Category: Distillery

The Most Popular Spirit You’ve Never Heard of: “Vodka”

Cyndi
3 vodka red bottles

By: Tod Stewart

That’s likely the answer you’ll get if you ask any spirits aficionado—and even a few distillers—what is the world’s most popular spirit. Though whiskey would have been a better guess, neither of these categories combined can hold a candle to one that you may never have heard of, namely, baijiu, China’s “white alcohol.”

  You probably don’t see it advertised in North American magazines, on roadside billboards or as a sponsor of entertainment or sporting events. But baijiu’s lack of visibility in no way diminishes its incredible sales perfor-mance. A glance at the 2021 Brand Finance report on global spirits shows that baijiu brands captured the five top slots in terms of brand value. And though “popular” may mean different things to different people, most who make a living distilling would likely prefer high revenues over high visibility. The top baijiu brand—Kweichow Moutai—generated an eye-popping USD 45 million in sales in 2021. The next one down, Wuliang-ye, pulled in a modest $26 million or so. It’s not until you work your way to the sixth spot that you hit some-thing recognizable—Jack Daniel’s. Sales generated? Close to four million dollars in 2021. Nothing to sneeze at, to be sure, but pretty much chump change compared to Moutai or Wuliangye.

One reason China’s national spirit flies under the radar of most Western hooch lovers is simple: About 99% of the volume distilled never leaves its homeland. Another is likely that, to the uninitiated, baijiu’s aromatic and flavor profile is decidedly alien, but we’ll get to that. Also, the stuff isn’t cheap, with the most coveted bottles selling for hundreds of dollars. A few go for well over 1,000 Canadian dollars.

  In its homeland, baijiu flows like a river through birthdays, weddings, national celebrations and even diplomat-ic encounters. It was baijiu, after all, that helped thaw the ice during the somewhat tense Sino-American ne-gotiations of the 1970s. President Richard Nixon raised a glass, possibly two, in an historic toast with Chinese Primier Zhou Enlai in 1972. Margaret Thatcher was treated to a round of it upon conceding Hong Kong back to China. At one point, baijiu consumption by Chinese government officials got so out of hand that in 2012 President Xi Jinping ushered in austerity measures to prevent copious amounts of public funds from turning into copious expenditures on baijiu. In China today, baijiu enjoys a fanbase that runs into the hundreds of mil-lions who actively consume most of the billions of liters distilled every year, so why even bother with an ex-port market?

  Okay, so it’s historic and popular, and expensive. But what the heck is it, exactly?

  Pronounced “bye-jeeoh,” baijiu is a clear spirit distilled primarily from sorghum, a hearty, drought-resistant grain of African origin. What makes it particularly useful in spirit production is its easy gelatinization—a fancy term for the breakdown of starch into a paste when steamed. (It can also be particularly useful in generating triple-word scores in Scrabble). Rice, glutinous rice, wheat, millet, peas and corn can also find their way into the mix. These are not the ingredients most international distillers would even contemplate using, with the ex-ception of corn. But if the ingredients seem a bit unconventional, it’s the distillation and aging of the spirit that raise the most eyebrows.

  The process that most of us are familiar with typically starts as a two-phase endeavor. For example, in whis-key making, grains are first subject to saccharification (another potentially winning Scrabble entry)—the con-version of starch to sugar. Yeast is then introduced to convert the sugar to alcohol before being distilled.

  In baijiu production, this becomes a one-step operation thanks to the use of jiuqu or just qu (pronounced “chew”). Qu is an interesting little beast. For those who know the ins and outs of sake brewing, qu in baijiu making can be likened to koji in sake brewing—both are fermentation starters, and they both result in what is referred to as “solid-state” fermentation. There is plenty of scholarly material floating around the internet for those curious about the process (or are having trouble sleeping). Suffice to say that it incorporates a solid ra-ther than a liquid fermentation catalyst (solid-state fermentation vs. submerged fermentation). The “solid,” in this case, is qu.

  Writer’s note: I should pause a moment here to say that what I’m describing next refers to grain-based “big qu.” There’s also a rice-based “little qu.” The ingredients differ, but the use of each and the end results are similar.

  Qu typically starts its life as a paste made from clumps of moistened grain. When raised in the proper envi-ronment, these clumps attract wild yeasts, bacteria, and assorted microorganisms from the air. Fashioned into bricks, the qu—having generated considerable heat (up to 145 degrees Fahrenheit) during the microbe infestation period—are cooled for several weeks before sitting in storage for a few months to maximize flavor. In the baijiu fermentation process, ground grains are soaked, and crumbled qu added. The enzymes in the qu convert the grain’s starches to sugar. The yeast in the qu then converts the sugar into alcohol. The fermented grains are then distilled—a process that involves forcing steam through the grains and collecting the concen-trated alcohol. This process is repeated, with each batch stored separately. Aging typically takes place in clay pots, sometimes buried underground (fermentation often takes place in underground clay vessels as well). In the final process, various batches of aged baijiu are married together. In some cases, up to 200 different batches make the end product.

  Okay, so what’s the result of all this toil? Upon their first nosing and sip, Baijiu newbies may wonder why so much time and effort went into creating something so, well, “unusual” (I’m refraining from using more descrip-tive language here). Baijiu is a complex spirit, no question there. The real question is whether or not you have any hope of warming to the sort of complexity baijiu offers.

  First, it’s helpful to know that baijiu “styles” are defined aromatically and fall into four broad categories: light aroma, rice aroma, sauce aroma and strong aroma. These are pretty self-explanatory, but you probably won’t be able to figure out which is which by looking at the label, even if you can read Mandarin. Of these, the most popular—and probably the most challenging to the new-to-baijiu crowd—is the strong aroma variety. I’ve tried a few of these, including Wuliangye and Yanghe, and, personally, find them a bit tough to describe. Funky, fruity, fishy, earthy: To some, fascinating, maybe not so much to others.

  I’ve also tried a few in the sauce aroma category, including the famed Kweichow Moutai. While I wouldn’t necessarily be inclined to get up early to secure a bottle, I’ll admit I found Moutai to be rather pleasant—in an “I have never tasted a spirit that even came close to something like this,” pleasant. With its penetrating soy sauce, herbs and fermented bean aromas and flavors, it’s a savory, slightly salty, and certainly distinctive tip-ple. For those into the umami-rich profile of nato, soy sauce, kimchi, miso and other fermented delicacies, sauce aroma baijiu might be your next thing.

  A note of caution: Baijiu is potent stuff, typically bottled well over 40% ABV. The traditional Chinese way of toasting with it involves a rather complex ritual, culminating in the knocking back—or more accurately, re-peatedly knocking back—of thimble-sized glasses of the clear liquor amidst cries of “ganbei!” which trans-lates, somewhat loosely, as “bottoms up!”

  On that note, I wish you ganbei and good luck in your exploration of a new adventure in the spirits world!

Taking it Easy With Light Spirits

Cyndi

By: Hanifa Sekandi

You want to be the life of the party, but you do not want the party to take the life out of you. So you are on the hunt for a middle ground where you can entertain and imbibe with friends yet feel refreshed in the morning. So far, you have tried mocktails and light cocktails with just a splash or two of tequila. Globally, you are not alone. Just like you, people are looking for lighter spirits that maintain a robust flavor profile. Luckily, the industry is catching on. Spirits, ready-to-drink beverages and beer brands create must-have light spirits and drinks to keep the party going with-out tipping the scales.

  This change is a major innovation in an industry where consumers desire more than just the same thing packaged differently. Light spirits attract discerning beverage enthusiasts who seek a healthier lifestyle or simply to consume less alcohol. However, craftsmanship and ingredient still matter, and consumers are not ready to compromise quality. Brands who plan to enter this bur-geoning, niche market must understand consumer demand and how and what to bring to the shelves.

What is a Light Spirit?

  When discussing light spirits, it sounds like we are talking about the paranormal. Alas, we are not. However, it does seem like magic when thinking about a once hard liquor becoming less po-tent.

  So, what is a light spirit? A light spirit, also known as a spirit drink, is an alcoholic beverage that contains a low alcohol percentage between 0.05% and 1.2%. This percentage scale is not con-sistent across the board and is dependent on the alcohol type. Some lighter alcohols are referred to as “reduced alcoholic” beverages since they contain higher alcohol content than light spirits. Anything above a 5% ABV is considered a reduced or moderate alcoholic beverage. Moderate alcohol drinks contain approximately 9.5% ABV. This percentage scales up to 20% ABV for spirits, far below the higher alcohol range for spirits with a legal minimum of 40% ABV.

  As the market gains momentum, lighter spirits will provide consumers an outlet to create and imbibe quality cocktails and drinks that still taste as good as their full alcohol counterparts. One could consider lighter Scotches, whiskeys and gins as the rebellious offspring of the spirit world, having one foot in tradition and the other in modernity. An example is Scotlands’s Whyte & Mackay Light with a 20% ABV. This smooth, earthy spirit is aged in bourbon and Sherry casks. The fact that it can be enjoyed neat or over ice is a true test for a moderate spirit.

  This trend has seen gains in North America and across the globe. A study conducted on alcohol consumption in the U.K. found that Brittons are either reducing their alcohol intake or opting for no or low alcohol alternatives. According to the study, by 2030, there will be a decrease in alco-hol consumption per adult by 11 liters. The change is predominantly led by individuals 18-24 in the U.K. and 25-34 in the U.S.

  The results provide perhaps an unexpected pivot from previous generations who viewed these years as a time when drinks were endless and throwing caution to the wind was the norm. The “viva forever” celebration no longer fits the ideals of many younger imbibers. Light spirits seem like an appropriate transition for these consumers, who have less desire for wild nights of binge drinking.

  Globally, the light spirit trend is set to grow 34%, a significant marker since product selection in this category can be limited. This growth possibility opens the door for some brands to change focus and become light spirits producers.

  Two things that cannot be compromised when crafting lighter spirits are that they must be pre-mium quality, and they must blend in. It is not about standing out. It is about being a welcome addition to a bar cart or restaurant menu selection. The pleasant surprise for a low ABV spirit should be that there is no compromise on taste, so much so you cannot tell the difference be-tween it and its higher alcohol counterpart.

Taking it Light & Easy

Around the Globe: South Korea

  Change in every industry is inevitable. The transition to lower alcohol spirits has been slowly happening over the last ten years. Notably, in 2015, Diageo debuted a 35% ABV “spirit drink” – W Ice by Windsor – in South Korea. The spirit was the first low ABV whisky.

  What spurred this change in South Korea? Simply, whisky is no longer the desired spirit. There was a time in South Korea when Scotch was the drink of choice and often used to make a popu-lar drink called poktanju, a combination of beer and Scotch. Another reason for this change, sim-ilar to other countries around the world, is affordability. Younger consumers in South Korea want inexpensive spirits. In addition, spirits synonymous with youth appeal to this generation. Although there has been a shift and the younger generation is finding interest in what was once considered an “old man’s” drink, the creation of spirits that appeal to younger consumers has taken hold as brands observe the popularity of vodka.

  As a result, the goal of whisky brands in South Korea is to entice people to see it as a viable drink choice by lowering the alcohol content and promoting it under the guise of light and con-scious imbibing.

The Sensible Imbiber

  Taking something old and giving it a new image needs to encompass more than beautiful pack-aging. A complete product delineation needs to be undertaken to make spirits appear new and fresh. The central premise must sit within the ideal of living a more healthy lifestyle. Drinking just one glass of spirit neat or over ice and not feeling the effects also signifies the end of an era of binge drinking, ushering in a new time of sensible imbibing. For the light spirits consumer, drinking is about living life while not feeling pressured to be anything other than yourself. It is not about standing out or being the life of the party. Instead, it is about connection and requires one to slow down and experience moments that build memories worth remembering.

The Brewstillery Movement

Cyndi

By: Kris Bohm: Owner of Distillery Now Consulting LLC.

gin drink set

Breweries make beer and often their equipment has the capacity to brew more beer than there is necessarily a demand for. Plain and simple, idle equipment does not help generate cash flow. An alternative use to consider to keep idle brewery equipment running is whiskey. American single malt whiskey is the new hot trend in spirits. Single malt whiskey has been touted for decades in America as a premium whiskey, and now bourbon whiskey is absolutely booming worldwide. If your brewery has a brew house that is sometimes sitting idle, it is time to put it to work. With the addition of a commercial still for distilling, a brewery can turn an idle brew house back on, and start producing single malt whiskey. The addition of a distillery will create a new business avenue for a brewery that can bring in new customers and generate more revenue for the overall business.       

Brewers Making Whiskey

  A few of the well known breweries, who have jumped into the distilled spirits world, are Ballast Point and Rogue Ales. There are amazing spirits being produced and distilled by breweries all over the world and your brewery can seize this opportunity as well. Brewstilleries, as we will call them, are pioneering a new business model. By using existing equipment to produce the wort or mash for distilled spirits, a brewery can create a diverse portfolio of products which can appeal to a broad base of customers.

  Ballast Point Brewery is a notable and very successful brewery that added a distillery to their operation. The Ballast Point took on a wild side project in 2007 where they added a still to their brewery in California, to experiment in spirits production. The brewers there mashed a beer recipe, then lautered an un-hopped wort that was then fermented and distilled into single malt whiskey. They also used their equipment to cook corn mash for bourbon production. A few years later, their whiskies had aged in barrels and it was bottled then released. Both their single malt and bourbon were wildly successful and well received spirits. Ballast Point Brewery sold a few years after the distillery was started and their distillery branched off to become Cutwater Spirits.

Tools of the Trade

  Breweries and distilleries use equipment that is very similar for the production of beverage alcohol. Fermenters, pumps, hoses, yeast, mash tuns, lauter tuns, and fermenters are common tools utilized by both distillers and brewers. Some breweries have capitalized on this opportunity and co-utilize their equipment and expand into distillery operations.  Let’s detail a few of the tools that brewers use that distillers can co-utilize for whiskey production. Of course this can only work if the brewers are willing to share.

Brew House Mash Tun

  A brew house is the essential tool used for the production of beer. This brew house will sometimes be idle when there is not enough demand. The steam heated mash tun in a 4 vessel brew house is used to mash malted barley for brewing beer. This equipment can also be utilized to produce mash for whiskey. With a few small changes, a mash tun can be used to produce cereal mash, made with corn or rye, that is cooked and fermented for bourbon whiskey.

  The production of malt whiskey in the Scottish tradition, using 100% malted barley, requires more complex equipment than the basic cereal cooker utilized by most distilleries. The lauter tun is a unique equipment for separating barley from the sugary wort in beer production. When making American single malt whiskey, the lauter tun is used to produce wort for distillation in the same way it is used to make wort for beer.

Fermenters

  Every brewer and distiller has fermenters in which they transform grain from sugary liquid into alcohol through fermentation. The fermenters used in a brewery work perfectly for fermenting wash or wort destined to become whiskey. If the excess space is available to ferment, a distillery can make use of otherwise empty tank space. Often distillers ferment their wort for whiskey fast and warm. A fermentation is often finished and ready to distill in as little as 4 days.

Pumps and Hoses

  The workhorse tools of brewers and distillers are their pumps, hoses and tri-clamps. The same pumps and hoses can be used to accomplish liquid transfers in a brewery and a distillery. Sanitization is important to mention here as it is easy to introduce unwanted bacteria or yeast into hoses if a distiller is not careful and conscientious of proper sanitization, which is required in a brewery for beer production, but not as necessary for a distillery.

Yeast

  The essential ingredient that all producers of beverage alcohol must utilize every day is saccharomyces cerevisiae, or the fungi simply known as yeast. The yeast used by distillers and brewers is closely related. In fact, many brewstilleries will use the exact same strains for both brewing and distilling. The use of yeast and the knowledge of how to handle yeast effectively is similar for brewers and distillers. Sharing yeast strains and yeast propagation equipment between a brewery and distillery increases the value reaped from every batch of yeast.

  All of these tools above can be made to serve double duty for a brewstillery. Careful planning, management, and execution are key to successful sharing of equipment.

Behind the Scenes

  Many questions come up in the discussion of adding a distillery to a brewery. Let’s go through and look at some of the common questions.

  How does a brewstillery function and get licensed from a legal perspective?

  The answer to this question will vary widely depending on the location of the brewstillery. Every state and country has different laws on what a brewery and distillery are allowed to do when working in conjunction. Typically, the distillery operations are required to be separate from the brewery both in physical location and in bookkeeping. The way a brewery meets this requirement of separation is as simple as a wall that keeps the two businesses apart with a separate exterior door to enter the distillery. A distillery can share steam for heating and glycol for cooling with a brewery, but the key here is that the still and the vessels holding distilled spirits are kept separate from the beer. On licensing a distillery will need to get a federal and state distiller’s permit before they can start producing spirits and may also need local licenses or permits.

  How are records and bookkeeping managed for a brewstillery?

  When it comes to bookkeeping, the distillery part of the brewery is typically an entirely separate business. This means a separate business entity or LLC must exist for the distillery which will hold its own business license, separate books, and tax reports. For the day to day operations and transactions, a distillery within a brewery will often buy the grain from the brewery and lease the brewing equipment on a daily basis to make wort for whiskey production.

  How is a distillery taxed?

  Taxes are a big concern because distilleries and distilled spirits are taxed very differently than beer. Although they are taxed differently, by having the distillery operate as a separate business it makes the bookkeeping and taxes simple by not mixing them with the brewery. Volumes have been written on taxes of distilled spirits all about proof gallons, wine gallons, and gauging, but we will save a deep dive into taxes for another day.

  How much beer does it take to make whiskey?

  In the production of a single malt whiskey the sugar content of the wort is on the high side to maximize the potential amount of whiskey produced per batch.

  Often the ABV of a fermented wash is as low as 7% to upwards of 12%

  There are a multitude of factors that will affect the amount of whiskey produced per pound of malt, including mash procedures, fermentation, distillation and maturation.

  When distilling a beer you can expect to roughly see the following yields. This estimated yield includes the distiller’s cuts and loss from barrel aging.

  A single 31 gallon barrel of 10% abv beer can produce upwards of 25 bottles of whiskey.

Beer to Whiskey and the Hops in It

For the vast majority of whiskies both malt and bourbon are strictly made from grain. No hops or other flavoring agents are added. Beer, of course, has hops and specialty grains in it. A beer that is distilled into whiskey which we will call “hopped malt whiskey,” will carry the distinct flavor of hops and into the spirits. This can be good or bad, depending on who you ask.

  Let’s weigh the good side of whiskey made from hopped beer.

  Hopped malt whiskey tastes very different from traditional Scottish malt whiskey. Because it tastes so different and can be marketed as part of the beer story, a hopped malt whiskey is often well accepted by the public as a new kind of whiskey, since it is not compared against bourbon or scotch.

  There is a downside to distilling hopped beer into whiskey. Beer that is distilled into whiskey and then barrel aged carries a strong and unique flavor profile dominated by the hops. For some consumers, this flavor is off putting even to the biggest IPA loving hopheads. Most people that enjoy whiskey have a pallet that is trained to like bourbon or scotch single malt. A hopped malt whiskey tastes nothing like either of these spirits, your average whiskey drinker may not like unique flavors of such a spirit. This warning is not to deter a creative brewstillery from distilling such things, but to merely inform.

Let’s Make Some Whiskey!

  For those currently running breweries, you may be considering getting into distilling. If you are, be sure to do your homework or hire a pro to help you, as there are many differences between brewing and distilling. This learning curve can be expensive without prior experience. For those just getting started, the brewstillery model is a business worth considering that will give you access to a larger customer base, and create better returns on your equipment. Consideration of state laws is essential as they vary widely on the legality and requirements to operate on this business model. The future is looking bright for craft beverage alcohol production and brewstilleries are on the lead in producing new variations of traditional spirits.

  Authored by Kris Bohm the Owner of Distillery Now Consulting LLC. When Kris is not helping folks build distilleries and creating great whiskies, he is out riding cyclocross or defending his beer mile record. Would you like to talk about making whiskey? Drop us a line. Distillerynow@gmail.com

Is it Time to Franchise?

Cyndi

By: Raj Tulshan, Founder of Loan Mantra

franchise opportunities available

The Casual Pint, a craft beer shop and bar, opened its first location in 2011 and their first franchise two years later. Since then, they’ve steadily expanded. Now, they have 20 franchises in eight states, and have found the franchise model to be lucrative for their business – and a great way to grow their brand.

  Part of the Casual Pint’s success is a combination of a solid concept with the right set of circumstances to succeed. First, they have a stable infrastructure in place that can be replicated in other locations.  They also provided all necessary resources to their franchisees, including market research, architectural design, and marketing and sales materials. They’ve ensured that the owner of each franchise was heavily involved in their communities, a model they’ve implemented from their very first shop. Additionally, each location promotes themselves as a community gathering place that provides exceptional beer, and the business is thriving.

  Franchising, like The Casual Pint, can work really well. Consider these stats:

●   90% of franchisees enjoy operating their

      business.

●   88% enjoy being part of their organization.

●   85% feel positive about their affiliation with their franchisor.

●   80% feel their franchisor operates with a high level of honesty.

●   78% would recommend their franchise brand to others.

●   73%, given the option, would do it all over again.

  Independently owned businesses looking to grow can explore whether franchising would be a good solution for their unique situation. Here are some things to consider before you decide whether to franchise:

  Are you ready to sell your brand concept? To be successful, you’ll need more than just a savvy business concept. Before you franchise, determine whether you can clearly explain what your brand is, what it does, and its unique value proposition. Remember: you’ll need to be able to clearly articulate your brand and your vision to key audiences, including investors and potential franchisees, to entice them to get involved.

  Do you have a solid structure in place? Your franchisees will need to replicate your business model and operational structure for marketing, sales, technology, etc.  So, you’ll need to have strong systems and processes in place before diving into franchising. Expect to hand over ready-made “toolkits” for your franchisees to use in their day-to-day operations. Allow plenty of time to develop these concepts, plans, and materials.

  Can your business be replicated? Is there a market for your business elsewhere? Could someone else run another location as well as you do? For a company to thrive as a franchise, it must be replicable. The Casual Pint found success as a community-focused meet-up space with amazing beer, and it didn’t matter if the community was in Tennessee or Arizona. The concept translated well in different locations, and can continue to grow and thrive anywhere.

  Are you ready to scale your passion? Are you ready to teach and manage others on a larger scale? Are you comfortable stepping back from the daily operations and focusing more on franchise management? For example, if you’re a craft beer maker, once you decide to franchise, you’re no longer going to be hands-on with beer brewing.  You’ll be focused on running a franchise to sell your beer, and teaching other people how to brew it, sell it, market it, etc. You’ll also be helping your franchisees get set up with real estate, construction, hiring staff, etc. Are you ready to scale your passion, overseeing several others in a new and amplified managerial role?

  Are you ready to build a dream team of outside experts? It’s essential to consider hiring knowledgeable professionals to help you through the entire process of developing your franchise model, preparing the necessary documents, and navigating the finances, including securing loans. You’ll need to hire financial professionals who specialize in accounting, loans and assisting business start-ups, as well as, specialized franchise attorneys to assist in the drafting of your paperwork. 

  Are you ready to invest in the business’s future? Expect to invest personally in the venture, which may require a business loan. Also, you may need to recruit investing partners to help manage the expenses. Anticipate a variety of costs, including brand development, experts’ fees, legal fees, and outreach to potential franchisees. You’ll need significant capital to launch your franchises, so think about how you will raise the necessary cash.  Many people choose to divest a 40IK, start with personal savings or take loans from family to start their first franchise. Others seek out investors, small business loans and  lines of credit.

  Have you researched funding? There are several different ways to fund a franchise. Seeking out an experienced loan advisor that you can trust can save you time and money. For example,  Loan Mantra has relationships with all types of franchise lenders, so even if you don’t know the exact kind of funding you need, we can help you determine the right loan package. Anecdotally, bankers and financial experts notice significant cycles to franchise funding. In January, more franchisers will seek equipment loans; whereas in the summer months, specifically July & August, they often seek more inventory-based loans (e.g. a cyclical  inventory such as football jerseys to sell in a bar or other seasonal products).   Regardless of season, 7a loans are always a significant source product for franchise funding. Most franchise lenders will attempt to use a 7a product first, followed by direct equipment company loans, followed by loans given by manufacturers. The franchisor will usually have a set deal with an equipment company and negotiate those terms out front.

  What will attract franchisees to buy into your concept? Be the brand that you represent. Personally meet with potential owners and attend area trade shows. Be easy to do business with. Streamline your business processes. Loan Mantra’s franchisors are able to house all of their franchise contracts, financing applications, and associated documents online through the BLUE platform, allowing their franchisees to complete everything online, without having to meet in person or send by snail-mail. The way you do business tells others something about you. Working through an antiquated analog system may tell them you’re antiquated, whereas using today’s tech tools will tell them you’re ready for the future.

  If you’ve considered most of these points this may be the time to franchise your passion!

About the Author

  Neeraj (Raj) Tulshan is the Founder and Managing Member of Loan Mantra, a financial advisory firm with best-in-class and proprietary fintech, BLUE (“Borrower Lender Underwriting Environment”). Loan Mantra, Powered by BLUE, is next-level finance: a one-stop-shop for business borrowers to secure traditional, SBA or MCA financing from trusted lenders in a secure, collaborative and transparent platform.

  After graduating from Ithaca College in Finance, Tulshan began his banking career at Merrill Lynch in New York City. He spent more than a decade in the Currencies, Commodities and Investments Group where he also worked with global asset-backed securities, structured products and principal investments. There, he also originated and underwrote deals valuated over $100 million and structured finance transactions.

  When the market crashed in 2008, Raj saw a significant opportunity to fix the fractured lending ecosystem. Soon thereafter, he sought after and completed an MBA from the Said School at Oxford University and began developing Loan Mantra. His goal was to remove the silos that exist between lender and borrower using secure financial technology. Though Tulshan continues to be iterative with his fintech, meeting current demands of both market and borrower, his professional mission and good- natured approach with clients remain the same. In this, Loan Mantra displays its founder’s proud partnership between best-in-class fintech and top-marks human experts. Time-and-again, clients turn to Raj because they know he will always pick up the phone and offer unparalleled financial counsel in a remarkably human —even friendly—way.

About Loan Mantra

  Loan Mantra is a financial services company designed to serve small and medium businesses with offices in New Jersey, South Carolina and New York. At Loan Mantra your success is our success. This means that our attention, purpose, and intention are all focused on you, our client.  We are your ally to overcome obstacles, bringing peace through uncertain times to achieve your highest goals and aspirations. Your friendly, responsive agent will listen respectfully, and service your account actively through one of three locations in the US.  We speak your language whether it’s English, Spanish, Hindi, Bengal, Hospitality, Laundry or QSR, let us help you today. Connect with us at www.loanmantra.com, 1.855.700.BLUE (2583).

Unpacking Findings From the Craft Spirits Data Project

Cyndi

By: Becky Garrison

craft spirits tray

While Jason Parker, co-founder and President of Copperworks Distilling Company, reported an 80% drop in revenue in 2020 due to Covid-19 closures and restrictions, in 2021, Copperworks actually expanded their operations. After the furniture store directly next to their Seattle water-front property closed, they plan to lease this establishment with plans to turn this facility into a cocktail bar and event space.

  In January 2022, Copperworks signed a lease to build in the former Nine Yards Brewing facility in Kenmore, Washington. They raised $2 million for this expansion, which will allow them to distill ten times more spirits since their partner breweries, Pike Brewing Company, Elysian Brewing and Fremont Brewing, cannot produce enough product to meet the growing demand.

  Copperworks’ ability to grow during this global pandemic was emblematic of other craft distiller-ies, evidenced by the 2021 Craft Spirits Data Project report. The report was presented on De-cember 7, 2021, by the American Craft Spirits Association and Park Street Companies at the Annual Craft Spirits Economic Briefing during ACSA’s Annual Distillers’ Convention & Vendor Trade Show in Louisville, Kentucky.

  Since its inception in 2016, the Project has been a research initiative designed to quantify the number, size and impact of craft spirits producers in the U.S. Among the industry groups who participated in this project include the Alcohol and Tobacco Tax and Trade Bureau and the Na-tional Alcohol Beverage Control Association.

Assessing the Growth of Craft Distilleries

  Despite the global pandemic, the U.S. craft spirits category as a whole did grow in both volume and value in 2020, albeit at a slower rate than in previous years. Park Street CEO Harry Kohlmann attributed the slower growth rate to the early period of the pandemic when on-premise sales were shut down in a significant portion of states and consumers were “pantry loading” the brands that were available at off-premise locations. Pre-pandemic, craft spirits brands often prioritized onpremise to brand build, so it stands to reason this period was detrimental to the category.

  However, as Copperworks’ story illuminated, craft spirits companies are nimble and innovative. Kohlmann noted that the majority of them were able to transition to a market strategy that relied more on e-commerce and off-premise sales. Also, Kohlmann pointed to a 2020 trend that partial-ly made up for the drop in sales early in the pandemic regarding consumer buying habits. “Consumers went from purchasing big staple brands early on in the pandemic to more premium ex-pensive products like craft spirits when the pandemic panic subsided.”

Craft Distillers by Size

  In compiling this report, the Project team utilized data from surveys, regulatory agencies, nation-al and regional industry data sources, survey data, interviews and team assessments. The report defined a craft distillery as a “licensed U.S. distilled spirits producers that removed 750,000 proof gallons (or 394,317 9-liter cases) or less from bond, market themselves as craft, are not openly controlled by a large supplier, and have no proven violation of the ACSA Code of Ethics.”

  The survey delineated between small, medium and large craft distillers by a range of gallons and 9L cases removed from bond annually. A large craft distiller produces 100,001 to 750,00 gallons (52,577-394-317 9L cases), a medium craft distiller produces 10,001-100,000 gallons (5,259-52,576 9L cases), and a small craft distiller produces 1-10,000 gallons (1-5,258 9L cases).

  Small producers make up 90.1% of all U.S. craft producers though they are responsible for just 10.3% of annual case sales. While larger producers only make up 1.6% of the total number of craft producers, they are responsible for 56.6% of cases sold.

  As of August 2021, the number of active craft distillers in the U.S. grew by 1.1% over 2020 to 2,290. To put this growth into perspective, Park Street charted the growth in distillery numbers from 2015 to 2020. During this time, large craft distillers grew from 23 in 2015 to 37 in 2020, a 61% increase.

  Also, the number of medium craft distillers more than doubled from 73 in 2015 to 188 in 2020, while small craft distillers nearly doubled from 1,067 to 2,054.

Sales of Distilled Spirits

  The survey compared results from 2020 sales compared to sales in 2015. These statistics were not broken down by ecommerce versus brick and mortar sales. Nor did this Project address the impact of grassroots marketing strategies employed by some distillers during Covid-19, such as pairing with restaurants and bars to offer cocktail-to-go kits or forming collaborative local alcohol delivery services.

  The number of cases produced by medium craft distillers has grown from 1.3 million 9L cases to over 3.9 million 9L cases. On average, the number of cases produced by a medium-size craft distillery rose from 18,000 9L cases to 21,000 9L cases. Small distilleries grew from 597,000 9L cases to over 2 million 9L cases, with the average number of cases increasing from 559 9L to 663 9L cases.

  Overall, the U.S. craft spirits market volume reached over 12 million 9L cases in retail sales in 2020, at an annual growth rate of 7.3%. In value terms, the market reached $6.7 billion in sales, with an annual growth rate of 9.8%. U.S. craft spirits market share of total U.S. spirits reached 4.7% in volume and 7.1% by value in 2020, up from 2.2% in volume and 3% in value in 2015 and 4.6% in volume and 6.9% in value in 2019.

  In terms of distribution, large producers are often nationally distributed, medium producers are usually distributed regionally, and small craft distillers tend to be only available locally. In 2021,  46% of the total U.S. craft business occurred in the craft distiller’s home state. This local distribution accounted for 59.6% of sales by medium producers. For large producers, out-of-state business sales remain key, accounting for 70.9% of the total business.

  While direct sales at the distillery are key for all craft distillers, they are particularly important for small craft producers, with over 47% of their total business coming from this sales channel. Along those lines, less than 8% of the total business for small craft distilleries comes from outside their home state, though this number appears to be growing slowly.

  Exports add 0.9% to the overall volume for U.S. craft distillers, with medium craft distillers reporting 0.2% sales from exports. These exports declined by 32.9% from 104,000 cases in 2020.

Employment In Craft Distilleries

  According to this survey, COVID-19 had a heavy impact on the U.S. craft industry. Between 2018 and 2020, the average number of full-time employees decreased by 24%. In 2019, total employment surpassed 30,000 but was reduced by nearly 50% in 2020 to under 17,000. While this data points to a significant drop by any standards, Kohlmann noted that the industry still maintained volume growth at a 7.3% rate, reaching 12 million cases produced with fewer employees.

Ranking of Distilleries by State

  In breaking down the number of craft distilleries by region, the West and South contain the highest percentage of distilleries at 30% and 29.3%, respectively, followed by the Midwest with 20.7% and the Northeast at 20%.

  The top five states that produce the most craft spirits are, in order, California (190), New York (180), Washington (135), Texas (135), and Pennsylvania (117). In this ranking, Pennsylvania passed Colorado, which has historically been in the top five. These five states make up 33% of the U.S. craft distilleries. The next five states––Colorado (107), Michigan (88), North Carolina (80), Oregon (77) and Ohio (73)–– comprise an additional 18.6% of the market, with the remaining states representing 48.4% of the market.

Impact of Legislation on the Industry

  The Craft Beverage Modernization and Tax Reform Act reduced the Federal Excise Tax on dis-tilled spirits from $13.50 to $2.70 per proof gallon for the first 100,000 proof gallons removed from bond annually. As a result of this decision, the U.S. craft spirits industry invested $759 million in their businesses, rising from $698 million in 2019. According to the Project, the top moti-vation for investing was expanding to meet consumer demand and increase visitor space.

  As a small craft distiller who opened during the pandemic, Stephen Hopkins, owner and distiller at Aimsir Distilling in Portland, Oregon, pointed to how state law can aid small craft distillers for whom tasting sales remain critical. “Oregon recently updated its law to reduce the taxes on tasting room sales which has really helped our business survive the pandemic.”

  Also, he noted the need to streamline the process of moving products to different states. “The overhead of moving to another state is very high and often hard for small producers to overcome. Even regional states being more cooperative would help small producers as well as the consumers.”

Pumps, Motors and Drives in the Distillery

Cyndi

By: Alyssa Ochs

distillery equipment set

There are various kinds of specialized machinery used in modern craft distilleries to produce the high-quality spirits we know and love. Among these are pumps, motors and drives, which are worth learning more about to choose the best options for your distilling needs. To kick off the new year, here are some best practices and tips for ensuring that these pieces of machinery are functional and effective for their intended distilling purposes.

Distillery Uses for Pumps, Motors and Drives

  Pumps perform many unique functions in a distillery, including bringing in water, mashing, wort recirculation and fermentation transfer. Distillers also use pumps during distillation, for filtration, to fill barrels for aging and fill bottles when the finished product is ready.

  Motors drive the pump and grinding mills using electricity. Motors serve various purposes in distilleries, including pumping cool water, charging, discharging the still, agitating tanks and transferring distillate and spirits. Explosion-proof motors are critical in a distillery as a safety precaution while handling high-proof liquids and vapors. Some motors used to make craft spirits are not explosion-proof, but the key to using them safely is strategic placement on the property.

  Drives are part of the mechanical device that brings about its dynamic movement and are a great way to streamline the bottling process.

  All of these moving parts contribute to the automation process that modern distilleries use to increase efficiency, improve safety and work around labor shortages.

Pump Recommendations and Tips

  Among the many types of pumps available, centrifugal and positive displacement pumps are common in distilleries. Distillers also use flexible impeller pumps and double diaphragm air pumps with grounding tags.

  Air-driven double diaphragm pumps work well in flammable distillery areas and are versatile and self-priming. Meanwhile, electrically-driven double diaphragm pumps tend to be more cost-effective because they do not require compressed or pneumatic air. Electrically-drive peristaltic hose pumps can discard botanical waste by pushing liquid through a rubber hose and ensuring the desired flavors and fragrances remain in the spirit.

  Typically constructed with stainless-steel and hygienic materials, air-operated diaphragms pumps can handle multiple fluid types and applications, and they can be trolley-mounted for greater versatility. Hygienic pumps comply with food and beverage safety requirements, while pumps with low flow rates can transfer spirits from tanks to barrels for maturation. However, it is important to have the capability to adjust the flow rate for different cask sizes to prevent spillage and product loss.

  Glenn Mulligan at FLUX Pumps Corporation in Kennesaw, Georgia, told Beverage Master Magazine that FLUX drum and container pumps are ideally suited for distilleries of all sizes.

  “The pumps are lightweight and portable for ease of operation in many areas of the plant,” Mulligan said. “Whether you are pumping concentrates, additives or sanitizing products or ingredients like honey, FLUX has a solution. Food-grade pump options and motors suitable for use in classified atmospheres, such as explosion-proof products, pose no problems for the equipment.”

  FLUX Pumps Corporation has been producing pump technology for over 70 years, starting with the invention of the first electric drum pump. Beyond its well-known drum pumps, FLUX’s product line includes eccentric worm-drive pumps, centrifugal immersion pumps, air-operated diaphragm pumps, flow meters, mixers and complete system solutions. The company also carries a comprehensive range of accessories to suit the needs of various industries and applications.

  Overall, distilleries need pumps that provide efficient transfer of their products over a wide range of head and viscosity conditions. Multiple seal options are also useful, as leaky seals are common. Other things to look for in a new distillery pump include clog-free check valves, durable integral mounting, corrosion-resistant materials and easy installation with quick disconnect ports.

  Jon Johnson from Carlsen and Associates told Beverage Master Magazine that using pumps in a distillery is tricky, and the only type of pump he would sell to a distillery is an air diaphragm pump. Johnson has been in the industry for over 30 years and understands that distilleries must abide by rules that vary between each city, county, state and fire department.

  Based in Healdsburg, California, Carlsen & Associates is primarily a wine equipment supplier that offers positive displacement pumps, centrifugal pumps and air pumps, along with various related tools and fittings.

  “If you use an explosion-proof, Division 2 pump––which means that all rotating devices are non-sparking and have a cast-iron frame on the motor––you can put the motor and pump in there, but you have to put the control on the outside of the building and can’t run the speed control into the room because that is still illegal,” Johnson said. “You also need to have three backups if the air pressure drops.”

  He said that air diaphragm pumps could be safely used to pump high-proof and mash anywhere in the distillery and an explosive environment. Some distilleries use positive displacement pumps, but this is only safe if not in an explosion environment.

  “Make sure the products are grounded and that elastomers in the pump are compatible with whatever you are pumping and cleaning it with,” Johnson said.

  Carlsen and Associates sells Yamada-brand diaphragm air pumps, and Johnson said that the NDP-25 and the NDP-40 pumps are the most popular options. An NDP-25 pump costs approximately $3,200, while an NDP-40 model is closer to $5,000. The main difference between the two is volume.

Recommendations and Tips for Motors and Drives

  Experienced distilleries prefer energy-efficient, hygienic and explosion-protected motors, as well as those with effective brakes and built-in encoders. Different types of pumps use different motors to power them, but distillers should seek out certified motors that are explosion-proof and have multi-phase power, as some motors only fit certain transmissions.

  Air motor pumps are small pumps used to ensure safety and prevent explosions. Air motor power costs considerably more than a direct drive electric motor; however, upgrading motors can dramatically improve safety and comply with standards.

  Variable frequency drives can provide power at low speeds and have options for efficient designs, normal and heavy-duty operation, safety functions and cooling systems. Distilleries use electric variable frequency drivers as motor controllers that vary the voltage and frequency of power. This is how the electric motor is driven within an RPM range instead of a binary on or off. Drives can be programmed to minimize hydraulic shock and provide great accuracy while maximizing the properties of heat exchangers.

Considerations

  When choosing new pieces of equipment, factors to keep in mind include having access to readily available parts and quality people who can install and repair the equipment when needed. Mobile machinery and multi-functional pumps can help save valuable square footage in small distillery operations.

  Distilleries benefit from having pump-related products built from materials that conform to FDA and 3A requirements and can be quickly taken apart, cleaned and put back together. Mulligan said that this is why FLUX pumps are perfect for pumping different liquids while preventing cross-contamination. He also said that there is a common misconception that drum pumps are pieces of “throw-away” equipment.

  “While this may hold true for the lesser-quality brands, FLUX is committed to providing the best pump on the market with the lowest overall cost of ownership,” Mulligan said. “Every part for all of our pumps and motors are sold as individual components, which can result in repairs costing as little as just a few dollars. FLUX has customers that have been using pumps for over 20 years–some by just completing only the bare minimum for maintenance.”

  Mulligan also said choosing the best pump should be easy because many drum pumps on the market will solve the customer needs, but with varying degrees of customer satisfaction.

  “Selecting equipment from a manufacturer that is long-lasting, with the ability to be repaired when necessary, will result in a pump life that can be counted in decades,” Mulligan said. “Quality equipment results in less downtime and more production, ultimately adding to the bottom line. We can show you how the break-even point for the return on investment comes in just a few months, with thousands of dollars saved over the lifetime of the pump.”

Blending In

Cyndi

By: Tod Stewart

distilling instruments in the table

It’s been said that spirit distilling is a science, and spirit blending is an art. As I am neither a scientist nor an art-ist, I prefer to simply enjoy the end result of the distiller’s science and blender’s art.

  That being said, in the interest of science (possibly art), I’ve subjected myself to the organoleptically humbling “blending exercise” on several occasions, trying to duplicate house styles with the Metaxa Master Blender in sunny Greece; with the Mount Gay Rum Master Blender in sunny Barbados; with the Appleton Estate Master Blender in sunny (sort of) Jamaica; and with the Brand Ambassador for the Famous Grouse Blended Scotch Whisky in the bowels of a definitely un-sunny bar in Toronto. I’m sure there were more. Most have been men-tally blocked, as the mind can only tolerate a finite number of crushing failures.

  So, acquiescing to the reality that I would never enter the sacred realm of Master Blender, I chose instead to live vicariously through the lives of those who have, in an effort to understand more about the art and science of blending.

  Enter Cécile Roudaut, Master Blender for St-Rémy, the French distiller of one of the world’s most popular brandies. To her mind, distilling and blending are equal parts art and science, but the approach to each differs slightly.

  “For me, both distillation and blending are arts, but they are expressed differently,” she said. “I think that the art of distillation requires a lot of know-how but also intuition, and depending on what you want to achieve…inspiration.” When it comes specifically to blending, Roudaut said that “the olfactory notes are a bit like music notes, they must be harmonious and not discordant. Blending is the art of harmony of notes; there is a part of intellectual, of artistic property.”

  To me, the art/science/frustration of spirit blending is twofold. First, it aims to create a sort of liquid gestalt, where the blend turns out to be something magically different than its component parts. Secondly, it seeks to do this consistently, day in day out. Most spirits are, in fact, blends. Whether you’re blending whisk(e)y, brandy, rum or tequila, you’ll be shooting for a common goal, though you may go about it somewhat differently.

  “The common objective [in blending] is to obtain a product that conforms to a standard,” said Karina Sanchez, Global Brand Ambassador for the tequila producer Casa Sauza. “For a specific [type of] spirit, the blending process has unique details related to customs and legal constraints, production and warehousing processes, ap-proval criteria and so on.”

  These blends are typically closely guarded secret recipes, sometimes passed down from hand to hand. Could someone who’s not a part of the covenant of the Master Blender/Knights Templar/Masonic Orders in general ever be able to duplicate a successful blend? Maybe it isn’t possible. Maybe trying to replicate a blend is a mug’s game.

  So I asked a few Master Blenders this: Is trying to replicate a blend a mug’s game? To which they replied: “Yeah, pretty much.” See, even if you had all the exact component liquids and mixed them in the exact propor-tions, you still wouldn’t get the correct mix down in a blend-off competition that might last an hour.

  Here’s a possible reason why.

  Spirit blenders have been likened to marriage counselors in many instances, or at least in one instance I know of for sure. In the book Goodness Nose, Richard Patterson, Master Blender for Whyte & MacKay scotch, revealed this about whisky blending: “Not all of the whiskies will immediately fall in love with each other. Indeed, some may be totally incompatible. The boisterous, younger malts may simply flirt, only to go their separate ways. The chosen whiskies must be given time to court, time to sort out their differences and to make the necessary compromises before a perfect partnership is achieved.” Obviously, all this cohabitating, marrying and getting-to-know-each-other isn’t really doable during a blending exercise that may only last a half-hour or less. Before that stage, the professional blender’s task is not only to select the spirits that will best work together to create a final product but also to ensure that there is sufficient stock of the components on hand to recreate this product in the volume required regularly.

  “I believe that blending is about controlling all phases of the rum-making process,” said Nelson Hernandez, Master Blender at Diplomático rum. Hernandez explained that crafting what he calls the  “Diplomático style” calls for a combination of elements and processes, including the final blending of distillates extracted from three distinct stills.

  “We have a continuous distillation system we call Barbet. It was designed in 1959 exclusively for our distillery, with a very particular internal shape that allows us to obtain a light but very aromatic distillate. Another unique system we have was imported from Canada. It is called a Batch Kettle, and we adapted it to get a semi-complex distillate. Finally, we have a discontinuous copper system, which was used in Scotland until 1959 to produce malt whisky. These distinct distillation systems allow us to obtain three completely unique and exclusive distillates, which we then age for different durations and blend them to achieve our specific expressions.”

  Be it rum, whisky, brandy or tequila, once the blender is satisfied with the profile of the new blend — or the proximity to the “standard” is so close that no differences can be detected — the blend is ready to be replicated on a commercial scale. However, given the advances in modern science and technology, I wondered how im-portant the human senses are in the finalizing process, especially when it comes to duplicating a pre-existing blend. Surely in the world of gas spectrometers and the like, this task would be best handled by machines. Or so I thought.

  “The Whisky Mastery Team at The Macallan are a truly unique group of individuals whose abilities to blend single malt whisky have put them at the forefront of the industry,” said Cameron Millar, The Macallan Brand Ambassador. “The human element of whisky making is largely down to the use of a whisky maker’s nose or olfactory sense. This team of whisky makers will nose each and every cask selected for use by The Macallan, providing a quality check that no machine or technology could ever replicate.”

  In fact, of the half dozen or so Master Blenders, Cellar Masters, and Brand Ambassadors I spoke to, all were unanimous in asserting that while technology can offer assistance, it is ultimately human senses that dictate the final blend. “So far, there is no modern technology that has managed to replace the talent of men and women Cellar Masters,” confirmed Anne Sarteaux, Cellar Master for French brandy producer De Valcourt. “Of course, there are analyses that ensure the organoleptic components serving as support for the daily work, but only the human palate identifies the subtlety of the Eaux-de-vie which make up the final blend.”

  Hernandez concluded that, from a strictly human perspective, a Master Blender has to have an exceptionally good memory for aromas and flavors. Probably a bit of an understatement.

  Once the ultimate blend has been settled on, it’s time for the Master Blender to unleash it on a thirsty world. This basically involves recreating the blend by the barrel rather than by the beaker. But it’s not quite as simple as a straight swapping of millilitres for casks.

  “To start, each blend is elaborated in our laboratories with graduated test tubes,” Sarteaux said. “Then we select the available blends that we regularly test. We then develop the blend on a larger scale, always testing the or-ganoleptic quality. Each selection is then tasted. Lastly, we test our brands blind with an independent and expert consultant.”

  Constantine Raptis heads up perhaps one of the most intricate blending regimes. As Metaxa Master, Raptis blends spirits, wines, and a special aromatic component together to create the signature spirit of Greece.

  “I create Metaxa by bringing together aged distillates, Muscat wines from the Aegean islands and a secret bou-quet of May roses and Mediterranean herbs,” Raptis said. “Every blend is created following the same philoso-phy. The first step is to collect, evaluate and record all the information (years of aging, origin, organoleptic characteristics) of every cask where distillates are left to age. Then, based on my experience and — sometimes small-scale tests — I decide which cask will be used for the specific blend. The content of the casks is emptied in a tank and stirred. The new blend is then tested, and if needed, I may add some specific distillate to achieve the final character of the blend that I am looking for. Usually, my blends are 20,000 or 70,000 litres, depending on the Metaxa style that I want to create.”

  Consistent flavor is what a blender aims for, but just as different casks bring different nuances in flavour and taste, color consistency also has to be considered and typically adjusted. Raptis said, “Every blend is created with distillates of different aging that may have certain variations in their appearance. Therefore, every final blend may present slight colour variations that are adjusted by the addition of natural caramel colour. This step is important so as to maintain stable all the other organoleptic qualities of the blends.” Note that the addition of natural caramel color is standard practice in the blended spirits industry and has no impact on the final taste of a brown spirit.

  Sometimes, for blenders to offer something truly unique, a break with traditional practices (and mindset) is re-quired. Canada’s Alberta Distillers Ltd. releases an annual, limited edition Alberta Premium Cask Strength Rye Whisky. In blending the final product, a bit of “coloring outside the lines” is necessary.

  “To create our award-winning Cask Strength Rye whisky, Alberta Distillers Ltd. breaks from the traditional blending technique that other Canadian distillers are known for and selects only pot stilled liquid that is aged in new white oak barrels,” said George Teichroeb, the distillery’s General Manager. “Once matured and drained directly from these barrels, nothing is added to the whisky. Additionally, we use both pallet and rack style warehouses during maturation. This, coupled with the unique weather we experience here at the foothills of the Rocky Mountains, offer distinctive nuances to this coveted whisky.”

  Like the end product itself, the art and science of spirit blending are complex. But whether they are mingling whisky, rum, tequila, brandy or exotic elixirs like Metaxa, the aim of the blender is the same — consistency and uniqueness in aroma, flavor and color. The Master Blenders and Cellar Masters use both talent and time to en-sure that, as a spirit aficionado, you can be confident that the second bottle you buy will be every bit as enjoya-ble as the first one.

If It’s Premium & Luxury, We’re Drinking It

Cyndi

By: Hanifa Sekandi

bartender mixing alcohol

Maybe we have been home too long? Could it be sheer curiosity leading us to develop a sophisticated spirits palate? It is true that when your life is busy, you tend to give very little thought to what goes into the cocktail you are drinking. You may know you like gin, bourbon, whiskey or tequila but, unless you are a spirits connoisseur, the quality of liquor you drink may evade you. Now that you have graduated from junior bartender to an award-winning at-home mixologist, drinking just anything does not cut it. You want premium and luxury spirits that are high quality and arouse the palate. You desire a tequila on the rocks that is as smooth to sip as it is when poured for a single shot. Your bar cart is the a la carte experience that your neighbors dream of; they sure do envy it in the community group chat. It is time to expand your horizons to premium and luxury spirits from around the world.

  You may not be able to travel to a far-off land, but you can feel its energy, the ingredients, the rich soils, and the minerals that make up the alcohol in each bottle. Alas, you can feel the African rhythm, the tranquility of India, the heat of Mexico when you savor one of their premium spirits. It is the road less traveled that leads one to incredible experiences. During this time, our hearts and minds come alive and begin to dream again. Until then, the road will be through the liquid poured and made with pure heart by people who want you to discover their lands and what makes them unique.

The Heat of Mexico: Tequila

  It is not that people were not drinking tequila in years past; they certainly were. As with all things great, it takes time for people to appreciate what has always been good. Tequila traces its beginning to Jalisco, Mexico. Travelers to this sunny destination learn very quickly that tequila is one of the essential elements of experiencing Mexican culture. Yes, there is more to Mexican culture than this ancient craft spirit, but there is no denying its pulsating effects. There is the ad-age that you may have heard, “tequila makes babies,” meaning that it goes down so smooth and keeps the party going, you most likely will not remember what happened the night before. With each sip, the heat rises, the party becomes passionate and livelier. What has changed? Why has tequila gained popularity in recent years? What seems like a newfound love for tequila is due to education. Premium tequila brands are going a step further by partnering with brand ambassa-dors, bartenders with in-depth knowledge about tequila and a deep understanding of how tequila is made and what makes a brand luxury.

  For some, tequila is a waist-friendly, craft-spirit-alternative that sips well. It is the alcohol of choice when mixed with low-caloric pre-made drinks. This trend might have been ushered in with popular diet-savvy cocktails, like the skinny margarita, since pared-down emphasizes the quality of tequila used.

  Premium tequila contains 100% de agave. Lower-quality tequila, called mixto, consists of other alcohols and less than 51% agave-derived alcohol. It is most likely what you tried years ago at your local bar before they upped their alcohol repertoire due to the patron’s elevation of tastes.

  If tequila is the main event for burgeoning spirit enthusiasts delving into premium alcohol, skip-ping the frills and enjoying it “just as” seems appropriate. A familiar mid-level premium brand is Clase Azul Reposado. Due to the white ceramic bottle with beautiful blue hand-painted details, it is a recognizable brand. Although this mid-range tequila only ages for 8-months in American oak barrels, it boasts a rich flavor profile. It is not unusual to find this bottle perched on the shelves of travelers who have visited Mexico and needed to take a piece of tequila splendor home with them. Another noteworthy premium tequila made with agave from the highlands of Jalisco and aged for five years is Tears of Llorona Extra Añejo Tequila.

  Word travels fast with the premium brands recognizing that tequila education increases aware-ness and demand. Hence the prevalence of tequila tastings has become a common occurrence not just in Mexico but in bars across the globe that showcase premium tequila as the main event.

Feel the African Spirit: Brandy

  South Africa is known for its Winelands but, for those who know, there is something rhythmical-ly beautiful about African-crafted spirits. Each country on this rich continent has homegrown spirits that keep the symphony of well-made liquor loud enough to entice explorers far and wide. It is not surprising that as the premiumization of this sector flourishes, South African spirits are found on the top shelf right next to the best American-made bourbon in town. Although South Africa is known for its brandy, there is a diverse array of spirits that never fail to impress. A standout spirit is a blue-hued botanical gin by Six Dogs that gets its color from a blue pea flower. The magic of this gin is apparent as it changes to a lovely pink when mixed with tonic.

  On the world stage, South African brandy has received prestigious accolades. KWV Centenary Limited Edition Brandy, made in the Paarl region of South Africa, has a premium price tag that will send chills down your spine. Its namesake and distiller is Ko-operatieve Wijnbouwers Vereniging van Zuid Afrika, a distillery that has been making brandy for over 100 years.

  The word brandy derives from the Dutch word ‘brandewijn,’ meaning burnt wine. Brandy’s long legacy dates back to the 17th century with Dutch settlers. This is apparent with the breathtaking gardens and Dutch farmhouses where spirits are still made. South African brandy is described as having a velvety texture with robust citrus and floral notes along with an enchanting aroma. A standout attribute is that distillers maintain traditional brandy-making practices. Although they have pivoted with the times, honoring the tested and true techniques produces a premium amber spirit.

  What brandy distilleries in this country have maintained is crafting beautifully aged batches with copper pot stills as the first stage. They follow this by further aging it in oak barrels. Batches un-dergo this process for at least three years before a brandy with an alcohol content of 38-43% is ready to be bottled.

  South African brandy is composed of Colombar and Chenin blanc grape varietals, fermented to make this chest-warming spirit. For those who love wine but turn their nose up at this deep-colored, rich, alcoholic beverage, the two are close relatives that share the same roots, often liter-ally.

  When sourcing authentic South African premium brandy, keep in mind that the rules are strict for brandy distillers. Therefore the real deal is only made from grapes endemic to the South Afri-can Winelands and distilled, aged, and bottled there.

The Tranquility of Spirits in India: Whiskey

  When most people think of India, they imagine themselves in an ashram meditating and doing yoga. India is a country where people travel to find what is missing within and, for some, to simply find what is yet to be seen. It is a land that is full of beauty and undiscovered treasures. It is not surprising that premium spirits are made in a country rich and diverse with indigenous plants. The climate is ideal for growing and harvesting; therefore, making unique premium whis-key was inevitable. 

  For Hermes Distillery, a premium spirit distillery founded in 2018, producing homegrown pre-mium whiskey was a necessary endeavor. Founder Amit Kore recognized that India could pro-duce top-shelf liquor just like America and Europe. The Rockdove premium label whiskey made by this nouveau distillery bouts all the luxuries that an avid whiskey drinker desires: A rich and deep-colored whiskey, light-bodied and smooth like scotch.

  The 100-year old technique used by Hermes Distillery at their Tomsa plant, the first in India, is from Spain, and it is the same technology used by familiar brands Crown Royal and Johnnie Walker. Moving at a pace that would take most distilleries decades, Hermes is opening the door for Indian-made premium liquor to join prestigious distilleries as a top-shelf selection.

  Drinking premium or luxury is not about social class. It is about quality. A survey conducted by Bacardi found that 75% of the people value cocktails made with high-quality spirits. For those looking to experience more than a night out with any old cocktail, premium spirits allow them to enjoy the moment with ease and appreciation. It is better to stretch your wallet just a little bit to drink the real deal. In the case of tequila, 100% de agave is a must! And wouldn’t you like your botanical gin to contain ingredients sourced from the lush gardens of South Africa? Seeing the meticulous effort that goes into an Indian-made whiskey, you must recognize that there are no shortcuts for luxury. So, as we usher in a new year, let’s take the long road down luxury lane, slowly sipping one premium spirit at a time.

“SHOW ME THE MONEY”

Cyndi

After Friends and Family, Where Do I Get Growth Capital?

By: Quinton Jay

dollar bills flying

Like most entrepreneurs, founders and owners of smaller craft breweries and distilleries often find themselves having to wear many hats. You need to be aware of your internal operations and external logistical factors in your business’s supply chain, as well as understand how to best market and sell your brand’s products.

  Arguably one of the most important hats you will have to wear that is not obvious is the one that reads “finance.” Without having a finger on the pulse of your business’s finances, you’re setting yourself up for inevitable failure. Running out of cash is the number 1 killer of businesses within the first two years.

  When your finances start leaning towards the red, or you know your business requires an additional injection of capital to grow successfully, it can be easy to feel frustrated and discouraged. But this is simply another part of business; you can’t expect to reap the benefits without having to face and overcome the hurdles and challenges you’re bound to encounter.

  If you — like many other small business owners — were able to obtain at least a portion of your original capital through friends, family, or other investors, this may not be a possibility further down the road. This is where that “finance” hat comes into play once more. In order to emerge from uncertainty with a brewery or distillery that is ready to continue growing, you as a founder or owner are required to find alternative means of raising funds, especially if your overarching aim or goal is to land an eventual, profitable exit. But where do you start?

  Here are some ways that you can use as means of obtaining additional growth capital for your small brewery or distillery business when reaching back out to friends and family is no longer an option.

Understand the Realm of Private Equity Investments

  As the Managing Director of Bacchus Consulting Group and its capital management fund, I have more than twenty years of experience managing, consulting for, and investing in more than a handful of small, independently-owned brewery and distillery businesses. I have helped dozens of businesses in the industry understand their options when it comes to raising growth capital through VC investments, the separate stages of fundraising, and the impact that each fundraising option has on those businesses.

Private Equity Funding

  When the time comes to look into raising growth capital for your small brewery or distillery business, the most prominent option you will run into is private equity (PE). To put it simply, PE involves investing in companies using capital that has been sourced from individual or institutional investors, as opposed to investing in companies using capital sourced from public equity markets like the NASDAQ or New York Stock Exchange.

  For the sake of insight, the general thesis of any PE investment is three-fold. A PE investment is made to: firstly, purchase a company (or portion of a company) using significant leverage and a minimal amount of equity; secondly, utilize the industry expertise and synergies of the PE investor(s) in order to maximize the growth and efficiency of the acquisition or investment made, and; thirdly, to sell that acquisition in an approximate period of 3-7 years based on the company’s improved metrics and lowered levels of debt.

  A common misconception with PE funding is that giving away equity in return for capital is “free,” but this could not be further from the truth. Selling equity for capital is simply a means of delaying payment. With PE funding, there’s no true cap on what you can give away in return for the growth capital you want or need. If you believe in your business, you’re better off acquiring debt rather than selling a portion of your equity. When you give away equity, you’re giving away infinite returns in perpetuity.

Alternative Lenders (Non-Bank Financing)

  Some sources of alternative financing include:

●    Merchant Cash Advances (e.g., Quickbooks capital, Shopify capital, AMEX Merchant Finance, etc.);

●    2nd Lien Lenders (similar to a 2nd lien on a home mortgage)  and;

●    Unitraunche Lenders: a hybrid lending model that combines multiple different loans — sometimes from multiple lending parties — into one, with a blended interest rate that tends to average those of the lowest and highest rates of the individual loans lent.

  As their name states, these are each an alternative form of financing available for businesses looking for access to growth capital. However, these forms of financing for businesses tend to be riskier on the part of the lender, hence why they charge more for these sources of growth capital.

Traditional Lenders (Bank Financing)

  Financing for growth capital through bank loans is another available option for small businesses. This avenue tends to come with lower interest rates than most sources of alternative financing but is usually much more difficult to acquire.

  Financing can also be done through debt, rather than its equity, but again: if your small brewery or distillery business is already deep in debt, it may not be the most beneficial option available to you. Although, when acquiring bank debt, or any debt instrument (as opposed to equity via PE financing), there’s always a cap on how much you can pay for the use of those funds received.

Finding the Right Investor for Your Brewery or Distillery Business

  Regardless of which financing option you choose to go with when searching for additional growth capital, the most important factor to keep in mind is to find the specific investor, fund, or lending institution that compliments your business and its goals. If your aim is to grow your brewery or distillery into a business that can be acquired by a larger parent company in a multi-million dollar deal, then PE financing is likely your best option. Similarly, if your business has a higher amount of debt, finding an investor that can provide you with acceptable terms for a second lien may be the avenue you wish to pursue.

  Whatever type of growth capital investment you wish to see for your business, be sure to ask yourself questions regarding the synergies your investor has with your business. Some examples of these might include:

●   Does this investor have good chemistry with me and my core leadership team?

●   Does the investor have a willingness to help and mentor me and my team on how to best successfully grow our business in line with our goals?

●   Does this investor believe in me, my team, and our ideas for our business?

●   Do they have relevant experience and connections we can utilize for additional investment opportunities now and/or in the future?

●   Does this investor have the domain and expertise — along with the capital — necessary to help carry our business forward through periods of growth we want to achieve?

  If your answer to any one of these questions falls into the realm of anything other than “yes,” then chances are high that they are not the right investor to bestow you and your business with growth capital. Additionally, if you or your core team are not ready or willing to accept mentorship from an investor, then don’t waste their time (or yours) trying to receive an injection of capital for growth solely for the sake of having more cash to fuel your business’s runway. Too many businesses — even smaller breweries and distilleries — land themselves in hot water this way. Don’t become one of them.

Showing What Investors Want to See in Your Business

  Before any investor, fund, or firm will agree to make an investment of growth capital in your business, they are going to scrutinize your business from every perceivable angle. Throughout their vetting process, you can (and should) expect any potential investor to analyze no less than the following aspects of your company:

●   Business Model: How does your brewery or distillery make money? What are your key business metrics such as revenue and gross margin, operating profit, and EBITDA? Is your current model scalable or does it need to be reworked if your business wishes to continue growing?

●   The Team: Does your business’s core team (including you) possess the knowledge, skills, and ability to carry the company through periods of growth? If not, which employee(s) need to be let go and replaced? Is the team able to collectively address and resolve issues?

●   Structure and Governance: How is your company structured and led? Is there transparency and accountability across its departments? Does your business have a succession and/or key man insurance plan in place? If so, what does it look like?

●   Exit Plan: Does your company have an exit strategy in place? If not, then why not? If so, what does this plan look like, and is it reasonably sound?

  All of these factors will play a vital role in your business’s ability to land growth capital. From my own experience as an investor/financier, I am looking for specific reasons not to invest in or finance a company; anyone can fall in love with thier own deals and each deal must stand on its own merits. This means that you, as the founder or owner of your business, will need to know both your company and its market viability inside and out if you wish to gain an investment of capital necessary to grow it in a way that meets your goals.

  If you are able to show investors and financiers that you are credible and trustworthy, that your business has shown the capacity to make sales of quality products and grow from its revenue and profits to date, and that it has the potential to continue growing in its existing market or into new markets, then your chances of landing an investment of capital required for growth are much higher.

Types of New Software & Technology in the Beverage Industry

Cyndi

By: Alyssa L. Ochs

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Everything is going high-tech these days, and the craft beverage industry is no exception. If you work in this industry, staying updated on the newest technology will help you make smart decisions for your business. Not all forms of technology make sense for every beverage business, but the benefits of familiarizing yourself with what’s on the market will pay off in the long term.

How Technology Can Improve Beverage Production

  Although the processes of making beer and spirits haven’t changed much over the years, many smart technology options are available to help with everything from product-tracking to label-making to helping consumers connect with brands interactively. Whether you’re looking for help with beverage planning, supply purchasing, production assistance or quality control, there’s likely a tech-savvy solution.

  In the front of the house, technology makes it possible for customers to order drinks via touchscreen rather than through a human server. Behind the scenes, it allows tracking and data management for traceability and knowing what’s in demand. Breweries and distilleries may be interested in learning how to print 3D materials, such as creative artwork for glasses. Blockchain technology can improve trackability across the supply chain and assist producers in better adhering to regulations. Many companies use software platforms to ensure they meet compliance standards.

  Many breweries and distilleries would benefit from upgrading their data management systems to eliminate time-consuming and error-prone spreadsheets. A sound data management system can help producers with sales, distribution, production metrics and demand analytics to better understand what and when to order. Cloud-based software is often preferred by breweries and distilleries because the data can be accessed from anywhere, regularly updated by a vendor and maintained by a professional IT team. Pieces of technology should work together with existing task management apps, such as Trello, and communication apps, like Slack, that your team uses.

  Another use of technology in the industry involves mobile apps to integrate different data points, such as diagnostics, GPS, electronic logs and temperature controls. Artificial intelligence data can develop new flavors based on predictions of what consumers want. AI is also being used to improve quality control through the use of sensors and cameras.

In today’s era of staffing shortages, technology can be utilized to train staff, retain the workforce and recruit new talent when resources are strained. Beverage-makers may also use technology to expand where they sell products to lessen their dependence on traditional distribution channels.

Technology Spotlight: Refractometers

  Based in Solon, Ohio, MISCO designs and commercializes digital handheld and inline process refractometers for industries requiring quantitative determination of fluid concentration and quality. MISCO has been in the refractometer field for four decades and is the only U.S. manufacturer of digital handheld refractometers. It is actively developing new technologies to bring even greater usefulness of refractometry to its markets.

  Mark Keck, Chief Commercial Officer for MISCO, told Beverage Master Magazine that MISCO digital handheld units are ideal for generating immediate results anywhere in the operation. He said they can be programmed with up to five measurement scales from an extensive scale library to provide customers with a device tailored to their exact testing requirements.

  “This feature is especially useful for operations that produce a range of products, eliminating the need for multiple units with a single readout capability,” Keck said.

  Meanwhile, inline process refractometers are best for larger operations and give continuous readings that can be output to any data capture system.

  “For breweries, MISCO has developed a set of measurement scales that were scientifically derived from a complex sugar profile specific to wort,” Keck said. “Other refractometers base their readings on sucrose, which is why using a correction factor is required when using these units. MISCO Pro-Brewing Scales account for the wort’s complex sugar profile, which includes maltose, maltotriose, dextrose, fructose, sucrose and other materials, eliminating the need for correction factors and providing more accurate results.”

  Recently, there have been advances and innovations in refractometry that breweries and distilleries may find helpful.

  “Because every operation has unique testing requirements, MISCO has developed a build-your-own tool on its website to allow customers to easily design and order digital handheld refractometers with programming they select from our large measurement scale library,” said Keck. “In addition, we are developing new refractometers that utilize technologies that are part of the Industry 4.0 paradigm for improvements in operations, automation and communication.”

  Even when beverage-related technology looks and sounds intriguing and exciting on the surface, there is little benefit to trying it just for the sake of novelty. Keck told Beverage Master Magazine that “spyglass-style” analog refractometers are still commonly used in the industry, but these devices have numerous limitations compared to digital units, such as reading subjectivity, precision and durability.

  “When upgrading to a digital refractometer, or even considering a different digital unit, customers would want a unit that is easy to use, employs quality materials, is durable, has automatic temperature compensation, is easy to calibrate and provides readings that match the fluid testing requirements of the operation,” Keck said. “Lastly, product support should also be considered – where the unit would be serviced for routine maintenance and calibration certification.”

  Whether refractometers or any other technology, learn about the products and choose those that set themselves apart from the competition. Depending on the device, this could be related to durability, level of precision or ease of use.

  “Our optics utilize sapphire prisms for high precision, improved temperature equilibration and durability,” Keck said. “Signal detection is achieved with high-definition detectors that provide up to eight times the resolution of other handheld units. Lastly, our commitment to Lean Manufacturing principles and adoption of ISO guidelines ensures that the quality of our products is second to none.”

Benefits of Trying New Software and Technology

  Even with practical considerations in mind, producers benefit from having a forward-thinking approach to brewing and distilling and an open-mindedness about technology solutions that may help your business. Technology can help you be more flexible with production, consume less energy for an eco-friendly operation and make the quality of beer and spirits better.

  Certain pieces of software and technology help integrate functions and manage assets more efficiently, optimize production lines for greater control over processes and attract the attention of tech-savvy consumers. When used correctly, technology can help breweries and distilleries be competitive in an oversaturated market. A good technology solution exists for every brewer and distiller, whether that involves on-premise software, cloud-based software, mobile applications or specialized devices, such as refractometers.

Choosing the Right Tech Upgrades for Your Business

  It’s not always practical to take on multiple types of new technology simultaneously, but a few innovations are worth looking into further. For example, there are some excellent platforms for brewery and distillery management software, and food-ordering software for establishments serving food and drinks. Online restaurant POS systems accept instant payments and provide food traceability solutions for inventory and beverage distribution management solutions. Beverage warehouse and logistics management systems, as well as “Internet of Things” solutions to keep track of food safety recalls and shelf-life management, can be addressed with the latest and greatest technology available to the industry.

  “Tools are available or in development that can impact productivity, improve product quality and consistency and result in greater operational efficiency,” said Keck. “MISCO is integrating many of these technologies into our refractometer to allow our customers to do what they do better.”