Category: Brewery

Can You Reinvent the Beverage Marketing Wheel?

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By: Hanifa Anne Sekandi

A lot of people believe that marketing a brand is an arduous task. Yes, it requires work. But if you hate this part of building a business, you may find yourself in the marketing denial loop. What is this?

  It is when brands do extraordinarily little marketing and expect big results. It is when brands put in less than what they desire to receive. This mindset leads to a sense of disillusionment and disappointment. We are sure you have encountered individuals who say running a brand is hard. The truth is, creating and growing a brand requires work. But the work should not be regarded as hard. It is important to eliminate this mindset. Embrace a simple, thought-out marketing plan and strategy whether you are a new brand, a mid-range brand or one of the big guys. Understanding how to market your brand should never be approached begrudgingly or negatively. Last Beverage Master issue, we focused on the “why,” as in why is your brand so unique? Why should consumers purchase your beverage rather than Bob’s beverage? Why is your brand making this beverage? Is there a story? The “why” is your first building block, and this will lead you to the most important phase of your simple marketing strategy — who is this for? 

  Nowadays, you do not have to look too far to see the dos and don’ts of marketing. You are in a time where the triumphs and tribulations of top-tier brands are well documented. As of late, major marketing blunders have been put to the forefront. The common mistake among all these brands, not just those in the alcoholic beverage industry, is that they forget the most important marketing building block: the “who,” and I’m not referring to the classic and iconic English rock band. In this case, the “who” refers to your audience, the consumer. Understanding their buying decisions and why they select your brand or your competitor’s brand when purchasing beer and liquor should be at the forefront of your marketing strategy. 

Who is Your Consumer?

  All your marketing initiatives are built from understanding who your consumer is. A concept that seems obvious and basic, yet both new and old brands make it complicated. Since you and your beverage experts are creating the beverage, tasting it and perfecting it, start here. What would appealto you? What would make you run out and purchase your alcoholic beverage over a top-shelf or legacy beverage? Also, what do you wish some of your favorite beverage brands did? How does your brand fill this missing element? A large list is not needed. You are not going to be loved by everyone. Focus on three key features your “who” (consumer) would look for. Look at their lifestyle and how you can highlight that your beverage compliments their personal ethos. Remember, people attach feeling to their purchases. This is why the “why” story is such an essential first step in brand development. It lets you clearly map out how to appeal to and reach the “who.” 

  There are many ways to find your audience. The above is a simple and effective method. If you cannot sell this magical beverage to yourself or your team, then you will not sell it to anyone else. For those who have an existing brand and are struggling with your brand in a marketing landscape, which has become quite cutthroat with the advent of social media platforms, taking a trip back to where you started and your initial goals will help you zero in on your consumer base. Do not be greedy. Do not strive to be all things to everyone. If your brand has been performing relatively well and you are looking for more brand visibility to boost sales.

  Simple changes, more times than not, are needed. Creatively amplifying your existing message can increase your reach and growth. You do not need to burn the building down and start again, so you target a new demographic to buy your beverage. What about the people who have kept you afloat? Your loyal consumer bases? Some brands conduct surveys. Ask the people who have already purchased your drink what you can do better. Or what is on their wish list? Conduct a poll. This will give you some great ideas or help you re-strategize and expand your existing marketing methods.   

Should You Reinvent the Wheel?

  If you are a new brand, the alcoholic beverage world is truly your oyster. You can be outlandish and try something new. You have leeway to reinvent the wheel. Why? Aside from making a quality beverage, there is no sense in trying to copy the marketing strategy of a legacy top-tier brand. Their consumer is loyal. This does not mean that they will not become a fan of your brand. It is like football; people love the team they love, but when it is the Superbowl and their team has not made the cut, they will root for the team they like second best. Some people drink the beer their granddad drank and pass the love of this beverage on to their kids. It is a staple beer at all family events and their go-to beverage when dining out. Whatever the hook was that appealed to their granddad was passed on to them, and so on. Consider this a legacy brand. Legacy brands must strive to expand the wheel, but they should not reinvent it or break it unless they want to lose a loyal consumer base. Ignoring your “who” so you can reach a new consumer is sloppy marketing and a hasty marketing method often spurred on by newer brands going viral on social media. 

  You might be wondering how you would know who your consumer is. What other methods can you use to understand them better to build a formidable marketing strategy? This may sound contradictory to what was stated above. Start by identifying three brands that you are comparable to, your competitors. Study them, but do not copy them.

  Moreover, analyze them and look for what you do not like first. What would you do better, and what is missing? Make this list small. Next, look at the elements you like and what you would do better from a consumer’s perspective. For example, some beverage brands have made different-size offerings for their beverages. This is a simple yet effective difference that sets you apart and boosts sales. Who does not love those single-serve wines or a small-can imperial stout? Your consumer’s needs are not hard to understand if you start with yourself, assuming you are making a product you believe in, and then look for like-minded individuals with the same sensibility. Stay faithful to your plan, even when no one is looking, because someone looking for what you are offering will eventually turn into a large, loyal consumer base that will tell their like-minded friends to purchase your beverages too.

Glycosidic Nitrile, You Really Should Care Now 

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By: Becky Garrison

At the American Craft Spirits Association’s 2022 conference held February 10-12, 2023, in Portland, Oregon, Dr. Campbell Morrissy, a graduate research assistant in the Barley Project at Oregon State University, led a talk about why distillers should be concerned about Glycosidic Nitrile (GN).

  First, he defined GN as “naturally occurring plant metabolites that are used as defenses against predators.” They’re actually pretty sweet, and they are present in almost all plants.” Epiheterodendrin (EPH) is a type of GN found naturally in barley. 

During fermentation, yeast contributes beta-glucosidase, which acts on EPH, resulting in a precursor to hydrogen cyanide. Add heat and copper, and then suddenly,  EC (ethyl carbamate) is present in the final spirit.

    In the United States, there’s a voluntary limit of 125 parts per billion of EC permitted in alcohol products available for sale, which is quite low. As this is a voluntary limit, it’s become a regulatory gray area. As far back as 1993, high enough levels of EC were found in bourbon produced in the United States that would have exceeded regulatory limits established by the EU, UK, Canada and some other countries. Additionally, whiskey sold in Europe needs to meet that low EC concentration. So, those selling to the EU market may face regulation and monitoring of EC levels.

  About 30 years ago, those working with barley in the UK began to realize that GN resulted from barley variety. Now, more than 50 percent of all malting barley purchases in the UK are GN zero and essentially all for the distilling market. Morrissy added that those making whiskey in the UK use GN zero malt with no exceptions.

Defining Barley Varieties and EC Levels

  Generally, there are three categories for defining barley varieties and their propensity to create EC. The non-producer is GN zero, defined as anything less than half a gram per ton of EC. Low producers have 0.5 to 1.5 per ton, and high producers are 1.5 or greater per ton.

  A barley’s ability to produce EC can be measured in two ways. A PCR assay can ascertain whether a given barley variety will have the gene to produce EPH. Also, the quantitative method enables one to measure photometrically if a particular barley reacts to hydrogen cyanide.

  Low GN producers will still produce GN, and its production can be modulated during malting. Anything that’s going to promote malt modification is going to result in more GN. Here, one needs to look at the length of germination. Typically, the germination time for brewing malt is about four days, though with a distiller’s malt, germination can go up to five days, depending on the type. As germination increases, one can see a pretty clear relationship with the level of glycosidic nitrile. While barley variety is important, what matters more is how it malts. Hence, Morrissy recommends connecting with the malthouse to work together to see if pushing modification will impact the EC levels of the resulting spirit.

What Look for When Breeding Barley

  First and foremost, Morrissy stresses looking for strong agronomics. “The farmers are going to need to grow something that they can rely on. Thankfully through very traditional plant breeding techniques, we produce high yielders with low disease resistance, which means fewer inputs. We breed for intolerance for drought and look into low-temperature tolerance for winter lines,” he states.

  Also, Morrissy suggests looking at AMBA-recommended specifications for malt guidelines to select grains known to produce high-quality malt. Along those lines, look for multi-environment adaptation that can be grown all over the place and weather new climatic experiences.

  Here, one needs to differentiate between growing spring or winter barley. Spring barley is planted in the spring and harvested in the summer. Conversely, winter barley is planted in the fall and harvested in the summer. Unlike spring barley, winter barley goes through vernalization and overwinters.

  Winter barley yields more often and has a low-temperature tolerance and less water requirement. When it requires water, it tends to be when water is abundant in most regions due to runoff from winter and late spring rains. While one of the best things for winter barley is snow, some historically very cold places do not see the same snowpack they used to see. Also, winter barley is an excellent erosion control for winter.

  Morrissy observes, “In those places that are windy, putting something that has a root structure in the ground can preserve a lot more topsoil. You also kind of have a de facto cover crop in a time that it might be fallow, so you’re going to out-compete weeds. You may have some pest resistance associated with that.”

  Morrissy notes that different regulatory mechanisms within that GN gene pack can turn on or off depending on climatic changes. Right now, they are not sure how environmental stress response impacts GM production. Currently, more research is needed to understand how the environment impacts GM production in the field.

Producing GN Zero Barley Varieties

  Currently, there’s one GN0 variety approved by the American Malted Barley Association (AMBA). However, Morrissy predicts that with the advent of AMBA’s new recommendations that all varieties of malt for distilling be GN zero, we will start seeing more of these come on the market for brewing and distilling as they go through the AMBA pipeline. Also, some foreign varieties are coming from the private breeding program, and U.S. land grant institutions are breeding some domestic varieties.

  An interesting alternative is naked or hull-less barley. Inherently naked barley is GN zero, though, as Morrissy noted, there isn’t a great supply chain for naked barley right now. Still, there’s a lot of potential for sowing grain without the husk, as that can take up five to seven percent of the total weight of the grain. “If you’re not lautering, you’re doing grain fermentations, or maybe you have a mash filter, you don’t need the husk,” he states.

  At this writing, 10 public breeding programs in the US are working on barley. They’re covering many different areas, producing barley that’s well suited for those larger growing regions and collaborating to make sure that the genetic stocks for sustainability are being shared industry-wide.

Managing EC in the Distillery

  EC is a lowly volatile, heavyweight compound,   whereas its precursor hydrogen cyanide is a very highly volatile, low molecular weight compound. So, according to Morrissy, the more EC that can be formed in the stills and recovered in the silage, the less it will make it into the barrel. Depending on the distilling technique, Morrissy thinks the cyanide fraction is volatile, and the conversation into EC happens very quickly, though it might not get picked up until the spirit is in the barrel.

  Early investigations into the distilling technique find that reflux is highly important in controlling EC. Also, still design and still feed are so important. Trace amounts of EC will form during fermentation, but primarily, the copper catalyst in distillation produces EC. While this work is in the emerging stages, research with copper contact and reflux and controlling EC looks promising.

  For further research into this topic, Morrissy recommends The Hartwick College Center for Craft Food & Beverage, a testing and education resource that supports small and mid-sized breweries, malthouses, farms and other craft food and beverage producers. Also, he suggests joining the American Malted Barley Association.

Enforcing Your Trademarks: How Far Should You Go?

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By: Brian D. Kaider, Esq.

You’ve secured federal registration for your trademarks and you’ve been building your brand recognition.  Per your trademark attorney’s recommendation, you’ve had quarterly searches conducted to find similar marks.  Lo and behold, a new entry to the market is using your trademark.  Now what?  Stop and take a breath; let the initial surprise or anger settle. There is a lot to consider before taking any action.

Take Stock of the Situation

  First, take a look at your own trademark.  Is it the name of your company or of one of your products?  Is it a national brand or one that is distributed in a small geographic area?  In what classes of goods and services is it registered (e.g., class 033 for vodka, class 040 for “rectification of distilled spirits for others,” etc.)?

  Then look at the competitor’s mark.  Is the mark identical to yours or similar?  How similar?  Is it broadly distributed?  Is it used for the same goods and services as your mark?  If not, how similar are the goods and services?  Are your products marketed through the same trade channels?  Are consumers likely to encounter both your products and theirs?  Have they attempted to register their trademark and, if so, where are they in that process?

  No one question will be determinative in any given case, but on balance, they will help develop a sense of how much effort should be expended to enforce your rights.  As discussed below, there are numerous paths, each with its own set of risks and potential rewards.  An international brand that is known throughout the industry, like Jack Daniel’s®, must be far more protective of its marks than a small brewery in Oregon that has a registered trademark for an IPA product only distributed in the Pacific Northwest.

First Contact

  As the owner of a registered trademark, it is your duty to “police” your mark; that is, to monitor unauthorized use of your mark by others and to enforce your right to exclusivity of that mark.  When large corporations learn of potential infringement, their immediate response is generally to have their attorneys send a cease and desist (C&D) letter.  For smaller companies, a personal attempt to contact the owner of the infringing business is often effective.  Sometimes the other party simply did not know about your mark.  If you found their use of the mark before they spent considerable time and money developing it as a brand, they may be willing to simply let it go.

  When making these calls, it is important to maintain a demeanor that is both friendly and firm.  There is no need to accuse the other side of wrong-doing or of violating your trademark knowingly.  However, you should simply let them know that you do have a registration for the mark and that their use is likely to cause confusion in the market as to the source of your respective goods.  If you give them a reasonable amount of time to work through any inventory bearing the infringing mark and to rebrand, this can often be the end of the matter.

Cease and Desist Letter

  If the friendly approach doesn’t work, the next step is generally a cease and desist letter.  This is most effective if drafted and sent by an attorney.  The tone of these letters tends to be more matter-of-fact.  They identify your trademark(s); explain that you have spent a considerable amount of time, effort, and money to build your brand around the mark; identify the other party’s infringing use; state that the use is unauthorized and likely to cause economic harm and loss of goodwill in your brand; and demand that they stop using the mark within a given time frame.

  While these letters can sometimes be effective, especially against smaller companies, they have become so commonplace that often they are simply ignored by more savvy companies who may wait to see if further steps are taken before deciding whether to rebrand.  Accordingly, you should carefully weigh all of your options and decide in advance whether you will escalate the matter if your C&D letter is ignored.

Letter of Protest / Trademark Opposition

  If the other side has attempted to register their mark, there are two ways to try to prevent the registration.  First, you can file a “letter of protest” with the U.S. Patent and Trademark Office (USPTO).  The letter simply informs the trademark examiner of the existence of your trademark and the reasons why you feel that registration of the other party’s mark would damage your mark.  The benefit of this approach is that it is quick, easy, and relatively inexpensive as it generally only takes a few hours for an attorney to prepare and file the letter.  Often filing the letter will prompt the USPTO to issue an office action refusing the registration in light of your trademark, forcing the other side to argue why registration should be allowed.  The downside to the letter of protest is that once it is filed, you have no further opportunity to engage in the process.  If the other side responds to an office action with arguments as to why registration should be permitted, you cannot respond to those arguments. 

  Whether you have filed a letter of protest or not, if the USPTO’s trademark examiner determines that the mark is registerable, it will publish the mark in the Official Gazette.  This publication opens a 30-day window for anyone who believes they will be harmed by registration of the mark to file an opposition to the application.  

  This process should not be entered into lightly.  In some cases, simply filing the opposition will be enough to get the other side to give up its mark.  But, if they choose to fight the opposition, you will find yourself in a litigious process that takes time, effort, and money to complete.  As in civil litigation, the parties to an opposition file motions and briefs, request documents from the other side, take depositions, serve interrogatories that must be answered, and present their evidence to the Trademark Trials and Appeals Board for its consideration. 

  If the opposition goes all the way to the trial stage, it will generally take at least 18 months from when the notice is filed to when the last brief is due and will cost each side in the tens of thousands of dollars.  As with civil litigation, most oppositions do not reach the trial stage, because the parties are able to come to terms and settle the dispute on their own.  But, this often does not occur until sometime in the discovery phase, after both sides have spent a considerable amount on legal fees.

  It is important to note that the object of an opposition proceeding is to prevent registration of the other side’s trademark and, if you are successful, that is your sole remedy.  There are no monetary damages awarded, nor can you recover your legal fees from the other side.  Moreover, while they will lose their ability to register their trademark, it does not necessarily mean the other side will stop using the mark on their goods or services.  In that case, you would have to file a trademark infringement litigation (see below) to get them to stop using the mark, entirely.  In practical terms, succeeding in an opposition will often be enough to get the other side to abandon their mark, because if you were to follow through with a civil litigation, they could be on the hook for treble damages for willful infringement.

Trademark Cancellation

  If you discover the other side’s trademark application after the 30-day opposition window has expired, your only option to challenge the mark at the USPTO is to wait until the trademark actually registers and then to file a trademark cancellation proceeding.  Though there are some differences between cancellation and opposition proceedings, particularly if the challenged mark has been registered for more than five years, they are similar in most procedural respects. 

Trademark Infringement Litigation

  As one might expect, filing a trademark infringement case in federal court is the nuclear option.  Depending upon the jurisdiction, the time frame for completing a litigation may be faster or slower than an opposition or cancellation proceeding at the USPTO.  But, whereas those procedures will likely cost the parties tens of thousands of dollars, a civil litigation will likely reach six figures, or more. 

  The reason for this higher cost is that there are more issues to consider in these cases.  If you are successful in a civil litigation, you may not only obtain injunctive relief, foreclosing the defendant from all future use of the mark, but also may obtain monetary damages associated with the defendant’s past use of the mark, as well as attorney’s fees expended in the proceeding.  Moreover, if the defendant is found to have willfully infringed your trademark, they may be required to pay treble damages. 

  These issues, which are not even addressed in an opposition/cancellation, add breadth to the scope of discovery taken, which increases the cost.  Further, whereas most opposition/cancellation proceedings are decided without an oral hearing, a civil litigation generally requires live testimony and argument in front of a judge or jury.  These proceedings require a great deal of attorney preparation, dramatically increasing legal fees.

Conclusion

  As the owner of a valid trademark registration, you are obligated to police your mark and failure to do so can result in a dramatic diminishment of your rights or even outright abandonment of your registration.  But, that does not mean you have to file a civil litigation against every minor infringement.  Determining the appropriate path in any given situation requires a careful evaluation of all the circumstances and balancing the risks of action versus inaction.  It is critical to engage a knowledgeable trademark attorney, who will properly assess these risks, your likelihood of success, and the most effective course of action in your case.  

  Brian Kaider is a principal of KaiderLaw, an intellectual property 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. 

Five Essential Key Performance Indicators for Taproom Managers

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 By: Kary Shumway and Andrew Coplon from TaproomSuccess.com

Taproom managers wear many hats that correspond to a countless number of responsibilities. From hiring to firing, to training and retaining, it is the goal of taproom managers to equally maximize the experience of their guests as it is their staff. One of their most valuable tools to create a successful taproom is data. By understanding data, taproom managers can monitor, maximize, and maintain world-class experiences that customers crave and their team is proud to be a part of, leading to more memorable and profitable taprooms.

5 Essential KPIs for Taproom Managers that can Help You See Greater Guccess

  KPIs, or Key Performance Indicators, are the most important numbers to measure in your business. Think of KPIs like the gauges on the dashboard of your car. The speedometer measures how fast you’re driving, the fuel gauge shows how much is in the tank, and the check engine light tells you if you’re overdue for maintenance.

  Those are important things to know to keep your car running smoothly and legally. Likewise, KPIs for your taproom business need to track the same critically important measurements.

#1: Tip Percentage

  What it is: Tip percentage is the tip amount divided by the total tab (i.e. a $10 tip on a $40 tab equals 25%).

  Why it’s important: Tip percentage corresponds directly to staff member engagement with guests. From Secret Hopper data, we see that when staff offer a low level of engagement, the average tip percentage is 23%. When staff offer a high level of engagement, the average tip percentage is 27%. If Andrew’s average tip percentage is 17% and Kary’s is 27%, it can be deduced that Kary is going above and beyond to build relationships with his guests.

  Where to find this data: Your POS system. If your employees have their own login, it’ll be easy to see their individual tip percentages. If your setup has your team sharing a login, monitor trends over time. For example, if you typically have 3 taproom servers in the taproom and when Andrew’s behind the bar you see a lower average tip percentage, you’ll be able to discover that he’s the weak link.

  How you can use it: Reward and recognize team members who consistently receive a high tip percentage. Make them feel appreciated. When you discover a team member who receives a lower than average tip percentage, use this as a training opportunity. Speak to this employee and discuss what can be done to offer greater support. Even for employees that may treat their position as “just a job,” money can be a motivator. The more employees take the time to build relationships with taproom guests, the higher their tip will be, making them a little bit more money and a little bit happier. As a manager, having happier and better compensated staff will make your life easier.

#2: To-Go Sales

  What it is: To-go sales represent additional purchases on a tab for consumption outside the brewery. Think crowlers, growlers, bottles, and cans.

  Why it’s important: Encouraging beer to-go is an actionable strategy you can train your team to authentically implement that generates immediate returns. On taproom visits when staff do not suggest beer to-go, the guest only makes the purchase 9% of the time on their own. When taproom staff encourage the guest to take beer to-go, the guest makes the added purchase 49% of the time, resulting in tabs nearly $15 higher.

  This metric is not only important as a tool to motivate taproom staff to increase their tabs, but also a valuable KPI for managers/owners to monitor and reward your team.

  Where to find this data: Your POS! Ask your provider the easiest way to filter transactions that include to-go purchases. Consult this data regularly and see who on your team is demonstrating upsell skills.

  How you can use it: Engagement is a common thread in these top 2 KPIs, and you are likely to see those with the highest tip percentages also selling the most to-go beer. Makes sense, right? Your most engaged team members are developing deep relationships with your guests, and are more likely to also suggest taking beer home. Hold frequent to-go beer competitions to see who can sell the most over X period of time, whether a Saturday afternoon, an entire month, or based on hours worked. Moreover, don’t just consistently reward the same top sellers. Consider using this to-go data to recognize your most improved staff on suggesting beer to-go. Whether we’re talking about brand new employees or 10-year taproom veterans, regularly monitor this KPI to make sure they’re using it to their advantage. After all, what server doesn’t want to get tipped a little more when their tab also includes beer to-go? As a taproom manager, monitoring this KPI will help you better maximize the amount of to-go beer sales and increase overall in-house revenue.

#3: Number of Customers

  What it is: The number of customers represents what you might expect – the foot traffic into your taproom. This is how many people come in during a given day, week, month, or year.

  Why it’s important: Clearly, the more people who come in, the more sales you can generate. We often create taproom sales projections using just two numbers to start: 1) Customers x 2) Average Spend Per Customer (which we’ll cover next).

  These two data points are the key drivers of revenue through your taproom. The more you can increase one or both of these KPIs the more you can boost your taproom sales.

  Where to find this data: Here again, your point of sale system will track this data. It may be useful to create your own trackers (hello, spreadsheets!) so that you can easily access historical information and make use of week over week and month over month comparisons.

  How you can use it: Set up a simple spreadsheet to track the total number of customer visits by week and by month. Pull information from the prior year (or years) so that you can see what the trends look like.

•   Are the number of customers increasing or decreasing month over month?

•   Are there patterns that emerge when you look at the historical data?

•   Are there weeks or months that have unusually high volumes of customers?

•   Why did that happen?

•   Can you duplicate this, or do more of the things that brought people in?

  The goal of tracking the number of customers is simple: bring more customers in to spend more money so that you can increase sales. However, tracking the numbers isn’t enough. Review the trends and use the data to brainstorm ways to increase traffic.

#4: Average Spend per Customer

  What it is: The average spend per customer is a measurement of (you guessed it) how much folks spend when they come into your taproom.  You may see this KPI also shown as average spend per check. Whichever measurement you use, this is an important one to track so that you can understand spending patterns, habits and identify ways to improve on each.

  Why it’s important: When customers come into your taproom they want to buy from you. Unlike some retail stores, where people go in to browse and just look around, folks are coming into your taproom to buy. They want a beer, some food, and maybe some merchandise. The more you have to offer, and the easier it is to buy it, the more your customers will spend. And the more they spend, the more financially viable and successful your business will be.

  Where to find this data: We’re starting to sound like a broken record here, but your point of sale system is the place where you’ll find average spend per customer (or check) data.

  How you can use it: The old saying goes that your best customer is the customer you already have. These are the people that have already purchased from you and love what you have to offer. Why not work to offer them more when they come to your taproom?

  As with most KPIs, it is useful to take the measurements over time, analyze the trends, and make comparisons. A key best practice is to benchmark against your past performance and work to improve the number. 

#5: Revenue per Barrel (BBL)

  What it is: Revenue per barrel, or sales per barrel, is a measurement of how effectively you are monetizing a barrel of beer.

  To do the calculation, take the total number of dollars sold through the taproom in a given time period and divide by the total number of barrels transferred to the taproom.

  For example, in the month of January taproom sales were $100,000, and there were 100 barrels of beer transferred and depleted during January. $100,000 divided by 100 barrels = $1,000 per barrel.

  Why it’s important: The revenue per barrel KPI shows how many dollars each barrel of beer is making us, and will provide clues as to how we can make more.

  Furthermore, one of the key tenets of business and financial management is the safeguarding of assets. The revenue per barrel KPI can help with this.

  What this means is that we need to have checks and balances to make sure that our assets are well taken care of and that we are getting a proper return on our investments. The revenue per barrel KPI can help identify beer loss when the number dips below expectations.

  To continue the example above, let’s say you’ve been measuring revenue per barrel for years and it tends to be around $1,000 per barrel. Fairly common. Then one month it dips to $800 per barrel and stays at this level for several months. What happened? The KPI won’t answer this question, but it will force you to go and figure it out.

  Where to find this data: Again, for this KPI you’ll need to know total taproom sales in a given period and total barrels transferred to the taproom. The POS will have the sales data and your production software (or accounting software) will have the total barrels transferred.

  How you can use it: As with the KPIs discussed above, set up a tracking system to show month over month revenue per barrel numbers. Look back for 12-24 months and see what the trends look like. Is the KPI increasing? Decreasing? Staying about the same?  You can use this data to inform pricing decisions, product mix, and pour sizes.

  Understanding KPIs provides you the ability to find out where your taproom stands, spot areas of opportunity, and the tools to monitor consistency and quality. Moreover, don’t just treat the data as numbers, use it to reward and recognize your team for a job well done. As a taproom manager, these KPIs are vital assets in your toolkit to see greater taproom success.

How Beverage Business Owners Can Achieve Financial Freedom

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By: Raj Tulshan, Founder of Loan Mantra

They say money can’t buy happiness, but it can help create peace of mind by alleviating stress in professional life – especially if you’re a business owner! Professional financial freedom means taking control of your finances and amassing enough cash and savings to manage daily operations, handle emergencies, drive growth, expand and maybe even sell the business one day.

  For beverage business owners, knowing that payroll can be met, a second location of your bar or location could be opened, staff and vendors can be paid – and there is still enough money set aside for any emergencies can provide stability. We’re all familiar with certain strip malls or vacant locations where different businesses seem to come and go, unsuccessfully. In contrast, towns and cities are identified by the bars, pubs and restaurants that are landmarks, meeting spots and seen as a local staple in their areas.

  Financial freedom offers a variety of benefits that go beyond financial control. A recent study by Harvard Business School found that having more money reduces intense stress, brings greater control, and leads to higher life satisfaction. Other benefits of financial freedom include improved mental health, better relationships, more opportunities, an elevated lifestyle and greater independence.

  The path to financial freedom. We all want financial freedom so how do you get there?

  Become a business owner. Simply becoming a business owner provides an essential freedom that can’t be explained unless you are one. As countless entrepreneurs attest, many people prefer to work for themselves rather than for someone else because they have more control over their future – and their finances. A Baylor University professor found that despite the challenges of business ownership – including long hours and high stress levels – entrepreneurs report consistently higher rates of happiness vs. people who work for others.

  Create a budget. Develop and stick to a budget. Outline operating income, receipts, expenses, loans, rent/mortgage, insurance, utilities, payroll, supplies, equipment, etc. Carefully track spending to account for every dollar. Negotiate where possible, switch vendors or gain better rates for your phone and cable services. Determine which of your products are the best (and worst) sellers and adjust stock accordingly.

  In addition to tracking budget, there are common questions each business owner should ask themselves to manage their financial health. For instance, do you have outstanding accounts? Do your clients pay on time? Have you spoken with your top clients in the past 90 days? Do you have your documentation prepared in case you need to apply for a loan? Loan Mantra’s financial health checklist is a great tool to monitor ongoing questions that will not only help you track your budget, but your continued success.

  Make it “to go” and be in the know. A report released in June 2023 by the National Restaurant Association found that more than half of millennials (62%) and Gen Z adults (52%) would pick a restaurant for takeout if alcohol beverage options were included. Currently only ¼ of adults order alcohol beverages online due to availability or state legislation, but that is changing leaving room for opportunity. It’s also important to know the upcoming industry trends. For example, that same report states that it reaffirms the associations predictions that local experiences would be this year’s hottest trends – 79% of beer drinkers would participate in a tasting event at a restaurant.

  Establish authentic customer relationships. According to the US Chamber of Commerce nearly everyone has been affected by Covid Fatigue over the past couple of years leaving people emotionally drained and physically worn out. As a result, consumers want their shopping and dining experiences to be easy, convenient and satisfying. Satisfied customers are repeat customers. In addition, customers are looking for a deeper emotional connection and a personalized experience.

  Use digital media. For brands to build and maintain customer loyalty, the digital experience matters but it must not make things more complicated for the consumer. Whether a customer is ordering online or on-site it must be intuitive and easy. People find the new hottest brew, bar or pub on social media so having a presence online is a must. Post images of the business with indoor/outdoor dining space, food and drinks. Post happy hours, specials, trivia nights, special tastings, etc. and publicize them. Encourage satisfied customers to leave reviews. Allow customers to order food or make reservations online. Make services like DoorDash or OpenTable available.

  Be frugal. Consider how business magnate, investor, and philanthropist Warren Buffett purchased a $31,500 home in 1958 and still hasn’t moved out of it, even though his net worth is currently $104 billion. He can obviously afford a bigger, more expensive house, but he’s famously frugal. Conversely, controversial rapper and designer Kanye West is known for his extravagant lifestyle. He lives in a $20 million mansion – and rented Madison Square Garden for a stunt with his clothing line – despite being $53 million in debt. In a bizarre move, he asked Facebook founder Mark Zuckerberg for $1 billion on Twitter.

  This is clearly an extreme example, but it shows how financially responsible Buffet amassed a tremendous fortune and achieved financial freedom, whereas financially irresponsible West spent money he didn’t have, wound up in massive debt, and begged a tech guru for a financial handout on social media. While you’re likely not in the same tax bracket as mega-successful billionaire entrepreneurs, you can learn a few lessons from them. Don’t spend more than you have. And keep your endgame in mind. It may be easier to save money when keeping your eyes on the prize.

  Invest.  Go for a long, slow simmer vs. a quick sear. Most investments are like an Italian grandma’s Sunday sauce – they need to simmer for a long time to be any good. Know that you’ll be in it for the long haul. This won’t be a quick sear type of situation, where your money will be tied up only for a short time. While there’s always some risk and market fluctuations involved in investments, putting some of your available funds toward stocks, bonds, mutual funds, Roth IRAs, 401(k)s and other investment opportunities can help grow your wealth and put you on the path to professional financial freedom. Talk to a financial expert about how to build an investment portfolio and choose the investments that will best fit your specific goals.

  Focus. Focus on factors you control. Over the past few years, we’ve seen headlines about banks collapsing, an impending recession, plummeting stocks, and other doomsday stories about how our financial futures are in crisis. Don’t panic. Everything that’s happening today is just part of the normal economic cycle. There will always be recessions, wars, and fluctuating interest rates. Take a deep breath. Unemployment is down. Banks are protected. There’s been recession chatter for years, and it hasn’t happened. Prices and the stock market will fluctuate over time, which is out of your control. Focus on what you can control on your path to professional financial freedom: creating a budget, saving money, and investing.

  Have an emergency plan.  Create an emergency plan, ensuring that you have enough savings to cover daily and unexpected business expenses. Without adequate funding in place for emergency expenses (the air conditioning breaks, the plumbing isn’t working, the roof leaks), as well as for the inevitable periods of higher spends (e.g. extra products and staffing around the holidays, etc.), you’ll get stuck in a cycle of borrowing to fund necessary operating expenses or to repair what has been damaged, rather than using capital to look ahead to the future.

  Find financial partners.  Who is your banker, attorney and loan officer? Does the banker have a vested interest in your community? What are the financials? Does the bank have good leadership? Do you have an attorney in case you need legal advice, or someone should make a claim against your business? What about a loan officer or provider? If you need assistance with funding to cover the business in a pinch, to handle an expansion or to keep you aware of current government subsidies that you might take advantage of.

  Having the right partners in place before you need them can mean the difference between a quick phone call and financial mayhem. Find a financial team that will be trustworthy, provide insight and are available when needed.

  You should have complete confidence in their knowledge, experience and capabilities. Talk to them about your business financial status and goals and create a financial plan to help you achieve financial freedom and long-term financial health.

  “For business owners, becoming financially free is a desirable – and achievable – goal,” Tulshan explained. “It takes dedication, determination, and consistency, but follow these tips and you will be well on your way to financial independence.”

About the Author

  Neeraj (Raj) Tulshan is the founder and managing partner of Loan Mantra, a one-stop FinTech platform that democratizes the loan process by providing corporate sized services and access to new entrepreneurs, small and medium sized businesses.

Software Options Available for Breweries and Distilleries

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By: Alyssa L. Ochs

As the craft beverage industry continues to grow, many tech companies are focusing on the needs of breweries and distilleries around the country. There are many benefits to incorporating software into a beverage production business, including reducing human errors, automating repetitive tasks, getting staff organized, harnessing the power of data and ensuring quality control. Software is available for accounting, inventory, packaging, purchasing and scheduling. Breweries and distilleries also use software for sales, quality control and legal compliance. Mobile app software is an option in this industry, as well as all-in-one management software that takes a comprehensive approach and handles various functions. Meanwhile, some producers embrace a more manual process and rely basic spreadsheets and paper recordkeeping.

  So, what are today’s breweries and distilleries using for software, and how are those products working for them? Representatives from two breweries and two distilleries weighed in on this topic and told Beverage Master Magazine about their experiences with software. 

BOSQUE BREWING CO. Albuquerque, New Mexico

  One brewery that Beverage Master connected with on the topic of software is Bosque Brewing Co., which has multiple New Mexico locations in Albuquerque, Bernalillo, Santa Fe and Las Cruces. With a history dating back to 2012, it is one of the largest brewing companies in the state and has grown from a small startup producing 350 barrels the first year to more than 10,000 barrels annually.

Bosque’s production manager Tim Woodward told Beverage Master Magazine that his brewery uses Ekos for inventory and production management. He also uses a few self-built spreadsheets for forecasting, sales and analysis. The brewery handles accounting with separate software not directly tied to Ekos functionality.

  “Bosque has been using Ekos since 2015,” Woodward said. “At the time, it was very affordable and relatively simple to use. The tools in Ekos addressed what we needed most: inventory management. We are able to track inventory, manage orders, invoice sold product, track costs, review pertinent data and oversee production steps with relative ease.”

  But while fully functional, Woodward said he often runs into little “Ekos glitches” that can be frustrating, such as the services being laggy.

  “Cleaner, more functional report systems with intuitive interfaces would be wonderful,” Woodward said. “I pull a lot of data from Ekos on a daily basis, and sometimes manipulating the report parameters to pull accurate data can be cumbersome. Ekos has done a wonderful job developing product planning calendar with drag and drop features, which is very lovely. They have other modules, such as order hub and keg asset tracking, which we do not use or have not found to work with our particular business model but are helpful pieces. Another offering which would be nice is perhaps a more robust server system to support software operation.”

ALVARIUM BEER CO. New Britain, Connecticut

  Nick Palermo, the head brewer of Alvarium Beer Co., told Beverage Master about the software programs his team uses in New Britain, Connecticut. Alvarium launched New Britain’s first microbrewery, founded on the principle of creating an inclusive and communal taproom while revitalizing a historical city.

  On the brewhouse side of things, Alvarium Beer Co. uses Beersmith to fine-tune recipes and DIY templates on Google Sheets for its calendar and brewing schedule, individual brew sheets and inventory of raw materials and packing materials. Alvarium uses Google Drive to store nearly everything related to production, from brew logs to SOP’s, manuals, inventory and supplier contact information.

  “Beersmith is one of the founding tools that many brewers have used in a homebrew or production setting, allowing quick integration and easy ways to edit recipes with something that is fairly familiar and quick to learn,” Palermo said. “We ended up choosing to use Google Sheets and Drive because of the ability for company-wide visibility and editing capabilities.”

  “We are an increasingly growing brewery in Connecticut, and such quick growth over the last couple of years has led to use needing to be able to combat the ebbs and flows of this industry,” he said. “Whether we need to make a quick change to the schedule, edit a recipe from home or have different departments be able to access information without complication, we found our method has been working really well as we expand.”

  “I’d say the biggest challenge we face with our method is the need to manually enter all of our data and make changes in the templates as we see fit,” Palermo said when asked about challenges with Alvarium’s current software. “Lack of auto-entered data does take up a little more time when it comes to keeping track with inventory and can lead to some mistakes.”

  In the future, Palermo would like to see more flexible software plans for different brewery sizes and needs, with costs to match. He said that having a method to integrate software programs more easily into companies with a system in place or smaller staffing structures would also be helpful.

  Cherokee Robbins, the director of sales for Alvarium, told Beverage Master Magazine about software this brewery uses for other purposes.

  Robbins said that Alvarium uses Google Business software, such as Gmail and Google Drive for recordkeeping, Google Sheets for reporting and inventory and Google Docs and Google Calendar for events, appointments and employee schedules. She says these pieces of software are user-friendly, easy to access and meet requirements for digital storage. Alvarium uses Untapped for Business to store information about brewed beers, to allow customers to view beers and check in and to use the menu board to list available products. Robbins said this software is user-friendly and great for keeping track of customer reviews, archiving past beers and helping other businesses find products.

  Alvarium uses Square POS in the taproom for on-premise and online transactions. The team likes this software because it is easy to add, customize and categorize items with an online store that is set up as an extension for customers to shop. However, she has noticed that sometimes items can “disappear” in Square POS, or if they are intentionally hidden, customers can still find them online and order something that is no longer available. After experimenting with various email marketing platforms, the brewery uses Mailchimp for analytics and to monitor communications with its customer base. However, sometimes these emails have ended up in spam folders even after the team has certified and legitimized its domains.

  After interviewing approximately nine different CRM/ERP-related software companies, InSitu hit the four major categories of importance for Alvarium’s sales and distribution team: QBE integration for accounting, inventory management, mileage tracking and logistics for sales routes and customer relations.

“This is a relatively newer software for us, as we started using this in February of this year,” Robbins said. “There is much to learn with all of its functions, but there are times when we may have delayed connectivity issues with its integration to our QBE. Our account representative has been great with staying in communication and finding resolutions for us when we need help, so that is a huge plus. Sometimes support teams with software can be hard to get in touch with when you need something fixed right away.”

  Other types of software the Alvarium team uses include Adobe Illustrator for signage and labels, Canva for business cards and marketing and QuickBooks Desktop Enterprise for accounting and payroll. It uses Prolific as its delivery-routing software to optimize routes for delivery drivers with self-distribution, Eezycloud’s remote desktop for multiple users to access QBE and Workable and Glassdoor for job postings and recruiting.

  When asked what she would like to see in future brewery software offerings, Robbins said, “It would be ideal if all of the platforms we use can be lumped into one software for a brewery our size, especially because we have a hybrid business model with the taproom, self-distribution and now working with a wholesaler. I know there are options like Encompass or Lily Pad available, but those can be pricey and are geared more towards larger distribution networks. I have also heard of a few software platforms that other breweries have worked on creating themselves in the past few years that fit close to what we ideally would need, but there seems to be an important element missing such as integration to QBE, delivery routing software logistics or the CRM portion for our sales force.”

MUDDY RIVER DISTILLERY Belmont, North Carolina

  Caroline Delaney, co-owner and CFO of Muddy River Distillery, told Beverage Master Magazine how her company approaches software in Belmont, North Carolina. Muddy River is the oldest rum distillery in the Carolinas and launched in 2011 with 500 square feet of space in an old textile mill before growing its production from 35 bottles per day to more than 1,200.

  Delaney said that her distillery uses QuickBooks for accounting and payroll and Square for POS and retail sales. She noted that QuickBooks is straightforward for day-to-day accounting, and Square has the lowest credit card processing rates without a monthly fee. She was familiar with QuickBooks from previous companies and says while it can be limiting, the next step up in accounting software is much more expensive, and most offerings require contracts.

  Yet running sales reports with multiple customers, states and distributors can be tricky and lengthy, she said, plus QuickBooks raised its payroll fees this year.

  “It seems like once you are signed up with Whiskey Systems or similar systems, they have all your data and it would be hard to switch back or to another software,” she said. “And the monthly fees are quite a bit higher than POS systems, so that will add up. Since we were pretty limited here in North Carolina, we weren’t able to sell unlimited bottles and cocktails until late 2019. We are under construction on a building where we will actually have a bar and event space, so I am looking into changing payroll and POS systems.”

  Delaney shared that Muddy River Distillery does not use distilling software for federal reports but that her husband, Robbie, developed his own system for that purpose and is still using it with the distillery’s production manager. 

  “I know he has spoken to some of the companies, but has not made the switch because of the monthly fees and not wanting to get into a system and get stuck with them,” she said.

STILL 630 St. Louis, Missouri

  Another spirits producer that shared details about its software usage with us is Still 630, which makes award-winning, handcrafted spirits in downtown St. Louis, Missouri. David Weglarz, the owner and distiller of Still 630, uses as many organic, local ingredients as possible in his spirits, with an old-world double distillation method that captures all the flavors while consistently embracing the adventure of experimentation. 

  Weglarz told Beverage Master Magazine that he uses Google software for his distillery’s spreadsheets and recordkeeping. He chose this option and still likes it because it is free and not localized to just one computer that could be damaged.

  “It allows us to edit simultaneously from different locations, and since it’s not based on one physical computer, it’s more safely guarded against a catastrophic loss,” he said.

  However, Weglarz acknowledged that Google Docs and spreadsheets are not specifically built for distilleries, so challenges have inevitably occurred while using this strategy.

  “It’s just an excel-type format so I had to build my own spreadsheets to make it work correctly,” he said. “But I did that, and now I have my own personal distillery software. It’s certainly not as fancy and sleek as the pre-packaged software solutions, but it works and the price (free) is right!”

  In the future, Weglarz would like to see more cost-effective software options offered in the distillery industry. He says that his distillery is priced out at the moment, something many craft beverage producers can likely relate to.

Conclusions and Opportunities

  Based on our conversations with craft beverage producers across the U.S., a few things stand out about what is working for software and where improvements can be made. In general, craft beverage producers are pleased with user-friendly software that offers multiple applications, features analytics to optimize processes and gives multiple users access to shared data. Affordability is paramount for craft beverage producers, and if software seems too costly, they often settle for free solutions that require more manual entry and monitoring despite the extra labor and risks.

  There is a need and demand for software for small breweries and distilleries with limited budgets and modest distribution networks. Many current solutions cater to large operations and are financially out of reach for smaller and emerging businesses. Integration is important to brewers and distillers, yet many of these businesses feel that they understand their needs better than what any software provider could provide and prefer to take a DIY approach, creating their own internal systems to get the job done internally. Therefore, there are significant opportunities for software companies to focus on the basics and adjust their offerings with tiered options to connect with breweries and distilleries in mutually beneficial ways.

What Beverage Producers Should Know About Hoses and Tubes 

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By: Alyssa L. Ochs

Hoses and tubes are used for various purposes in a craft beverage production setting, including transferring liquids, washing containers and connecting essential pieces of equipment. Over time, this equipment can begin to show signs of wear and tear, or it can cease to be adequate for growing operations during times of expansion.

  Industry experts from companies specializing in these products weigh in on what breweries and distilleries should know about hoses, tubes and related accessories, plus how to choose the right options for your business.

Hoses and Tubes for Breweries

  Breweries benefit from using specific hoses to transfer and mix liquids at various levels and avoid contamination risks. All-in-one brewery hoses can be used to brew multiple beverages and eliminate manual labor tasks from mixing and transferring. Crimped hose fittings, clamps, gaskets, mounting bridges and hose barbs are hose accessories that help clean and maintain brewery vats and barrels.

  The most common materials used in brewery hoses are chlorobutyl, FDA UHMW, PVC, nitrile, silicone, EPDM and Teflon. Chlorobutyl hoses are common in brewery settings because they meet sanitary compliance standards and are ideal for non-oily applications and clean-in-place tasks. Yet it is crucial to ensure that the hoses you use can withstand specific temperature ranges and pressures. A food-grade, temperature-insulated, pressure-rated, 1.5-inch insulated brewer’s hose will accomplish many brewery tasks. But you might also look into highly rated hoses for resistance if they are placed in a high-traffic area where the hose could become kinked, twisted, or crushed. Tubing connects large components in a brewery to send waste products outside the production area.

Hoses and Tubes for Distilleries

  Craft spirit distilleries also use hoses to transfer products safely, hygienically and in a way that ensures excellent taste. Distillery hoses must meet industry sanitary requirements and FDA and USDA certifications. It is beneficial to use hoses specially designed for suctioning and delivering alcohol up to 96 percent.

  Clear tube hoses help ensure quality and cleanliness, and specific distillery hoses are designed to be odorless, so as not to alter the spirits’ taste. A higher working temperature allows for steam sterilization after use. Using hoses with a chlorobutyl or UHMWPE tube and EPDM cover in a distillery setting is common. Distilleries may want to look for kink-proof and compression-resistant hose and tube products to maintain flexibility under cold temperatures.

Alliance Hose & Rubber Co. Offerings

  One company that specializes in this industry is Alliance Hose & Rubber Co., an Elmhurst, Illinois-based company that has been providing construction and industrial supply products since 1932. It serves a variety of industries, including beverage, chemical, transportation and construction, with products that include industrial hoses, flexible tubing, couplings and fittings. Rob Williams, the sales manager for Alliance Hose, told Beverage Master about how craft breweries and distilleries use his company’s products.

  “We currently serve breweries in multiple ways,” Williams said. “One way is custom-cut and coupled hose systems, including a product hose, chemical hose, washdown and tubing to mate with the variety of connection options available, standard and special fittings, pumps and hose reels. Alliance Hose also serves breweries, distilleries and wineries with education on product knowledge and safety in person, at conferences and through webinars and podcasts.”

  He said nearly all Alliance Hose’s beverage products are also used in distilleries.

  “We do focus on the right hose for the distilling process, from front-end mash to the final high-proof product to be transferred,” Williams said. “Distilleries vary on what they like to use best. We just like to share insights and any additional knowledge that will help make their final product the best it can be.”

Kuriyama Offerings

  Another industry leader in industrial hoses, couplings and accessories is Kuriyama of America, Inc., which opened for business in 1968 and is located in Schaumburg, Illinois. The Kuriyama of America group of companies has eight subsidiaries and six distribution centers. It works through numerous distributors to provide thermoplastic, rubber and metal hose products and accessories, including couplings and fittings, for commercial and industrial applications.

  Tim O’Neill, marketing manager for Kuriyama, told Beverage Master Magazine that his company is best known for its high-purity, food-grade Kuri Tec® brand, clear vinyl hose and tubing products within the brewing industry. Most breweries use clear vinyl tubing, and Kuri Tec is a popular choice because it effectively maintains the purity of the materials that  the hose and tubing are made from. He explained that to ensure a high standard of quality and purity, Kuri Tec hose and tubing meet a wide range of safety standards, such as FDA, USDA, 3-A, NSF and USPS Class VI. To ensure compliance with these standards, Kuri Tec makes its own materials to manufacture its hoses and tubing, allowing for complete quality control.

  “An important consideration brewers should keep in mind when purchasing hoses and tubing is to understanding the difference between products that are simply considered ‘food grade’ and ones that are considered “high purity.” Often, brewers will hear the term ‘food grade’ and assume the hose will meet all their needs. However, the term only implies the product meets the basic standards of the FDA CFR 21 for food contact safety. It does not ensure the hose will not impart taste or smell on the ingredients or beer that pass through.”

  O’Neill said that the 3-A Sanitary Hygienic Standard, which originally started as a quality standard for the dairy industry, is quickly gaining acceptance in the brewery industry as the standard of choice to ensure the safety and purity of transferred materials. 

  “The 3-A standard defines additional criteria, such as ensuring low-extraction materials, as well as ensuring cleanability by reducing areas where materials can become stuck, potentially resulting in bacterial growth. Hoses, fittings and assemblies meeting the various 3-A Sanitary Standards have become a requirement at many craft and commercial breweries.”

  More recently, Kuriyama introduced a rubber “vat to vat” transfer hose under the Aflagomma® brand, called “The Brewt™.” In addition to meeting the 3-A standard for rubber purity, the hose provides a more flexible alternative to the heavy rubber hoses commonly used at larger breweries.

  “We found a lot of the smaller breweries were using the same heavy rubber hoses initially designed for larger commercial breweries,” said O’Neill. “The Brewt was designed to exhibit a similar ability to withstand the dragging and high-temperature cleaning to which these hoses are exposed, but to be light and flexible enough to work well in smaller craft breweries that may have space limitations.”

Common Hose Issues Among

Breweries and Distilleries

  Williams from Alliance Hose told Beverage Master Magazine that the most common problems that breweries and distilleries encounter with their hoses all relate to safety. These problems include pressure and temperature issues, trip hazards and finding the proper hose, tube and fitting for a particular application. These problems exist with product, gas and chemical transfers.

  “We address these needs by asking the right questions and recommending the safest option for that particular application,” Williams said. “We are not a click-of-the-mouse and a shopping cart. We ask questions and connect on a personal level with the beverage community. Concern for our customers safety and quality of their product is a high priority.”

Choosing the Right

Hoses and Accessories

  There are certain questions that brewery or distillery owners should ask themselves when buying a new hose. Williams from Alliance Hose uses the acronym STAMPED to get essential information from customers and provide the correct hoses and fittings for the application.

S    (size) What is the hose I.D./O.D. and length needed?

T    (temperature) What is the max fluid temperature inside the tube? What is the external atmosphere temperature?

A    (application) Where and how is the hose or tubing being used? What are the surrounding conditions?

M   (media) What is going through the hose or tube?

P    (pressure) Pressure product is being conveyed?

E    (ends) What fittings are required to make the connection?

D    (delivery) When do you want the hose or tube?

  “If we don’t have all the information we need, we will press in to gather those details as they are important to the hose system and overall brewing process,” Williams said.

  While discussing the topic of craft beverage hoses and tubes with industry experts, we found that there are few, if any, new technologies or innovations for brewers and distillers to be aware of. These are well-established and reliable products that get the job done, but there are differences in product quality and customer service to keep in mind.

  “I recommend talking to a hose professional instead of just relying on e-commerce to provide you what you think you may need,” said Williams from Alliance Hose. “I’m always available to talk product knowledge and especially safety.”

  O’Neill from Kuriyama said that the most important thing a brewery or distillery can do is ensure they have a good local hose supplier they trust to provide them with the right product for their needs.

  “The difference between using the right hose and one not best suited for a particular application can result in premature hose failures, causing lost production time,” O’Neill said. “Having a hose supplier that will understand your particular needs, rather than simply providing whatever hose they happen to have on the shelf, will improve overall operations.”

How to Scorecard Brewery Taproom Performance

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By: Kary Shumway and Andrew Coplon from TaproomSuccess.com

In sports you need a scoreboard to understand if your team is winning or losing. The same holds true for measuring the financial and operational results of your taproom. You need a scorecard to keep track.

  In this article we’ll walk through the steps to create scorecards for your taproom so that you can measure and improve outcomes.  It’s not difficult, and it can transform your taproom financial results.

Let’s start with some basics: What is the point of the scorecard?

  The purpose of a scorecard is to show the goal or goals you most want to accomplish. It can be as flexible as you like. It can present financial or non-financial numbers. It is designed to capture and quantify your most important numbers.

The scorecard should:

1.  Keep the goals front and center every day

2.  Be only one page (or one number) so that it’s easy to see how you’re doing at a glance

3.  Use numbers (key metrics) to communicate

     the goal

First: Measure the Most Important Thing(s)

  Deep inside, we all know what the most important thing really is. Whether it is in our taproom business or in our life, we know what it is. The problem is that we forget.

  The most important thing is remembering the most important thing. The scorecard helps you identify what is most important and remember it every day.

  It is a simple tactic, but very effective if you follow it. The scorecard provides focus on how you’re doing towards what’s most important.

How to Figure Out the Most Important Thing

  If you are struggling to figure out what is most important, try a few focusing questions:

●   What keeps you up at night?

●   What is the biggest opportunity to take advantage of?

●   What is the biggest problem you need to fix?

  Here’s Kary’s story…cash keeps him up at night.  More specifically, running out of cash!

  So, Kary designed a one-page scorecard to monitor our business cash position every day. It shows the bank balances, borrowing balances, upcoming spending and expected receipts. It shows borrowing ability and future cash needed to fund growth. 

  The cash scorecard helps Kary sleep better at night because he’s focusing on the most important thing.

  Figure out what your One Thing is, measure it, and put it on a scorecard. 

The Process to Communicate & Educate

  The scorecard alone won’t achieve the goal. You need to take action to get things done. Often, you need action by your managers and employees – your team. 

  The process below is an effective way to communicate anything you like, and it works well with the taproom scorecard:

1.   Know the Score. To know the score, you have to SHOW the score.  Don’t play hide and seek with your scorecard or bury it in a desk drawer. Share it with those that can help you win.

2.   Educate your Team. Teach your managers and employees how the scorecard works and how they can make a difference. People want to contribute, teach them how.

3.   Set a Goal to Improve. Use your past performance + set a goal to do better.

4.   Monitor the score, track Progress. Provide regular updates or people lose interest.

5.   Celebrate the win. Free beer works well when you hit the goal!

  Taken together, the 5 steps presented above are an effective method to make sure you get the most out of your taproom scorecard and achieve your goals.

Use Process and Outcome Metrics

  We are a results-oriented society. We like to get stuff done.

  However, it is useful to focus on the Process of getting stuff done in addition to the results or the Outcome. The idea here is to use “Process and Outcome Metrics” on the scorecard.

  Process means the action taken, or steps that need to be followed. We can’t always control the outcome, but we can control actions, effort, following a prescribed routine.

  For example: Teach your taproom staff to ask for the sale and offer an item to upsell.

  Teach them to ask for the customer’s email so you can tell them about new beers or special releases. Send out marketing emails and make social media posts on a regular basis. These are things you do to drive sales, increase profits, or achieve the most important thing.

  Outcome means the actual results. The Outcome is a by-product of actions. If you’re not getting the results you want, experiment with the actions.

Consider measuring both Process and Outcome goals on your scorecard. We all measure the result, but sometimes we need to measure (and reward) the process to get there. 

Scorecard Templates

  There are different scorecards for different needs.  For example, if you want to increase taproom sales, the scorecard will show key metrics to achieve that goal.  If you want to improve the customer experience and satisfaction, you can create metrics to support that goal as well.

Below, are three types of taproom scorecards:

1.  Sales Focused Scorecard

2.  Engagement Scorecard

3.  Motivation Scorecard

#1 The Sales Focused Scorecard:  As the name implies, the Sales Focused Scorecard is laser focused on key metrics to support sales.

Typical Key Metrics to support sales:

●   Total Sales $ / by day / week / month

●   Sales by category / product / service

●   Sales per BBL

●   Customers per day / week / month

●   Average ring per customer

The Chart below shows an example of the Sales Focused Scoreboard:

  The Actual Month LY (last year) column presents the results from the same month last year. The Trend Month TY (this year) column presents where we are currently, and how sales are trending. The Goal Month TY shows what we want to achieve this month.

  In summary, the scorecard shows the type of metric to measure. It shows where we’ve been (past results), where are now (current results), and where we want to be (the goal).

#2 The Engagement Score:  This scorecard combines similar elements of the Sales Scorecard, but takes a greater focus on how well your staff is building relationships with your guests. Your ability to understand the below engagement metrics can result in improvements on your sales metrics.

Typical Key Metrics to monitor engagement:

●   Tip percentage

●   Flight sales

●   Tab size

●   To go beer sales

  Your team members’ average tip amount correlates directly with their level of engagement. We see the staff member that offers a high level of engagement receive an average tip of 27.1% vs a staff member that offers a low level of engagement only seeing an average tip of 24%.

  While flight sales may not be an obvious sign of engagement, flights are an opportunity for a staff member to educate a guest further about your beers, and brewery. When staff suggest a flight, guests spend an average of 20% more, and also a tip a point higher.

  Additionally, because a staff member providing a higher level of engagement is seeking to build a deeper relationship with their guests, they are by default more likely to include more upsell opportunities in their interactions (i.e. suggested additional beverages, to go beers). This results in not only higher tabs, but also more meaningful connections. These guests are more likely to recommend your brewery to others and return sooner.

#3 The Motivation Scorecard:  This is a staff-specific scorecard. As a manager or brewery owner, the more successful you are at understanding your team’s needs, the better you will be able to motivate them.

When you are able to create successful

strategies to motivate your staff, you will see:

●    Greater passion from your staff

●    Greater teamwork

●    Higher tabs

●    Higher retention

●    Your job becomes easier

●    Greater taproom success

  But what metrics can you monitor to gauge how well you are motivating your team?

Typical Key Metrics to support motivation:

●   Frequency of rewards

●   Frequency of recognition

●   Frequency of team meetings and trainings

●   Growth opportunities

●   Length of employment

  While offering your team fair base pay is where to begin, it is also important to regularly reward your staff for a job well done. Motivation isn’t a one-time to go beer sales content. Motivation is finding a plethora of metrics, many from the lists above, that you can use to track and reward your team’s performance. The number and frequency of reward opportunities will correspond with how well your team is motivated.

  Through conversations with your staff, you will learn that some people are motivated by rewards, while others may be motivated by recognition. Your repertoire should include both physical rewards and recognizing team members who hit specific goals.

  While it is important to regularly reward and recognize your team for desired behaviors, hosting regular meetings and trainings is vital to provide them with the skills for success. These are opportunities for you as a manager or owner to connect with your team. The more your team feels connected, the more motivated they will be to work together for organizational goals.

  Increases in your team’s average duration of employment at your brewery correlates directly to the quality of their experience, and thus how well you are motivating them. Length of employment can also represent you offering staff the opportunity to grow with your company. This could come in the form of offering staff educational/certification opportunities, or providing them the ability to climb in rank at your brewery.

Wrap Up and Action Items

  The taproom scorecard is a powerful tool to help you increase the sales and profitability of your taproom. It measures the most important thing, the most important goal(s), and keeps it in front of your team every day.

  To get started with your taproom scorecard, determine your most important thing. Maybe it’s growing sales, profitability, or customer satisfaction. Whatever is most important, get it on the scorecard, and set a goal to achieve it.

  Engage your team in the game of reaching the goal. To know the score (and win the game) you need to SHOW the score. Don’t play hide and seek with your sweet scorecard. Share it with your team so that they can help reach the taproom goals.

  You’ve got the intel, and you’ve got the taproom, get out there and build an awesome scorecard today.

Breweries Making Hard Cider: Beware a Trap in the Regulations

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By: Brian D. Kaider, Esq.

Breweries are seeing increased demand for alternative products from customers who prefer a beverage other than beer.  Hard ciders are a popular choice both for flavor and because they are typically gluten-free.  However, it is crucial for breweries to familiarize themselves with the specific legal requirements associated with cider production.  In particular, there are three critical characteristics of a cider product that affect how it is regulated: alcohol level, ingredients, and carbonation level.  Moreover, there is an absurd structure to hard cider excise tax rates that results in one popular category of ciders having a dramatically higher tax rate than others.  For those unaware of this distinction, enormous outstanding tax liabilities and penalties could accrue.

Licensing Requirements

  For simplicity’s sake, this article will use the term cider to include both cider made from apples and wine made from pears, i.e., “perry.”  In practice, there are distinctions between these products, particularly when it comes to labeling.

  Some state licensing bodies regulate hard cider as a beer and do not require breweries to obtain any additional licenses or permits to manufacture hard ciders.  The federal Alcohol and Tobacco Tax and Trade Bureau (TTB), however, regulates hard cider as a wine.  Thus, before a brewery may begin manufacturing hard ciders, it must obtain a winery permit.

Alcohol Level

  When it comes to the alcohol level in finished cider products, there are three important numbers to keep in mind: 0.5%, 7.0%, and 8.5% Alc./Vol. (“ABV”).  Any cider product with an ABV in excess of 0.5% falls under the Internal Revenue Code implementing regulations (27 C.F.R. part 24), must be made at a qualified bonded wine premises, and, under the Alcoholic Beverage Labeling Act (“ABLA”), must include the Government Health Warning Statement. 

  Because the Federal Alcohol Administration Act (“FAA Act”) defines wine as having from 7% to 24% alcohol by volume, if a product is between 0.5% and 7.0% ABV, a Certificate of Exemption is needed, rather than a Certificate of Label Approval.  Further, the product is not subject to other FAA Act requirements, such as, advertising, trade practices, labeling proceedings, standards of fill, etc.  Instead, these products must comply with the applicable FDA food labeling and packing requirements, which include ingredient, nutrition, and allergen labeling requirements; though some small businesses are exempt from the nutrition facts requirements.

  Cider products in excess of 7% ABV, however, must comply with all FAA Act requirements, including COLAs and mandatory labeling requirements. (Note: if a product in excess of 7% ABV is not sold in interstate commerce, it can be covered by a Certificate of Exemption rather than a COLA.) 

As discussed more fully below, only ciders with an ABV below 8.5% are eligible for the hard cider tax rate.  Ciders at or above 8.5% ABV are taxed at a wine rate determined by alcohol content and carbonation level.

Ingredients

  It is generally understood that cider is made from the fermented juice of apples and perry from the fermented juice of pears.  But, even the simple addition of sugar above certain levels affects how a product is categorized, labeled, and taxed.  If other fruits are added, there are different classifications depending on whether the fruit is added before fermentation, after fermentation as a flavoring, or the wine of two fruits (e.g., apples and blueberries) are blended after fermentation.

  Taking the simplest case, a product can be labeled simply “cider,” “hard cider,” or “apple cider” if it is produced by the normal alcoholic fermentation of the juice of sound, ripe apples and is derived wholly (except for sugar, water, or added alcohol) from apples.  Even in this case, excess sugar or water can require special labeling (i.e., “specially sweetened cider”), formula approval, and application of a different excise tax rate.

  Any cider product that is made with fruits other than apple or pear or to which spices, flavoring, or coloring materials have been added will require a more descriptive designation, such as cider with natural flavors.  If two kinds of fruit juice (apple and blueberry) are fermented together, the statement of composition must be “apple-blueberry wine” or “blueberry cider.”  This product would not require a formula, because it would still be considered a natural wine.  A cider to which fruit juices, herbs, spices, natural aromatics, natural essences, or other natural flavorings are added after fer-

mentation would be considered a Special Natural Wine, would require a formula approval, and would require a statement of composition such as, “cider with natural blueberry flavors.”  If fermented cider is mixed with another fermented fruit wine, the product would be considered an “other than standard wine,” would require a formula approval, and would be designated as “apple wine – blueberry wine,” “cider – blueberry wine,” or a similar designation.

Carbonation Level

  A cider with a carbon dioxide level of up to 0.392 grams per 100mL is considered a still wine and may be labeled simply as a cider (assuming it meets the other ingredient requirements mentioned above).  If the carbon dioxide level is above 0.392 grams per 100mL, the cider must be designated as “sparkling” if the CO2 results solely from secondary fermentation within a closed container or “carbonated” if the CO2 is artificially injected into the product.  In order to be eligible for the “hard cider” tax rate, the CO2 level must be below 0.64 grams per 100mL.  For reference, a CO2 level of 0.392g/100mL or 0.64g/100mL is roughly equivalent to 1.98 volumes of CO2 and 3.24 volumes of CO2, respectively.

Excise Tax Rates

  Brewery owners are accustomed to a fairly simple federal excise tax assessment.  The first 60,000 barrels per year are assessed at $3.50 per barrel.  The tax rates for cider are not that simple.  In fact, there is an enormous trap in the tax structure that could cause serious problems for breweries that venture into cider production unaware.

  As explained above, the TTB regulates cider as a wine. It is important to note that the wine tax rates are assessed per gallon, not per barrel.  Although considered a wine, the regulations provide a special tax rate for “hard ciders,” of $0.226/gallon.  Like beer, however, there is a tax credit for small producers, reducing the hard cider rate to $0.164/gallon for the first 30,000 gallons.  But, the scope of products that qualify for this tax rate is very narrow.  It includes only products made from apples and/or pears that contain no other fruit product or fruit flavoring, have an ABV of greater than 0.5% and less than 8.5%, and a carbonation level below 0.64g/100mL (about 3.24 volumes of CO2).  Ingredients that impart flavors other than fruit flavors, such as spices, honey, hops, or pumpkins do not make a wine ineligible for the hard cider rate, according to Industry Circular 17-2 (even though pumpkins are fruit).

  If a hard cider product has any fruit other than apples and pears (and pumpkins) or has an ABV of 8.5% or higher, it does not qualify for the “hard cider” rate, and instead falls under the wine tax structure.  If the product has a carbonation level below 0.392g/100mL, it would be considered a still wine.  The tax rate for a still wine, under 16% ABV is $0.07/gallon for the first 30,000 gallons.  If the product has a carbonation level above 0.392g/100mL the first 30,000 gallons would be taxed as a “sparkling wine” at a rate of $2.40/gallon if the carbonation resulted from secondary fermentation in a sealed container, or as an “artificially carbonated wine” at a rate of $2.30/gallon if the carbon dioxide was injected into the product. 

  What may not be immediately apparent is the absurdity of this tax structure.  The following table should put it into perspective.  It shows five different products, their base tax rate, the tax rate per barrel, and the actual federal excise tax applied to a 6-pack of 12oz bottles.

  Thus, if making a cider product that contains fruit other than apples or pears and that is carbonated above 0.392g/100mL (about 1.98 volumes of CO2), a manufacturer will face a federal excise tax more than 30 times greater than if the carbonation level was below 0.392g/100mL.  Failure to appreciate this distinction and to pay the appropriate tax rate could result in an assessment of stiff penalties and interest and could even result in termination of the manufacturer’s permit.

Conclusion

  Entering the realm of hard cider production requires breweries to navigate a set of regulatory issues that are likely to be unfamiliar.  Beer and cider are treated very differently by the TTB and it is critical to understand the categories that cider products fall into with regard to labelling, formula approvals, and particularly excise tax assessments.  For those considering an expansion into this area, it would be wise to consult with an attorney knowledgeable in these areas to ensure full compliance. 

  Brian Kaider is the 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 licensing and regulatory requirements, drafting and negotiating contracts, prosecuting trademark and patent applications, and complex commercial litigation.

Is Your Brand Something to Talk About?

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By: Hanifa Sekandi

In the overly social world that we now live in, it can be hard to stand out. How does a brand become noteworthy? What makes a brand worth talking about?

  While you diligently craft your new alcoholic beverage, with hopes of becoming a formidable brand, it is important to remember as good as it may taste on the palate, it must also be as memorable to the imbiber. What do people see when they think of your brand? What feelings are evoked beyond an inebriated mind? Will people run to their local liquor store to purchase it? Now that production has finished, you know you have made a quality product. It is time to build a brand that is indeed something to talk about. 

  Fortunately, you have access to millions of people worldwide in the palm of your hand. One social media post can turn your brand into an overnight success. The truth is it does not happen overnight. There are strategies implemented before top-tier brands disseminate their marketing campaign to the masses. But, with just one post or compelling article written by a reviewer, a brand can quickly become a household name. Should you consider influencer marketing? It is an effective tool, but it is not necessarily the only way to spread the word. Instead, consumer reviews and testimonials are part of a long-term marketing plan for sustainable growth. View your customer as a micro-influencer who will host parties at their home, for example, and share your beverage with guests. They will also share photos and videos with their family and friends on social media. It is up to you to guide them, so let’s get started.

Build a Sustainable Strategy

  What most brands learned once social media became a tool to advertise is that it can be quite exhausting. Let us be honest; it is a free advertising tool that can yield impressive results when used wisely and innovatively. But guess what…social burnout is a thing! Most brands hit the ground running only to find out that they have run out of stamina and, more importantly, marketing content. It is important to build the ship before you set sail. Further, you must be building marketing materials that can be used for the entire year! If you are fortunate to hire an editorial or marketing manager, they will help you plan and execute marketing strategies that are viable daily, monthly and yearly. The biggest mistake that new and old brands make in modern marketing is thinking they can build as they go or create limited marketing resources. Remember, view your brand as a ship. Would you set sail with holes in your boat or without life jackets? Would you trust a captain who just goes where the wind blows or someone with skills, expertise and instincts? Of course, you will have to take risks, but your ship should still have an anchor. 

  So, how do you build a sustainable brand? Your first task is to discern the “why”? What makes your alcoholic beverage unique? Is it premium gin? Does your brand use sustainable production methods? Is it a family-owned business? You need to build the story to draw a connection to your brand. White Claw is a notable example of a low-cal RTD beverage that jumped in front of the line from what seems like out of nowhere. Their brand is built around a health-conscious consumer who enjoys drinking without worrying about the scale. They found their “why” and then focused on reaching their targeted consumers. Some consumers gravitate toward brands that have a compelling story. Some brands have attached their beverages to an impactful cause, pledging that a portion of their profits will go towards it. Back Country Brewing, a brewing company located in Squamish, BC, has effectively incorporated giving back to the community as part of its brand ethos. They have also effectively created a brand built off creatively thought-out branding. The continuous colorful and playful references to the outdoors are displayed on beer cans and paired with names that complement the brand’s rustic outdoors theme. Damn Alligator Just Popped and Don’t Cross the Streams are great beverage names that stand out but are in alignment with what their consumer would expect.

  Once you have figured out the “why” and what makes your brand unique, you can start to build marketing materials around this. It will also help you design a logo and select colors that you will utilize throughout your marketing initiatives. This stage is just as important as the product development stage. The same amount of care you put into ingredients, quality and taste must also be applied now. So, you are ready to get started. What is next? Consistency!

Stay Consistent

  Stick to your plan and only make minor adjustments. The foundation of your marketing strategy should be solid. It is okay to make minor variations, but your goal should be to build and evaluate your initial plan. It is easier said than done because this is a competitive industry. Do not forget your “why.” Focus on who you believe would enjoy your beverage and stay laser focused. Devise a marketing plan that includes a calendar that you religiously follow. Always be two steps ahead. What does this mean? Some months of the year have holidays or special days like National Pancake Day. When creating marketing materials with images, blogs and videos, mention and highlight these designated days.

  Unfortunately, there are no days off. There is nothing worse than looking up a brand online to find that they have not posted on their blog for a year or last posted on their social media a week ago. Curate behind-the-scenes features that allow your consumer to see how the beverage is made. You can also give them a glimpse into the trials and tribulations of your business experiences. Do you label your bottles by hand? Share this! It is easy to get discouraged initially. The idea that no one is looking will cross your mind several times. What you do not see during this time is the opportunity to push boundaries and try things that are out of the box before your consumer has an attachment to your product, and then there is little room for change. If you decide to build a blog to support your alcoholic beverage, view it as a mini-magazine and schedule a feature at the same time every week. Be sure to include it in your newsletter along with new product launches or sales. 

  As you build a consumer base, predictability is the only way to stay afloat. As stated above, White Claw appeals to the wellness consumer, and Back Country Brewing the outdoors consumer. There is no need to reinvent the wheel. Expand and elevate your initial marketing strategy. Add new elements or products that complement it. This will help you stay consistent, give you more time to engage with your consumers and build a brand that is not a one-hit-wonder.

Imagine Your Brand in the Future

  Where do you see your brand five years from now? Ten years from now? Do not get caught up in current trends. This is why a sustainable strategy and consistency are the gold standard. You may have wondered why that blush wine in the odd shape bottle still does well with little marketing. This is what long-term, effective brand development looks like. This vineyard’s goal was to design a bottle that was aesthetically pleasing to the eye so it would be a great decor piece, while at the same time elegantly displaying the wine. This is a brand that understands that it appeals to a consumer who likes the finer things in life. Consumers will stay loyal to a product because it is consistent and because they feel connected to the brand’s mission. 

  Will the consumer tire of your product in the summer? Or are you a lifetime brand, like many exemplary legacy brands built around sports or music? If you would like to be the go-to campfire brewer, keep an eye on this consumer’s changing habits and desires to grow with them. 

TAKEAWAYS

Strategy: A solid blueprint will steer you toward success.

Consistency: Keep going even when no one is looking.

The Future: Can you stand the test of time?