Category: Cider

Customizing Beverages the Easy Way

Cyndi
can beers in a beer table

By: Angelo Coletta, CEO – Zakeke

Enabling customers to customize their purchases is a quick and easy way to expand into new markets and boost profits. Some distilleries and craft brewers are beginning to take advantage of this innovative approach to scale their businesses. For example, Silent Pool Distillers increased their orders fivefold in 2020 in part with the help of product customization.

  Possibilities abound for other distillers and craft brewers to do the same. Moreover, it’s easier to enable customization than most business owners think. Today’s product customizers offer automated processes that reduce the required amount of attention and manual labor to little or nothing.

What is Product Customization?

  Product customization allows customers to change the visual appearance of products according to their own individual needs and desires. Sellers empower consumers to build their own unique products, perhaps by adding their names or those of others. Depending on the specific product and customization service, customers may also be able to add photographs or longer messages of their own writing. In a sense, the product becomes a canvas for them to create upon.

  Some of the beer, wine, and spirits industry’s biggest names allow their bottles to be customized, offering proof of concept. Tito’s Vodka and Hennessy VS Cognac bottles can be etched, and a large selection of bottles can be engraved, including Don Julio tequila, Woodford Reserve bourbon, and Dom Perignon champagne. Other makers, such as Maker’s Mark, Jameson, and Jack Daniel’s, offer bespoke labels. Silent Pool Distillers does this for four of their distinctive gins.

  A wide range of items can be customized, including purses, jewelry, keychains, apparel, towels, and bedding. There are even services that customize things you wouldn’t expect, like USB drives, coffee sleeves, drinking straws, bobbleheads, and — believe it or not — cookies or cakes.

Why Enable Product Customization

  The answer is simple: product customization improves the bottom line. According to a 2019 Tech Clarity survey of 285 companies that offer customization, 71 percent listed increased sales as one of its benefits. More than 50 percent pointed to differentiation and higher margins. Thirty-five percent nodded toward customization’s “cool factor,” and 34 percent said they experienced higher close rates. Forty-two percent indicated that offering customization had become a necessity in their industry to stay competitive.

  Product customization elevates profitability for a number of reasons. First, customers are willing to pay more for customized products. According to Bain & Company, they will reach into their wallets to the tune of 20 percent more than the uncustomized version. This means manufacturers who customize can set higher prices. Meanwhile, they don’t incur new costs, since automated processes minimize the work required. While customers may only purchase a single customized item or a small lot, these sales are a painless way for the business to expand, and they do add up.

  Secondly, product customization encourages customer loyalty. The same Bain & Company report also found that, “customers who had customized a product online engaged more with the company. They visited its website more frequently, stayed on the page longer and were more loyal to the brand.”

  Happy customers can result in repeat business and referrals to their friends and family. The ability to customize sets a business apart, distinguishing it from competitors in the eyes of consumers.

  If that wasn’t already enough, Bain reported lower rates of return for customized products than for their mass-produced counterparts. When customers take ownership of the look and feel of their purchase, they tend to be more satisfied with the outcome and less likely to change their minds.

  All of this adds up to increased sales and a better business.

Why Customers Love Customization

  Customization appeals to customers for many reasons. Part of the draw is that it makes customers feel special. They are willing to invest their time and effort into creating a unique product that is tailored to their own tastes and exacting requirements. Since they are the ones who determine what the final product looks like, it is sure to please them.

  Another reason is that customization provides customers with a sense of control, that all-too-scarce commodity in today’s hectic, stressful, and sometimes overwhelming world. They are in the driver’s seat throughout the process. This is one element of their lives that they can impose their will upon and be confident of receiving gratification.

  It can also be just plain fun. For instance, Silent Pool Distillery’s user-friendly website steps prospective customers through the creation process. After clicking on the option to personalize their gin, they are taken to a new web page with four varieties that may be customized: Original Juniper, English Garden, Fresh Grapefruit, and Spiced Pepper. When customers click on the name of the flavor they want to purchase, a new page comes up with the product’s specifications.

  Beneath the “Add to Cart” button, a “Customize” option takes customers to an interactive interface where they design their bottle’s label. A large button with an upward-pointing arrow invites them to upload photographs of themselves, their loved ones, pets, or places special to them. Alternatively, they may choose from a library of 140 million stock photos arranged by helpful categories like “Business & Finance,” “Sport & Extreme,” or “Travel and Vacations.”

  Next to the upload arrow is a button that allows clients to add text to the label, giving it a special name or writing warm messages to recipients. Customers can change the font size, make the text bold, position it anywhere from top to bottom, center the words, or align them to the left or right. They can even bend the letters along a curve of their own making. Magnifying glass icons allow them to zoom in to view fine details or zoom out to gauge the overall look.

  If a given component starts to mess up the label, then the customer can delete it. If the whole design ends up being a disaster, they can reset the label with the click of a button and start over.

  The result is a unique, bespoke bottle of high-quality, sustainable gin that’s perfect for gift-giving on birthdays, anniversaries, and holidays, as well as for celebrations, bachelor and bachelorette parties, showers, and weddings.

  Throughout the process, customers delight in the knowledge that they are putting together a one-of-a-kind present. Surprise is guaranteed: No matter how hard the recipient might try to guess what’s coming, they will never be able to guess what this gift is going to look like. Connection also seems assured — people tend to react positively to seeing their own name on an item, which often translates to feeling good about the person who gave it to them.

No Hassle Customization for Sellers

  Savvy distillers and craft brewers are understandably wary about adding a new feature to their already complex businesses. The last thing sellers want is to labor over a single item. Luckily, those days are over. Today’s customization services integrate with business’s existing websites and simplify the customization process itself.

  Take the case of Silent Pool Distillers. The distillery got their start offline, producing artisanal spirits with local ingredients in the Surrey Hills Area of Outstanding Natural Beauty, a nationally protected landscape in the United Kingdom. To take advantage of online sales, they built an online storefront on the e-commerce platform BigCommerce. Thus, the distillery was well positioned when the COVID-19 pandemic hit, closing pubs and restaurants in droves. The spurt in online shopping boosted their sales to new levels.

  When the business sought a way to start customizing their products, they wanted a service that would integrate with BigCommerce and not force them to reinvent their online shop. They chose Zakeke, a visual commerce platform that works seamlessly with not only BigCommerce, but also many other ecommerce platforms, including Shopify, Etsy, Wix and WooCommerce. It can also employ an application programming interface (API) for integration if needed.

  Silent Pool Distillers installed Zakeke’s software and configured its easy-to-use “plug and play” system. In the context of information technology, “plug and play” means software that does not require users to understand programming or make any adjustments. Instead, it is designed to work well immediately from the moment it is brought to life.

  After this initial setup, the distillery’s preexisting online shop gave customers access to Zakeke’s cloud-based platform for designing their own labels for certain products. Since the process is automated, this personalization happens without requiring attention from the seller. Once an order is placed, all employees at Silent Pool Distillers need to do is download the customer’s file, print it out, and attach it to an appropriate bottle.

  By equipping the Silent Pool Distillery to offer bespoke labels on their bottles, Zakeke boosted their sales while allowing the distillers to remain focused on what they do best: making high-quality spirits.

The Power of Personalization

  Today’s customers increasingly expect the ability to personalize their products. A 2020 report by Dassault Systèmes and CITE Research found that 83 percent of consumers “expect products or services to adapt [to their individual specifications] in a matter of moments or hours.”

  The future belongs to businesses who can meet this challenge. Local distilleries and craft breweries stand to gain by incorporating customization, just like the big names in the industry. Branching out in this direction enabled Silent Pool Distillers to capture a valuable new market segment and increase sales even during the dark days of the pandemic.

  The power of personalization helps retailers please long-standing customers and attract new ones. That’s why distilleries and craft brewers of all kinds should consider adding product customization.

What to Do if EIDL Payments Become Due

Cyndi
SBA logo

By: Raj Tulshan, Founder of Loan Mantra

Restaurants, bars and other businesses within the hospitality industry were hit hard by the COVID-19 pandemic. For instance, restaurant industry sales in 2021 were down a staggering $65 billion from 2019’s pre-pandemic levels. During shut-downs, quarantines, social distancing and other pandemic-related disruptions, many hospitality businesses struggled or shut down, including 90,000 restaurant locations that temporarily or permanently closed because of COVID.

  During the pandemic, bars were forced to reduce capacity limits, negatively impacting their profitability. Reopening after quarantine was expensive, requiring costly adaptations, including air filtration systems, plexiglass dividers, equipment for touchless transactions, cleaning and sanitation supplies and personal protective equipment for staff.

  Hospitality businesses – like companies across many industries – also struggled with employee shortages, supply chain issues and soaring inflation.

  This “perfect storm” of unprecedented challenges led four million small businesses to take out $390 billion in loans through the Economic Injury Disaster Loan (EIDL) program. The EIDL was part of the U.S. Small Business Administration (SBA) and US Treasury as an expanded part of The Coronavirus Aid, Relief and Economic Security or CARES Act.

  Although the loan payments were deferred for two years, they’ve still been accruing interest until the first EIDL payment was due.

  Many small business owners have questions and concerns about the repayment process. The timing is not ideal, as many businesses – including restaurants, bars, hotels, and other hospitality venues – need funds to prepare for holiday sales and events.

If you took out an EIDL loan, here are some valuable tips to act:

      Contact:  Business owners can contact their local district legislators by calling, e-mailing, or writing letters to express concern. Loanmantra.com has put together a tool kit with:

        A sample form letter, an e-mail draft, a phone script and phone numbers to save time. Unsure of who a district representative may be? Find them here.

      Share:  There’s strength in numbers, so share this message with other businesses, business networks, chambers of commerce, businesses in the same area, associations and like groups.

      Reach out: Talk to people every day for the “sphere of influence” to gain community support.

      Ask for help: Don’t be afraid to ask for help when and where it’s needed.

Also, here are some valuable repayment tips:

      The loans won’t be forgiven:  Unlike the Paycheck Protection Program (PPP), EIDL loans won’t be forgiven and need to be repaid. All Economic Injury Disaster Loan recipients received an email from The U.S. Small Business Administration (SBA) with the subject line: Important EIDL Reminder, which contains important information regarding your EIDL account setup and payment.

      Set up a repayment schedule:  Payments were deferred for the first two years, during which, interest accrued. Now, business owners must start making their monthly payments on their due date, which is determined by the “Effective Date” noted on your business’s promissory note.

        Another payment can seem overwhelming stressful given inflation, staffing and supply-related pressures. Don’t look at the big picture. Instead, think about the incremental payments today as steps in the right direction. Set a calendar reminder or appointment to make this payment every month so you will stay ahead of schedule.

      EIDL loans must be paid via a special platform: There are two separate platforms you will need to access your loan information and pay your loan balance.

        First, Capital Access Financial System (CAFS) maintains your EIDL & PPP loan information. This includes your original balance, interest, accrued interest balance, etc. To obtain the EIDL loan information for your business, please select ‘EIDL’ and then ‘borrower search’ from the menu options. When registering on the CAFS website, carefully follow each step. There is no room for error when using this system, so be thorough and accurate when inputting your information.

        Secondly, pay.gov allows businesses to input their bank information and to set up recurring payments online. Inside your profile, choose ‘Make an SBA 1201 Borrower Payment’ as the menu option. While registering on pay.gov may be simpler than registering on CAFS, it is not easy to change bank account information after you begin your loan payments.

      Use the right number:  Keep in mind that your SBA loan number is different than your EIDL loan number. This information can be found on the top of the second page of the promissory note.

      EIDL loans accrued interest:  Many business owners received their first EIDL loan in early 2020 and a second EIDL loan in 2021. For many borrowers, that means interest has been accruing for more than 24 months, with additional interest accruing for more than 16 months. Borrowers are responsible for paying back the loan plus all accrued interest.

      This type of loan program has ended:  The COVID-19 EIDL program is not accepting new applications, increase requests, or reconsideration.

  Business owners should focus on what they do best: Run the business and do it well. That’s why Loan Mantra is providing advocacy tools for business owners on  loanmantra.com so they can be empowered to take action and have the latest information to make the best decisions.

  Small businesses have been the backbone of the US economy and deserve fair economic terms and transparency. Loan Mantra is here as a resource to serve companies of all sizes and types during both good and turbulent times.

About the Author

Neeraj (Raj) Tulshan is the Founder and Managing Member of Loan Mantra, a financial advisory firm with best-in-class and proprietary fintech, BLUE (“Borrower Lender Underwriting Environment”). Loan Mantra, Powered by BLUE, is next-level finance: a one-stop-shop for business borrowers to secure traditional, SBA or MCA financing from trusted lenders in a secure, collaborative, and transparent platform. Clients turn to Raj because they know he will always pick up the phone and offer unparalleled financial counsel in a remarkably human—even friendly—way.

About Loan Mantra

  Small business owners identify two obstacles to their success: access to capital and financial education. Loan Mantra removes these hurdles so business owners can spend more time actually building their business.

For more information visit their website…www.loanmantra.com

Keeping an Eye on the End Game

Cyndi

Precision in Bottling and Canning for Craft Breweries

beer automated machine manufacturing

By: Cheryl Gray

Savvy craft brewers want problem solvers on their team, especially when it comes to bottling and canning products. 

Industry experts specializing in bottling and canning needs for breweries tout the equipment and technology to handle these tasks for operations of any size.

  One of those experts is XpressFill Systems, a long-established player whose clients, the company says, know to expect cost-saving innovations from its products and solid customer service, particularly after the point of sale. California-based XpressFill was founded in 2007 and began with the idea of solving a dilemma for small-scale wineries stuck with trying to bottle their wines by hand. It continues to service the wine industry, which surrounds the company’s facilities in San Luis Obispo.

  Today, XpressFill manufactures bottle- and can-filling systems in its San Luis Obispo plant, using top-quality components made exclusively in the United States. Its fillers come in several models, including volumetric, level fill and carbonated technology. With affordability, compact design and ease of use among its top priorities, the company continues forging ahead with new ideas to keep pace with customer needs in real-time.  

  The XFW200C is XpressFill’s latest addition to the line of filling products. Its weight-sensing technology is designed to ensure accurate fill volumes that will hit their mark every time. The importance of this precision, of course, is to avoid spills and underfills, which cost valuable production time and loss of product. 

  Rod Silver leads the company’s Sales and Marketing Division. He describes how the XFW200C is ideal for 12-ounce to 16-ounce cans. An industrial-grade touchscreen display allows the user to enter the desired weight and the technology installed keeps track of how much product fills the can. A larger flow path gives the user access to a smooth fill along with the flexibility of filling containers with almost any product of choice, including those with some level of particulates, such as flakes or small seeds. In addition to processing beer, kombucha, juice and RTD mixtures are among some of the other options.

  Twin Monkeys Beverage Systems, based in Denver, Colorado, is the brainchild of Josh Van Riper and Brian LeFevre. Their attention-grabbing moniker, along with the duo’s business model of customer-focused design, has earned Twin Monkeys a global presence in the craft brewing industry, with customers throughout North and South America, Europe, Australia, Africa and Asia.

  Both Van Riper and LeFevre have engineering backgrounds. They are focused on designing the kind of automated canning systems that didn’t exist when Van Riper was brewing craft beer.

  “I started a brewery and quickly found there were not good options for buying automated canning machines for craft breweries then (2013),”Van Riper said. “I got Brian to come to the brewery to discuss this opportunity and we then started Twin Monkeys to make affordable, high-quality automated canning systems for packaging beverages. We’ve grown to a 30-person company in a 14,000-square-foot facility, and we have over 500 canning machines strewn around the planet. I’m an automation engineer who does mostly controls engineering and mechanical concepts. Brian is a mechanical engineer. Between the two of us, we can design automated equipment from the ground up.”

  Twin Monkeys Brewing Systems offers a full range of can-fill-and-seam machines. The company offers craft brewers automation options that provide access to in-house, integrated canning lines equipped with three critical functions.

  “We are singularly focused on canning machines that do three things: fill cans, put lids on cans and seal cans. We rely on other expert companies to do things like labeling, depalletization and brewing, and we want to just perfect the three things we do over and over. We’re also creating a new customer service paradigm to provide easier and more efficient access to our knowledge for our customers.”

  Van Riper says that customer service extends to helping clients integrate their systems with a wide range of accessories.  

  “Although we only make canning machines, we consider ourselves to be systems integrators and that means we sell and support a wider range of equipment,” he said. “This provides more of a one-stop-shop model for customers to lean on us for a variety of their equipment needs. We plant 50 trees for every machine we sell, and in 2021 we became carbon neutral. We do serious work, but don’t take ourselves too seriously.”

  The process of canning and bottling craft beer also entails protecting the integrity of the product before it hits the market. That’s the role of Industrial Physics, which brands itself as the world’s leading test and inspection corporation. Armed with a global network of technical and support teams, the company’s 75-year history in quality control has guided the testing and inspection experience for some of the largest beverage corporations in the industry.

  Industrial Physics has a presence in 75 countries, with manufacturing facilities in 13 locations. Through its vast portfolio of more than a dozen testing and inspection brands, including CMC-KUHNKE, Quality By Vision, Steinfurth, Eagle Vision and TQC Sheen, test and inspection solutions are deployed to ensure premium quality control for beverage packaging, materials and products. At the same time, the company assures clients of personalized solutions for their product needs. 

  Whether a small start-up or a global name in the brewing industry, Industrial Physics says its

Testing and inspection solutions cater to every need and budget. Steve Davis, global product line director at industrial physics, has more than 20 years of engineering experience. He leads a team of experts who ensure that the equipment provided by Industrial Physics does its job.

  “When you’re dealing with bottles, cans and metal packaging, you’ll need reliable inspection machines to ensure the quality of your drinks,” Davis said. “With Industrial Physics, you’ll improve the efficiency of your processes and improve your product, saving yourself time and money and, ultimately, you’ll keep your customers happier. Through our leading brands, including CMC KUHNKE, Quality by Vision and Eagle Vision Systems, we’ve helped thousands of beverage fillers and breweries to taste success.”

  Davis went on to say, “From seam inspection and metal can testing to an inline inspection of empty and filled containers, our devices offer unmatched innovation and help you meet your quality needs. We protect the integrity of some of the biggest brands on the planet, as well as hundreds of emerging brands and everything in between. But how do we do this? By providing first-class test and inspection machines and products that check the quality of your packaging, materials and coatings.”

  Davis provides an example.  “Let’s take seam inspection. Our CMC-KUHNKE Auto XTS is a state-of-the-art, fully automated seam inspection solution. There’s nothing like it in the world, and it has the power to completely revolutionize seam solutions for your production line. We also have a wealth of smaller solutions to fit different needs and budgets.”

  The company offers instruments designed to provide functions that include double seam inspection, non-destructive seam inspection, bottle, keg and can vision inspection, abrasion testing and headspace and dissolved oxygen testing. Customer service, Davis adds, is a priority at every point of the client experience.

  “We understand that being fast, efficient and truly reliable is critical when it comes to servicing the instruments that keep your business running. And that’s why we’ve established a global network of dedicated service specialists to ensure you have an expert ready and waiting at a nearby location who can offer you support.

  Wherever you are in the world, our experts are on hand to support your needs, whatever they may be. We know that having the right people ready to help is critical. It’s critical to delivering quality and speedy service that ensures your instruments can get up and running as quickly as possible. From installation to calibration, repair and preventative maintenance, we’ve got you covered.

  We’re also passionate about being there for our customers in a more holistic way. We don’t just provide products. We’re there as a true partner. We have a wealth of solutions available across the beverage space, from metal packaging to bottles, our instruments test across an incredibly vast range of applications for many different manufacturing and laboratory needs.”

  Canning and bottling craft beer is a process that engages the expertise of filling, packaging and protecting products. Selecting the partner for one or more of these steps is not only based on budget but also depends upon which companies can accommodate the individualized needs of a craft brewery, no matter the size. Another important factor, experts say, is which company will stay with a brewery for the long run, ensuring that it can accommodate growth while not compromising on quality control. 

A Closer Look at Celebrity Brands of Craft Spirits & Beer

Cyndi

By: Alyssa L. Ochs

Actors, musicians and other celebrities love craft beer and spirits just like the rest of us. Yet the difference is that they often have the means, resources and connections to make significant investments in the industry. An increasing number of famous individuals have been getting interested in the craft beverage business and putting their names onto labels of products they stand behind or perhaps have even helped create.

  Here’s what the celebrity craft beverage industry looks like right now, major players in this field and what there is to look forward to in the future.

Celebrity Involvement in the Industry

  Celebrities take a step away from their typical work to get involved with craft beverages for various reasons. Some have a true passion for the craft, while others are in it for the money or just looking for more exposure and additional ways to promote themselves. While some celebrities learn about the production process and engage in making beer and spirits themselves, others do little more than attach their name to a brand for cross-promotional purposes.

  Either way, celebrity-brand craft beverages are often unique because of their higher price tags and limited availability. Some celebrities use their beverage-related profits to benefit charities, and others use their star power to launch tasting rooms for VIP guests. However, there are unique challenges that come with producing, marketing and selling celebrity craft beverages that other beer and spirit companies may not encounter. For example, a beverage brand may suffer when an affiliated celebrity declines in popularity or is involved in a scandal. Meanwhile, a celebrity’s popularity may be affected if the beverage he or she promotes isn’t received well by the public. Some craft beverage fans believe that beer and alcohol belong to them personally and not the rich and famous. Therefore, they might be turned off by the concept of celebrity affiliations and avoid these products entirely.

  But for people who are loyal to certain celebrities or just curious to try celebrity-affiliated beverages, these are accessible products that can often be purchased in stores and online. More popular beverages are usually found in liquor specialty stores, such as Binny’s and Total Wine & More. But you might have to search for more obscure and exclusive celebrity-brand beverages online through sites like Cask Cartel and Sip Whiskey.

Examples of Celebrity Beverage Endeavors

  From musicians across all genres to television personalities and film actors, a diverse array of celebrities have been making their mark on the craft beverage industry in recent years. Some of these examples were limited editions that are no longer sold, while others are ongoing efforts that are changing the industry one bottle or can at a time.

  For example, actor and comedian Dan Aykroyd co-founded Crystal Head Vodka as a way to introduce additive-free vodka and bring more creativity to the vodka industry. Along with his business partner, artist John Alexander, Aykroyd envisioned a new kind of vodka without unnatural ingredients and has a true passion for the product.

  Several years ago, pop music star Justin Timberlake entered into a co-branded partnership with Sauza Tequila to create Sauza 901 silver tequila. The name 901 references the area code in Memphis, which is Timberlake’s hometown. Timberlake said that he developed a love for tequila after visiting Jalisco, Mexico and seeing the craftsmanship that went into each bottle of the spirit.

  Iconic hip hop legend Snoop Dogg partnered with his friend and co-founder of Trusted Spirits, Keenan Towns, to establish his own spirits brand. Known as the “King of Gin and Juice” because of his famous song of the same name, Snoop Dogg developed Indoggo Gin, which mixes seven premium botanicals with all-natural strawberry flavoring. In the past, the musician has also had marketing deals with the Corona beer brand, released his own rosé wine and made investments in the cannabis industry.

  Meanwhile, actor William H. Macy co-owns Woody Creek Distillers, which is based in Colorado and operates a distillery and tasting room just west of Aspen. Not only has Macy invested in the brand, but he has also rebranded himself as Willie Creeks, an alter ego who is a musician and offers life lessons that ultimately promote rye whiskey.

  Another celebrity who has been involved in the spirits industry is actor Ryan Reynolds. He teamed up with Aviation Gin in 2018 after falling in love with the spirit and investing in the company. Since then, Reynolds has become a co-owner of Aviation Gin and driven the creative marketing for the brand. In recent years, and staying true to the aviation theme, he and the brand have teamed up with businessman Richard Branson to serve the gin onboard Virgin Atlantic and British Airways flights.

  A financial success story in the celebrity spirits industry brings us to the actor George Clooney. The idea behind Clooney’s tequila brand, Casamigos, came about after he and his friend, Rande Gerber, were in Mexico and wanted to find a smooth tequila they could sip all day without the dreaded next-day hangover. This was back in 2013, but the friends still personally tasted every batch of tequila made four years later. The brand exploded in popularity, mainly through word-of-mouth and having Clooney’s name attached to it. In 2017, they ended up selling the brand to Diageo for $1 billion, which made Clooney the highest-paid actor of the year.

  Thus far, celebrities have been more involved in the spirits industry than in craft beer or wine. But to a lesser extent, those markets are also drawing the attention of the rich and famous.

  The late-1990s and early-2000s pop band Hanson, comprised of three brothers who love craft beer (now that they’re old enough to drink it), launched the Tulsa, Oklahoma-based Hanson Brother Beer. They created their own craft beer business in 2013 with their flagship beer, Mmmhops, a 7.5 percent English-style pale ale. Since then, the brothers launched the Hop Jam Beer and Music Festival, collaborated with other breweries to create unique beers and dedicated a portion of their beer-related profits to clean water wells in Africa through a nonprofit organization they created.

  Another celebrity beer collaboration involves The Grateful Dead and Dogfish Head Brewing, based in Milton, Delaware. The psychedelic rock band has been involved with the brewery since 2013 and has worked together since then to create a third version of American Beauty HazyRipple IPA. The band’s “American Beauty” album and famous track “Ripple” inspired the beer, which features the iconic Grateful Dead dancing bear image on the label. However, the band’s involvement with other aspects of the beer production process is limited.

  To show how diverse and widespread the celebrity beverage industry has become, here are some additional examples of celebrities and their affiliated beer and spirit brands:

•    Kenny Chesney – Blue Chair Bay Premium Rum

•    Kendall Jenner – 818 Tequilla

•    Marilyn Manson – Mansinthe

•    Dwayne ‘The Rock’ Johnson – Teremana Tequila

•    Mark Wahlberg – Flecha Azul

•    Curtis ‘50 Cent’ Jackson – Effen Vodka

•    Bryan Cranston and Aaron Paul – Dos Hombres Mezcal

•    Sean “Puff Daddy” Combs – Cîroc Vodka

•    Channing Tatum – Born and Bred Vodka

•    Drake – Virginia Black Whiskey

•    George Strait Código – 1530 Tequila

•    Bob Dylan – Heaven’s Door Whiskey

Considerations and Looking Ahead

  The celebrity-brand beverage industry continues to be exciting because there’s always something new in the works to look forward to. There is always a strong public fascination with rich and famous people, and that trend is not likely to disappear anytime soon. As an increasing number of celebrities enter this industry, the competition increases and drives the demand for superb product quality that goes beyond just a popularity contest of celebrity status.

  Yet there are significant legal considerations that celebrities must keep in mind as they venture into the beverage industry for the first time. Collaborative efforts between celebrities and spirit-makers can take on various forms. These include development deals that give celebrities greater control over the final product and endorsement deals that offer little more than using a celebrity’s name. Other deals involve simply using a famous person’s image to promote an existing brand all the way up to full ownership, in which a celebrity owns both the brand and the means of production.

  Specific state and federal laws separate the roles of beverage producers, distributors and retailers, which can make it challenging for celebrities to navigate if they want to be involved in more than one part of the business. Other issues that celebrities must consider before diving into the beer and spirit industry are background checks needed to obtain alcohol beverage licenses, the age of their target audience, morals clauses in their contracts and endorsement disclosures required by the Federal Trade Commission.

  Alcohol production is proving to be an enjoyable and profitable side gig for numerous celebrities interested in connecting with their fans in new and unique ways. But to get beyond the initial hype and keep craft beverage customers coming back for more, it is time to embrace the spirit of innovation and achieve long-term growth with products able to stand on their own, even without a familiar name and face behind them.

Enhanced Single-Serve and Ready-to-Drink Markets Need Updated Point-of-Sale Systems   

Cyndi

By: Gerald Dlubala

Whether online ordering for pick up, requesting additional items to-go or purchasing single-serve containers from a local market, these options reflect the alternative and increasingly essential revenue streams for craft beverage producers. Additionally, they have proved to be a popular and effective way for craft producers to get their products into the hands of new and potential consumers. According to data supplied by Arryved, a leader in Point-of-Sale (POS) systems for food and drink businesses, many of the consumers that participate in the online and to-go craft beverage markets are different than those that choose to frequent brewpubs, tasting rooms and taprooms in person.

  The good news for craft beverage producers is that participation in the single-serve, ready-to-drink and to-go markets continues to grow. Consequently, it makes sense to nurture those relationships and make the off-premises consumer experience an event that provides value and enjoyment while enhancing your bottom line. The proper POS system can do that.

Your Business, Your Point-of-Sale System: Arryved

  “Of course, there was a sea of change beginning with the pandemic,” said Nancy Trigg, chief people officer for Arryved. “It seemed like, over the course of one night, the brewpubs, wineries and taprooms all had to scramble and pivot business models to come up with a functioning online and to-go ordering system, as well as a safe and viable delivery or customer pickup option. Point-of-Sale systems had to evolve and quickly match that change in direction. In haste, many businesses simply installed a separate system for this newfound revenue stream. It all seemed good until the businesses realized that, in reality, they were using two separate systems pulling out of a single inventory base, causing supply confusion and accountability problems. Point-of-sale systems, like Arryved, that looked at the situation and responded in a more business-sensitive, proper way were the ones that not only helped their clients survive but also helped them grow their consumer base during the uncertainty and shutdowns.”

  Trigg says that a proper POS system is one of the most crucial tools a craft producer has to understand and analyze for how they are doing business, and she urges owners to approach their businesses with that exact mindset.

  “If you have the proper POS system set up for all of your revenue streams, including on-premises, single-serve purchases and online ordering with customer pickup, you will immediately receive valuable insights into what you are selling, when you are selling it and how your products are being used,” said Trigg. “Are some products more popular at certain times, like lunch or dinner? Are some being consumed more with food? Which beverages are more popular at which times? Are they being sold in smaller pours? Larger pours? Are certain products more popular for carryout over in-house consumption? For flight purchases? So much data related to your specific craft products concerning single-serve and online-ordering revenue streams can be harvested from the right POS system.”

  Trigg told Beverage Master Magazine that the applicable laws about these types of sales will generally stick around because of the great work from the guilds, communities and cities to help food and drink businesses remain afloat during the height of the pandemic. Now, craft beverage producers must have a POS system that integrates these transactions into their daily business practices by highlighting and providing data tailored to their specific products, customer profiles and unique business situations.

  “When craft beverage producers start packaging their products, the inherent level of their risk rises, if only based on the costs of packaging,” said Trigg. “That little extra risk can be just enough to inhibit the creative experimentation that makes up the backbone of what a brewpub, taproom or tasting room is supposed to be. But with the right information derived from an inclusive and detailed POS system, that risk is minimized. Now they can offer the right products to the right consumers at the right time, including single-serves, ready-to-drink varieties or a wide range of to-go flight-type options or mix-and-match packs tailored to specific tastes. Unfortunately, not many POS systems properly provide these types of flight tools or pick-six options within their makeup. Arryved does just that, providing the craft producer meaningful insights into what is and isn’t working, and when.”

  Trigg said that Arryved is a POS system genuinely built to care for an all-inclusive beverage program, including those that, either now or in the future, want the option to offer food sales. In addition, Arryved enhances brewpub or tasting room atmospheres by allowing its customers to order drinks to-go, online or in single-serve, ready-to-drink options.

  “There are always developing options within the single-serve and ready-to-drink markets that craft beverage producers need to stay aware of,” said Trigg. “This includes the growing popularity of flight options and different sizes of mix-and-match take-home packs that the customer can customize. Craft producers need a POS system that recognizes these trends and supports mobile guests just as well as it does with on-premises guests. Arryved supports craft beverage producers in all facets of their revenue streams, while featuring unmatched support for the industry. In addition, we stay engaged in the business sector and always have someone available to speak with directly.”

Ready-to-Drink, Single Serve and To-Go Markets Thriving

  The ability to try and enjoy craft beverage products off-premises was, and still is, a game-changer for many craft brewers, winemakers and distillers. For the past couple of years, these markets have helped many establishments remain open and proved they could be a robust, new revenue stream. Breweries have traditionally offered their products in growlers and crowlers so their consumers could enjoy the beer at home. Additionally, the popularity of individual can seaming devices, like those offered by Oktober Can Seamers, gives craft beverage producers more flexibility in to-go offerings and allows consumers more flexibility in how and where they choose to use the beverage.

  In its primary function, can seamers allow craft beverage producers to get their product out the door and into the hands of consumers for off-premises enjoyment. But Dennis Grumm, CEO and lead engineer for Oktober Can Seamers, told Beverage Master Magazine that many clients realize additional untapped revenue possibilities by canning beer, mixed drinks and specialty cocktails for to-go orders. Brewpubs, distilleries, and wineries can all use a can seamer to offer their beverages, unique brews and house cocktails on a to-go basis. It’s an economical and very effective way to get new customers to try your products while satisfying your current customer base. Distillers have had great success canning their best-known, ready-to-drink cocktails, but canning is also an effective way to offer seasonal or limited-release drinks and cocktails.

  Pouches are another way to get your product in the hands of consumers that would not normally spend time in your place of business or would just like to take your crafted offerings with them on the go. Pouches range from those in the refrigerator for individual pours of wine to the single-serve cocktail and wine pouches that resemble the child-friendly juice pouches. The benefits of using pouches include offering a resealable, portion-controlled package that reduces packaging weight by up to 94 percent and can be shipped and packed using fewer resources.

Enhancing the Single-Serve and Ready-to-Drink Market: O-I Glass

  O-I Glass, based in Perrysburg, Ohio, is looking to elevate the single-serve, to-go and ready-to-drink markets to better reflect the on-premises, brewpub and tasting room experience. Megan Henry is the global marketing communications business partner for O-I Glass. She told Beverage Master Magazine that they are transforming the to-go, single-serve and ready-to-drink markets by offering a new glass packaging alternative called the Drinktainer™ for these markets.

  “In an increasingly common world of to-go packaging, we feel that it’s time for craft beverage producers to elevate that part of their business and the consumer experience,” said Henry. “Growlers and crowlers are great, but they have limitations. As soon as you open them, you’re under a time constraint as to how long that product will be good. Using our wide-mouthed Drinktainer™, you’re promoting a sustainable packaging option with the recyclable glass and RipCap® closure, and you’re allowing the consumer to enjoy your products as if they were in your brewpub, taproom or tasting room.”

  Henry said that capacity and shortage concerns still affect many industry players, but those worries are not an issue with Drinktainer™, which is currently available in inventory.

  “We know that many beer aficionados prefer to consume their beer out of a glass, straight from the tap,” said Henry. “Offering to-go, single-serve options in a recyclable glass container is just a naturally better way to enjoy beer and craft beverages in general. Glass packaging provides great flavor retention in any environment and allows producers to feel more comfortable offering their consumers different types and combinations of products without the fear that alternative packaging, like plastics or pouches, will taint their beer, cocktails or wine. In addition, with the wide mouth (42mm), consumers get the deeper flavor and more robust aroma experience as if they would be drinking from a glass on premises.”

  Sustainability is a significant issue of consideration in every phase of craft beverage production, and the Drinktainer™ is a fully sustainable product, available in clear that is customarily used for beer and in a flint tone that highlights the color combinations of cocktails and other beverages. It’s sealed using a RipCap®, an easily applied and highly secure closure that O-I Glass believes brings a nostalgic feel to the products. Drinktainer™ has been successfully used to offer pick-six trial packs and beer flights, and it requires no other glasses or barware to enjoy as the beverage maker intended.

Find more information on the Drinktainer™ at www.o-i.com

The Most Important Opportunity for Brewery Owners

Cyndi

Why So Many Are Missing It

employee retention tax credit

By: Catherine Tindall

The Employee Retention Tax Credit (ERTC) is one of the best ways for those in the beverage industry to regain their footing in a post-COVID age. Unfortunately, according to current estimates, many eligible businesses are missing out on this historic opportunity. For those who received or may otherwise be familiar with the Paycheck Protection Program, also known as the PPP, the concept is similar, but there are key differences that make the ERTC a much more generous program overall.  To understand why I will outline some of the key provisions and eligibility parameters, explain the process for claiming the credit, and answer some common questions I encounter in my own practice, such as “why haven’t I heard of this before?”

  The ERTC is a tax refund credit entitling employers to up to $26,000 per employee, depending on the number of quarters a business qualifies for. Eligibility is determined by either revenue disruptions or government orders on a quarterly basis. Many breweries are unaware that they are eligible for the ERTC due to the capacity and operation restrictions on their indoor dining and/or tasting rooms that occurred during the pandemic. Financial disruptions to that aspect of the business trigger ERTC eligibility for all the divisions of the brewery, not just the restricted segment.  We routinely see businesses qualify for six or seven-figure credits under these parameters.

  There are a number of features that set this credit apart from other programs designed to aid businesses affected by the pandemic, like the PPP. Unlike the PPP, the credit itself comes back as paper checks from the IRS, and also unlike the PPP funds, which were restricted to certain uses, a business owner is free to use the ERTC however he or she sees fit. This is because the credit is actually a refund of wages and payroll taxes your organization has already paid. A consequence of this is that there is no overall program limit on the funds to be disbursed through the ERTC, in contrast to the PPP which had a limited fund pool. Businesses affected by government orders are entitled to every cent they qualify for. Taken together, all of these factors are what gives this program its power. The only limitation is time. This credit will begin to be phased out in April of 2023, meaning that business owners need to ensure they submit their claim as soon as possible. 

  Given the tremendous upsides, every business owner in the beverage space should try to see if their business qualifies, even if it seems doubtful. There is no need to become experts in the credit’s provisions, which can often be nuanced. The important thing is to find the right professional, and, to this point, one must be careful. There are unfortunately a lot of bad actors in this space looking to make a quick buck, and many of them are very good at seeming legitimate. 

  The following are some of the most asked questions associated with the ERTC.

  Should I get a second opinion? Because of the substantial nature of these credits, it’s often worth speaking to multiple providers for the credit to get a sense of the relative merits of each, and to look to the expertise and experience of those working on your case rather than fancy marketing or smooth sales tactics.

  Why haven’t I heard about this before? There are several reasons why many business owners have not heard of this important credit. One is that, in contrast to the PPP program, the ERTC has not been well advertised by the government (after all, since when did the IRS advertise refunds you’re entitled to). Another is that many tax practitioners are hesitant to pursue it given the sometimes complex nature of the claims, if this isn’t their area of expertise. Finally, we commonly find that too many CPAs mistakenly believe that their clients do not qualify for the credit, and so never bring up the possibility of claiming it with them.

I would encourage all brewery owners to actively explore eligibility. The potential benefits of qualification, hundreds of thousands of dollars in obligation-free money from the IRS, is one of the highest value things you could do for your business in the current environment of economic uncertainty.

  There are certain pitfalls to avoid, such as dishonest companies operating in the space, but if you choose the right firm or professional to partner with, the process is remarkably painless. Just be mindful that this is an opportunity with a time limit attached. With less than a year before it begins to phase out, now is the time to claim the credit you’re entitled to.

  Catherine Tindall is Partner & CPA, Dominion Enterprise Services (DES), a full-service CPA firm providing tax planning and consulting alongside specialty tax credit processing. The firm has more than 50 years of collective experience and recently announced the launch of its Employee Retention Tax Credit (ERC) Division to help restaurants assess their eligibility for the ERC and properly secure the maximum refund allowed. Learn more at…

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New Brewery, Winery or Distillery Start Up

Cyndi
a cozy winery

By: Kris Bohm: Distillery Now Consulting, LLC  

Starting up a new beverage alcohol business is hard. Whether making beer, wine, or spirits, the challenges are daunting and upfront costs are huge. No one takes the leap to start a new business knowing it will fail, but many of them will. Based on industry data, up to 40% of new beverage alcohol businesses fail. To create a successful business, there is a common question that arises during the planning phase of launching a new beverage alcohol business.

What is the difference between a successful business and one that fails?

  This massively important question should be answered early on for a new business. In doing so, key strategies will be defined for the business from the beginning as it ventures forward. In the following paragraphs, you will find not only the answer to this question, but also a further analysis of successful business practices.

Defining Success: Let’s take a moment to define and measure success in a beverage alcohol business. This definition applies whether in a brewery, winery, or a distillery. These measurements of success will allow us to look closer at the internal workings of the business. As you look closer you will find common traits among nearly every business that is successful. For the sake of this article we will narrowly define success using the specific individual metrics of profitability, sustainability and velocity.

Profitability: The first key metric and measurement of success is profitability. A business must either be profitable, or at a minimum near self-sustaining, with revenue covering the cost of operating the business. Achieving profitability is one of the biggest metrics that defines success. Reaching profitability is essential, as every successful business must be self-sustaining after a certain amount of time. If a business is not profitable for too long of time, it is almost certain to fail.

Sustainability: A successful business must be sustainable in the capacity to produce the products it intends to sell. To clarify, we do not mean sustainability from an environmental impact or energy usage standpoint. Sustainability in this model means the ability to sustain and meet demand for products through growth. For a business model to be sustainable the equipment must have the capacity to grow and meet new demand as the company grows. The reason this metric is so essential is that most businesses must grow to reach profitability. If your business cannot sustain growth it most likely can not grow to become profitable.

Velocity: A business needs to have regular sales to provide consistent revenue for the business. Velocity is a measurement of how quickly your business is turning raw materials into finished goods and selling those goods. High velocity of product means there will be more consistent cash flow for the business. As product velocity increases it is followed by increases in revenue and often economies of scale. Both of which help a business become successful.

Tripod Business Model: Most businesses achieve some of these measures of success, but not too many will achieve them all. Among those who do succeed in meeting all three, there is a common thread that these successful businesses share. They will usually have three separate divisions that perform distinct business activities. These three divisions are production, sales, and marketing. This concept we will refer to as the tripod business model. If the top of a tripod is a successful beverage alcohol business as measured by our success metrics, then there almost always exists these three divisions in the business that make up equally important legs that hold up the business. If you remove any of the three legs, it only leaves the business on two unstable legs, and in time the business will fall and is likely to fail. It is easy to take this observation and call it as incorrect, but if one was to look closely at established successful beverage alcohol businesses they would find truth in this observation.

  When a sizable amount of time and resources are heavily invested into sales and marketing, the business has a strong probability that it will flourish. Often the business will flourish so strongly that production will often feel constrained in the resources it needs to meet the demand of the business. This is the correct way to invest time, financial resources and manpower to grow. If too many resources are dedicated to production in most instances production will have far too much capacity and there will not be enough demand for product to keep production running near its capacity.

  Now that we have defined some measures of success and the business practices that support them, let’s look closer at the three practices that hold up a successful beverage alcohol business, through the lens of a distillery.

SALES: Sales is essential and paramount to the success of nearly any business that has a product they sell. It can be the easier path for a new distillery to focus on their production with a plan to only sell spirits through a tasting room or cocktail lounge that is part of the distillery. A business plan like this can work, but it has a low ceiling that will often restrict a distillery from growing to a successful level. Real sales of considerable volume come from a distillery selling products in the same market as its competitors. This means working to sell spirits in liquor stores, bars, restaurants and other venues. In this market there is immense competition. The only way to compete in the larger spirits market is by investing into sales. This means having people working for your business who are full time employees whose job is to pull your spirits through the market and drive sales.

MARKETING: Marketing is the driving force that directly links to the success of sales. Marketing can come in a multitude of forms, some obvious and some not so obvious. Public facing platforms, such as social media, websites, billboards, magazines, newspapers, and influencers are all forms of marketing in action. The more a consumer or target consumer encounters a brand, the higher the chance that the consumer will buy your brand. Without an active marketing plan in place, consumers will quickly lose sight of your brand. A strong marketing plan and the person or people to continually implement, monitor, and drive a marketing plan is paramount to achieving success. Marketing is the key difference that will take a brand to the next level and keep pulling it up from there. Although it can be easy to not put an emphasis on channeling resources to marketing, it would be a mistake to do so. Many businesses have launched with little to no resources committed to marketing. Often these launches feel successful, but by our measurements are in fact not truly successful. Oftentimes the business will get going and be selling some amounts of product but in most instances a lack of marketing will cause a business to plateau quickly.

PRODUCTION: This practice of manufacturing is easy to give too much focus in the business of distilling. Whether you are distilling whiskey from scratch or bottling sourced spirits, the production part of this business is extremely important. While production is absolutely paramount to the business, this does not mean that the bulk of resources the business has should be invested into the production of spirits, nor the labor or equipment to produce the spirits. If the bulk of resources go towards production thus starving sales and marketing, there will invariably be a lack of sales to cover the costs of production. Now the manufacturing of distilled spirits is in no way inexpensive. Considerable resources have to go to production for it to function. We are trying to urge you to consider all resources the business has and properly allocate them to all three practices.

The battle between the practices: If you ask most folks who work in this industry, whether they work in sales, marketing, or production, they will all likely tell you that their business function is the most important to the success of the business. To be fair, all these folks can probably make a reasonably sound argument to support that statement. It is normal that there is some friction between all three practices because they all have unique functions and priorities that often do not align with one another. For a business to be successful, production, sales, and marketing must work together to achieve the goals of the business. When common goals are shared it is much easier for each part of the business to work in harmony.

Is it Time to Order More Brick-and-Mortar Locations for Your Bar or Restaurant?

Cyndi
dark bartending area

By: Raj Tulshan, Founder of Loan Mantra

Is commercial real estate making a comeback in the hospitality industry? After several extremely disruptive years of a global pandemic – and the resulting lockdowns, inflation, supply chain disruptions, and staffing shortages – is the future finally brighter for hospitality and real estate? Is it time to invest in more bars and restaurants – and if so, where exactly should you invest and when do you know if it is the right time?

Investing in real estate is a major, long-term commitment requiring careful consideration. Business owners must do their homework before signing a real estate contract, thinking about a host of factors, including the building’s location, the economy, zoning laws, the projected value of the property, and its expected appreciation over the coming years.

  Location is a huge factor. Is the property you’re considering in a good spot that will attract customers? Is the property attractive, in a safe, high-traffic location? Is the community vibrant and growing, with a history of economic stability? Is there easy access with ample parking, or is there a subway or bus stop nearby? What’s the neighborhood like? Is there considerable competition in your space, with tons of other bars and restaurants nearby? Is the neighborhood hungry (pardon the pun) for your type of establishment? Are the demographics right for your type of business? For instance, a heavy metal-themed bar might not flourish in a neighborhood with an older demographic.

  Despite major difficulties in 2020 and 2021, the hospitality and commercial real estate industries are finally in growth phases again, and this growth is likely to continue in 2022. Some things to consider include:

  People are going out again. Demand for in-person goods and services is rising again, as people want to eat at restaurants and go out for some beers. This pent-up demand is good for commercial real estate – and the bars, restaurants, and other businesses that occupy these buildings.

  Hospitality is rebounding. Now that the worst of the pandemic is (hopefully) behind us, business and leisure travel will start increasing again, and people will be dining out more frequently. The growing travel demand means hotels, restaurants, and bars may take on renovation and expansion projects that stalled during COVID. And, increasingly, hospitality business owners will invest in real estate to house their bars and restaurants.

  Secondary markets are growing. The evolution of remote and hybrid work means many employers and employees are moving out of high-rent cities into smaller markets that are more cost-effective. Recently, people have been leaving big, expensive cities like New York in droves, in favor of smaller, more affordable markets like Nashville and Tampa. If you’re thinking of opening a bar – or expanding your brand to new markets – consider these geographies.

  Operators are opting for building ownership. Some restaurant and bar brands are opting to own real estate rather than leasing. When leasing, the building owner is making money, regardless of whether your business is profitable. However, when you own the property, you’ll be building equity regardless of how your business is performing. Many restaurateurs and bar owners are choosing to buy instead of lease because it makes more financial sense over the long term. If you’re the property owner, you won’t have to worry about surprise rent increases. You also won’t need to abide by your landlord’s rules, giving you more freedom with your business and your property.

  Add new revenue streams to boost profitability. With labor shortages impacting the operating hours (and bottom lines) of hospitality businesses, restaurants and bars have realized the importance of having multiple revenue streams to increase profitability, especially if they’re working to cover the cost of their mortgage. Some brands are selling their own beers online or selling branded merchandise at their brick-and-mortar location and online. While people are finally coming back to dine and drink in-person, it’s wise to have additional revenue streams to keep a steady stream of revenue flowing – and so you can cover your mortgage and property taxes if you’re the building owner.

  If you’re financially able to swing it, buying property for your bar or restaurant can be a wise move. As experts predict that the worst of the pandemic is behind us, it looks like the hospitality and commercial real estate industries are poised for a rebound. If you’re thinking about a real estate investment for your hospitality business, be thoughtful and consider the decision carefully before signing the contract.

About the Author:

  Neeraj (Raj) Tulshan is the Founder and Managing Member of Loan Mantra, a financial advisory firm with best-in-class and proprietary fintech, BLUE (“Borrower Lender Underwriting Environment”). Loan Mantra, Powered by BLUE, is next-level finance: a one-stop-shop for business borrowers to secure traditional, SBA or MCA financing from trusted lenders in a secure, collaborative, and transparent platform. Clients turn to Raj because they know he will always pick up the phone and offer unparalleled financial counsel in a remarkably human—even friendly—way.

About Loan Mantra

  Loan Mantra is a financial services company designed to serve small and medium businesses with offices in New Jersey, Charleston, SC and New York. At Loan Mantra your success is our success. This means that our attention, purpose, and intention are all focused on you, our client. We are your ally to overcome obstacles, bringing peace through uncertain times to achieve your highest goals and aspirations. Your friendly, responsive agent will listen respectfully, and service your account actively through one of three locations in the US. We speak your language whether it’s English, Spanish, Hindi, Bengal, Hospitality, Laundry or Manicure, let us help you today. Connect with us at…www.loanmantra.com or 855.700.BLUE (2583)

The Indemnification Clause: A Lease Landmine?

Cyndi
man typing lease agreement contract
Lease Renting Contract Residential Tenant Concept

By: Brian D. Kaider, Esq.

Most breweries and distilleries are built on leased property.  Negotiating the lease can be a daunting task, as these contracts are commonly over fifty pages long and full of dense legal language that can be difficult to understand.  Additionally, many landlords have “standard” leases to which they expect the tenant to agree with minimal changes.  Aside from definitions of rent and the duration of the lease, many tenants simply accept the remainder of the lease, as is.  More savvy tenants may negotiate issues such as the right to penetrate walls or ceilings for equipment ventilation, the use of outdoor space/common areas, or the state to which the premises must be restored following termination of the lease.  But, there is a section in virtually every lease that is typically ignored and has important consequences: the “indemnification clause.”

What is an Indemnification Clause?

  In the simplest terms, an indemnification clause identifies who is responsible if a third party (e.g., a customer) is injured on or around the leased property.  Most often, the injury refers to a physical injury, such as when a customer slips and falls on a wet floor.  The language of the clause typically provides that in such a case, if an injured customer sues the landlord as a result of the fall, the tenant agrees to compensate the landlord for any expense associated with the claim.  This makes sense, because the landlord cannot be expected to supervise every action of the tenant and if the tenant allows a hazardous condition, like a wet floor, to exist, the landlord should not be held responsible for the tenant’s negligence.  Of course, circumstances are often not as simple as this example and there is a lot of gray area in these clauses that may not be immediately apparent.

  After reading this article, it may be tempting to try to negotiate taking the indemnification clause out of the lease entirely.  First, it is unlikely any landlord would agree to the deletion.  Second, it would actually cause more problems that it solves.  Absent the indemnification provisions of the lease, the landlord could still file a legal claim against the tenant under a variety of legal theories to recover any damages they suffer as a result of the third-party claim.  The better course is to negotiate the terms of the indemnification clause to minimize exposure of the tenant and ensure that the terms are clear and unambiguous.

The Guts of an Indemnification Clause

  The typical indemnification clause is composed of very long sentences with multiple subparts that make it difficult to even read, much less understand.  The following is a breakdown of some of the key terms.

  Definition of the Parties – “Landlord Parties” and “Tenant Parties,” or similar terms are defined to include each respective company along with their owners, officers, directors, shareholders, affiliates, agents, employees, representatives, etc.  In other words, if an injured customer sues the owner of the landlord company, this definition includes the owner as an indemnified party, just as if the customer had sued the landlord company, itself.

  Required Actions – Every indemnification clause will use some or all of the following terms: “indemnify,” “defend,” and “hold harmless.”  While at first glance these terms would appear to mean the same thing, they are very different and which terms are used has important consequences.  In particular, “indemnify” and “hold harmless” seem similar and, in fact, the differences between them varies from state to state.  In general, “hold harmless” means that the landlord will not be held liable for any injuries or damages caused by the tenant.  In other words, if the tenant is sued by an injured customer, tenant will not blame the landlord or try to bring the landlord into the case as a separate defendant.  “Indemnify,” on the other hand, means that if the landlord is sued by the injured customer, the tenant agrees to reimburse them for costs incurred as a result of the lawsuit.  “Defend,” however, means that tenant is responsible for defending the landlord from lawsuits.  That word in the clause should then trigger other questions, such as, who chooses the counsel to defend the landlord? Does the landlord have the right to approve the proposed counsel?  And what happens if there is a conflict of interest between the landlord and tenant being represented by the same counsel?  Those issues should all be addressed in the indemnification clause.  If the word “defend” is not in the clause, though, that means the landlord is free to choose its own counsel to represent them and tenant is still responsible for the landlord’s legal fees, meaning tenant may be paying two different law firms to fight the same case.

  Scope of Covered Claims – The clause should have some description of the types of expenses that are covered.  In some cases, it is extremely broad, such as “any and all costs suffered by or claimed against landlord, directly or indirectly, based on, arising out of, or resulting from tenant’s use and occupancy of the premises or the business conducted by tenant therein.”  The description may be limited to only physical injury, death, or damage to property.  In some cases, it may refer to “reasonable claims.”  Of course, what is reasonable is a subjective question and likely to spur additional legal battles.  In some cases, the lease may require the tenant to warrant that they do not and will not infringe on another party’s trademark rights.  The tenant should always try to limit the scope of such terms to only “knowingly” infringe or infringing “known” trademark rights.  Otherwise, it would impart on the tenant an obligation to scour the earth for all trademarks that could possibly be asserted against it; an impossible task.

  Scope of Covered Property – It should be clear exactly what property is covered by the indemnification clause.  Often a lease will make a distinction between the “Premises” and the “Property.”  Premises usually refers to the actual unit that the tenant is renting, whereas Property refers to the entire parcel of real estate owned by the landlord, which may include other rented units and common areas.  Obviously, a tenant should not be required to indemnify the landlord against something done by another tenant in a separate unit.  But, common areas are much more tricky.  Often, either explicitly in the lease or by oral agreement, a landlord will permit a brewery tenant to occupy common areas, including parking lots, to serve beer and/or allow customers to eat and drink.  If someone drops a glass in the parking lot and the brewery does not clean it up promptly and a customer is cut by the broken pieces, the indemnification clause should protect the landlord if the customer sues.  But, if the landlord is responsible for snow removal in the parking lot and fails to adequately perform its obligations and a customer slips and falls when getting out of her car, the tenant will want such incidents to be outside the scope of indemnification.  If the clause is not worded carefully, that distinction may not be recognized by a court.

  Carve-Outs for Landlord’s Activity – This raises the broader issue of carve-outs in the indemnification clause for landlord’s activity that contributed to the injury.  For example, if the landlord was responsible for the build-out of the premises and was negligent in the installation of the electrical system, then if a customer is electrocuted, the tenant should not be required to indemnify the landlord against such latent defects.  Even then, the choice of wording in the clause is important.  Some leases only carve out “gross negligence,” “recklessness,” or “willful misconduct.”  In that case, if the injury is caused by landlord’s “ordinary negligence” that does not rise to the level of gross negligence, the tenant would still be required to indemnify the landlord against such claims.  It is worth noting, however, that some states hold such clauses to be against public policy, void, and unenforceable.  Those cases, however, often turn on whether the part of the property in question was under the exclusive control of the tenant.

Conclusion

  Landlords generally provide the first draft of a commercial lease and, not surprisingly, they are drafted heavily in favor of the landlord.  While a tenant’s focus may be on maximizing building improvement allowances and minimizing rent, they should review the entire lease thoroughly, and preferably with assistance from an attorney knowledgeable about the beverage industry.

Often, the landlord will be in a position with greater bargaining power than the tenant, but the law will view both parties to a commercial lease as being sophisticated enough to negotiate the terms of the agreement they consider important.  A court is unlikely to be persuaded that the tenant did not understand the terms or had no choice but to accept them.  The indemnification clause should clearly set forth the responsibilities of each party in clear and unambiguous terms, including: the covered property, the scope of covered claims, what actions the tenant is required to perform in the event of a complaint, and what landlord activity is excluded from the indemnification.

  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 regulatory requirements, drafting and negotiating contracts, prosecuting trademark and patent applications, and complex commercial litigation.

10 Ways to Maximize Beverage Sales Through Every Spring & Summer Holiday

Cyndi
people drinking and celebrating

By: Raj Tulshan, Founder of Loan Mantra

The arrival of spring means sunshine, warmer temperatures, gatherings and lots of drinking. This often involves celebrating with a cold pint of beer, glass of wine or festive cocktail. Special days are a great time to attract crowds planning to connect with family and friends at area restaurants and pubs and to increase beverage sales.

  More than 335,000 gallons of tequila are consumed in the U.S. during Cinco de Mayo fiestas. An estimated 92 million Americans take their moms out for a meal for Mother’s Day, making it the most popular day for restaurant dining. People don their big hats and spring finery, while sipping Mint Juleps at Kentucky Derby-themed parties. Then it’s time to toast to dads on Father’s Day, celebrate graduations, for bachelor and bachelorette parties and bridal showers. So, how can you maximize beverage sales all throughout these warm weather celebrations? Here are 10 tips:

1.   Spring into Theme – Jump into action with some tropical themed drinks. Serve a refreshing Cherry Blossom, Tequila Honeysuckle, or a Lemon Drop for festive seasonal celebrations and, of course, don’t forget a Mint Julep for Kentucky Derby parties. Source fresh ingredients whenever possible and use fun garnishes, like edible flowers. For a Spring Fling, use sorbet as a drink ingredient, with fancy glasses and pastel cocktail napkins. Get patriotic with red, white, and blue themed drinks for Flag Day, and consider garnishing the drinks (or the tables) with cute little sparklers. Throw a tropical party and encourage employees and guests to wear Hawaiian shirts and leis, with mai tai or pina colada specials. Have a taco and tequila party for Cinco de Mayo and decorate with bright colors and a cactus or two. What about hosting an ice cream party with boozy milkshakes on a hot summer night social? The possibilities are endless, so be creative!

2.   Partner with the right vendors – Many beer, wine and liquor vendors will provide plenty of marketing materials to help restaurants and bars drive beverage sales. They’ll often give you free table tents, branded coasters, and other materials to promote their brands. Some vendors will go a step further and provide give-away items, like branded pint glasses, t-shirts, or baseball caps for customers that order their products. This is an easy way for you to boost excitement and sales – and a fun incentive for your guests to enjoy.

3.   Get your financing in order – Restaurants and bars have, understandably, had a tough two years, due to the COVID-19 pandemic. And now the COVID fallout includes a trifecta of major challenges, including soaring prices on food and beverage supplies, ongoing supply chain disruptions and continued staffing shortages. Be sure that your financing is stable enough to sustain your operations, especially amid this turbulent period and as you recover from the pandemic hardships. If you need a business loan, talk to an expert that can advise you about which path to take. There are many viable options available to help your business through the short-term or for your longer-term needs.

4.   Get the funding for your marketing needs – You might have the most amazing place that serves the best food and drinks in the area, but if people don’t know about you, you won’t maximize sales, profits and other key metrics. Elevate your marketing efforts to generate awareness and excitement and drive traffic and sales. Be sure to have a professional, easy-to-navigate website with updated menus, drink lists, and specials. Become more active on social media and buy online ads that target your priority populations. Host special events and tastings. Send out emails about upcoming events and other incentives. If your budget is strained, consider a loan to boost your marketing efforts and attract more attention.

5.   Host VIP tastings. Boost customer loyalty with VIP tastings – Valued customers will feel special to be part of an “elite” event, so make these tastings feel exclusive and important. Send out VIP invitations. If your budget allows, you can go all-out with a red carpet and champagne. Or create a different vibe with beer flights, a wine tasting or a sampling of different types of whiskey. Ask your vendors to provide experts to discuss their products and educate your guests about the types of beer, wine, or liquor they offer. Your vendors might provide VIP gift bags or other SWAG, as well.

6.   Create a comfortable atmosphere – Be certain that your guests feel comfortable at your establishment, whether that means continuing to social distance during higher COVID transmission periods or keeping plastic partitions up for a while longer. Guests want to see “proof” that your restaurant or bar is still following strict cleaning and sanitation protocols, so place hand sanitizer dispensers around the facility and continue to sanitize tables, bars and other high-touch locations frequently. Have comfortable seating that will make people want to linger and have another drink. Use appealing soft (not harsh!) lighting and play fun music. Also, consider what would appeal to your target demographics. Men will want the big game on your TVs. A bachelorette party will want a fun waitstaff that will dare them to do shots. And guests appreciate some creative decorating for the holidays, whether that’s flowers and champagne flutes for Mother’s Day, or big hats and roses for Derby Day (also called The Run for the Roses).

7.   Provide outdoor seating – One of the silver linings of the pre-vaccination landscape was that many restaurants and bars added outdoor seating, which customers loved. Now that spring is finally upon us, people will welcome the opportunity to eat, drink and celebrate outdoors. Set up tables and chairs outside. Consider adding fire pits or offering blankets on chilly evenings. Offer boozy popsicles or milkshakes to boost beverage sales when the weather gets warmer. String up pretty lights. Plant colorful flowers. Make your outdoor area feel lovely and inviting.

8.   Offer special incentives – Promote special deals around the spring holidays, like “Moms drink for free on Mother’s Day” or “Dads get a free beer for Father’s Day.” Promote specials on tacos and margaritas for Cinco de Mayo. Offer Mint Juleps and tiny sandwiches for a Kentucky Derby watch party. Offer discounts on your special spring drink menu. Consider discounts on beer buckets for the spring or 2-for-1 drink specials on a typically slow weekday.

9.   Train your staff about the drink specials – Make sure your staff are educated about your drink specials and encourage them to upsell to your guests. This is especially important when you add new seasonal cocktails to your menu or if you’re having special holiday-themed drinks. Be sure your employees know what each drink tastes like, how it’s made, and what it pairs well with. Your staff are your best ambassadors. The way they describe your menu and drink specials will matter. In fact, it will have a direct impact on your sales.

10. Be active on social – Social media can be a very effective way to incentivize your events, spotlight drink specials, and highlight fun plans and celebrations for the season. Post about what you’ll do to treat soon to be brides well for bachelorette parties (Champagne toasts! Bloody Mary specials!), so they’ll come to your establishment instead of your competitors.’ Feature different staff members raving about their favorite spring drink or talking about the upcoming events or parties that you’re hosting. Share photos of beautiful spring drinks garnished creatively. Showcase that your place is the place to be this summer, for any seasonal celebration.

  Spring is in the air and there are so many opportunities to celebrate. There are also so many opportunities to promote your establishment, drive traffic and boost your beverage sales. Try these 10 tips to increase traffic to your establishment, customer loyalty and profits.

  Neeraj (Raj) Tulshan is the Founder and Managing Member of Loan Mantra, a financial advisory firm with best-in-class and proprietary FinTech, BLUE (Borrower Lender Underwriting Environment). Loan Mantra, Powered by BLUE, is next-level finance: a one-stop-shop for business borrowers to secure traditional, SBA or MCA financing from trusted lenders in a secure, collaborative and transparent platform. Clients turn to Raj because they know he will always pick up the phone and offer unparalleled financial counsel in a remarkably human—even friendly—way.

About Loan Mantra

  Loan Mantra is a financial services company that helps level the playing field for small and medium businesses to gain financing by providing a one-stop portal, paperless application process and personal service. With offices in New Jersey, Charleston, SC and New York, our only success is through your success. This means that our attention, purpose and intention are all focused on you, our client. We are your ally to overcome obstacles, bringing peace through uncertain times to achieve your highest goals and aspirations. Your friendly, responsive agent will listen respectfully and service your account actively through one of three locations in. We speak your language whether it’s English, Spanish, Hindi, Bengal, Hospitality, Laundry or Manicure, let us help you today. Connect with us at www.loanmantra.com, 1.855. 700.BLUE (2583)