Category: Brewery

In the Can & Out the Door: Canning Systems Adapt to Current Market Needs

Cyndi
canning system in a facility

By: Gerald Dlubala

“The situation that we’re all in just adds to the advantage of selling beverages and cocktails in cans,” said Dennis Grumm, CEO of Oktober Design, manufacturer of can and crowler seamers for the craft beverage industry. “With the COVID-19 situation, the lifeblood of many bars and restaurants is the sale of their beer, wine or mixed drinks to-go, for pick up or for their patrons to buy and enjoy at a nearby outside area. Having one machine that can deliver all of these in a quality canned form at any given time is a huge advantage.” 

Can Seamers

  Oktober Design’s can seamers, such as the Model-7 series, are designed for easy plug-and-play installation and operation. Right out of the box, the can seamers are calibrated and ready to go using standard 110v power. There is minimal maintenance, involving only user related adjustments. Additional customer support is available if needed, but Grumm said that’s usually not the case. 

  “It’s as easy as putting the can in, clamping it down, closing the door and rotating the handles,” he said. “Our seamers handle any U.S. can and some non-U.S. sizes. You set it up depending on the size of the can end you’re using, with different tooling sets available for different ends. Switching end sizes takes about 15 minutes using standard tools. Maintenance generally involves keeping the unit clean, so wiping it down and performing a weekly cleaning on a quick release shaft is recommended. Honestly, most customers are doing these things daily or at the end of each shift as their normal cleaning process anyway.

  “Can seamers are common-sense purchases right now. Whether canning for individual purchases or small batch runs, with the quick changeover ability, you can see what is working with your customers and what isn’t. Then you know where to spend your time and effort.”

  Grumm told Beverage Master Magazine that Oktober Design’s Series-7 units are incredibly reliable, easy to care for and available at an entry-level price point friendly to the brewer’s budget. The units can handle 100,000 cans or, in some cases, upwards of 200,000 cans without any issues. Oktober Design also sells can ends in smaller lots to match the needs of craft brewers, and soon it will offer brewers the ability to order fully labeled and designed cans right from its website.

  “We want brewers to remember that when looking for a machine like this, that even though we call it a plug-and-play can seamer, it is still a precisely engineered and fine-tuned machine,” Grumm said. “You’ve got to look for quality, and all of our moving parts are stainless steel or aluminum, with a minimum of normal wear parts involved. We’ve sold thousands with great success because we started as engineers and designed a quality machine with that mindset.”

Filling Systems

  XpressFill Systems LLC offers fillers designed and manufactured for the modern-day artisanal beverage producers. Weighing in at under 35 pounds, these compact, easy-to-use machines are built for tabletop portability and easy use by a single employee.

  “XpressFill offers two types of fillers for carbonated beverages,” said Rod Silver, Marketing Coordinator for XpressFill Systems. “A counter-pressure, air-operated system capable of filling up to 200 12-ounce cans per hour, and an open fill, 110v or 220v, two or four spout system capable of filling between 300 to 600 cans per hour. They’re pretty simple to calibrate. A scale is used to verify the fill levels in the cans. Our counter pressure fillers come with a clear can so pressure and fill rate is optimized for each beer and the needed corresponding carbonation level. Once calibrated, you’re ready to fill.

  “Our open can fillers feature a moveable shelf that is easily adjusted for various can sizes, with a maximum diameter of four inches. The counter pressure filler features stoppers that fit snuggly into the can opening to seal and pressurize. The standard setup is for the 202-lid size, but custom stoppers and other components may be required for different sizes of lids. Our fillers provide a cost-effective means to distribute a product in cans or bottles without the prohibitive expense of an automated production line. But, even larger breweries use our fillers for canning small batch or specialized runs. It saves them the expense of starting up their automated lines or calling in mobile canners for a less than normal size run.”

  Codi Manufacturing has made a name for themselves with their professional counter-pressure filling and canning systems, offering whole systems from depalletizer units through filled container conveyance. They design systems for individual spaces and provide specific upgrades for components that have reached their maximum limits. They offer that same knowledge and technical expertise in their smaller machines.

  “There has been a massive uptick in the demand for counter-pressure filling because of the need and desire to package items other than just beer,” said Andrew Ferguson, Sales Manager for Codi Manufacturing. “We’re talking the ready-to-drink canning market, and the rapid spike of popularity in seltzers, which have a more rapid foam cap dissolve rate than beer. Counter-pressure fillers can reinvigorate that foam cap right before seaming, which has shown to increase seltzer shelf life from the standard three months to up to a year.”

  Ferguson said that to meet the demands of today’s world, brewers have different priorities in canning systems. Those include smaller, more economical builds that offer a path for future growth and expansion when allowed. It also usually means more modest in-feed options with a plan for automation down the road.

  “But just as critical right now is the option and availability for complete sanitation and sterilization of the filling and canning lines,” said Ferguson. “We always recommend using stainless steel systems and components that can handle this type of cleaning. Aluminum components prohibit the use of any sanitization or sterilization process involving caustic methods.”

  Ferguson said that craft beverage producers should always, but especially under current conditions, make sure there is a reliable aluminum can supplier with adequate inventory for the system they’re using, especially if it requires a specific size. Will you always have the cans and ends that you need? What happens if the supply dwindles? Yes, you can switch seamers and get new tooling, but that will cost you. Brewers must have a supplier that fills their needs both now and for future upgrades.

  “Hopefully, restrictions eventually ease up, and you find a need for faster production,” he said. “Sometimes this is as simple as a faster filler, but sometimes that means a better in-feed system to keep up with that filler. Always research future possibilities.”

  Codi Manufacturing researches future possibilities as well, and Ferguson told Beverage Master Magazine that soon they will roll out a single canning machine that will run every can on the market worldwide. 

  “As far as we know, we are the only ones to do this,” said Ferguson. “That’s quite an advantage when you think about it because we don’t believe that the canned beverage and ready-to-drink market is going to stop or slow down anytime soon. In other countries, especially in places with high alcohol taxes like Australia, the canned beverage and ready-to-drink market is very heavy. It’s likely going to remain a way of life, and a good one at that.”

Moving on Up: Automation in Times of Increased Demand for Canned Beverages

  Like other manufacturers, Jim Mackay, CEO of SKA Fabricating, has seen a mad dash by craft brewers to install smaller canning lines to fit in with the new economy and get their products packaged and out the door. SKA offers automated lines and accessories designed specifically to utilize available floor space and footprint. They offer everything needed before the filler and then from the filler to packaging operations.

  “We help craft breweries with automating their can depalletization before the filler and then the repalletization for packaging,” said Mackay. “A lot of the time, the main issue with small craft breweries is the limited amount of available space, so smaller footprint machines like our Half Pint OD (orbital discharge) mobile depalletizer are designed to solve this problem specifically. Any astute brewer can set it up and have it running in minimal time, but we also will consult by phone if needed.”

  SKA’s first of its kind rotary design is a 30-inch wheel featuring a better drop angle for the rinse cage, allowing for more accumulation and higher line speeds in a smaller footprint. The rotary wheel can run both clockwise and counter-clockwise, making it possible to install two discharges for different can sizes with minimal changeover. The Half Pint OD requires no specialized installation, increasing its value and popularity with craft breweries and mobile canning operations. The unit is on wheels for ultimate portability and the ability to safely store it out of the way when not in use. 

  “Before purchasing any system, the brewer has to ask critical questions and know their limitations, goals and future projections,” said Mackay. “Honestly, packaging is, a lot of times, the last consideration, but in most areas of production, we believe that any automation is better than the manual option. Your automation needs are determined by how quickly you need a new pallet of cans when canning your product. If you’re canning at 200 to 250 cans per minute, you should probably start looking into some sort of automated in-feed and out-feed to keep up.

  “When considering Ska equipment, we’ll need to know what type of filler you have or are planning on having. Different fillers have different characteristics and needs. It’s critical to maintain both mechanical compatibility and upgrade capability regarding can sizes used now and in the future. What capacity can your filler accommodate? You may need to address your filler capability before your lines. You don’t want a filler that can’t keep up with your lines, and you don’t want your lines running dry waiting on cans. Brewers should always consider future growth in their machinery choices, and we, along with our trusted partners, can design your whole system from start to finish if needed.”

Sealing in the Craft Brewery Difference

  OneVision Corporation leads the industry in providing advanced measurements and information systems that help users predict and prevent double seam quality issues. They have been providing seam inspection solutions to the food and beverage industry since 1994, installing more than 300 SeamMate Systems for food and beverage canners. Their proprietary, ready-to-use system includes a video module controlled by SeamMate software for use in a standard or networked Windows environment. It quickly takes the user through a process of cutting, measuring, viewing and recording double seam dimensions for ongoing comparison against the original can manufacturer’s specifications.

  “Craft brewing is all about taste, so it’s critical to retain that taste and freshness in the can to guarantee a quality consumer experience. That’s when a system like our SeamMate Craft Beverage System becomes essential,” said Neil Morris, CEO of OneVision. “Simply put, our system helps brewers ensure leaky can seams don’t sabotage the taste or integrity of their beer. It includes all the necessary equipment and software that craft brewers need to properly inspect and track the quality of can double seams in a low maintenance, dependable and affordable system, including on-site installation, training and unmatched support from our OneVision team. The OneVision team member installs the system and provides a full day of training. After startup, telephone and email support are available free of charge. Except for the occasional saw blade and seam stripper cutter wheel change, the system requires little maintenance.”

  SeamMate software runs on a Windows 64-bit PC, which is included in the SeamMate Craft Beverage System package. It functions as a standalone system or is connected to the customer’s network with optional SeamMate reporting software. 

  “Brewers should be regularly inspecting and tracking internal double seam dimensions to prevent leaking seams and flat beer issues,” said Morris. “Being proactive and inspecting and tracking the double seam saves brewers money and headaches down the road and is an integral part of delivering quality canned beverages to customers. We provide everything the customer needs to get started using the SeamMate System. Breweries only need to be canning and commit to quality.”

21st-Century Growlers: Pairing Innovation and Convenience

Cyndi
hand filling the beer cup

By: Cheryl Gray

Portable beer containers earn their reputation not only by how convenient they are to transport but also by how well they protect the beer inside. In the age of COVID-19, these portable options have also become a lifeline for craft breweries whose businesses have turned to beer-to-go sales to survive.

  The growler has been around since the late 1800s when beer was transported from saloons in a rickety metal pail with a not-so-secure lid. Fast forward to 1989, and the year historians say that Charles Otto, founder of Grand Teton Brewing in Wyoming, introduced the half-gallon glass growlers we see most commonly today. Since Otto’s reinvention, the growler has come a long way. Many 21st-century growlers have little resemblance to their predecessors.

  However, the demand from consumers remains the same. Beer lovers want their favorite craft brew to stay cold, fresh and ready-to-pour in a container that can go anywhere.

Craft Master Growlers

  John Burns knows a thing or two about the creativity and technology required for manufacturing the perfect growler for beer lovers on-the-go. He is CEO of Source Management Limited, the 22-year old parent company of Craft Master Growlers, Inc., based in Tacoma, Washington.

  Burns told Beverage Master Magazine that craft breweries can truly benefit by marketing products through the use of growlers. This is especially true for onsite brewing operations that don’t distribute their beer to wide areas. Pressurized growlers can help unlock a key market for those breweries because these growlers bring the convenience, portability and attributes of kegs down to an individual level. 

  “The craft beer industry is a dynamic industry with constant innovations,” he said. “But they need to get their product out to the public. There is nothing like a fresh beer direct at the brewery or brewpub, but you are limited to customers who visit your establishment. Growlers have a high demand and are encouraged by the industry because it allows more people to enjoy the breweries.”  

  While growlers are becoming more widely used, Burns said not all produce the same results. He compared glass and insulated-style growlers to his products.  

  “Unfortunately, the most widely used growlers–glass growlers–have a very limited shelf life. If not consumed within hours of filling, the beer changes. The experience is diminished,” said Burns. “A thermos-style growler is slightly better, keeping the beer cold for a certain period of time. But with Craft Master Growler’s pressurized systems, brewery customers can give a true, just-poured-by-the-brewery experience in any location and on their own schedule. By preserving the carbonation, the beer stays fresh, one glass at a time, for a period of weeks.”

  Craft Master has a variety of growlers, kegs and portable containers available for industrial and consumer use. They use only food-grade materials in production, an important factor, Burns said, because it protects the beer’s flavor integrity. Among the materials used is SUS304,  food-grade stainless steel that is standard in commercial kitchens and breweries.

  “We currently sell two lines, Craft Master CO2, a heavy-duty, high-end line of pressurized growlers for hotel/restaurant, breweries/brewpubs, home bar and homebrewers. These come in the legal filling sizes of 64 ounces and 128 ounces,” he said. “We also sell a lightweight, portable growler, ‘Growlveller,’ which comes in various finishes and is a 64-ounce capacity.”

  Burns, who built Craft Master by keeping pace with new technology and developing innovative products, shared the marketing logic behind its earliest innovations.    

  “Our first step was to create a square growler. This is very important for commercial establishments where refrigeration space and counter space is at a premium. The nature of metal fabrication is such that pressing a round container is straight forward, but to create a square is technically a lot more difficult.

  “Growlers are put into residential refrigerators, but round containers take up too much space.  The square enables the growler to be placed, for example, in a refrigerator door. And we created a tap which can swivel 180 degrees.” 

  Craft Master is currently developing integrated caps with PSI dials that perform functions such as pressurizing, maintaining safety, regulating CO2 and controlling pressure release. The company is also responsible for creating the Perfect Head USB pump. This patented system uses ultrasound to stimulate the release of CO2 into the beer and create a perfect head.

GrowlerWerks

  Tap on-the-go with a flair for style is the signature mark of GrowlerWerks. The Portland, Oregon firm enjoys the benefit of a team of engineers and product design experts whose focus is to provide consumers with unique and functional products. Its flagship growler is the ProSeries uKeg. This product’s features include an internal variable pressure CO2 system, a sight tube to check beer levels, a pressure gauge to dial in the perfect carbonation and a pour tap for tapping off beer when and where the consumer wants it. Fiona Berry is President of GrowlerWerks Canada, the company’s Canadian distributor. 

  “Craft breweries want to create a buzz about their products, so they should want their beer being served in ultimate condition. A growler from GrowlerWerks does that job exceptionally well,” she said. “Our growlers have been designed to serve craft beer the way the brewer intended.  Because of the variable pressure regulator cap, you can serve your craft beer exactly as it would be from the brewery’s tap line.” 

  GrowlerWerks products come in a standard 64-ounce size and a double-sized 128-ounce version and feature a stainless steel tank and brass fittings. For carbonation, the growlers use eight and 16-gram food-grade carbon dioxide cartridges that provide head pressure in the growler. The regulator cap is made mostly from plastic, silicone seals. 

  Aside from functionality, GrowlerWerks is big on appearance. “The brass fittings on our growlers give it a stylish appearance that attracts a lot of attention when seen going out for fills,” Berry said. “Our clients all comment on how many people ask questions and start up conversations with them because of their growler. It is a very social item.” So much so, she added, that GrowlerWerks is branching out with new products for new markets.  

  “Our line of growler products has expanded into nitro cold brew coffee. You can now brew and serve an excellent cup of nitro coffee with that signature cascade of bubbles from your own home,” she said. “Our recently released GO growler is designed for the outdoor enthusiast. It has a simple and rugged design yet delivers all the functionality of the Pro Series uKeg. We will be releasing a GO 128 in November. We have just signed a deal with the NHL to apply team logos on our GO growlers.” 

  In addition to marketing strategies, GrowlerWerks also considers itself a competitor when it comes to innovation. Berry pointed to one key component that she believes is superior to others on the market. 

  “I think our most innovative accomplishment is our variable pressure regulator cap. It allows for stylish integration of CO2. Other pressurized growlers on the market have their CO2 cylinders attached externally to the growler.”  

TrailKeg

  For consumers who already own a non-pressurized growler and want to upgrade, TrailKeg provides some options. The Lexington, Kentucky-based company offers its brand of growlers as well as the TrailKeg Lid Package, a conversion kit that makes it possible to transform an existing non-pressurized growler into a pressurized one. TrailKeg markets its growlers for more than craft beer. 

  The company promotes its growlers for multiple uses, including creating carbonated sodas, draft cocktails, seltzers, nitro coffees and kombucha. Sold in half- and one-gallon versions, TrailKeg growlers are double-wall, vacuum-insulated containers designed to keep beer and other drinks cold for 24 hours and hot beverages, such as coffee, hot for 12 hours.

American Keg

  For bigger options in portability, there are always kegs. In Pottstown, Pennsylvania, American Keg manufactures and supplies stainless steel kegs for the craft brewing industry. According to the company, it is the only steel beer keg manufacturer in the United States. Its team touts the use of domestically sourced AISI 304 stainless steel to produce 1/2bbl and 1/6bbl kegs. American Keg also offers custom embossing and silk screen printing on orders, which craft breweries find cuts down on keg loss.

  No matter whether the container is a keg, growler or the like, all breweries have to factor in return, refill and exchange policies that are governed by state and local laws. Now that COVID-19 has become part of the business climate for beverage service nationwide, many breweries have incorporated multiple safeguards, including curbside growler fill-ups and suspension of container exchanges. The aim, naturally, is to protect their employees and customers.

  In doing so, many breweries continue to promote their products by drawing on the convenience of growlers, kegs and other portable containers that allow consumers to enjoy a tap fresh, chilled craft beer experience–exactly what the brewer had in mind.  

Canadian Brewery Turns Wastewater Into Beer

Cyndi
row of beer cans
Advancing Canadian Wastewater Assets (ACWA) has partnered with Village Brewery and Xylem Inc. to brew Alberta’s first beer made with reused water. Christine O’Grady is the ACWA employee who led this project, and Jeremy McLaughlin is the Brewmaster from Village Brewery.

By: Briana Doyle

It’s one thing to turn lemons into lemonade, but will customers buy turning wastewater into beer?  On August 22, Village Brewery released a blonde ale produced in collaboration with University of Calgary researchers and the U.S.-based water technology company, Xy-lem, to create a limited-edition ale from water sourced by a Bow River wastewater treatment plant. The purpose of the project was to address water scarcity by proving that “dirty” water can be safely purified for drinking purposes. 

  The beer’s launch was initially pegged for March 22, which is U.N. World Water Day, but was delayed due to COVID-19.

  “There’s a mental hurdle to get over of how inherently gross this could be,” said Jere-my McLaughlin, head brewer at Village Brewery. “But we know that this water is safe, we know that this beer is safe, and we stand by our process.”

  Before brewing, the water was tested by Alberta Health Services to ensure it met pro-vincial quality standards for drinking water. The partially treated water was purified us-ing ultrafiltration, ozone, ultraviolet light and reverse osmosis. 

  “This beer shows that water reuse can be a safe and important part of our sustainable future,” said Christine O’Grady, program co-ordinator at Advancing Canadian Water Assets, another key partner in the project. “Wastewater can be treated using advanced treatment technology, making it into a reliable and safe water supply for many uses.”

  ACWA is a unique test bed and research facility where researchers, municipalities and industry professionals collaborate to improve wastewater treatment and monitoring technologies. It is a partnership between the University of Calgary and the city of Cal-gary.

   Reusing wastewater where possible is a practical solution to improve sustainability of our freshwater resources, O’Grady said, because it can reduce the amount of freshwa-ter needed for human consumption, lowering the demand for freshwater sourced from sensitive ecosystems.

  “AHS was happy to be part of this project to help develop a water safety plan and en-sure the water met drinking water standards,” said Jessica Popadynetz, AHS public health inspector. “With the right measures in place, alternative water sources such as wastewater, grey water, rooftop collected rainwater and stormwater can be made safe for many potable and non-potable end uses.”

  Xylem has been involved in similar projects to explore potable water reuse in the pro-duction of beer, wine and spirits throughout Europe and the U.S. In 2019, they part-nered with the city of Manchester, Heineken’s Manchester brewery, and the Manches-ter City Football Club to produce “Raining Champions,” a limited-edition beer brewed with purified rainwater collected from the rooftop of Manchester city’s Etihad Stadium.

  The company was also involved in the Pure Water Brew competition in Oregon last year, which challenged local homebrewers to create the best beer possible using sew-er water from Clean Water Services’ Durham treatment facility in Tigard, Oregon. The water was run through an additional high purity water treatment system. Brewers were then able to use the high-purity water, along with selected minerals, to custom-tune the water in order to modify the flavors of their beer.

  “Water scarcity continues to be a global challenge as populations keep growing,” said Albert Cho, vice-president and general manager of Xylem Inc. “Innovation and reuse are essential parts of the solution. Xylem is proud to partner with Advancing Canadian Wastewater Assets and Village Brewery in Calgary to demonstrate how we can all make this happen together. And we’re excited to try the beer!”

Upstart Alberta Brewery Takes the Crown in 2020 Canadian Brewing Awards; Quebec-Made Gluten-Free Red Wins Beer of the Year

  The verdict is in: Canada’s best brewery in 2020 is a three-and-a-half-year-old brewery in Calgary.

  Common Crown Brewing Company took top honors at the Canadian Brewery Awards, an annual competition that judges Canadian-made beer based on blind tastings from certified judges. The competition is open to domestic breweries of any size from across the country.

  In addition to winning Brewery of the Year based on the strength of the beers submit-ted, Common Crown was also awarded three gold medals for specific beers: the Ploughman Wheat Ale in the North American-style Wheat category, Andy’s Wee Heavy Scottish Ale in the Scotch Ale category, and Coppersmith Brown Ale in the Brown Ale category.

  The prize for Beer of the Year, however, went to Montreal, QC’s Brasseurs Sans Gluten for its chestnut-infused Glutenberg Red. The brewery’s Glutenberg brand, which launched in 2011, is not just a Canadian phenomenon; the company said half of all production is exported to the United States. 

  In addition to the company’s flagship blonde, pale ale and red beers, the Glutenberg line also includes some more unusual varieties, including a gose, stouts and a double IPA.

  To achieve a 100% gluten-free beer, the company brews strictly with gluten-free grains such as millet, buckwheat, corn, quinoa and amaranth, sourced primarily from farmers at nearby Ferme Sans Gluten. After brew day, spent grain is returned to the same farm, where it is used as compost in the millet and buckwheat fields that supply the brewery.

  Sales at Canadian microbreweries across the country were hit hard this year when the COVID-19 pandemic hit, and the whole country went into a months-long lockdown, and Common Crown was no exception.

  Co-founder Damon Moreau told Global News that being able to quickly pivot to home delivery when the pandemic hit helped “keep the lights on” when on-premise sales at the brewery and local restaurants and bars plummeted during confinement.

B.C. Brewery’s Popular Charity Program Returns After Pan-Demic Pause

  In September, British Columbia’s Fernie Brewing announced the return of its popular fundraising program for local charities.

  The brewery’s established Cheers for Charity program, in which a portion of sales from flights in the tasting room is given to a different local charity each month, was put on ice during the spring quarantine.

  Although the taproom has now reopened, tasting flights are still not permitted by local health order. Cheers for Charity will return in a slightly different format. One of the brewery’s 12 beers will now be selected as a “featured beer,” and proceeds of all sales of that brew will be given to the charity of the month.

  Since it launched in December 2013, Cheers for Charity has raised more than $150,000 for local charities, groups and clubs. The program is designed to support Fernie-based community groups.

  Past beneficiaries have included the Old Type Music Society bluegrass appreciation group, Fernie Friends of Refugees, WildSafe B.C., wildfire relief efforts and more. September sales will contribute to a fundraising effort for a new ultrasound service at the local hospital.

Pike Brewing Company Cofounder Rose Ann Finkel Leaves Behind Pioneering Legacy as Seattle Food-scene Entrepreneur

Cyndi
couple smiling enthusiastically
Rose Ann Finkel with her husband, Charles.

By: Becky Garrison

After the July/August issue of Beverage Master Magazine featuring an article highlighting the 30th anniversary of The Pike Brewing Company went to press, news broke of the death of Cofounder Rose Ann  Finkel. She died on Tuesday June 16, 2020 at the age of 73 from Myelodysplastic syndrome blood cancer.

“We have had a wonderful experience for almost 52 years,” Charles says of Rose Ann. “She had a lot of friends, a lot of people who loved her. She made a really great impression on everyone she met. I miss her, obviously. But I’m very happy she died in peace surrounded by people who loved her.” (Forbes, June 17, 2020).

As reported by the Seattle Times, It’s impossible to talk about Seattle brewery history without mentioning Rose Ann Finkel. From her arrival in Seattle in the mid ‘70s, she helped shape the way this city ate, thought about beer and how the two best complemented each other.

Jason Parker, Co-Founder/President Copperworks Distilling Co., who served as Pike Brewing Company’s first head brewer, reflected on Rose Ann’s legacy.

Rose Ann was the perfect dance partner to Charles in life, love, and in business, which for the Finkels, were one in the same. Though frequently in the spotlight with Charles, Rose Ann also worked behind the scenes to pull deals together and lead the business of their endeavors, from importing containers of malt to picking out tee shirts for the staff. Transcending her contributions to helping the company succeed was her influence on folks, and especially women, in the industry, who looked at Rose Ann as a role model for enjoying life, getting things done, and encouraging others, all at the same time. 

After finding Merchant du Vin in 1978, the Finkels became known in international beer circles due to their success introducing Americans to specialty beers brewed by family-run breweries from England, Germany, and Belgium, as well as other places throughout the world including the United States. Along with this commitment to craft culture, Rose Ann championed community causes through events such as Pike’s Women In Beer. This annual cerebration of craft beverages, local foods, and the women who make them, benefits the Planned Parenthood of the Great Northwest & Hawaiian Islands.

When asked how Women in Beer tied in to Pike’s company philosophy, Rose Ann offered this response.

Pike’s community mission is focused on being good and doing good. Whereas brewing great beer is in itself a laudable goal, it is our mission is to provide employees with a happy, artistically driven, and soul satisfying experience. To build a team of diverse employees who share our vision to be good community citizens, supporting non-profits whose mission is in concert with ours.

As an example of the Finkels’ commitment to building a better world, the aforementioned Forbes article noted how Charles concluded a phone call. “He didn’t elaborate on how he wants to get back to work at the agency (he does) or lament that COVID is keeping his family from holding a proper funeral for his wife (he hopes a memorial service will happen at some point in their home garden) but enumerated more than half a dozen civil rights movies he recommends. There may not be a more illustrative example of the Finkel spirit: forward-looking, optimistic, pragmatic, gracious and genuinely working for the betterment of the community – not just their own but everyone’s.”

People have inquired about her favorite charities. They include The Weizmann Institute of Science, Fred Hutchinson Cancer Research, Planned Parenthood, The Southern Poverty Law Center, and College Success Foundation. 

Growing Your Brewery’s Brand

Cyndi

By: Lewis Barbera – Vice President, Sales

assorted beers lined up in a table

There are currently more than 7300 regional breweries, brewpubs and microbreweries in the United States. Even during difficult times, the popularity of the craft brewery continues to grow. For many home brewers and beer aficionados, the prospect of owning and operating their own brewery is a dream come true. It’s an opportunity to expand their personal recipes that they have refined over the years as a hobbyist and share them with a wider audience.

  Making your mark within the industry is not an easy task to accomplish. Perfecting your craft is an important start in staying relevant. But satisfying your regulars and marketing through word of mouth is just the beginning. It’s the additional, day-to-day business details that become so incredibly important. Maintaining your brand and ensuring that it reaches the widest audience possible will help you to stand out in a crowded market.  

Brand Identity

  One of the benefits of owning and operating your business is the freedom associated with developing its brand. From the name to the logo, this is an opportunity for you to work closely with your business partners to establish something catchy and unique, while also cutting through the clutter and staying top of mind with your customers. But once you’ve picked out your colors and have come up with a memorable catch phrase that highlights your craft, what’s next?

  In today’s market it’s not uncommon to promote your brand through a variety of related products. Whether that’s pint glasses and coasters, umbrellas, signage or an oversized Jenga set reserved for outdoor events, merchandising your business in creative and unique ways is critical. But there are numerous moving parts that inevitably get in the way. Working with your local Kinkos and your cousin (twice removed) to help with the graphical design will only get you so far.

  Properly sourcing your merchandise is an indispensable asset to your overall brand marketing initiatives. Working closely with a partner capable of assisting with the delivery of your products can make an immense difference in your day-to-day operation.

  Understanding the ins-and-outs of product sourcing often includes first-hand experience in knowing what works and what does not. These conversations can help steer you in the right direction, while also shielding you from potential missteps. Promoting your brand with a Point of Sale (POS) system capable of delivering the best return on investment (ROI) in a growing market will help you to realize even greater success.

Off-Premise Initiatives

  Traditionally, craft beer has primarily been sold on-premise. The experience of enjoying a freshly tapped beer while socializing at your local brewery is one of the reasons the craft beer industry has stayed consistently strong. When combined with ongoing marketing and merchandising efforts, off-premise sales has the strong potential to develop into an additional sales and distribution plan.

  Some beer aficionados might argue that traditional retail sales takes away from the uniqueness of the craft beer experience and no longer differentiates itself from large national brands. However, retailers are very much in tune with consumer preferences and will always be looking for opportunities to emulate the success of on-premise craft breweries through off-premise sales.

  It’s important for every craft brewery to take the steps necessary to continue promoting their name and their brand. As such, there are several opportunities worth considering for an off-premise strategy:

•   Stand Out in a Crowded Space: Whether you’re positioned within a local liquor store or the corner grocer, make sure your branding is prominently displayed and catches the eye of every customer. Proudly present your most popular beer or newest recipe on shelves, stackers and corrugated risers that clearly exhibit your branding. Make sure the colors are bold and vibrant, and that the wording can be read from across the aisle. Take pride in your craft and give it the attention it deserves.

•   Small Idea, Big Impact: Even the smallest idea can have the biggest impact when it comes to branding and product marketing. Sticky shelf talkers, ceiling danglers, window clings and floor placements. Make it so that no matter where the customer is looking, your brand is sure to grab their attention. And it’s not always about how big of an impression you make or how much real estate your branding utilizes. A strategically placed logo can help even the most undecisive beer drinkers make the right choice.

•   Your Fans are Your Biggest Advocates: Don’t overthink it. The practicality of the idea often becomes the biggest win for off-premise business. Let your fans do the “heavy lifting”. Selling a variety of tote, lunch coolers and brown paper bags, each with your branding clearly identified for everyone to see, is a great way to continue getting your name out there. Used at work, on vacation or attending any number of social events, your biggest fans will be promoting their favorite beer without ever saying a word.

•   The Signs Are Everywhere: Chalk-based A-frame menu boards. LED light boxes. Laser cut, digitally printed hardboard wood. What do all these different types of signage have in common? They’re the most classic form of beer advertising you can think of. People of all ages collect them and prominently display them in their homes, garages and on the walls of the businesses they own. They catch your eye, make a statement and get you thinking about one thing, and one thing only – BEER!

Product Management

  Having access to your own, business-specific e-commerce website is an opportunity to more effectively manage your growing list of products. When conveniently organized by category, a robust e-commerce solution is more likely to yield an increase in the number of merchandising orders placed. By providing your sales group, wholesalers and consumers 24/7 virtual access to your products, you’re removing yourself from the time-consuming difficulties and headaches of manual maintenance and upkeep.

  An effective e-commerce portal is not only a reliable source for managing your inventory in an organized fashion, it can also be seamlessly updated to accommodate for new products and inventive promotional efforts. Including pre-order windows and making them available to your distributors will help to better gauge the potential success of your latest product promotions before taking the plunge and jumping head first into a new initiative.

  Planning for the upcoming year’s promotions, brand launches and seasonal programs is an important function critical to the ongoing success of your business. Having access to online ordering is a great resource to take advantage of when working toward upcoming events. Providing your distributors access to your ecommerce site makes the process of managing and expanding your brand a seamless activity.

  However, maintaining your inventory and shipment data can often be challenging. Working from a comprehensive and reliable report – one that details the data needed to drive a successful program – saves time and increases productivity, allowing you to focus more on your craft. Accessing these reports, whenever needed, makes the process of future inventory planning and promotional efforts even easier and more sustainable.

Inventory Optimization

  Space is a commodity. You’ll never have enough and will always be needing more. When owning and operating your craft brewery, you’ll quickly realize that as more of your space is consumed by branded merchandise, less will be available for that essential, behind-the-scenes equipment – brewing systems, canning lines, tanks, fermenters and more. Working with a total fulfillment partner opens up the possibility of maintaining and safely storing your merchandise stock.

  At its core, inventory optimization and supply planning answers the question about how much merchandising inventory should be carried. Working with your fulfillment partner, you’ll be able to better understand the complexities of supply and demand and more accurately identify inventory targets. By maintaining appropriate levels of merchandising stock you’ll greatly reduce the chances of inventory obsolescence, thereby freeing up capital that can be applied elsewhere throughout your business.

  Fulfillment partners often include consignment opportunities, giving you the option to store your products offsite while still retaining ownership. As the products begin to ship, you’ll be able to track how much inventory sold and work closely with your fulfillment provider on the transactional details.

  When tied directly with your unique e-commerce platform you’ll have even greater flexibility and control over the number of products sold, understand when and how they have shipped and be able to effectively report – from week-to-week and month-to-month – for better management of your business’s overall expenses and profits.

  Pre-orders are also designed to increase profitability. Utilizing your fulfillment partner’s expertise in identifying products that are best suited to both order windows and the make-and-ship process, you’ll capitalize on an effective solution to the POS puzzle. This pre-order option provides greater overall flexibility when planning for upcoming events and seasonal placement.

Dedicated Support

  Whether it’s the account manager, sourcing, logistics or warehouse, the various touchpoints of a fulfillment team provide the support needed to effectively operate your business. Their focus is helping you maintain yours. In doing so, you’ll have greater opportunities to further pursue your passion.

  A committed support team should be analyzing your POS operations on a quarterly, bi-annual and annual basis, and provide feedback to assist with any changes that may be needed. Their long-standing relationships within the industry are designed to support your needs and ensure that your business realizes continued success.

  Your merchandising efforts are directly connected to establishing your brand and helping your business thrive in an increasingly competitive market. Aligning yourself with a reputable fulfillment program will assist you in meeting the goals you have established for your business. When done well, your brand will realize the greatest potential to reach more customers and leave lasting impressions.

Brewery Financial Statements 101:

Cyndi

How to use Financial Reports to Improve Results

By: Kary Shumway, CPA, CFO, Numbers Guy

2 men analyzing data

Financial literacy is the ability to read and understand the numbers of your brewery business so that you can improve financial results. Improving financial results may include growing sales, improving gross margins or increasing cash flow. In today’s uncertain times, financial literacy is more important than ever.

  The numbers of your brewery business are reported on the financial statements – the income statement, balance sheet and statement of cash flows. Each of these reports provides vital financial information to understand what’s going on in your business.

  In this article, we’ll review the basic components of brewery financial statements and provide examples of what these reports should look like. We’ll also dig into the mysteries of the brewery chart of accounts – the building blocks of the financials – and provide tips to make sure your financial reporting is as good as it can be.

  We’ll close out with a list of best practices to follow so that your financial information is accurately reported. These best practices are summarized into a handy checklist of month end procedures to follow.

Brewery Financial Reports

  The numbers of your business are organized into reports called the financial statements: the income statement, balance sheet and statement of cash flows. Each statement provides useful information about a different part of your brewery business.    Below is a brief review of each report.

Simple Income Statement

  Income statement (Profit & Loss Statement or P&L): The brewery income statement reports on sales, margins, operating expenses and shows whether the business had a profit or loss. This statement measures results over a period of time – the month, the quarter, or year to date, for example.

  It’s important to understand that the income statement measures transactions but does not measure cash flow. The income statement records sales when earned, and expenses when incurred, regardless of whether cash was received or paid out. 

  Balance sheet: The brewery balance sheet lists assets, liabilities and equity.  Assets are things you own, liabilities are things you owe, and equity is the difference between the two.  If assets are larger than liabilities, you have equity.  If liabilities are bigger, you have a deficit.

  While the income statement measures results over a period of time, the balance sheet measures numbers as of a specific point in time – at month end, quarter end or year end, for example. 

  Statement of cash flows: This financial report measures the flow of cash coming into and going out of the brewery business.  It tells you where cash came from (collections on sales, for example) and where cash went (payments to vendors, for example).  The income statement measures transactions, not cash. The statement of cash flows shows picks up where the income statement leaves off and records the flow of money through the business.

Brewery Income Statement (P&L) Examples

  Now that we’ve covered the basic financial reports, let’s look at examples of what brewery income statements should look like.

  We’ll begin with a summarized version of the P&L.  Shorter reports are easier to read and allow you to see important information quickly.  The summary report includes sub-totals for each major P&L category: sales, margins, operating expenses and profit or loss.

  The simple P&L shows the summarized results for a period of time (Year to Date, in this example) and presents each category as a percentage of sales. P&Ls don’t need to be five or ten pages long to be good. In fact, shorter is better. Shorter is easier to read and makes it more likely that you actually will read the report. Start with a summary P&L like this one, then expand the report by adding more details. Here’s an example:

Brewery Income Statement

  This P&L shows sales, cost of sales, and margins by package type. This type of presentation makes it easy to see the margin percentage by package type (kegs, cans or bottles) which is useful in analyzing portfolio profitability.

  An alternative to this P&L is to present the information by line of business. This might include sales through the taproom, self-distribution and wholesale distribution. Regardless of which method you use, it’s helpful to mirror the sales categories within the cost of sales and margins categories. For example, have a separate account for taproom sales, taproom cost of sales, and taproom margins.

  Financial literacy is the ability to read and understand the numbers of your brewery business so that you can improve financial results. The income statement, balance sheet and statement of cash flows are reports that summarize those numbers. Each report gives you different information about the business, and each is important to review on a regular basis.

Brewery Chart of Accounts

  Accountants use the term Chart of Accounts to describe the listing of all the things you want to track and report on in your business. These include all of the assets, liabilities, revenue and expenses. The purpose of this listing is to provide organization and structure for your financial reporting. The Chart of Accounts serves as the building blocks of your financial statements.

  The level of detail in your chart of accounts listing will depend on how much information you want to see on your financial reports. For example, you may have three different sales accounts, as shown earlier: Sales-Kegs, Sales-Cans, and Sales-Bottles.  Each captures the sales specific to a type of package.

  Alternatively, you may have any number of different sales accounts to show sales by market and package type. For example, Sales Self-Distribution Kegs, Sales Self-Distribution Cans, Sales Self-Distribution Kegs, etc.

  Be purposeful about the level of detail in your chart of accounts. More detail may be preferable, however this will take more time for your bookkeeper to record the transactions into the proper accounts. Start with the kind of reporting you need to see in your financial statements and build the chart of accounts accordingly.

  For an example of a full brewery chart of accounts, visit www.craftbreweryfinance.com and enter chart of accounts in the search box.

Brewery Financial Month-end Process

  We’ve covered the basics of how to read the financial statements and understand the chart of accounts. Next, we’ll review a month-end process you can use to make sure your numbers are complete and accurate. A process is defined as a series of steps, followed in order, that will lead to the right outcome. In this case, the right outcome is accurate numbers in the financial reports.

  The month-end process should be clearly written and used as a document to train your bookkeeping staff. An accounting manager should periodically audit the work of staff to ensure that the process is being followed. 

  The process can be presented in the form of a checklist, indicating what task to do, when to do it, and who is responsible for completion.  Below is an example of a month-end financial checklist:

Month End Checklist

  The process checklist should contain all the necessary steps to close the books for the month in order to ensure the accuracy and completeness of the information. For example, all payroll journal entries should be made on the 1st day of the new month and all bank statements should be reconciled by the 5th business day of the month.

  To create your month-end process checklist, have your bookkeeper write down all the actions they take to close the month. Compile this list of actions and assign due dates and a responsible person. Each month when it’s time to close the books, use the checklist as a guide to make sure each step is done and completed on time.

  The best way to make sure you have good financial information is to follow a good process consistently. To download a full month-end process checklist, visit www.craftbreweryfinance.com and enter month-end process in the search box.

Wrap Up + Action Items

  Financial literacy is the ability to read and understand your financial statements so that you can improve results in your brewery business. Improved results may be sales growth, margin increases or positive cash flow. You define the result you want to achieve and use your financial literacy to make it happen.

  Use the summary income statement templates presented here or create your own so that you can monitor financial outcomes. Review your chart of accounts and compare to the template at www.craftbreweryfinance.com to identify any needed changes.

  In today’s uncertain business environment, financial literacy is a competitive advantage. Use this advantage to drive increased financial performance in your brewery business today.

    Kary Shumway is a Certified Public Accountant and has been working as a CFO in the beer business for the past 15 plus years. He creates financial training courses for beer wholesaler owners so that you can build a more profitable business.

For more information please visit…www.craftbreweryfinance.com.

Pike Brewing Company: Celebrating 30 Years as a Craft Beer Pioneer

Cyndi
2 men toasting

By: Becky Garrison

Why is Seattle-based Pike Brewing Company still standing 30 years after its 1989 founding when a growing number of craft breweries in the Pacific Northwest are either shuttering their doors or being bought out by global conglomerates?

  According to Pike’s co-founder and co-chair of its board, Charles Finkel, “There’s an unbelieva-ble amount of competition out there with a challenging business climate, but we’ve done our best to have a sustainable business model. We work really hard and have a good team of people.”

  Following his lifelong passion for imported beers, Finkel founded Merchant du Vin in 1978, so he could introduce consumers to craft beers from England, Scotland, Germany, Belgium, France and Norway, as well as several small American breweries. Jason Parker, co-founder of Copper-works Distilling and Pike’s first brewer, points to the difficulties in convincing Americans to give craft beer a chance. “Back then, nobody knew how to drink a quality beer, so Charles had to edu-cate each person bottle by bottle.”

  Finkel would enter a restaurant and ask to see their beer menu. Inevitably, the waiter would re-spond, “We don’t have a beer menu, but I can tell you what we have.” The waiter would recite names of commercial beers like Budweiser, Coors Light, and Rainer. Then Finkel would reply, “Oh, just bring me some jug wine.” When they noted they don’t serve that type of wine here, he would respond, “Yes, but you serve that type of beer.” Following this exchange, he would set out some imported beers and encourage them to up their beer game.

  In assessing the Seattle beer culture circa 1980, Christian Krogstad, Seattle native and founder of House Spirits Distillery in Portland, Oregon, recalls being smitten by the unusual styles and packaging of Merchant du Vin’s imported beers. In Krogstad’s estimation, “More people than you can imagine were influenced by the beers they imported. I credit them more than any mi-crobrewery or homebrewing writer with creating the spark that led to the explosion in American craft brewing.” In the spirit of other like-minded folks, Krogstad tried his hand at home brewing, and he discovered his vocation in this process.

The Founding of Pike Place Brewery

  In the late 1980s, Finkel took his experience influencing some of the finest breweries on the way that they brewed, packaged and marketed their beer, and founded his own brewery. “I felt if I could sell beer from Bavaria, Yorkshire or Belgium at a price level that was the highest in histo-ry, I could do at least as good, if not better, here in Seattle.”

  On October 17, 1989, the Pike Place Brewery announced its grand opening courtesy of the World’s Shortest Non-Motorized Uphill Parade. John Farias of Liberty Malt Supply led the pa-rade pushing a two-wheeled silver hand truck filled with a keg of Pike Pale Ale. Following Fari-as were the Finkels, Franz and Angela Inselkammer from Bavaria’s Ayinger Brewery, and Jason Parker, along with local media and about a hundred beer aficionados. Also included in the parade were dogs, a cat, a walking geoduck from the Sheraton Hotel, a llama from the Herb Farm and an oyster. After a two-block uphill walk, the menagerie arrived at Cutter’s Bay House, where Franz Inselkammer tapped and poured the inaugural pint of Pike Pale Ale.

  Finkel chose the brewery’s location on Western Avenue due to its uphill location so he could in-stall a gravity-flow steam-powered system. At the time, the brewery’s equipment was state-of-the-art with a four-barrel copper kettle custom made by Seattle’s Alaska Copper and Brass Com-pany.

  When Dick Cantwell, currently the Head of Brewing Operations for Magnolia Beer Company in San Francisco, was hired in 1991 after Parker went back to college, the craft brewing scene was in its infancy. About 200 U.S. breweries were in existence, with Pike being the third in the great-er Seattle area. Cantwell recollects, “By today’s standards, most people made mediocre beer, but the scene was exciting, and we all became lifelong friends.”

  In addition to brewing their perennial best-selling Pike Pale Ale along with a porter and Pike XXXXX Stout, Pike also has the distinction of making one of the first IPAs in the United States. By developing relationships with companies such as Skagit Valley Malting and area grain farm-ers, Finkel sourced local products to create flavorful beers.

  Finkel worked in conjunction with his wife Rose Ann, co-founder and co-chair of the board. Parker sums up their creative, collaborative relationship. “Charles is the artistic force while Rose Ann is the business financier. When he wants to bring a vision to life, Charles needs a team who can come behind him and help him figure out how to do that.” Finkel’s artistic touch can also be found on Pike’s iconic beer logos. The art is distinctly “Charles Finkel” in its design, colors and Victorian-style lettering.

Opening of Pike Pub

  In 1996, they moved to a larger 30-barrel brewery located at the site of a former winery on First Avenue. Rose Ann’s experience of owning a cooking store played a seminal role in their mission to combine craft beer with local, sustainable food. Also, they changed their name to the Pike Brewing Company due to their proximity to Pike Place Market.

  Concurrently, they launched Pike Pub as a destination place that offers a curated experience visi-tors cannot experience elsewhere. For example, the pub houses the Microbrewery Museum, a collection of Finkel’s personal artifacts that document 9,000 years of brewing history. “My goal was to encourage people through our decorations to view beer as cultural items instead of a mass-marketed highly advertised commodity,” Finkel tells Beverage Master Magazine.

  Then after realizing that the brewery and pub could not stand on its own without the support of parent company Merchant Du Vin, the Finkels sold the brewery and pub to Merchant Du Vin the following year. Drew Gillespie, Pike’s current president, began as a line cook in 1998 during this period, which he describes as the Dark Ages. “There wasn’t a lot of investment or passion within the company.”

  After realizing they were missing their brewery and the maturation of the industry, the Finkels purchased Pike back in 2006. Gillespie describes this purchase as “a rebirth that really picked up the heart and soul that the Finkels bring to their work.” Upon their return, the Finkels further built up their community connections, ethical business practices and sustainability focus.

  Among their numerous community projects include a long-standing commitment to Planned Parenthood, where Charles Finkel served on their board before founding Merchant du Vin. They brew a specialty beer titled Morning After Pale as a fundraiser for Planned Parenthood, which they offer during their annual Women in Beer event. Also, their annual event, Chocofest, sup-ports Long Live the Kings, an environmental group dedicated to preserving local salmon.

Moving Towards the Future

  Currently, Pike has five owners, who are all members of the board: the Finkels, Gillespie, VP and Controller Patti Baker and Executive Chef Gary Marx. “We call this selling in versus selling out,” Gillespie says. “You have to have people on site who are really focused on how to make it successful and willing to put their life into it.”

  Pike further expanding its brewing capacity in 2017 by launching Tankard & Tun. This intimate seafood restaurant located on the second floor above the pub enabled them to serve dishes like oysters on the half shell that are hard to serve in a hectic pub environment.

  They also introduced cocktails, which Parker says is a relatively new development in brewpubs. “There was a time, if you were a brewery and you had cocktails, you were seen as not committed to being a brewery. You must think your beer is not good enough to be able to stand on its own. But that’s sort of like saying we’re not going to serve wine either because no wine can be better than our beer. Well, that’s wrong.” 

  Presently, Pike partners with local distilleries, including Woodenville Whiskey, Dry Fly Distil-ling and Copperworks Distilling for their barrel-aged program, which they look to expand in 2020. They also plan on making more sour beers to meet the customer demand for more extreme types of beers.

  Despite these innovations, Pike’s prime focus remains its consistency. “We like being slow-moving. We don’t feel we need to expand and get giant. We just want to have a nice solid base, two restaurants and a beer distribution network in the Pacific Northwest,” says Gillespie.

  To this end, they’ve made in-roads in Hawaii and Alaska and want to establish a presence in Or-egon. In 2018, Pike went global by launching a collaboration in Japan with hopes to expand the Pike concept to China through a Chinese partner.

  “If we could maximize the capacity of the brewery, we will be helping the local community and being a good employer,” says Gillespie. “That’s a recipe for success for our little mini-empire.”

Beyond the Mask: Rebuilding after COVID-19

Cyndi
earth covered with face mask

By: Tracey L. Kelley

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

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

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

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

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

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

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

Consider:

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

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

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

Adapt—or Get Ready to Sell Your Equipment

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

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

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

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

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

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

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

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

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

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

1.  Get a bigger glass.

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

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

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

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

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

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

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

•    Where have you struggled before?

•    Where were you suffering most recently?

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

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

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

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

•    Are you able to make hard decisions as needed?

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

  Account for everything that has happened and can happen. 

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

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

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

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

JH:

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

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

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

RL:

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

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

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

SS:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

BEER FINANCE: Covid-19 Cash Tactics & Strategies

Cyndi
dollar bills inside a jar

 By: Kary Shumway, Founder of Craft Brewery Finance

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

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

Short-Term Planning: Survival Mode

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

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

Simple Cash Flow Tracker

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

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

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

Change Your Cash Process

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

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

2.   Insert yourself into the money-out process.

3.   Review past spending … and adjust.

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

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

•    Accounts payable

•    Payroll

•    Manual checks

•    Electronic Funds Transfer (EFT)

•    Automated Clearing House (ACH)

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

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

Step 2:  Insert yourself into the money-out process

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

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

Step 3:  Review past spending

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

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

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

Use these cash flow tactics

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

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

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

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

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

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

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

Re-forecast Your Financials

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

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

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

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

Sample Brewery Table

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

Wrap Up + Action Items

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

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

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

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

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

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

SUPPORTING “TRADE” DURING COVID-19

Cyndi
alcohol and tobacco tax and trademark bureau seal

By: Ryan Malkin

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

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

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

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

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

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

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

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

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

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

For more information contact Ryan Malkin at…

Malkin Law, P.A.

260 95th Street, Suite 206

Miami Beach, FL 33154

Office: (305) 763-8539

Mobile: (646) 345-8639

Email: ryan@malkin.law

Website: www.malkinlawfirm.com