
designed, the program will be able to convert that initial interest and
motivation into brand loyalty over time. Loyalty is about more than rewards;
rewards appeal to self-interest while loyalty is rooted in creating mutual
interest. Craft beer producers can create this loyalty by using their incentive
program to provide a highly personalized experience and to help their channel
partners become more effective salespeople.
This personalization
should extend through every phase of the incentive program, from designing
program communication to be relevant to each segment of their channel partners
to basing reward selection on participant lifestyle and interests. Craft beer
producer can use engagement metrics from their incentive program to identify
which of their supply chain trading partners have a high level of buy-in and
which of their partners might need a little more help. They can provide
enablement to their partners by providing online courses and certifications and
using their incentive program as a platform to educate partners on their brand
and product lines, equipping them to more effectively sell their products.
By using personalization
and focusing on partner experience, craft beer producers can build loyalty with
their supply chain trading partners in ways that make extrinsic rewards less
important. This makes trading partners drastically less likely to lose interest
in the program.
Re-Launching the Program with Updated Features and Branding
Finally, when the growth
of an incentive program begins to stagnate, it might be a sign that it’s time
to re-launch the program. A program re-launch gives craft beer producers the
opportunity to step back and figure out what their prior program did
effectively, as well as what they can do better. During this time, craft beer
producers should also explore other pain points they would like their new
program to target.
A pause between programs
can help build anticipation, as supply chain trading partners realize the value
proposition of the previous program that they had begun to take for granted.
Once the new program launches, with updated branding and new features, supply
chain trading partners will enthusiastically re-enroll and craft beer producers
will experience a renewed period of growth. Better yet, by using the knowledge
gained from the previous program, craft beer producers can make their
re-launched program even more effective than the first.
Planning Ahead for Program
Management
Additionally, craft beer
producers can enlist the help of incentive companies to design and manage their
programs. Just like crafting an excellent brew requires years of experience, so
too does managing an effective incentive program. Working alongside an
incentive company with a proven track record can help craft beer producers
avoid potential pitfalls and take advantage of decades of experience in
managing successful programs.
Whether a craft beer
producer is looking to launch their first program or improve a program that is
currently underperforming, the initial investment of partnering with an
incentive company can pay dividends down the road.
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.
Breweries have been around for thousands of years, and while some
aspects of the brewing process remain the same, a lot is changing in the modern
brewing industry. Craft beer producers have been asking for more from the
machinery they use, and innovative companies have answered that demand with
some exciting new technology.
Whether your brewery is
brand-new or has been around for many years, it’s worth learning about the new
mechanisms, tools, technology and improvements that are being made to brewing
equipment right now.
Brewer Demand Driving Innovation
From automated bottling to
bourbon-barrel aging methods and distilled hop oil, there have been many
brewing industry innovations over the years. Yet modern brewers are still
asking for more changes in the equipment and technology they use to suit their
brewing styles and customer preferences better.
Bob Haggerty, head brewer
for Steel Bender Brewyard in Los Ranchos de Albuquerque, New Mexico, told Beverage Master Magazine, “While loads of improvements have been, and continue to be, made
to increase the convenience and connectivity of today’s equipment, I think that
the focus on fewer bells and whistles and more quality is what I look for.
“I’m not interested that
my mash tun can send me email updates and would rather have mash screens that
effectively filter wort,” Haggerty said. “I am not saying that I think we
should move backward and eschew technology in all forms, only that shiny
gadgets don’t impress me on their own.”
Concerning brewery equipment that holds great potential for the future, Haggerty said that he has been intrigued by the idea of real-time, continuous monitoring of product in fermenters and brite tanks for data, such as gravity, pH and dissolved oxygen.
“Though I have been approached with a gadget that does this
already, it came with a hefty price tag and was coupled with a pricy
subscription service,” Haggerty said. “I’d be more interested in something that
was lower in cost and could be installed on every tank without the obligatory
online aspect or subscription model.”
Basically, when it comes
to equipment, the Steel Bender brewing team prefers the focus to be on
function, not Facebook.
Torrey Lattin, the
co-owner and head brewer for Hopping Gnome Brewing Company in Wichita, Kansas,
has found that the most crucial brewing equipment is basic supplies that are in
high demand, such as access to aluminum cans right now.
“There have been several
shortages during the pandemic, and it has been difficult to find enough cans
with most breweries increasing their to-go options,” Lattin said. “We know of a
few companies that we regularly purchase from, but we’re wondering if there are
more options out there and if we can discuss this more with others in the
industry.”
In terms of machinery, the
most in-demand pieces of equipment are generally the ones that save brewers
time during the brewing process.
“We recently purchased a
keg washer, and it is probably my favorite piece of equipment for the time and
work it saves,” said Lattin. “I highly recommend it for anyone utilizing a lot
of kegs.”
Recent Advancements in Brewery Equipment
In general, there has been
a lot more automation in the various steps of the brewing process to replace
manual oversight and guidance. Brewery-focused companies have created cryogenic
products for hop preservation and used advanced laboratory science to
effectively can beer and measure dissolved oxygen.
Meanwhile, depalletizers
help improve quality control for canning and require just one operator on the
line. Some breweries use a mash filter press that is a specialized plate and
frame filter to recover extract, improve wort production and be more efficient.
A recent development
involves two holes on cans’ standard ends to improve airflow and let consumers
get a smoother pour with less foam. There’s also technology for cans that
transform them into their own cup to eliminate the need for glassware and
reduce waste. Brewery equipment is also enabling breweries to create packaging
with an airtight seal that re-closes the tab after opening so you can save part
of a beer for later.
Another trend worth noting
is investing in machines that can produce both beer and spirits so that
beverage companies can have crossover brewery and distillery operations. A
barrel-aging system makes it easy to combine these two methods of beverage
production.
Cavitation involves a
rotating impeller that generates low pressures at its fast-moving tips. This
process increases the rate that starch passes from pulverized malted barley
into the wart and eliminates the need for milling malted barley in advance.
Other equipment upgrades
and innovations that breweries may be interested to learn about include
multi-purpose aseptic container brewing vessels, kink-resistant brewery hoses,
beer-serving tanks to use in taprooms as an alternative to kegs and scalable
wastewater treatment.
With regard to significant brewery equipment updates in recent years, Jef Lewis, the president of BrewBilt Manufacturing, told Beverage Master Magazine that the drop dosing tank has become very popular among breweries lately. Based in Grass Valley, California, BrewBilt is a handcrafted brewery equipment company that has been working on several exciting new pieces of equipment.
“Hopping techniques have changed since the old days, and there’s a
lot of dry hopping going on in the fermentation process,” Lewis said. “The hop
dosing tank allows brewers to fill it with whatever they want to add to the
fermentation. You would then purge the tank of any air and begin recirculating with
a pump.”
Lewis said that, lately,
his company also includes whirlpool recirculation heat exchanges.
“These are specially
designed heat exchangers that cool the wort down from boil temperature to 167
to 170 degrees in about 10 minutes,” he said. “This allows the brewer to do hop
aroma additions without getting any bitterness from the hop.”
Rusty Riley, founder and president of Oronoko Iron Works in Baroda, Michigan, told Beverage Master Magazine the most significant shift he has seen in the last 10 years has been toward a greater degree of automation in every corner of the brewery, better-equipped laboratories, and better data collection and utilization. Oronoko Iron Works is a custom-fabrication, CNC plasma cutting and machining company with a foundation in the brewing and distilling industry.
“From grain handling to
the brewhouse and on to fermentation, people have begun to utilize automation
and data analysis to develop more consistent processes, which, in turn, leads
to a more consistent product,” Riley said. “As consumers become more
health-conscious, more breweries will move into producing non-alcoholic
products that still satisfy a beer drinker’s palate. I anticipate some
innovation in that sector in the coming years.”
New Brewery Equipment to
Consider
One example of a new piece
of equipment from BrewBilt is this company’s Wort Oxygenator that allows
breweries to eliminate the need for an oxygen tank to oxygenate their wort on
the way from the heat exchanger to the fermenter. This is an important piece of
equipment because sanitary oxygen is the most expensive and dangerous type of
gas used by breweries.
“What we offer is a safe
alternative that eliminates the recurring cost of getting a tank filled,” said
Lewis. “All that is needed is a small air compressor to deliver air to a
specialized filter, and what comes out is sanitary oxygen. Then it goes through
a flowmeter that allows the brewer to select and monitor how much oxygen is
added to the wort through a venturi.”
Another popular piece of
BrewBilt equipment is its Mobil Flow Meter. It is a magnetic, digital sanitary
flow meter that can be connected to anything in the brewery through a
tri-clamp.
“Plug any 120-volt
extension cord to the unit, and you’re on your way,” Lewis said. “It includes a
reset button to set it back to zero when you’re done, and it’s packaged in a
small, sturdy stainless-steel frame with a handle to keep it safe from the
rigors of the brewery environment.”
Other BrewBilt equipment
currently on-trend with breweries are the CIP Cart that uses electric or steam
heat for cleaning brewery tanks and the three- and six-head manual and
automated keg washers.
Oronoko Iron Works
launched in 2014 with a mission to build a better roll mill for brewers. It is
still the company’s top product.
“The biggest factor in
consistency is repeatability, and our mills are easy to adjust and get the same
setting over and over again,” Riley said. “Since day one, we’ve strived to make
our mills more user-friendly and bomb-proof. We’ve created additional particle
reduction solutions like hammer mills, comminutors and other types of crushers
and grinders, as well as ancillary products, like bulk bag stands, bins and
bag-dump stations.
“Along the way, we discovered
that our customers also have a need for automated knife gates and other
automation, so we’ve begun focusing on those areas too,” Riley said. “We’ve
tried to become a ‘one-stop-shop’ for our customers so we can grow as they
grow.”
Conclusions and Advice About New Brewery Equipment
Although not all equipment
innovations add significant value to the brewing process, certain strategic
pieces can make life much easier. For both new breweries and well-established
ones, it is a smart idea to stay up-to-date on recent equipment trends and
learn about forward-thinking companies that are helping brewing processes
become more efficient.
Lewis of Brewbilt
recommends that breweries don’t underestimate themselves and buy too small of a
brewhouse. “There are golden ratios for brewhouse tanks, like boil kettles,
mash tuns and lauter tuns that greatly increase your brewhouse efficiency,” he
said. “Don’t buy the wrong shape tanks!”
Lewis also said breweries
should make sure the dead space under their lauter tun’s false bottom is
minimal, to get a larger hot liquor tank than you think you need and to invest
in lab equipment.
“New technology is
important and exciting, but don’t overlook ROI of the technology you’re
investing in and examine how it might impact the growth trajectory of your
business,” said Riley of Oronoko Iron Works.
Riley also encourages
breweries to ask themselves whether investing a few more dollars now will see
them through to the next phase of growth. “Look out one, two, five or 10 years
and try to envision what will improve your bottom line and help you achieve
those goals over that time frame.”
The canned and ready-to-drink beverage markets have shown to be
the current lifeblood for many craft producers. More mobile canners are
adapting to their needs, helping them get their product to market without the
expense of purchasing a canning line. But what is mobile canning all about?
What should you look for in a mobile canning service? What should you expect
when a mobile canning service comes through your door? And how do you choose?
Invest In Your Product
“Mobile canning is an investment, and like any investment, when you decide to jump into it, it’s best to go with experience and expertise,” said John Culp, owner of Beer Dudes Mobile Canning. “Canning lines are costly. They can run you $150,000, and if a brewer or distiller is only using their canning line on a minimal basis, they are wasting way too much of both their product and their overall resources. We believe that the cutoff, or magic production number, for actually benefitting from owning a canning line is right around the 2,000 cases a month mark. If you’re seeing this kind of production on a year-round basis, then you might look into taking ownership of a canning line. Otherwise, it’s better to put your resources and capital into buying more tanks and increasing capacity. Do more of what you do best, and we’ll get it canned for you.”
Beer Dudes Mobile Canning
is a full-service mobile canning company offering expertise and experience in
on-site canning of carbonated and non-carbonated products, including beer,
wine, spirits, sports drinks, energy drinks and seltzers. They currently offer
two complete Wild Goose canning lines with SKA Fab depalletizers and a third
line in the works. The canning lines are contained and transported in box
trucks or trailers equipped with ramps or rail gates that eliminate the need
for a brewery or distillery to have a loading dock.
“As a mobile canner, we’ve
got a history of filling over 10 million cans, so we have the experience and
expertise. We do it daily, consistently metering key elements like dissolved
oxygen and carbon dioxide while monitoring and performing can seaming
inspections and adhering to regular maintenance of our quality machinery with
parts on hand to repair them if needed,” said Culp. “There really is no
difference in our service when canning different types of beverages. We use the
same canning lines but with different parts. Part of the benefit of partnering
with Beer Dudes Mobile Canning service is that we have a lot of money and
expertise tied up in the unique parts, changeover equipment and specialized
tools necessary for different canning services and needed changeovers. Our
employees can react quickly and confidently to any situation that arises while
the average craft brewer or distiller likely wouldn’t have the resources to do so.
We have everything at hand ready to use, including premium printers.”
Culp told Beverage Master Magazine that the canning systems are assembled on-site, usually taking
about an hour. The client should provide two 110v GFCI power sources for the
depalletizing, canning and seaming equipment, and possibly an air source if
needed with at least 90psi and 15cfm. They do have helper compressors available
or can bring a complete system when necessary, and that would require a 230v
15- or 20-amp service.
“Give us a 10- by 26-foot
space to operate in, and we’re in business,” said Culp. “Our employees
depalletize and feed the cans while the client company supplies the necessary
personnel (usually 2 or 3 workers) to handle the product post-filling. They can
expect an average rate of 40 to 44 cases per minute stacked on 80 to 100 case
pallets.”
Beer Dudes charges a daily
rate based on an eight-hour workday and consists of a one-hour setup and
sanitization, six-hours of run time, and then another final hour of cleanup and
breakdown. Pricing is a tier-based cost system, with lower rates as the amount
of product to can rises.
“As part of our service,
we can provide anything that relates to the distributor, vendor or marketing
function,” said Culp. “Our resources run the gamut and feature anything related
that the producer would need, including the cans and ends, sleeves, the ability
to do white labeling, etc. We have the expertise and ability to can from brite
tank or keg and offer nitro dosing for nitro brews or wine filling.”
Culp said that Beer Dudes
always tries to help out the brewers that call in with an emergency, but it can
be challenging because of many factors, including the can shortages that have
affected the industry. While they have the necessary cans for their recurring
customers, it can sometimes take six to eight weeks to source cans for a new
customer.
“The best way to combat
that situation is for beverage producers to consistently plan ahead,” said
Culp. “We generally look for lead times of four weeks, but those lead times are
inherently dependent on the specific customer’s needs. We always recommend that
a brewer or distiller adhere to a canning schedule and then regularly get on
our calendar so that they always have a set appointment.
Another issue is getting the client’s artwork
ahead of time. We can offer guidance and consult, but the initial artwork
requires Alcohol and Tobacco Tax and Trade approval. It’s also helpful if the
brewer adheres to our recommendations regarding temperature and carbonation
levels for their products. By following these recommendations, we can
immediately limit the amount of waste and product loss and get to canning
faster.
“The bottom line is we’re
in the business of supporting craft beverage producers,” said Culp. “We help
them remain effective and competitive while getting their product out to
market. A trend under current market conditions is for some craft brewers and distillers
to operate within a smaller footprint, so we will soon offer a smaller canning
unit that will be able to roll right through their standard front door. Other
producers may have the resources and capability to produce a great product, but
they don’t have the equipment or knowledge as to how to get those products
packaged and ready for market. Beer Dudes is, like most mobile canning
businesses, a regionally based operation, but will soon be adding the title of
regional co-packer to their business as well.”
Beer Dudes already holds
all the licensing needed to be considered a manufacturing winery, distillery
and brewery. Customers will soon be able to manufacture their beverage and then
can it right at their co-packing facility in Denton, Texas. With the exception
of transporting craft beer because of Texas law, they can transport a client’s
beverages to their facility to be canned, or buy larger quantities of product,
like wine, from a larger producer for the purpose of packaging and selling it
in smaller quantities or lots under different labels.
Choose Knowledge And Experience
Before Sean Kingston
started WilCraft Can, a provider of mobile canning solutions for the brewing
and distilling industries, he amassed 13 years of chemical and aerosol engineering
experience at SC Johnson. He fully understands the process of maintaining
quality regarding the liquid filling of pressurized products. He and his
like-minded team bring that critical engineering mentality and knowledge to
WilCraft Can.
“Look, canning lines
aren’t cheap, so a craft brewer needs to ask themselves a few questions and
then answer honestly,” said Kingston, owner and Chief Operating Officer of
WilCraft Can. “Are you consistently canning at least 1000 cases a week? Can you
afford the valuable floor space you’ll be giving up to a permanent canning
line? Can you afford the training and retraining of employees to stay up to
date and remain efficient with the canning line and potential maintenance
issues? What tasks aren’t getting done because your employees are busy canning
your product.”
“As a brewer or distiller,
your first and foremost task is to produce the best product you can,” said
Kingston. “If you’re ready to expand, then use any available extra resources to
expand production rather than jump into the packaging business. Do more of what
you do best, and we’ll use our expertise to complement that with our seamless
process to can and package your product to your specifications, even down to
specific carbonations levels. We can suggest temperature levels, but your beer
is your beer, and we’ll adjust our equipment to keep it that way.”
WilCraft Can willingly
works with any contact and supplier you prefer. Still, their experienced team
comes prepared with all of the quality contacts needed for filling and
packaging your product, including the availability of quality aluminum cans.
“All we really need to
know is the size of can you need and two to three weeks advance notice of the
artwork you want on your cans, and we can do the rest,” said Kingston. “The
producer supplies one or two people along with a three-phase power supply,
compressed air and a CO2 supply and space for us to set up. We use premier Codi
Counter Pressure Fillers, SKA Fab depalletizers and pressure-sensitive labelers
to produce a fresh, consistent and customer appreciated canned product, all
essential qualities for a craft beverage producer.”
Kingston believes that by
using a mobile canning business, beverage producers can see how their business
is doing regarding base profitability and best-selling products. They can then
make adjustments and decisions to grow their business better.
“Packaging and canning
expertise is even more critical in today’s market conditions,” said Kingston.
“Craft producers should always look for credentialed quality and exceptional
customer service in a mobile canner. It can be easy for mobile canners to get
grouped into the inexperienced market category, but we at WilCraft Can have
years of packaging and canning experience behind us. That experience allows us
to fill a critical need in the craft beverage market by offering a
well-informed and knowledgeable mobile canning business. We understand the
entire process, start to finish. If a canner doesn’t ask you what the final
gravity of your product is or make accommodations for variances in cans and can
manufacturers that affect target fill weight, you may want to look elsewhere.”
“Additionally, quality
customer service is always crucial,” said Kingston. “Delivering on a promise is
critical, and we do what we say we’re going to do. We respond to emergencies as
best as we can, and our record of nearly 400 runs without a miss is something
we are extremely proud of. On that same note, brewers can help themselves out
by thinking ahead and planning at least four weeks in advance. They know that
they’re going to have to can their product, so plan ahead and guarantee the
time and necessary resources.”
Kingston told Beverage Master Magazine that he believes that the specific guidelines and benchmarks for
manufacturing set by the National Institute of Standards and Technology will
eventually be coming to mobile canning.
“WilCraft Can is already
prepared for that move. We have them implemented and adhere to them daily,
including critical documentation practices. The saying goes that if it’s not
documented, it didn’t happen, so continuous documenting of specific practices
is mandatory.”
WilCraft Can stays focused
on the canning process with an eye on supply and keeping adequate inventory.
They pride themselves on reacting to the marketplace with confidence in having
an adequate supply of materials to meet their customer’s needs. They also have a
growth plan of supplying cans at minimums far below current market demands that
they will directly print on, eliminating the need to use sleeves or labels.
The COVID-19 pandemic continues to reshape the craft beer
landscape in Canada. Unlike in the spring, when businesses closed from
coast-to-coast, what breweries are experiencing to-day is very different
depending on where they are in Canada.
Breweries in the Maritime
provinces — Nova Scotia, Prince Edward Island and Newfoundland and Labrador —
are almost back to business as usual, thanks to the Atlantic Bubble. Strict
mask-wearing and sanitation rules, along with aggressive contact tracing, have
left this part of Canada with some of the lowest rates of COVID-19 in the
world.
Like Australia and New
Zealand, the remote Maritime region has benefited from its isolation. This
region has almost completely eliminated cases of COVID-19 thanks to strict
travel re-strictions that require anyone entering the region — including fellow
Canadians — to self-quarantine for 14 days. The only other Canadian region with
a similar requirement is the Northwest Territories, which also has a low number
of cases.
Even here, however,
festivals and events have been canceled, restaurant and pub seating ca-pacities
are reduced and gathering limits have been imposed to reduce the risk of
super-spreading events that could lead to a resurgence of COVID-19.
In Quebec, by contrast,
breweries and brewpubs, like bars and restaurants, were forced to close again
this fall as partial lockdowns were reimposed to quell the spread of COVID-19.
When this column was written, it appeared that other provinces, including
Ontario, British Co-lumbia and Alberta, were heading in the same direction.
For breweries in Canada’s
COVID-19 hot spots, the playing field is far from even. Each prov-ince has
responded differently to the pandemic. In Ontario, for example, home delivery
has emerged as an important sales channel for craft breweries. Taprooms that
were focused on servicing their local community are now launching full-fledged
e-commerce websites and ship-ping beer anywhere the rules allow.
The province has relaxed
certain rules around alcohol delivery, which has opened up new op-portunities
for brewpubs to sell beer from other breweries — something the craft beer
industry has been lobbying for over many years. Dominion City in Ottawa, for
example, is now offering a “Friends of the Dominion” variety pack featuring a
handpicked selection of Ontario beers. The package comes with a bag of chips —
the token “food” item to meet the restaurant license re-quirements.
In areas hit hard by the
second wave of the pandemic, many breweries are struggling to stay afloat. To
offer some of these producers a little lift, Canadian brewery supplier, Hops
Connect, created a pandemic beer called Isolation Nation, a light and
refreshing ale with notes of man-darin, lemon and tea. The company provided the
hops and malt required to produce it, at no cost, to 45 breweries from
coast-to-coast to help them make a little extra cash. The beer is made from
Canadian-grown malt and locally produced Sasquatch hops.
The first brewery to
launch its version of Isolation Nation was the New Maritime Beer Company in
Miramichi, New Brunswick. The brewery opened in 2020 and brewed its inaugural
batch of beer just two days before the first pandemic shutdowns in March.
Co-founder Adam Lordon told CBC News that it was hard to think of worse timing
for the shutdown. “It was pretty much at the beginning and the worst possible
timing. The startup phase is certainly challenging enough and can be stressful
enough in the best of times,” he said. To pay it forward, the brew-ery is
donating a portion of profits from the sale of this beer to the local food
bank.
New Maritime Beer Company
is still in business, for now at least, but many other Canadian craft breweries
are closing operations or seriously considering it. After six years in business,
Ontario’s Abe Erb Brewing announced in October that it would shut all four of
its locations in Waterloo, Kitchener, Ayr Village and Guelph.
In Alberta, Mill Street
Brewery announced in late October that it would close its Calgary brew-pub due
to COVID-19. Mill Street’s other brewpubs in Toronto, Ottawa and St. John’s
will re-main open.
In British Columbia,
Central City Brewers + Distillers also closed one of its Red Racer Tap-houses
in downtown Vancouver after five years.
In April, a survey of
craft breweries conducted by the Canadian Craft Brewers Association found that
44% reported a year-over-year drop in revenue of 50% or more when the pandemic
hit in March.
Most breweries who
responded to the survey reported having cash reserves for only three months or
less. Although the federal government has introduced financial support programs
for businesses, many craft breweries did not meet the requirements for
financial aid. Establish-ments in business for less than a year did not qualify
for many programs, for example, while other programs specifically excluded
alcohol-based enterprises.
With restaurants and bars
closed in many parts of the country, more Canadians are eating and drinking at
home these days. A poll released in June by the Canadian Centre on Substance
Use and Addiction found that one in five Canadians who drink alcohol and have
been staying home more since the pandemic drink more often than before the
onset of the pandemic. About 20% said they have a drink every day.
“It is reassuring to see
that for the majority of Canadians, alcohol use has either decreased or
remained stable since the onset of COVID-19,” said Dr. Catherine Paradis,
senior research and policy analyst at CCSA. “However, from a gender perspective,
there is concern. On average, female consumers of alcohol are reporting 2.4
alcoholic drinks per occasion — which is above the low-risk alcohol drinking
guidelines — and about 12% are reporting they consume alcohol in excess when
they drink. By doing so, women are putting themselves at risk for short- and
long-term negative health consequences.”
As awareness grows of the
negative health impacts of alcohol, a growing number of millennial beer-lovers
are now looking for low- and no-alcohol beer alternatives. Between 2013 and
2018, nonalcoholic beer sales increased more than 50%, and over the past year,
the category has grown 12% in total volume.
In a press release
announcing the launch of alcohol-free Budweiser Zero in Canada this fall, the company
noted that consumer data reveals the 19-to-34-year-old age group, including
mil-lennials and older members of Generation Z, led all demographic groups in
consumption vol-ume of nonalcoholic beer.
These “sober-curious”
consumers aren’t necessarily teetotallers but are seeking responsible
alternatives when they do not wish to drink booze, whether for health reasons
or because they don’t want to drink and drive.
According to Budweiser’s
research, 64% of no- and low-alcohol beer is consumed by those in the 19-to-34
bracket. Women most often choose nonalcoholic beer as an alternative to sugary
drinks, and men see it as suitable for a variety of social occasions.
It isn’t just big
breweries that have noticed this consumer trend. This fall, Beau’s Brewing in
Ontario joined a growing number of breweries offering lower-alcohol options for
customers, with the introduction of Lug Tread 2.5% — a lighter version of its
flagship brew.
Beau’s designed the
layered ale to mimic the taste of the company’s most popular beer, Lug Tread,
with a blend of barley malts and wheat delivering fresh grain flavor and a
satisfying mouthfeel. The brew has mild herbal and orchard fruit notes and a
clean finish.
“This is no watered down,
bland ‘lite’ beer,” company co-founder Steve Beauchesne told Na-tion Valley
News. “We’ve put time and care into developing this recipe, and we’re super
happy with the results. This is a low alcohol beer that actually tastes like
craft beer.”
The beer is available in
single 473mL cans at provincial liquor stores and the brewery, and will also be
in the brewery’s six-pack winter sampler.
In the spring,
Toronto-based Rorschach Brewing also launched a nonalcoholic offshoot, Free
Spirit Brewing, which debuted with the 0%, low-calorie Adventure IPA. The beer
is available in cans and on tap at the brewery.
Microbrasserie Le BockAle,
based in Drummondville, Quebec, has gone even farther. The company has made a
name for itself producing nonalcoholic craft beer, which it distributes throughout
Quebec and Ontario. In June, the company also launched an e-commerce website
offering free shipping across Canada. Le BockAle offers three core beer
varieties, Découverte IPA, Berliner Sonne Berliner Weisse and Trou Noir Stout,
as well as occasional limited-edition releases.
Likewise, Toronto-based
Partake Brewing has developed a line of five low-calorie, nonalcohol-ic craft
beers that have proven popular in Canada: a red, IPA, blonde, pale ale and
stout. Now the company is getting set to expand into the U.S. In September,
Partake announced that it raised $4 million of Series A capital in a funding
round led by San Francisco-based CircleUp Growth Partners.
The new funds will accelerate the company’s growth, specifically in the U.S. market, by allowing the brand to secure key hires, grow its distribution and retail network and build consumer brand awareness. This growth will support Partake Brewing’s expanding coverage with retailers such as Total Wine & More and Whole Foods Market.
While many people are familiar with the four
main types of intellectual property: patents, copyrights, trademarks, and trade
secrets, often they don’t know the distinctions between them or what they are
meant to protect. This article is meant
to cut through the confusion and explain these distinctions and how each
property right applies to the beverage industry.
Patents
Protect Ideas – sort of
Most
people have a general understanding that a patent protects an “invention” or an
idea. In a very general sense, that’s
true. But, even though the Congressional
authority to grant patent rights comes directly from the U.S. Constitution
(Article 1, Section 8, Clause 8), exactly what is patentable is the subject of
tremendous confusion among the U.S. population, examiners at the U.S. Patent
and Trademark Office, lawyers, and even judges; sometimes requiring
clarification from the U.S. Supreme Court.
The purpose behind the grant of a patent is to encourage innovation by
granting exclusive rights to one’s discoveries for a limited time. In other words, it gives the patent holder a
short-term (20 years from the date of filing) monopoly on his invention. Generally, new machines, chemicals,
electronics, methods of production, and in some cases, methods of doing business,
are eligible for patent protection.
But,
not all ideas are patentable. In fact,
ideas alone cannot be patented. They
must first be “reduced to practice,” meaning that either you must have actually
created your invention or have described it in sufficient detail that someone
skilled in that area could follow your disclosure and create it
themselves. So, you can’t get a patent
on a time machine, because (at least for now) no one has figured out how to
defy the time-space continuum. In
addition, to be patentable, ideas must be novel, meaning that no one else has
ever disclosed that idea before, and non-obvious, meaning that your idea cannot
be an obvious variant on someone else’s invention.
Given
that humans have been making beer for thousands of years, one might think that
coming up with something novel in the brewing process would be impossible. Not so.
In preparation for this article, I ran a quick search of patents
containing the word “beer” in the title and got 491 hits. Some recent examples include U.S. Patent No.
10,570,357 – “In-line detection of chemical compounds in beer,” U.S. Patent No.
10,550,358 – Method of producing beer having a tailored flavor profile,” and U.S. Patent No. 10,400,200 – Filter
arrangement with false bottom for beer-brewing system.”
Improvements in any area of the alcoholic beverage industry may be
patentable including, new types of bottles, cans, growlers, and kegs; new types
of closures and caps; improved methods of separating hops from bines and
leaves; new processing equipment, improved testing procedures and equipment,
improved packaging, etc. Essentially,
anything that lowers costs between the farm and the consumer, improves the
quality of the beverage, or enhances the consumer experience is worth considering
for patent protection.
One
word of caution, however; time is of the essence. The America Invents Act, effective March 16,
2013, brought the U.S. in line with most other countries in being a “first to
file” system, meaning if two people develop the same invention, the first to
file for patent protection wins, regardless of who first came up with the
idea. Also, any public disclosure of
your idea (such as at a trade show) starts a 1-year clock to file or you may
lose your eligibility for patent protection.
Copyrights
Protect Creative Works
The
authority for copyright protection stems from the same section of the U.S.
Constitution as patent protection, discussed above. Our founding fathers recognized the valuable
contribution made to society by authors and artists and, therefore, sought to
encourage creative expression by providing protection for artistic works. Examples of copyrightable materials include,
books, paintings, sculptures, musical compositions, and photographs.
Unlike
inventive ideas, which are only protected when the government issues a patent
to the inventor, copyrights attach at the moment the artistic work is “fixed”
in a tangible medium. So, for example,
if a composer develops a new musical score in her head it isn’t protected, but
the moment she translates that tune to notes on a page or computer screen, it
becomes protected by copyright. In order
to enforce that copyright in court, however, it must be registered with the
U.S. Copyright Office. While it is
possible to wait until an infringer comes along before filing for registration,
doing so can severely limit the damages that may be available to the author of
the creative work. So, early
registration is the better course.
In the
beverage industry, copyright issues often crop up with regard to labels and
advertising materials. But often
disputes arise relating to who owns the artwork contained within a label, for
example. Generally, the author of a work
owns the copyright. But, if an employee
of a brewery, acting within the scope of their employment, creates an image
that the brewery owner incorporates into its labels, that picture is considered
a “work made for hire” and is owned by the brewery. Where disputes often arise, however, is if
the brewery hires an outside artist or a branding agency to develop the
artwork. In that case, the brewery
should include language in its contract requiring assignment of all copyrights
to the brewery for the created artistic works.
The same would apply for any artwork commissioned for use inside the
brewery tasting room or for marketing materials.
Trademarks
Protect “Source Identifiers”
People
generally associate trademarks with the protection of a brand. In fact, I have often described trademarks as
an “insurance policy for your brand.”
But, in more technical terms, what a trademark protects is a “source
identifier.” The purpose of trademark
law is to protect consumers from being misled or mistaken as to the source of a
product. So, for example, if a consumer
sees a pair of shoes with a certain famous “swoosh” image on the side, they
should be reasonably able to assume that pair of shoes was manufactured by
Nike, Inc. and was made with the same degree of workmanship and quality that
they have come to expect from that company.
That “swoosh” symbol, therefore, acts as a source identifier to tell the
public that the product was made by Nike, Inc.
What
may function as a trademark can be quite broad, including: the name of the
business (e.g., Triple Nickle Distillery®), a logo (e.g., the “swoosh”), a
color (e.g., the Home Depot orange or the UPS brown), even a scent (e.g.,
Verizon owns a trademark on a “flowery musk scent” it pumps into its stores to
help distinguish them from competitors’ environments). Not everything can be trademarked,
however. Slogans, words, and images that
appear merely as decoration as opposed to a means of identifying the supplier
will not qualify for protection unless the applicant can demonstrate that the
item has achieved “secondary meaning,” i.e., that the public has come to
associate that item with the manufacturer.
As an example, in the 1970’s McDonalds used the slogan, “You deserve a
break today” in its commercials and other advertising. People came to associate this phrase with
McDonalds and in 1973 they were granted a trademark registration. Incidentally, McDonalds briefly let this
trademark go abandoned in 2014, but quickly re-filed and the mark is still
active today, more than 45 years after it first registered.
In
general, marks also cannot be descriptive of the product or geographically
descriptive of the source in order to be registered as a trademark. For example, one could not obtain a
registration for just the words “India Pale Ale.,” because it simply describes
the product and does nothing to differentiate it from every other IPA on the
market. Similarly, an attempt in 2019 to
register the name “Philly City Brewery” was refused as “primarily
geographically descriptive,” because the applicant could not demonstrate that
people had come to associate that name with its business as opposed to the many
other breweries in Philadelphia.
Trade Secrets Protect Valuable Confidential Business Information
Unlike
other forms of intellectual property, there is no registration system for trade
secrets, because, by their very nature, they must be protected from all
unnecessary disclosure. Trade secrets
can be just about anything that is confidential to your business and gives you
a competitive advantage. Some examples,
include recipes, client lists, manufacturing processes, marketing plans, and
client lists. These are things that, if
publicly disclosed, would harm the competitive position of the company and,
therefore, must be vigorously protected.
One of
the most famous trade secrets is the formula for Coca-Cola. This formula has been protected for more than
130 years, sometimes through extraordinary measures. In 1977, The Coca Cola Company withdrew its
product from India, because in order to sell there, they would have had to
disclose the formula to the government.
They decided it was more prudent to forego sales to one of the biggest
populations on earth rather than risk disclosure of their secret recipe.
Protecting trade secrets requires constant vigilance in two ways. First, the information should only be
disseminated to people within the company, or outside consultants, who need the
information in order to perform their duties for the company. In other words, the information is on a
strictly “need-to-know” basis. Second,
those few people who are given access, should sign non-disclosure agreements
with harsh penalties for breach of their duty of confidentiality. Once the information gets out, it’s nearly
impossible to un-ring that bell, so there must be severe financial consequences
to someone who leaks the information.
Brian Kaider is a principal of KaiderLaw, a law firm with extensive experience in the craft beverage
industry. He has represented clients from the smallest of start-up breweries to
Fortune 500 corporations in the navigation of regulatory requirements, drafting
and negotiating contracts, prosecuting trademark and patent applications, and
complex commercial litigation.
The Fall season is upon us and that means it’s time to create your
brewery budget. This document will serve as the financial road map for your
business and will provide clear directions to reach your sales and profit goals
for the coming year.
One challenge of the
budget process is that it feels like an overwhelming task. There are so many
numbers, so many unknowns and so many changes that come up unexpectedly in the
brewery business. How can you accurately predict everything that will happen
and get it all down on paper? The short answer is that you can’t.
As the saying goes, plans
are useless, but planning is indispensable. Likewise, the budget planning
process is indispensable for your brewery business.
In this article, we’ll
review the key building blocks to create your budget and provide tips so that
you can get started (and finished) quickly. An effective brewery budget is
within your reach.
Brewery Budget Quick-Start
To get started with your
budget, I recommend writing out the plan in words first. Don’t worry about the
numbers right now, just write down your goals, objectives and strategy for the
coming year. The numbers will come easier after that.
For example, if your goal
is to grow sales by developing new beer styles or introducing new package
sizes, write that into your plan. Perhaps you want to expand into a new market
and hire a new sales rep for the territory. Write this into the written plan as
well.
Continue this process, in
writing, until you’ve got all your goals and objectives listed out. This
creates clarity and momentum for the rest of the budget process. Once the big
picture goals are clear and in writing, it’s much easier to quantify the
objectives and build the numbers into the financial plan.
Effective Budget Basics
The operating budget
involves five major building blocks: the sales forecast, margin plan, operating
expense plan, capital budget and debt schedule.
Below, we’ll dig into each
of the budget building blocks and give you some tips to get started. Use these
ideas in connection with the budget templates and you’ll be well on your way to
creating an effective budget for your brewery.
Budget Building Block #1:
SALES FORECAST
The sales forecast is
simply a projection of how much beer you will sell. It should show the sales by
customer, by brand, by package, and by month.
If you sell through
distributors, start by making a schedule of who you currently sell to (and who
you plan to sell to). Include the historical sales for the past 12months, and
the year over year growth for each distributor.
If you plan to open new
markets with new distributors, that should be included in the schedule. If you
have self-distribution sales and taproom sales, include the figures for these
as well.
With a sales forecast, the
trend is your friend. If growth this year was 10% but you project 50% next
year, make sure you know where it will be sold.
Ask questions. Challenge
assumptions. Build an achievable sales plan.
Budget Building Block #2:
MARGIN PLAN
Let’s begin with some
simple math:
• Sales minus the cost of
sales = margin
• Margin divided by sales
= margin percentage
In other words, the price
you charge for your beer minus the costs to make the beer is your margin.
When building your plan, use an expected margin percentage. This will make communication of the margin goal easier and allow for quick comparisons to past results.
For example, if the
historical margins in your brewery are 45%, use this as an expectation for your
new budget. This can be used as the goal (or a baseline) for new brands or
packages you intend to create.
To dig in on your margin
planning, review the cost components of your beer: Direct labor, direct
materials and overhead.
Direct labor is the cost
you pay people to make the beer. Salaries and benefits for brewers, cellar and
packaging go in direct labor. Direct materials are the ingredients you combine
to make the beer. Hops and malt go in direct materials.
Overhead is the cost of everything else that you need to produce the beer. It includes lease expense, insurance on the brewery and depreciation expense of the equipment. Overhead costs are those indirect costs, or support costs, which keep the brewery running.
Build up the costs of new
beer styles or packages you intend to sell. Determine pricing, calculate
expected margins, and include this information in your total brewery margin
plan.
Budget Building Block #3:
OPERATING EXPENSE PLAN
Every big expense number
on your budget should have a supporting schedule. Examples of big expenses
include payroll, lease payments, travel budgets, and marketing costs. A
supporting schedule is a detailed listing that adds up to that one number on
the operating expense plan.
For example, to create the
payroll schedule, list out the number of employees, expected wage rates and
hours that will be worked. The sum total should match up with the payroll expense
line on the budget.
To build up the expense
plan and make sure everything is accounted for, I find it helpful to review
spending that has occurred in the past. I do this by looking through the
detailed transactions in the general ledger.
The general ledger is a
listing of all the transactions that hit the financial statements. It’s like a
check register that shows where money was spent and a description of what was
purchased in the past.
Where did we spend money?
Will that happen again? Will we spend more or less? What new plans do we have
next year? What will it cost?
Chances are, if you bought something this year, you may buy it again next year. Use the general ledger to jog your memory on expense items that are likely to repeat. Use these amounts as a baseline for budgeting expenses next year.
Use the budget that you
created in words and estimate spending needs based on those goals and
objectives. If you don’t account for this spending in the operating expense
plan, it’s tough to make the goals a reality.
Budget Building Block #4:
CAPITAL BUDGET
The capital budget is the
place for big purchases like a new canning line, a keg washer or delivery van.
Anything that costs more
than a set amount, say $1,000, and will last longer than a year should be on
the capital budget.
The difference between a
Capital Expense and an Operating Expense is that capital items need to be
depreciated (or written off) over a certain period of time. If you buy a box of
copy paper for $50 it’s an expense on the current income statement. If you buy
a $15,000 forklift, that’s a capital expense that will be depreciated over the
next five years.
Make your wish list of
needed capital items. Determine what the items will cost and when you expect to
buy them. This will help with cash needs planning and be an important building
block of your financial budget.
Lastly, match up the
expected spending to the expected funding. During this step of the budget
process you’ll need to determine how you’re going to pay for a new canning
line, keg washer or delivery van. List any new bank loans or new equity you
will need to invest in the business to make the Capital Budget a reality.
Budget Building Block #5:
DEBT SERVICE
Debt Service is the amount
you pay each month on your loans. These payments are made up of two parts:
principal and interest. The principal portion reduces the loan amount on your
balance sheet while the interest portion is an expense on the income statement.
To start, create a
schedule of all your loans and the payments due on each. List the bank, type of
loan, term of the debt and payment amounts. This schedule will be an integral
part of the financial plan and will serve as a reminder of how much is due and
when.
Wrap Up + Action Items
The brewery budget is the
financial road map for your business. The plan will provide clear directions to
your team so that you can reach your sales and profit goals for the new year.
Starting the budget
process can be tough. So, begin by writing out your budget goals in words.
Simply write out what you want to accomplish, how you intend to do it, and what
resources you will need. Start with words, and let the numbers come later.
Once you have the goals
and objectives written out, it’s time to add the numbers. Use the five budget
building blocks: the sales forecast, margin plan, operating expense plan,
capital budget and debt schedule.
An effective brewery
budget is within your reach. Use the ideas here to get started and to finish
your plan. Your income statement is counting on you.
