Category: Distillery

Turning Market Lemons into Tax Lemonade

Cyndi

How tax-loss harvesting can help business owners lower their tax burden.

a woman serving lemonade from a booth called turning market lemons into tax lemonade

By Sarah Hite, MBA, Northwestern Mutual Wealth Management Company

Running a business means you’re constantly juggling decisions: hiring, cash flow, taxes, growth plans, and the occasional existential crisis over payroll week. Somewhere in that chaos sits your investment portfolio—often quietly doing its thing in the background. But when markets get choppy, those investments can do more than just make you nervous. They can actually help reduce your tax burden overall.

  Enter one of the more underappreciated tools in the tax-planning toolbox: tax-loss harvesting.

  Before you picture someone wandering through an orchard picking sad-looking apples, let’s talk about what this strategy actually means—and how it can benefit business owners both personally and, in some cases, indirectly through their businesses.

What Is Tax-Loss Harvesting?

  Tax-loss harvesting is the practice of selling investments that have declined in value in order to realize a capital loss for tax purposes. That loss can then be used to offset capital gains elsewhere in your portfolio.

  In plain English: if you’ve made money on one investment but lost money on another, the loss can help reduce the taxes owed on the gain.

For example:

•     You sell stock in Company A and realize a $50,000 gain.

•     You sell stock in Company B that has dropped in value and realize a $30,000 loss.

  Your taxable gain becomes $20,000 instead of $50,000.

  That difference can translate into meaningful tax savings, especially for high-earning business owners who may already be in higher tax brackets. This could mean the difference between paying the IRS 12% or 22%, 22% or 24%, 24% or 32%, etc.

  But here’s where it gets interesting: the benefits don’t stop with offsetting gains.

Losses Can Offset More Than Gains

  If your realized capital losses exceed your capital gains for the year, the tax code still gives you a break.

  You can use up to $3,000 per year to offset ordinary income.

  For a business owner reporting substantial income from their company—whether through a salary, K-1 distributions, or pass-through income—that can be useful.

Even better: unused losses carry forward indefinitely.

  Think of it like building a tax shield you can deploy in future years. If you sell your business down the road, those accumulated losses might offset gains from that transaction (if you haven’t read it, check out my article in the Feb/Mar ‘26 edition to learn more about exit planning).

  Not a bad “insurance policy” to have sitting on the shelf!

Why Business Owners Should Pay Attention

  Business owners often have complex tax pictures. Income may flow through multiple channels:

•     Salary or guaranteed payments

•     Profit distributions

•     Capital gains from

       investments

•     Real estate income

•     Other business interests

  Because of that complexity, small tax efficiencies can compound quickly.

  Here are a few situations where tax-loss harvesting can be especially valuable for entrepreneurs.

1.    Offsetting Investment Gains During Good Years:  When business is thriving, owners often invest excess cash into brokerage accounts. Over time, those portfolios may generate gains from stock sales, mutual fund distributions, or portfolio rebalancing. Harvesting losses in underperforming investments can offset those gains and help keep the tax bill under control.

2.   Managing Taxes During Liquidity Events:  If you sell a piece of real estate, a side investment, or even a portion of your business, capital gains taxes can be significant. Strategically harvesting losses beforehand can reduce the taxable impact. This doesn’t eliminate taxes entirely, but it can soften the blow.

3.   Creating Future Tax Flexibility:  Some business owners accumulate losses over time and carry them forward for future years. This can become incredibly valuable when selling a business, selling highly appreciated investments, and diversifying a concentrated stock position. In those moments, previously harvested losses can reduce the tax cost of making big financial moves.

Tax-Loss Harvesting Isn’t Just “Selling the Losers”

  One of the biggest misconceptions about tax-loss harvesting is that it means abandoning your investment strategy. That’s not how professionals approach it.

  Instead, the process often looks more like this:

1.  Identify an investment currently trading below its purchase price

2.  Sell the position to realize the tax loss

3.  Reinvest the proceeds into a similar (but not identical) investment to maintain market exposure

  The goal is to capture the tax benefit without drastically changing your portfolio allocation. In other words, you’re adjusting the plumbing—not demolishing the house. But this is where things can get tricky.

  The Wash Sale Rule: The Buzzkill of Tax Planning

  The IRS anticipated that investors might try to game the system, so it created something called the wash sale rule. The rule states that if you sell an investment at a loss and then buy the same or a “substantially identical” security within 30 days before or after the sale, the loss is disallowed. Yes, the IRS really did create a 61-day window specifically designed to ruin lazy tax strategies.

Here’s a simple example:

  You sell shares of a stock for a loss on December 1. If you buy that same stock back before December 31, the IRS says the loss doesn’t count. Instead, the loss gets added to the cost basis of the new purchase, delaying the tax benefit.

  For investors who don’t track these rules carefully, it’s surprisingly easy to accidentally trigger a wash sale—especially if the investment appears in multiple accounts.

For example:

•     A brokerage account

•     A spouse’s account

•     An automatic dividend reinvestment plan

•     A retirement account

  Yes, even activity in an IRA can trigger wash sale complications, which is why this strategy should never be done casually.

Why Business

Owners Should

Involve Their

Financial Advisor

  Tax-loss harvesting sounds simple on paper but executing it properly requires coordination. A knowledgeable financial advisor can help ensure the strategy is used effectively by:

1.    Monitoring portfolios for harvesting opportunities:  Markets fluctuate constantly. Professional advisors track portfolios throughout the year to identify losses that can be harvested strategically.

2.   Avoiding wash sale traps:  Experienced advisors know how to maintain investment exposure while avoiding “substantially identical” securities.

3.   Coordinating with your broader tax picture:  For business owners, taxes rarely exist in isolation. Advisors often work alongside CPAs to understand expected income for the year, business profitability, planned asset sales, and other capital gains events. This allows harvesting to be done intentionally, rather than reactively.

4.  Integrating the strategy into long-term investment planning:  Tax savings are valuable, but they should never derail the bigger financial picture. A professional advisor keeps the portfolio aligned with your goals while still capturing available tax benefits.

A Word of Caution: Don’t Let the Tax Tail Wag the Investment Dog

  One of the biggest mistakes investors make is selling strong long-term investments purely for tax reasons. Taxes matter—but they shouldn’t drive every investment decision. The goal of tax-loss harvesting isn’t to chase losses or time the market. It’s simply to take advantage of declines that already exist. Think of it as financial recycling. Markets go up. Markets go down. If something temporarily dips below its purchase price, harvesting that loss can turn an otherwise frustrating moment into a small tax win.

  The Bigger Picture for Business Owners:  Entrepreneurs spend an enormous amount of time thinking about how to generate income. But building wealth also depends on how efficiently that income is managed and taxed – it’s not only about sufficient money, but also, efficient money. Strategies like tax-loss harvesting are rarely flashy. They don’t make headlines or dominate cocktail party conversations. But over time, they can quietly save thousands—or even tens of thousands—of dollars in taxes. And for business owners who already juggle complex financial lives, those efficiencies can make a meaningful difference.

Now What?

  Tax-loss harvesting isn’t a loophole or a gimmick. It’s a legitimate strategy built into the tax code that allows investors to offset gains and manage taxable income more efficiently. For business owners, the potential benefits can extend beyond a single year, creating flexibility for future investment decisions or major financial events like exit strategies or expansion.

  However, it’s also a strategy filled with technical details—particularly when it comes to the wash sale rule and maintaining proper portfolio allocation. That’s why the smartest approach isn’t trying to DIY your way through the tax code. Instead, work with an experienced financial advisor who understands how tax-loss harvesting fits into the broader picture of your investments, your business income, and your long-term financial plan. Because when markets inevitably throw a few lemons your way, it’s nice to know someone is there to help turn them into lemonade.

Better Than the Cool Kids

Cyndi

Becoming a noteworthy brand isn’t about fitting in with the cool kids

a man at a bar with a glass of whiskey and behind him are 4 people taking a selfie

By Hanifa Sekandi

Your problem isn’t that your brand isn’t viable. Your problem isn’t that your beverage isn’t good. It is probably great. Your problem is that your goal is to be better than the cool kids, the cool beverages in town, that is. Remember in high school when everyone wanted to be friends with the cool kids? Is the idea of fitting in constantly on your mind? Where are the cool kids now? Who’s talking about them in 2026? As much as we love the cool flashy brands, we do. It is important to understand that becoming a noteworthy brand isn’t about fitting in with the cool kids. Some of your favorite brands were once outliers, something people often forget when a beverage brand becomes mainstream.

  When you try to fit in, you tend to lean into inauthenticity. It’s like wearing a trendy hairstyle that doesn’t fit your face shape or getting a perm because everyone else is doing it. Oh, the eighties! It becomes a struggle to convince yourself every day when you look in the mirror that you feel good. You may fit in more, likely blend in, but you feel out of place. Imagine if a beverage, a bottle of bourbon or whiskey, could speak? We are in the AI animation era, so anything is possible. What would your beverage say to you? Our senses ignite our soul, and sipping your beverage should provide the information you need. How does this beverage want to show up in the world and on liquor shelves? How does it present itself to you? What does it trigger in you? Beyond igniting the desire for revelry.

The Odd Brand Out

  Unbelievably, being the odd brand out is a good thing, the underdog if you will. You have no one to impress but yourself. You can focus on what feels right to you and your marketing team. Draw on raw, authentic vision and emotion. The same energy that drove legacy brands when they began. It’s that grassroots grit mentality, that there is nothing like this on the market. That you are indeed better than the rest. No competition needed, because when you view your brand as a timeless winner, you don’t compete; you simply show up and exist in a league of your own.

  You’re the team that no one sees coming, but when they do, they admire you. They respect your beverage hustle, the product is stellar, and the marketing is bar none. Your goal should be to become an inspiration more than a competitor. Races eventually end. Every track athlete understands this. They do not spend their training season watching other runners run. Instead, they train, reflect, and continue. Understanding that self-reflection is the biggest hurdle to great outcomes. A hard feat to accomplish with social media. A medium that legacy brands did not have to contend with was a full view of what other beverage brands were doing in real time or at rapid-fire speed. They had to learn to stand behind and live with their marketing decisions. An effort that required continuous follow-through and promotion.

a man and woman looking in a book surrounded by oils and spices

Be Bold Without Hesitation

  So where do you start? Be bold. When you were in your youth, you were not limited by the constraints that plague you as an adult. You existed in a world of your own; it was okay to be bold and fun. You had a curiosity about life and the world. This is the energy your team needs to exude to become bold marketers. Marketers who do not strive to be boxed in and placed on a shelf, trying to blend in, hoping a beverage enthusiast will spot them. Your goal is to be chosen. Understanding buyers’ choices and what compels them to purchase a beverage they have never heard of or tried is essential.

  What do you look for in a beverage? Be objective when ideating ways to boost your brand’s image. Also, what makes the cool kids cool? What would you do differently? View yourself as a leader in your industry. Remember, you are not competing; you are co-existing in an industry that needs variety. Your brand is the cherry on top of the whipped cream on an ice cream sundae. Two ingredients that add a burst of flavor. Your beverage adds that missing ingredient to a perfectly crafted cocktail. It’s the showpiece on the bar cart; a can never be without lager on a hot summer’s day.

  It’s about being more than an afterthought. It’s about being the missing beverage, that something your consumer has been looking for. To achieve this, you must be bold in every way. The kind of bold that doesn’t go out of fashion, this isn’t about trends. The kind of bold that belongs in a league of your own, that is the first beverage that comes to mind in your beverage category. Your next question is most likely, ” How do you go about this? Just do it anyway is the answer. That wild idea of a futuristic campaign or one that takes consumers back in time, a beverage time traveller. This is the beverage marketing mindset to live by. Does your brand sparkle with color? Is it sleek and sophisticated? What story are you telling your consumer?

  You must believe in what you are selling more than the person buying it with unequivocal confidence. Are you the punk rock of all beverages? Or giving luxury a run for its money? Be outlandish, but sensible. It isn’t about controversy; it’s about the conversation that your brand evokes and the feeling it enlivens.

You’ve Got to Have Faith

  If you don’t believe in what your brand stands for, no one will. When you encounter opposition from other brands that want to push you out, how will you measure up? How will you manage the criticism from beverage aficionados? All that noise doesn’t matter. Drown it out, and just be, just exist, and have faith in your product. Put love into each bottle distilled, never compromise on quality ingredients, never dull your product to make a profit. Once you are firm about what your beverage brand stands for, all the turbulent times that this unpredictable industry throws at you won’t rock your foundation.

  This is the secret that the best bourbon and ale makers discovered early on. Hence, they have outlasted many hopeful brands that thought it was a competition. Beyond the fun, each beverage is steeped in culture and history. It is this that topshelf brands hold onto firmly. Beverage brands built on struggle, triumph, and faith. Whether it’s the story of a family, a town, or a monastery, these beverages travel many roads, some lasting 200 years. So, are you in? Are you ready to join the legacy, or would you rather sit with the cool kids?

Sealing the Craft

Cyndi

How modern bottling and canning machines power breweries

several canning and other packaging machinery on the flor of the brewery

By Alyssa L. Ochs

In the craft brewing industry, packaging is a critical step where craftsmanship intersects execution. Many breweries can brew exceptional beers, but if carbonation is inconsistent or oxygen creeps in during packaging, the end product won’t reflect the hard work you put into it.

  For modern breweries, packaging beer in bottles or cans is more than just the last step for to-go sales – it’s a natural extension of the business that impacts brand perception, quality, and profitability. As the years go by, many breweries are looking to scale production and expand distribution, making the need for precise, reliable, and efficient canning and bottling equipment more important than ever.

  Beverage Master explores the packaging machine options available to breweries today and how to choose the right one for your current and future operations. To learn more from a successful brewery’s perspective, we connected with the team at New Realm Brewing Company, which has expanded its operations across multiple cities and states. 

Types of Brewery Packaging Machines

  There are three basic categories of brewery canning and bottling machines: manual, semi-automatic and fully automatic. Each type offers a different balance of speed, cost, labor, and control.

  Manual systems are often the first entry point for new breweries because of their simplicity and affordability. Manual setups typically rely on counter-pressure or gravity fillers and require careful management of fill height, foam control and timing between the fill, seal, and sanitation between cycles. A manual canning or bottling machine may be sufficient for taproom-only breweries and for pilot systems used for experimental batches. They can produce excellent beer, but only with tight standard operating procedures to reduce risks.

  Semi-automatic canning and bottling machines are helpful as a brewery’s production ramps up because they enable controlled filling speeds and provide more consistent carbon dioxide purging, which improves shelf life. They often reduce human error risks with integrated seaming and capping while allowing quick changeovers between assorted sizes and formats of cans or bottles. These systems may be ideal for breweries that package beer multiple times per week, are looking to increase distribution and want to reduce human error and worker fatigue.

  The third category of canning and bottling machines is fully automated and may offer inline rinsing, filling, and sealing in a continuous flow. Fully automatic machines typically have programmable controls for repeatable settings and integrate packaging with labeling and case packing. It’s usually time to move to this type of system when you are expanding into wider distribution and when running the numbers proves that packaging efficiency directly impacts your revenue.

  Kane Wille, the director of brewing for New Realm Brewing Company, told Beverage Master that his brewery is currently running a KHS Innofill  Can C 21 head filler and a Kosme Barifill 28 head filler. New Realm is a craft brewery and distillery founded in 2016. It has a flagship brewery and restaurant in Atlanta, Georgia, a production brewery and restaurant in Virginia Beach, Virginia and a brewery and restaurant in Charleston, South Carolina.

  There’s also a stylish New Realm taproom in Auburn, Alabama, a barrel-aging and blending-focused location in Greenville, South Carolina and an outdoor-and-music-focused venue in Suffolk, Virginia.

  “The KHS line was chosen for its versatility (12 oz. standard, 12 oz. sleek, 16 oz. standard and 19.2 oz. standard) and speed,” Wille explained.

  “The Kosme line was purchased at auction and commissioned to meet the projected demand of on-the-books business and the anticipation of a swing back to bottles in the craft market.”

Benefits of Modern Canning and Bottling Machines

  Whether you choose to can or bottle your beer, the equipment you choose helps protect it from oxygen ingress, as even tiny amounts can dull the hop aroma, darken the beer’s color, and shorten its shelf life. Optimal packaging machines ensure the best consistency across batches, offer higher throughput for faster packaging cycles, and optimize your labor force. With more accurate pours and better foam control, you’ll use less beer and save money over time.

  Wille from New Realm Brewing Company said that since commissioning their KHS line, the most noticeable benefits have been a significant increase in shelf life and drastically improved throughput.

“Since commissioning the Kosme line, our biggest win has been the ability to capitalize on the untapped market of bottles in the craft space since the heavy shift to aluminum,” Wille said.

  However, Wille also shared that commissioning any new piece of equipment is a tough endeavor and always takes longer than expected.

  “The KHS line took the most time to dial in the underlet gas and the bubble breaker to reduce HSO across the various package sizes it can handle,” he said. “Training and troubleshooting just take time due to the complexity of the machinery, and navigating the world of parts and service post-initial-commissioning is a chore. The Kosme line, as it was purchased at auction and was ‘used’ equipment, was a much taller mountain to climb. For quality and dependability reasons, many of the wear parts and gaskets on the line have been rebuilt or replaced or are on the radar to require some serious attention as we tack on the run hours.”

Cans vs. Bottles: Strategic Considerations

  Beyond just branding and costs, the choice between cans and bottles affects many aspects of a brewery’s coordination and beer’s product stability.

  With cans, you’ll get the best protection from light and lower dissolved oxygen potential. Industry trends show that many beer drinkers now prefer cans, which are also lighter weight than bottles and more cost-effective to ship. However, canning beer requires precise seaming, and the initial investment in a canning line is significant.

  The advantages of bottles include compatibility with refermentation in the package and the traditional, premium perception, which is critical for certain beer styles. Bottles are also the preferred option for some highly carbonated and specialty beers, such as Belgian beers. But when you package beer in bottles, you’ll also face the risk of light exposure and must account for the heavier packages that may be more expensive to transport.

Quality Metrics to Monitor in Packaging

  The initial investment in brewery packaging equipment is just part of the equation; successful brewers know they must continuously monitor its performance to achieve consistent results.

  One key quality metric to pay attention to is dissolved oxygen and aim to keep it as low as possible for flavor stability and shelf life. Seam and cap integrity are also essential to prevent leaks and contamination. To ensure compliance and reduce product loss, brewers pay attention to fill height and volume accuracy. Meanwhile, carbonation levels need to remain stable during transfer and packaging, as over- or under-carbonated beer affects mouthfeel and overall perception.

How to Choose the Right Packaging System

  If you are opening a new brewery or thinking of upgrading your canning or bottling equipment, it’s important to think beyond today’s volume so you don’t outgrow it too quickly. If you invest in slightly higher-capacity equipment now, you may be able to prevent an expensive upgrade later.

  Choosing a packaging system requires evaluating the total cost of ownership beyond the purchase price. Maintenance frequency, downtime risks, and the cost of replacement parts are all considerations. It’s also wise to look at how a packaging system integrates with your cold storage space, fermentation schedule, and distribution timeline. Choosing the right equipment manufacturer can lead to a long-term partnership that includes operator training, installation support and troubleshooting help. Having dependable, on-demand support can often be just as valuable as the machine itself when something goes wrong.

  Wille from New Realm Brewing Company agreed and told Beverage Master why he thinks it’s always important to account for access to support and spare parts.

  “Many of the more complex lines are coming from Europe, and there is a significant time difference to keep in mind when in dire need of assistance during your production hours, even if there is stateside service available,” Wille said. “Many high-speed lines also use proprietary parts that may need to ship from overseas, and since COVID, it seems the availability of parts sitting on the shelf domestically or abroad is reduced. 

  Wille also noted that breweries should account for service contracts and consider building in options like teleservice.

  “Scheduling and training on staff personnel for preventative maintenance should be a day-one consideration,” he said. “It’s also very important to size your line to not only match current throughput demand but allow yourself room to grow into its capacity.”

  Whether you’re manually filling limited releases or running a high-speed, fully automated line, choosing the right equipment boils down to your production goals and growth trajectory. As competition in the craft beer market remains strong and steady, breweries that shop around for the best packaging machine fit will stand out for their consistency in every can or bottle that comes off the line.

Lost State Distilling

Cyndi

Pivoting Into the Future

THE OWNERS OF LOST STATE DISTILLING SITTING ON BARRELS WITH A GLASS OF SPIRITS IN THEIR HANDS

By Gerald Dlubala

Lost State Distilling’s name comes from its historical origins, as do the names of many of the spirits produced by this Bristol, Tennessee, producer of craft Rum, Gin, Vodka, Tennessee Whiskey, and canned cocktails.

  “The name is derived from when northeast Tennessee, as it is today, tried to become a separate state in 1784,” said Nick Bianchi, Head Distiller and President. “The area actually existed for four years as an independent territory, having a governor and one official battle. It obviously never became its own state, but had it, it would’ve been known as The State of Franklin. Since it never became an official state, it became the Lost State of Franklin, and we are Lost State Distilling.”

Pivoting From Initial Intentions

  “We officially started our journey in 2017,” said Bianchi. “I roped my dad in with me while originally wanting to start a craft brewery. I was a longtime home brewer and wanted to create my own commercial brand. But as we looked around, we noticed that there were already a significant number of breweries operating, which led us to explore craft distilling. I already had a nice appreciation for bourbon, so it was an easy decision to go down that path. It was just my dad and me, with really no experience, coming from the IT and oil industry, respectively. We began by working with friends at a Virginia-based distillery to learn the business and process of commercial distilling. We originally anticipated being a really small craft distillery. Then we ran across a really nice building in Bristol that we liked. It was bigger than we originally wanted, and larger than we had imagined, but we ended up taking it and growing from there.”

  Bianchi tells Beverage Master Magazine that his initial main goal was to make a great Tennessee Whiskey. He experienced Clayton James Tennessee Whiskey, made by Big Machine Distilling, which opened his eyes to the fact that not all Tennessee Whiskeys have to be Jack Daniel’s or George Dickel. Bianchi wondered what else he could produce, and the rest, as they say, is history.

  “It’s certainly been a journey,” said Bianchi. “We’ve had our share of hurdles, but each one has taught us how to evolve and pivot our plans when needed. And it seems we must pivot a little at least every year, depending on what the world throws at us. You don’t know what you need to know in this industry until you find yourself in a tight spot that forces you to adapt. It’s a fun industry, but it can be overly convoluted and complicated.”

The Goods

  “We have two stills,” said Bianchi. “We have our 100-gallon hybrid StillDragon still that is modular, so we can control what we want to make. It’s got a separate distillation column for higher proof spirits, or we can use it as just a straight pot still. It also has a gin basket in line. We started making our white spirits on this still before getting our bigger still online. That’s a 500-gallon hybrid pot still and is our main production still at this point. We like to stick with pot distilling for now. We are slowly growing, so we only make what we need, and with the bourbon glut, there’s no need to make 30 barrels a day right now or overproduce in an oversaturated market.”

  Bianchi uses local ingredients, all sourced within an hour of the facility. Production and bottling are done in-house, with vodka currently the most popular and most distributed product.

  The tasting room can get busy due to hosting NASCAR races and the NHRA Drag Racing Nationals.

  “We do get a significant amount of foot traffic then,” said Bianchi. “Within our tasting room, we offer a full line of tastings, bottle purchases, and tours. Visitors will find nine unique styles of whiskey, our apple brandy, aged and white rum, gin, and our popular line of canned cocktails. Customers will find that we’re pretty much open to anything. If you want to take a tour, you’re getting a tour from one of the distillery owners, so there are very few questions that go unanswered. You’re getting the information from someone who performs the process daily rather than a tour guide or random employee. We get a lot of positive feedback on that aspect of our tours.”

one of the owners at Lost State Distilling inspecting a glass of spirits in front of a rack of barrels

Evolving Through Contract Distilling

  “Within the past year, we’ve pivoted our business model,” said Bianchi. “We’ve stopped pushing so hard in our tasting room and started focusing more on distribution. There was some writing on the wall last year with some decline in spirits sales, particularly bourbon. We also wanted to get into contract distilling, so we started working with some moonshine distilleries that weren’t equipped to make a grain-based spirit. That has since evolved into distilling private label brands for vodka, which is our big growth goal at this point.”

  Bianchi said they started contract distilling with only four private-label liquor store brands but have since grown to 14 brands in East Tennessee alone.

  “We’re also working on a bigger label client that would pretty much cover all of Tennessee except for Memphis,” said Bianchi. “I think companies have seen the Costco and Total Wine models of doing things and noticed the value of having their own brands versus pushing other national brands. That’s driving a big increase in people wanting to go private label, and it’s fueling our growth plan to the point that we are having to expand our bottling and production lines to accommodate the demand for private label. Most are private-label vodkas, but we have some rum brands and clients interested in flavored whiskeys and moonshines. Hopefully, this all goes where we hope it goes, but only time will tell. Private-label contract distilling isn’t going to make you rich overnight, but because of the changes we’ve seen in liquor stores and with specific distributors, it’s helped us keep the lights on. That business has helped us recoup everything we’ve lost due to decreased foot traffic, whether it’s because people aren’t getting out as much as they did before or because of the general uncertainty of what’s going on. We’ve had our share of punches since day one, and we’ve never predicted any of them, so I just say roll with whatever punches present themselves.”

one of the owners looking at the still in lost state distilling

  Bianchi gets people all the time, usually after watching the moonshiner’s show on television, who want to get into distilling.

  “We try to warn everyone about the reality of the business versus those types of television shows,” said Bianchi. “You see the fun, but there is a significant amount of work that goes on behind the scenes that no one knows about unless you’re in the industry. You can have the best spirits in the world, but if you can’t get them out there on the store shelves, it doesn’t do you any good. It’s pretty much dominated by the middle-tier distributors, and then by retailers’ willingness to take your product. Additionally, as a distiller, outside of your product, you really have no control over anything. It takes significant effort to actually get something out there. There are no guarantees, and you only get out of any business what you’re willing to put into it.”

  In addition to working with friends at a Virginia distillery when Bianchi and his father were considering starting one, Bianchi also credits time spent at Sugarlands Distilling Company in Gatlinburg, Tennessee. Sugarlands Distilling allowed Bianchi and his father to gain valuable hands-on experience in commercial distillation and distillery operations through its distiller-for-a-day program. That is where they also heard about Moonshine University in Louisville, Kentucky, a six-day training program that teaches a “business plan to product on the shelf” curriculum.

  “That was our first real exposure to what we might experience in the real world,” said Bianchi. “Working with a distillery gave us the hands-on experience needed to develop our own products and the ability to plan out and predict our production goals. No one knows what’s coming, so we prepared for four years down the road and hoped for the best. But now, there are more options for those interested in the industry. All, or most, universities offer course programs in brewing and distillation sciences, providing more education and insight into the industry than when we started. Before, if you didn’t distill illegally and have some idea of how everything works, you had to work under someone else to learn. Moonshine University was the only exception to that, and they did a fantastic job with training, at least the broad strokes of what you need to know.”

  Bianchi tells Beverage Master Magazine that his end goal is to walk into a liquor store and see that Lost State Distilling is producing the store brands.

  “Lofty goals, for sure,” said Bianchi. “But we hope to get to that point sometime.”

  For more information or to contact Nick Bianchi and Lost State Distilling:

Lost State Distilling

200 State Street

Bristol, TN 37620

(423)797-4432

www.loststatedistilling.com

info@LostStateDistilling.com

Adaptive Employee Skills Training Unlocks Competitive Advantage

Cyndi
A WOMAN AND A MAN STANDING IN FRONT OF A STILL IN A DISTILLERY

By Jorge Izquierdo, Vice President of Market Development for PMMI

As workforce woes persist, investing in training, technology, and pertinent partner outreach is the best way forward.

  Labor issues continue to be a production stumbling block for craft beer and spirit manufacturers, but solutions, such as artificial intelligence (AI), automated systems, and targeted training, can help increase efficiency and overcome workforce problems, according to “State of the Industry 2025,” a business intelligence report from PMMI, The Association for Packaging and Processing Technologies.

  Attaining and maintaining a qualified workforce continues to be one of the most demanding challenges facing the industry and is characterized by the shortage of skilled tradespeople, technician burnout, and limited internal capacity to meet customer demand.

  Rising labor costs are reshaping brewery strategies, according to a recent study entitled Craft Beer Production in the US Market Research Report (2015-2030) from IBISWorld.

  Breweries are paying more to attract talent and keep pace with inflation, but this puts a real squeeze on already-thin profits and forces innovative staffing and retention tactics, the report states.

  Technological advancements in brewing techniques and supply chain management are resulting in better quality and more creative flavors, helping the market to grow, according to a study called Craft Beer Market (2024 – 2030) from Grand View Research. 

  At the same time, research from the Manufacturing Institute (MI) suggests that there is no one-size-fits-all approach for manufacturers seeking to revamp their manufacturing and training programs. In other words, manufacturers need to tailor their labor upskilling strategies to realize transformative operational benefits fully.

  In fact, MI’s study concluded that manufacturing organizations that emphasize the development of adaptive skills are more likely to unlock a competitive advantage, accelerate their transformation, and directly address the manufacturing skills gap. The research also demonstrated that adaptive skills represent the critical translation point necessary for reskilling the current workforce and for rebranding, attracting, and retaining talent.

  Many savvy manufacturers are considering automation not only to address production issues but also to alleviate the challenges of labor shortages. At PMMI’s 2025 Top to Top meeting, a report entitled 2025 Performance Optimization: Insights for Packaging Line Readiness concluded that three distinct, yet interconnected, phases create an environment of operational readiness. These phases are vertical startups (productivity), operator training (workforce), and IT-OT integration (automation).

  The operator training phase focuses on ensuring that operators have the necessary knowledge and resources to perform their roles effectively. This phase emphasizes the importance of designing training programs around the needs of the workforce and adopting a people-centric approach. Key themes include using technology to improve training, enhancing the skills of trainers, and regular and hands-on training.

  Technology to support training and improve information retention should include videos, interactive manuals, augmented reality, and tablet-based instructions. In addition, beverage manufacturers should request that original equipment manufacturers (OEMs) simplify machinery design and provide user-friendly and intuitive human-machine interfaces to accommodate operators with varying skill levels.

AI Provides Increased Efficiency

  One tool for workforce development is AI. According to PMMI’s 2024 study, The AI Advantage in Equipment: Boosting Performance and Bridging Skills Gaps, AI is not at the level yet where tasks can be completed solely by the technology, so a human is still required to make final decisions. The key impacts that currently available AI solutions can have on the packaging industry are increased staff productivity, better machine performance and OEE, and the mitigation of skills gaps and labor issues.

several employees in a distillery looking at a computer screen titled ai fermentation

  AI technology, particularly AI assistants, has the most potential to improve staff efficiency and productivity. Time-consuming tasks, such as data entry and coding, can now be completed with the help of these assistants. This increases the speed at which projects can be completed, freeing up additional time for staff members to focus on other tasks.

  With a high turnover of staff positions (particularly among maintenance staff and machine operators), optimized training can ensure that employees are receiving the highest-quality training available. AI assistants and generative AI predictive maintenance solutions enable users to ask questions about any issues they encounter, further allowing staff to upskill independently and reduce the risk of human error.

More Solutions Are Available

  PMMI’s OpX Leadership Network explores common industry challenges and develops new work products through special task forces and solutions groups. The entire OpX library of solutions is free for all to use.

  Recently, OpX has focused its efforts on bridging the workforce divide characterized by seasoned operators with decades of institutional knowledge leaving the industry, while a new, tech-savvy workforce comes in with a fresh perspective on learning, relevance, and impact. This generational shift demands not just replacement, but a reinvention of how work is performed.

  To aid in this process, OpX has launched two industry-led solutions: Operator Training Standardization (OTS) and Data Management Standardization (DMS). Built collaboratively by OEMs and consumer packaged goods firms, these work products can help close the gap between experience and execution — accelerating onboarding, strengthening data practices, and elevating performance across entire operations.

  Another tool, PMMI’s Mechatronics Certification program, provides technical credentials to employees through a series of tests based on industry-developed skill standards. The PMMI Mechatronics Certification program:

•     Helps employers assess workers for core skills.

•     Guides schools in developing curricula to prepare students for the manufacturing workforce.

•     Provides a career pathway for students looking for rewarding careers in advanced manufacturing.

The Struggle to Stay Ahead in the Face of Constant Change

  At the same time they’re adapting to new technologies and operational models, beverage producers are facing economic pressures, labor shortages, and regulatory changes, according to Ernst & Young LLP’s Trends in the Beverage Industry: Navigating Change and Innovation report.

  Industry success requires innovation and optimized supply chains, as well as social media- and data-driven marketing strategies, even as market fragmentation complicates the landscape.

  While many craft beverage manufacturers tend to focus on practical applications that can help solve real problems on the plant floor, one clear way to improve efficiency is by increasing corporate investment in workforce development programs.

Pushing the Boundaries

Cyndi

Distillers produce their own distinctive twist on gin

Three people holding different gin bottles over a map of the united states

By Becky Garrison

L.J. Temple, President/Head Distiller of Temple Distilling Company and author of So, Why Gin? defines “gin” as “a botanical spirit rooted in juniper that’s defined by the oils extracted from flavorful plants, herbs, and spices. The piney taste of juniper leads this concentration of different flavors.”

  The word “gin” is derived from the French name for the juniper berry, genièvre, which was then altered by the Dutch to genever and shortened by the English to gin. As per Britannica.com, “Its origin is attributed to Franciscus Sylvius, a 17th-century professor of medicine at the University of Leiden in Holland, who distilled the juniper berry with spirits to produce an inexpensive medicine having the diuretic properties of juniper-berry oil. The beverage became popular and was introduced to England by soldiers returning from the Low Countries.” A spirit labeled as “gin” includes both the malty-flavored and full-bodied Netherlands types and the drier types, characterized by distinct botanical flavoring, produced in Britain and the United States.

How is “Gin” Defined in the United States?  

  According to Jason Parker, Co-founder of Copperworks Distilling Co. (Seattle, WA), the answer to this question depends on who you ask.  As per the Alcohol and Tobacco Trade and Tax Bureau (TTB), the legal definition of gin distilled in the United States is as follows:

  A product obtained by original distillation from mash or by the redistillation of distilled spirits or by mixing neutral spirits with, or over, juniper berries and other aromatics, or with, or over, extracts from infusions, percolations, or maceration of materials. It is bottled at not less than 80% proof.

  Most consumers think of gin as being “botanical forward with a resin piney character, that’s very dry.” Parker attributes this taste preference to the dominance of London Dry Gin, which accounted for 52.02% of the U.S. market in 2025. The majority of London Dry gin sales were the mass market gins produced by commercial distillers with an eye toward affordability not flavor. In comparison, craft distillers focus more on flavor using locally sourced botanicals like seaweed, spruce tips, and lavender in their gins.

  The following are some examples of how Pacific Northwest distillers produce their own distinctive twist on gin ranging from a craft classic London Dry gin to cask finished gins and gins made using Pacific Northwest botanicals.

Aria Classic Dry Gin (Portland, OR):  Aria Classic Dry Gin, founded in 2012 by Ryan Csanky and Martin Ryan, set out to produce a top-shelf classic dry London gin. As much as former bartender Csanky loved gins made with creative flavors like prickly pear, spruce tips, and lavender, he found they did not work when he made classic gin cocktails like a martini.  Aria’s Classic Dry Gin offers a classic London dry gin experience with a craft sensibility. They experimented with traditional English botanicals looking for bold flavor combinations that were also delicate. Their final proprietary recipe combines the ten ingredients they list on the bottle: juniper, coriander, angelica root, grains of paradise, cubeb berry, orris root, lemon zest, orange zest, and cassia bark. 

BOTTLES AND CANS OF ARIA GIN

  The pristine Bull Run water used to distill Bull Run Distillery’s gin speaks to this gin’s origins in the Pacific Northwest. In addition, they collaborate with other producers, such as Ken Wright Cellars in Carlton, Oregon, to create cask-finished gins. They produce Distiller’s Reserve Gins, limited edition releases with unique barrel finishes as well. Also, they produce a canned Aria Gin & Tonic made by combining their award-winning Aria Classic Dry Gin with a bespoke tonic created specifically by them to pair with Aria Gin for the perfect G&T on the go.

   At their tasting room, they feature a wide array of mixers and bar tools for creating a range of gin cocktails, along with a rotating selection of tasting flights featuring Aria Gin. For example, during the summer months, they offered a tasting flight titled “summer of sours” that included a variety of sour cocktails including a gin slushie made with Aria Gin.

Copperworks Distilling Company (Seattle, WA):

When Copperworks opened in 2013 with a focus on making American Single Malt whiskey, they chose to produce gin to sustain them until their whiskies matured. They chose to distill their gins in

the spirit of their whiskeys by producing their own malt-based grain spirit that they distill in-house along with ten world-class botanicals. To maximize the flavor, they chose to macerate the botanicals for 24 hours in an alembic pot still, which they only use to distill their gin. This gin was then placed in new oak barrels with the ensuing result emerging as their flagship gin.    

A COPPERWORKS GIN BOTTLE IN FRONT OF COPPERWORKS BARRELS

Following this success, they began aging other gins in a variety of casks. Their first cask finished gin was made using a used Westland American single malt whiskey cask as all their whiskey at the time was in barrels. Since then, they have experimented with thirty cask finishes to date including Spanish Brandy, Oloroso sherry, chai cider, and red wine barrels from Washington State and around the world, along with barrel exchanges with several local breweries. In addition, they make a plum gin every year using Italian plums from co-founder Micah Nutt’s brother’s farm on Orcas Island.

Freeland Spirits (Portland, OR):  In Beverage Masters’ profile of Freeland Spirits, founder Jill Kuehler notes how she was drawn to gin due to the infinite number of botanicals one can play with to develop a unique spin on a classic spirit. She sourced fresh botanicals from local farmers’ markets and area farms, such as Vibrant Valley Farms (Sauvie Island, OR).

A BOTTLE OF FREELAND SPIRITS GIN WITH A GLASS HALF FULL

  Their flagship gin is small batch crafted using a unique blend of traditional heat distillation along with vacuum distillation, which allows them to use a combination of fresh, Pacific Northwest ingredients. In addition to their flagship gin, their other expressions of gin include a Forest gin made using chanterelle mushrooms, Douglas fir tips, and other items foraged from their backyard woods, a Dry gin styled after a classic London Dry gin, and their pink gin crafted in honor of Women’s History month infused with huckleberries, white tea, marshmallow root and turmeric.

Scratch Distillery (Edmonds, WA):   The name “Scratch” refers to distiller Kim Karrick’s commitment to produce all their spirits from scratch using local ingredients, when possible, such as Skagit Valley and Walla Walla Valley grains and botanicals from the Salish Crossing complex’s garden. distilled vodka and gin and now produce over thirty spirits. Among their range of gin expressions are a barrel-finished gin, G&T style gin, Holiday Gin, Martini Style Gin, and an Old Tom Barrel Finished Gin.

A CLAR BOTTLE WITH A BLACK LABEL OF SCRATCH DISTILLERY GIN

  Karrick’s obsession with the infinite combinations of botanicals, coupled with her conviction that everyone can like gin if they just get the opportunity to find their favorite combination of flavors and aromas, led to the creation of her GINiology™ workshops. In these workshops, participants learn about the history of gin and taste more than 30 different botanicals and spices that can be used to make gin before creating a bottle custom-tailored to their palate.

Temple Distilling (Lynnwood, WA):   Temple calls gin the ‘chef’s spirit’, the final product an expression of the intended flavor profile of the distiller. In his estimation, distilling gin is akin to creating a wonderful, complex meal. “You want as much flavor without overwhelming or letting anything get out of balance. Whiskey on the other hand is more like baking – you are limited to a few different grains, yeast, and water, the rest is up to Mother Nature.” As you can create gins with so many assorted flavors Temple doesn’t see any other path forward besides experimenting with different expressions of gin. “You don’t want to eat the same thing every day, and the same goes for your gin and cocktail choices,” he adds.

A BOTTLE OF TEMPLE DISTILLERY GIN

  As a big believer in how Europe has done gin for centuries, Temple honors that tradition with their London Dry Gin. This flagship gin is made with Italian juniper, lemon and orange, grains of paradise and cubeb berry, angelica and orris root, a combination Temple designed to hit every corner of the flavor wheel while keeping it all in balance. Temple makes another London Dry Gin in their Constant Reader Gin, which they describe as a ‘mass market paperback’ version of their London Dry. Here the recipe is simpler with juniper and citrus and a hint of earthiness.

  Also, Temple distills Chapter One Navy Strength Gin. As the higher proof plays better with the lighter citrus oils from distillation, Temple leans heavier into the citrus profile by using fresh lime peel and dried grapefruit. He uses this gin for their Woodcut Barrel Rested Gin, which is made using bourbon barrels, which turn the citrus into more floral notes while adding a touch of sweetness from the bourbon-soaked oak. They release a 5-year-aged Woodcut Barrel Rested Gin, which yields a lot of wonderful baking spices into the gin designed for those whiskey lovers who like a sipping gin.

  Other expressions of gin include a Co-authored Roasted Gin made via a partnership with a local roastery where they distilled fresh espresso beans alongside juniper, black and green cardamom, and clove to mimic Turkish coffee notes. One of Temple’s favorite collaborations is their Co-authored Gin foraged made using two pounds of fresh black truffles they found by partnering with a local company that trains truffle hunting dogs. This truffle-infused gin was aged in a barrel for about a year for a velvety body.

Vivacity Fine Spirits (Albany, OR):  From the start of their distilling journey, they envisioned offering two distinct styles of gin that would reflect both the classic and the innovative aspects of the craft, offering something for everyone. Their process began with an ambitious collection of 12 unique gin recipes. Each was carefully crafted, analyzed, and refined as we narrowed down our selection to two standout profiles: their Bankers’ Gin and Native Gin.

A BOTTLE OF VIVACITY GIN NEXT TO A GLASS HALF FULL IN FRONT OF A FLOWERED BUSH

  Modeled after the classic London Dry style gin, their Bankers’ Gin is named after the banker who gave them their first loan. This spirit’s dry and citrusy, crisp, and clean flavor profile features subtle aromatics derived from a combination of six herbs and botanicals. Their Native Gin features dynamic floral & aromatic notes with a focus on using 17 herbs, spices, and botanicals that are native to the Oregon Pacific Northwest including a few hand-picked ingredients. After sipping the Native Gin, they suggest “chewing” on it by making smacking noises with the tongue and lips to bring out different layers of flavors.

Dappled Tonic (Portland, OR):  Throughout Faith Dionne’s career as a pastry chef, artisan confectioner, distiller, and now with Dappled, she has been drawn to taking industrialized, standard products and reimagining them as something exceptional. So instead of treating tonic water as a sidekick, she makes it with the same care and attention you would expect from a craft spirit. Dionne knew that instead of just lengthening gin, tonic water could complement this spirit. That concept became the basis of Dappled: tonic waters designed to “click” with the gin and create layers of flavor for a more complete, satisfying cocktail.

SEVERAL SIX PACKS OF DAPPLED TONIC IN CANS BEHIND A FILLED GLASS WITH 2 STRAWS AND A LIME

  Dappled grew out of Dionne’s experience as a craft distiller. At JAZ Spirits she would hand-forage wild botanicals and take extra steps in distillation and infusion to coax out their unique flavors. But she discovered that when she served those gins, the tonic water options never did them justice, as they just diluted the spirit, and added bitterness and bubbles. Currently Dappled is available in citrus, floral, and aromatic flavors with plans to release a brand-new flavor designed to pair with rum in 2026. All Dappled SKUs also work well served over ice for those looking for an NA craft cocktail.

The Big Beautiful Bill on Your Beverage Business

Cyndi

There is plenty of debate from stakeholders across finance, labor, and industry groups.

a group of men and woman sitting around a table on a brewery production floor discussing the new tax bill

By Raj Tulshan, Founder & Managing Partner, Loan Mantra

Welcome to the bright start of a new year! 2026 brings new laws and legislation that will impact the beverage business industry. At the forefront of industry news is the One Big Beautiful Bill Act, often called the Big Beautiful Bill. So how does the Big Beautiful Bill affect beverage businesses like breweries, distilleries, bars, restaurants, distributors? Let’s take a look.

  As with any major legislative proposal, there is plenty of debate from stakeholders across finance, labor, and industry groups. Now that the statute is moving from draft language to enactment, beverage businesses can start planning around what’s actually in effect.

Tax Relief Extension

  The Big Beautiful Bill enables beverage business owners to better predict revenue and outcomes because it extends corporate and individual tax rates from the 2017 Tax Cuts and Jobs Act. The Act, which was scheduled to expire at the end of 2025, helps owners avoid large tax increases. For beverage business owners, especially small producers, distributors, and related service providers, it provides a level of certainty and security for strategic plans. For business owners operating as pass-through entities such as LLCs, S-corps and partnerships, the Qualified Business Income (QBI) deduction, which is usually up to 20% of profits, is extended. This should help owners of pass-through beverage businesses lower their taxable income if they qualify.

Larger, Immediate Expense Limits

  The Big Beautiful Bill increases expensing limits to $2.5M for qualified property and allows for immediate expensing (100% bonus depreciation) so businesses can deduct even bigger asset purchases immediately, rather than depreciating them over many years. This can be a great incentive to invest in production equipment, brewing systems, delivery vehicles, taproom upgrades, or refrigeration and storage that is needed now and reduce taxes sooner rather than later. But some production-related tax perks (like Qualified Production Property) have specific eligibility rules. This means if your beverage business’s facility doesn’t qualify under the IRS’s definitions, you won’t receive bonus depreciation for portions of the property used for sales or tasting rooms. Check with your financial or tax advisor to confirm eligibility.

To make these deductions easier to support, keep clean documentation: a formal written statement from vendors, an itemized list of assets purchased, and invoices showing the purchase price. This will can substantiate the deduction and any later claim.

Expanded Deductions

Interest on Loans:  The Big Beautiful Bill reinstates a more generous calculation to deduct business interest on commercial loans. Beverage businesses can again add back depreciation, amortization and depletion when calculating adjusted taxable income. This change allows capital-intensive businesses, which carry heavy debt loads and have high depreciation expenses (such as those operating large vehicle fleets), to potentially deduct more of their interest expenses and reduce their overall tax liability. It also allows for expanding beverage business owners to take greater deductions paid on commercial loan interest to help finance future goals like buying a new facility or refrigerated box trucks. Check with a loan advisor to ensure all qualifications are met.

  From an operational standpoint, many beverage businesses will want tighter visibility into payables, receivables, and loan accounts—especially when interest expense is a key lever in financial workflows.

Research and Development:  As beverage business owners push for innovation by developing new drinks and products, domestic research and development expenses can once again be fully deducted in the year they are incurred. This is significant even for small businesses that are innovating with products, processes, or software. Beverage Research & Development (R&D) is crucial for driving innovation through the creation of new beverages, enhancing existing formulas, and catering to the evolving consumer demands for health, taste, and sustainability. This has financial impacts on concept development, ingredient sourcing, prototyping, sensory testing, regulatory compliance, or even scaling up manufacturing to remain competitive. Key areas of focus include functional ingredients, plant-based options, low-sugar alternatives, and sustainable packaging, which require market research, flavor science, and process optimization.

  If you’re capturing R&D time, lab supplies, or pilot-batch inputs, using financial automation software (or an expense management app tied to your accounting system) can help track costs in real time and keep supporting documentation consistent across your finance team.

No Tax on Tips

  One of the biggest changes created in the Big Beautiful Bill is the new “No Tax on Tips” requirement. This temporary provision was put in place to be effective for tax years 2025 through 2028. It allows qualified tips to be income-tax-free of up to $25,000 for federal taxes only. All wages, including tips must still be reported and recorded by both employer and employee. What is important to note is that Social Security and Medicare taxes still apply on tips — the deduction affects only income tax. In addition, some states may not conform to this deduction, so tips could still be taxed at the state level. Employers must report tip income on W-2s or similar forms for employees to claim the deduction.

  It’s also important to know who qualifies for this tax benefit. The rule applies to workers in occupations that “customarily and regularly receive tips”, as recognized by the Internal Revenue Service. Good examples from the beverage industry include staff such as: Bartenders, servers/waitstaff, cocktail servers, barbacks, tipped food runners, sommeliers/wine stewards, or counter service staff who receive tips. If your business handles or hold events this could also include Food/Beverage delivery drivers, catering service staff, event bartenders, valet attendants and beverage service staff. There are gray areas of this line item. If tipping is customary, regular, and documented then brewery taproom staff, tasting room hosts, coffee baristas, food truck operators (employees, not owners) and tour guides (brewery/distillery tours) may also benefit. Those who are NOT eligible are: Owners and partners, salaried managers (even if they receive tip-outs) and back-of-house staff unless tips are truly customary.

  To protect the business and employees, an owner should keep records separating true tips from service charges and other charges and ensure tip reporting ties back to POS/payroll. Clear facts and documentation matter, especially if an owner or employee must ever support a claim under state law or payroll records.

  The Big Beautiful Bill brings significant changes to the beverage industry, offering what is intended to be financial incentives for business owners. With extensions on tax relief, increased expensing limits, and expanded deductions, beverage businesses are better positioned to invest in growth and innovation. The act’s provision for tax-free tips provides additional support for frontline workers, offering a temporary financial boost.

  As the beverage industry continues to evolve, the Big Beautiful Bill ensures that businesses have the tools and flexibility to adapt to changing market demands. Whether you’re a small brewery experimenting with new flavors or a large distributor expanding your fleet, these legislative changes offer numerous opportunities to enhance operations and drive success.

  Business owners should remain informed and consult with financial advisors to fully leverage these benefits while navigating any specific eligibility requirements. The Big Beautiful Bill marks a positive step forward, reinforcing the industry’s foundation and encouraging a vibrant, innovative future.

The Tipping Point

  Who qualifies for the new “no tax on tips” benefit? *

YES, RULE APPLIES:

If tips are customary, customer-provided and reported, these workers generally qualify.

•     Bartenders

•     Servers / waitstaff

•     Cocktail servers

•     Barbacks

•     Tipped food runners

•     Sommeliers / wine stewards

•     Counter service staff who receive tips

      •Food delivery drivers

•     Catering service staff

•     Event bartenders

•     Valet attendants

MAYBE RULE APPLIES:

Certain positions may qualify if tipping is regular and documented. If customers routinely tip and tips are tracked through payroll/POS, the role likely qualifies.

•     Brewery taproom staff

•     Tasting room hosts

•     Coffee baristas

•     Food truck operators (employees, not owners)

•     Tour guides (brewery/distillery tours)

NO RULE APPLIES:

•     Owners and partners

•     Salaried managers (even if they receive tip-outs)

•     Back-of-house staff unless tips are truly customary

•     Any role where “tips” are really bonuses or service charges

Important:  Mandatory service charges are NOT tips under IRS rules and do not qualify.

*This is just a general guideline. Visit the irs.gov page for complete guidance and clarification on this topic.

  Raj Tulshan is founder and managing partner of Loan Mantra, connect at Raj@loanmantra.com or on Linked-in at https://www.linkedin.com/in/tulshan/.

Sustainability or Survival?

Cyndi

When wastewater projects actually pay for themselves

a wastewater treatment plan processing the waster water in a brewery

By Frances Tietje Wang

As the beverage industry moves further into an era of necessary efficiency to accommodate skyrocketing costs, wastewater management cannot be an overlooked utility function. Aging municipal infrastructure, rising treatment costs, and stricter enforcement of industrial pretreatment requirements have pushed utilities to the forefront of operational and financial concerns. Under the U.S. Environmental Protection Agency’s (EPA) National Pretreatment Program, facilities exceeding domestic-strength benchmarks for biochemical oxygen demand (BOD), total suspended solids (TSS), or allowable pH ranges may face surcharges, permit modifications, or enforcement actions.

  This regulatory pressure coincides with broader business expectations. Wastewater performance now sits at the intersection of financial risk, regulatory compliance, and sustainability reporting. As production varies and the market remains unpredictable with cost pressure and uncertainty, sewer bills continue to fluctuate, impacting overhead costs and future planning. Compliance failures can delay expansions, harm government relations, and/or require capital upgrades under compressed timelines. At the same time, water and wastewater metrics are now standard components of sustainability benchmarking and ESG (environmental, social, governance) disclosures in the brewing sector.

  As a result, wastewater investments are no longer evaluated primarily as environmental gestures. The strategic question has become whether a given project delivers measurable return on investment (ROI) and protects long-term operational viability.

Defining “Payback” in Wastewater Projects

  In beverage production, payback extends beyond a simple comparison of capital expenditure (capex) and operating expense (opex). Direct savings commonly include reduced BOD and TSS surcharges, avoiding penalties for noncompliance, and lower costs associated with chemical neutralization or off-site hauling. These kinds of savings align with municipal cost-recovery frameworks, which are embedded in federal pretreatment regulations 40 CFR Part 403, which is designed to prevent interference with publicly owned treatment works.

“Wastewater investments are no longer evaluated primarily as environmental gestures. The strategic question has become whether a given project delivers measurable return on investment (ROI) and protects long-term operational viability.”

  Indirect value is often more consequential.  Stable wastewater systems can reduce unplanned downtime, protect discharge permits, and preserve expansion capacity. In fact, research has shown that wastewater constraints frequently become limiting factors for brewery growth before brewhouse or fermentation capacity is exhausted.

  Across utility data and academic literature, payback timelines cluster by project type. Pretreatment, solids capture, and flow-equalization projects commonly can achieve ROI payback within 1 to 3 years, whereas anaerobic digestion and water reuse systems often require 3 to 7 years. These all depend on scale, incentives, and local rate structures.

High-ROI Wastewater Projects Breweries and Distilleries Are Actually Using

Solids Capture and Flow Equalization: Upstream solids capture combined with flow equalization remains one of the most reliable ROI drivers in brewery and distillery wastewater management. Methods such as screening, settling, and rotary drum filtration reduce TSS loading before wastewater reaches municipal systems. This results directly in lowering surcharge exposure and downstream treatment demand.

  Flow equalization further improves economics in smoothing short-duration load spikes associated with cleaning-in-place (CIP), yeast removal, or batch discharges. EPA guidance emphasizes that stabilizing hydraulic and organic loading often provides greater compliance benefit than adding downstream treatment capacity, particularly for batch-driven industries such as brewing and distilling (EPA, 2000).

  This approach is reflected in brewery practice, as at Sierra Nevada Brewing Co., which documents wastewater treatment and solids management as integral components of its sustainability strategy. At the facility in Mills River, North Carolina, wastewater treatment infrastructure is embedded into site design rather than treated as an afterthought.

pH Neutralization and Smart CIP Controls: pH excursions remain among the most common enforcement triggers in municipal pretreatment programs. Extreme pH changes can inhibit biological treatment and damage sewer infrastructure. By using methods such as automated pH neutralization, conductivity-based diversion, and smart CIP controls, it is possible to reduce reliance on operator intervention and lower the likelihood of violations.

  Scholarly reviews consistently describe brewery wastewater as highly variable, driven by batch operations, product losses, and cleaning cycles. The best option for managing these sources is in upstream practices, which is often more effective than relying solely on end-of-pipe corrections.  Industry guidance reinforces optimizing sanitation chemistry and discharge timing, some of the most cost-effective wastewater interventions available.

Anaerobic Digestion (When It Makes Sense)

  Anaerobic digestion (AD) can deliver strong returns when organic loading is sufficiently high and consistent. The U.S. Department of Energy identifies beverage production as a sector with meaningful biogas potential, in particular where waste streams are concentrated and predictable.

  New Belgium Brewing is a well-documented example of anaerobic digestion. Trade engineering publications and supplier case studies describe how the brewery integrates anaerobic wastewater treatment and biogas recovery. In combining these two methods, the organic load is reduced while generating renewable energy, supporting both environmental performance and long-term cost control.

  Distilleries, which typically generate higher-strength effluent than breweries, often reach economic thresholds for AD more readily. Breweries may achieve viability at larger scales or through co-digestion strategies, but it is important to note that the literature says that AD economics depend on operational discipline, energy pricing, and access to incentives.

Water Reuse and Process Water Reduction

  Water reuse strategies, such as rinse recovery or reuse for non-product-contact utilities, can reduce both freshwater intake and wastewater discharge. The EPA’s Water Reuse Action Plan emphasizes “fit-for-purpose” treatment. The Plan discusses matching reclaimed water quality to its intended application rather than defaulting to over-treatment.

  Eel River Brewing Company is an excellent example of how small breweries have implemented reuse-adjacent strategies without complete reuse systems.

  By incorporating pretreatment infrastructure to reduce municipal impact and comply with discharge permitting requirements documented in municipal engineering analyses, the brewery illustrates how wastewater investment can scale to smaller producers when aligned with operational needs.

  Economic analyses indicate that reuse projects are most viable in regions with high water and sewer rates or where discharge capacity is constrained, and when integrated into broader water-efficiency programs rather than pursued in isolation.

Grants, Incentives, and Financing: The Hidden ROI Multiplier

  Technically sound wastewater projects proceeding are often determined by grants or low-interest financing if capital costs exceed internal investment thresholds. In the United States, the Clean Water State Revolving Fund (CWSRF) remains the primary financing mechanism for wastewater infrastructure, including eligible pretreatment and reuse projects.

  Energy recovery projects may qualify for additional incentives through state or utility programs. The Database of State Incentives for Renewables & Efficiency (DSIRE) is widely used to identify applicable funding opportunities and rebates.

  Producers who successfully secure funding tend to align wastewater projects with municipal objectives, such as reducing peak loading or deferring treatment plant expansion, rather than aspirational narratives. They may also use support applications with documented monitoring data rather than aspirational sustainability narratives.

Case Study Patterns: Making the Math Work, Not Waste

  Across scholarly literature and industry documentation, three recurring patterns emerge:

1.    Breweries implement solids capture and equalization, which consistently reduce surcharge exposure by stabilizing discharge characteristics.

2.   Distilleries and large breweries integrate anaerobic digestion with energy recovery. AD can offset both wastewater and energy costs when scale and incentives align.

3.   Mid-size producers leveraging CWSRF financing and state incentives frequently offsetting 30–50% of capital costs, bringing payback into acceptable ranges.

  In layering strategies, there is an opportunity for immediate and long-term cost savings.

Wastewater as Strategic Infrastructure

  Wastewater management has evolved from a compliance cost into strategic infrastructure. Breweries and distilleries that invest in the fundamentals of solids capture, equalization, smart controls, and right-sized recovery systems can reduce financial volatility, strengthen regulatory standing, and preserve growth capacity. As scrutiny tightens and costs rise, wastewater planning is no longer optional sustainability branding; it is a survival strategy for an operational reality.

Resources

 Fillaudeau, L., Blanpain-Avet, P., & Daufin, G. (2006). Water, wastewater and waste management in brewing industries. Journal of Cleaner Production, 14(5), 463–471. https://doi.org/10.1016/j.jclepro.2005.01.002

Sierra Nevada Brewing Co. (n.d.-a). Sustainability. https://sierranevada.com/sustainability

Have You Considered Co-packing?

Cyndi

How to fast track your new spirits brand

a bottle of Velocity spirits

By Kris Bohm, Distillery Now Consulting

The spirits industry is growing and this growth has enticed newcomers to enter the industry and start unique brands. Starting a new beverage alcohol business and entering the industry is challenging, to say the least. There are regulatory, financial, and technical hurdles that make starting a new alcohol beverage brand complex and challenging. Starting a new business takes an immense amount of time and more money than most people expect. Even if you spend many hours budgeting and planning to build a distillery it will likely take longer, and cost more than you thought. An aspect of a successful brand that is overlooked and underappreciated is that high-quality brands spend a great deal of energy on marketing their products. There is a faster and cheaper way to start a new brand you may not be aware of. The path to a quick start up is called co-packing. Co-packing puts the strain, stress and capital expense of production equipment on someone else and lets a new brand focus time and money on marketing and promoting the brand.This article will cover how co-packing works and weigh the pros and cons of launching with a co-packer.

  The common path we see taken to starting a new spirits company is by building a business that manages all aspects of manufacturing and sales. While managing everything from start to finish is a noble goal, it is also expensive. When you manage production, packaging, warehousing, marketing, sales, and even distribution it is easy to flounder in the complexity of such a business. For a new entrant to the industry, learning all these aspects of business and succeeding at them is a huge challenge. The faster and cheaper way to launch a new beverage alcohol business is with a co-packer. This is done by working with an existing manufacturer who will make your product for you. By outsourcing the production of your product, you can focus on the two critical aspects of a beverage alcohol business which are sales and marketing.

  Co-packing in simplified terms is outsourcing the manufacturing of your product. In a broad sense a co-packer is a group or facility that produces beverages and offers services to manufacture products for other brands that are not their own. A co-packer can be contracted to manufacture and produce your product for you. Whether you want to make bottled whiskey or  canned vodka soda, any sort of beverage alcohol can be produced by a co-packer. Co-packers can package distilled spirits, ready to drink cocktails, liqueurs or nearly anything else you can imagine.

Why spend years building a distillery when a co-packer can produce a product in months?

  There is far less capital outlay needed when working with a co-packer as you do not need to buy specialized equipment for bottling and then also learn how to operate it. By removing the capital-intensive aspects of manufacturing a product, the owners of a new brand will have more time to focus on selling their product. You can create a product and bring it to market quickly when the co-packer does the manufacturing for you. A good co-packer will help you avoid mistakes and manufacture your product ready to sell. Let’s explore the process step by step you take to bring a new brand of whiskey to the market with help from a co-packer.

12 simple steps to creating your own bottles of whiskey

•    The first step toward creating a product is to decide what you want to make.

•    Find yourself a company (co-packer) who will make the product for you

•    Talk with the co-packer to understand the constraints and limitations of their equipment

•    Select packaging that works and fits your brand and your copacker’s equipment

•    Sign a contract with your co-packer and start putting the pieces together.

•    Design the brand, logos, names, artwork, labels, and bottle selection. (have a pro help you)

•    Take a break and enjoy a tasty cocktail

•    While you are stopping for a refreshment, select the whiskey that will go in your bottle

•    Navigate federal and state approval process (your co-packer should handle this)

•    Order and secure raw materials so your co-packer can manufacture the product.

•    Co-packer will bottle and package the whiskey

•    Launch your brand.

  Just like that you have created your very own brand of whiskey that is ready for its debut. A co-packer usually has a minimum order quantity and will likely produce at least a few hundred cases of bottled spirits. When the copacker is done packaging the product you will now have several pallets of whiskey that are ready to sell. While the simple 12 steps all sound straight forward, there are many critical aspects of work underneath this list. Behind every step there are decisions, details, licenses and permits that are required prior to the product being produced. Let’s dive a bit deeper into these critical decisions and how best to work through them.

  The liquid in the bottle must taste good but more important than the whiskey is the brand itself. Creating a professional looking package takes experience and extensive design. There is much more to design than just selecting a bottle shape. You will need to create a brand with logos, label artwork, and many other design elements. Unless you have experience in branding and marketing beverage alcohol, the creation of a new brand is best managed by experienced professionals. Your product must have a polished look and feel for it to succeed. The way your product looks is the biggest opportunity you’ll get to sway consumers to consider tasting the product. If you take a moment the next time you are in your local liquor store you will likely find a few bottles that do not look professional or polished. These not-so-great looking bottles are often created when someone starts a new spirits company without design professionals on their team with alcohol branding and design experience. Hiring a professional designer is a worthwhile investment to help your brand put its best foot forward.

  There are an abundance of distilleries that will sell you their spirits in bulk that can be packaged up into your own brand. Whether it’s Tequila, Vodka, or Bourbon Whiskey, all types of spirits can be bought in bulk. There are a few licenses and permits needed to buy barrels of whiskey, but those are easy to secure with the guidance of an industry professional. Taking the time to taste a variety of spirits will guide you to find the right whiskey for your brand. It is also important to look closely at the cost of the whiskey you are considering purchasing. The whiskey cost will impact what you will charge for your bottle and how much profit you will see.

  While I believe that co-packing your first products is the smart path to launch a brand, some folks would argue that co-packing is not the best choice. Let’s weigh the pros and cons of co-packing to consider it from both angles.

  What is the good side of collaborating with a co-packer? It takes extensive time and financial resources to launch a brand. A generous amount of time and money needed for a brand to launch successfully must be allocated to marketing and sales. This is essential to get a product onto store shelves and people buying the product. Co-packing affords a new brand the chance to conserve money, time and energy that would otherwise be put into manufacturing and direct that energy into selling the product. Co-packing affords a new entrant into beverage alcohol the space and time to learn the nuances of the business with much less overhead cost. Mistakes are not cheap to make and having a co-packer oversee the production work of your product ensures that you will make less mistakes when it comes to making and packaging the product. The largest advantage of not producing your own product is that you do not have to carry the high overhead of funding and operating a manufacturing facility.

  Now it’s time to talk about the bad part of Co-packing. Plain and simple.It is expensive. Co-packers mark up the cost of their service to cover their costs of overhead, labor to, of course, make a profit. When working with a co-packing company, you pay a premium for them to manufacture your product. It will cost more per unit to produce a product with a co-packer than it would if you manufactured the product yourself. Some folks do not like working with co-packers as they find there is a lack of control. When a co-packer is making your product, you will not have direct control over every aspect of the manufacturing process. A key step to reducing the risk of quality control issues is collaborating with your co-packer to define their production standards. A good co-packer will define their quality standards in their manufacturing process and track it to make a product cleanly and correctly. One other potential downside to co-packing is the lack of a store front. Most brands launched via a co-packer do not have a tasting room or cocktail lounge to serve drinks and sell bottles. Selling products made via a co-packer will require wide distribution which has smaller margins when compared to direct-to-consumer sales.

  It can be hard to decide what is the right way to create and launch a new product. Many factors must be taken into consideration to make an informed decision. While co-packing is perfect and cost effective for some it can be a bad fit for others. A distillery consultant or person with extensive industry experience is the best way to make an informed decision on how to launch your brand. Creating a new product and selling it can be a challenging and rewarding business endeavor. Launching a product the right way and finding success will make the creation of your product much more rewarding.

  Kris Bohm is from Distillery Now Consulting. When Bohm is not helping new distilleries launch you can find him defending his beer mile record and exploring the world by bicycle.

Core Brewing & Distillation System Components

Cyndi

The basic components & systems are similar, they both start with some version of grain or neutral grain spirit handling

photo shows a copper still next to mash tanks in a distillery or brewery

By Gerald Dlubala

Whether you choose copper, brass, stainless steel, or another alloy, understanding the details, quirks, and ins and outs of your production systems is critical to running a successful brewery or distillery. A general understanding of the core brewing and distilling components of your craft beverage production facility leads to better-quality, consistently replicated products. That replication and consistency of a quality product help to build customer following and trust.

Core Brewing Components

•     Grain Storage Area: If the beverage producer grows its own grain, storage silos may be needed. If purchased in bulk, a designated grain storage area is required.

•     Grain Mill:  Brewers will need a milling station to mill the grain to fit the recipe required for the beer they are brewing that day. The grain is crushed and sent to the Mash Tun.

•     Mash/Lauter Tun:  Crushed grain gets mixed with hot water and allowed to rest, ensuring the starches are broken down into sugars by the natural enzymes. By controlling temperature and time, the mash and lauter tun convert grain starches into fermentable sugars, which can directly affect your beer’s final body and brewing efficiency. The resulting liquid, or wort, is separated from the mash and spent grain and pumped over to the brewing kettle.

•     Brewing Kettle:  Once the wort is pumped into the brewing kettle, it gets boiled to concentrate flavor, sterilize the liquid, and develop color. The brewing kettle stage is where the beer develops its character, bitterness, taste, and aroma profile through the addition of hops at various times and combinations. Once completed, the flavored wort is sent to a heat exchanger.

•     Heat exchanger:  The hopped wort is sent to a heat exchanger/cooler to cool and take on oxygen in preparation for delivery to the fermentation tanks.

•     Fermentation tanks:  Once in the fermentation tanks, yeast is added to start the magical fermentation process, converting the sugars in the wort mixture to alcohol and CO2.

•     Cooling and Filtration:  After the proper amount of fermentation time and the removal of excess yeast, the beer is chilled in conditioning tanks to mature before moving through the filtration system. Filtration can be minimal or multi-phase, depending on the style and desired finish or polish level the brewer is after. From here, that perfectly brewed beer is ready to be consumed and can be moved to a brite tank to await packaging.

•     Packaging System:  Depending on the choices of the brewer, the beer is ready to be packaged in bottles, cans, or kegs for distribution, retail sales, or taproom sales.

Core Distillery Components

  Distillery systems are like brewing systems in that the distiller has a choice about what the system should look like. Distillers who want to show off the production area may opt for the wow factor of large copper or brass stills, while those with production facilities out of public view may choose stainless steel to help keep costs down. Additionally, although some distillers grow their own grain, most craft distilleries do not. They purchase their grain for crushing or buy neutral grain spirits for their own use.

•     Grain Cookers:  Cookers are needed to cook the grains and turn the starches into sugar to feed the yeast.

•     Fermenters:  Fermenters are the vessels where yeast is added to ferment sugars and produce the first “distiller’s beer” before it heads to the still. The type of still is the distiller’s choice.

•     Pot Still: The pot still is a single large kettle-shaped vessel in which the fermented liquid, or “wash,” is heated. It is the original method of distilling. Pot stills can be customized for optimal performance in distilleries ranging from small craft operations to larger commercial producers.

•     Continuous Column Still: Distilling using a column still can speed up the distillation process. The wash is continuously injected into the column with rising steam, stripping the alcohol, and leaving the undesired, or bad, compounds behind. Column stills require less cleaning while allowing more columns to be added when needed. Repeated distillation in column stills yields more neutral, higher-ABV spirits than pot stilling. Additionally, column stills can offer greater control and consistency in high-volume production facilities.

•     Hybrid Still:  Hybrid stills combine the best qualities of both pot and column stills into a single unit, used for distilling all spirits.

Needs Versus Wants

  Rick Morris is the Owner and President of Brewhaus Distilling Experts in Keller, Texas. Brewhaus is the oldest manufacturer of small-scale distilling equipment and supplies in North America. They manufacture, cut, weld, and test all their systems in-house.

  While Morris hasn’t seen any significant trends in systems over the past 10-15 years, he has some thoughts on systems and what commercial distillers should consider before buying or updating their core production equipment.

  “Multiple smaller systems can be better,” said Morris. “Depending on what a distiller wants to do, I’ve had startups with as little as a one-gallon pot still and then added another and another until they had about eight of them lined up. It’s one way to keep costs down at startup. In general, it can be beneficial to use a couple of smaller systems rather than one large one. Yeah, you’re monitoring two systems instead of one, but redundancy isn’t a bad thing when you consider downtime. If one system breaks or needs to be down for cleaning, you’re not down, just reduced, and that can be huge for a small craft distiller.”

  “We’ve also had distillers use 55- or 85-gallon drums and put multi heads on them”, said Morris. “They cap the heads they don’t need, and as capacity increases, they open those heads up for use. If they only want to use two heads to start, we can set it up for four and cap two. It allows a distiller to scale up when needed. You don’t want to jump into a quarter-million setup on startup if you can avoid it, especially as volatile as the liquor market is right now.”

  Morris says that budget and space requirements always factor in which system components a distiller chooses. “A larger system means more warehouse space,” said Morris. “Typically, the systems we provide craft distillers are basic and not as computerized as larger systems. That means less breaking down. But if, say, a heater goes out, that’s where the idea of two smaller systems can help. Reduced capacity over complete downtime is huge for a small producer.”

a copper still in a distillery

  Morris tells Beverage Master Magazine that frequently potential distillers get caught up in seeing those massive, beautiful copper Vendome systems that run a quarter- to half-million dollars and become obsessed with them. When he sits down and looks at their needs, he can often put together a system for them for under ten thousand dollars.

  “We all like to drool over the copper eye candy, but what is needed is usually not aligned with that vision,” said Morris. “If that money is truly in their budget, that’s great, and they can save the money for when growth occurs. Just don’t jump into the deep end immediately because it looks great behind the tasting room glass. You can buy a 4-inch copper system with copper plates, or a 4-inch stainless column with copper plates, and they will do the exact same thing, function the exact same way, and produce the exact same quality product because you have the same copper in both systems. But wanting everything in copper will be 60-70% more expensive. If you have copper in the vapor path, you are good with either system.”

  Morris says he hasn’t seen a meaningful change in system choice, but they are being tailored specifically to the distillery’s projected needs. “It’s a way to keep costs down upfront,” said Morris. “Is this a full-time distillery or weekends only? How many hours of running time will the system be in use? Get the system you need and maybe get a little larger kettle upfront. That’s a small expense, and you can set it up for a couple of 3-inch systems. Then, scaling up may be as easy as replacing those columns with 4-inch systems. You’re replacing the column but not needing to replace the entire system. Choices like that enable cheaper scaling later. The initial smaller columns can be tuned a little more for smaller volumes, while the larger columns don’t manage smaller volumes as well.”

The Future: More Fads Rather Than Trends

  Morris says that rather than trends, they notice little fads that come and go. Trying to speed up the aging process is a big one because of the cost involved.

  “The product sits in barrels for so long,” said Morris. “You’ve got the barrel cost, the product cost, and the warehouse storage space cost, along with the extended length of time involved. There’s been a lot of movement and potential technology over the years trying to speed up that process. We see things spike as the next wonderful thing, and then six months later, they’re gone. All the different flavor profiling is big as well. The NA market is increasing, but that doesn’t change the distilling process. It’s the same process, separating the bads from the goods.”

  Morris said that the type of brewing or distillation system a craft beverage producer really needs depends on the quantity and type of products being produced, as well as the owners’ future production and expansion plans. The Brewhaus team encourages makers to adopt a system that, instead of being replaced, can be adapted for a fraction of the cost when needed for volume or product expansion.