How Bars & Restaurants Can Protect Themselves Amid Heightened Violence

photo of man in bar holding down another man on a table getting ready to punch that man and a women is trying to stop that man from punching

By: David DeLorenzo

Rising violence is an unfortunate reality around the world. It’s happening close to home, too. Bar and restaurant owners are experiencing incidences involving weapons or shootings in and around their establishments on a more regular basis. This is a sad situation and a dangerous one. Bar and restaurant owners need to know what to do in the aftermath of a weapons incident. Even more importantly, they need to know how to protect themselves and help prevent incidences from happening in the first place.

  Unfortunately, many people don’t realize that it’s becoming more common for firearms exclusions to be included in insurance policies. These prevent an insurance company from having to pay out any monetary compensation to not only the insured but also victims of an incident. That means beyond any monetary compensation, these exclusions ensure the insurance company would also not have to cover other items such as risk assessment, business income lost if the establishment had to temporarily close or was hit with a lawsuit or post-counseling services for those involved. Just one incident could put a bar or restaurant right out of business. It’s important that they are aware of what their policies do and do not cover — and to protect themselves from scenarios like this.

  In the current state of the industry, and at any time, being informed is essential. Bar and restaurant owners should check their policies to see if weapons are excluded from their commercial general liability coverage. If these exclusions exist in their current policies, bar and restaurant owners should add stand-alone coverage to their policies (or purchase them separately). These will protect them in the case of active shooter and deadly weapons incidents.

  As with being educated, being proactive in preventing an incident is key. Bar and restaurant owners need to protect their businesses, their livelihoods, their staff and their patrons. That’s a heavy responsibility — one that should not be taken lightly, especially amid heightened violence situations. There are a few steps owners can take.

  First, simply posting “no weapons” signs at the entries of the establishment, on the building and around the premises (such in the parking lot) can help. If the bar or restaurant owner suspects a violent incident could occur or has noticed aggressive behavior, they could heighten security measures by hiring a door person as well as additional security personnel, preferably those who have previous law enforcement or nightclub experience.

  Proper staff training is another factor that can help bar and restaurant owners in the case of an incident (or hopefully in the instance of preventing one). It’s important for employees to receive on-going training for security as well as preventing overserving that could lead to aggressive behavior, a fight or a shooting. Servers should know how to spot an “obviously intoxicated” person and understand the establishment’s policies on how to address refusing to serve or no longer serving alcohol to an obviously intoxicated person.

  The California Department of Alcoholic Beverage Control notes: “The law states that no person may sell or give alcohol to anyone who is obviously intoxicated. Therefore, every person who sells, furnishes, gives, or causes to be sold, furnished, or given any alcoholic beverage to any OBVIOUSLY intoxicated person is guilty of a misdemeanor. A person is obviously intoxicated when the average person can plainly see that the person is intoxicated. In other words, the person looks or acts drunk.”

  Because weapons incidences are often a result of too much alcohol, staff should be trained on how to spot the signs of intoxication so they feel confident in assessing whether or not they should serve that patron. Restaurants can actually be slapped with a lawsuit if a fight breaks out on their premise. In today’s world where people become easily triggered and too much alcohol, a recipe for an incident is brewing.

  Ideally, an intoxicated person (or a person carrying a weapon) shouldn’t make it past door security — another reason to create a position for that very important role if the restaurant doesn’t already. If a staff member notices that a person is becoming intoxicated, they need to halt their alcohol service immediately.

  In addition to door security, security cameras are an excellent resource to help protect bar and restaurant owners in the case of a weapons incident. Good quality security video footage with timestamps can help catch the details of an incident, limit liability and hopefully absolve the bar or restaurant of any fault in the case of a weapons or shooting incident at their establishment.

  Keeping weapons out of the establishment is crucial, but oftentimes these acts of violence are happening around the establishments or in their parking lots, not actually inside. This is where the addition of cameras and security around the perimeters and in their parking lots can also prove helpful.

  Weapons exclusions are becoming mainstay on policies with carriers not wanting to cover violent acts with a weapon that happen on the premises of bars, restaurants and other businesses in the hospitality industry. However, with these types of instances on the rise, businesses need to ensure they are protected — as well as their employees and their patrons.

  In addition to weapons exclusions becoming more common, assault and battery exclusions as well as sub-limits on policies stating carriers don’t want as much liability on violent acts between partners and or employees are becoming more frequent. Liquor liabilities are also an issue. Liquor liability sub-limits no longer cover the full limit of an establishment’s lease.

  I was recently part of a team that worked to change the law when it comes to establishments that serve alcohol in Arizona. While it’s legal to serve alcohol to adults, establishments can literally get a claim filed on their record and get a letter from an attorney if they so much as think a person stepped foot onto their premises and had a sip of one drink. 

  The burden has been for the establishment and their insurance carrier to prove that they didn’t do something negligent. The problem with this is a combination of many things — one of them being that wording of “obviously intoxicated” mentioned earlier. This phrase has taken on whatever meaning it needs to in order for whatever party suing the establishment to make their case.

  Together with some very influential people in the Arizona hospitality along with the Arizona Licensed Beverage Association (ALBA), which was a major player in this effort, an Amicus Curiae brief was formed. With this decision by the Supreme Court being held, there should be some changes to the way establishments are sued and how insurance companies underwrite risks. This is new to everyone involved and it will take some time to see changes occur, but overall this is a win for the Arizona hospitality industry.

  Finally, it’s important that bar and restaurant owners stay in communication with their insurance agents and up to date on any changing policies. Spending some time ensuring an establishment is properly covered provides safety and peace of mind for all.

  Out of his passion to serve the restaurant and hospitality industry, David DeLorenzo created the Bar and Restaurant Insurance niche division of his father’s company The Ambassador Group, which he purchased in 2009. For more than 20 years, he has been dedicated to helping protect and connect the hospitality industry in Arizona.

For more visit: barandrestaurantinsurance.com

Top Sustainability Practices for Breweries and Distilleries

2 beer mugs full of beer in front of a sunset

By: Alyssa L. Ochs

Protecting the environment and conserving resources have been topics of increasing interest and importance in the craft beverage industry lately. Although these considerations may take a little extra time and effort for business owners and staff, implementing eco-friendly practices has many long-term benefits, such as attracting like-minded consumers, saving money and contributing to a healthier planet.

  Some sustainability practices appeal to craft beverage producers more than others because of their ease of setting up, affordability and projected impact. Review these ideas and examples with your team to discuss a new and improved approach in the new year and to determine whether they might complement your future brewing or distilling practices.

The Importance of Craft Beverage Sustainability

  Unfortunately, the traditional processes of brewing and distillery are not inherently eco-friendly. It takes significant water, energy and other resources to make just a single batch of beer or spirits. Yet there are ways for producers to get creative and offset their costs while being responsible community businesses, too. This concept is critical because the continual production of high-quality beverages depends upon reliable waste elimination and efficient resource utilization.

  In addition to simply feeling good about the beverage production process and attracting consumers who care about the environment, sustainability can have unexpected effects in a craft beverage setting. Producers can increase profits and protect supply chain ingredients by conserving resources and reducing waste. Sustainability measures can contribute to a safer work environment if fewer potential toxins are in workspaces. Additionally, breweries and distilleries can minimize their usage of natural resources, add value to the local community and partner with environmentally conscious groups to create a greater culture in the community around sustainability.

Ideas for Your Brewery or Distillery

  Following the examples of other craft beverage producers and brainstorming your own ideas, there are many ways to take an eco-friendly turn in production for the new year. For example, producers can upgrade their packaging systems to use biodegradable six-pack rings for cans. They can prioritize using local ingredients, reuse waste water and inquire into the costs of solar panels. Waste reduction projects, water-saving technologies and land stewardship programs can promote sustainability in a distillery or brewery. A couple of ideas that incorporate sustainability, philanthropy and community involvement are donating spent grain and hops to feed local livestock and participating in a tree-planting effort.

  Brewers and distillers work with various vendors and suppliers in the course of regular business. Therefore, one idea is to vet all companies about their internal sustainability guidelines to address the broader impacts of packaging, transportation, water and emissions. Distilleries can focus on sourcing local ingredients by purchasing barley and rye close to home, partnering with local farms to send spent grain to feed cattle on nearby farms and installing closed water systems that recirculate water to operate stills. Including a page dedicated to sustainability on your brewery or distillery website can help consumers learn more about the eco-friendly efforts you are working on and connect with your brand on a more personal level based on shared interests.

  Here are some additional ideas to inspire your internal conversations about becoming a more sustainable producer:

•    Train staff how to read the water meter and about water usage

•    Monitor groundwater with annual water quality testing

•    Check for plumbing leaks regularly

•    Install a closed-loop cooling system for the fermenter

•    Use low-flow toilets and auto-flush sensors in taproom bathrooms

•    Use a nitrogen generator to clear hoses and lines instead of carbon dioxide

•    Utilize low volatile organic compound (VOC) paint, flooring, and furniture

•    Use LED lighting throughout the brewery or distillery

•    Install energy-efficient windows, doors and skylights

•    Install insulation jackets on hot water pipes and water heaters

•    Recycle as many materials as possible during production

•    Offer employees incentives for biking, walking, or using public transportation to work

Examples of Sustainability Practices

  One example of a producer prioritizing sustainability is New Belgium Brewing in Fort Collins, Colorado. This prominent producer was the first brewery to join 1% for the Planet and commit a percentage of annual sales to environmental causes. It also became the first carbon-neutral-certified major brewer and is a Certified B Corporation, a designation that holds organizations to high environmental and social standards. Another notable Colorado brewery is Mountain Tap Brewery, which has worked to lower its carbon footprint by buying malt and hops from local growers so that ingredients don’t have to travel as far to reach them.

  Meanwhile, Beerburg in Austin, Texas, is committed to responsible sourcing ingredients through partnerships and land conservation. Beerburg’s beers feature ingredients foraged from its own land. It also has committed to creating a zero liquid and solid waste facility that provides its own water and energy. Some breweries, such as Alaskan Brewing Company in Juneau, Alaska, have used CO2 recovery programs to address the issue of carbon dioxide produced during the production processes. To promote the oceans and waterways around Alaska, this brewery donates a portion of its Icy Bay IPA to water and coastline cleanup efforts across the markets it serves.

  Moving across the country, many breweries and distilleries in Virginia have added eco-friendly practices into their operations. For example, Lickinghole Creek Craft Brewery sources its water onsite, contributes to river cleanup efforts and collaborates with organizations to build wells in other countries with water supply issues. At Virginia’s Catoctin Creek Distillery, a large percentage of electrical usage comes from solar energy, and excess solar power generated goes back to the local grid to support other homes and businesses.

  The Appalachian Gap Distillery’s sustainability efforts extend to utilizing a solar array and donating liquid stillage and waste grains for cattle feed on local farms. Located in Middlebury, Vermont, Appalachian Gap became America’s first climate-neutral distillery and also promotes sustainability with its insulation, windows, doors, heaters and water conservation process. Other producers that serve as sustainability models include Bozeman Spirits Distillery in Montana, which sources water from the local snowmelt, and Five & 20 Spirits and Brewing in Westfield, New York. Five & 20 is the state’s first combination brewery/winery/distillery. Industry leaders have recognized the producer for combining stillage, spent grains and wash water byproducts with wood chips to create a protein source to feed various types of fish. There’s also Frey Ranch Farmers & Distillers in Fallon, Nevada, which practices a 100 percent farm-to-glass model. Frey Ranch sustainably grows 100 percent of its whiskey grains onsite and offers behind-the-scenes tours for visitors to learn how whiskey is created from these homegrown grains.

Sustainability Resources for Producers

  If your brewery or distillery is interested in trying out some new sustainability practices, numerous companies, government agencies and consultants are available to help. For example, the Connecticut Department of Energy & Environmental Protection is committed to assisting statewide breweries with their interests in reducing pollution, promoting energy efficiency, lowering greenhouse gas emissions, minimizing waste and using less toxic cleaning products. The agency offers a free and voluntary Connecticut/New England Environmentally Sustainable Craft Beverage Program that extends beyond just Connecticut and involves partnerships throughout New Hampshire, Maine, Massachusetts and Rhode Island. Local government resources are also available to learn about preventing pollution, applying for small business energy saving programs and free assistance for reducing waste in a brewery or brewpub.

  The Brewers Association, a nationwide nonprofit trade organization, is a source for craft beer research and service grants to help breweries improve their sustainable growth. Specific sustainability priorities for its industry grants include the following:

•    Understand best practices and payback in hop and barley production, which enhance soil sequestration of greenhouse gases

•    Innovate packaging materials, including reduction of plastic, materials collection or recycling and reusable containers that reduce greenhouse gases

•    Benchmark malt house water and energy utility intensity rates

•    Develop new materials and compare the quality outcomes of hops packaged and stored in recyclable alternatives to Mylar foils over time

•    Study climate resiliency of North American hop and barley production, especially as crops broaden and diversify into minor growing regions and breeding efforts that address climate adaptation

•    Research environmentally safe alternatives to current clean-in-place chemicals commonly used in the brewing industry

•    Identify areas of efficiency improvements for small-scale carbon dioxide recovery and direct air capture

  Meanwhile, the Distilled Spirits Council of the United States is an Energy Star partner and offers member-spearheaded environmental sustainability efforts through a taskforce focused on advocacy and policy reform. This organization’s current strategies include land stewardship, responsible water use, energy reduction, circular material syncing, waste reduction and evaluating transport burdens.

For further assistance with “going green” as a brewery or distillery, you may want to look into these resources to make a connection or find inspiration:

•    First Key, consultants to the brewing and beverage industry

•    Green Brewery Project, a nonprofit sustainability consulting venture

•    Lueders Consulting, expertise for the brewing industry

•    Cornell Sustainability Consultants, sustainability-focused student group

•    Heather Paulsen Consulting, sustainable business consulting

•    Campden BRI, brewing environmental services

•    Pure Water Brewing Alliance, dedicated to brewing beer with recycled water

•    Brew Recruit, brewing and beverage manufacturing consulting services

Is Your Tweet an Advertisement?

photo of someone holding a cell phone up to a glass of beer to take a photo

By: Brian D. Kaider, Esq.

Members of the alcoholic beverage industry should be aware that TTB regulations require certain mandatory information and prohibit some practices and statements in all advertising of alcoholic products and brands.  But, what constitutes advertising may be broader than some members realize.  Specifically, how the rules apply to the expanding realm of social media may be a bit of a surprise.

What is an Advertisement?

  “Advertisement,” as defined in 27 CFR Parts 4, 5, and 7, for wine, spirits, and malt beverages, respectively, includes any verbal statement, illustration, or depiction that is in, or calculated to induce sales in, interstate or foreign commerce, or is disseminated by mail.  The regulations further provide that the requirements for such advertisements apply regardless of the means of dissemination.  Some of the specific examples listed in the regulations include: radio or television broadcast, newspaper, periodical, publication, sign, menu, book insert, or by electronic or internet media.  The TTB considers “electronic or internet media” to include all forms of social media.

Required Information

  All advertisements must include the responsible advertiser’s name and either its city and state or other contact information, such as a telephone number, website, or email address.  If the advertisement refers to a general line of products (beer, wine, or spirits) or all of the products by the company or brand name, then no more information is required.  If the advertisement refers to a specific product, however, then it must also include a conspicuous statement of the class, type, or distinctive designation to which the product belongs.  This statement must match what is on the product label.  For example, if the product is labeled as a “Rum with natural flavors,” an ad that identifies the product only as “Rum” would be non-compliant.  Further, in the case of distilled spirits, the ad must also include a statement of alcohol content and, if applicable, the percentage of neutral spirits and the name of the commodity from which such spirits were distilled.

Prohibited Practices

  The list of prohibited practices in the advertising of alcoholic products is too long to be inclusively presented here.  However, as a generalization, an advertisement cannot: be false or misleading in any respect; be inconsistent with the product label; contain inappropriate health-related statements; or contain representations, flags, or symbols that give the impression of endorsement or sponsorship of the armed forces or any government.

Applicability to Online Media

  Most breweries, wineries, and distilleries have a website to advertise their products and/or overall brand.  The TTB views a website and all of its subpages collectively as a single advertisement.  The required information, therefore, only has to appear in one part of the website to be compliant.  The information, however, cannot be hidden; it must be conspicuous, readily legible, and apparent to persons viewing the advertisement.  While the TTB does not require a specific location on the website, it recommends that information be presented in the place consumers would typically expect.  For example, name and contact information is typically found in the “about,” “profile,” or “contact us” section.  Class, type, and alcohol content for specific products would be expected to be found on the “shop” or “products” page.  One potential problem occurs with mobile versions of websites.  They are often structured differently from their desktop counterparts and are, therefore, considered a separate advertisement and must independently be compliant with the regulations.

Social Networks and Media Sharing Sites

  Social Network Services, such as Facebook and LinkedIn are treated very similarly to websites.  Viewed as a whole, they commonly contain required name and contact information on a main page or “about” section.  In that case, individual posts may not have to contain the mandatory information.  There are exceptions for shareable content, however, as discussed below for Media Sharing Sites.

  Media Sharing Sites, such as Instagram, YouTube, Pinterest, Instagram, etc., allow companies to share photographs, videos, gifs.  As with websites and social network services, the TTB views a company’s media sharing site as a single advertisement. So, if the profile or about section of the site contains the required information, the company is generally compliant.  However, if the posted media content can be downloaded or shared by viewers, it is considered to have been disseminated by the advertiser and the content stands on its own as a separate advertisement.  So, for example, if a brewery posts a video introducing a new product and that video can be downloaded or shared by viewers, the video itself must contain all of the mandatory information.

Blogs and Microblogs

  Blogs allow a company to post stories, commentaries, images, videos and other content.  They are commonly included in a section of the company’s website and, if so, may rely on the mandatory information presented elsewhere on the website.  If the blog stands alone, separate from the website, or is electronically disseminated, then it is a separate advertisement and must independently be compliant.  Microblogs, such as Twitter and Tumblr, are different because they have a maximum character number that makes each post very short.  Because of these limitations, the TTB recognizes that the mandatory information cannot be included in each post.   Instead, to be compliant, the advertiser must provide the information either on their microblog profile page or use a descriptive link that directs the viewer to a separate webpage containing the information.

  Outside Links

  Advertisers will often include links and QR codes that direct viewers to sites outside of the original advertisement.  Similarly, a product label may allow viewers to access an augmented reality video or image.  So long as such outside content is only accessible using the product label or other advertisement that already contains the mandatory information, nothing else is required.  Otherwise, the content would have to be independently compliant.

Social Media Influencers

  Building a large following on social media can be difficult, especially for small, local businesses.  To broaden the scope of brand awareness, some turn to others who already have a large following to help promote their products.  These social media influencers may post content created by the company or may create their own content on the company’s behalf.  If the TTB determines that the post was published or caused to be published by the company or that the company compensated the influencer for publishing the content, it will be treated as an advertisement by the company and it must be compliant with TTB regulations.  The mandatory information may be provided through a clearly marked link to the company’s website, for example.

Beware the “Like” Button

  One of the benefits of social media is that the user does not have to create all its own content.  Posts created by others can be shared or “liked” by a company, which allows that content to be viewed on the company’s own page.  Doing so helps to build a following as a third-party whose content is shared is more likely to reciprocate, broadening the reach of company’s own content.  However, because shared or liked content then appears in the company’s feed, it becomes a part of the company’s advertisement and must, therefore, be compliant.  This is typically not a problem with regard to the mandatory information, because that is already included in the company’s profile.  However, the shared content must also not include any prohibited practices.  For example, if a distillery comes out with a new product that is a “rum with natural flavors,” and they share or like a user’s post in which they refer to the product only as a “rum,” they could be viewed as being noncompliant, because the ad is inconsistent with the product label. 

Conclusion

  The rules for advertising an alcoholic product or brand on social media really are not any different from the rules for advertising in more traditional media.  Issues may arise, however, because social media enables new and different ways of presenting information and it may not always be obvious that they are advertisements.  Further, because of the ease of disseminating content, it can become detached from its original source, which would take it out of compliance if it does not contain the mandatory information.  Having an attorney periodically review social media content and/or train marketing staff may help to avoid compliance issues. 

The information presented in this article is based upon TTB Industry Circular 2022-2 and the regulations contained in 27 CFR §§4.60-65, 5.231-236, and 7.231-236.  Review of those materials is recommended.

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

2023 – Quarter Three Lender Update on the Craft Brewing Market

Man standing by brewery tanks holding up and looking at a glass of beer with foam

By: Adam Stump – Managing Director at Hilco Valuation Services

Since our previous Craft Brewing article published back in mid 2020, fear of mass closures in the craft brewing industry has subsided, and the industry as a whole seems to have largely recovered.

  As of 2023 – Quarter Three, we have seen microbreweries faring somewhat better than brew pubs when comparing openings vs closings. This can be largely attributed to the higher food cost and lower margins associated with the pubs. The labor market, which continues to present challenges across all areas of customer service, also remains an impediment to brew pub operational efficiency and profitability.

  Closings of small breweries rose in 2022 as compared with 2021, but were only around 3% of the market, which is relatively low and further signifies that the industry is maturing. Meanwhile, the overall U.S. brewery count increased from 9,384 in 2021 to 9,709 in 2022.

  U.S. beer volume was also down just over 3% last year. While craft volume was up slightly, it is worth noting that total Craft volume stood at 21MM BBLs in 2014 and has grown by only 3MM BBLS over nine years to reach a level of 24MM BBLs in 2022, with quite a few ups and downs in between. Many in the industry and across the associated supply chain had hoped and, in some cases, banked on more significant growth.

  Year-over-year craft beer production volume was relatively flat in 2022 when compared with the previous year, while draft and distributed sales were down somewhat. We expect that this will require breweries to refocus on stronger brands and geographies while still innovating new products moving ahead.

  Craft breweries have continued to diversify their portfolios in an attempt to reach a broader audience via a variety of beverage offerings. These include items such as seltzer, canned cocktails, hard kombucha, and other creative options designed for today’s palate. Most are targeted at those who do not regularly drink beer, producers’ core offering. This year we have also seen greater numbers of operators with excess capacity more proactively seeking out and providing contract brewing services to third parties. While this practice can help generate necessary cash flow in the short term, it can have the unintended consequence of stalling out an operator’s longer-term planned growth strategy. In some cases, both in this and other industries, we have seen this lead to a lack of investor confidence and cascading funding issues.

  These factors, combined with the nature of a maturing industry with increased competition, make for an environment conducive to acquisition and consolidation. Accordingly, a number of deals have taken place recently. Already in 2023, Stoup Brewing acquired Optimism Brewing and Lucky Bucket was bought back by its original co-founder, now the owner of Brickway Brewery and Distillery. These transactions follow other notable sales that have taken place over the past couple of years, including the Bell’s Brewery sale to Australia/New Zealand-based Lion, a division of Kirin Brewing Company and Stone Brewing’s sale to Sapporo Breweries.

  As always, Industry-backed engagement with state regulators and legislators has been active this year. The emphasis of these efforts now is on further loosening laws such as those for differentiating malt-based and spirit based tax rates, direct-to-consumer shipping and self-distribution, as well as sports and entertainment sponsorships that result in near exclusivity. These are important issues for many operators that stand to directly affect their market share and profitability moving ahead.

Photo of 4 different beers in glasses with caption saying by 2025 47% of spending and 25% of volume consumption of beer will be attributed to bars, restaurants, and breweries

  While supply chains have continued to ease, enabling faster access to new equipment, the cost of acquiring those new assets has risen notably as a result of inflation, the tight labor market, and higher raw material costs. Additionally, a continued CO2 shortage has impacted the industry. Because brewers use CO2 to purge oxygen levels during certain critical processes and for pressurizing tanks and moving beer through lines, some have taken to recapturing the gas during the fermentation process, for later reuse. The good news is that overall, import shipping and delivery costs have decreased by nearly 50 percent since the peak of the pandemic-driven commercial transportation crisis and fewer manufacturers are reporting cancellations on existing orders.

  With government assistance well behind us and capital harder to come by, producers and marketers across the beer market are having to refocus their efforts on their best performing brands. We are seeing this play out in many ways, perhaps most notably with Constellation brands which first signaled its exit from craft beer via the sale of Ballast Point to Kings and Convicts Brewing in 2019 for a fraction of its purchase price, and more recently with the divestiture of both Funky Buddha Brewery and Four Corners Brewing, presumably also at a significant loss.

  Lastly, it is important to point out a variety of trends that have been pervasive in the craft beer industry over the past year. Some of the most notable of these are summarized below:

•    Sour beers have continued to gain popularity, transitioning from niche to mainstream and driving impressive sales for many of those brewers who have embraced the trend.

•    After being largely disregarded on the craft scene, lagers are enjoying a healthy resurgence alongside dominant IPAs.

•    The rise of CBD’s popularity has resulted in many craft breweries experimenting with CBD-infused beers targeted at those likely to appreciate their relaxing properties.

•    Appealing to those who prefer or frequently drink wine, the wine-like notes of rosé beer are growing in acceptance and popularity.

•    Greater access to hops is allowing more breweries to produce fresh hop beers that are generating solid enthusiasm from customers.

•    Hazy, fruity beers are continuing to thrive, attracting first-time and experienced beer drinkers to their ranks.

Concluding Thoughts for Lenders with Industry Exposure

  Because craft brewers specialize in regional, unique beer styles such as ales, stouts, and wheat beers, these smaller enterprises tend to encounter certain challenges that are unlike those faced by their large scale, mass production brewer counterparts. For example, craft breweries rely heavily on local water quality, which affects the flavor of their beer. The specific mineral content in water is also crucial for certain varieties. Importantly, for every gallon of craft beer produced, up to seven gallons of water may be used. This makes access to pure water sources critical and any disruption to that access potentially catastrophic.

  While craft beer aficionados appreciate a variety of flavors, brand loyalty can be fleeting. To remain relevant and successful, craft breweries must constantly be innovating and introducing new offerings. The cost of this type of constant innovation can be significant, particularly when the market does not respond well to one or more of a brewer’s releases. In addition to the industry lobbying efforts referenced earlier in this article, the Brewers Association is actively supporting pending legislation that would allow craft brewers and others to immediately deduct research and experimental (R&E) expenditures in the year these costs are incurred.

  Additionally, with thousands of players vying for market share, attracting skilled employees and standing out from the crowd has become difficult, particularly given the shortage of applicants that this and many other industries have been facing since the pandemic.

  With these thoughts in mind, we encourage lenders with exposure to the craft beer market to remain in close contact with, and provide guidance to borrowers. From margin pressure to inventory aging, it is important, as always, to understand the many distinct challenges that those borrowers now face– only some of which have been outlined here. Doing so can help build a strong, mutually beneficial relationship while serving to help limit downside risk.

  Hilco has engaged with multiple craft brewers and suppliers over the past year and we welcome the opportunity to share the many insights we have gained through those efforts. Accordingly, we encourage you to reach out to our team to discuss any current or imminent needs you may have. We are here to help.

  Hilco Valuation Services is the world’s leading provider of asset appraisals with a proven, decades-long track record of providing the most accurate appraisals across all asset categories. The scope of the valuations we deliver ranges from a single asset in one domestic location to millions of assets located around the world. We are able to affirm current asset value through proprietary market data sourced from the collective worldwide asset disposition and acquisition experiences of Hilco Global over time. In contrast to the aged data relied upon by others in the industry, access to this cumulative, real-time information ensures delivery of the most reliable valuations for our clients. From brewing, distilling and chemical processing, to aerospace, financial services, retail, energy, healthcare and technology, we have delivered valuations for all industries. Additionally, the breadth and depth of our team’s expertise enables us to provide services ranging from Lending and Financial Reporting to Enterprise Planning and Litigation Support.

  Adam Stump is a managing director at Hilco Valuation Services and has been active in the auction, liquidation and appraisal industries since 1998. He frequently consults with financial institutions on asset-based loans and recovery, and over the past 12 months has been instrumental in delivering appraisal and advisory pertaining to dozens of craft brewers. During the course of his career, Adam has conducted or managed thousands of valuations across a wide spectrum of M&E categories including Metalworking, Fabricating, Plastics Manufacturing, Production & Assembly, Packaging, Distribution, Fulfillment, Food and Beverage, Chemical Processing, among others. He also has testified as an expert witness in numerous litigation cases. He is an avid home brewer as well. Adam earned his Bachelor of Science Degree in Computer Sciences from Bowling Green State University and his Associate of Arts Degree from Colorado Mountain College. Contact Adam at 847.849.2953 or astump@hilcoglobal.com.

Real World & Digital Marketing Beverage Trends-2024

marketing trends seen in 2 monitors

By: Hanifa Sekandi

The beverage race requires a lot of grit and stamina. It is about the long game and certainly not short wins. Although, every brand aspires to be the viral brand of the moment. What the alcoholic beverage industry learned in 2023 is that not all trends are beneficial to your bottom line. Also, your consumer values quality more than social acclaim. Let’s be honest: online growth is integral to modern marketing success. Although out-of-home (OOH) marketing is still viable, it must be coupled with innovative digital marketing strategies.

  So, where do you start in your next marketing cycle? Now that you have wrapped up your holiday marketing campaign, a new year brings endless opportunities to become a standout brand or to keep your current notoriety.

Where the Real World Meets the Digital World

  Subliminal marketing will never get old. Although some consider it to be an archaic marketing strategy, it is not. Have you ever walked or driven by a billboard of a chicken sandwich by a popular food chain and then later that day see the same ad while you scroll through social media? By the end of the week, when that hunger strikes, it is likely that you will find yourself either making a chicken sandwich with a recipe you stumbled upon on TikTok or firing up your food delivery app to order one.

  Traditional marketing still works, although it is hard to measure the return on your investment with tangible metrics. Remember, before the digital world took over, advertisers spent a lot of time creating campaigns for magazines, billboards, benches, buses or anywhere they could display. It worked, and it still does. What digital advertisers understand from this method is that the more people see something, the more likely they are to gravitate toward it when they are browsing through beverage options at the store. Something new is always worth a try when it is familiar.

  A notable example of this is when Red Bull filled garbage bins with empty cans of Red Bull. They also had empty cans placed outside of London’s popular clubs while at the same time distributing their beverage to DJs. Simple but amazingly effective.

  Another fitting example of this is Taiwan Beer’s use of Honey Beer Drones to deliver complimentary six packs of Honey Beer, the brand’s new beverage, to those who registered on their website. As a result, within just 10 days, 15,000 people subscribed. This interactive guerilla marketing strategy worked well because it highlighted the use of honey in the beer and added a visual effect that people could see, film, share and talk about. It also added another great component: delivery through drones, and tech aficionados approved of this creative delivery tool. Both brands understood that real-time marketing strategies allow consumers to feel connected to the brand.

  As you look ahead at your marketing strategies, keep in mind that people are expecting more than just digital strategies. Also, the assumption that your consumer only exists in the digital world is erroneous. With that said, digital marketing does matter. It is up to you to do the research to discern what digital strategy will best position your beverage in this competitive landscape. Hopefully, your brand mission and messaging clearly define your “why” – why your brand was made just for your intended consumer, and your “who,” – who your consumers are. How does your brand complement their lifestyles and their buying decisions when they purchase an alcoholic beverage?

Beverage Marketing in the Digital World

  Welcome to the modern digital world. It is not old, but honestly, it feels new since every day, there is something new on the horizon. Currently, AI technology is said to disrupt modern-day advertising. As you begin to adopt some of these tools, do not get carried away. Remember, these tools are meant to enhance your digital marketing strategy and, in some cases, streamline processes so you can spend time on other tasks. So, what are digital trends to implement into your next marketing cycle in the new year?

Video Marketing: Creating compelling visual marketing is no longer an afterthought. Companies need to invest in the talent and tools to create videos, both long and short-form clips, to highlight online. Consider these videos as mini commercials that can be uploaded to your social media channels or used as strategically placed ads. Your marketing team should perform A/B testing on the desired platform to see which videos are worthwhile paid ads. You may find that some videos perform quite well on Instagram as a reel, while others perform better on TikTok, YouTube or Facebook. Many great and easy-to-use marketing tools allow you to create videos. The benefit of these tools is that they allow you to create a lot of visual content and allocate your marketing budget effectively. Video marketing should also include testimonials by real consumers.

Curated Marketing: As you know, it is a numbers game, so your company must understand analytics to develop marketing campaigns that target specific consumers. Email marketing campaigns fall short when you do not invest the time to understand your customers. Paired with mobile marketing, having a good grasp of analytics and using this data to create personalized marketing campaigns will improve your open rate and engagement. For example, some consumers prefer to receive newsletters that feature sales and discounts, whereas others enjoy reading blogs that are informative while also displaying your product. There are many CRM tools for marketing now. Finding one that works for your team should top your list as the new year approaches. For example, HubSpot and Klaviyo are great tools for segmented marketing campaigns.

Real World Beverage Marketing

  Once you have a digital marketing strategy, devise a real-world marketing strategy to enhance and complement it. You may also choose to start with OOH marketing strategies before you delve into digital ones, but the two are needed for a complete package. In addition, you cannot assume that your digital strategy is the only golden ticket to success. If your goal is to be in the alcoholic beverage sector for the long haul, it is best not to rely solely on one strategy. Although spending time online has become the modern-day norm, it does not account for the real-time moments that people experience in their daily lives. Endcaps at grocery stores, miniature bottles placed by the cash counter or free samples or coupons handed out on the way into a store create real-world experiences for consumers. Earned marketing builds trust. Other than advertising in magazines or utilizing display ads, what are other ways to market your brand in real-time?

Experiential Events: Create experiential events where people can taste your beverage. This is a common strategy by agencies when marketing to the press and influencers. Instead, invite your consumer to these events! Partner with bars and restaurants to create events such as tastings or food pairing menus that highlight your beverage. Most hotel bars and restaurants have happy hours. Offer to sponsor a happy hour. Not only does this encourage these establishments to carry your beverage, but it also creates a fruitful partnership. They are also more likely to recommend your drink to customers, as well.

Think Outside the Box, OOH Marketing: The more you are seen, the more likely you will become an option. Some brands have cut down their marketing budgets in this regard. Understandably, digital marketing appears to be the most viable strategy. Do not get lost in the idea of going viral. It is nice to have, but consider it as luck of the draw. Just make a high-quality product and build authentic, evergreen marketing strategies. Reserve some of your expenditure for OOH Marketing. Oddly enough, these ads make their way into the digital sphere if they are buzzworthy.

  A splendid example is Corona’s billboard display in Brighton, Great Britain. When Corona wanted to highlight that their beverage is made with natural ingredients, they painted a wall with their brand’s classic yellow and placed the signature Corona label in the center. At a specific time, when the position of the sun changed, between 6:30 p.m. and 6:45 p.m., a bottle overlay of beer appeared along with text that said, “made from the natural world.” During this time, people could view the classic Corona bottle. Now, this is not only something to talk about but also a great intersection of digital marketing via social shares. 

Make 2023 Holiday Beverage Sales a December to Remember

Photo of different bottles and glasses and cans of beer and spirits hanging from branches

By: Neeraj (Raj) Tulshan – Founder of Loan Mantra

It’s the most wonderful time of the year. The Holiday season is in full swing so it’s time for one and all to get out of the house. Celebrating the holidays looks different for many people whether that be shopping for friends and family, attending parties or making a toast with a good cocktail or beer. And it’s a peak time for restaurants and bars.

  Festivities can bring more customers into your restaurant as they spend more time eating out with friends and family. Plus, there’s always a lineup of Christmas parties, concerts and winter festivals, so many people don’t have time to cook at home.

  It’s the perfect time for a promotional strategy to kick into high gear. Holiday marketing campaigns capture the joy of the season and encourage valued customers to indulge in a special meal, dessert and/or drinks. There are a variety of options to help your establishment standout. Here are some thought starters:

●   Sponsor a Charity Nigh: Choose a charity of your choice (Toys for Tots, Make a Wish, or a local charity) and select a night or two during the month to donate a portion of your sales to that program. If you can, a local charity is much more likely to draw in more customers, as people flock to support their community. Make sure you market which date you are choosing to do this, and when it’s over, update your customers on the total amount raised. Fun fact: According to National Giving Month, 31% of annual giving happens in the month of December.

●   Offer Gift Cards: The National Retail Federation (NRF), surveys consumers on their spending on holidays and seasonal events throughout the year. Over the last decade, consumers have been kicking off their holiday shopping early in order to spread out their budgets and avoid the stress of holiday shopping. Continuing the trend this year, 60% of holiday shoppers started browsing and buying by early November. Having gift cards available makes it easy for consumers to grab a gift card, apply money to the card for their loved one/friend and stuff it away until their holiday for a present or a stocking stuffer. So, what gift made it to the top of the wish list? It’s gift cards!

●   Add Holiday Spirit to Your Online Presence: Use holiday-themed stock images, Create holiday-themed social media posts using free online templates as a guide on sites like Canva, Ripl and PosterMyWall. Use festive images to engage your audience and update your social media graphics to quickly freshen up your accounts and help boost engagement.

●   Host A Fun Event: Draw people in by hosting fun, quirky events such as an Ugly Sweater Party. This is sure to get everyone in the holiday spirit. Anyone who’s wearing an ugly sweater, enters the contest. From there, an ugly sweater fashion parade is a must. A few possible categories: most festive, most original, just plain ugliest etc. Winner of each category gets a free shot/drink of choice.

●   Holiday-Inspired Drink Menu: Spiked eggnog, peppermint cocktails, holiday-inspired shots, all these drinks help capture the essence of this loved season. With minimal risk and utilization of current inventory, launching a new drink menu is a no-brainer! Seasonal drink menus appeal to new customers and build intangible relationships with your restaurant’s loyal guest base by reinforcing brand concepts and generating spontaneity within the restaurant. This operation, if done efficiently, provides a foundation for increased profit margins.

●   Host a Tasting or Pairing Event: The National Restaurant Association research indicates that the sale of alcoholic beverages can be a key driver to restaurants. Eighty-four percent of adults who drink wine, beer, or cocktails say that restaurants are a good place to learn about new alcoholic beverages while 82% of these consumers say they trust the staff at their local restaurants to make good recommendations when it comes to alcohol beverages. These facts present a great opportunity. Why not host exclusive tasting events for VIP customers? Or hold tasting events which pair the perfect cocktail or beer with the perfect starter, meal or desert? In addition, 70% of beer drinkers, 69% of wine drinkers, and 67% of cocktail drinkers are more likely to say the availability of alcoholic beverages makes them more likely to choose one restaurant over another.

●   Neighborhood Bar Crawl: Feeling collaborative? Team up with nearby bars and restaurants to host a bar crawl. A successful bar crawl is often organized with a predetermined route, listing a selection of bars to visit within a specific timeframe. Oftentimes, bar crawls follow a theme, like a polar bear crawl. So have your bar themed out and guests dressed accordingly! A bar crawl can do wonders for your business. Bar crawls not only bring a flood of new customers to your bar but also creates an atmosphere sure to attract more customers. It’s a great mix of entertainment and growth for your business. Organizing a bar crawl, or getting your bar included in one, requires strategic planning. Partnering with other local businesses, advertising the event, and creating a fun and welcoming atmosphere are all key to a successful bar crawl.

●   Make a Seasonal Favorite: Create a themed drink or special brew that is only offered once per year – think McDonalds Shamrock Shake and Starbucks Pumpkin Latte to get customers talking. Keep the customers’ senses in mind – what visuals, sound and texture can be incorporated to highlight the experience? How will the customer interact with the brand (via server, bartender, store pick up)? How can the presentation be kicked up to give it a little more sizzle as it’s being served? What elements could be included to help recreate the ultimate customer experience each time? 

  Holiday marketing can help you boost revenue, solidify relationships with current customers and gain new ones this holiday season to help make this sales season a December to remember.

About the Author

  Neeraj (Raj) Tulshan is founder and managing member of Loan Mantra. Connect with Raj: https://www.linkedin.com/in/tulshan/, Raj@loanmantra.com or 855.700.BLUE (2583), Ext. 101.

Raising a Glass to the 90th Anniversary of the Repeal of Prohibition   

Photo of men and women at the bar in black and white during Prohibition being served alcoholic drinks by 2 bar tenders

By: Becky Garrison

December 5, 1933, marks the date the repeal of the 18th Amendment went into effect, thus ending the United States’ failed efforts to outlaw liquor. The 18th Amendment to the United States Constitution, which went into effect on January 17, 1920, prohibited the manufacture, sale and transportation of alcoholic beverages and their import into or export from the United States and all its territories. The National Prohibition Act designed to enforce this amendment became known as the Volstead Act after Rep. Andrew J. Volstead (R-MN).

  Despite this ban, alcohol continued to flow throughout the United States. So, what exactly were people drinking during Prohibition? 

Legal Consumption of Alcohol During Prohibition   

  Select exemptions under the Volstead Act permitted one to imbibe legally. Any liquor purchased before January 17, 1920, could be consumed at home. Private social clubs and individuals of means and available space amassed a collection of fine wines and liquors that would rival any well-stocked bar, with liquor stores announcing “going out of business” sales throughout the country.

  In keeping with the spirit of allowing mild alcohol consumption in private, this act permitted home winemaking and brewing. Soon after National Prohibition began in the 1920s, grocery stores often carried brick-sized blocks called “Vine-Glo.” These compressed raisins were bound together with condensed grape juice. Attached to the block was a small container of dried yeast. The wrapping contained the following text:

  “WARNING: Do not dissolve this fruit brick in warm water and then add the contents of the yeast packet, as this will result in fermentation and the creation of alcohol, the production of which is illegal.”

  Along those lines, this act banned only the sale of beer but not the ingredients for making it. So, one could purchase malt syrup with a packet of yeast attached that included similar instructions that combining the two could result in an illegal product.

  Also, one could obtain liquor with a medical prescription from a licensed doctor. However, in the first five years of Prohibition, only 26 states allowed the sale of medicinal liquor. In addition, liquor could be used for sacramental and religious purposes, though no statistics exist regarding how many Americans suddenly “got religion” during Prohibition.

The Canadian Connection

  Under Canadian law, local distillers could make spirits for sale to the United States if they paid a $20 per gallon export tax. By the late 1920, the Canadian government suddenly realized how much alcohol revenue was being earned by these various export houses, courtesy of the American bootleggers, and decided to raise the annual licensing fees for these liquor exporting businesses from $3,000 to $10,000.

  As expected, the U.S. government pressured Canada to stem the flow of liquor coming from Canada to the United States. In 1930, the Canadian government finally passed a law banning foreign customers from purchasing booze directly from export houses. However, this failed to deter the export of spirits coming primarily from British Columbia, Ontario and Toronto. 

  Other international waters where one could find smuggling of illicit spirits included the Caribbean, where rum was smuggled, especially along the East Coast. Those who transported their wares via sea, often using high-speed boats designed to evade capture, became known as rumrunners, named after the spirit they were transporting.

Distilling Prohibition-Era Spirits

  Since law enforcement could spot the trails of smoke coming from fires used to heat illegal stills, moonshiners often used cane or malt syrup, as these products could be fermented at room temperature, unlike raw grains that needed to be cooked pre-fermentation. Traditionally, distillers make “cuts” (discarding the beginning and end of the run) of the liquid out of the still to ensure they remove the natural acetaldehyde, methanol and fusel oils that form during fermentation. During Prohibition, distillers often skipped that step so they could get more product from each run, resulting in illegal hooch that proved to be deadly at times.  

  This cutting tended to take place at night in seemingly deserted industrial-looking buildings, rural farms, and other facilities that wouldn’t draw undue attention from law enforcement. Some added water to their liquor so they could produce more bottles from each run. Then, they turned to industrial (denatured) alcohol to give the product an extra kick now that it had been diluted. Denatured alcohol product was still on the market as it was used to make products like fuel, explosives and solvents. Among the products used for cutting were mouthwash, hair tonic, shellac and perfume. Even after the government added an emetic to those products containing denatured alcohol, they were still used as cutting agents with cocktails designed to mask the vile taste of these Prohibition-era spirits.

  In The Spirits of America, Eric Burns notes how poisoned booze was the great, unsung tragedy of Prohibition. “People today know about bootleggers and speakeasies; they are familiar with the names Capone and Kennedy; they have a general impression of casual lawbreaking and wild times kindled by spirits that were not supposed to be so readily available. But they do not know about Yack Yack Bourbon and Jackass Brandy and Squirrel Whiskey. They do not know about cooking alcohol squeezed through a rag and mothballs dropped into a steaming mug of gasoline. And they do not know about Jamaica gin and the men who drank it in doses that were so much more than minute, thereby getting rid of their thirsts for a few minutes as they turned into cripples for the rest of their lives.” (Page 224)

  As Daniel Okrent noted in Last Call: The Rise and Fall of Prohibition, “In the saloon era, calling for liquor by brand name was almost unheard of; in the speakeasy era, it became a habit, first as a means of protecting oneself from alcohol of questionable origin, and secondarily as a way of expressing one’s level of taste. Decades later, many of the liquor industry’s best-known brand names owed their prominence to the ubiquity of Prohibition-era rotgut. But knowing one’s brand did not ensure one was drinking said brand. In too many places, if you ordered Brand X, you got Brand X; if you ordered Dewar’s or Gordon’s, you paid twice as much and got Brand X.” (page 162)

The Repeal of Prohibition

  While some states began loosening their liquor laws in the early 1930s, National Prohibition was still in effect until December 5, 1933, when Utah was the 36th state to vote for the 21st amendment repealing Prohibition. The debate over alcohol shifted from whether Prohibition should be repealed to debates over how to tax and regulate the sale of alcohol and distilled spirits in particular.

  John D. Rockefeller, Jr., a nondrinking Baptist who had earlier been a heavy donor to the antiliquor cause, funded a study group in 1933 to explore how to best address this “alcohol problem.” While the group recommended that Prohibition be repealed, they advocated for strict government control of alcohol sales, preferably through state stores where the states could make profits.

  In response, the federal government adopted a three-tier system that permitted each state to develop a structure of checks and balances that provided safe alcohol to consumers while ensuring a simple method to collect tax revenue. The three-tier system is simple in theory: manufacturers provide alcoholic products to wholesalers, who distribute the products to retailers, who sell to the consumers. No one entity can be involved in more than one tier under most state models, and each tier is regulated and licensed separately.

  Alexandra Clough, a spokesperson for the American Crafts Spirits Association (ACSA), reflects on the lingering effects of Prohibition 90 years after its repeal. “We have made much progress to help consumers gain access to craft spirits, but we still struggle to achieve the same loosened regulations that our counterparts in beer and wine have enjoyed for many years. Though we, of course, will be toasting the 90th anniversary of Repeal Day, we will also continue to focus on helping consumers access the incredible craft spirits this country has to offer in more modern ways, like through direct shipping.”

  In recent years, distillers ranging from craft nano-distilleries to Jack Daniels have come out with their version of “White Whiskey,” A.K.A. moonshine. In 2023, Buffalo Trace launched The Prohibition Collection, an annual limited-edition, multi-bottle collection they describe as “honoring the whiskeys that were legally produced and sold at the distillery during arguably the most contentious period in alcohol history.” This debut release tributes five Prohibition-era brands: Old Stagg, Golden Wedding, Three Feathers, Walnut Hill and George T. Stagg Spiritus Frumenti.

  Spirits like Wohlfert Craft’s Distilling’s Sugar Shine continue their family’s spirited legacy by distilling spirits using their relatives’ recipes. John Wolfert’s great-grandparents opened several successful “bakeries,” which became a more spirited clandestine operation during Prohibition. As the smell of the yeast and sugar fermenting smelled similar to bread, they were able to ferment their brews undetected and were even able to downplay a still explosion as simply the result of, say, a gas leak.   

  Even though December 5 has yet to achieve the notoriety of, say, St. Patrick’s Day, some bartenders from across the country continue to honor Prohibition Repeal Day by highlighting Prohibition-era cocktails, including the Bee’s Knees, Side Car and Gin Rickey. Buildings like Smith Tower, where Seattle’s gentleman bootlegger Roy Olmstead conducted his smuggling operations, celebrate the Roaring Twenties with historical displays and craft cocktails on their 35th-floor Observatory Bar. Other establishments, such as Bar 600, located inside Cannery Pier Hotel & Spa in Astoria, Oregon, continue the spirit of this era. Situated on the former site of the Union Fisherman’s Cooperative Packing Company, this decor takes one back to an earlier era by recreating the feeling of the canneries of yesteryear with smokestacks, exposed steel beams & wooden trusses along with a vintage car service.

 Portions of this article are excerpted in Distilled in Washington: A History (March 18, 2024).

Proactive, Protective Measures to Avoid Liquor Liability

2 people negotiating showing hands

By: David DeLorenzo

There is a plethora of things business owners in the hospitality industry need to oversee and manage. Bars and restaurants that serve alcohol have the added challenge of serving their customers while also avoiding the liabilities associated with a guest’s alcohol consumption — and the choices they make upon leaving an establishment.

  One of the biggest dangers bar and restaurant owners should steer far clear of is becoming part of a lawsuit related to drunk driving. It cannot be overstated that establishments serving alcohol need to be extremely diligent about their protocols and also vigilant about their insurance policies. They should ensure they not only have proper coverage to protect their business and staff in the event of an alcohol-related lawsuit, they should also stay on top of the ever-changing liquor laws. This is for the safety and protection of all parties. 

  First and foremost, bar and restaurant owners should have good insurance. They also need to be aware of what their policies cover — and what they don’t. Though understanding the ins and outs of insurance may not seem like something that a hospitality business owner has time for, it is vital to the success of their business. Ideally, a bar or restaurant owner should work with an insurance agency that specializes in their industry and is well versed in the laws that impact it. They should also work with an agent who keeps current on the ever-changing laws that pertain to things like liquor policies. Keep in mind unexpected changes such as the ability to sell cocktails and other alcoholic beverages to go during COVID as well as marijuana usage and weapons exclusions, too, which are impacting today’s businesses in new ways.

  It’s always recommended business owners have their policies reviewed at least once a year. This way, they can be notified of changes or new exclusions or endorsements and take stock of whether they need to modify or add to their current policies to better protect themselves. This is also a good time to make note of any changes to the company that need to be reflected and protected in their policies. The “better safe than sorry” adage is not too cliché for this scenario. Just one incident can put a company out of business if they are not properly covered. Just as with auto insurance, some people may not understand they didn’t have the right coverage until an accident — and then it’s too late. This is where an agent that specializes in the hospitality industry can best guide and protect the business, staff and customers alike.

  Beyond air-tight insurance coverage, there are many things bar and restaurant owners can take into their own hands to ensure the safety and protection of staff and customers. Bar and restaurant owners should ensure they have the current certificates for serving alcohol in their state.

  Education is crucial. Employees must understand how liquor law works, how they can notice intoxication and know what steps that need to be taken in order to avoid overserving of alcohol.

This begins with safety training for all staff as well as training staff on how to properly identify an intoxicated person before they even enter the bar. Is it also vital that staff understands how to detect whether a customer is becoming intoxicated during their service.

  It is illegal for an establishment to allow an intoxicated person onto their premises — so safety begins at the door. It is important that a bar have door security to do ID checks to ensure first that guests are indeed of age and also that they are not intoxicated before they even step inside. In addition to door security, bars may want to invest in security personnel for their exterior or parking lot areas as well.

  Upon entry, it is also essential that staff understands how much is too much when it comes to serving their patrons. Training staff on the obvious symptoms of intoxication can help prevent a lawsuit. Signs to watch for can include slurring speech, becoming loud, the pace of their drinking, red eyes or flushed face. It is also important to note that it is illegal to serve an intoxicated person whether or not they are driving.

  Obviously no bar or restaurant owner wants to turn away customers or have to cut them off during their service. However, these measures need to be seen as non-negotiable safety protocols for staff and customers. It could be a matter of life or death if an intoxicated person decides to leave, get in their car and drive away. They are then not only putting their own lives in danger but putting others’ lives at risk.

  Another strategy bar and restaurant owners can employ to help protect themselves is the use of surveillance cameras in and around their property. This can be a lifesaver. Video surveillance can provide timestamped evidence of an incident, such as a fall in the kitchen or a server-customer interaction that can help prove vital in a court of law. Surveillance cameras are a wise investment and are there for safety and protection of all parties.

  It’s also crucial to think about specials bars and restaurants are offering. While happy hour drink specials are a great way to bring in much-needed customers to help boost sales, this can be a risky move — especially reverse happy hour specials that are offered at the end of the night or right before the restaurant is closing. It’s also a good idea to avoid “last call.” These measures can be construed in a lawsuit as encouraging patrons to order more drinks before alcohol will no longer be served or to order more alcoholic beverages because they are being offered at a discounted price.

  It is also key to stay up to date on liquor laws. Knowledge of any changes should be a red alert to check with the company’s insurance agent to see how that might impact current coverage. Staying in communication with their insurance agent can also help bar and restaurant owners ensure they are properly covered as laws and policies change.

  I understand that is a lot to keep up with, especially while trying to operate a bar or restaurant in today’s unstable climate. That is why I created my Connector and Protector Hospitality Series on YouTube. It features videos and interviews with experts on topics such as liquor liability and more to help guide bar and restaurant owners. It is a goal of mine to help my clients and everyone in the hospitality industry be successful — and safe.

  The bottom line is that no one wants an accident to happen to their customers or their staff. Putting simple protocols in place to avoid an incident may seem tedious. However, they can be lifesaving and could save a business if it is hit with a liquor liability lawsuit. Taking proactive and protective measures is for the benefit of all.

  Out of his passion to serve the restaurant and hospitality industry, David DeLorenzo created the Bar and Restaurant Insurance niche division of his father’s company The Ambassador Group, which he purchased in 2009. For more than 20 years, he has been dedicated to helping protect and connect the hospitality industry in Arizona. For more information visit barandrestaurantinsurance.com

Yeast Considerations & Management for Beer, Cider and Spirits

close up of beer liquid

By:  Alyssa L. Ochs

Without yeast, there would be no such thing as the modern form of beer we have come to know and love. This fascinating microorganism is responsible for the essential fermentation process of this beloved beverage. As a living organism and unicellular type of fungi that consumes sugars to produce carbon dioxide and create alcohol carbonation, esters and phenols, yeast influences the quality of a beer and the properties that make it unique.

  Meanwhile, yeast is also valuable for making cider and spirits by impacting flavors and alcohol content during fermentation. Certain yeast strains have proven beneficial for these purposes, while proper yeast measurement and management are critical for a successful craft beverage. To learn more, Beverage Master Magazine connected with industry experts to explore the topic of using yeast in breweries, cideries and distilleries.

Types and Variations of Yeast

  Various kinds of brewery yeast are available to aid craft beverage production, including ale, lager, wheat beer and Belgian yeast strains. Yeasts, such as champagne, wine, beer, wild and cider-specific yeast, are also available for making cider. Craft spirit distillers have traditionally used the saccharomyces cerevisiae species of yeast because of how it converts sugars and produces consistent alcohol without adding off-flavors.

  Hybrid yeast strains that cannot be categorized into the typical types are available and work well when other yeasts are too warm for lagers or too cold for ales, for example. Hybrids can be beneficial for altbier, Kolsch, blonde ale, cream ale and American wheat beer styles. Gene-edited yeasts are genetically modified to achieve more creative flavors and opportunities to mix beer yeast strains to achieve complementary characteristics. While non-saccharomyces were once considered contaminants in brewing and winemaking, recent research suggests they may provide unique sensory characteristics and future potential. All of this goes to show that there’s a lot more to yeast than what you might initially expect in the craft beverage industry.

Fermentation Products for Spirits – Lallemand Biofuels & Distilled Spirits

  To discuss the distilling side of yeast, Mitch Codd, the technical sales leader for Lallemand Biofuels & Distilled Spirits, told Beverage Master Magazine about his company’s role as a leading supplier of fermentation ingredients and how it provides distillers with high-quality yeast, nutrients, enzymes, bacteria, tech support and education programs.

  Codd explained how saccharomyces cerevisiae have been utilized, domesticated and bred for thousands of years. He said that in doing so, humans have selected traits advantageous to whatever application they need, such as baking, brewing beer or making whiskey. Because of this domestication and selection, we now have different types and strains to choose from, each exhibiting unique characteristics from one another.

  “In distilling, there are several important factors that should be considered when choosing a yeast strain,” Codd said. “In the production of spirits, our main goals for fermentations are to utilize all available sugars while also producing desirable flavors and aromas. We may also wish to reduce the production of flavors as much as possible, in the case of making vodka. Both flavorful and neutral spirit productions are feasible and may require a specific yeast selection.”

  “Interestingly, some strains of yeast will utilize maltotriose, a common sugar found in whiskey fermentations, while others may not use them at all,” Codd continued. “The same goes for rum yeast or agave yeast. Molasses will contain high amounts of sucrose while agave fermentations can be high in a sugar called fructose, which can be difficult for some yeast to fully utilize. If we choose a strain of yeast specifically intended for rum or agave, the fermentation will finish dry, and we won’t be sending these valuable sugars to the still. The esters and congeners that each of these strains produce are quite specific to the genetics of each strain. A rum yeast may produce a very high level of isoamyl acetate, responsible for the ripe banana flavor in a heavier rum while a whiskey strain may produce lower levels of Isoamyl acetate but higher levels of phenethyl acetate which would bring a rose or floral note to a good rye whiskey. The strain of yeast we choose for our fermentation can dramatically impact our total amount of spirit produced, as well as the actual flavor and aroma of the final spirit.”

  Customers often ask the Lallemand Distilling team whether a beer or wine strain of yeast can be used for spirits. Codd says that the answer is “maybe” because the strain of yeast chosen is often very specific to the type of final product.

  “Some beer strains can produce a lot of aromas and flavors,” Codd said. “For example, saison strains will generally produce a lot of isoamyl acetate. If that is specifically something we want in a whiskey, it may be possible to use this strain for that fermentation. Oftentimes, however, this will come with fairly significant drawbacks. In the case of using a beer strain for whiskey, one of the more common issues would be with sugar utilization. Earlier, I mentioned that maltotriose, the three-chain sugar molecule, can be very difficult or impossible for some yeast to utilize. A lot of beer strains will never use this sugar, as it is usually desired to have some sweetness left over in the final beer. In distillation, this sugar will never actually show up in the spirit, but it will burn in the still and create off-flavors in your final spirit.”

  “The same concept goes for using wine strains in distilling,” said Codd. “There may be some cases where this practice could make sense and produce a great spirit, but more often than not, a quality distilling strain will produce a far superior product than a beer or wine strain in the same conditions. Since the science of distilled spirits production has advanced so far recently, there are great yeast strains specific for distilling that will help you achieve any goal with respect to flavor production.”

Yeast Measurement and Management – Aber Instruments

  Not only is the type of yeast important in beverage production, but also accurate yeast management and understanding how many live yeast cells are helping you achieve your production goals. Aber Instruments Ltd., UK, headquartered in Aberystwyth, UK, specializes in yeast measurement and management solutions for the brewery industry. They also have an office in Alexandria, Virginia to better support their customers in the Americas. Aber’s yeast monitors are designed to be used in real-time to measure live yeast concentrations. Its Online Compact Range features the flagship Compact Yeast Monitor, the Compact Adapt and the recently released Compact PerfectPitch mobile skid to improve pitch performance and consistency. Meanwhile, Aber’s Countstar Yeast expedites and automates lab yeast readings.

  All major brewing groups and many innovative craft brewing companies, including Summit, Marble and Meantime, have trusted Aber to optimize their pitching and production processes. But in addition to offering these products for effective yeast management in the brewing industry, Aber is engaged in industry research and has published the findings of multiple studies in scientific journals and magazines.

  For example, Aber Instruments introduced the concept of a portable yeast pitching skid for craft brewing and aimed to scale this new technology for smaller breweries. The London-based Meantime Brewing Co. performed a case study to assess the PerfectPitch product’s functionality and found significant improvements in yield and predictability in the pitching process, concluding that the unit ultimately pays for itself. In the case of the Meantime Brewing Co., the Aber PerfectPitch helped reduce fermentation times and improve productivity by up to 25 percent without needing to invest separately in real estate. In a separate study, Aber reported on the process improvements of a yeast monitor tested in South Africa after checking the real degree of fermentation and ferment rates before and after its installation.

  To assess a new rapid automated yeast cell counter that uses a bright-field microscopy and dye-exclusion method, the Aber Countstar Yeast, the company published an article with promising findings in the Journal of the Institute of Brewing & Distilling. According to the report, “The automated cell counter successfully reduced inter-operator errors, a major hindrance with manual analyses. Tests carried out at a brewery in the UK demonstrated that the cell counter provides consistent counts for assorted yeast strains. External tests highlighted the instrument’s ease of use and consistency among different strains of brewing yeast and various stages in the brewing process.”

Yeast Recommendations and Innovations

  Dr. Aditya Bhat, the vice president of technology for Aber Instruments, told Beverage Master Magazine that in his experience of supporting the craft brewing industry over the years, depending on the size of the brewery, craft brewers either acquire yeast from a yeast supplier or they grow and propagate their own yeast. Yeast purchased from a supplier, usually in dry form, must be rehydrated before it is used for pitching and fermentation and monitored for the yeast’s quality and viability.

  “Typically, larger brewers have a cut-off viability percent, below which they will discard the yeast,” Bhat said. “Depending on the brewery, this is typically around 85 to 90 percent viability. The presence of dead cells is detrimental to the final quality and flavor of the beer, hence the importance to check viability. For craft brewers, you would want to use a simple, easy-to-use, plug-and-play technology for this estimation. Something like the Aber Countstar Yeast works really well. It is sometimes known in the brewing world as a ‘lab-in-a-box’ – technology that calculates parameters like live cell count, dead cell count, viability, cell size, percentage aggregate and circularity index in just a few minutes from preparation to measurement.”

  For yeasts propagated in-house, Bhat said that monitoring the propagation in real time has several benefits and can be done using the Aber Compact or Compact Adapt Yeast Monitor.

  “Aber technology will enable you to track the entire propagation process, identify whether the process is going well or is deviating from expectation, activate troubleshooting steps if necessary, save time and energy because of real time monitoring and action and identify when there are enough yeast cells in the propagator to pitch the next brew,” Bhat said. “It makes planning a lot easier, and better planning typically leads to an increase in productivity.”

 There are many things to look forward to with craft beverage yeasts and exciting innovations, such as gene-edited yeast strains. Codd from Lallemand Biofuels & Distilled Spirits explained that a strain of yeast that has been gene-edited is a natural yeast but has been “steered” towards expressing specific characteristics through the intervention of lab methods and DNA editing.

  “Sometimes this has a sort of ‘spooky’ connotation to it, but in reality, using these methods can be incredibly safe and specific with the results that are achieved,” Codd said. “With modern day methods, the changes that are made are precise, and oftentimes they are just changes that boost or suppress natural pathways the yeast is already expressing.”

Codd said that gene-edited yeast strains are a fairly new concept to the distilling industry, with no real precedent yet for use but plenty of promise. In adjacent industries like brewing, these strains seem to have been embraced with open arms, and use was adopted very quickly when they became available.

  “Strains like Lallemand’s “Sourvisiae” beer yeast, which is able to produce sour beers in a single-step fermentation without the need for kettle souring or bacterial additions, are now commonplace in breweries across the country,” Codd said. “I believe the distilling industry would be a fantastic next step for the use of these strains, and there are plenty of really interesting opportunities that it presents. With the recent focus across our industry, and the world, on sustainability, gene edited yeast could help us make big strides in reducing the footprint spirits production has on the environment.”

  But while it is easy to get wrapped up in these more “flashy” innovations on the horizon, Codd said there’s also a lot of promise in some of the more traditional strain development methods.

  “The microorganisms that are responsible for fermentation have an incredible amount of genetic diversity, all with their own unique characteristics,” Codd said. “It’s reasonable to assume that, with that much diversity, there are some really exciting expressions of yeast strains just waiting to be found out there. Every strain we use today has to be discovered at one point in time. The exciting thing is that now we have whole laboratories and companies devoted to searching for or prospecting for these future strains, Lallemand being one of them.”

  “We may find that we can breed various strains together and get an even better flavor expression from the new yeast, or we can search in interesting historical environments and bring a historical strain to market that creates a whiskey similar to what George Washington would have produced,” Codd said. “With new methods, we can screen enormous libraries of yeast and use powerful analytical methods to see exactly what congeners they produce and how well they ferment our intended mash or wash. Most of the next generation of yeast strains will likely be from our tried-and-true species saccharomyces cerevisiae, but there are also several other genres of yeast that seem interesting, colloquially known as ‘non-sacch’s.’ These may prove to be a valuable addition to the distiller’s toolbox in the future.”

Contract Packaging Agreements

Purpose in Brand Owner and Manufacturer Relationship and a Look at Some Key Provisions

2 people shaking hands

By: Brad Berkman and Louis J. Terminello, Greenspoon Marder

Brewers and brand owners both, do not underestimate the importance of a well drafted “contract bottling agreement.” First, for the uninitiated let’s briefly explore what in fact, a contract package arrangement is and brand development within the context of that arrangement.

  Breaking into the realm of manufacturing alcoholic beverages can be a very expensive endeavor. Startup costs for opening a brewery, distillery or a winery can be immense. Even startup costs at the “craft” level are significant. Land and facilities must be bought or leased, mechanical, electrical, and plumbing systems need designing and buildout, and of course, manufacturing equipment such as tanks, stills, bottling lines, and pumps must be purchased and installed, among many other things. The costs can be very high. Hundreds of thousands of dollars, likely even more, will come out of pocket before the first bag of grain is poured into a mash tank, distilled, and bottled, labeled, and a corked brand comes rolling down the bottling line. Of course, merely producing an alcoholic beverage brand is just the beginning. The idea is to sell bottles, boxes, pallets, and container loads of happiness in the bottle. This of course requires tremendous expenditures on brand marketing, sales, and promotional initiatives. Happiness in the bottle can quickly turn into weeping in one’s glass if poor planning is exercised.

  Enter the contract package arrangement. A business deal that benefits the independent brand owner and marketer and the skilled brewer, distiller, or wine maker. It is the foundation of a symbiotic relationship that cuts costs for both parties and goes a long way in increasing the likelihood for the economic success of each. In the simplest terms, in a contract package relationship, a brand owner will “contract” with an existing manufacturer to produce and bottle and alcoholic beverage for the owner. All production and labor are contributed by the producer, paid for by the brand owners, ultimately leading to a finished product owned and ready for sale in the market by the brand owner.

  For manufacturers, contract packaging, in addition to bottling their own labels, can be a significant and badly needed additional stream of revenue. For the brand owner, the significant cost savings from avoiding building out a plant are immense and allows for valuable financial resources to be directed to advertising and marketing activities. After all, a bottle is not going to come off the retailer’s shelf by itself.

  With the above in mind, this article will examine some of the key provisions that must be addressed in any well drafted contract packaging agreement that are likely concerns of both parties to any agreement of this sort. When crafted properly, the agreement will ensure that the rights, duties and obligations of both parties are clearly defined, ideally leading to an unambiguous business relationship. It is important to note that every deal is different, and the terms of a well drafted agreement will be deal specific. The below provides general but important guidance on some essential terms.

A few Key Provisions:

  Intellectual Property Rights and Licensing

The brand owner almost always has spent significant treasure in developing a brand name and identity. The first step in protecting brand ownership commences in fact prior to entering into a contract packaging agreement. The brand owner should make every effort to trademark the brand name and logo in the appropriate trademark categories prior to bottling and sale in the marketplace.

  Building brand equity or value is a labor intensive and costly exercise. Trademarking the brand name is an absolute requirement to ensure brand value remains with the owner. As for the contract packing agreement, the brand owner will grand a limited, non-exclusive license to the manufacture to produce and bottle the product for the duration of the agreement. At termination of the relationship, the limited license shall cease to exist, and the manufacturer will generally have no future rights to the brand name.

Formulation, Ownership

  Product formulation must be addressed in these agreements as well. Both the manufacturer and brand owner must agree prior to production, the formulation specifications and method of manufacture of the liquid in the bottle. A well-crafted agreement should address deviations from the agreed upon formula. If a dispute arises between the parties in regard to formulation and product quality or integrity, a means for determining fault should be incorporated into the agreement. It is highly recommended that third party laboratories are identified in the agreement where the finished product can be sent for testing and ultimately assignment of responsibility.

  Compensation to the injured party for out-of-spec liquid should be codified as well.  The contract should also address formula ownership and use of the liquid. Common place vodkas, as example, are drastically different from unique formulations with unique ingredients. Assignment of ownership of the formula should be addressed in any contract packaging agreement in a similar fashion as usage of the brand name as described above.

Raw Materials, Packaging

  Every beverage product produced requires raw materials and packaging materials. Grains, malt, yeast, and other ingredients are required as well as bottles, labels, stoppers, and cases. These items can be secured by the manufacturer as part of the contract arrangement, or they can be secured by the brand owner and delivered to the producer’s plant (producer is used interchangeably with manufacturer). The acquisition of these items is very important for many reasons including the quality of the materials used and the costs involved.

  Ultimately, the costs of these materials will determine the price of the finished product on the shelf. The parties to any agreement should establish roles and responsibilities for obtaining these items to ensure adequate supplies of the same at the right cost point. Storage of inventory of both raw materials and packing and how to deal with defective materials should be sorted through by the parties with the costs assigned accordingly.

Production Quantities

  Production amounts are an essential element of negotiations and memorializing them in an agreement is vital. Both the manufacturer and brand owner need to align their expectations on this issue. Either party will quickly cry breach of an agreement if the manufacturer cannot produce the quantities the brand owner requires and conversely, the manufacturer will do the same if the brand owner does not contract and purchase the quantities bargained for. 

  Realistic volume expectations need to be established for both parties to the agreement. As an offering of sage advice, if there is not a meeting of the minds on this issue by the parties, it is best to walk away from any arrangement. Further, it is advisable to incorporate reasonable and realistic annual volume growth expectations, year over year, in a multi-year agreement.

Payment Terms

  It goes without saying that payment terms may be the most important part of a contract packaging agreement. Clearly both parties need to know when they will make and receive payment and the timing of the same. In some instances, manufacturers may be willing to provide favorable credit terms, (most likely offered to a long-standing brand owner partner who has well established credit).

  In many instances manufacturers may require all monies to be paid prior to production. In other instances, they may require one-half of the production amount prior to commencing manufacturer, the remainder due at pick up of the finished product. Once again, this essential term must be negotiated and memorialized in a well drafted contract package agreement.

Quality Control and Product Recall

  This provision was briefly mentioned above but is worth restating here. Ideally, production moves along without a hitch and product quality and integrity remains excellent. Of course, that is not always the case. There are times when product formulation is off or foreign objects make their way into the bottle. The parties to a production agreement must memorialize issues such as the right to inspect finished product prior to leaving manufacturers warehouse, the procedures and allocation of costs if in fact product must be recalled.

  As a final thought, contract packing agreements must be beverage law compliant.  Additional terms in the agreement must comport with and be legal under alcohol beverage law and the parties to the agreement must be licensed accordingly.

  The above is very much a sketch of some important issues that must be addressed in a well-crafted contract package agreement. There are many other areas that must be negotiated between the parties and included. A word to the wise, it is always beneficial to both parties to consult with attorneys who are experts in this area. Ideally, the agreement should provide a business framework that makes for a productive relationship between manufacturer and brand owner and anticipate problems that may arise and incorporates mechanisms and procedures for addressing reasonably foreseeable issues.