Category: Brewery

Testing, Metering and Monitoring Tools Enable Consistent Brewing

Cyndi
staff checking quality control

By: Gerald Dlubala

Consistency in the craft brewing process is achieved through quality control. Quality control includes regular testing and monitoring of ingredients and processes to achieve consistent results over multiple batches, while also ensuring that all regulatory issues are followed and the risk of contamination is minimized. With new flavor profiles and textures being introduced seemingly daily, a craft brewer needs to practice exceptional quality control to make their beer the best they can, even if it’s a new and unique offering. Craft brewing starts with water, and as a major component, that is where the testing must begin. Quality testers and monitors are a necessity, but so is the willingness and discipline to use them diligently at the proper times.

Simplifying the Chore of Testing and Monitoring

  Milwaukee Instruments Inc., of Rocky Mount, North Carolina, operates on the belief that digital testing technology should be easy to use and available for every level of brewer. They focus on offering affordable, easy to use instruments manufactured from quality hardware. Milwaukee Instruments offers all the most widely and regularly used testing and monitoring products for the craft brewing and winemaking industries, and they do so without the use of test strips. Being known for outstanding capability while packaged in a smaller, more convenient size, their handheld meters can be kept conveniently in a pocket, and feature exceptional accuracy and lab grade performance.

  “Temperature probes, pH meters and a unit like a refractometer that measures Brix are must-haves when brewing craft beer,” said Jason Brown, Operations Manager, North American Operations. “Monitors and meters are used throughout every stage of the brewing cycle. Depending on the type of beer the brewer is making at the time, there are major factors to be controlled and monitored. The initial pH of your water plays a big role in the taste and profile of the beer, whether you’re brewing a lager or a stout, a smooth or a bitter, or anything in between. The Brix, or sugar content, is measured before and after fermentation by measuring density. We have the right testing and monitoring products available for every stage of brewing, as well as every level of brewer.”

  Included in that selection of testers and meters is their turbidity, or haze meter, used to measure clarity by the concentration of undissolved, suspended particles that are present in the beer.

  “All of our instruments are very precise and accurate when taking measurements within the specific applications of pH, temperature or Brix. Our testers and meters are manufactured to be small and wireless, yet durable and waterproof to give a brewer the most convenient and easy-to-use method for testing and monitoring applications. These instruments have withstood the test of time and generally fit all of the required needs of the craft brewer at all levels,” said Brown. “That being said, of course, there are always ways to improve on the current tools and instruments. Brewers haven’t asked for anything that we can’t provide, but faster processing and longer-lasting probes would always be welcomed. The average lifespan of a normal pH probe is 12 to 18 months, so maybe we can improve upon that. More manufacturers are heading towards data logging equipment so brewers can have a historical view of their pH, temperature and Brix levels during different applications.”

  Milwaukee Instruments’ automatic smart controllers continually monitor the required parameters set for the brewing process, including pH and ORP. These monitors dose and adjust the system as needed, 24 hours a day, seven days a week. Automatic monitoring and control systems are nice additions because let’s face it, things happen, and measurements can and will get delayed or forgotten, allowing water makeup parameters to possibly get off track. Automatic smart controllers have your back when needed.

Quality Water Before Quality Beer

  Industrial Test Systems in Rock Hill, South Carolina, knows that water matters in craft brewing, and, no matter what type of beer, it’s best to know the makeup of the water source. Without quality water, there cannot be quality beer. The water chosen for brewing, depending on things like chlorine or other contaminants, affects the sulfide to chloride ratio, how the beer is expressed to the drinker’s palate, and, ultimately, the final taste of the beer. 

  Water hardness plays a significant role in the beer’s mouthfeel. Light beers tend to be noticeably smoother on the palate, and a lot of that has to do with using softer water for brewing. Dark beers can use harder water, producing that familiar stronger or crisper flavor profile.

  All-in-one kits, like the Smart Brew Starter Kit by Industrial Test Systems, can keep water testing on target. The self-contained kit tests for water hardness, calcium hardness, alkalinity, pH, chloride and sulfates. Once brewers get the hang of the basics and are looking to expand their testing, the Smart Brew Professional Kit provides the same testing plus the eXact pH+ Smart Meter System, a Bluetooth enabled, handheld multi-parameter pocket meter that works within their eXact iDip app for both iOS and Android smart devices. This unit can test pH, conductivity, salinity, Total Dissolved Oxygen, Temperature, and Oxygen Reduction Potential using two different probes. The data captured is useful for specific brewer formulas and brewing-specific calculations.

Temperature and pH Determine Results

  “A good pH meter and thermometer are used in all stages of brewing and are, by far, the best friend of the craft brewer looking to produce a quality, consistent brew,” said Casey Thomson, Application Sales Engineer for Hanna Instruments, a world leader in pH and titration science.

  Hanna Instruments is known for developing innovative products, and many are the norm throughout the instrumentation industry. Included in their product offerings are pH electrodes with built-in temperature sensors and waterproof, portable pH meters.

  “As a brewer, one of the most important things to test regularly is the water supply you’re using as source water. If you’re using your area’s general water supply on a year-round basis, chances are your source water is changing with the seasons, and that’s ultimately going to alter and change the taste of your beer. Inconsistency in the taste of your product is something you never want because that’s a good way to lose customer loyalty. Pilsners, for example, are all about the water that they’re brewed from. Guinness will never be exactly duplicated here in the states because of the water that is used as the base.”

  “Craft brewers also need to keep tabs on temperature over the entire process,” said Thomson. “Extra-long probes, like the one we affectionately call ‘The Sword,’ come in very handy to monitor the temperatures down deep into the mash to ensure consistent temperatures throughout. When you do that, you’ll know that you’re keeping the yeast happy enough to form alcohol from the sugars.”

  Thomson told Beverage Master Magazine that refractometers are useful for brewing reports and for measuring the sugars before fermentation. After fermentation, a refractometer measures alcohol content. Many brewers still like to use older style hydrometers, and that’s fine, but they have to use a larger amount of product for a sample. If the brewer offers hazy IPAs, a haze meter is a great addition to their testing instruments and can indicate the amount of concentrated, suspended particles in the beer by measuring the amount of transmitted light through the product.

  “Due to the growth in the popularity of sour beers, we are also seeing increased interest and requests from brewers for a tool to measure lactic acid,” said Thomson. “While we don’t currently have beer-specific units to do this, we do supply these types of testing units to the dairy industry, so the breweries can use those and expect quality, true results. Additionally, being able to measure the alpha and beta enzymes in hops is an area with some interest, so we’re learning more about the science behind as this is an area of business growth.”

  “All of our instruments are generally easy to learn and use,” said Thomson. “It’s more of a situation of having the time to get the measurements done as needed. I always like to show the users what the process is to take the measurements and make sure they know what they’re getting into as far as using our equipment consistently. We get users up to speed in about two hours tops, but we also provide web training through YouTube videos, our online training manuals, etc.”

  Hanna Instruments also provides testers and monitors for the wine industry. Consistent pH measurements are important throughout the process. Their Halo wireless pH meter provides direct readings on a phone or tablet. Their edge wine meter kit is their most popular unit, measuring pH, conductivity/cold stability and dissolved oxygen. It’s Bluetooth capable, able to be carried around and equipped with an eight-hour battery. A benchtop cradle transforms the unit into a tabletop wine lab.

  “Winemakers are more traditional with their processes, so the testing tends to stay more standard,” said Thomson. “Occasionally, you’ll get a winemaker with a science background that wants to play around, experiment and see what happens under different circumstances so that other tests can come into play. But pH is, of course, very important throughout the entire production process, as is the ability to stay aware of free acids and sulfur dioxide that affect both bouquet and shelf life.”

Collaboration is Key in Canadian Craft Beer

Cyndi
blood brotherhood beer

By: Alyssa Andres

With the number of breweries in Canada growing to over 900 this year, craft brewers need to find new ways to set themselves apart from the competition. A series of rotating taps isn’t enough to draw the crowds to the tasting rooms anymore. There are over 300 craft breweries doing that in the province of Ontario alone. Many Canadian breweries are choosing to team up with other brewers, local businesses and people in the community as a way of creating something newsworthy, both in their beers and in their tasting rooms. It’s no longer an “every man for themselves” mentality in the brewing industry. Collaboration is a key component for some of Canada’s most exciting and successful breweries. It allows them to experiment with new techniques and approaches. It also sparks interest in new products while building a sense of community and assisting other local businesses.

  In downtown Toronto, Canada, craft brewers have to battle to be the latest and greatest in the food and beverage scene. The foodie culture is strong in the city, but Torontonians tend to lose interest quickly, so the battle to stay hip is hard.

  Blood Brothers Brewing has managed to stay at the top of the wave since opening its doors in 2015. Owners and actual brothers, Dustin and Brayden Jones, combine innovative brewing ideas and methodical techniques with beautiful design and packaging, making Blood Brothers Brewing stand out amongst the hordes of other Toronto craft breweries. However, that’s not all they’re doing to keep people’s attention. For the brewery’s newest releases, they’ve teamed up with four other Ontario craft breweries to create “The Blood Brotherhood.” The brewery released four beers on February 22nd, each a different collaboration with a smaller microbrewery in the area; Barncat Artisan Ales, Badlands Brewing Company, Short Finger Brewing Company and Rouge River Brewing Company. The limited-edition series sparked massive interest from the brewery’s online following after only a week of promotion. The Blood Brotherhood Imperial Stout with chocolate, coconut and banana, a collaboration with Barncat Artisan Ales in Cambridge, Ontario, sold out all 200 bottles within an hour of release.

  For microbreweries like Barncat, pairing with a reputable brewery like Blood Brothers gives them exposure and instant credibility in an otherwise volatile market. It’s easy for many new craft beer releases to fall under the radar, but a limited release collaboration creates something one of a kind, and people tend to take notice. At the same time, collaborating allows brewmasters to work with other brewers, sharing new ideas, learning new techniques and utilizing different facilities to make unique products they might not otherwise create.

  Powell Brewery in Vancouver, British Columbia, used this mentality when brewing its Ode to Wallflower Pale Ale. Powell has teamed with East Vancouver distillery, Odd Society Spirits, to create a Citra pale ale aged in Odd Society gin barrels. This limited edition 6.2% ABV beer has incredible personality. It is crisp and botanical, with a slight oak quality and smooth finish. A collaboration like this helps both businesses gather attention and create a hyper-local product that speaks to its location.

  Many craft brewers in the Niagara Peninsula are collaborating with local winemakers to create innovative beers that reflect the region. Exchange Brewery in the heart of Historic Downtown Niagara-on-the-Lake, uses grapes from popular local winery, Pearl Morisette, to create their Grand Cru Ale. The ale is brewed with a hint of spice and aged for one year on pressed grape skins. The result is a dry, fruity ale with a deep colour and smooth body. Nearby, in the Twenty Mile Bench VQA appellation, Bench Brewing Company is also using local wine barrels and grapes to brew their beers. Not only that, but they’re also using a plethora of fruits grown in the surrounding farming region. The result is a roster of beers that showcases the land from where it comes. These collaborations help to support the community and local farmers.

  Collaboration is not only happening in the breweries but the tasting rooms as well. Many Canadian craft breweries are choosing to partner with local businesses to enhance the front of house experience and create something authentically local. At A-Frame Brewing Company in Squamish, British Columbia, owner Jeff Oldenborger works alongside local businesses to create a one of a kind haven for people in the community. Local food trucks serve guests regularly outside the brewery, and snacks are for sale from local vendors such as Spray Creek Ranch Pepperoni and Kaylin & Hobbs Pickles. Oldenborger has even partnered with Trae Designs, a local toymaker that creates sustainable and innovative wooden toys, to create “Okanagan Lake,” a play area for children to enjoy while visiting the space. Combined with regular events and live music, the space is a hub for ongoing collaborations within the community, and a popular retreat for locals.

  On Cape Breton Island, Nova Scotia, on the eastern coast of Canada, a similar collaboration is happening between local craft brewery, Big Spruce, and Cabot Public House, a popular local pub. The restaurant has orchestrated a regular “Tap Takeover” with Big Spruce, where the pub pours only their beers for a night, offering locals the chance to try a larger selection of their products. The event draws quite a crowd.

  That’s not the only exciting collaboration for Big Spruce. Each year since 2017, the small east coast brewery partners with the Ocean Tracking Network to create a “colla-BEER-ation” that raises awareness surrounding issues that face the ocean’s ecosystem. The beer, Big Spruce’s “Tag! You’re It!” American-style IPA, doesn’t change, but each year the brewery chooses a new oceanic creature to be featured on the label. The 2019 label featured an Atlantic salmon and raised $5000 for marine conservation. This brought the total amount to $56,000 in donations since the project launched. This year’s featured species will be announced in May, and the donations will continue to help support ongoing initiatives to support the ocean ecosystems.

  On the opposite coast, another brewery choosing to collaborate to do good is Surrey, British Columbia’s Central City Brewing Company. Every April, their Red Racer line releases a special edition beer to raise money for autism research. This year the brewery released a Superfruit IPA. Two dollars from every six-pack and $0.25 from every pint sold at participating restaurants go to the cause. Since 2013, the company has raised $600,000 to help battle autism. Red Racer also collaborates with a slew of craft breweries all over Canada to create their “Across the Nation” collaboration pack, originally released to celebrate Canada’s 150th birthday in 2017. Now in its fourth year, the 12-pack features beers from 12 different Canadian craft breweries, one from each province and territory in the country. Beers range from traditional to entirely experimental, but they each pay tribute to a local monument from their hometown. This collaboration helps put smaller Canadian breweries on the map and builds camaraderie within the industry from coast-to-coast. 

  The ultimate example of craft beer collaboration in Canada is Collective Arts Brewing in Hamilton, Ontario. This grassroots brewery has made collaboration the core spirit of their company. They collaborate every step of the way, not only with other brewers, local businesses and charities, but also with artists and musicians from all over the world. The result is truly remarkable. Each of Collective Arts’ beers displays artwork from a different artist chosen from thousands of applications on a bi-annual basis. To date, over 600 artists have been featured on Collective Arts’ cans. Visitors of the brewery can see the entire collection in the tasting room. A recent three-way collaboration with Chicago brewery Marz Community Brewing Co. and Hamilton Donut shop Donut Monster resulted in the hugely successful “Beady Eyes Pale Ale.” The beer, brewed with blood orange, hibiscus and lactose sugar, to emanate one of Donut Monster’s signature treats, featured art from Hamilton artist Joel MacKenzie.

  Collective Arts’ cans showcase not only artists but also feature different bands and musicians. To take it one step further, the brewery has expanded this alliance and is hosting an event in Hamilton, Ontario, in June 2020. Liquid Art Fest will see over 50 brewers from all over the world pouring their most unique and rare beers. The event will feature live music as well as live mural artists, screen printing and food trucks. Collective Arts has transformed what it means to be a craft brewery and created a company that embodies creativity, community and collaboration.

Canadian craft brewers all over the country are coming up with new ways to join forces and make headlines. Collaboration in the craft beer industry creates the same buzz as a celebrity romance. It’s like a superstar duet featuring two of your favourite bands. Not only does it create a buzz on social media and allow a brewery to network outside of its direct audience, but it inspires innovative ideas and results. It brings communities together and helps local businesses. It encourages camaraderie within the industry and can even support charitable causes. There is no downside to collaboration, especially when the other result is just really good beer.

How Craft Beer Producers Can Incentivize Distributors and Wholesalers to Help Them Go to Market

Cyndi
lone beer glass in front of a beer stall

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

As a craft beer producer, competition is fierce. According to the Brewers Association, there were 7,346 craft beer producers in the U.S. last year competing for $27.6 billion in sales. That’s a lot of beer! And, that doesn’t even take into account competition from “The Big Five” or import beer for shares of the overall U.S. beer market.

  For craft beer producers who are looking to scale and increase sales, it might be tempting to start pouring your marketing funds into consumer marketing. But will that really make a splash? Think of the hundreds of millions in media spend by beer companies every year that you’ll be going up against.

  Could there possibly be a more efficient way to use that marketing spend? For craft beers producers who are trying to go to market, it’s important to sit down and ask yourself, “Who has the biggest impact on whether or not end consumers find my beer? And how can I motivate them to prioritize my business?”

Understanding the Craft Beer Sales Channel 

  When it comes to connecting with end consumers, craft beer producers have four options:

•    On-Site: Selling directly to consumers at your brewery.

•    E-Commerce: Selling directly to consumers online.

•    Retail: Selling to consumers through other retailers.

•    On-Premise: Selling to consumers through bars and restaurants.

  However, on-site sales are limited by geography and e-commerce sales require brand familiarity or extremely creative (or very expensive) marketing. For a scalable sales and marketing strategy, craft beer producers have to turn their attention to retail and on-premise sales and the indirect sales force that helps them achieve penetration with these vendors.

Incentivizing Distributor and Wholesaler Sales Reps

  Outside of smaller, highly localized breweries, most craft beer producers rely on distributors, wholesalers and other supply chain trading partners to market to retailers and restaurants. Distributor and wholesaler sales reps are responsible for selling vendors on the value of your beer, negotiating pricing and terms of sale agreements and ultimately getting your craft beer to market.

  There’s one small problem: no matter how awesome your craft beer is, it only a small fraction of your distributor or wholesaler’s supply mix. In this battle for mindshare, it’s up to you to educate reps about your brand, enable them to sell your product and supply them with a value proposition that inspires them to take action on your account.

  This is where an incentive program comes into play. When many people think of incentive programs, they think about rewards. But while rewards play a big role in building relationships with your channel partners and adding to your overall value proposition, modern incentive programs take a more holistic, software-driven approach.

  Today’s incentive programs act as comprehensive sales and marketing platforms that enable craft beer producers to:

•   Build mindshare with distributor and wholesaler sales reps.

•   Target promotions by qualifying participant type, regions or product line.

•   Fill data gaps within their channel.

•   Enable sales reps to sell their product to vendors.

•   Deepen relationships with partners throughout their channel.

Building Mindshare with Distributors and Wholesaler Sales Reps

  Sales reps, for the most part, sell what they know. However, in a crowded supply mix, building this awareness and product knowledge with sales reps can be challenging. While every supplier wants something from these outside sales reps, far fewer supplier focus on offering value and creating memorable brand interactions.

  Inviting these sale reps to enroll in an incentive program where they have the opportunity to earn millions of rewards or exclusive incentive travel opportunities (and perhaps giving them a generous point bonus upfront) is more than a nice gesture. It’s a strategic differentiator and an opportunity to stand out from your competitors.  

  Your rewards program also creates new opportunities for communication and engagement that aren’t strictly business. These brand interactions are an opportunity to improve personalization and build relationship capital, which can be difficult to achieve in supply chain partnerships.

Targeting Promotions to Minimize Cost and Maximize Return

  It’s worth noting that a channel partner program is an investment. When planning an incentive marketing strategy, craft beer producers need to focus on maximizing the return on their marketing spend. This means that they should target first and scale second.

  For instance, would it make more sense financially to target your program to the sales and brand managers at the distributor level or the individual reps who work beneath them? It depends on your go-to-market strategy and the size and number of distributors you work with. If you sell through smaller wholesalers with a handful of reps, who each are responsible for a significant portion of your overall sales volume, then it might make sense to structure your program to reward individual sales reps. On the other hand, if you’re selling through a number of wholesalers and distributors, or an extremely large distributor with thousands of reps, it might make more sense to target your incentive programs to sales and brand managers.

  Additionally, from those managers and sales reps, craft beer producers can set qualification thresholds, based on sales volume or engagement, to ensure that their incentive program spend is allocated toward the participants who are most impactful to their sales growth.

  Another aspect of your targeting strategy is choosing to set incentive promotions by specific regions or product lines, based on strategic initiatives and opportunities for growth.   

Collecting More Complete Data Throughout Your Channel

  Craft beer producers, like many other companies who sell into a channel, often struggle with having inaccurate and incomplete data about their channel. Your incentive program is an opportunity to motivate distributors and wholesalers to provide more complete data. There are several ways craft beer producers can use their incentive program to fill in gaps in channel data:

•   Structuring enrollment forms that capture contact information and firmographic data during program registration.

•   Including automated tools for sales reps to attach invoices or other documents as part of the program’s sales verification process.

•   Offering rewards to participating sales reps for referring other reps within their organization.

•   Rewarding sales reps for completing voluntary surveys that can be used to clean up your existing database or collect more information about your participants’ interests, demographic and lifestyle.

•   Analyzing engagement datapoints the program generates to spot highly engaged accounts that are ripe for upsells and cross-sells.

  All of this information can be used to inform your sales and marketing strategy and increase the level of personalization you offer your supply chain partners.

  However, all the data in the world is useless unless you’re able to act on it. Modern incentive software includes CRM integration, data filters, reporting dashboards and custom reports to streamline this data for optimal use.

Enabling Your Distributor and Wholesaler Sales Reps

  Do you know one of the quickest ways to build brand preference with an indirect sales rep? Provide quality sales enablement. Using proven strategies to educate sales reps on your brand and your products makes it easy for them to sell your products to vendors.

  Integrating interactive quizzes and training videos with your incentive program is a powerful tool for supplying your external sales reps with the knowledge they need to sell your beer. This education can be supplemented by your incentive program’s digital communication platforms. (If you use this kind of strategy, make sure to break things up into bite-sized pieces and focus on the highlights your partners will need to help you go-to-market). Additionally, these quizzes are another opportunity for sales reps to earn rewards, increasing the overall value proposition of your program.

Deepening Relationships Throughout Your Channel

  Finally, in addition to short-term sales growth and marketing penetration, your incentive program has another benefit that will have a lasting impact on the success of your go-to-market strategy: relationship-building. Non-cash rewards are a social currency that achieve emotional impact and memorability with sales reps at distributors and wholesalers. In addition to motivating sales growth and reinforcing desired behavior, the rewards your program offers create a sense of personalization.

  For craft beer producers, your distributors and wholesalers are more than just conduits to the end consumer. They are your partners – an indispensable part of your go-to-market strategy. Offering your sales reps the opportunity to choose from exciting rewards or treating top performers to unforgettable incentive travel experiences represents the type of brand interactions that will set you apart from the competition. But more than that, these rewards inspire your distributor and wholesaler sales reps to emotionally invest in your brand and take an active interest in your success.

Unsure About Where to Start? Be Smart, Explore Your Options and Focus on Scalability

  An incentive program can be an integral part of a craft beer producer’s go-to-market strategy. However, what about companies who have never used this type of strategy before? If you are interested in creating a channel marketing program for your distributors and wholesalers, do your homework. Identify a goal for your program and the software functionalities you’ll need to achieve that goal.

  Compile a list of incentive program providers who fit your requirements and who have a proven track record, with case studies and testimonials to prove it. From there, begin reaching out to these providers and enlist their help in planning your incentive strategy. Use these conversations to refine your strategy and learn more about what has worked for companies with similar goals and similar distribution channels to yours in the past.

  Once you’ve decided on a provider, you don’t have to go all in. It’s prudent to start small, maybe with a pilot program or highly targeted incentive promotion. You can always scale, once you’ve proven that you can do this successfully.

  However, it’s also important to have a sense of urgency. As craft beer sales continues to grow, so will competition for craft beer dollars. Beating your competitors to building an incentive program for your distributor and wholesale sales reps can be a major competitive advantage. Plus, you owe it to your future customers to help them find their new favorite beer!

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

Increasing Brewery Cash Flow: Craft Breweries and the R&D Credit

Cyndi
A money bag with the word Cash Flow and a chart with an up arrow

By: Wendy Landrum, CPA, Partner and R&D Advisory Leader; Mark Heroux, JD, Principal, Tax Advocacy and Controversy Services Leader; and Brian Haneline,  CPA, Senior Manager, R&D Advisory

Craft brew popularity is at an all-time high in the United States, with explosive industry growth in the past five years. According to the Brewers Association, craft brewers now make up 98 percent of all U.S. breweries. As new craft brewers continue to enter the industry and existing brewers look to keep up with recent trends, significant financial investments must be made before the first brew can reach the consumer. Whether these costs are related to the formulation of the brew, or how to produce or package the brew, costs can be substantial.

  Fortunately, federal and state governments offer an often overlooked but valuable benefit to help offset these costs in the form of R&D tax credits for craft brewers engaging in “qualifying activities.” 

R&D credits result in a dollar-for-dollar reduction in income taxes and, if applicable, payroll taxes, providing cash flow for future investments. The R&D credit applies not only to new product development, but also to improvements to existing products and manufacturing processes. Importantly, the activities need only be evolutionary to the organization, not to the industry as a whole, to qualify for the credit.

  Because the R&D credit is nonrefundable, startup companies and other small businesses like craft breweries are often limited in their ability to claim the R&D credit in the current tax year because they do not have current income tax liability to utilize the credit. Despite the credit having a 20 year carry forward if not used currently, the company receives no immediate tax advantage from the R&D credit, especially for years in which R&D activities and investments may be high.

Payroll Tax Offset

  However, the Protecting Americans from Tax Hikes (PATH) Act of 2015 allows certain small businesses to offset the R&D credit against payroll taxes instead of income taxes. PATH allows for up to $250,000 of annual federal R&D credits that can be allocated against payroll tax liability. This applies to tax years that begin after Dec. 31, 2015.

  To qualify for the payroll tax offset in 2019, a business must have gross receipts of less than $5 million in 2019 and may not have had gross receipts for any tax year before the five-tax-year period ending with 2019. For example, if the credit-claiming year is 2019, a company must have had less than $5 million of gross receipts in 2019 and no gross receipts prior to 2015.

  The R&D credit may be applied against the FICA portion of payroll taxes beginning in the first calendar quarter following the date on which the business files the income tax return. If the payroll tax credit portion of the R&D credit exceeds the tax liability for any calendar quarter, the excess is carried to the next calendar quarter and allowed as credit for that quarter. The payroll tax election is limited to five taxable years.

Four-Part Test

  Naturally, the question then becomes, what are “qualifying activities” to be able to claim the credit and what costs can be captured? Generally, activities must meet the following four criteria (referred to as the “four-part test”) to include the related wages, supplies, or contract research costs in the R&D calculation:

1.   The activity must be technological in nature. The activity must be based on the principles of a hard science such as chemistry or engineering.

2.   The activity must be for a permitted purpose. The activity must involve the creation of a new or improved level of: function, performance, reliability, quality, durability or cost reduction for a product or manufacturing process

3.   The activity must involve the elimination of uncertainty. The activity must explore what was not known at the start of the project.

      •   Capability: Can we develop the new or                                improved product or process?

      •   Methodology: How will we develop the new                       or improved product or process?

      •   Design: What is the appropriate design of                            the new or improved product or process?

4.   The activity must involve a process of experimentation. Substantially all activities must include elements of experimentation such as:

      •    Evaluating one or more alternatives

      •    Performing testing or modeling

      •    Examining and analyzing hypotheses

      •    Refining or abandoning hypotheses

  A wide range of technical activities related to product or process development or improvement in the craft brew industry may qualify for the R&D credit. Consider the examples below:

•    Developing new or improved recipes and styles.

•    Brewing experimental or pilot batches of new or improved recipes and styles.

•    Performing lab testing, or other functional testing, on new or improved products or processes.

•    Developing new or improved ingredient mixing methods.

•    Developing new or improved yeast strains or fermentation processes.

•    Developing new or improved manufacturing processes.

•    Researching new or improved production techniques.

•    Automating existing manufacturing processes.

•    Developing new or improved processes or methods to prevent spoilage.

•    Developing new or improved bottling or packaging processes.

•    Developing new or improved methods to minimize or treat wastewater.

  For reference, examples of activities that may not

qualify include:

•    General administrative and managerial functions.

•    Sales, marketing and business development activities.

•    Routing data collection (e.g., management studies, efficiency surveys).

•    Day-to-day production activities.

•    Routine quality control and inspection.

•    Maintenance and installation services.

•    Training (even if related to new equipment or technology).

•    Research conducted outside the U.S.

Qualifying Costs

  As mentioned above, the following costs are included in the R&D calculation:

1.  Wages paid or incurred to employees who are directly engaged in qualified research activities, or who directly supervise or support qualified research activities. Qualified wages are computed by multiplying the percentage of an individual’s annual time attributable to qualified research activities against W-2, box 1 wages.

2.  Supplies include any tangible property, other than land and depreciable property, which is used or consumed during the development process.

3.  Payments to third parties to perform research and development activities on your behalf. The services must be performed within the U.S. and you must have financial risk (with T&M or hourly contract terms paying for the services versus final product).

  There are two calculation methodologies to consider, alternative simplified credit and regular credit, both with alternatives for start-up companies.

Documentation Requirements

  Federal and state regulators focus on whether a taxpayer can document: 1) the process of experimentation, and 2) the development of a new or improved product or process (also referred to in a research credit discussion as “the business component”).

To maximize the credit taxpayers are well-advised to conduct a disciplined, documented research process. It is important to document every step of the research process, particularly the process of experimentation used to eliminate uncertainty and the identification of the business components, i.e., the new or improved product or process. Sales increases and customer surveys will help to identify improved products, but will not be conclusive. It’s the contemporaneous recording of the research activity that will carry the day in an IRS exam.

  It’s also important that breweries identify the amount of time that professionals spend performing qualified research activities. Time tracking software that identifies the various activities that take place when creating a new or improved product or process is the best option to document time spent by professionals in the conduct of qualified research activities. Taxpayers that do not use time tracking software generally use estimates provided by the research professionals, through the use of time surveys, as to the percentage of time that they spend conducting creditable research activities.

Case Study

  To see how the credit can benefit a craft brewer, the following case study is instructional. In this example, XYZ Brewery in Texas wants to design a new brew from scratch. Once research is conducted to determine the ideal end product (and this research should qualify for the R&D credit), here is the process employed by the brewer (pre-bottling) and who is involved:

  General R&D process including potentially qualifying activities:

1) Mashing – malts are mixed with adjunct flavorings and liquor (pure water) and heated to allow enzymes to break down starch into sugars.

2) Lautering – consists of three steps: mash out, recirculation, and sparging.

3) Hops boiling – once the mash is sparged, the resultant wort is sent to a hops boiler where hops are added for flavor and boiled according to a recipe hops schedule.

4) Fermenting – the wort is sent to a fermentor where the sugars undergo fermentation, via the glycolysis which causes a chemical reaction.

  Who might be involved in the process:

1) Head R&D Brewer

2) R&D Brewery Manager

3) Production Manager

4) Assistant R&D Brewer

5) Brewery Quality Control/Lab

The brewer in this case provides their tax advisor with a W-2 box 1 wage listing and supply expenses for the current and previous three years, and had no contractors that assisted with the development process. Your tax advisor conducts technical interviews with the employees below to help identify the qualifying activities and to allocate a percentage of time to each qualifying activity:

  Assumptions:

•   Head R&D Brewer’s time qualifies at 100%

•   R&D Brewery Manager time qualifies at 100%

•   Production Manager’s time qualifies at 50%

•   Assistant R&D Brewer’s time qualifies at 100%

•   Brewery Quality Control/Lab’s time qualifies at 100%

  Qualified supply expenses by year:

•    2018: $60,000

•    2017: $50,000

•    2016: $50,000

•    2015: $40,000

  Once the data is gathered, analyzed and quantified, your tax advisor calculates a federal and state R&D credit. In this case, the brewer will generate a federal credit of $10k and a Texas state credit of $6k.

  As can be seen from the case study above, the R&D credit can be a valuable tool for craft brewers to help offset startup or other operational costs, either in the way of credits to offset tax liability or refundable payroll tax credits in certain cases.

  While it may not be readily apparent that the R&D credits are in-play for the craft brew industry, many craft brewers have taken advantage of this opportunity. Craft brewers should take notice of the activities that they engage in and consider whether R&D credits might be an option.

For more information, contact the authors at Baker Tilly or 608-240-2334.

Distribution Agreements: Negotiate Your “PreNup” Carefully

Cyndi
Business people shaking hands, finishing up a papers signing
Business people shaking hands, finishing up a papers signing. Meeting, contract and lawyer consulting concept.

By: Brian D. Kaider, Esq.

Starting a brewery requires learning a lot of new skills and practices that have nothing to do with making great beer.  One of the most confusing and frustrating is the issue of distribution.  If their state allows, most new breweries initially distribute their own products and, if the brewery is content to be relatively local, that might never change. 

But, in many cases, brewery growth necessitates working with a distributor.  This is not a relationship to be entered into lightly. A distributor becomes an ambassador for the brewery’s brand and, once retained, the supplier may have little control over how its beer is marketed. Further, these relationships can be difficult or financially impossible to break once established.

  Supplier/distributor relationships are governed by franchise laws in most states. In the absence of franchise laws, the relationship is defined entirely by a distribution agreement between the parties. But, even in franchise states, the distribution agreement can play a critical role, particularly in the termination of the distributor relationship.

  Too often, however, breweries accept a distributor’s “standard” agreement and when the relationship sours, the supplier finds that they are stuck with no viable option to terminate. The best practice is to engage an experienced attorney to negotiate the terms of the distribution agreement. While even the best attorney cannot evade state franchise laws (which generally prohibit a distributor from waiving its rights), there are ways an attorney may help bring balance to the supplier/distributor relationship.  Some of the key terms to negotiate include termination, territory, brand scope, and exclusivity.

Termination

  The most critical section of the agreement sets forth the manner and circumstances under which a supplier may terminate the distributor. In a franchise state, the law typically says that a supplier may terminate for “good cause.” If good cause is defined in the law, it is paramount that the distribution agreement mirror the language of the law, because in many cases, a contract that contradicts the law will be held invalid, leaving the supplier in the position of effectively not having an agreement at all.

  For example, the Virginia Beer Franchise Act states that good cause includes “failure by the wholesaler to substantially comply, without reasonable cause or justification, with any reasonable and material requirement imposed upon him in writing by the brewery.”  Further, the Act provides, “good cause shall not be construed to exist without a finding of a material deficiency for which the wholesaler is responsible.”  Tracking that language, a distribution agreement in Virginia should clearly define certain of the distributor’s obligations as “material requirements” and explicitly define certain actions as “material deficiencies.” 

For example, the Virginia law identifies failure to “maintain a sales volume” of a brewery’s brands as being a reasonable and material requirement.  But, the law does not specify what volume is required.  So, the distribution agreement should clearly lay out specific minimum sales volumes (preferably on an escalating scale) and identify the requirement to hit those volumes as a material requirement of the contract. 

  When the law does not define good cause, and in non-franchise states, it is essential for the distribution agreement to do so. The contract should clearly set forth the distributor’s requirements that are critical to the business relationship and for which failure to perform will be grounds for termination.

Examples of common requirements include: meeting specified sales and marketing goals, maintaining appropriate records and reports regarding inventory and sales, transporting and storing the product under specified temperature and lighting conditions, exercising adequate quality control measures to ensure product freshness, and paying invoices within a specified time frame. It is also common to include termination rights if the distributor is declared bankrupt, enters a voluntary’ petition for bankruptcy, enters into a compromise or agreement for the benefit of its creditors, or fails to maintain in good standing all Federal and State licenses and permits necessary for the proper conduct of its business.

  In some cases, sale of the distributor or even a change in the ownership structure may be justification for termination.  In February 2019, Bell’s Brewery of Kalamazoo, Michigan completely pulled all of its distribution in the Commonwealth of Virginia.  The issue was that its distributor in Richmond was sold to a subsidiary of Reyes Beer Division, the largest distributor of beer in the United States.  Per its distribution agreement, the original distributor was to have provided Bell’s with certain information about the sale to Reyes, but it failed to do so and Bell’s believed that because it did not have the opportunity to properly vet the new distributor, termination of the franchise was warranted.  To this day the dispute has not been resolved and Bell’s beer is not available in Virginia.

  In most states, a supplier must compensate the distributor for the lost business even if the supplier is able to terminate for cause.  Sometimes the law simply says the supplier must pay the distributor the “fair market value” of the distribution rights.  There can be an expensive battle just to determine that compensation if fair market value is not defined in the distribution agreement.  Often the value is defined as a percentage of the prior year’s case volume multiplied by some dollar amount per case. The “standard” contracts pushed by some distributors can be very severe in this section. In the beer industry, it is not uncommon to see values set at an entire year’s worth of profits times a multiplier that can range from 1.5 to many times higher. In practice, often a new distributor will buy out the distribution rights from the old distributor, but if the supplier wants to return to self-distribution, this buy-out provision may be cost prohibitive. 

  While the beer franchise laws in most states were written at a time in which large beer manufacturers had significant market power over small distributors, those roles have substantially reversed.  Slowly, state laws are being revised to accommodate this change.  In Maryland, for example, the law changed on January 1, 2020 to eliminate the “for cause” provision of termination for suppliers who manufacture fewer than 20,000 barrels per year and the termination notice was shortened from 180 days to 45.  However, the manufacturer still has to give the terminated distributor fair market value of the franchise.

Territory

  Depending on the size, experience, and reach of the distributor, there may be an opportunity to creatively carve out different territories. Territories are most commonly limited to certain states. However, a supplier may be able to limit a smaller distributor to certain counties or even specific types of establishments (grocery stores, but not restaurants, for example). One of the clearest breaches of the distribution agreement, that may constitute good cause for termination, is for a distributor to make sales outside of its contracted territory. 

Brands

  Generally, when a distributor is hired to carry a brewery’s brand, it has the right to all of the products in that brand. But exactly what constitutes a  ‘brand” is unclear both in the statutory language of most state franchise laws and in many distribution agreements. 

In Maryland’s beer franchise law, for example, “brand” is not explicitly defined, but the law appears to favor the distributor in terms of brand scope. Specifically, section 105 of Maryland ‘s Beer Franchise Fair Dealing Act prohibits a brewery from entering into a beer franchise agreement with more than one distributor for “its brand or brands of beer” in a given territory. One might argue that the language “or brands” means that the first distributor has the right to all brands of the manufacturer in a given territory.

In fact, that very’ issue was litigated in the 1985 case of Erwin and Shafer, Inc. v. Pabst Brewing Co., Inc. and Judge Couch, writing for the panel of The Court of Appeal of Maryland, disagreed. The court held that if a brewery retained a distributor to handle one or more of its brands within a territory, it could not then contract with a second distributor within the territory for those same brands. It could, however, contract with a second distributor to carry a different set of brands.

  How far the court would take its interpretation of what is a “brand” is unclear, however. In the Pabst case, the first distributor was given the right to distribute Pabst brand beers, but Pabst later merged with Olympia Brewing Company and gave the second distributor the right to sell its newly acquired Hamm’s brand beers. Whether the court would have allowed the brewery to contract with one distributor for Pabst and another for Pabst Extra Light it did not say.

Exclusivity

  Even if rights under a distribution agreement cannot be divided by brand (as in the case of the beer franchise law in Maryland), some states may nevertheless allow a supplier to contract with more than one distributor within a territory. If permitted in their state, a brewery should ideally enter into all of its distribution agreements for a given territory simultaneously, providing notice to each distributor. At a minimum, the brewery should ensure that the first agreement entered into is explicitly designated as non-exclusive. Otherwise, the distributor may view the agreement as giving it exclusive rights to the territory and could sue the brewery for diminishing the distributor’s business if it were to engage a second distributor in that territory.

Final Thoughts

  Whether a brewery is in a franchise state or not, it is critical that it review and negotiate its distribution agreements carefully, with the assistance of an experienced attorney. It is also important to remember that the supplier’s diligence does not end when the agreement is signed. No matter how well the terms of the distribution agreement are negotiated and drafted, they are effectively useless if the supplier cannot back up its claims for good cause.

Accordingly, thorough documentation is essential. If a distributor is not meeting sales goals, mishandling product, or failing to provide adequate reports, they must be given written notice of those deficiencies each time they occur.

  There are great distributors out there who become essential partners in a brewery’s business. But, sometimes those relationships can sour and signing an agreement without anticipating complications down the line can make it virtually impossible to sever those ties. A little forethought and planning and a lot of diligence will go a long way toward a successful termination of a bad relationship.

  Brian Kaider is a principal of KaiderLaw, an intellectual property law firm with extensive experience in the craft beverage industry. He has represented clients from the smallest of start-up breweries to Fortune 500 corporations in the navigation of regulatory requirements, drafting and negotiating contracts, prosecuting trademark and patent applications, and complex commercial litigation.

HOP SENSORY: Benefit to Growers & Brewers

Cyndi
people having beer taste test

Just because something is fun to do, doesn’t mean there isn’t a robust science involved. Case in point: beer sensory. My relatives like to joke that they also studied beer sensory in college, but I think the readers will be aware of the difference between running a carefully randomized tetrad test and doing a keg stand on a football player’s front porch. To properly conduct the science of beer sensory, you start by finding 16-or-so willing participants (shouldn’t be difficult) to undergo rigorous beer flavor training and validation. Through this training and validation, you ensure that everyone is speaking the same flavor language, describing specific flavor-active compounds in agreed-upon terms.

  While technology has come a long way in helping us describe the chemical reactions taking place on brew day, quantitative data from analytical equipment falls short in describing the sensory experience of drinking a given beer – good news for your 16-or-so panelists. The human nose is capable of detecting millions of aromas, and more importantly, humans are capable of linking these aromas to incredibly specific real-world objects like guavas or jasmine flowers. It’s an impressive feat, and in this particular battle of Human vs Machine, we’re winning. 

Beer Sensory in a Hop Context

  Beer sensory is important to the industry, but it’s far too time consuming and resource intensive to assess every lot of hops during harvest this way. Enter: hop sensory. The process of gathering and training panelists is similar to that of beer sensory, but the results are produced a lot faster; thousands of samples can be assessed within a harvest period. This allows for ruined harvest lots to be eliminated from the get-go before expensive resources go into processing them. Hop sensory produces a clear snapshot of different varieties from different growers, harvested on different days, so that brewers participating in hop selection can get exactly the product they’re looking for each crop year. Using this data, we can reveal how the sensory characteristics of each variety are evolving over time.

  However, due to thousands of reactions that take place during brewing, the key aromatic compounds identified in hops have undergone many changes by the time they make it into the final product, if they even make it at all. When brewing, hop compounds are modified by thermal reactions, yeast biotransformation, chemical conversions such as oxidation/reduction, hydrolysis, isomerization, ester exchange, and even evaporation. During fermentation, for example, yeast metabolic activity will biotransform geraniol (a bed of roses) into β-citronellol (zesty lemon), completely changing the aroma characteristics of the beer. So, it’s not only necessary to apply sensory to hop aroma, it’s vital to also focus on the aroma compounds present in the end product – the beer brewed with these hops, to fully understand which hop characteristics are of the greatest importance to brewers. 

  To complicate matters further, brewing components like malt and yeast contribute to flavor in varying degrees depending on the beer style, and hops contribute non-aroma characteristics to beer such as bitterness, mouthfeel, and haze, all of which are important to monitor and assess in order to fully understand a hop’s full contribution to beer.

Benefit to Growers

  Hop growers are beginning to identify the specific genes responsible for producing certain flavor compounds and can use beer sensory data to zero in on the ones that actually make it into the final product.

Beer sensory assessment acts as a helpful stage in filtering through the thousands of experimental varieties that breeders develop to determine the lucky few that will be planted on a large scale and eventually released to the public. The whole process of new varietal development takes upwards of 12 years, with only one in every 10,000 new hop varieties ever making it to market. This lengthy, arduous, and resource heavy process relies on sound assurances that beer drinkers will embrace a new hop, in turn giving brewers a reason to welcome it onto their brewing schedule.

  At the other end, when growers wish to tweak production to increase efficiency, beer sensory can make sure that any changes have not negatively impacted sensory attributes of the final product. From optimizing harvest windows to dialing in the perfect kiln temperature, growers use beer sensory feedback to guide the decision-making process.

Benefit to Brewers

  Brewers ask a lot of questions. How do I get my beer to taste like starfruit? When in the process should I add hops to achieve a perfect balance between fruity and bitter? How will dry-hopped beer behave over time in different storage conditions? Answers to such questions are critical for success, but not all commercial brewers have the luxury of committing precious resources to pilot brews in order to find them. Beer sensory scientists can glean important information from brewing the exact same beer multiple times, tweaking only single aspects (like hop variety, hop addition timing, or storage conditions). The results of sensory analysis on these experiments can be passed to brewers, saving them time and capital, and optimizing the quality of their outputs. 

  The results of beer sensory studies also help brewers by guiding hop blend development to meet specific market demands. For example, an additive effect has been found to exist whereby the coexistence of linalool, geraniol, and β-citronellol creates a strong flavor impression of lime – crucial information in a time where citrus flavors in beer are fervidly sought, making access to hop products developed using this information incredibly valuable.

  To put it simply, brewers just want to make good beer that people like, and sensory assessment is one weapon in the arsenal that can be used towards that goal.

The Circle of Sensory

  Hops growers, brewers, and the beer market are linked in a never-ending feedback cycle. Growers develop and produce a hop variety, brewers use it to make the best beer they can, and the market lets us know what they think with their dollars. That information gets passed back to growers, who can adjust according to what the people want.

  And the stitches linking this whole process together? You guessed it. Beer sensory.

  Written by Tessa Schilaty, Sensory Coordinator at Yakima Chief Hops

  At Yakima Chief Hops, we have invested in a robust hop and beer sensory program, dedicating time and resources to gathering this valuable information in-house that we then share with our industry partners. Trained YCH staff members from all areas of the company meet regularly to taste, sniff and evaluate various beers and hop varieties with the guidance of our own Technical and Brewing Innovations teams. Drinking beer is a tough job, but our employees are happy to take one for the team!

Do’s & Don’ts of Opening Your Microbrewery

Cyndi
Thoughtful young man in casual shirt holding note pad and looking away while leaning at the wooden barrel with metal containers in the background

In The Microbrewery Handbook we discuss a variety of topics that can have a positive or negative impact on your brewery ranging from financials to operations to zoning, equipment and employee engagement.

  I wanted to share a few key do’s and don’ts of opening or operating your own microbrewery based on our experience opening Perfect Plain Brewing Co., a taproom-focused brewery in the heart of downtown Pensacola, Fla.

  We often focus on the part of the business we are passionate about: Beer. That’s understandable, but in an ever-evolving market, it can sometimes lead to a lack of focus on other important pieces of running a successful operation.  Let’s dive into some do’s and don’ts.

Do What you Know & Know What You Don’t

  Ego gets the best of all of us at one time or another. We think we know how to do something; we think we know the right way to handle something, we think we have the objectivity or perspective to make a sound decision on something. And sometimes, after it fails, we realize that perhaps we could have used some help.

  This happens all the time in business. Would you open a brewery without anyone on the team having any knowledge about beer? Likely not. Ask yourself why so many breweries open without consulting in help with banking, with accounting, with hiring and onboarding employees, or with sound expertise in customer service.

  The reality is that most often, people gravitate to their comfort zone. So if you’re a brewer, you focus on the beermaking and very little on the other things. And vice versa.

  Point is, it’s a major help to ensure your leadership team, or your mentors as you begin your company, provide a litany of expertise. Surround yourself with smart people who can fill the gaps in your skill set.

  I was fortunate to have Reed Odeneal, a friend, to start as director of brewing operations. I didn’t come from a brewing background, instead my expertise was in marketing, messaging, branding and operations. We complemented each other, and that has proven quite valuable so far.

Be Meticulous in Your Hiring & Onboarding Process

  Ask yourself: What is your hiring process? How do you onboard employees? Do you have standards or procedures for these things? In the Microbrewery Handbook I lay out a three-step interview process that I migrated from the health care industry and adapted to our specific needs. It allows the owner, the direct supervisor and the new hire’s peers to all have a say in the people who join our team. It’s a format that provides a sense of ownership for all and accountability to each other to make new hires successful.

  In the hustle of opening a new business, standards like these are so often disregarded. We “fly by the seat of our pants.” But realize this: The cost of one position turning over in the hospitality industry is more than $5,000. Why? Lost productivity, additional training hours, loss of regulars for that person, paying overtime to cover shifts, etc. That doesn’t even factor in the stress of hiring again, new faces, onboarding them and the other psychological variables that come into play.

  So knowing that, it seems like clarifying your hiring and onboarding should be a higher priority, right? Tie this financial outcome to the consequence of hiring poorly and you’ll quickly see that spending some time working on these processes are a major benefit.

Give Your Employees a Sense of Ownership

  At Perfect Plain, we share our financials with every member of our staff upon request, and we remind our staff of this at every meeting.

  We have a three-person peer interview panel – the final interview for all potential new hires – and if our peers don’t say yes to them unanimously, we don’t hire them. We are the first bar in our region to offer comprehensive health benefits to all full-time staff.

  We give each bartender $25 per shift to do the right thing without having to consult a manager to void. A spilled beer, a birthday celebration, etc.

Why do we do these things? Simple. We ask that our staff have a sense of ownership. We want them to treat their job like it’s their own place. Every business owner wants that, right? Well, ask yourself: What are you doing to provide a sense of ownership? It’s easy to request that your staff act like owners, but too often it’s a one-way street. We expect that but provide nothing to make them feel like owners.

  I challenge you, even if it’s just one or two steps, to empower your staff with some ownership-type information and responsibilities. I know it seems awkward.

  Let’s use sharing the financials as the example. The feedback I get most often when I present a brewery owner with this fact is some kind of concern that if they see the business being successful, “everyone will ask for a raise.”

  Research has proven this point to be false. Let me tell you what actually happens. Your bartenders and brewers probably see the daily sales reports coming through, and if you’re doing well, they see big numbers, right?

  Do they know how much insurance costs? Do they know about your $2,000 power bill each month? Do they know how expensive supplies and materials are? I’ve experienced that when you share financials, more often than not your staff is surprised at what it truly costs to operate a business. When they only see revenue, and not the profit and loss statement, they likely thing profits are much higher than normal.

  And at the end of the day, I offer this: If your company is doing so well that a staff member asks for a raise down the road, I can think of a LOT bigger problems you can be having as a business owner.

Don’t Undersize Your Brewhouse to Save Money

  A sound business plan will outline a range of top line revenue needed to make your brewery break even or turn a profit.

  It’s surprising how many people go through the laborious process of calculating these sales numbers, then you realize that because they’re trying to save money the first thing they do is downgrade the size of their brewhouse. Fitting your equipment to match your revenue goals and future potential is a must.

  Let’s say you were buying a car that was slightly out of your price range. Would the first thing you ask them to do to cut costs is take 50 percent of the horsepower out of the engine? Of course not. You need most of those horses just to pull the weight of the vehicle efficiently. You’d likely find some features you like but could live without. Or perhaps you cut other things in your personal budget so you can afford the vehicle.

  The brewhouse is the engine. You can only make as much beer as your labor and equipment allow. If you need a 10-barrel brewhouse and to save money you cut it to five barrels, then double your labor cost because you’re having to brew around the clock, are you saving money? Of course not. You’ll pay back those “savings” in the form of labor, repairs on equipment needing maintenance faster, etc.

  I’m not suggesting you bust your budget. What I’m suggesting is that a sound budget factors in the need for your company to produce product efficiently and at scale. So I’m all for saving money, but this is one place where your revenue goals and your equipment need to match. Don’t say you’re going to produce 1,000 barrels per year on a 2-barrel. If you need 1,000 barrels to make money, then get the proper amount of horsepower to make your business sustainable. 

Don’t Treat Your Taproom as an Afterthought

  This is one of the more common mistakes seen in taproom-focused breweries around the nation. There’s so much focus on the beermaking process, and what could make that process easier. But reframe the mindset: What’s the use of spending thousands of dollars on equipment that can speed up your brew day by 90 minutes … if no one is there to drink that beer?

  Craft beer consumers delineate between quality, no question. Don’t misread this as saying that quality doesn’t matter. It’s vital. However, reaching a certain quality standard – and knowing that yourself and at least a handful of your competitors will be in that same zone – engaging customers with an exciting taproom and fun vibe will produce more results for your business than that extra equipment ever could.

  At this moment in the craft beer movement, this fact is only becoming more prevalent. Competition continues to saturate markets all over the U.S. I wrote an entire chapter on making sure every brewer and every brewery owner asks themselves “What makes us different?” I would always include a large investment in the taproom as one of the safest ways to create some uniqueness in your market.

Suds & Soldiers: Beer and World War I, 1914-1919

Cyndi
beer carriage

By: Doran Cart, Senior Curator, National WWI Museum and Memorial

By the time of World War I, which started in 1914, beer was already an ancient beverage made and consumed by most the nations involved in the war. In light of the long history already written about beer, this article will center on the personal, official and period-printed references of beer during World War I held in the archives of the National WWI Museum and Memorial in Kansas City, Missouri.

  Many of the early war photographs show soldiers, especially German, posing for their gone-to-war photographs with beer mugs in hand and often sitting on beer kegs. Ceramic beer tankards were illustrated with scenes of soldiers’ service so they could be reminded of what they had gone through while enjoying their favorite brew. A German/Anglo brewery in Tsingtao, China was in production at the beginning of the war and was there when Japanese forces attacked the German garrison taking control. A graphic illustration of that attack is on exhibition at the museum. The brewery still exists.

  Changes in the opening and closing hours of pubs in England occurred during the war when the situation became dire from many of the war industries’ workers spending more time drinking beer and “other intoxicating liquor” than producing artillery shells and airplanes. The Defense of the Realm (Consolidation) Regulations of 1914 specifically prohibited the sale and consumption “on weekdays 12 noon to 2:30 p.m. and 6 p.m. to 9 p.m. and on Sundays [the same hours].”

  British soldiers wrote in their diaries about beer:

“Hallowe’en was celebrated in our billets – beer, soup, roast beef, plum duff.” A. Stuart Dolden, 1st Battalion, London Scottish Regiment

  October 1916 – “I was amazed to get two bottles of Guiness to drink.” George Coppard, British Machine Gun Corps, after being wounded.

  C.H. Williams, 5th Battalion, the Oxfordshire and Buckinghamshire Light Infantry, British Army, wrote after Christmas of 1916: “We had our Christmas dinner in Albert, France in an old sewing-machine factory.  We had beer for our dinner – plenty of it – and a good tuck-in to go with it!  Roast pork!  Beautiful after bully beef!” [Bully beef was canned processed beef issued as a ration].

  In England in 1918, the Hart Family Brewers produced a commemorative extra pale ale called the “Flyer.” It was brewed to honor Wellingborough, England’s “Own Flying Ace, Major Mick Mannock.” Major Mannock was a Victoria Cross recipient for his World War I actions in which he recorded 61 aerial victories with the Royal Flying Corps (later the Royal Air Force). He was killed over France on July 26, 1918.

  Although the American Expeditionary Forces were technically “dry,” prior to the US 18th Amendment ratified in 1920, enterprising soldiers soon learned where the beer and wine were. One US Signal Corps photograph is captioned: “American soldiers in a captured German trench drinking beer out of steins and smoking cigars.”

  From the papers of Captain Clarence J. Minick, 361st Infantry, 91st Division the following order was found: “Headquarters 3rd Battalion, 91st Division, Sarrey, France, July 24, 1918. Extract General Order No. XXI. 1. “The following regulations for the government of troops billeted in Sarrey are hereby published for the guidance of all concerned: (a) Cafes will be open to troops for sale of light wines and beers during the following hours: 1:30 A.M. to 1:00 P.M. 6:00 P.M. to 9:00 P.M. Absolutely no drinking of other intoxicants will be permitted and all cases of intoxication will be summarily dealt with. Wine or beer purchased in cafes will be used on the premises and not carried away in bottles or other receptables.”

  At the Battle of St. Mihiel, France, September 1918, this report of the 353rd Infantry Regiment, 89th Division Intelligence Section related:

  “In the evening of September 13, the Regimental observers established an O.P. [observation post] on the high ground south of Xammes. While occupying this O.P. the observers lived on the fat of the land. An abandoned German commissary in Xammes furnished bread, honey, butter, jam, gold-tipped cigarettes and cigars – from the well-kept German gardens in the vicinity came a variety of vegetables – and crowning all, German beer, wine and schnapps were on tap in former Boche (German) bars (for the ‘dry’ All-Kansas regiment).”

  During the American occupation of Germany in 1919 when the rules regarding consumption of beer and wine had been unofficially loosened, Charles MacArthur, 149th Field Artillery Regiment, related that in his [cannon] battery’s stop in Bittenburg, “we ran into real German beer, a little watery for the famine in grain.”  Another discovery was made in Bittenburg:  eierkuchen, or German waffles.  “With a helmet full of flour and a little corn syrup any hausfrau could produce an elegant set of waffles.”  Evidently, the waffles reached such an esteemed place that “the very name of eierkuchen was transferred to anything that looked appetizing, especially young women.”

  A Captain Biggs related that the clothing worn by German civilians seemed serviceable, but that the “shapeless, heavy shoes” was a noticeable feature.  Much of the material was ersatz [substitute], made of paper products.  Beer was plentiful at 20 to 30 pfennings a glass, but “of a poor grade,” as was the wine.

  As part of the agreement for the occupation of Germany after the signing of the Armistice on November 11, 1918 was one unpopular requirement that all dram shops be closed except during a few hours of the afternoon and early evening.  The sale of any intoxicant except beer and light wines was prohibited.

  A printed announcement of a “Reunion and Smoker” party for the 77th Division’s MP Company on October 25, 1919 at the 77th Division Association Club House in New York City. states that “they will organize an American Legion Post and there will be a keg. Organized by Francis N. Bangs.” Captain Bangs was in the MP Company, 77th Division, AEF.

  A postcard with an inscription, described the outdoor tables in Bourges where the French would gather to drink and socialize, as pictured. Inscription on the back: “the French people like to have this little beer table outside. This is very typical.”

  On a printed card from the YMCA, “The Y.M.C.A accepts no responsibility for money or valuables kept by soldiers during the night. These should be handed for safe keeping to the Leader in charge of the Hut. Overcoats, rifles, or other equipment should be stored in the cloak room. You are urged to leave no articles of clothing or equipment in the cubicle after dressing or about the Hut at any time. By order of the Police, Beer and Spirits must not be brought into the Institute.”

  From the service of Private Walter G. Shaw, 18th Infantry Band, 1st Division. He died at Charpentry in the Argonne in 1918:

  Oct 31, 1917 “I like France fairly Well don’t think I would like to live here always [sic] they have fine roads here. white and red wine can be bought for 1.50F a bottle (30c) some of the soldiers get tanked up on it I don’t like it because it is so sour French people have it with every meal. Champagne can be bought for 9.00F a bottle $1.75 this is extra dry costs about $7.00 in the U.S. Beer costs .30 centimes a bottle 10c….”

 From the service of Corporal Reid Disman Fields, Ordnance Detachment, 13th Field Artillery, AEF:

“Feb. 23/19

Dear Clara:

  No doubt you will be surprised to hear I am going down into Germany. Left Mehnin today 11AM. Am going to the Third army. So far as I know somewhere near Coblenz. So don’t expect I will be back very soon. Tell your mother I will drink her share of beer. Ha! All for the time so Bye Bye, Reid.”

  The roster and menu for Christmas dinner, 1915 from the 133rd Company, US Coastal Artillery Corps, Fort Terry, New York listed that the dinner included oyster stew and crackers, roast turkey, oyster dressing, cranberry sauce, mashed potatoes, creamed corn, creamed peas, stuffed olives, tomato catsup, celery, pumpkin pie, mince pie, cocoanut layer cake, chocolate cake, bananas, oranges, apples, grapes, figs, cigars, cigarettes, apple cider, and bottled beer.

  From US volunteer truck driver, Ned Henschel, December 8, 1918, Verdun, France:

  “…a rumour floated around that there was beer to found in a neighboring village. Another lieutenant and I walked eight kilometres to investigate – and found that it was all wrong; there wasn’t even Pinard!” Pinard was a red French table wine.

  During the Easter Uprising in Dublin of 1916 of Irish citizens against British rule, the British Illustrated War News of May 10, 1916 reported that British troops took cover behind a barricade of beer barrels.

  One postcard shows a “German concrete cellar used as cooler for beer, in woods, Meuse, France.” A British humorous postcard shows a tent surrounded by flood waters with a downcast soldier poking his head out lamenting “‘Ah! If it were only beer.” A German postcard that a Karl Rosendahl in writing to Frieda Rosendahl of Riemsloh, Germany related: “My dear Freidelchen, We are sitting in the Train with a nice glass of beer and send you greetings.” [translated to English].

  A letter from F. Thunhorst of Riemsloh Germany to Carl Rosendahl, June 3, 1915, related that one of their acquaintances “Old [illegible] is still the same and he just keeps going. The beer still tastes excellent, and he still drinks a few pints daily. He sends his greetings.” [Translated from German to English].

  American Dale E. Girton, Base Hosp. #78 wrote on May 8, 1919,

“Hello Rummy:

  I guess that is a fitting salutation for one who has told me in a – past letter he has started drinking Rum, BEER, Wine & Cognac. How about it? Haven’t heard from you for some time and we are expecting to leave Toul for a port of embarkation at any day now, so I thot [sic] I would write you a word so that if I am quite a while.”

  Beer was universal in WWI. It was used to quench thirst, to enjoy in comradeship, to relax and possibly, to help for a moment, to forget about the horror of war.

  From the Archives of the National WWI Museum and Memorial.

Profiling Software: Used by the Breweries, Cideries, and Distilleries

Cyndi
map seen in an iphone

By: Becky Garrison

As we enter into a new decade, an increasing number of breweries, cideries and distilleries are moving from recording their finances, employee logs and other data from offline pen and pencil accounting methods to online software systems. Here’s a sampling of some of the latest techno-logical developments that are specifically geared towards helping these outfits better manage their businesses.  

ShiftNote

  ShiftNote is an online manager logbook and employee scheduling software. The program, re-leased in 2002, gives owners, managers and employees the ability to communicate in one place. Employees can change their shifts and request time off in a few easy clicks. Then managers can approve or deny these changes and requests.

  The scheduling feature allows users to create and publish schedules and shift notes that can be viewed on any mobile device. Additionally, the manager log book can track key daily sales, re-pair and maintenance schedules, upcoming events and labor stats. As this logbook is entirely cus-tomizable, business owners can add custom categories and stats contingent on their particular needs.

  Help articles, tutorials and free screen share trainings are available for those who need assistance in setting up and using ShiftNote. A major software update slated for 2020 will offer new and enhanced features.

Whiskey Systems Online

  Whiskey Systems Online is a complete production tracking and TTB reporting system tailored to the unique needs of American craft distillers. Launched in 2014, this software offers complete distillery operations tracking, from raw materials to cases shipped out. Features include invento-ry and barrel management, cost of goods sold, manufacturing cost accounting, forecasting and planning, batch tracing, auto-generated TTB monthly reporting and federal excise tax returns, QuickBooks integration, employee task management, TTB audit preparation, success metrics dashboards and much more.

  Whiskey Systems’ propriety hardware interface allows distillers to track the temperature and humidity of their warehouse during a barrel’s entire aging lifecycle. By tying the aging history to their Whiskey Systems barrel inventory, the software can both optimize aging conditions and eliminate manual data entry from a third-party monitoring system.

  In 2020, the company plans on launching a brand new interface to improve the user experience and navigation. The update will include more production planning and forecasting tools and more success metrics and dashboards. As Whiskey Systems is a “subscription as a service,” there are no required downloads, and eve-rything is available via a browser. Users just activate their subscription online for immediate ac-cess. Whiskey Systems has extensive online resources such as training videos and help pages, as well as one-on-one support and set up for no additional charge.

Daruma Tech

  Since 2015, Daruma Tech has been developing mobile loyalty applications for beer guilds. For the more significant guilds and associations, it has a customizable solution that can be tailored to suit their marketing needs. For smaller guilds, the “lite” version can help them get started with their digital loyalty program.

  This loyalty program software rewards consumers for visiting participating locations. App users can keep track of the breweries they’ve been and the places they want to visit next. Users collect stamps at each brewery and claim prizes based on the number of stamps they’ve collected.

  Brewers who participate can access a portal where they manage their content, including location-specific information, beers, events and deals. The app also provides a marketing channel where brewers can communicate directly with their target audience, as well as a social component where users can share their thoughts on different breweries and beers.

  The mobile app is powered by a cloud-based mobile content management system. Participating locations can update the content in real-time through their MCM. There is nothing to maintain, download and install, as it’s also a subscription-based service. A knowledge library where users can access help documents is available online.

  Current guild users of the app are New York State Brewers Association, Ohio Craft Brewers As-sociation, Brewers of Pennsylvania, Massachusetts Brewers Guild, Rhode Island Brewers Guild, Connecticut Brewers Guild and the Washington Beer Commission.

  In 2020, Daruma Tech will begin offering these services for other craft beverages and related craft foods.

KegID

  KegID is a cloud-based asset scanning and tracking application that’s been available to brewers since 2001. The software allows brewers to track how many kegs they currently have in use by providing visibility and insight. This application can create accountability by pinpointing the lo-cation of a barrel, its contents and dwell time.  

  Scanning can be done with a variety of equipment, from Android or iOS mobile devices to fixed in-line scanners. In addition to scanning kegs at the brewery, they can be scanned in the field and marked for special handling if any part of it is found to be damaged or malfunctioning. It can al-so identify kegs that are due for routine maintenance.

  Also, KegID is automatically included on any kegs leased through its lease-to-own solution, KegFleet, at no extra charge. Each brand new European keg comes laser-etched with the scan codes and the ID numbers pre-loaded into the application. They are ready to scan and track upon delivery. 

  In addition to online resources, a team of people located in KegID’s Houston-based office are available to provide personal assistance to new users during business hours.

  The app can also be used to manage other reusable assets like pallets and tap handles.    

Kegshoe

  For the past four years, cideries, breweries, distilleries and other craft beverage producers worldwide have been using Kegshoe tracking software. Using either an iOS or Android app alongside Kegshoe’s barcode stickers, producers can track their keg fleets throughout the entire production, storage and distribution cycle.

  The application then offers insights into the status, location and development of a keg fleet, ensuring that turnover cycles are kept in check and kegs are not being lost. Having the reporting and logging tools available to show the contents, location and details of each barrel allows customers to manage their fleet inventory better.

  To make setup and operation as convenient and affordable as possible, the company eliminated the need for additional hardware. Producers can download the Kegshoe app on their devices and start scanning. Other features include rental customer logging and tracking, and production batch assignment and monitoring 

  Kegshoe is currently in the process of releasing a craft beverage-focused customer relationship management software. The CRM will help to provide an industry-tailored system for sales reps and managers to log and manage their customers, sales cycles and productivity. With both desk-top and mobile functionality, it is meant to make the sales process for craft beverage producers as efficient and affordable as possible.

  All new customers receive a series of onboarding materials, including detailed product tours that walk them through the app and desktop software, as well as a support article library. Additional-ly, Kegshoe offers around-the-clock support, ensuring all issues and questions are addressed promptly and don’t interrupt brewing operations.

Small-Batch Maps

  Released in 2019, Small-Batch Maps is designed to help breweries and distilleries better manage their distribution and sales. The company wants to lessen the challenges of market forecasting by helping producers determine if they should market one product or concentrate on all of their of-ferings.

  The software allows potential customers to search for products on a website, and for beverage companies to gain marketing insights, estimate product needs and discover new distri-bution regions. Producers can then use this data to market the products most in-demand, or those with less traction.

  Breweries and distilleries can easily add Small-Batch Maps to their websites and other online properties. Once they’ve added the feature, they can head over to their website, log in, and add new locations as their distribution networks grow.

MAN VERSUS MACHINE: Options in the World of End-of-Line Packaging

Cyndi
man operating package machine

By: Cheryl Gray

Quality, efficiency and speed are but a few of the attributes assigned to best practices when it comes to end-of-line packaging.  Craft breweries and distilleries that make the change from manual to automatic or, in some cases, combine the best of both worlds, have a universal goal: to produce an attractively packaged and cost-effective end product that draws in consumers and keeps them coming back.

  When it comes to automation for end-of-line packaging, the best companies listen to the needs of craft brewers and distillers, rather than drive them to a product that won’t benefit their bottom line. Such is the case with WestRock of Atlanta, Georgia, which touts itself as the only company in the paper packaging industry with in-house machinery manufacturing teams designing full lines of automatic packaging systems. WestRock considers itself a leader in innovation and sustainable packaging practices. David Hayslette is WestRock’s Senior Director of Business Development for Craft Beverages.

  “Customers come to us because we create customized, sustainable and value-added solutions using the world’s most comprehensive portfolio of paper and packaging products,” says Hayslette. “Customers appreciate our partnership approach. They know that when they work with WestRock on a total automated solution, they have a single point of contact for paperboard, corrugated and machinery solutions that work together.”

  Hayslette points out that for many craft breweries and distilleries, automation comes into play when growth demands something beyond what a manual operation can handle.

  “Typically, end-of-line packaging automation decisions are driven by upgrades to filling capacity. In other words, if a brewery is filling cans at a rate of 45 cans per minute with a mobile filler and they decide to purchase their own filler with a speed of 100 cans per minute, they will likely not be able to keep up with the speed using labor, or their costs will increase prohibitively. Instead, with the investment in the faster filler, they also become interested in automated packaging to address their objectives.”

  There is a delicate balance, Hayslette says, between reducing costs for labor and materials, while working to maximize productivity.  

  “Automation brings a level of consistency in the packing process by the way cartons are erected and glued versus the manual approach, which can be subject to human variance. In a tight labor market like we have in the U.S., finding laborers to hand-pack cartons can be challenging, and the hourly pay rate is increasing in some jurisdictions. Automation also brings the ability to pack out more product in the same period. Manual packaging works best when there is no bottleneck created to the production process; there is readily available labor; and the rate of pay is reasonable, such that the total cost of packaging is reasonable. “

  Hayslette stresses that WestRock works with clients to help ease the burden of financing the capital investment costs tied to purchasing machinery for end-of-line packaging. He points to return-on-investment as one key consideration for breweries and distilleries thinking of buying automated packaging systems.

  “We encourage customers to think about their total cost of ownership and do a side-by-side analysis of the manual versus automated process. A manual process typically carries with it the cost of labor, a cost associated with the packaging materials to be used and a productivity rate. This would be compared to the automated option, which would typically reduce labor, reduce materials costs and increase productivity rates. However, there is the added investment in the machinery itself.”

  Minnesota-based and employee-owned Douglas Machine sold its first automation product in the 1960s to none other than the Curtiss Candy Company, makers of iconic candy bars that include Baby Ruth and Butterfinger. More than 50 years later, Douglas provides a vast array of what it describes as cutting-edge machinery for cartoning, case packing, as well as tray and shrink wrapping.

  Todd Welker, Beverage Sales Manager for Douglas, says top producers in brewing—both craft and legacy—along with distilled spirits, come to Douglas for their packaging machinery needs. The company, Welker says, designs and builds exclusively servo platforms in its Minnesota factory.  All come with nationwide sales and service support, backed by a three-year warranty and a parts price guarantee.

  “Typically, our customers come to us when either their speeds increase beyond their current low-end machinery, or when they are planning ahead to accommodate future outputs,” said Welker. “It is our clients who make the decision to automate based on labor costs, labor availability and safety of their personnel. Reducing labor or the concerns of safety due to manual processes generally drives automation, in addition to increasing line speeds, which reduces labor economies.”

  Welker says that switching from manual to automated end-of-line packaging takes output to new levels.

  “Manual packaging is extremely flexible. The human hand can do a number of things that are difficult with automation. Still, automation of packaging is by far more cost-effective, and it can reduce or eliminate repetitive motion injuries where one injury can potentially cost more than a fully automated line.  Automated packaging can also run much faster than manual work, thus increasing line speeds, reducing labor and driving up efficiencies.”

Welker says that his brewery clients work with a variety of end-of-line packaging options.

  “The carton and tray are the most accepted packages in the brewing industry when cans are run. Bottles are often run on older case erectors, drop packs and case closers, but more breweries are looking to eliminate the box-shop and utilize all-in-one wraparound case packing technologies. These greatly reduce footprint, labor, case costs, and can even potentially eliminate partitions in the cases for even more material savings.”

  However, for some craft beverage makers, the dollar investment of automated end-of-line packaging can be daunting. Meghann Quinn, co-owner of Bale Breaker Brewing Company in Yakima, Washington, says her brewery’s end-of-line packaging is all done by hand. 

  “We manually put the six-packs into the cases and palletize them.  We do both of those manually because end-of-line automated packaging systems are too expensive, and our speed doesn’t necessitate them.”

  Some breweries and distilleries deploy manual labor as a way to test the market to learn what are the best pack sizes and styles. Once the decision is made on what works and what doesn’t, many producers turn to automation to quickly get their products to customers.

Best of Both Worlds

  The marketplace had to wait nearly a century before Nelson’s Green Brier Distillery, founded in the 1800s in Nashville, Tennessee, was resurrected by brothers Andy and Charles Nelson. The Nelson brothers worked to restore the landmark distillery built by their great-great-great-grandfather, Charles Nelson, and with it, a brand that many consider highly responsible for putting Tennessee whiskey on the map worldwide before Prohibition dried up production.

  Fast forward to the 21st Century, when the Nelson brothers have embraced many aspects of automation in their end-of-line packaging. However, just as they managed to re-create the family’s original whiskey recipe through meticulous, hands-on research, Andy Nelson says the distillery is just as careful not to abandon many of the manual end-of-line packaging techniques that make Green Brier’s products unique. A combination of automated and manual systems, Nelson believes, brings together the best of both worlds.

  “We have been utilizing both for quite some time,” Nelson says. “If you have all or mostly automated equipment, it’s important to have a good tech on hand to help when things inevitably go wrong.  And, with manual or semi-auto equipment, it’s necessary to have a staff that is attentive and detail-oriented.  It’s all about quality and efficiency!” 

  Sourcing suppliers for end-of-line packaging needs is as careful a process as deciding what products to order. Nelson says that his distillery relies upon a variety of options.

  “We’ve used a handful of methods, ranging from brokers to OEM directly. It can depend on how much I know about each item and how much I trust others to help me select equipment and coordinate maintenance.”

  For those embracing automation on any level, the opportunities are endless. While manual packaging renders what only a human approach can offer, automation addresses the future, boosting production and the bottom line.