Intellectual Property for Beverage Manufacturers

By: Brian D. Kaider, Esq.

While many people are familiar with the four main types of intellectual property: patents, copyrights, trademarks, and trade secrets, often they don’t know the distinctions between them or what they are meant to protect.  This article is meant to cut through the confusion and explain these distinctions and how each property right applies to the beverage industry.

Patents Protect Ideas – sort of

  Most people have a general understanding that a patent protects an “invention” or an idea.  In a very general sense, that’s true.  But, even though the Congressional authority to grant patent rights comes directly from the U.S. Constitution (Article 1, Section 8, Clause 8), exactly what is patentable is the subject of tremendous confusion among the U.S. population, examiners at the U.S. Patent and Trademark Office, lawyers, and even judges; sometimes requiring clarification from the U.S. Supreme Court.  The purpose behind the grant of a patent is to encourage innovation by granting exclusive rights to one’s discoveries for a limited time.  In other words, it gives the patent holder a short-term (20 years from the date of filing) monopoly on his invention.  Generally, new machines, chemicals, electronics, methods of production, and in some cases, methods of doing business, are eligible for patent protection.

  But, not all ideas are patentable.  In fact, ideas alone cannot be patented.  They must first be “reduced to practice,” meaning that either you must have actually created your invention or have described it in sufficient detail that someone skilled in that area could follow your disclosure and create it themselves.  So, you can’t get a patent on a time machine, because (at least for now) no one has figured out how to defy the time-space continuum.  In addition, to be patentable, ideas must be novel, meaning that no one else has ever disclosed that idea before, and non-obvious, meaning that your idea cannot be an obvious variant on someone else’s invention.

  Given that humans have been making beer for thousands of years, one might think that coming up with something novel in the brewing process would be impossible.  Not so.  In preparation for this article, I ran a quick search of patents containing the word “beer” in the title and got 491 hits.  Some recent examples include U.S. Patent No. 10,570,357 – “In-line detection of chemical compounds in beer,” U.S. Patent No. 10,550,358 – Method of producing beer having a tailored flavor profile,”  and U.S. Patent No. 10,400,200 – Filter arrangement with false bottom for beer-brewing system.” 

  Improvements in any area of the alcoholic beverage industry may be patentable including, new types of bottles, cans, growlers, and kegs; new types of closures and caps; improved methods of separating hops from bines and leaves; new processing equipment, improved testing procedures and equipment, improved packaging, etc.  Essentially, anything that lowers costs between the farm and the consumer, improves the quality of the beverage, or enhances the consumer experience is worth considering for patent protection.

  One word of caution, however; time is of the essence.  The America Invents Act, effective March 16, 2013, brought the U.S. in line with most other countries in being a “first to file” system, meaning if two people develop the same invention, the first to file for patent protection wins, regardless of who first came up with the idea.  Also, any public disclosure of your idea (such as at a trade show) starts a 1-year clock to file or you may lose your eligibility for patent protection.

Copyrights Protect Creative Works

  The authority for copyright protection stems from the same section of the U.S. Constitution as patent protection, discussed above.  Our founding fathers recognized the valuable contribution made to society by authors and artists and, therefore, sought to encourage creative expression by providing protection for artistic works.  Examples of copyrightable materials include, books, paintings, sculptures, musical compositions, and photographs.

  Unlike inventive ideas, which are only protected when the government issues a patent to the inventor, copyrights attach at the moment the artistic work is “fixed” in a tangible medium.  So, for example, if a composer develops a new musical score in her head it isn’t protected, but the moment she translates that tune to notes on a page or computer screen, it becomes protected by copyright.  In order to enforce that copyright in court, however, it must be registered with the U.S. Copyright Office.  While it is possible to wait until an infringer comes along before filing for registration, doing so can severely limit the damages that may be available to the author of the creative work.  So, early registration is the better course. 

  In the beverage industry, copyright issues often crop up with regard to labels and advertising materials.  But often disputes arise relating to who owns the artwork contained within a label, for example.  Generally, the author of a work owns the copyright.  But, if an employee of a brewery, acting within the scope of their employment, creates an image that the brewery owner incorporates into its labels, that picture is considered a “work made for hire” and is owned by the brewery.  Where disputes often arise, however, is if the brewery hires an outside artist or a branding agency to develop the artwork.  In that case, the brewery should include language in its contract requiring assignment of all copyrights to the brewery for the created artistic works.  The same would apply for any artwork commissioned for use inside the brewery tasting room or for marketing materials.

Trademarks Protect “Source Identifiers”

  People generally associate trademarks with the protection of a brand.  In fact, I have often described trademarks as an “insurance policy for your brand.”  But, in more technical terms, what a trademark protects is a “source identifier.”  The purpose of trademark law is to protect consumers from being misled or mistaken as to the source of a product.  So, for example, if a consumer sees a pair of shoes with a certain famous “swoosh” image on the side, they should be reasonably able to assume that pair of shoes was manufactured by Nike, Inc. and was made with the same degree of workmanship and quality that they have come to expect from that company.  That “swoosh” symbol, therefore, acts as a source identifier to tell the public that the product was made by Nike, Inc. 

  What may function as a trademark can be quite broad, including: the name of the business (e.g., Triple Nickle Distillery®), a logo (e.g., the “swoosh”), a color (e.g., the Home Depot orange or the UPS brown), even a scent (e.g., Verizon owns a trademark on a “flowery musk scent” it pumps into its stores to help distinguish them from competitors’ environments).  Not everything can be trademarked, however.  Slogans, words, and images that appear merely as decoration as opposed to a means of identifying the supplier will not qualify for protection unless the applicant can demonstrate that the item has achieved “secondary meaning,” i.e., that the public has come to associate that item with the manufacturer.  As an example, in the 1970’s McDonalds used the slogan, “You deserve a break today” in its commercials and other advertising.  People came to associate this phrase with McDonalds and in 1973 they were granted a trademark registration.  Incidentally, McDonalds briefly let this trademark go abandoned in 2014, but quickly re-filed and the mark is still active today, more than 45 years after it first registered.

  In general, marks also cannot be descriptive of the product or geographically descriptive of the source in order to be registered as a trademark.  For example, one could not obtain a registration for just the words “India Pale Ale.,” because it simply describes the product and does nothing to differentiate it from every other IPA on the market.  Similarly, an attempt in 2019 to register the name “Philly City Brewery” was refused as “primarily geographically descriptive,” because the applicant could not demonstrate that people had come to associate that name with its business as opposed to the many other breweries in Philadelphia. 

Trade Secrets Protect Valuable Confidential Business Information

  Unlike other forms of intellectual property, there is no registration system for trade secrets, because, by their very nature, they must be protected from all unnecessary disclosure.  Trade secrets can be just about anything that is confidential to your business and gives you a competitive advantage.  Some examples, include recipes, client lists, manufacturing processes, marketing plans, and client lists.  These are things that, if publicly disclosed, would harm the competitive position of the company and, therefore, must be vigorously protected. 

  One of the most famous trade secrets is the formula for Coca-Cola.  This formula has been protected for more than 130 years, sometimes through extraordinary measures.  In 1977, The Coca Cola Company withdrew its product from India, because in order to sell there, they would have had to disclose the formula to the government.  They decided it was more prudent to forego sales to one of the biggest populations on earth rather than risk disclosure of their secret recipe.

  Protecting trade secrets requires constant vigilance in two ways.  First, the information should only be disseminated to people within the company, or outside consultants, who need the information in order to perform their duties for the company.  In other words, the information is on a strictly “need-to-know” basis.  Second, those few people who are given access, should sign non-disclosure agreements with harsh penalties for breach of their duty of confidentiality.  Once the information gets out, it’s nearly impossible to un-ring that bell, so there must be severe financial consequences to someone who leaks the information.

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

For more information please contact Brian Kaider at…
240-308-8032; BKAIDER@KAIDERLAW.COM; www.KaiderLaw.com

Empowered Makers, Spirited Women

By: Tracey L. Kelley

In the spirits world, female master blenders and head distillers are creating more buzz than ever, not simply for being “the first” but for their positions as innovative navigators of taste, brand and industry.

  With this angle in mind, we reached out to a few notable makers who could share valuable insight to help propel your efforts. We asked all of them three questions:

1.   What are you most proud of regarding your craft?

2.   What’s the top lesson you’ve learned as a businessperson/distiller?

3.   What advice would you give women entering the industry?

  Here’s what they shared with Beverage Master Magazine.

Connie Baker—Head Distiller and Queen Bee—Marble Distilling Co. 

  A former pharmaceutical sales consultant, eco-minded Baker went to distilling school in 2010. She now leads a family- and friends-owned and operated business in Carbondale, Colorado, that includes the distillery, two bars and an inn. Maintaining local sustainability is important: her grains, water, and filtering marble are all sourced in the state.

  Signature Spirits: Moonlight Expresso, Gingercello, Vodka 80°

1.   Marble Distilling Co. has a first of its kind Water & Energy Thermal System (WETS) that reuses 100% of our process water and harvests the energy created through distillation, saving more than four million gallons of water and reusing 1.8 billion BTUs (20 homes) of energy annually. I’m proud that while we’re creating award-winning craft spirits, we’re being sustainable and thoughtful about the planet and natural resources. Water is our most precious resource in Colorado, so we’re doing everything we can to “drink sustainably” and “save the planet one bottle at a time.”

2.   Never give up, and believe in yourself and your craft: fear is failure, and work ethic is second-to-none.

3.   Do your homework—maybe even work for an existing distillery for a time. And don’t be intimidated by the fact that the distilling industry has been historically male-dominated. We women have great noses and palates, are thoughtful, creative and bring unique perspectives to a previously male-run industry.

Krystal Goulart—Head Distiller—Spirit Works Distillery

  Spirit Works Distillery owners Ashby and Timo Marshall celebrate female-driven innovation at this small distillery in Sebastopol, California, and give Goulart and her team plenty of opportunity to craft with skill and instinct. In July 2020, the American Distilling Institute named the organization Distillery of the Year and extended its Bubble Cap Award for diversity and community engagement.

Signature Spirits: Sloe Gin, Barrel Reserve Sloe Gin, Vodka, Four Grain Straight Bourbon

1.   First, an absolute trust in my palate, which is necessary when making “cuts” at the still, blending and product developing. Sensing subtle flavor and textural nuances within a run is what helps maintain a house profile as much as it also defines a distiller’s signature. Second, my ability to understand equipment and process timing so that I can develop efficient methods of working to increase speed and productivity. The best production hand is one who maintains speed with the least amount of movement.

2.   Being part of the craft distilling industry is, first and foremost, a passion play. The goal is to provide an environment of inspiration, education and exploration so you can stand together on new frontiers. Though deadlines and malfunctioning equipment might get in the way, cultivating employee and client relationships creates a robust team that can withstand any challenge.

3.   Learn all aspects of the business, from pressure-washing drains to making cocktails. Share respect and value with your team members, your production space and the products you make. Embrace opportunities for future growth or change. Be fearless in the face of challenge, enjoy the ride and embrace your personal evolution.

Becky Harris—Co-Founder and Chief Distiller—Catoctin Creek Distillery

  Harris, a former chemical engineer, formed Catoctin Creek in Purcellville, Virginia, with husband Scott, in 2009. Considered Virginia’s “Most Awarded Spirits,” Harris celebrates her state’s heritage and history through many aspects of the brand and produces a vibrant private single cask expression program.

  Signature Spirits: Roundhouse Rye, Rabble Rouser Bottled in Bond, 1757 Virginia Brandy XO

1.   I’m incredibly proud of how our vision and product have matured in the past several years. Catoctin Creek has always been grain-to-glass, but we have really leaned into our identity as the Virginia Rye Whisky, incorporating the regional grain, terroir and even wood to highlight our primary and unique focus on 100% rye mashbill whiskies. It sounds simple, but really learning who you are as a company is an evolution.

2.   As a chemical engineer, I always appreciated the technical challenges and achievement of making delicious whisky. Over the past 11 years, I’ve grown to appreciate the visual and story aspects of this business. Engaging more on the marketing aspects of what we do has not only improved my communication skills but also made me more confident as a founder and leader in a business that I entered in my 40s.

3.   I would recommend this to everyone: join one of the professional organizations available to you—volunteer to serve. You’ll gain knowledge, friendships and a better understanding of the industry and the best ways to navigate it for your company, your employees and even yourself.

Lein and Michelle Ly—Co-Founders and Head Distiller—Vinn Distillery

  Seven generations of the Ly family have crafted Baijiu, a 4,000-year-old Chinese rice liquor. In 2009, Phan Ly and wife, Kim Trinh, started Vinn Distillery in Portland, Oregon, to carry on this “white liquor” tradition in the United States. Today, five Ly siblings share various operational roles, with Lein as head distiller and sister Michelle handling sales and marketing.

  Signature Spirits: Vinn Baijiu, Baijiu Family Reserve, Whiskey, Vodka

1.   We’re most proud that we make everything from scratch using our family’s traditional methods, and to introduce one of the oldest and most-consumed spirits in the world to the general market here in the U.S. Using non-GMO rice products, we were the first to produce Baijiu, a rice vodka, a rice whiskey, and flavored Baijiu in America.

2.   The top lesson we’ve learned is that introducing something different, like Baijiu, to the market, is extremely difficult. Every sale requires an explanation of what the product is and how to consume it.

3.   My advice would be to have a target audience in mind, find a niche and dominate it.

Julie Shore and Arla Johnson—Co-Founders and Head Distiller—Halifax Distilling Company

  Business and life partners Shore, a former dental hygienist, and Johnson, a counselor, previously owned and operated Prince Edward Distillery, home of Canada’s first potato vodka, before launching Halifax Distilling Company in Nova Scotia in 2016. Shore, a fourth-generation distiller, now focuses on a Maritimes favorite, rum.

  Signature Spirits: J.D. Shore Rum Cream, Black Rum, Gold Rum

1.   I love creating and visiting other distilleries to taste their creations. It’s so exciting! This industry has grown so much since we first distilled in 2008. It has brought such awareness to the public and gained much support! This is no small feat when the big conglomerates dominate the industry—to be able to carve out a piece from them is a very proud feeling!

2.   As a businesswoman, I’m still learning. Seems we learn everything the hard way! I think the top lesson that I’ve stumbled across is I try to be a real part of my community—and not just for the social media posts either. We want to help out when we can. If someone asks us for something, we really want to be there for them. Johnson adds: “’No’ does not mean no—you have to push back.”

3.   Follow your dream, and don’t take anyone’s shit! Seriously, there are folks who will get in your way—don’t waste time with them. Figure out how to get it done without them. If—and this will happen, too—you have to work with them, swallow hard and compliment the hell out of them. These folks trying their best to prevent you from succeeding typically have huge egos, and complimenting them really works. Just try not to sound sarcastic. Johnson adds: “You have to have passion and tenacity. You have to push through the challenges.”

Joy Spence—Master Blender—Appleton Estate Jamaica Rum

  The grand dame of master blending, chemist Spence has spent nearly 40 years crafting Appleton Estate’s centuries’ old tradition for the modern age—first working with the master blender, then assuming that role in 1997. Along with creating special blends for presidents and princes, she mentors Nassau Valley high school students in chemistry. 

  Signature Spirits: Appleton Estate Signature Jamaica Rum, 12-Year-Old Rare Casks Jamaica Rum, 8-Year-Old Reserve Jamaica Rum

1.   As a master blender responsible for the legacy of our rum, I’m most proud of the several limited-time releases that we have introduced, such as the Appleton Estate 50-Year-Old, the Appleton Estate 30-Year-Old and the Appleton Estate Joy Anniversary 25-Year-Old. These offerings have created greater focus on the premium quality of the Appleton Estate range while showcasing the depth of very old rums in our inventory.

2.   During my career, the top lesson I have learned as a master blender is that every failure leads to an improvement, and being pragmatic is a key success factor.

3.   My advice to any woman entering the industry is to focus on your craft and not your gender. Become an expert in your field and pass on your knowledge. It’s your passion, skill and creativity that will make you successful.

Chanel Turner—Creator— FOU-DRÉ Vodka

  Once a government contractor, Turner spent more than six months researching distilleries with the technology to produce the quality of crisp, clean vodka she wanted. Today, her “lightning” brand has robust Asian sales and a strong online market. She’s also the founder of the Black-Owned Spirit and Wine Festival in Washington, D.C.

  Signature Spirits: FOU-DRÉ Vodka

1.   I’m most proud that we’ve been able to sustain in an industry that sees many brands come and go. Looking back, I identified a problem that many can relate to, with vodka being a spirit that people tend to grow out of. At 25, I knew I wanted a “better experience” when consuming spirits without having to use sugary mixers. I realized I would have to source the right distillery to bring my vision to life. It took months of research, formula tests (87!) and market surveys to come up with the infused formula that’s found in a bottle of FOU-DRE today. We’ve not compromised the unique taste or exquisite packaging of FOU-DRE in any way—that truly makes me proud.

2.   I’ve learned to celebrate the small wins and appreciate the journey. The older I get, this matters more than ever before. Essentially, I’ve grown with the business, becoming a proprietor at such an early age. Outside of what it takes to build a spirit brand, I’ve learned patience!

3.   My advice would be to make the right alliances early on. Though we’re seeing more women come into this space, it’s still a male majority industry. So it’s important that we unify, join together and share moments of pains and progress. We can learn so much from one another and get ahead of the game by tapping into each other’s resources. When I first started, there was a small percentage of women owners/distillers in the industry. Even more disheartening, there was an absence of platforms for community-building and very little visibility for women in the field. We’ve come a very long way but still have far to go. I encourage women coming in the industry to network, network and network some more! Make your presence in the industry known. When one wins, it’s a win for us all.

Kaitlin Vandenbosch—Head Distiller/Brewmaster— Mill Street Brewery

  After earning a master’s in brewing and distilling at Heriot-Watt in Scotland, Vandenbosch started at Mill Street in Toronto in 2013, just when it was expanding into micro-distillation. She advanced in many management positions since then, helping Mill Street refine its line. In 2019, she became the organization’s brewmaster.

  Signature Spirits: Single Barrel Canadian Malt Whisky, Tankhouse Bierschnaps, Small Batch Gin

1.   There are two things I’m proud of: first, Mill Street brought distilling back to the Distillery District in 2013, and I was the first head distiller. Spirits hadn’t been distilled on-site since the mid-1980s! Second, during my time as head distiller, I set down two barrels of whisky. Since it was very small scale, I was able to take a lot of time and care with the recipe design, aging and blending. I am really happy with how both turned out (released in 2017 and 2018).

2.   It’s fairly technical, but one of the most useful skills that I learned from my former boss, Joel Manning, is benchtop trials. This comes in handy when determining flavor additions, final alcohol strengths, barrel blends, cocktail designs, and so on. It’s extremely useful to dial in on a small scale the flavor profile you’re aiming for and then adapt it to a larger scale.

3.         Network! I believe it’s really important, especially in craft distilling, to meet others in the industry or similar industries. There’s also a lot of overlap between brewing and distilling and wine/cider making and distilling. Similarly, it’s good to meet people who are the end-users of your product—bartenders and customers. Networking is a great way to share ideas, learn about events, ask questions and make connections.

All About Boiler Use in the Distillery

By: Alyssa L. Ochs

There are many different things to think about when operating a distillery. However, one often-overlooked detail is the distillery’s boiler and its quality, condition and features. There are various kinds of boilers available to craft distilleries today, which is why it’s a good idea to learn more about them and know what questions to ask before either buying your first boiler or upgrading your current one.

The Importance of Distillery Boilers

  Boilers are used in distilleries to heat the kettle, for sanitation and sterilization, for pasteurized heating, to maintain precise temperatures and to meet production demands efficiently. Boilers are essential in the distilling process because making spirits requires hot water to be at specific temperatures, and a boiler helps the distiller control temperatures. The ability to control this heat improves the quality of the spirit and ensures the distiller’s safety.

  Boilers create high-quality steam that impacts a spirit’s taste and are commonly used to sanitize and sterilize distilling equipment. In some instances, boilers can even help control a distillery’s air temperature where tastings and tours take place.

Boiler Types

  Modern water tube boilers start producing steam faster than older models, while older fire tube boilers take longer to heat up and can be out of commission for longer during servicing. Distilleries use low-pressure and high-pressure steam boilers or steam injection boilers that are typically affordable to buy and install, supply steam with no filters needed and provide hot water for various distillery needs. Low-pressure steam boilers are efficient and low-cost to operate, less noisy than steam injection boilers and pass inspections more easily.

  Dave Baughman, President of Allied Boiler & Supply, told Beverage Master Magazine that low-pressure boilers produce and supply steam below 15 PSI. These boilers come in various designs, including fire-tube, water-tube, tubeless and cast iron sectionals.

  “Some of these boilers are great at handling low-pressure steam heating loads, such as a church, school or apartment building,” Baughman said. “But they aren’t as conducive to a production type of application.”

  He also said that the type of boiler used in a distillery should be dictated by the distillery equipment and the associated steam load requirements.

  “A small craft distillery may be able to utilize a boiler that produces steam up to 15 PSI, which is ASME Section IV construction,” Baughman said. “As the pounds of steam per hour load demand increases with larger distillery equipment, then a power boiler of ASME Section I construction–which produces steam greater than 15 PSI–may be required in order to hold a steady steam pressure at the equipment. Holding a steady steam pressure at the distillery equipment is extremely important as steam pressure relates to temperature. The distillery equipment needs to have steady pressure in order to perform properly. If the steam pressure fluctuates, then temperature fluctuates accordingly, which affects the performance of the stills and other distillery equipment.”

  Allied Boiler manufactures fire-tube and tubeless boilers, both Section I and Section IV construction, from six to 2,000 horsepower. Baughman said that each installation and its particular steam load determines the type of construction the boiler needs to be.

Boiler Features

  Many modern boilers are narrow enough to fit through a standard doorway and easily install into a distillery building. Boiler companies make over a dozen different sizes ranging from five to 150 HP. Options for craft beverage producers of varying sizes are generally between five and 120 barrels per batch. Commercial distilling boilers are usually over 50 gallons. For example, a distillery can get a 150-gallon steam injection boiler that produces 337 pounds of sanitary steam per hour. For regulatory purposes, boiler and pressure vessels should have a stamp of approval from the American Society of Mechanical Engineers.

Questions to Ask Before Buying a Boiler

  One crucial question to ask about is the start-up time for a new boiler. It is usually unnecessary for a boiler to run 24 hours a day and waste energy, so quick-start-up boilers are designed to be turned on and start producing steam within a few minutes. Also, ask a boiler salesperson about energy efficiency because you’ll want to pay attention to fuel costs and not run up utility bills unnecessarily.

  Confirm the exact boiler measurements to ensure that it fits in your distillery space and also fits well alongside other equipment and any tasting or tour areas. Ask about the maintenance process, because if routine maintenance shuts down the distillery for a long time or if repairs are complex, this could hurt future business. Newer models of boilers typically have lower emissions for a reduced environmental impact. However, it still doesn’t hurt to ask about any emissions or harmful substances that may come from the boiler. It’s also good to know if extra parts will be readily available if they’re needed later.

  “The boiler itself is a powerful piece of equipment,” said Baughman. “If operating personnel are not properly trained, or if the boiler and support equipment are not properly maintained and serviced, then the boiler can be deadly.”

  He recommends asking the following questions before purchasing a first boiler or upgrading a current one:

•   Do you offer boiler training?

•   Do you perform start-up commissioning, boil-out, combustion tuning and jobsite operator training with the purchase?

•   What are some installation references from distilleries that have had your boiler for at least three years?

•   Do you have 24/7 personnel available for service?

•   What makes your boiler, support equipment and company different from others?

•   Why should we purchase this design boiler versus a different one?

When to Upgrade a Current Boiler

  For existing distilleries that have been in operation for a while, the time may come when you need to consider replacing or upgrading your current boiler. Common reasons to upgrade are a boiler that’s too noisy in public areas, high utility bills resulting from energy inefficiency and inconsistent steam pressure. It may also be time to replace your boiler if it can’t produce steam quickly and on-demand.

Maintenance Considerations

  No one likes to think about a brand-new boiler breaking down, but maintenance should always be part of the decision-making process when making a significant distillery investment. Fortunately, many modern boilers require minimal maintenance and need to be blown down at the end of the day to flush out the sediment that settles at the bottom. The blowing down process should be quick and help prevent damage to drains and plumbing lines.

  Routine maintenance should also involve checking chemistry levels to ensure the pH is ideal for steel. There are mandatory state inspections to adhere to as well. For ease of operation, consider installing an alarm system to tell if the feed tank is running low. Some boiler systems can be easily maintained by distillery staff; however, older models may require an expert maintenance specialist to come onsite for repairs.

Boiler Placement

  Concerning placement, it’s vital to keep boilers away from other equipment and isolated with a vapor barrier. Place the boiler at least six feet from still parts that are 18 inches or less from the floor. Also, place the boiler at a minimum of two feet from still parts above that 18-inch mark.

  Most boiler experts recommend placing boilers as close to the still and fermenters as possible to minimize the distance that cold water and steam have to travel to and from the equipment. This placement helps control heating and cooling loss, as well as piping costs. Boilers are often located in a separate room from other distilling equipment, but not every distillery separates their boiler in this way.

  Another consideration is the floor strength in the distillery. Older buildings may require custom installation because of inadequate floor strength, building materials or availability of utilities.

  Baughman said that the best placement of a boiler is in a separate boiler room because the boiler is a pressure vessel that is hot and typically has a water level sight glass, gaskets and other parts that can leak or blow.

  “By definition, wherever the boiler is placed becomes a boiler room,” he said. “Because of this, the boiler room has certain code requirements that must be met. From an environmental standpoint, a boiler likes to operate where there is not a lot of moisture. A separate boiler room affords this environment typically, whereas, if the boiler is out in the distillery, it may be subject to moisture from the wash down of the floors and cleaning of the equipment. So, from a safety and operational standpoint, a separate boiler room is the best.”

Boiler Accessories

  New boilers come with accessories that need to be added to the budget and stocked for repairs and maintenance. For example, CRT and VRT return tanks are used to collect condensate from the system and recycle it back to the boiler. Copper coils are used to make potable hot water for sterilization and keg wash-down. There’s also the blow-down separator used to flush out sediment and keep everything working well.

Choosing the Right Boiler

for Your Distillery

  Like grains, extracted juices and sugars, boiler steam is an essential ingredient in many spirits. The right boiler will meet your steam demands at production time without waiting hours for it to provide steam. It should be able to handle multiple processes simultaneously for greater efficiency and be capable of adjusting the steam supply on demand to save fuel costs and reduce energy waste. Other things to think about when choosing a boiler is proper roof venting for boiler operation, and whether to hire a licensed steam boiler technician to install the boiler and service it in the future.

  No matter what you’re looking for in a boiler, ask a lot of questions. There is a lot more that goes into this piece of distillery equipment than you might think. And, as Baughman said, the only bad question is the one that doesn’t get asked.

Varieties of Gin Botanicals in the Pacific Northwest

By: Becky Garrison

The recent sale of Aviation Gin to Diageo in August 2020 put the Portland, Oregon, distillery scene, and gin in particular, back on the national map. Aviation’s history can be traced back to 2004 when Christian Krogstad and his wife, Christina, launched House Spirits Distillery intend-ing to make American single malt whiskey. However, as whiskey requires a significant time in-vestment, they decided to generate some revenue by redistilling a neutral grain spirit-based gin that could be brought to market relatively quickly.

  They chose to deviate from the other gins on the market at the time, which they found to be juni-per heavy. They began experimenting with different botanicals and spices in a quest to manufac-ture a truly American spirit.  

  “When I started a beer business, I learned from my brewing experience that you really have to innovate. You can’t just do what other people are doing,” Krogstad said.

  A year later, Ryan Magarian joined the team and came up with the term “New Western Dry Gin.” The first taste of Aviation’s new style of gin was not juniper, but a balanced blend of bo-tanicals that included cardamom, coriander, French lavender, anise seed, sarsaparilla, juniper and two kinds of orange peel.

  These botanicals are steeped in neutral grain spirit for about 18 hours and then combined with water and distilled in a steel still for about seven hours. The resulting product is 142 proof initial-ly but cut to 84 proof for bottling.

  The name Aviation came from the iconic Aviation Cocktail created in the early twentieth centu-ry. Their bottle design, Krogstad noted, is “almost reminiscent of the Chrysler building in New York City,” and brings to mind the style of the TV series “Mad Men,” circa 1960.

  In 2016, owners Christian Krogstad, Thomas Mooney and Ryan Magarian sold the Aviation brand to Davos and put their money and energies toward expanding production of Westward Whiskey. (Incidentally, Westward Whiskey is also partly owned by Diageo).

Cask Finished Gin at Copperworks Distilling Company

  Jason Parker, first head brewer at Pike Brewing Company and co-founder of Copperworks Dis-tilling Company in Seattle, Washington, took a somewhat similar route to Krogstad when he founded Copperworks in 2013 with fellow craft beer maker, Micah Nutt. They began distilling their small batch gin so the proceeds could keep their business afloat until their American single malt whiskey matured and could be marketed. Their gin is distilled from a base of Washington-grown malted barley with a balance of juniper and hints of coriander, citrus and other exotic bo-tanicals.

  They also began experimenting with cask finished gins. Copperworks New Oak Cask Finished Gin is finished for roughly three months in charred, new American Oak barrels, the same barrels used to age Copperworks’ single malt whiskies.

  Cask finishing brings forward floral, coriander and cinnamon notes and softens the juniper. Also, the presence of caramel and vanilla comes from the barrel. “The other spices really pop forward, and you get this kind of burnt character to the orange. It’s really delicious,” Parker said.

  This venture led to an experimental cask finished gin series that includes limited-edition gins fin-ished in casks that previously held spirits such as Laphroaig Single Malt Scotch Whisky and Caol Ila Single Malt Scotch Whisky.

Surveying Other Gins in the Pacific Northwest

  In what appears to be a trend, Freeland Spirits in Portland, Oregon, founder Jill Kuehler also be-gan distilling gin while waiting for their bourbon to mature. Named in honor of Kuehler’s grandmother, Meemaw Freeland, this women-owned distillery seeks to capture the flavor of Meemaw’s garden gin. Kuehler’s team combines traditional heat distillation with vacuum distil-lation to turn fresh Pacific Northwest grains, ingredients such as cucumber, rosemary and mint, as well as other dried botanicals, into the small-batch gin. They also produce an award-winning canned gin and tonic cocktail, and Geneva, a spirit inspired by genever that showcases Oregon-grown rye with savory botanicals.

  Scratch Distillery in Edmonds, Washington, was born out of Kim Karrick’s passion for making gin– from scratch–using locally sourced organic ingredients. Scratch Gin is crafted from the dis-tillery’s organic, non-GMO, wheat-based vodka, and vapor infused in the still using a gin basket. Customers can choose from a barrel-finished, martini-style or gin-and-tonic-style gin, depending on their taste preferences. Knowing that each person has a unique palette, Karrick also developed the GINiology program. Here, participants choose from more than thirty different botanicals, spices and other flavors to create a personalized gin to take home.

  AJ Temple of Temple Distilling Company in Lynwood, Washington, distills his gin using a cus-tom stainless steel and copper bain-marie style pot still. This double boiler heating method lends an even and soft heat to the botanicals. Temple Distilling’s first and flagship spirit, Chapter One London Dry Gin, was made to showcase a love for old world-style gins. Other offerings include Navy Strength gin, aged in once-used bourbon casks, and a limoncello. Since Temple discovered citrus oils play better at higher strengths, they use fresh lime peel and dried grapefruit, as well as cassia bark for added body, when making their Navy Strength gin.

  Rusty Caldwell, co-owner at 503 Distilling in Oregon City, Oregon, views gin like a calling card. Every distiller tells their story by showing what they find tasteful and elegant through their choice of botanicals. “Like wine, our Circa 17 gin tells the story of terroir,” Caldwell said. “Our use of Oregon juniper, fresh-cut spruce tips, gardened rosemary and other herbs represents a taste of our environment in the Pacific Northwest.”

  Distilled in Seattle, Washington, Big Gin is named after founder and third-generation distiller, Ben Capdevielle’s father, Big Jim. The juniper, sourced in Italy, Albania and Macedonia, along-side cardamom, cassia, and Tasmanian pepperberry, gives the gin a complex peppery or spicy flavor, while the angelica, coriander and bitter orange peel add citrus and savory flavor. Now owned by Hood River Distillers, Big Gin offers a London Dry gin, along with Big Gin Bourbon Barreled, Big Gin Peat Barreled and other Big Gin Single Barrel releases.

Aria Gin: Dry London Gin Infused With the Pacific Northwest Spirit

  In response to this ginned up craze, Aria Portland Dry Gin, established in 2012, set out to pro-duce a top-shelf classic dry London gin. As much as co-owner Ryan Csanky loved gins like Avi-ation, he found they did not work when he would make a classic martini for his older clientele. 

  “Distillers would use all these innovative and creative flavors like prickly pear, spruce tips and lavender, and build a drink around them. But they don’t always plug directly into some of the classic gin cocktails that people like,” Csanky said.

  Rather than push the boundaries of flavor even further than Aviation, Csanky decided to pursue another route. “We had this aha moment where we decided to take a big step back and shift our focus to doing something that is not being done. For us, that was a high-quality, independently-made alternative to the mass-produced gins.”

  They experimented with traditional English botanicals, searching for the right harmony and bal-ance in crafting a classic dry London gin. “I didn’t want the gin defined by a single ingredient or a single component of the flavor profile,” Csanky said. “The art of this gin is all about how we paint the picture with the botanicals.”

  Two years into product development, they realized they did not need to use nearly as much product. So they moved away from the heavy-handed, intense flavors Csanky found were present in many independent gins, in favor of flavor combinations that were bold but also delicate. Even-tually, they settled on a recipe that 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. 

  Presently, Csanky does not plan on distilling other products. “I don’t want to make a little bit of everything and do it all kind of decently. I want to make one thing and be known for doing it well.”

  Moving forward, Caldwell of 503 Distilling offers a reflection on the future of gin. “One of the things I love about gin is that within recent years distillers–and consumers–have opened their minds to appreciating gin like they would whiskey. Until recently, gin has always been given the distinction of a mixer spirit, which means that it must be neutral enough to be blended into an-other substance. However, among craft distillers, there is now the trend to treat botanicals like a brewer treats hops.”

Distillery Startup: Where the Journey Begins

By: Gerald Dlubala

“You want to start a distillery? Try not to be overwhelmed, but by all means, prepare to be overwhelmed,” said Patrick Kelty, President of VITOK Engineers, Inc. VITOK Engineers help design and optimize every element of the distillation process, from raw material receiving to proofing and bottling. Their clients range from craft distillery startups to the likes of Wild Turkey and Jack Daniels. And if nothing else, Kelty wants potential distillers to remember a few things.

  “Educate yourself about the distilling process and business,” said Kelty. “Talk to other owners. Learn from their mistakes and successes and apply them to your situation. Get to be best friends with your Fire Marshal, insurance agents and inspectors. They are the ones with intimate knowledge of the specific rules and regulations of your location. Base your design on your current situation, your forecasted production numbers and goals and your target customers and marketing plans.”

  Kelty said that too many distillery startups begin with the owner blindly agreeing to options and amenities before obtaining proper cost estimates, causing hard decisions regarding cost-cutting and expense squeezing later. Collecting accurate cost measurements before startup is a lot of work, but it ensures that the owner gets the equipment and machinery based on what they have right now and what they want in the future.

  “For example, going with a column still means you’ll be installing the entire system upfront, even if you don’t yet need it,” said Kelty. “You may only run it on a part-time basis, but with a column still, once you reach max productivity, you have to install additional column stills to increase production. One fermenter is generally needed per eight-hour shift, so if you run continuous shifts, you’ll need up to three fermenters per 24-hour cycle. A simpler pot still can be run on a batch basis and, if needed, can also be used after fermentation as pre-bottling holding bottling tanks. They are multi-functional and can be added to, but they require more attention than a column still.”

  Kelty told Beverage Master Magazine that using experienced professionals in distillery design is a must. Roughly half of VITOK’s distillery design business includes the trendy retrofitting of old buildings into new distilleries. Often, these buildings need redesigning to accommodate the potential hazards of distilling. New construction is costly upfront but allows optimal design based on current and future plans. 

  “All architects, designers and engineers must have a safety-first mindset because of the inherent dangers of distillery operation. VITOK started as chemical plant engineers, so safety is ingrained in our way of thinking. Others may not necessarily have that same mindset,” Kelty said. “Did you know that commonly installed PVC drains installed under slab concrete floors can melt if distillery wastewater is pumped through them at too high of a temperature? Neither did the particular distiller that this happened to. That’s just one example of things that experienced distillery professionals know, and some unexperienced general contractors in the distillery construction field may not.”

  Future goals and expansion plans should include the possibility of increased deliveries, the need for additional raw materials storage and what happens to your spent grain. Farmers used to take all they could, but in Kentucky, Kelty said there’s now an overabundance of distilleries and spent grain, so farmers are now charging to haul it from the distillery, meaning additional costs.

  A project manager is also critical, he said, to keep the project on deadline, within budget and moving smoothly.

  “And then assemble as much of a dream team as you possibly can to keep all parties moving in the same direction towards the same goal. The owner, architects, engineers, lawyers and marketing consultants need to start at the same time to be on the same page and working towards the brand story or identity that the distiller wants to convey. Having that singular vision helps avoid cost overruns and delays.”

  “Just learn as much as you can, talk to those that have gone through it, and partner with those having verified experience in distillery startup equipment, procedures and practices,” Kelty said.

Don’t Forget About Grain Handling

  “Grain handling is usually an afterthought,” said Adam Dubose, Sales Engineer at ABM Equipment (See their ad on the Inside Front Cover). “It’s just how it is. By the time we get involved, it’s usually the last step, and we have to deal with the leftover space. But that’s okay because that’s what we do.”

  “Most brewers will mill their grain if they can,” said Dubose. “If you can do that, you have total control over the coarseness, the makeup and the content while saving significant money. You’ll find out just how quickly you go through grain when you only buy small bags of pre-milled grain. The costs will add up quickly, so if possible, it’s best to mill it and start with one silo. Just keep in mind a plan and a place to install two or three more down the road.”

  ABM Equipment helps brewers design a future-friendly brewery layout to efficiently use the available space to maximum advantage. They take the needed time to go through plans and goals and develop an agreed-upon design to match each brewery’s specific needs. This method heads off potential problems and headaches before installation begins.

  “Good planning with good future projections is the key,” said Dubose. “With grain, milling and conveyance equipment, you need to plan as far into the future as you can. Budget will always be a factor. Get what your budget allows, and add the needed equipment later, but good planning and foresight with design and space will make any future additions easy to implement.”

Been There, Done That, and Willing to Help

  Starting up a distillery is unlike any other business startup. It’s critical to take advantage of the information and help from those that have traveled the path. People like Patrick Heist, Ph.D., Chief Scientific Officer of FermSolutions and Co-owner of Wilderness Trail Distillery, are a wealth of knowledge, from questions about the startup process through full-service consultation and design of your distillery.

  “We engage with customers from the conceptual phase through the distillery construction,” said Heist. “FermSolutions was started in 2006 and works directly with hundreds of distilleries on process optimization and problem-solving. By starting Wilderness Trail Distillery as an extension of FermSolutions, we have real-life experience in the right versus wrong ways of doing things to help solve issues for other distillery startups. Once they are running, we offer our expertise-driven fermentation products like yeast, enzymes, lab services and more to make sure the process is optimized and producing the best possible yields and flavor. We’ve expanded three different times since, from a one barrel per day operation to now being the fourteenth largest bourbon producer and the eighteenth member of the Kentucky Bourbon Trail.”

  Heist said that there are numerous questions to consider when starting a distillery, and as expected, the big one involves funding. “Make sure you are properly capitalized, not only for seeing the project through but for any unforeseen situations that will arise. Make sure you can wait, if you haven’t already, for the aging process before you start realizing a cash flow. Some distillers are trying to get initial cash flow through products that can be ready to sell in short order, like moonshine, vodka or gin. I will warn you that sometimes the marketing required to get any meaningful revenue out of these types of spirits is cost-prohibitive. Make sure you have your priorities in order. You should already know the types of distillate you plan to produce along with what feedstock you’ll use for each type. What recipes will you follow? Are your sources reliable? What are your plans to meet future growth and demand? What type of equipment do you need to meet these goals? Are your building utilities proper for your distillery plans?”

  Heist suggests that just as you use your budget efficiently and wisely, so should you use your time. For example, if you’re planning on making a straight whiskey, you likely have at least two years to design a bottle and work on marketing plans, so stay focused on the current operation itself, including yields and great flavor profiles. Legalities, laws and regulations must be precisely met and followed, so it’s mandatory to get help in these areas. FermSolutions can provide guidance, but the Distilled Spirits Council of the United States (DISCUS) and the Alcohol and Tobacco Tax and Trade Bureau (TTB) are also great resources. Tap into other nearby distilleries that have already navigated those waters, and don’t be afraid to ask for help and guidance.

  “Be a student of the process,” said Heist. “Take the initiative to get yourself going and choose help based on actual need. A lot of money can be spent on non-essential consulting services that could be put to use in production. Because when you get down to it, it’s about what you can afford. Some say to go with bigger equipment, like stills, to support future growth and production increases, but along with that comes more energy requirements, the need for bigger boilers, chillers and so on. Focus on getting equipment that will serve your immediate needs within your current budget constraints.”

Addressing COVID-19 During Startup

  “You normally have the big five concerns when starting a business: namely, your business model, portfolio mix, funding, appropriate licensing and equipment, but 2020 has put a whole new spin on things, especially where the public is concerned,” said Donald Snyder, founder of Whiskey Systems, a complete craft distillery management service. “You’ve now got to also ask yourself how you’re going to comply and maintain the safety requirements for your area, including OSHA-based requirements and more, and of course, social distancing if it’s still mandated later this year. In my experience, most new startups don’t consider the current requirements for their locality. How are you going to achieve and continually manage the mandates needed to comply with your local safety, health or fire regulations?”

  Snyder told Beverage Master Magazine that while opening and building anticipation of a new distillery in today’s market can be done within local requirements, it’s a different story moving forward. “You’ve got to have some sort of system in place to build on and meet your needs while remaining current on, and working within, those state and local allowances and restrictions. You may, for example, have to prepare to spend money upfront and wait the necessary number of years to age and produce a quality product. White spirits and moonshine age faster and are available to sell quicker, so you just have to be creative and use what you are given.

  “A good example is the option to sell your full bottles, mixed cocktails and related items to go,” said Snyder. “If you’re in one of the states that allow that, then great, that’s a quality feature you can build and design your business model around while waiting for the restrictions to ease up, hopefully in a reasonable time. If you aren’t allowed to do that, then for now, at least, your storefront has to be built around merchandising and awesome consumer experiences. When I walk into your place, the customer experience should be your number one concern, followed by the tasting and the tasting room experience.”

  Snyder believes in having something to show for your investment, so it’s best to purchase or lease-to-own quality equipment. Financing can work, but the thing to remember is that, unlike the beer or wine industry, distilling equipment holds its value exceptionally well. It won’t depreciate like other manufacturing machinery, so, many times, you’ll get your full or near full investment back. With leases, it can be easier to have someone take over the lease and be on your way. A lot of the equipment for wine and beer can be interchangeable, but distillery equipment is different.

  “Little things that have big meaning for distilleries can be overlooked if you’re not using engineers and architects experienced in distillery design,” said Snyder. “One mistake I see made a lot is the absence of roll-up or dock doors. How are you going to move your glass, cans, grain, spent grain and materials? Prepare for the cost of employees, rent, any leases, etc. You’ve got to stay aware of long-term logistics for business expansion or the addition of future lines or products. Don’t layout your distillery in a way that restricts or financially inhibits future growth and expansion. Safety is another important area of concern, so it’s important to consult with engineers and architects that are familiar with and understand the workings of a distillery and the relatable OSHA regulations. Distilling and grinding your grain produces natural explosion hazards, so it’s critical to design your spaces accordingly.”

  “As important as all these other things are, it’s just so critical to stay in compliance with state and federal reporting regulations,” said Snyder. “It’s so important to start your reporting and tracking before you get audited. Choose a system similar to Whiskey Systems that fits your needs and provides an audit-ready place to manage your records.”

Diaphragm Pumps Remain Popular Choice in Distillery Applications

By: Gerald Dlubala

If you’re pouring your passion into distilling a quality crafted product, you need equipment that’s manufactured using that same level of passion. You want quality equipment that will not breakdown, is easily maintained, and most importantly, matches the needs of your distillery. It’s especially true for pumps because they are used throughout every stage of the distilling process, from bringing in water, through the mashing stages, wort recirculation, fermentation transfer, distilling, filtration and filling of barrels, totes and bottles. Quality pumps are critical for a distillery to retain the ability to replicate and deliver a consistent product for their consumers and should be chosen based on needs regarding pressure, proof of liquid to be transferred, head capacity, viscosity and acidity of the product being pumped.

Yamada America Inc. Stresses Versatility, Experience and Partnership

  “Diaphragm pumps have many advantages when compared to other pumping technologies used in distilleries, starting with affordability,” said Jeff Selig, National Sales and Marketing Manager for Yamada America Inc, an innovator in developing complete lines of air-operated double diaphragm pumps (AODD). “Additional out of the box advantages include infinitely variable flow rates needing no special controls and the ability to run dry and deadhead, all with the sensitivity to pump very clear, fragile liquids up through thicker liquids and even solids. Depending on a distilleries size, they are found in every application from simple waste transfer to product transfer to being used to pump cleaning and sanitizing solutions on through the final bottling.”

  “It’s a whole pumping system in a box,” said Selig. “With flow rates ranging from less than a gallon per minute (GPM) to over 200 GPM and made from materials like stainless steel, polypropylene and Kynar with food-grade diaphragms, an AODD is by far the most capable and flexible pump for distillery application use. And due to their unique flexible nature, the ability to be made explosion-proof and the ability to operate on compressed air, an AODD pump is usually mounted on a portable cart to use them for more than one application. The carts can be outfitted complete with filter regulators and the needed hoses for any application.”

  Diaphragm pumps are easy to maintain, with less moving and normal wear parts than other pump types. Diaphragms will eventually fail and need to be replaced, but preventative maintenance based on the number of pump strokes can prevent an emergency repair situation. Experienced manufacturers can estimate the life of their pumps for select applications, and repair can be done by a distributor or trained user. Kits are available that coincide with training videos to show the exact repair procedure for the corresponding pump.

  Selig tells Beverage Master Magazine that choosing a pump manufacturer with experience is important. But so are their partners.

  “You want to work with a company who has been there and done that,” said Selig. “Someone who has the right construction materials and the know-how to apply available technology. Then you want them to have a strong distribution network to help you at the facility level. Most distributors have trained staff with intimate knowledge of the pumps, inventory, and available repair services. If a facility has an experienced mechanic, he can quickly be trained to repair the pumps on-site as needed. A distillery builds a partnership with the manufacturer and their distributor to maximize uptime and be assured of timely repairs.”

  “New technology is always welcome,” said Selig. “For starters, companies are putting more effort into making their pumps smarter, with things like monitoring pump cycles or allowing externally controlled operation. Batching systems along with stroke monitoring and leak detection can quickly turn a simple pump into a true process pump. There are also evaluations on some material changes and modifications that will lead to longer pump lives. Quality manufacturers are in the pump business and strive to get their pumps to last as long as possible. They’re not in the parts business. The longer the pumps last, the more likely customers will keep buying them. We are currently introducing the next generation of pumps with upgrades to the operating air valves, pump communication and material technologies.”

  To add to the versatility of their AODD pumps, Selig said that his customers have been able to use their standard sanitary pumps without making any changes to switch to sanitizer production. Additionally, Yamada pumps have been provided to some of the largest sanitizer companies in the world.

Versamatic diaphragm Pumps Prove to be Gentle Workhorses

  “Several different pump options are available depending on what phase of the distilling process we’re looking at,” said Tim Caldwell, National Sales Manager of Versamatic, a global provider of the air-operated double-diaphragm (AODD) pumping solutions. “But the AODD pumps are always great choices because of their ability in matching distillery applications. Diaphragm pumps require less attention, can run dry, are self-priming and are designed to be portable so they can be used where needed. Our diaphragm pumps don’t need constant monitoring like some types of equipment. They will deadhead pressure and then stop pumping, so once a certain pressure is built up in the lines, the pump shuts off but will hold the pressure for immediate restart. Deadheading capabilities are efficient and very functional for filtration and cleaning, which can produce clogged filters.”

  Caldwell tells Beverage Master Magazine that Versamatic diaphragm pumps are popular in distilling because they can all be grounded for use with high proof vapors or liquids. The air inlet pressure and discharge valves are easy to adjust and control, and all you need is a clean air source sized for your process. Diaphragm pumps are excellent choices for everything from pumping tank overs through the bottle filling and cleaning and sanitization processes.

  “Diaphragm pumps work great to clean sludge and solids buildup when tank cleaning too,” said Caldwell. “They’re able to move what we call cake (semi-dry waste) out of the tanks through the pumps and lines. When you think of everything that gets included in the waste cleaning process, whether it’s naturally occurring sludge or other waste, why pay to have all the unfiltered wastewater removed if you can manage the waste by pumping it through a filter press that will allow your wastewater to be deposited down city sewer systems? Then you’ll just have a small amount of cake to dispose of, saving money.”

  When matching pumps to applications, Versamatic has pumps and lines for distilleries that are approved by the FDA and also adhere to the EU Framework Regulation 1935/2004, meaning that their products contain nothing that will leech into any food or beverage applications that come in contact with or run through them. What comes out is the exact same product that went in.

  “Diaphragm pumps like ours at Versamatic are just really good values for distillery use,” said Caldwell. “They can be used throughout the distillery, are shear sensitive and won’t damage or change the makeup of the product that flows through as can happen with some centrifugal pumps. There is no damage by impellers, and maintenance and repair are minimal. They can safely handle the distillery processes, they’re reliable, easy to maintain with long life capability. Replacing normal wear parts is fairly easy with parts or repair kits found at distributors that include all consumable parts for your pump. It’s one less thing for the distiller to worry about. And under changing conditions like those that we currently work in, we’ve had good success using diaphragm pumps in hand sanitizer conversions.”

KOVAL Distillery Chooses Diversity in Pump Selection

  The type of pumps you use may be a personal choice, but as Mark DeSimone, Vice President of KOVAL Distillery believes, it’s a good idea to match equipment to specific needs. KOVAL matches pump type to process and uses different manufacturers to get that match. By performing normal daily visual checks, their pumps require minimal maintenance with repairs done only when needed. Needed maintenance other than routine cleanings are occasional services to the impellers and screw pump stators.

  “We typically produce about 70,000 gallons a year using a variety of pumps in our distillery,” said DeSimone. “All are grounded and explosion-proof for safety, and chosen based on the material, alcohol content, viscosity and temperature of the product that we’re moving. For water circulation, we use several centrifugal pumps that move water through our heat exchanger and pump warm water captured during the distillation process to our mash tank for heat up. Both of these processes save us a good deal of energy as well. We move cold mash from the fermenters to our still with impeller pumps. Screw pumps are utilized for moving hot, thick, or sticky mash through our heat exchanger and for transfer to our fermenters. And then we use air diaphragm pumps to move alcohol between storage tanks and when filtering or bottling the final product.”

  As to any new technology, there hasn’t been a lot of groundbreaking developments to the traditional pumps that continue to do the job, but DeSimone tells Beverage Master Magazine that new improvements are always welcomed.

  “We’re always excited to see new advancements,” said DeSimone. “Our centrifugal and screw pumps have dry run sensors built into our automation systems that add to the lifespan of our equipment. It’s very important to keep everything running or at least have a backup for redundancy. It’s really tricky when something goes down and you’re unable to produce, so we naturally try to prevent that as much as we can.”

  As an experienced distiller, DeSimone said that there are two critical components to look for when choosing a pump supplier. “I feel it’s important to look towards and choose someone with specific experience in the distilling field. But just as importantly, that experienced supplier has to come with quality support that will be available whenever it’s needed.”

Barrels Old and New: Make Crafting Spirits a Careful Balance of Art & Science

By: Cheryl Gray

Distilleries are as selective about the barrels they use as they are about the ingredients that go into crafting their spirits. In fact, the right barrel plays an integral role in the entire process.

  Experts say that new barrels impart the highest wood impact into a spirit, giving it color and emphasizing characteristics exclusive to the wood. On the other hand, older barrels play a very different role and are used in a variety of ways by the spirits industry.

  Brown-Forman is the only spirits company in the world to handcraft its own barrels. Michael Nelson is Director of Brown-Forman Cooperage.

  “The barrel plays an important role in the making of whiskey,” said Nelson. “With more than 50% of the flavor and 100% of the whiskey’s color coming from the barrel, it is a key ingredient, not just a storage vessel. Barrels impart this flavor and color by sucking whiskey into the wood and through the char and layers of sugar behind it during the winter. When summer comes, it pushes the whiskey back out. That process repeats itself several times before it’s ready.”

  Brown-Forman has two cooperages, one in Louisville, Kentucky, and the other in Decatur, Alabama, both of which use American white oak to custom craft barrels for time-honored brands including Jack Daniels, Old Forester, Canadian Mist and Woodford Reserve. Few know better how barrels impact the end product than Woodford Reserve Master Distiller Chris Morris.

  “When crafting a straight whiskey, such as Woodford Reserve Bourbon or Rye, the use of a new, charred oak barrel is required by the federal standards of identity,” said Morris. “The pros of using a new barrel are that we achieve the product type and descriptor we desire. The cons would be that if we filled a used barrel, we wouldn’t. There are additional pros and cons as well—those of crafting a desired flavor profile. A new barrel is an intense source of color, aroma and flavor, while a used barrel is not. During our initial use of a new barrel, we extract approximately 85% of the heat-induced oak character. Therefore, to create the product profile that consumers expect, we must use new wood.”

  However, Morris said, that doesn’t exclude using barrels from another beverage class, a technique he calls “finishing.”

  “We have finished Woodford Reserve in wine barrels, port, sherry and cognac barrels for a specific flavor formation purpose. Of course, by finishing a straight whiskey in a barrel that was previously used in any form or fashion causes us to lose the straight whiskey designation. That con is superseded by the pro of getting a unique finished product.”

  Morris told Beverage Master Magazine the concept of using finishing barrels is an innovation that Woodford Reserve Distillery introduced to the whiskey industry in 2006 when it became the first distillery to “finish” a whiskey in Chardonnay barrels. The flavor notes found in such barrels, like citrus, apple, pear and vanilla, are also found, Morris said, on the Woodford Reserve flavor wheel.

  “The ‘finishing’ barrel is selected so that it will highlight and enhance an existing Woodford Reserve flavor,” he said. “This will create an out-of-balance flavor presentation by design, therefore making the ‘finished’ expression ‘flavor focused.’”

  Canton Cooperage is also headquartered in Kentucky. Its master coopers handcraft barrels for wineries and distilleries worldwide, using American white oak, aged in open air. The company creates “Spirit by Canton,” a line of branded barrels for its distillery clients, who place orders based on specific barrel details, including the age of the barrel’s wood.  Bruno Remy, a veteran enologist, is Vice President and Sales Manager for Canton Cooperage.

  “At Canton Cooperage, our production is limited to craft premium spirit barrels,” said Remy. “We make our barrels by order with American oak wood seasoned for 12 months, called ‘Spirit by Canton;’ two years, called ‘Spirit Premium;’ three years, called ‘Spirit Grand;’ four years, called ‘Spirit Limited Edition;’ and even a very limited production of barrels with five-year-old wood called ‘Spirit FIVE.’”

  Remy told Beverage Master Magazine that distilleries pay attention to a barrel’s every detail.  He said that list includes dimensions, the thickness of staves and headings, logo branding on the heads, number of hoops, position and diameters of the bunghole, toasting recipe and charring.

  Another critical factor that distilleries look for in a barrel is the percentage of leakage, with 0%, of course, being ideal. That’s where handcrafted barrels have the edge. Industrial barrel production can show a higher percentage of leakers compared to artisan production.

  As for the life span of a barrel, some barrels can last 30, 40, 50, even 100 years or more, provided they are well-kept. Barrel recycling is fundamental to the spirits industry. Not only is it environmentally responsible but also financially practical.

  “Commonly, the large distilleries have a contract with their cooperage to sell back the used barrels after a certain number of years. Large distilleries can also transfer used barrels to subsidiary distilleries when part of a group,” said Remy. “There is a market of used barrels, and effectively, the barrels can have a second life when shipped to Scotland, Ireland, Spain, Caribbean islands, Japan, Brazil and Chile for whiskey, Scotch, sherry, rums, cachaça, pisco, etc.”

  In producing its rum, Washington D.C.’s Potomac Distilling Company uses a mix of new and old barrels to create Thrasher’s Rum. Owner Todd Thrasher told Beverage Master Magazine that multiple factors go into his barrel choices.

  “One con associated with new barrels is cost. It tends to be very expensive,” said Thrasher. “Also, because we have limited storage space, I only use 30-gallon barrels, which are more expensive than 50-gallon barrels. I find that many American spirit drinkers tend to enjoy the taste of oak, so it definitely makes for an easier transition for whiskey drinkers and can open our rum up to a potential new audience of drinkers.”

  Thrasher said that he sources old barrels from a variety of local distilleries with whom he has relationships. He chooses used barrels that are, on average, three years old, and inspects them for any aesthetic defects, especially for any signs of leakage. That aside, he is sold on the benefits his distillery gains from barrel recycling.

  “Barrels can absolutely be recycled! For example, one of our barrels is a used peach brandy barrel. I find that the recycled barrels can imbue the new spirit with a slightly different profile or flavor.”

  New barrels, Thrasher said, can be harder to source but, when he does place an order, in addition to size, he looks for other specific characteristics. “All new barrels are number three char with medium-toast. That’s the barrel profile that best suits my needs.”

  Cooperages do not typically stock a lot of new barrels in their inventory since most are made-to-order, and empty barrels sitting too long can cause problems. Even with a new barrel, the wood is continually drying out. As it does, the barrel shrinks. Once a shrunken barrel gets filled, it will almost certainly leak.

  Heidi Korb, owner and co-founder of Black Swan Cooperage in Park Rapids, Minnesota, said her cooperage’s typical lead time for a barrel order is approximately two months but will vary depending on the quantity of the order.

  Korb told Beverage Master Magazine there is a wide range of possibilities for clients to consider when choosing barrels. “The variables and options are fairly endless, so it very much depends on what the customer is looking for, what product they are aging and their preferred aging timeframe,” she said. “Using new barrels, especially smaller barrels 30-gallon on down, can be a great way to test new products because the age time will be less than if aged in a standard 53- or 59-gallon barrel.”

  Although used barrels are a staple in the spirits industry, Korb said that careful inspection includes more than watching out for aesthetic imperfections or signs of leakage.

  “In used barrels, you want to avoid any barrels that have off-flavors or barrels that have gone sour. This means they have sat too long empty or were stored in an area where they started to grow mold,” Korb said. “If a barrel is treated well and used rather continuously, it can be used—for lack of a better term—a very long time. Think of your 20-80 plus year aged Scotch whiskey!”

  Virtually all experts agree that the best method to protect a barrel’s integrity is always to keep it full. Industry veterans recommend that if barrels are to be ricked, empty them with the plan in mind to fill them within hours. Cellar or rick house temperatures should stay between 45 to 65 degrees Fahrenheit. Moisture in a cellar is vital for the barrel’s physical stability and aging of the spirit, with 50% to 80% of humidity recommended. Low variances of temperature and moisture present the ideal environment.

  New or old, the common denominator in the industry conversation about barrels is that they are a significant part of the distilling process that uniquely defines a crafted spirit, giving that spirit an identity all its own.

The Canadian Ready-to-Drink Canned Cocktail Movement

By: Alyssa Andres

Over the past five years, the Canadian ready-to-drink cocktail scene has gone from passé to a huge craze, hitting liquor stores across the country. Blossoming from a limited selection of sugary beverages to a sophisticated array of craft canned cocktails, RTD beverages act as an easy and accessible option for cocktail lovers. As more and more breweries and distilleries make the move to include alternative, ready-to-drink choices to their repertoire, it is clear Canadians love a canned cocktail. The movement has sparked an array of new RTD options across the country, each offering a unique, local flair.

  In 2015, the biggest names in RTD cocktails on Canadian liquor store shelves were Smirnoff Ice, Palm Bay and Mike’s Hard Lemonade. They were most popular amongst teenagers and novice drinkers but left something to be desired amongst cocktail connoisseurs. Still, sales of these vodka-based coolers were on the rise each year as the only portable alternative to beer. As consumers continued to reach for these products to bring along to the beach or a picnic at the park, the concept of the cooler started to evolve, and the idea of a sophisticated, more adult RTD cocktail was born.

  In 2016, a new, more refined canned cocktail arrived on the scene in Ontario. That year Georgian Bay Spirit Co., located in Northern Ontario, released the Georgian Bay Gin Smash, made with their award-winning, handcrafted London style dry gin. The Gin Smash, flavoured with lemon, lime, tangerine and a hint of mint, was an instant hit, earning rave reviews from The Toronto Star that called it “easily the best pre-mixed cocktail to have hit the shelves of the LCBO (Liquor Control Board of Ontario).” They could not keep it on the shelves, doubling their sales in 2017.

  The Gin Smash appeals to a more mature audience. The gin is made using wild juniper berries handpicked along the shores of Georgian Bay. It’s light, complex and refreshing while still having some sweetness. Since the remarkable reception of the original Gin Smash, Georgian Bay Distillers has released seven variations of RTD canned cocktails, including a Smashed Tea that combines the original Gin Smash recipe with black and Darjeeling tea. Following the Gin Smash’s enormous success, many breweries and distilleries across the country added ready-to-drink cocktails to their lineup.

  No longer are these RTD beverages marketed explicitly to young adults. Many companies are opting for a dry and often sugar-free alternative to the everyday canned cocktail using natural flavours and sweeteners. On the west coast, Vancouver company Ocean Blu has created a vodka-based beverage sweetened with stevia, a natural alternative to refined sugar. With zero grams of sugar and 100 calories per serving, these drinks are perfect for the health-conscious consumer and a far cry from the limited offerings of the early 2000s. True to its name, Ocean Blu is also dedicated to the environment, using eco-friendly packaging and donating 25 cents from the sale of every six-pack to ocean shoreline clean-up initiatives and marine wildlife conservation, pivotal to the west coast’s ecosystem.

  Further inland in Kelowna, British Columbia, Orchard City Distilling has created their own conscious cocktail, Zen Kombucha, which combines vodka with kombucha and other organic herbs and botanicals in a convenient can. The health tonic/alcoholic beverage is the first of its kind in Canada and hints at a potential future evolution of hybrid RTD cocktails that could cross over into health elixirs and probiotics.

  While British Columbia distillers create health-conscious canned cocktails, in Alberta, Canada, they are crafting a spirit that is unique to the province. Eau Claire Distillery in Turner Valley created Alberta’s first line of craft cocktails. They instill a “field-to-glass” attitude in their small-batch craft cocktails, using local ingredients like spruce and handcrafted techniques, including hand-harvesting and hand-sealing. Master distiller, Caitlin Quinn, has created a unique spirit made with prickly pears that are indigenous to Southern Alberta. She uses the Prickly Pear Equineox, a sweet, barley-based alternative to gin or vodka, in the Eau Claire Equineox Mule. The spirit is naturally sweet, intensely fruity and has hints of watermelon and bubble gum.  The Equineox Mule combines this unusual spirit with a ginger beer made by local brewery, Annex Ale Project, and is a great option for cocktail lovers interested in Alberta’s local flavours.

  The emphasis on local flavours doesn’t stop in the west. The prairies of Canada are also serving up a variety of RTD cocktails. Prairie Cherry and Prairie Pear are the results of a collaboration between Manitoba’s Fort Garry Brewing Company and Capital K Distillery. These RTD cocktails are produced in Winnipeg using small-batch gin made from Manitoba grains and are released seasonally, selling out each summer in liquor stores across the province. Fort Garry Brewing Co. general manager, Scott Shupeniuk, says the duo of gin beverages has been a huge success. They plan to continue releasing these types of beverages despite being predominantly focused on beer most of the year. Many breweries and distilleries are choosing to release variations of their usual offerings to please consumers looking for new drinks to sip on this summer. 

  Canada’s signature summer drink, The Bloody Caesar, has also evolved with the RTD movement. Four variations of the original cocktail are now available at liquor stores across the country, including Pickled Bean, Lime and The Works. Made with Mott’s Clamato juice, vodka, tabasco and Worcestershire, the Caesar is just one example of a classic cocktail that now comes pre-mixed in a can, no bartending skills necessary. This is a huge draw when most bars have been closed since the start of the COVID-19 pandemic. The notion of sitting down and ordering a cocktail at a bar is no longer, so more brands are choosing to offer classic cocktails in a pre-mixed, RTD format.

  So, what’s next in the Canadian ready-to-drink cocktail movement? As single-serving pre-mixed cocktails become more popular amongst consumers, a new line of spirit-forward beverages has started to appear on the Canadian RTD scene. Dillon’s Distillers in Grimsby, Ontario, has created a single-serving Negroni they call The Professor’s Negroni, available at Ontario liquor stores. At 18.4% alcohol by volume, this product is the first of its kind in Canada. It took two years for Dillon’s to get the product on the shelf due to the cocktail’s spirit-forward nature. As of May 2019, Canada set in place restrictions on ABV in canned cocktails. Previously a 568 mL beverage could contain up to 11.9% ABV. Now, a 473 mL canned cocktail may contain 5.4% ABV, while a 568 mL can is limited to just 4.5% ABV. Dillon’s Distillers has gotten around these restrictions by classifying their pre-mixed Negroni as a spirit and serving it in 125 mL glass bottles. It isn’t located in the RTD section of liquor stores; it is placed on the shelves alongside bottles of liqueurs and aperitivos, despite being pre-mixed and ready to pour over ice for quick and easy cocktail convenience.

  The Professor’s Negroni is an example of a truly artisanal RTD cocktail. Dillon’s Distillery crafts all three ingredients for the cocktail, from the Dry Gin to the vermouth to the bitter aperitivo, made using rhubarb, violet and wormwood. The distillery believes this sort of spirit-forward RTD cocktail fits their brand better than a canned drink and allows them to showcase what they do best. The distillery has even tried a kegged version of the classic Negroni, ideal for busy bartenders and extremely cost-efficient for restaurants. As the idea of easy, accessible, pre-mixed beverages continues to evolve, RTD cocktails might be the new alternative to traditional bartending. 

  Presently, new RTD products are hitting the shelves each month in Canada. From seltzers to spiked iced teas to classic cocktails-in-a-can, the options are limitless. Unique cocktail creations are becoming more common with flavours that might be surprising to find. Collective Arts in Hamilton, Ontario, is producing an artisanal dry gin soda with grapefruit, lemon and thyme. Little Buddha Cocktail Company in Toronto makes a premium distilled vodka-based cocktail with grilled pineapple and rosemary that also contains carrot and pumpkin juice. No matter their preference, there’s an option for every cocktail lover.

  With Canadians deprived of bars and restaurants for the majority of 2020 due to the COVID-19 pandemic, and therefore unable to grab a cocktail made by a proper bartender, the pre-mixed cocktail movement may continue to rise. With seemingly many more days of social distancing ahead, RTD beverages are the perfect option for summer outdoor gatherings and backyard barbeques. Opting for an RTD beverage makes perfect sense for most, as opposed to spending money stocking a bar cart with expensive liquor bottles and taking the time to prepare the perfect cocktail to-go. As the food and beverage and hospitality industries continue to change and evolve through this pandemic, so too will the vision of the RTD cocktail.

Beyond the Mask: Rebuilding after COVID-19

By: Tracey L. Kelley

  At press time, details about the future economic impact of the pandemic are in constant fluctuation. However, most forecasters are certain greater challenges loom large. 

  It’s not for a lack of effort. There were many expedient pivots in the craft beverage industry, from the much-lauded manufacturing of hand sanitizer and flipping stale beer into whiskey to crafting subscription boxes and extending off-premise sales.

So, now what? We asked business consultants to provide their perspectives, and they eagerly offered frank but encouraging relaunch and repositioning action steps we hope spark ideas. Our experts include:

  Jacob Halls, partner, and Rick Laxague, partner, Craft Beverage Consultants in Columbia, Missouri. Halls advises in areas of business strategy, compliance and marketing and distribution. Laxague provides plans for distribution, operations and sales and marketing. Laxague said, “Our experts have a combined 150 years in the alcoholic beverage industry, with deep knowledge in everything from sales and distribution, production and regulatory compliance to marketing, package design, event planning, IT, (social) media, hospitality and even values-based executive coaching.”

  Scott Schiller, managing director of Thoroughbred Spirits Group, which specializes in helping new and established spirit companies. Schiller said, “Since 2009, our Chicago-based company has helped launch more than 30 distilleries, designed over 50 spirits brands and facilitated three exits.”

  Beverage Master Magazine (BM): Right now, there’s still considerable uncertainty in the beer, cider and spirits industries. Is this a time to wait and see what happens, or an opportunity to take proactive steps?   

  Jacob Halls (JH): Be proactive—successful companies see their environment and adapt to it. Waiting to see what happens to you takes you out of an element of control of the direction of your company. See the changes in the hospitality climate and take note of how they’re not going to be going back to how they were anytime soon and adapt accordingly.

Consider:

1.  Were your on-premise sales 80% of your business? Find a way to team up with your prime on-premise accounts to set up partnered order pairs if the state allows curbside/delivery alcohol sales. For example, if you have 200 kegs, sell them directly from the taproom.

2.  Slow down production in the areas where your sales drastically diminished, and shift to areas that have picked up. 

3.  Are you currently doing curbside sales at your taproom to supplement that revenue generation? Have you created a gift card program? Have you developed an online sales system and where legal, delivery/distribution program for your products and merchandise? Have you explored every option of new streams of sales? How have you maintained connection with your customer base?

Adapt—or Get Ready to Sell Your Equipment

  Rick Laxague (RL): Be proactive now! If you’re not analyzing your business right now and what the new normal looks like for your brand post-COVID, chances are you won’t recover from this.

Scott Schiller (SS): The spirits business is recession resilient, not recession-proof. I’m not an economist, but at the time of writing this, I don’t foresee the economy recovering quickly. As such, there’s no better time for the well-prepared—whether existing or those in the wings to enter the industry.

  I take no pride in writing this, but there are many distilleries, and companies in general, at risk before COVID. Unfortunately, COVID is forcing their hand. The knowledgeable, well-financed, nimble and diversified—such as those with a healthy combination of on- and off-premise ratios and affordable price points—have the potential to flourish. For the distiller in planning, there’s likely to be less competition and a healthy offering of used equipment.

  BM: In your estimation, how much of a shift do you think the pandemic and its aftermath will make in the industry?

  JH: I don’t want to sound grim, but the taprooms, bars and restaurants will take the largest hit, which passes to the alcohol producers for a decrease in on-premises sales.  Walking around or dancing shoulder-to-shoulder in a club for three hours isn’t going to be viewed as normal for a while. If an establishment’s happy hour was its primary earnings time-of-day, and it could seat 200 people with the average space between seats being two feet, how many people concerned about this will want to sit that close to someone? 

  As businesses adapt, seating space becomes less per square foot. In order to earn the same dollars-per-hour, something has to change in the pricing or the amount of staff—both of which can drastically change customer flow and demographic of the restaurant. Service may go down with fewer staff, causing a less-positive experience and fewer return visits. 

  If the prices have to go up in order to maintain the same level of staffing, then some customers may now be priced out of the establishment, as they’re financially affected by the pandemic as well. 

  The brands of alcohol purchased by the establishment may also change: a package by the smaller craft producer that’s normally $45 per case or $200 per keg may be passed over for a cheaper $23 case and $60 keg in order for the establishment to maintain its customer service level of staffing and pricing. 

  Something will have to give. Bars, restaurants, wineries, breweries, cideries, meaderies and distilleries will suffer and, in many cases, cease doing enough business to survive their existing debt loads.

  RL: It’s obvious that all segments of the industry have seen growth from new entries—that is, companies and brands opening in the past eight or more years. Some of these segments have triple-digit growth. This caused the glass for the consumer to be overflowing with overloads in brand, flavor, style and marketing. There’s no loyalty to a brand in the new 21–28 age range due to the influx of offerings. To stop the glass from overflowing, you have the following options:

1.  Get a bigger glass.

2.  More space in retail stores, as the stores aren’t getting any bigger. B: More stores, but with the cost of real estate and larger corporate retail stores the “A locations” are gone and a “C location” won’t deliver a ROI.

3.  Turn off the faucet. Stop the “overflow abundance.” The thinning of the crowd needed to happen, but it’s unfortunate that a worldwide pandemic life scare is what it took. Think of Mother Nature and our farmers who produce ingredients to make these beverages. They burn off their fields after harvest to create new healthy growth for the coming year.

  SS: The mid-size and larger distillers will benefit from this pandemic. Part of what has hindered their typical growth patterns is the number of new entrants and the plethora of local distillers who often gain favor.

  The second tier puts an incredible focus on companies that provide their quickest pathway to recovery/profitability, which will likely cause some brands to have even less attention. I believe some brands will be delisted before that dance plays out.

  Once we reach the third tier, the on-trade will rely on brands that provide value and support. Off-trade is doing very well, but I don’t foresee these profits being poured into unsupported/unknown craft brands, as consumer confidence isn’t likely to be there to warrant the investment to carry them.

  BM: In what ways is a relaunch plan essential now, and how can a producer formulate one? What might it entail?

  JH: I tend to have three or more plans for almost every situation—you can never be too ready, but you can always be underprepared.  One may ask how to prepare as a producer. In order to plan, know your business history:

•    Where have you struggled before?

•    Where were you suffering most recently?

•    How agile is your marketing team to communicate your company’s changes, and in a tone that maintains a positive message? 

•    How agile is your production team in shifting from kegs to package? 

•    How able is your operations team to facilitate the changes that need done: ordering disposable growlers, cans, contactless delivery material, etc.

•    How able are you as the proprietor to manage the economic responsibilities needed to maintain changes in your company?

•    Are you able to make hard decisions as needed?

•    Laying off or furloughing a long-time employee is incredibly hard to do. Do you have a support system yourself for this?

  Account for everything that has happened and can happen. 

  RL: What is the saying: “You have one chance to make a good impression?” Well, now you have a second chance! Look at your original business plan and model and select all the positives—then write a new one. You can remove things you did wrong and implement those you thought of after the fact. You know more now, but not everything. So source out what you don’t know, a.k.a, “phone an expert.”

  SS: No matter how this pandemic is influencing your business, it’s vital to create a strategic plan with several pathways and outcomes, for there is only one who is all-knowing in this unknown, and that is neither you nor me.

  With plans in place, financial models need to be built to ascertain how much time you have, and along with an awareness of critical decisions and time periods. Assigning weights to the various outcomes also allows you to make a calculated risk assessment on what should even be attempted.

  BM: What top three action items do you recommend to producers right now?

JH:

1.  Don’t produce just to produce unless you need to burn through raw materials already purchased. If you can, barrel-age or delay the release dates to maintain the production/release rate to sales rates.

2.  Take a cold look at your finances. The hardest part of that is being honest with yourself. Don’t let ego make the decisions.

3.  Be as proactive in your community as possible. If you can, develop a T-shirt that’s available online or curbside with 100% of the proceeds going to support your furloughed taproom staff or a local community cause. Work with your distributors in other communities outside your own to be supportive there as well. Be part of the community, even if you’re not local—keep your face seen in a positive way.

RL:

1.   Evaluate finances. What can you afford to do, and what can you afford not to do, have or upgrade?

2.   Branding. What can you improve upon from a brand perspective—as in, how to reach the consumer and engage with them? Get them to stop scrolling, and “like” (buy) your brand. I think virtual happy hours will be a popular thing moving forward for friends and families apart.

3.   Distribution. Improve your relationship with the distributor network. This also means having adequate sales-brand representation to work with your distribution network to secure those placements.

SS:

1.  Center yourself and get extra clear on your definition of success.

2.  Develop a rock-solid strategic plan and financial model.

3.  Get your team informed and aligned, from front-line workers to investors. Prepare them mentally and emotionally for what’s at hand. Ensure that you have the right warriors, and that you have the leadership and wisdom to see them through.

  BM: In what ways can producers work within their communities and develop new marketing strategies to rebuild their businesses?

  JH:  As mentioned above, team up with distributors, businesses that supported your brand well, and charities and causes that are positively helping communities during this pandemic. 

  RL: Thank the community for the support during this crisis. If you have a loyalty program, use an email marketing platform to send a direct thank you letter to the zip codes where members reside. Make it a bounce back: “Thanks for the support, bring this letter in for a ½ off item,” or a similar promotion.

  SS: Every business is in this together, and every business is going to need help. Distilleries and other craft producers have always been important members of communities, from supporting other local businesses such as farms and utility companies; to offering dependable and well-paid jobs from production to sales to executives; and of course, providing extensive tax revenue for their municipalities and states.

  Distillers switched gears during world wars, and are doing so now during the pandemic. This is an amazing time to be a leading light in the community and an essential economic engine in a town’s rebirth. We often say “support local.” This is a two-way street and right now, distillers can lead.

  BM: Finally, “no revenue” is an obvious answer to the question, “Should I close?” But in the current over-expanded market, what other answers might a producer consider?

  JH: SKU reduction. If you have a brand that’s working and some that are lagging, but they’re being produced to fill out the portfolio to make your brand more attractive to distributors, grocery, C-store sets or franchise restaurant chain mandates—cut them! Focus on what’s working and do it well.

  RL: Be humble. It’s more admirable to ask for help than to never build a new door to walk through. Also consider:

1.   What’s your quality of life? Health, stress levels, missing kids’ activities because you must run the business and so on. This pandemic has brought families together. More meals in groups, board game conversation and outdoor life vs. a face in a phone all the time.

2.   Are you staying true to the mantra, integrity and goal of why you opened the business? Some people will say no—they’re just trying to keep up.

  SS: This pandemic will hopefully be the toughest business challenge you’ll ever face in your lifetime. As such, it presents an excellent opportunity to confirm your commitment to your business:

1.   Is it your life’s calling/purpose?

2.   Do you have the energy and resources to start back from where you were in the early years?

3.   What will your personal and financial well-being look like if it takes two years to get to where you were at the end of 2019?

  If you have the fortitude and the wisdom, you can work through this. And the field will likely be even greener if you can make it through the next 730 days.

SUPPORTING “TRADE” DURING COVID-19

By: Ryan Malkin

  Does the rulebook go out the window during a pandemic? As the Alcohol and Tobacco Tax and Trade Bureau (“TTB”) and states weigh in via guidance and industry advisories, the resounding answer is no. Still, brands seek to support bartenders with, by and large, pure intentions. That is, brands have money and bartenders may not. Bartenders and brands establish important and long-term relationships over the course of, in some cases, decades. If your friend needed a meal, you’d certainly oblige. However, when the funds are coming from an upper tier (manufacturer, supplier, wholesaler) member’s pockets, we must consider whether and how funds can go towards trade. As a threshold matter, we should consider whether the bartender is employed or unemployed. If a bartender is unemployed, arguably that person is no longer considered a retailer within the meaning of the rules. If that’s the case, the rules with regards to how a brand may engage with that person may also go out the window.

  By way of very brief background, it is unlawful to induce a retailer (an on-premise or off-premise licensee) to purchase your brand to the exclusion in whole or in part of another brand’s products. In particular, the federal and most state rules note that, subject to exceptions, “the act by an industry member of furnishing, giving, renting, lending, or selling any equipment, fixtures, signs, supplies, money, services, or other things of value to a retailer constitutes a means to induce within the meaning of the Act.” In short: unless there is an exception, you may consider the giving of any “thing of value” to be impermissible.

  That means, but for exceptions, it is impermissible to acquire or hold any interest in a retail license, pay or credit a retailer for advertising, guarantee a loan to a retailer, require a retailer to purchase a certain amount of products, or provide any items that are not allowed under an exception. Those of us in the alcohol beverage industry may not realize it, but we largely play in the world of exceptions. The exceptions are where you find it permissible to offer point-of-sale materials, conduct tastings/samplings, provide displays, offer educational seminars to retailers, and stock/rotate your products.

  Federally and in many, though not all, states the providing of the “thing of value” must also lead to exclusion. Exclusion is when the practice “puts the retailer’s independence at risk.” To determine that, the TTB will look at the practice and consider, among other things, whether it required an obligation on the part of the retailer to purchase or promote the brand, and whether it resulted in discrimination among retailers. That means the brand did not offer the same thing to all retailers in the area on the same terms without business reasons for the difference in treatment.

  Now that we’re on the same page with regards to the rules, we want to consider whether the person we want to assist is employed by a retailer or unemployed. If the person is employed by retailer (remember that means on-premise or off-premise), the brand will be more limited in how it may engage with that person. In short, follow the pre COVID-19 rules. TTB’s recent guidance on this topic specifically states that “the furnishing of business meals or entertainment to a trade buyer is an inducement under the Act” if the inducement results in the full or partial exclusion of products sold by that brand in the course of interstate or foreign commerce. In other words, according to TTB, “the furnishing of business meals or entertainment to a trade buyer is not by itself a violation of the Act.” In fact, providing retailer entertainment is quite common and many states have specific regulations that permit the practice.

  Typical states rules will require that the brand’s representative be present, that the entertainment be reasonable, and not conditioned on the purchase or agreement to purchase any of the brand’s products. Retailer entertainment rules are how you often see brand’s take bartenders and liquor store owners to ballgames, concerts and dinner.

  Given the social distancing rules, it is impractical and unsafe to get together with working trade. Instead of going to dinner and discussing business, it may be worth considering whether a brand feels comfortable doing so online via, say, Zoom or FaceTime. The brand can send drinks and a meal to the bartender. When the food and drinks arrive, the brand and the bartender can hop online and eat together. The brand representative would be as present as one can reasonably during this time. Of course, the brand should analyze this against the rules in the applicable state(s) and with its own attorney.

  However, if the bartender is no longer employed, one should now consider him or her as just a regular consumer, albeit with above average mixology skills. Now the brand may feel comfortable entering into an agreement with the person to be a brand consultant to perform any number of services. For instance, to create how-to cocktail videos or conduct virtual tastings. The brand would then pay that person whatever the two agree as reasonable. The brand should consider putting an agreement in place with that out-of-work bartender. The agreement should include basic provisions, perhaps paying particular attention to intellectual property (we own it, you’re using it with our permission and we own what you create) and representations around the unemployed bartender’s status. This compliance section should require the person being hired to acknowledge that he or she does not have any direct, or indirect, ownership in any retailer, and, at minimum, that the fee being paid is not conditioned on or being used to induce any retailer to purchase the brand’s products to the exclusion of any competitive products.

  Now that you have a solution for supporting both employed, though perhaps struggling, bartenders and those out-of-work, go out there and keep your brand alive and relevant during these unprecedented times.  Be careful out there.

  Ryan Malkin is principal attorney at Malkin Law P.A., a law firm serving the alcohol beverage industry. Nothing in this article is intended to be and should not be construed as specific legal advice.

For more information contact Ryan Malkin at…

Malkin Law, P.A.

260 95th Street, Suite 206

Miami Beach, FL 33154

Office: (305) 763-8539

Mobile: (646) 345-8639

Email: ryan@malkin.law

Website: www.malkinlawfirm.com