Sourcing Grains for Craft Distilled Spirits

two men standing at bag with grains in their palm

By: Becky Garrison

According to Michael Swanson, co-founder, farmer and distiller for Far North Spirits (Hallock, Minnesota), craft distillers have an excellent opportunity to highlight the difference between a crop grown for flavor compared to a crop grown solely for yield. This distinction affords them unique opportunities to explore how to source the specific grains that will produce a spirit with a particular desired flavor profile.

  Swanson cites rye as an example, as that’s the primary grain he utilizes in his whiskeys, and he observed how this scenario plays out similarly to many crops. As he observes, historically and across multiple countries, winter rye has been grown and sold as a commodity. There are exceptions to this, particularly in pre-prohibition Pennsylvania, where rye was grown specifically for use by the many distilleries across the state. But for the most part, rye was and still is treated as a commodity. However, when they started growing rye to distill into whiskey, they realized that their particular variety had a distinctive flavor profile.

  So, Swanson and his team conducted a three-year crop research study that was the first of its kind. In this study, they grew 15 different varieties of rye and then milled-mashed-fermented-distilled them individually. From this, they could determine that all other things are equal, the variety of rye alone affects the flavor of the whiskey. Also, after barrel aging the whiskey, they found that the aging process amplified the differences in flavor between the varieties. In particular, the open-pollinated varieties showed a much broader flavor spectrum than the hybrid varieties.

  Despite the increase in flavor in the open-pollinated varieties, the hybrid varieties have been quickly gaining acreage across the U.S., Canada and Europe because of their much higher yields. These high yields enable farmers to increase their gross revenue to the point that growing hybrid rye can be almost as profitable as a corn/soybean rotation, with much lower input costs. But growing the majority of open-pollinated varieties at this price point isn’t profitable. Hence, mass producers of whiskey aren’t willing to pay more for open-pollinated rye due to the massive number of bushels that they consume in a year.

Talking About Terroir

  Swanson has observed that craft producers who focus on producing products based on flavor rather than yield are willing to pay more for grains with a broader spectrum of flavor. To this end, craft distillers have started conversations about terroir that are very similar to defining a wine by taking into account factors such as the vineyard where the grapes came from and the AVA where this vineyard is located. Simply put, place matters, with regional differences emerging among whiskeys produced by craft distillers based on where the grains are grown.

  Miles Munroe, master blender for the Portland, Oregon-based Westward Whiskey, views barley similar to how a winemaker considers different wine styles, the different grape varietals and the various climates in which they’re grown.

  “We know that barley types, soil, and climate bring diversity and complex flavors to whiskey. The shape of our custom pot stills and the way we approach distillation allows for the most amount of grain character to come through, so we’re focused on high-quality barley that has a sense of place,” he reflects.

  In recent years, the Skagit Valley in Western Washington State, situated along the same latitude as the Scottish Highlands, has emerged as a major agricultural hub. This distinction led to Copperworks Distilling Company (Seattle, Washington), Westland Distillery (Seattle, Washington) and Westward Whiskey emerging as leading players in the evolution of the creation of American Single Malt as a new spirits category.

Sourcing from Malthouses or Direct to Farmers

  Except for a select number of distilleries that malt their grains in-house, distillers work with a malt house to source and then malt the grains according to the distiller’s particular specifications for a given spirit. These malt houses can ensure that the grain meets minimum specifications so that it can be malted.

  Some craft distillers follow the model of distilleries like Westward Whiskey, where they work with malt houses that source local barley, which gives their spirits a sense of where the grain is from. Miles Munroe, master blender for Westward, chooses two-row barley because it meets the standards of what craft brewers also expect. So, they select their malt houses with these criteria in mind.

  Others, like Tyler Pederson, master distiller at Westland Distilling, work with a network of local malt houses and brokers to source their malted barley. These partners work with regional farmers to select and procure the raw barley they malt to their specifications. Pederson describes this process, “It’s a very involved effort, and we collaborate with everyone throughout our supply chain, even going so far as funding a barley breeding program to develop new varieties for the whiskey industry.”

  Westland’s Colere editions were created specifically to reflect how different varieties of barley offer different flavors. To date, they’ve released three expressions: Colere #1, made with Alba, #2, made with Talisman and their current expression and #3, made with Pilot. How Westland sources its grains was one contributing factor to its achieving B-Corp Certification in 2024.

  A small but growing number of distillers like Far North Spirits purchase their grains directly from the farmer. According to Jason Parker, co-founder of Copperworks Distilling Company, “This represents a new way of doing business where a customer is getting better flavor, sometimes at the expense of a good yield.” He cites his experience sourcing a barley variety named Alba as an example. After they created a delicious whiskey using Alba, they found their local malt house had encouraged their supplying farmers to quit growing it because they found another barley that was easier to malt and produced a higher yield. But it didn’t taste like Alba, and now the flavor it produced is no longer possible to produce.

  To convince farmers to grow specialty grains like Alba that may yield fewer bushels per acre or perform less efficiently in the malthouse, they put the word out to farmers that they were willing to pay the farmers per acre instead of per bushel. Once they contract with farmers to bill by the user rather than the bushel, thereby sharing the risk with the distillery of planting grains for flavor rather than yield, they will contract with a local malt house, such as Link Foods, to malt the barley.

  Before contacting farmers, Swanson recommends doing research into the specific varieties of grains that grow best in one’s particular area. This knowledge will help ensure that the farmer can grow this particular grain variety in a large enough quantity without sacrificing quality such that the farmer can make a profit and the distiller can produce a quality spirit.

  Gabe Toth, lead distiller for The Family Jones (Loveland, Colorado), describes how working with Olander Farms/Root Shoot Malting, which is less than five miles from their production distillery, affords them multiple opportunities. “We can develop local, unique flavor, keep our dollars local and support local businesses. We can also reduce our supply chain footprint, reducing both our vulnerability to disruption and our carbon usage via transit and work directly with our farmers to experiment with new grain varietals. This helps us support on-farm sustainability initiatives or collaborate on other projects that are a result of having direct relationships and even friendships with them.”

Challenges in Sourcing Grain Directly from Farmers

  In Toth’s estimation, price is probably the major factor working against this approach, followed by uniformity. As he reflects, “Commodity agriculture over the last several decades has increasingly squeezed small farmers out of the market, and the relatively small farms we work with don’t have the economies of scale to leverage for competitive pricing. Local grain can also be more prone to variability compared to a large processor that can over-contract and be more selective or blend away variation.”

  However, Parker reminds craft distillers that focus on making value-priced whiskeys, as opposed to flavor-driven whiskeys, that they can’t compete with the big producers on price. Big companies have economies of scale and contracts that are not available to craft distilleries. “So, you might as well chase the one thing you can control, which is good, unique flavor. To do that, you probably don’t want to be putting the cheapest ingredients in but rather use grains and other products that make a real flavor difference.”

Liquor Licensing & Insurance 101

What Establishments Selling Liquor Need to Know

By: David DeLorenzo

When you’re operating an establishment that serves food and alcohol, being properly licensed and insured is crucial to the safety and the success of your business. Even if you’ve been in business for some time, it’s vital to stay abreast of ever-changing laws as they apply to serving liquor, specifically. Read on for some liquor licensing and insurance tips to keep your business running strong, while you protect yourself and your staff.

  First of all, it’s important to consider the type of license that you have and the insurance that will cover it. A lot of people may have a misconception about the type of license they have and the dictation for what type of insurance that is needed. For example, a No. 6 license (subject to Arizona law), which is generally a bar license that is 100 percent liquor that will have some dictation on the type of insurance that you will need. You will have to go to markets that are fully vested in the ability to write 100 percent liquor or 50 percent or more liquor, because of that No. 6 license.

  However, the license itself is not as important as the percentage. It only matters that you have a license when it comes to insurance. For example, consider a No. 12 license, which is a restaurant license that allows you to serve 60 percent of your sales in alcohol and at least 40 percent of your sales in food. The insurance agency will look at that No. 12 license, but what they really want to know is how much you are actually serving in alcohol and how much you are serving in food.

  The reality is that most No. 12 businesses may serve 30 percent alcohol or five percent — a lot less than that 50 percent (which is generally what a No. 12 license allows for). All the insurance company really cares about or looks at is the actual percentage of liquor to food. However, if you served 60 percent alcohol and 40 percent food, the insurance company may still classify you as a bar and you will likely have a higher rate even though you have a restaurant license. It’s the percentage of food to alcohol sales that really matters when it comes to your insurance coverage and rates, not necessarily the license itself.

  In the insurance world, if you serve 30 percent alcohol and 70 percent food, for example, that is generally the threshold and the maximum for you to get the most positive and beneficial insurance rate in Arizona because your liquor is 30 percent or lower. Once you exceed that 30 percent threshold, it puts your business in another category of insurance that basically does not allow you to go to those direct markets for your coverage.

  You will need to go to a secondary market, generally a more expensive market, because your liquor liability is increased when you have more people drinking liquor. You have to be insured differently the more liquor you serve and typically those direct markets don’t want to take on that risk. However, there are other markets for that.

  If at least 30 percent of your sales are attributed to liquor, you should look into an umbrella to go over your primary coverage. This umbrella will give you another layer of protection over what you’ve already purchased in terms of your insurance.

  It’s also important to carefully analyze the amount of entertainment your establishment provides and the hours of operation if you’re getting into heavy liquor service. Those two factors will impact on your rate just as much as serving more alcohol than a standard restaurant would.

  There is nothing wrong with entertainment or later hours, but you do need to understand that those factors put you in a different classification at that point. Based on that you will need to adhere to higher rates. This is because the companies that write these have actuaries that have determined what they need to charge in order to create an actual rate that makes sense for the carrier to write the business.

  When it comes to selling to-go alcohol, it hasn’t really come to full fruition as many thought it would after COVID. There are insurance companies that write liquor stores, convenience stores or even grocery stores, which is basically to-go alcohol. When you look at those types of establishments, to-go alcohol is already being sold. It hasn’t really changed the stance from an insurance perspective when restaurants are selling to-to alcohol. They just look at the total amount of alcohol sales coming out of that establishment. For example, if a restaurant is selling only three percent alcohol and the rest is food, the insurance company won’t really look at whether that three percent is from to-go liquor sales or not.

  Ultimately, it is up to the establishment to perform in the act of not overserving a customer and not serving a customer that is already noticeably intoxicated. That is regardless of whether the alcohol is served at their establishment or purchased to-go. While selling to-go liquor as a restaurant or bar is legal, is it important to be properly licensed for that.

  For any business selling liquor, it is important to review your policies once a year with your insurance agent to ensure there aren’t any changes that would necessitate an adjustment to your coverage. It is also vital to adequately train your staff, particularly in the awareness of not overserving or not serving a customer that appears to be already intoxicated.

  Documentation of this training is also extremely important. Keeping that and all other documentation in a place that is safe and yet accessible can help protect your business if something were to go awry. If you hear of an incident, even if you don’t

know whether that person was at your establishment, collect your camera footage from that evening and save it in the event of a law suit. You may or may not be liable, but it is good to have, particularly if there was a wreck or even a death near your business. It’s a good idea to collect that data just in case. Security cameras with time-stamped data can be a lifesaver to your business and your staff.

  It’s always important to work with an insurance agent that specializes in the bar and restaurant industry. They will have the knowledge to support your needs and also ensure that you have the coverage you need to protect your business, your staff

and your clientele.

  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 our website: www.barandrestaurantinsurance.com.

Keg Washing: Working Smarter to Conquer an Essential Brewery Task

kegs on conveyor belt going through wash machine

By: Cheryl Gray

Imagine a dried egg inside a frying pan. Then, imagine the bacteria that immediately begins to grow because you’ve left the problem to fester, and, well, you know the rest.

  The same premise holds true when cleaning the kegs for your brewery. If the job is not done properly, breweries are setting themselves up for all kinds of safety and hygiene problems, both inside and outside the keg. Ensuring that beer is safe to consume is not an option. It is a must.

  Beer products are very sensitive to any outside contamination. Even tiny traces of bacteria or other contaminants can ruin an entire batch of beer, costing breweries money in lost time, resources and, of course, product. 

  There are some key differences in cleaning the outside of a keg versus the inside. Cleaning the inside of a keg involves focusing on removing any beer residue, bacteria or contaminants. Success in this area can ensure that the beer dispensed maintains the quality its brewer intended and is safe to drink. A proper external cleaning, of course, guarantees the removal of any contamination or dirt that may be present on the outside surface of the keg.

  While properly cleaning beer kegs is not an impossible task, choosing the wrong cleaning apparatus can be costly on all fronts. If you choose kegs for your beer products, knowing how to protect your customers from contamination is the job of expert companies with solutions that can help. Many breweries are opting for automatic solutions to clean and sanitize their kegs.

  Fillmore Packaging Solutions, headquartered in St. Louis, Missouri, promises affordable solutions for keg washing designed for craft breweries of all sizes. Since owner Tony Saballa founded the company more than twenty years ago, it has focused on perfecting the mechanical side of production. Saballa says his company is all in when it comes to automatic keg washers.

  “We don’t offer manual keg washers since they typically require the same amount of labor and cost to construct as fully automated washers. We also have found that manual washers often have variable outputs with wash quality issues due to operator missteps and errors.

  Our keg washers are built to completely automate the washing process utilizing state-of-the-art UL certified electronics. Automation simplifies the washing process so brewers can apply their attention to other tasks.”

  Saballa adds that Fillmore’s keg washers are UL Certified and constructed to meet the UL508a safety code standards for the United States and Canada. The washers are constructed at the company’s St. Louis manufacturing facility.

  “We aim to deliver American-made automation that functions to the highest standards at a cost that is affordable for both startups and expanding breweries.”

  Saballa points out some major mistakes that brewers make when it comes to keg washing and how Fillmore can steer them in the right direction. One major error, Saballa says, is overdoing the cleaning process. He says that more is not better in the case of keg washing.

  “Here at Fillmore, we often find that brewers tend to over-concentrate their cleaning and sanitizing solutions, sometimes using double and triple the manufacturer recommended usage rates. More is not better. This increases the operational cost, and safety for the operator must also be taken into consideration. Other factors that exist are the accelerated wear on pumps, valves, seals and gaskets, which can lead to down time and costly repairs.”

  Saballa explains how Fillmore’s keg washers are built to operate on a special voltage and designed for different breweries of different sizes. 

  “This is important since most new breweries are not located in industrial zones. Single-phase machinery offers a solution for brewers operating in areas where three-phase power is inaccessible or installation would be cost-prohibitive.”

  Each Fillmore keg washer operates on either 120v or 220v AC and compressed air and is capable of handling advanced pressurized CO2. Equipped with an enhanced design and technologically advanced features, the semi-auto keg washers include a fully programmable interface designed for customized operation, high-capacity cleaning and advanced sanitizing for brewery kegs.

  Another company specializing in keg washers is Craftmaster Stainless, headquartered in Rancho Cordova, California. The company manufactures production equipment for multiple beverage industries, including beer, cider, wine, spirits and coffee. Its clients range from small craft brewers to large global producers. With more than two decades of experience in stainless steel fabrication, the company’s team has the capability to custom-design and build commercial beer brewing equipment.

  When it comes to cleaning kegs, Craftmaster Stainless offers the Keggernaut Semi-Automatic Keg Washer. The product features a Siemens interface that gives breweries full state-of-the-art touch control over temperature settings and wash cycle timing. 

  The Kerrernaut is equipped with dual cleaning stations designed to wash two kegs of any size.    It can clean up to 40 kegs an hour, contingent upon the length of the wash cycle. The user-friendly features allow the kegs to simply be inverted, automatically washed, sanitized and pressurized in minutes. This semi-auto beer keg cleaning equipment allows for a quick and easy option to increase productivity. 

  Craftmaster Stainless offers its customers lifetime support on all commercial brewing equipment. It also provides custom designs for its microbrewery clients. 

  Keg washers are also available from Alpha Brewing Operations. The company, headquartered in Lincoln, Nebraska, provides fully automated options for an entire brewery. Its automation options from breweries range from semi-auto to what the company calls its fully automated package. The works include features such as a large touchscreen interface and connectivity options with mobile devices.

  For keg washing, Alpha Brewing Operations offers a product called the Alpha “Wash Dog Junior.”  It is an affordable, compact, automatic version of the company’s larger and fully automatic counterpart. The “Junior” is still highly automated but requires manual coupling to kegs and comes in a smaller package. This smaller keg washer is designed to fit into the tight budgets and tight spaces of startups and small breweries.

  Keg washers are also available from international manufacturers, such as Comac, which has its headquarters in Italy. Comac has several varieties of external keg washers, capable of washing anywhere from 30 to more than 1,000 kegs per hour. Comac offers customized keg-washing solutions for breweries of all sizes.

  Comac’s most compact keg washer is only about six and a half feet long, including a single section and one track. The company touts it as an ideal option for hot or recycled water washing. There is a larger option that performs multiple tasks for keg washing, such as pre-washing with recycled water, washing with a caustic solution to remove hard-to-clean dirt and a final rinse with clean water.

  For larger production facilities, Comac offers a dual-track keg washer to boost cleaning capacity. Other features include easy and cost-effective maintenance, quick changeover ability and savings in water consumption. Other options available for large production lines include a separate skid for components, such as pumps, valves and heat exchangers to simplify cleaning and maintenance.

  Experts agree that keg washing, inside and out, protects the beer and the consumers who buy it. For breweries large and small, the task is an inevitable necessity made easier by automated machinery designed to make a mundane task easier to manage while increasing safeguards against cross-contamination.

Uncorking Accessibility:  Ensuring Your Website Complies with the ADA

By: Vanessa Ing, Farella Braun + Martel

In today’s digital age, having an online presence is crucial for businesses, including wineries, breweries, and other beverage companies. Accordingly, it’s essential to ensure that your beverage website meets federal standards for accessibility to avoid lawsuits and fines. In this article, we will help beverage companies understand how to comply with federal law and implement accessible features on their websites.

Why is web accessibility important?

In 1990, Congress enacted the Americans with Disabilities Act (ADA). It prohibits businesses open to the public (otherwise known as “public accommodations”) from discriminating against people with disabilities in everyday activities. These everyday activities can include purchasing goods and services, or offering employment opportunities. 

In March 2022, the U.S. Department of Justice issued web accessibility guidance, reiterating that ensuring web accessibility for people with disabilities is a priority for the Department. Relying on the ADA’s prohibition against discrimination and its mandate to provide equal access, Department of Justice emphasized that the ADA’s requirements apply to all the goods, services, privileges, or activities offered by public accommodations, including those offered on the web. The Department of Justice’s guidance was particularly timely given that many services moved online during the pandemic. 

In its guidance, the Department of Justice explained that people with disabilities navigate the web in different ways: for example, those with visual impairments might require a screen reader that reads aloud text to the audience.  Those with auditory impairments might require closed-captioning software, while those with impaired motor skills might require voice recognition software.  A website, therefore, should be compatible with the full range of such software. 

Is your beverage company a “public accommodation” business?

Public accommodations include businesses that sell goods and services, establishments serving food and drink, and places of recreation or public gathering.  Companies that sell drinks, wineries that offer a tasting room, or breweries that host events are all considered public accommodations.  Thus, those businesses’ websites must comply with the ADA by being accessible to people with disabilities.  

It is an open question whether beverage companies without a physical location open to the public must still have ADA-compliant websites. Some jurisdictions, like the Ninth Circuit (which has jurisdiction over Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington), have tied the necessity of ADA-compliant websites to the existence of a brick-and-mortar location (Robles v. Domino’s Pizza, LLC). However, the Department of Justice, along with several federal circuit courts of appeals, has taken the position that even a public accommodation business without a physical location must have an ADA-compliant website.  

Given the increased prevalence of online-only services open to the public, it is very likely that litigation over the next few years may resolve this open question.  In the meantime, it is wise for beverage companies to take preventative caution and ensure that their websites are accessible.  

What are some website accessibility barriers?

To ensure ADA compliance, beverage companies must be aware of common website accessibility barriers.  These include poor color contrast, lack of descriptive text on images and videos, mouse-only navigation, and more.  By addressing these barriers, beverage companies can enhance the user experience for people with disabilities.

Six examples of website accessibility barriers highlighted in the DOJ’s accessibility guidance include:

  • Poor Color Contrast: Ensure sufficient color contrast between text and background to aid individuals with visual impairments or color blindness. Use color combinations that are easy to distinguish.
  • Use of Color Alone to Give Information:  Avoid using color alone to provide information.  Using color alone can be very disorienting for someone who is visually impaired or colorblind.  Someone who is colorblind might not be able to distinguish between shades of gray.  One solution might be to ensure that symbols conveying information are differently shaped.  
  • Lack of Descriptive Alternative Text for Images and Videos: Provide descriptive text (alt text) for images and videos, allowing screen readers to convey the information to visually impaired users. This makes your content more accessible and inclusive.
  • No Closed Captions on Videos: Include closed captions for videos to accommodate individuals with hearing impairments. Utilize manual or automatic captioning options and review the captions for accuracy.  Free options are available on the web.
  • Inaccessible Online Forms: Make online forms user-friendly for people with disabilities. Provide clear instructions before the form, ensure that a screen reader could recognize required fields and fields with special formatting, ensure keyboard-only navigation, use accessible labels for inputs, and display clear error messages.  Note that an image-based CAPTCHA is not a fully accessible way to secure your form; your CAPTCHA should offer users who are visually impaired an audio alternative.
  • Mouse-Only Navigation: Enable keyboard-only navigation on your website to assist individuals with motor skill impairments or those who cannot use a mouse or see a mouse pointer on the screen.  Make sure all interactive elements can be accessed using the tab, enter, spacebar, or arrow keys.  Use a “Skip to Main Content” link to ensure that users employing only a keyboard can easily navigate the website’s primary content. 

To implement these features, beverage companies should discuss accessibility concerns upfront with the web developer.  Beverage companies should keep in mind that posting a phone number on a website to call for assistance, as commonly utilized by businesses, does not sufficiently provide equal access to the website and the services or goods provided.

Who can sue beverage companies?

Non-compliance with ADA standards can lead to potential lawsuits.  Although some courts have held that a nexus must exist between a private plaintiff’s disability and the web accessibility barrier claimed, a private plaintiff may easily surf the web for websites that are inaccessible.  A private plaintiff may then file a lawsuit in federal court without first notifying the business.  Further, liability under the ADA is strict, which means that the intent of the business to comply is immaterial.  Thus, it is prudent for beverage companies to proactively address accessibility issues to avoid potential legal troubles.  

Private lawsuits under the ADA can result in injunctive relief (a court order to comply with the ADA) and attorney fees.  And in some states, like California, the state law version of the ADA may enable plaintiffs to demand monetary damages ($4,000 per violation of the ADA). 

Government involvement, while less frequent, is possible in cases involving national retailers.  If the Department of Justice observes a pattern or practice of discrimination, the Department will attempt to negotiate a settlement, and may bring suit on behalf of the United States. At stake are fines of up to $75,000 for the first ADA violation, and up to $150,000 for each subsequent violation.

What are the rules for website accessibility?

Although the ADA itself does not spell out the rules for website accessibility, several sources provide detailed rules that can aid beverage companies in building accessible websites. 

First, the ADA authorizes the Department of Justice to enforce the statute.  Accordingly, the Department develops and issues regulations explaining how businesses must comply.  Specifically, § 36.303 of the Electronic Code of Federal Regulations specifies that a public accommodation shall provide auxiliary aids and services when necessary to ensure effective communication with people with disabilities, and that a public accommodation should consult with people with disabilities whenever possible.  The Department also issues administrative guidance, such as its March 2022 guidance described above.  

Second, Section 508 of the Rehabilitation Act of 1973, which requires federal agencies to make their electronic and information technology accessible to people with disabilities, provides detailed guidance concerning the display screen ratios, status indicators, audio signals, and other accessibility features. 

Third, the Web Content Accessibility Guidelines 2.1 (WCAG 2.1), which were originally designed by a consortium of four universities, provide highly specific web accessibility guidelines grounded on the idea that information on the web must be perceivable, operable, understandable, and robust.  These guidelines are widely referenced in court cases and settlements with the Department of Justice, as the guidelines address numerous aspects of web accessibility and offer three different levels of conformance (A, AA, AAA). Beverage companies can consult the WCAG 2.1 guidelines (including a customizable quick reference guide, at https://www.w3.org/WAI/WCAG21/quickref/) to ensure their websites meet ADA compliance. 

Looking Ahead

Web accessibility standards evolve over time, with updates being released periodically. Beverage companies should stay informed about changes and updates to ADA compliance regulations. For example, the WCAG 3.0 is scheduled for release in the latter half of 2023, further refining accessibility guidelines.

In sum, by understanding and identifying web accessibility barriers, and implementing necessary accessibility features, beverage companies can enhance user experiences and minimize the risk of legal repercussions. Embracing web accessibility is not only legally required but economically prudent in the long run, as it enables beverage companies to cater to a broad and varied audience, and demonstrates a commitment to inclusivity in the digital realm.

Vanessa Ing is a litigation associate with Farella Braun + Martel and can be reached at ving@fbm.com. Farella is a Northern California law firm representing corporate and private clients in sophisticated business and real estate transactions and complex commercial, civil and criminal litigation. The firm is headquartered in San Francisco with an office in the Napa Valley that is focused on the wine industry.

Financial Literacy Training

By: Kary at Beerbusinessfinance.com

Financial literacy is the ability to read and understand the most important numbers in your beer business.

Financial literacy training starts with practical and actionable ideas that you can use right away to improve financial results.

All of our financial training is for non-financial owners and managers.

Here’s how our financial literacy training works:

Quarterly financial meetings

You’re invited to join our beer wholesaler financial round-table meetings.

Network with peers, share best practices, and learn specific ways to improve financial results. Right away.

Library of wholesaler financial training courses

Access over a dozen wholesaler financial training courses.

Learn how to build your budget, build your key metrics dashboard, create (or update) your wholesaler business plan, and more.

Weekly beer wholesaler financial newsletter

Each week you’ll receive financial tools and resources straight to your inbox.

Examples of topics covered: Key drivers of wholesaler cash flow, sales growth strategies, cost cutting processes that work, and much more.

Beer wholesaler webinars, workshops and podcasts

Join our webinars and workshops (or watch the replays). This is your opportunity to hear from the best of the best in the beer industry.

Past topics: How to improve gross profit, beer wholesaler budgeting workshop, the latest technology and software.

Planning templates, models, and spreadsheets

We’ve got models to help you create your sales forecast, analyze gross profit, track cash flow, and much more.

If you’re ready to learn more about beer wholesaler cash flow, net operating income, and (wait for it…) EBITDA, now is the time to invest in your financial literacy training. 

Yours in financial literacy,

Kary

P.S. Interested in learning more about our beer business financial training programs? Book a time for a 15-minute talk. 

Forecasting Business Plans in Uncertain Times

How to Plan for the Fiscal Future in 2024

a robot hand and a human hand both pointing to a dollar sign

By: Raj Tulshan, Loan Mantra

Over the past few years, small business owners have seen dramatic changes in the financial landscape, with an array of challenges and an uncertain future. Several years of global disruption have left small businesses on a rollercoaster ride, facing a global pandemic, supply chain disruptions and ongoing labor shortages. Recently, despite rising inflation and bank failures, small businesses experienced some good news, with cryptocurrency going mainstream, an increase in diverse small business owners, a rise of Artificial Intelligence (AI) in the workplace and more. As we welcome 2024, let’s review a few highlights of 2023.

In 2023 small businesses reported becoming more optimistic, predicted a growth in revenue and planned to hire more staff in the coming year.  They anticipated making higher investments in their companies moving forward. What’s more, we saw an increase in diversity among small business owners, and a rise in the number of small businesses across the country, which account for an impressive 99.9% of the businesses in the U.S. 

While the economic outlook improved in 2023, there are no guarantees that 2024 will be the same. And, as the new year begins, many businesses remain hesitant about the road ahead. It’s human nature to want to predict the future – and in the business world, vital for owners to have a plan to move forward. The one constant is change. Financial service professionals can help business owners and leaders manage these economic and cultural shifts to stay adaptive and resilient during the coming year and for years to come. While no financial expert has a crystal ball, there are key factors that impact the fiscal future. Here are financial considerations for making business plans and strategies that will work today and tomorrow.

The Rise of Artificial Intelligence (AI) and Machine Learning (ML)

AI and ML technologies are already being used in fraud detection and investment research in the Fintech industry. ChatGPT is a new tool that is generating interest in average consumers who have interacted with it out of curiosity. Chatbots are already augmenting customer-facing service roles, increasing speed and simplifying complex transactions. Personal finance, budgeting, operations and management apps are becoming integral for business owners who want to use business data to take control of revenue and meet financial goals. Adoption of these technologies and resulting changes present large business opportunities – and a quantum shift for the business over the long term.

Digital Payments and the Blockchain

As was seen during the pandemic, the shift to digital payments continues to accelerate. Further declines in cash usage will be seen with an upsurge in alternative payment methods, including cryptocurrencies. In 2023 we saw cryptocurrencies go mainstream as patrons used crypto to purchase goods and services, real estate and more. At the same time, governments worldwide are exploring cryptocurrency regulations.  In 2024, expect to see clearer guidelines and potentially greater acceptance of cryptocurrencies in mainstream finance. In addition, the standardization of one central currency may appear called the Central Bank Digital Currency or CBDC.

The CBDC has become a highly charged issue as adoption of it would be controlled by a central entity with likely ties to a social credit system for consumers. Consumer advocates warn that the use of this would put unfettered power and control in the hands of those controlling it. The World Economic Forum states that a CBDC would forever change the relationship between the public and their money with an end to private accounts and choice over what is purchased by individuals.  The WEF states their plans are to monitor every purchase made and eventually restrict what a person could spend their money on and when. This means proposing limitations on travel, dictating how much protein is consumed per week or even collecting carbon taxes directly from accounts without personal choices of the account holders. A CBDC account could be turned on and off at will, restricted based on that individual’s social behaviors, political leanings, religious belief systems and health choices (imposing mandatory experimental vaccines, for instance) and penalize those that don’t go along with centralized dictates.

Interest Rates and Inflation

High interest rates and inflation have a direct impact on those that seek commercial loans and how much funding is available. With an economic constriction, the availability of credit opportunities for business will lessen. As challenges mount, it will be more important to have a financial education. Financial literacy is gaining recognition as a crucial life skill. In 2024, there will be a growing emphasis on financial education, with schools, organizations and governments working to enhance people’s understanding of money management.

Redefining Retirement

The concept of retirement is evolving.  More individuals are opting for phased retirement or exploring flexible work options.  This trend will continue in 2024 as people seek purposeful post-retirement activities and income streams. People will also seek more control over their money in the coming year with the use of personal financial apps becoming integral for money management.  In 2024, expect these apps to offer more sophisticated features, from AI-driven budgeting to customized investment advice, empowering users to take control of their finances.

It’s also vital to note that in the wake of the upcoming election, social security and Medicare reform will be at the bottom of the United States government’s political to-do list. Alternatively, on October 31 2023, the White House announced a Retirement Security Rule, which legally protects consumers seeking financial guidance.

Sustainable investing is also gaining momentum.  Investors are seeking opportunities that align with their values, focusing on companies making a positive environmental and societal impact. In 2024, this trend will continue to grow as investors emphasize responsible investment choices.

Hitting the Debt Ceiling.

As the past year saw banks collapse, new debt ceiling highs and potential interruptions of government created anxiety and lack of confidence in political leaders. These actions will give rise to new bank systems, options and alternatives to banking. Decentralized Finance (defi) is also reshaping traditional banking and finance.  In 2024, we can anticipate more DeFi projects and platforms emerging, offering decentralized lending, borrowing and trading options.

Economists Predict Soft Landing

According to J.P. Morgan Wealth Management, Looking into 2024, strategists now expect that while the U.S. economy is likely to slow, it should avoid recession. The lower likelihood of a painful economic crash should help with financial decision making going into the new year. Other economists are skeptical that the U.S. can maintain economic growth with interest rates so high. The Conference Board predicts slow GDP growth slowing means a “shallow recession” in the first half of the year. The nonprofit research group said wage growth is slowing, pandemic savings are declining, and U.S. household debt is spiking.

At the same time the labor market is resilient heading into the new year. The unemployment rate has risen to just 3.8%, and the economy has averaged more than 250,000 jobs created per month over the past three months. The Federal Open Market Committee projects the U.S. unemployment rate will average a healthy 4.1% in 2024, still well below its long-term average of around 5.7%. The firm said softening consumption, coupled with rising interest rates, will also weigh on U.S. business investment in early 2024.

With these points in mind, plan for the coming year knowing that the ability to be flexible, adaptable and agile will be of significant benefit.

Raj Tulshan is founder and managing partner at www.loanmantra.com. Reach him via Linked-in at https://www.linkedin.com/in/tulshan/.

How to Disrupt the Beverage Industry with New Marketing Strategies

Jorge Olson

By Jorge Olson — Co-founder & CMO of Hempacco and Green Globe International, Author of “Build Your Beverage Empire

The beverage industry is growing rapidly, with innovators entering the space year after year touting the next big idea. The global beverages market is expected to grow from $3.56 trillion in 2023 to $4.39 trillion by 2028 at a CAGR of 4.26%, allowing room for disruptors to enter the space, especially considering two of the largest growing categories in the beverage industry are hemp beverages and mushroom beverages.

If you are set on being one of those disruptive entities in the beverage industry, you will want to devise some novel marketing strategies that will set them apart from the competition. Those entering the beverage industry or seeking to retool their marketing approach need to consider several factors, including budget, target audience, and branding.

Entering today’s beverage industry

The beverage industry comprises a litany of products, from ales and liquors to flavored seltzers, hard teas and lemonades, and more. As consumer demand grows, innovators in the beverage space churn out an abundance of ever-expanding options, and as markets continue to grow, more opportunities arise for beverage companies to get a foothold.

With over 2,000 beverage companies in the United States alone, effective marketing is more important than ever before. Marketing builds awareness of your brand and is especially integral to launching and growing new businesses within the beverage space.

The cost of launching and scaling a new business — especially one tied to a physical product — can be high. If you are seeking to disrupt a long-standing industry with a new product idea, you must be savvy about your marketing budget to have the greatest impact and bang for your buck.

Every marketing strategy begins with a great idea that should be formed with consideration to what consumers are seeking but not finding in the current market. The beverage’s formula should be consistent before being unleashed onto the market, and the opinions of experts and stakeholders should also be considered. Being thoughtful about your actions before launching can help you avoid costly (or embarrassing) mistakes.

The beverage industry is incredibly competitive, but with the right product and the right marketing strategies, your product can make considerable waves.

Innovative marketing approaches

In an industry that can be as crowded as the beverage space, new businesses will be required to think outside of the box concerning marketing approaches. The old standard marketing strategies will not likely garner enough engagement to disrupt such a massive industry.

Savvy marketing can also help consumers create an emotional connection to your brand. Many beverages can be connected to moments or memories for consumers — that bottle of Coca-Cola they shared with their dad on a fishing trip or their very first beer when they turned 21. Tapping into these emotional markers can help elevate a brand and solidify the brand’s story within the current culture.

There are several innovative marketing strategies that your beverage company can leverage, but your chosen strategy (or strategies) should depend on the market you are targeting, your specific product, location, budget, and several other factors. The thoughtful pre-planning discussed in the previous section will help determine the right strategy to meet their goals.

Social media marketing

Social media marketing is nothing new, but it is constantly changing. It seems that with every introduction of a new platform or a change in an algorithm, the goalposts for marketers are moved.

Today’s approach to social media marketing utilizes a variety of platforms for a diversified strategy. TikTok is still going strong as the platform of choice for many Gen Zers, but older generations may still prefer Facebook or Instagram. This means you can capture a larger slice of your target demographic by splitting marketing among the various popular platforms.

Social media is still suitable for quickly sharing content with a large number of people and is still the best way to create a personal connection with your target market. By engaging with people across the platforms, answering questions, and sharing content they want to see, you can grow your social media following and brand recognition.

Even though social media is not a new marketing tactic, it is constantly changing and creating new hurdles for business owners. Remaining aware of changes and best practices will allow you to get the most out of social media use.

AI and new technology

It seems like everywhere you look; artificial intelligence (AI) is taking over. For marketers who know how to harness its power with predictive analytics, AI could revolutionize how products are created specifically for consumers. Through AI technology, consumer products like beverages can be designed to exactly what customers want and marketed to the market at large based on what they want or need.

Through AI-enabled packaging creation, specific segments of a market can be targeted and catered to. Branding, ingredients, feel, and culture can be considered — allowing businesses to elevate their new product above other products in the market.

AI also allows companies to gather data on consumer reactions to marketing campaigns quickly and accurately. With this data, businesses can quickly assess whether a campaign is working — or if they need to shift focus.

High-quality content marketing

The best brands are not just products on a shelf. They are entities with which people develop connections.

To help foster those meaningful connections, businesses should focus on creating high-quality content around their brand. This can include blog content that shares brand-related stories or learning opportunities. It can also include video content showing behind-the-scenes making your beverage product or people enjoying it in real-life scenarios.

The focus of your content marketing should be quality and engagement, so take a look at what your competitors do with their own content marketing and strive to do something different. Quality content marketing can drive new sales, create new customers, and help you unveil new products.

Paid advertising

Like social media, paid advertising is not a new approach but is being approached in new ways. As we enter the new year, video is still ruling the internet, so incorporating video content into your paid online ads will allow your ad to stand out over the ads that feature only static images or simple copy.

When approached correctly — and with your target market always in mind — paid ads can be incredibly effective. In fact, recent studies show that paid YouTube ads are 84% more likely to capture viewer attention than traditional TV ads, which can be far more expensive.

The way people consume media is always changing. Targeting the most viewed platforms with your paid advertisements will ensure better reach and engagement.

Seize the season

It’s an oft-repeated marketing myth that the Coca-Cola company owns the “rights” to Santa Claus. While that is not true, the company did have a hand in creating some of Santa’s most recognizable features for a 1931 marketing campaign. The white beard, the rosy cheeks, and twinkling eyes combined with Coca-Cola’s red and white branding became solidified in the cultural zeitgeist, forever connecting Coca-Cola and Christmas.

Beverage companies are positioned well to seize seasonal marketing opportunities. The dog days of summer go well with a crisp lemonade, while the dead of winter leaves many craving a hot cocoa or hot toddy.

Beverages are a part of gatherings, milestone moments, and seasonal celebrations, no matter the time of year. By connecting emotion with brand recognition, marketers can use seasonal positioning to further their reach.

Brand partnerships

With our hyper-connected world, forging brand partnerships is easier than ever before. Beverage companies have created some famous brand partnerships over time, such as GoPro and Red Bull, or Bonne Bell and Dr. Pepper.

With a brand partnership, a mutually beneficial collaboration is formed. New products can leverage the popularity of the established brand, and the partner company can have something novel to share with its audience. Brand partnerships can also allow a beverage company to create exciting new taste combinations or product ideas.

If you are interested in finding another company for a brand partnership, consider their target audience and brand identity. That potential partner’s goals should match your own to forge a successful collaboration.

Engaging events

When a beverage hits the scene, the creators often host a launch event to introduce the beverage to the market. This marketing strategy is still valid, but beverage creators seeking to disrupt the status quo should put a lot of time and effort into making their event stand out among the competition.

Knowing your audience lets you know who to invite to your event to get your new beverage in front of the right people. The proper venue and the right theme can also help elevate your event from just a simple launch to a night no one will soon forget. However, hosting elaborate launch events can be pricey, so an ROI analysis should be performed before you go all-in on the “event of the century.”

The goal of any marketing campaign is to increase visibility and engagement surrounding your new product. If you aim to disrupt an industry as long-standing and — let’s face it — crowded as the beverage industry, your marketing approach will need to be thoughtful, well-researched, and novel if you wish for it to make the intended impact.

By considering emerging marketing approaches and developing new takes on old marketing standards, a new beverage business with a great product idea can thrive.

Flavored Malt Beverages: Origins and Applicable Federal Regulations

6 bottles of different beers lined up on a table

By: Brad Berkman and Louis Terminello, Greenspoon Marder

There is a strange concoction that lurks within the bowels of the brewer’s tank. It is formed with malt, but is not beer, it is something other whose mere mention may frighten beer aficionados to the essence of their being. This mysterious liquid soon slithers through tubes and to the bottling line where 12oz bottles are filled with this ethereal liquid. The bottles make their way to the grocery shelf where it is soon removed from its cold box perch to the refrigerators of eager consumers. There the potion rests until its top is popped and it’s brought to the lips of the drinker. A first sip and this bottled creature metamorphizes to a glorious nectar, causing a love affair that is reflected in astounding Nielsen numbers. To the disappointment of any beer geeks, the flavored malt beverage or FMB is a darling of the brewing industry, not for its purist nature but for the sound of jingling coin that comes from the brewer’s pocketbook after each batch is made and sold and drank and asked for more of. The FMB is a clear consumer favorite.

  The FMB as a category, has an Alcohol and Tobacco Tax and Trade Bureau (TTB), codified definition. Before we get there, however, the reader should be aware that the style of drink isn’t a new phenomenon. The drink made its way first on to the shelves of certain European countries in the late 1990’s, among other places, and caused quite a bit of controversy for its generally sweet flavor profile, small bottle size, and perceived target audience.

Of course, it bears refreshing the memory that these drinks were and are offered as beer alternatives. They are meant to be, in most iterations, a light, flavorful alternative to traditional beers. Initially, they were referred to as alcopops, and now are more commonly called Ready-to Drinks or RTD’s (there are many drinks formulas that fall into the RTD category, including spirits based and non-malt based (see hard seltzer), but certainly FMB’s are a leader in that general category. Another publication reports that beer RTD’s “make up the vast majority of overall RTD’s sales with 42.7% of RTD dollar sales coming from FMB’s.  

  Some early precursors to contemporary FMB’s, the reader may recall, were Smirnoff Ice, WKD and Hoopers Hooch. In fact, this writer recalls from his prior career in “the industry”, travelling to the UK and witnessing the small cold-boxes stationed below virtually every back bar and thinking that the English will drink anything and wondering how long it will take before these drinks make their way across the Atlantic to the shores of the United Sates. Woe is me, if I only had bought stock.

  Well, the answer to the above question is, arguably 1993 with the introduction of Zima by the Coors Brewing Company. Buffs of the history of the drink will clearly remember Zima, (and the pun is intended), as the first clear, citrus-like malt-based beverage to make its way onto the beer shelf. Offered as a light alternative to beer, it had a modicum of success at introduction, but its popularity faded quickly (it was in fact re-introduced in 2017 but sales quickly sputtered out).

  The origins of RTD’s likely stemmed from restrictions on the activities permitted on the brewing premises by federal law. Creative brewers looked to unique formulations using permitted brewers’ ingredients only. A driving force behind limiting ingredients and production processes at a brewery is to ensure that tax revenue generation is not jeopardized. As the reader likely knows, malt is taxed at a different rate than wine which is taxed at a different rate than spirits and never shall the thrice be combined.  I point the reader to the following section of the Internal Revenue Code (the IRC):

26 USC 5411:

  The brewery shall be used under regulations prescribed… for the purpose of producing, packaging, and storing beer, cereal beverages containing less than one-half of 1 percent of alcohol by volume, vitamins, ice, malt, malt sirup, and other byproducts and of soft drinks; for the purpose of processing spent grain, carbon dioxide, and yeast… and for such other purposes as the Secretary by regulation may find will not jeopardize the revenue.

  As we see from the above the purpose of the brewery premises is limited to the production of beer and storing certain brewing materials. Also, the code section below has arguably a more profound limiting effect on the materials permitted on the premises. But here, I caution the reader to pay careful attention to subpart (b) of the following and different code section. It is here that lays the codified origin of the FMB.

 § 25.15 Materials for the Production of Beer

(a) Beer must be brewed from malt or from substitutes for malt. Only rice, grain of any kind, bran, glucose, sugar, and molasses are substitutes for malt. In addition, you may also use the following materials as adjuncts in fermenting beer: honey, fruit, fruit juice, fruit concentrate, herbs, spices, and other food materials.

(b) You may use flavors and other nonbeverage ingredients containing alcohol in producing beer. Flavors and other nonbeverage ingredients containing alcohol may contribute no more than 49% of the overall alcohol content of the finished beer. For example, a finished beer that contains 5.0% alcohol by volume must derive a minimum of 2.55% alcohol by volume from the fermentation of ingredients at the brewery and may derive not more than 2.45% alcohol by volume from the addition of flavors and other nonbeverage ingredients containing alcohol. In the case of beer with an alcohol content of more than 6% by volume, no more than 1.5% of the volume of the beer may consist of alcohol derived from added flavors and other nonbeverage ingredients containing alcohol.

  The above code section limited the amount of alcohol from flavors and nonbeverage ingredients containing alcohol to 49% but that didn’t stop brewers and drinks makers from creating unique products with malt base and taxed at the beer rate, making for a competitively priced product on the beer shelf. In fact, TTB permits the use of mixed cocktail names such as Margarita or Moscow Mule on malt-based products that resemble these cocktails. Many brewers have done a fine job of emulating these mixed drinks flavors under the FMB rubric. Of course, that hasn’t stopped consumers from bringing civil actions against producers arguing that these drinks have been mislabeled and are untruthful but that is a topic for another days.

  I’m sure it’s obvious to the reader that the hard seltzer craze finds its origins in the FMB category, many of which, but not all are malt based. The bottom line here is that this category of malt beverage finds its roots in three factors; consumer demand for variety of taste profiles, the brewer’s ability to create these brews within the confines of government tax revenue regulations and using ingredients that do not jeopardize revenue collection w maintaining the desired shelf price. This writer for one looks forward to watching how consumer demand for unique flavors pushes brewers to come up with creative FMB formulas which surely will lead to greater excitement in the category.

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

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.