Category: Finance

“An Outlier”

Cyndi

Why Is the Craft Beverage Industry Competitively Restrained?

glass of beer surrounded by chains

By Ethan E. Litwin

Since the 1980s, the U.S. craft beverage industry has expanded dramatically. Breweries grew from fewer than 100 in the early 1980s to nearly 10,000 today. The U.S. spirits industry shows a similar trajectory, rising from under 100 licensed distilleries in the 1980s to over 3,000 today.  The U.S. wine industry experienced earlier momentum after the 1976 “Judgment of Paris,” yet still only had about 2,500 vineyards by the early 1980s. That number has since grown to nearly 12,000.

  Despite this remarkable expansion, most craft producers remain small.  Craft brewers typically produce under 7,500 barrels annually, while craft distilleries typically produce fewer than 250,000 proof gallons per year.  These small producers face competition from dominant incumbents: two brewers control about 65% of the market, with output exceeding 6 million barrels each, while large distilleries produce more than 8 million proof gallons annually.  U.S. vintners also generally remain small, producing fewer than 60,000 wine gallons annually, while their largest competitors produce more than 15 million wine gallons.

  One of the most consistent challenges for small-scale producers has been distribution and market access.  Simply put, making a high-quality beer, wine, or spirit is only half the battle—getting it into the hands of consumers via restaurants, bars, or retail shelves is often far more difficult.  This article outlines some of the major challenges faced by small producers and suggests some avenues on how the system may be changed, or challenged.

Regulatory Barriers to Competition

The Legacy of Prohibition: The largest obstacle for small producers is the U.S. alcohol distribution system itself. After Prohibition ended in 1933, most states adopted a “three-tier system,” which separates producers (tier one), distributors/wholesalers (tier two), and retailers (tier three). Under this structure, producers are generally prohibited from selling directly to retailers or consumers, except under limited circumstances such as on-site taprooms, tasting rooms, or, more recently, direct-to-consumer shipments in some states.

  The three-tier system artificially enhances distributors’ importance—distributors often control key customer relationships, point-of-sale marketing, and product placement decisions. The architects of the three-tier system envisioned a competitive marketplace where distributors would compete for producers’ business on the price, scope and quality of their services. State franchise laws, however, significantly restrain that competition by restricting the ability of producers (generally brewers, but often in other sectors as well) to switch distributors without proving “good cause,” a dauntingly expensive and time-consuming endeavor. These laws inevitably created a misalignment of incentives, reducing distributors’ investment in marketing new or smaller brands—the very craft producers who generally lack the ability to terminate their distributors for cause.

  Most states also impose price controls on distributors in the form of “post-and-hold” rules, which require distributors to “post” their prices with state authorities and then “hold” those prices constant for a period of time. During the hold period (typically 30-60 days), producers are prohibited from engaging in any form of price competition. Some states all for limited “meet-but-not-beat” competition, which allows for price-matching, but continues to prohibit distributors from undercutting rivals’ prices. Although most states do not directly control prices set by distributors, some states have adopted uniform pricing rules, prohibiting distributors engaging in price discrimination downstream by charging different prices for the same product to different retail outlets.

  While these rules are clearly anti-consumer in effect and in intent.  Prohibition may have ended in 1933, but concerns about alcohol remained and states actively sought to manipulate market prices to discourage the consumption of alcohol.  It is hard to think of another American industry where regulations are specifically designed to restrain price competition and increase consumer costs.

Antitrust Enforcement Failures

The Problems Caused By Distributor Consolidation:

Ironically, the three-tier system was intended to prevent market foreclosure by a dominant, vertically integrated producer, while state franchise laws were intended to protect distributors from the whims of powerful producers. But as the distribution sector has consolidated, the few remaining distributors have tended to prioritize brands with high volume, national recognition, and strong marketing budgets. A small craft brewery or distillery will struggle to get attention from distributors compared to giants like Anheuser-Busch (ABI) or Diageo.

  Another barrier is the consolidation of the wholesale industry. Over the past several decades, wine and spirits distribution has become dominated by Southern Glazer, which operates in 44 states, and Republic National Distributing Company (RNDC), which operates in 35 states.  The next largest competitor, Breakthru Beverage, operates in only 13 states. Southern Glazer and RNDC command national networks and wield enormous leverage with retailers. The situation is no better in the beer segment, where independent distributors are typically affiliated with either ABI or Molson Coors. ABI, however, is now vertically integrated in many key states and its wholly-owned distributors do not carry third-party brands other than a handful of very small local brands. Accordingly, in markets where ABI’s wholly-owned distributor is present, craft brewers are forced to deal with a monopolist—the independent affiliated with Molson Coors—to gain market access, with predicable results.

  For small producers, signing with a distributor is often seen as a milestone—but in practice, many end up buried in vast portfolios. A small distillery’s gin may compete for the same distributor’s attention against dozens of other gins, including global brands with multimillion-dollar marketing budgets. Without aggressive representation, small brands get little visibility, and sales stagnate.

Competition for Shelf and Tap Space

  Even if a distributor agrees to carry a small producer’s product, there remains the issue of limited space at the retail or restaurant level. Supermarkets and liquor stores typically allocate shelf space to brands with strong consumer demand or to those offering better promotional support. Large producers can incentivize retailers with discounts, rebates, and marketing dollars, effectively buying visibility. Small producers rarely have the financial muscle to compete. Without marketing support, distributors and retailers often deprioritize smaller brands. Even when products make it onto shelves, they may sit unnoticed among hundreds of competing SKUs. Shelf placement matters enormously—a small brewery’s seasonal IPA stuck on the bottom row may never be seen by casual shoppers.  For restaurants and bars, education is key. Servers and bartenders are more likely to recommend a product they know. Yet small producers often lack the resources to run training programs, provide free samples, or sponsor events at scale.

  Similarly, bars and restaurants often have limited tap handles, wine lists, or cocktail menus. A bar might have 20 taps, but a distributor may push them to feature a national brand lager and IPA, squeezing out smaller craft options. Wineries face the same issue with wine lists: Many restaurants lean toward recognizable labels that reassure consumers, leaving little room for lesser-known vineyards.

Consolidation in Adjacent Markets Threatens the Viability of Craft Producers

  Distribution challenges are compounded by the financial realities of small production. Craft breweries, distilleries, and vineyards typically operate with slim margins. The costs of raw materials, labor, equipment, compliance, and packaging leave little room for the kinds of marketing and promotional spending that larger competitors deploy.

  For example, the cost of aluminum beverage cans has risen sharply in recent years due to a combination of industry consolidation and trade policy. The aluminum can market has become increasingly concentrated, with just three suppliers—Ball, Crown Holdings, and Ardagh— controlling more than 80% of U.S. can production. On the raw material side, a similar pattern has emerged: Only a handful of rolling mills, led by Novelis and Constellium, dominate domestic aluminum sheet supply. In these highly concentrated markets, buyers have limited ability to negotiate price as demand for cans has surged and supply bottlenecks have emerged. At the same time, the Section 232 tariffs first imposed in 2018 added a 10% surcharge on imported aluminum, effectively lifting domestic prices as well since U.S. producers peg contracts to tariff-inclusive benchmarks. This year, the situation has become worse as tariffs have progressively increased and currently stand at 50%. Together, these dynamics have pushed can costs up by double digits over the past five years, making packaging one of the fastest-growing expenses for brewers, distillers, and vintners. While large producers with established brand presence can pass on these costs to consumers, smaller producers seeking to gain traction in a crowded marketplace may be forced to absorb a greater percentage of these costs.

Solutions

  There is no single solution to the competitive problems in the beverage industry.  First, wholesale changes to the regulatory structure governing the distribution of alcoholic beverages.  In addition to permitting self-distribution and direct-to-retail sales, the rules governing distribution should be amended to prohibit the sort of exclusive contracts that tie retailers and bars to dominant brands. Pay to play schemes, such as tap handle exclusivity and shelf space payments should be broadly prohibited.  Direct to consumer sales, widely practiced in the wine industry, should be expanded to include craft beer and spirits along the lines of recent legislative initiatives adopted in New York and elsewhere. A federal law enshrining direct of retail and direct to consumer sales would also reduce the compliance headaches created by differing regulations at the state level.

Regulatory reform, however, may not prove to be sufficient to create a truly competitive marketplace where craft producers can flourish. Even without changes to regulations, anticompetitive practices can be challenged under the antitrust laws by federal and state enforcers, as well as by private companies acting alone or as part of a class action. There are several potential grounds for antitrust enforcement. Exclusive dealing contracts that favor large producers over craft competitors (e.g., denying such producers access to shelf space, taps, or distribution) can be challenged as an illegal market foreclosure. To the extent that large producers and distributors have entered into agreements that result in the exclusion of craft competitors at the distribution or retail levels, those agreements can be challenged as illegal group boycotts. Tap handle exclusivity, shelf space payments and other pay to play schemes can similarly be challenged under the antitrust laws without any further changes to regulations. Even corporate transactions, such as the acquisition of leading craft producers by large established producers, can be challenged under the antitrust laws if the effect of those acquisitions will be to substantially foreclose distribution channels for competing craft producers, forcing them to use smaller, less efficient distributors who are typically unable to secure comparable placement at retail stores—all while increasing the costs of such distribution. Finally, antitrust enforcement in packaging and logistics markets can also help to reduce costs that are disproportionately borne by craft producers.

  These issues are not hypothetical. Following its investigation, the Federal Trade Commission, which typically takes the lead on antitrust issues affecting the spirits industry, sued Southern Glazer at the end of last year for price discrimination, alleging that the distributor was offering preferential discounts to large chains making competition from small independent retailers more difficult. For its part, the Department of Justice, has uncovered evidence that large brewers use a combination of anticompetitive practices to obtain exclusive distribution, which inhibits the ability of craft brewers to expand sales. These efforts are important, but more work must be done in order to level the playing field for craft producers.

Conclusion

Marc Farrell, the founder and CEO of Ten to One Rum, is one of the lucky ones.  Through a combination of passion and business savvy, his brand is breaking through in a meaningful way.  But Marc increasingly feels like it is becoming impossible for new brands to get to market.  The system, he notes, is set up to favor large incumbents. “The U.S.,” Marc observes, “is the most forward thinking business environment in the world.  But spirits is an outlier.”  Beholden to antiquated regulations and largely denied direct access to retail customers and consumers, craft brands are “flying blind.”  If this remarkably innovative industry is to survive long-term, systemic change is needed.

Economic Moves to Make in 2025

Cyndi

Smart financial moves for beverage businesses to consider before the end of the year.

chess pieces sitting on a pile of $100 bills

By Raj Tulshan, Founder & Managing Partner, Loan Mantra

In today’s economy it might seem like the best action is to remain still. To take little or no financial action at all. But this can be detrimental to your business. Even though inflation and interest rates are high, there are still smart financial moves that your beverage business can make now for continued success.

  Interestingly, a Harvard Business Review article studied the specific actions of companies during recessionary periods.1 They measured the specific actions companies made during this time and the outcomes. It was found that a certain combination of decisions that company leaders made during this time made them more profitable coming out of and after the recession. The article states, “These companies acted progressively by deploying the right defensive and offensive moves to reduce costs selectively by focusing more on operational efficiency than their rivals do, even as they invested relatively comprehensively in the future by spending on marketing, R&D and new assets.” It is also interesting to note that successful companies cut operational waste versus people.

  With these factors in mind, here are some financial moves to consider:

Capital Forecasting & Expenditures

  Now is the time to forecast capital, credit and cash flow needed for the next 18 months. Consider new product development, seasonal and holiday spikes and shore up any money you will need. Consider USDA Value-Added Producer Grants (VAPG) for breweries/distilleries and state-level agribusiness/craft beverage incentives.2 Lock in long-term financing now while money and loans are readily available. Fintech platforms like those at loanmantra.com allow you to compare multiple lenders and access capital faster.

  If you need new equipment the tax incentive, or bonus depreciation rate, is better this year than in 2026. In 2026, the rate is set to decrease to 20%, before being eliminated in 2027. If you plan to make large capital expenditures, consider accelerating them to take advantage of the more favorable depreciation schedule.

Partnerships & Growth

  With many businesses struggling, establishing a partnership or acquiring another company might makes sense. As companies are forced to close, their customers will be looking for alternatives. Surprisingly, now is a great time to buy commercial real estate. Commercial real estate values are shifting where some markets are offering bargains for businesses ready to buy or lease. There may be less competition for prime locations. Less buyers also means that you have more negotiating power. And although interest rates can go down, you can always refinance the property.

Consumer Trends & Experiential Marketing

  Identify which of the most current consumer trends apply to your customer base and market based on that. According to current reports, what appeals to consumers is community-based localism and having a unique experience with a brand. An example of promoting this could be a campaign like, “Drink Local, Support Local Farms.” Or tell a farm-to-glass story that resonates with inflation-weary but community-focused buyers. Taprooms, tasting rooms, tours and events provide higher margins than wholesale. Use digital tools to build brand engagement like TikTok Reels to showcase behind the scenes brewing, mixing and bottling. Encourage User generated content of customers drinking your brand with a hashtag that you share on social media channels.

Operations & Expense Management

  Secure contracts for supply and pricing of ingredients early: hops, malt, fruit, glass can be volatile. Partner locally when and if possible. Aluminum can shortages are easing—explore canning over glass where margins allow. Eco-friendly packaging wins grants + consumer loyalty. Use part-time/seasonal labor during peak events. Upskill staff to cover multiple roles (bartender + tour guide).

Sales & Distribution

  New distribution channels are only limited by your imagination. Test the places you think would be ideal for your products’ expansion. Here are some places to start: retailers, grocery stores, specialty shops, farmers markets, events management firms and catering companies. Another alternative is providing a beer truck for hire, keg with delivery (keg on legs) or other creative service. It’s about creating additional revenue streams. And as some states allow direct to consumer (DTC) sales, more opportunities arise.3 Beer of the month and subscription boxes offer consistent sources of income coming in.

Tech & Innovation

  Look at the ways other industries are using AI and Data and learn from the good examples. For example, many businesses use AI for sales forecasting and seasonal product planning. Also look at different resources that are used by other craft brewers like: WriteCream Label Writer, BrewFather and BrewTarget, if you haven’t already explored these. And think outside the box. Many restaurants use QR codes for menus but how about using digital tip jars to streamline the taproom

experience? Or using customer relationship management systems to segment tasting room customers for targeted offers? And many brewers use sustainable business practices in the manufacturing process. Have you considered looking at grants that might apply to green technology that saves water, and energy?

  Navigating the financial landscape of 2025 requires strategic planning and a keen eye on both current trends and future opportunities. For your beverage business, this means actively engaging in capital forecasting, taking advantage of tax incentives and exploring partnerships that can drive growth. By focusing on consumer trends, such as the demand for local and unique experiences and optimizing operations with eco-friendly practices, you can position your business for success despite economic challenges.

  Leveraging new sales and distribution channels, including direct-to-consumer options and embracing tech and innovation can open additional revenue streams and improve efficiency. As you implement Remember that the key to thriving in a fluctuating economy is adaptability and a proactive approach to seizing opportunities as they arise.

  By considering these financial moves, your beverage business can not only weather the economic uncertainties of 2025 but also emerge stronger and more competitive in the market. To contact the author, visit loanmantra.com or connect at https://www.linkedin.com/in/tulshan/

Starting a Distillery

Cyndi

Why, When, Where, and How?

By Stephen Tomori, Kindred Spirits Consulting

The process of starting a distillery is a daunting adventure that a number of entrepreneurs have undertaken in the past decade with mixed results. The process itself is comprised of navigating outdated and overly complicated government regulations, tariffs, fights with local authorities unfamiliar with the codes related to building out a distillery, and then trying to stake a claim in one of the fastest growing consumer markets.

  Some of these entrepreneurs have failed at their first attempt, due to improper planning and poor usage of available funds. Others are barely making ends meet, while burning the candle at both ends. Finally, you have the final category of those who planned well, executed their plan, and have reaped the rewards of success.  There are no guarantees when it comes to starting a business and a distillery is no different than any other venture. However, in order to have the best chances in making your business a success you will need to consider the Why, When, Where, and How before embarking on this journey.

Why am I Starting a Distillery?

  The reasons why you are starting a distillery affect your motivations and your willingness to stick out some tough times. If your goal is to make money, you can stop right here. If your goal is to make some truly great spirits and pursue a passion you might be on the right track.

  The world is changing and there have been some major shifts in the buying mentality of the younger generation. Consumers are picking up on the fact that the line between true craft spirits and commercialized mass-produced spirits is becoming blurred. The reason? A number of so-called craft distilleries are simply sourcing in commodity spirits and GNS flooding the market.

  The quality of the spirits you make are largely dictated by the quality of the raw materials you use. Since craft distilleries operate on a smaller scale and have more control over their day to day, there should be a noticeable difference between something made from scratch from the highest quality grains available and standard commodity grains. Your commitment to making something unique and truly great is what will help you maintain momentum despite the challenges you will face throughout the process.

  Your definition of success is also something you should consider before starting a distillery. Are your aspirations to be acquired by a major company? Do you dream of having a nationwide brand on shelves in stores and bars across the country? These dreams can be attained with a large budget for a buildout in a great space and by dedicating an enormous sum to marketing and branding. If your definition of success is a little smaller, doing something you love, something you can share with friends and family while covering your expenses and then some, you will be able to achieve those goals with less monetary investment.

When is the Best Time to Start a Distillery?

  We are currently in a craft distilling boom. There are now over 3,000 craft distilleries in the United States and that number continues to grow each year! Craft breweries and wineries are on the decline, but consumers are continuing to enjoy the great craft spirits being made. Now more than ever people have options when it comes to the sprits they are enjoying. Many are using this opportunity in the market to pivot from other careers to distilling. Some of the best distillers are from backgrounds in art, engineering, sciences, and other fields where they are able to apply the skills they have developed over the years to the art of distilling.

  Every industry has its highs and lows and there definitely was a major increase in consumption during the pandemic, that is not to say that people are not consuming now. The amount of alcohol consumed annually has steadily grown each year in the world and consumers are developing a taste for premium spirits. Over the past few years there has been increases in the premium and super premium markets by 35.2% and 22.8% respectively, according to research done by Penn State. This kind of market shift is great for craft distilleries as it is primarily the highest profit section in the industry. The premiumization focus has been primarily on Whiskies like Bourbon and Scotch, but other spirits are on the rise like American rums, gins and RTDs.

  Each business will have to count the cost to determine if now is the right time.  While still possible to get small business loans and other forms of monetary inputs, loaners are becoming increasingly stricter. Meeting your funding goals is a crucial step in starting a distillery, so be sure to make an honest assessment of whether your goals are feasible.

Where Should I Start My Distillery?

  This is the $500,000/1 Million/10 Million dollar question. The location of your distillery will drastically affect the total amount of funds required in its buildout and construction. Things that can be significantly different from place to place are taxes (both excise and local), property costs, building codes, population density, population demographics, and much more. Expectations also change depending on where you are located.

  The main focus of picking a location is ensuring it is large enough to fit the right sized equipment to be able to meet all of your production goals for the first three to five years and enable you to sell and showcase your products efficiently. 

  If you are in a small town, you might be able to make a decent living with a small distillery with a small bar attached to showcase your spirits. This would enable you to keep your up-front costs down and start turning a profit quickly.

schematic building plans for a distillery

  Life in a big city can be a bit more challenging to start. You will have to deal with increased property or lease prices and in turn have to increase your production and sales to match. You may also have to compete with other bars/restaurants, so the fit and finish of your public facing space will need to be a bit more sophisticated to draw in consumers. You will have access to a much greater number of consumers and your marketing and advertising will see greater impact and returns. You also could potentially have the best of both worlds with a “Non-Contiguous” setup where the majority of production is performed at one site while you maintain a smaller public facing space to interact with consumers. This allows for great production capability in a larger cheaper area, yet maintain the pros of having a smaller location in a prime area for sales.

  Your commute is another thing to think about when selecting a location for your distillery. During the first few years of operation, you will be spending a large amount of time at the distillery. Do you really want a long ride home after working all day? Another thing to think about is the local availability of workers to help you achieve your goals. Are there enough employees available to help with distilling, bartending, and sales in your area? Do a thorough investigation to see what comparable salaries would be for those working at your establishment.

How Can I Make Sure I Make the Best Decisions Throughout the Process?

  If you have made it this far and you are committed to pursuing the process of starting a distillery you no doubt you want to do everything you can to make it a success. This involves wisely budgeting and spending, setting up a safe and productive space for making your product, using the best raw materials you can to ensure the quality of what you make, and to dedicate the proper amount of money towards marketing and branding.

  Marketing and branding are what introduce your product and brand to the consumer. With so many options out there, a compelling story and professionally designed label is key to having someone give your product a chance. It has been said numerous times, “your branding sells your first bottle, and your quality sells your second” so don’t skimp when it comes to developing your brand.

  The best advice anyone can give is to learn all you can before embarking on this journey. There are a number of ways to get familiar with the industry.

  Extensive courses are available through schools like Heriott-Watt, Louisville University, Kentucky State and others. Keeping in mind that these courses take a significant amount of time and going back to school may not be an option for those who already have other careers or family responsibilities. Short courses are offered by other establishments that won’t be as much of a time investment, but they still cost a decent amount of money and only give you a brief overview of the processes typical in a distillery.

  If you don’t have the time or extra funds to attend one of these schools, your best option is to hire a guide to help you along the way. There are a number of consultants and consulting groups in the industry who can help you to reach your specific goals, while saving you money and headaches.

  Many of them offer consulting on the things specific to your situation and needs. They can help you navigate the confusing waters of the TTB paperwork and permitting process, assist with layout and equipment selection, help you develop recipes, teach you how operate your equipment, and much more.

  Don’t be afraid to ask for help when you need it. A good consultant should save you significantly more than you spend on their services. If they aren’t saving you money or headaches switch to someone who will.

Kindred Spirits Consulting: Owner and Lead Consultant Stephen Tomori

Kindred Spirits Consulting: Owner and Lead Consultant Stephen Tomori

Five Bucks & a Bag of Chips

Cyndi

As We Peer Into Our Crystral Kegs & Stills Trying to Forecast the New Year, We Can’t Ignore the Trends!

crystal ball and tarot cards

By Mark Colburn

Beer, wine and spirit sales are sagging due to reduced consumption, inconsistent tariffs that threaten many aspects of our industry, wholesaler consolidation and low consumer confidence. Combining these trends means that the battle for shelf and handle space will be frenetic. The fight for the consumer’s share of stomach will be equally challenging. As a craft beer wholesaler marketing director in a major metro, I sat through hundreds of supplier business plan meetings which typically begin in October. These next year plans were filled with new products and clearly absorbed a great deal of executive supplier attention. Herein lies the chink in your competitor’s armor.

  Sitting on the opposite side of the supplier vs. distributor (I was the marketing director for one of the country’s largest craft, beer, cider, wine and spirits wholesalers) conference room table, I wondered how the fourth quarter seemed to be overlooked, or taken for granted by our large, medium and even small suppliers. Perhaps they were satisfied with the long summer’s results I mused during these marathon meetings?

  This particular large supplier was presenting in mid-September hoping to get the “attention jump” on the rest of the supplier roster. As I sat there viewing slide #68 of their PowerPoint presentation I got an idea. Keep in mind my background is in the ad agency business…

  As the one responsible for each month’s rather bulky sales plan (8-10 pages), I started looking for common denominators. It was easy. One of my brand managers even sarcastically coined his monthly supplier incentive as, “five bucks and a bag of chips.” I found that the vast majority of monthly sales incentives were alike – five dollars per Off Premise placement and slightly more for On Premise.

  The volume incentive was equally similar as was the compensation for a new tap handle placement. As a believer in the “zig vs. zag theory” I recognized a unique opportunity for a supplier that wanted to get a bit creative.

  Since it was still September I knew I had time to whip up something and get it agreed to…and funded. I also knew that Halloween had grown into a $12+ billion business. Moreover, anything to do with Halloween was fun. This seemingly obvious point is forgotten by so many businesspeople. Over my 15 years in this distributor position, I experimented with hundreds of fun incentives to assess their selling significance with a highly street smart, unionized and sizeable ON and Off Premise selling team.

  Most succeeded while a few did not. The one I’m about to share with you shattered all volume and distribution expectations and was in my top three of all time. Although this incentive may not be applicable to your situation, the point is to inject creativity and fun into your brand. Where legal, you might even fine tune my incentive into a consumer or employee event that will garner results.

The Sam Adams Haunted House

  By far the smartest executive I have ever met is Jim Koch. I first met him in Boston and later we rode together several times visiting key accounts throughout San Francisco. Mr. Koch had heard about some of my prior incentives, “Gordon Gekko’s Greed is Good,” “The Money Chamber” and “Broccolinchini” and probably thought I was thick as two short planks.

  He could not deny the results, however. After procuring the necessary budget from Boston Beer and my team, I set out to create the most fun incentive ever launched around a Halloween theme. Thus the Sam Adams Haunted House was “built.” How can this help your business? Please read on…

  In my career I’ve found that whenever “Fun” is used as a strategic denominator, the results are exponential. The Sam Adams Haunted House was created as a sales incentive “clutter buster.” The vast majority of supplier-side sales team incentives lacked even the most remote level of fun or creativity. The trend was to simply follow everyone else. The results were naturally proportional.

  To clearly differentiate the Sam Adams brand from the rest of the big, medium and small brand pack I worked with my graphic designer to create a huge haunted house graphic (see pic inset).  This graphic was brought into the Friday morning sales meeting, by yours truly, every Friday in October. If you’ve never been in a large, end-of-week, early morning sales meeting; you’re not missing much.

  These can last several hours as supplier sales reps and managers stumble their way through unrehearsed, monotonous sales presentations. Now that I’ve shared the setting, picture this: The huge sales meeting room (60+ occupants) is now dark (all lights out and curtains pulled). The huge sales team is now watching and listening, wondering what is next. Suddenly a boom box blasts sounds of howling wolves, creaking doors, chains and screaming goblins throughout the cavernous room. I enter wearing a black cloak with the scariest mask you’ve ever seen holding a flashlight under my chin. I let out a screeching howl, “Welcome to the Sam Adams Haunted House!!!” From that second on, Sam Adams owns this major metro sales team.

  To get to the Haunted House, the On and Off Premise sales teams competed weekly by making placements in their accounts. The salespeople with the most placements got a Friday morning trip to the house where they came up to the front of the room to select a scary graphic that I then flipped open (I had pre-trimmed these into little doors and marked dollar values for each that when combined kept us on budget) to reveal their winning cash prize.

  The prizes ranged from $25-$250 so there was significant interest to earn a pick every Friday in October. This kept the incentive top-of-mind throughout the salesperson’s week. To determine who picked each Friday morning I came into the office very early to run VIP reports showing individual sales rep accomplishments. After reviewing the numbers I was able to announce the weekly winners by 7am.

  Although this level of creativity (I admit it is a bit creepy but think of the audience – predominantly males aged 24-39) may not suit your personality or your brand, I must share with you that the sales volume and placement results shattered our wildest expectations.

  The incentive was so popular that I repeated it for three or four years in a row. This incentive DOMINATED all other suppliers during the month of October. Further, it created momentum and top of mind awareness within one of the largest sales teams in the country.

  This momentum carried the Sam Adams brand into the November and December holidays (supported by my “Santa Broccolinchini” incentive) where many brands concede this period opting to gear up for the New Year.

  This fourth quarter incentive tandem provided Boston Beer with sales plan DOMINANCE for 8+ weeks. Further, it put their brand on a substantial downhill roll teeing up their annual business plan meeting where the incentives and their results were the first thing that everyone spoke about in the executive meeting room.

  They really set the “fun tone” and paved the way for the coming year’s strategies and new items.  The Sam Adams Haunted House is provided to you as an example of the synergistic results achieved when creativity is mixed with a large dose of fun. I use the term, “Fun-kifize” (an old Tower of Power tune) in my podcasts and recommend such to you.

  If you don’t participate in wholesaler incentives try adjusting a version to your internal team or even at the consumer level. Perhaps a game could be played to earn trips to the haunted house to generate more consumer interest and traffic in your tap or tasting room?

  Lastly, to dot the “I’s” I learned that Jim Koch was going to pay us a visit in November. I asked his team if I could interview him for 15 minutes and videotape the session. They agreed so I taped Mr. Koch and gave him the names of the biggest achievers from the Halloween incentive. I then edited the tape and played it during one of those long, boring Friday sales meetings.

  The sales team loved hearing a luminary like Jim Koch give specific sales people “Atta boys” for their their outstanding performance. Just another example of adding legs to a creative idea to wring out even more benefit. Remember that people buy AND SELL for people and BRANDS that they like. Be THAT brand.

Happy Halloween!

About the Author

  Mark Colburn has 35 years of experience in the beverage industry working primarily with craft beer and cider brands. He is the host and creator of the pod cast, “The Shinerunner Show” http://www.thebrewingnetwork.com/shinerunner-ep18-dyno-ing-the-marketing-mix/ and author of the book, “Craft Beer Marketing & Distribution – Brace for SKUmeggedon.”

  After earning his master’s degree in marketing, Mark went into the advertising agency business then into brand management. For 15 years he was the marketing director at a large California beer, cider, wine, and spirits wholesaler where he managed a brand team, experiential events, and multiple craft brands. Currently Mark works as a consultant and is available to chat about your brand opportunities at …

shinerunner@comcast.net

https://www.linkedin.com/in/mark-colburn-8332625

Are Your Beverages Ready for a Recession?

Cyndi
calculator says recession on top of a $100 dollar bill with ben franklin looking worried

By: Raj Tulshan, founder of Loanmantra.com

Is the U.S. Headed for a Recession? And if so, is your beverage business recession proof? In the United States, only the panel of experts at the National Bureau of Economic Research (NBER) is able to classify economic conditions as an actual “recession.” At its most basic level, a recession is marked by two, consecutive quarters of economic contraction or negative real Global Domestic Product, (GDP). Understandably, more is at play in making this kind of analysis and most economists believe there are four major recession indicators.

  Understanding that NBER must classify a recession, economists and financial analysts are closely monitoring several key indicators that suggest economic slowdown in 2025:

Declining Consumer Spending: The University of Michigan’s Survey of Consumers’ Index of Consumer Sentiment showed a 10.5% decline in consumer confidence in April. U.S. households are beginning to cut back on discretionary purchases creating ripple effects across industries from retail to hospitality.

Tighter Credit Markets: The Federal Reserve’s efforts to control inflation have led to higher interest rates, making it more expensive for businesses to borrow. Many lenders have also become more cautious, tightening their lending boxes and limiting access to capital. Small Business Administration (SBA) changes have caused industry shifts for government-guaranteed lending and associated products.

Business Slowdowns: Hiring has slowed, and some companies are scaling back operations as demand softens. Government layoffs have impacted the private sector. These trends may continue to lead to more job losses.

Trade and Tariffs: With major tariffs, most business owners are wary of what that means for their bottom line. They suspect that tariffs will increase production costs, challenge the supply chain and disrupt small business operations.

10 Tips to Recession Proof Your Business

  If a recession takes hold, beverage businesses—especially those reliant on consumer spending—will likely face many challenges. Loan Mantra offers approaches to offset these challenges:

CHALLENGE- Staying Sober: Being in a constant state of uncertainty and entertaining a daily stream of negative news can have a devastating mental impact on the general population.

APPROACH- Drowning in questions and doubt will not help the business become more recession proof. As a business owner, employees, customers and the public will be watching your example for signs of a crisis. Focus on what the business does best. Instead of becoming overwhelmed, break down tasks into day-to-day actionable steps. Offer an open-door policy and be transparent with loyal employees. Offer a group approach and/or collaboration with all aspects of the business to come up with solutions on how to meet goals.

CHALLENGE- Less Served: With customers spending less, businesses may struggle to maintain sales levels.

APPROACH- Review tangential product flow and reduce expenses that may not be necessary. For instance, if you’re a restaurant, for food deliveries instead of including plastic utensils with to-go orders, include items upon request, exclude napkins or excessive packaging with Beverage delivery. Over a year these small adjustments can add up to substantial savings. Common expenses can also be distributed over several locations. For instance, cross train bar and waitstaff and schedule among different sections and work sites.

CHALLENGE- Hyped up Hops: Inflation-driven price increases on goods, materials and wages could squeeze already thin profit margins. Tariffs also threaten to make costs higher on imported goods.

APPROACH- Reduce time spent on tasks that don’t directly impact sales and produce revenue. Efficient inventory management ensures you’re not tying up capital when you need it most for tasks like cleanup, makeready and taking inventory. For example, many retailers take an inordinate amount of time on inventory. Could this utility time spent for employees to count and restock be more efficient? Consider tightening inventory management by prolonging buying until it’s necessary using the just in time method.

  Scale down product choices to the most popular brews or brands that offer higher margins. Companies like Bonobos are already ahead of this curve. This retailer offers concierge service that makes up for lack of on-site inventory. With an increased focus on customer service, customers can try on pieces at the store location which are then ordered and delivered to customers homes. Can this model be replicated by offering sample tastings with pre-pay for larger orders that can be delivered on demand?

CHALLENGE- Beer Money Fund: With banks tightening their lending standards, securing loans or lines of credit may become more challenging.

APPROACH- Having appropriate cash/capital reserves on hand is a vital step to recession proof a business. Loan Mantra recommends that businesses should have at least one month of operating expenses or ten percent of revenue on hand during a normal economy. In times of recession, businesses should hold 3-6 months of operating expenses. The time to shore up emergency reserves, apply for a line of credit or loans is before you need it.

  Don’t wait to get commitments from a lending institution. Prequalifying for loans before you need them can give you peace of mind knowing funds are readily accessible if necessary and help recession proof the business. Also remember that chaos creates the opportunity to buy assets when prices fall that will later appreciate.

CHALLENGE- Half on Tap: Trying to meet revenue projections made last year may be impossible impacting the ability to meet payroll, make payments or even stay in business.

APPROACH- Review original financial forecasts and re-assess plans based on the new economic reality. Scale back and ramp up essentials, finding new benchmarks and project out accordingly. Watch market trends like consumer sentiment. Invent new ways to make money and diversify revenue. Chaos brings opportunity. Discover what opportunities and optimize based on those findings.

CHALLENGE- Loan or Groan: The financial crisis in 2008 exposed the vulnerability of both consumer and commercial markets to predatory lenders. Institutions with questionable lending practices offered exploitive interest rates on loans where borrowers were caught in a cycle of paying interest on compounded interest that resulted in bankruptcies.

APPROACH- Be wary of inflated interest rates on loans. Right now, it is easier than ever to access a diverse group of lenders to get funding that offers the best rates and alternatives for businesses. For example, any business can seek expertise to find the lowest rate and financing through technology offered at companies like loanmantra.com, an online portal that provides streamlined access to all funding sources and expertise to determine the best loan products and providers.

CHALLENGE- Traffic Circle: Consumers facing job loss or decreased purchasing power may spend less and have limited disposable income.

APPROACH- Focus on retaining customers. This could be prioritizing exceptional customer service, capitalizing on loyalty programs and through marketing personalization to maintain and strengthen your customer base. Look at ways to make it easier for customer to spend money with your business like offering incremental payments instead of requiring the total up front. Acquire customers for life is more important that an individual transaction.

CHALLENGE- Bottle Battles: Increasing tariffs may limit access and availability of product components, bulk materials and supplies.

APPROACH- Evaluate cost increases, remain flexible and anticipate delays. Suppliers based in Asia may be the most hurt. Try to absorb some of the increased cost of good. Identify the least amount needed to push to the end consumer. Identify potential vulnerabilities and secure reliable suppliers to mitigate cost fluctuations. Find additional supply sources that are US-based if possible. Open lines of communication with current suppliers to negotiate better terms or prices and cost-cutting measures. Building strong relationships with suppliers can result in favorable deals that help reduce costs during lean times.

CHALLENGE- Distilled Down Sills: Previously approved expenditures including additional resources and equipment may be frozen.

APPROACH- Analyze operating systems to eliminate waste. Has the business drifted toward more expensive habits? Optimize operations by looking for ways to streamline tasks and improve efficiency. Aim to automate repetitive tasks through technology to save time and reduce long-term costs. Evaluate additional lines of business for profitability and sustainability. Look for additional ways to diversify and add revenue.

CHALLENGE- Measure or Pour: A lack of inventory can inhibit production.

APPROACH- Consider mass purchasing of supplies that may not be available in the future or before prices increase. Evaluate existing product lines and services to determine if substitutions can be made. Look at potential options as alternatives that may not be ideal long-term but will still satisfy customers. For example, if you are unable key ingredients, what can you make? For instance, if Champagne is not accessible can you offer high quality Sparkling wine as a choice?

Looking Ahead

  While the future remains uncertain, beverage businesses can become more recession proof against economic downturns by planning. Keeping an eye on market trends, managing finances strategically, planning for disruptions and maintaining strong customer relationships will be key to weathering potential challenges. For more information contact Raj at loanmantra.com.

The Financial Impact of a New Administration on the Beverage Industry

Cyndi
the dollar bill with a dropping down jones industrial average chart

By: Raj Tulshan, founder of Loanmantra.com

We’re a few months into the new year and the one constant we can count on is change, especially when a new administration takes America’s helm. So, what does this mean for the beverage industry, especially for business owners? And is the new administration having a positive financial impact on the beverage Industry?

  The last Trump administration brought a shift of policies and once again we see lots of moving parts. The biggest focus the Trump Campaign impressed upon the public was putting America first. This means incentivizing expansion initiatives inside the United States. This should be good news for growth plans inside the U.S. But for those with international suppliers, distribution or expansion plans, the road could be trickier.

  Here are some considerations on how the new administration could have a financial impact on beverage businesses:

Inflation

  One of the top concerns prior to the election was inflation and this hasn’t changed. A recent study by Pew reports that 43% of Americans say the affordability of food and consumer goods will get worse rather than better in 2025, 37% believe prices will improve, while 19% say prices will stay about the same.

  Our prediction on interest rates? They have already dipped slightly, but we anticipate that they will continue to drop in the future. As rates go down, value declines and the cost of obtaining capital is cheaper and easier to acquire. When this happens, it is a great time to buy real estate, spruce up, expand, upgrade equipment, buy additional trucks and secure business for plans.

Rising Labor Costs

  For many food and beverage businesses, one of the costliest balance sheet items is labor and employee-related costs: hiring, training, and health care benefits for employees. The cost of health care is projected to rise more in 2025 than it has in a decade, prompting employers to reevaluate partnerships and look for alternative strategies.

  At the same time, the Department of Labor (DOL) under Biden/Harris wrote the Fair Labor Standards Act (FLSA) expanding overtime coverage to millions of Americans. This Act, which has been challenged several times, is currently being blocked by a Texas Federal Court as of Nov. 15, 2024.

  I predict that the FLSA will be overturned, and individual states will regulate and enforce employment laws as they are already doing. Sweeping changes to the private business sector don’t typically work. They are too hard to define, implement, and regulate. Almost half of the states (23) have minimum wage increases in 2025 and six states: Alaska, California, Colorado, Maine, New York, and Washington states are already raising overtime pay thresholds in 2025.

Tariffs

  On March 4 President Trump imposed significant tariffs on imports from Canada, Mexico and China, marking a pivotal escalation in global trade tensions. These measures include a 25% tariff on Canadian and Mexican goods and an increase from 10% to 20% on Chinese imports. The administration invoked the International Emergency Economic Powers Act (IEEPA), citing the ongoing fentanyl crisis and illegal immigration as national emergencies necessitating such economic actions.

  For small businesses across the U.S., these tariffs could be particularly damaging. Many rely on affordable imported raw materials and goods to maintain competitive pricing. With increased costs, small businesses may be forced to pass these expenses onto consumers, reduce their workforce, or even shut down operations. Industries such as retail, manufacturing, and agriculture are especially vulnerable. Unlike large corporations with diversified supply chains, small businesses often lack the resources to absorb these additional costs, making it harder for them to compete in both domestic and international markets.

  For the beverage industry, expert reviews are mixed. According to a recent global report, the U.S. beer market may steal market share from beer imports because most brands are domestically produced. In contrast, additional tariffs are expected to be imposed on steel and aluminum which both the food and beverage industry relies on for production and packaging leading to increased costs. In addition, tariffs levied against U.S. imports are expected in retaliation.

Tax Changes

  The 2017 Tax Cuts and Jobs Act (TCJA), enacted during the last Trump administration, lowered income taxes and gave small business a 20% tax deduction that were set to expire in 2025. President Trump is currently calling for an extension of this act through 2034 so stay tuned.

State of Currencies

  The BRICS countries, Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia and the United Arab Emirates nations, have joined together to create a common currency as an alternative to the U.S. Dollar. So, does this mean that the U.S. Dollar is dead? According to the Atlantic Council’s Geoeconomics Center the U.S. dollar remains the world’s primary reserve currency dominating foreign reserve holdings, trade invoicing, and global transactions.

Cryptocurrency

  When it comes to crypto, we look at Trump’s cabinet for insight. Take Small Business Administration Kelly Loeffler, a female entrepreneur and administrator of a crypto company, and Elon Musk, supporter of Dogecoin. Both are likely not huge proponents of government oversight and stiff regulations. This could translate into an explosion of crypto currency opportunities, while it has even been suggested that a form of an American digital dollar might be coming soon.

  Although the early adoption of crypto occurred via alternative markets, research suggests that awareness and ownership rates have increased to a record 40% of Americans, of which 29% are women at the start of 2024. And over half hope to obtain more cryptocurrency in the future.

Federal Budget Cuts

  As the leader of the new Department of Government Efficiency (DOGE), Elon Musk aims to cut $2 Trillion out of government spending, leaving no stone unturned. The main DOGE website at doge.gov posts receipts and updates while doge-tracker.com features a live savings tracker that is updated in real-time which reports savings $105 Billion so far.

  A recent You/Gov CBS Poll found that 87% of Americans think federal agencies spending is wasteful. And while 54% of Americans think that Musk should have influence over spending and operations at U.S. government agencies, just over half (52%) expressed discomfort with DOGE’s access to data and authority to make cuts in the federal workforce.

  We are just starting to see how drastic federal workforce cuts could impact the economy with a downturn in the stock market. According to a recent Forbes article, agencies that oversee the beer industry could see a negative financial impact if their funding is cut. Defunding the Alcohol and Tobacco Tax and Trade Bureau, for example, which oversees the U.S. beer industry and the USDA Agriculture Research Service, could stifle growth and innovation, making it harder to obtain permits, approvals on new ingredients, requirements for labeling and slow brewing operations.

  So, where does that leave the Beverage Business in terms of financial impact? The United States still enjoys one of the most stable economies in the world. Regardless of who is in political offices, if we keep calm and carry on while staying informed about the policy shifts that might affect inflation, we’ll be okay. One thing is certain: we’re in for an interesting ride!

  Raj Tulshan is the founder and managing member of Loan Mantra, a one-stop FinTech business portal that democratizes the loan process by providing corporate sized services and access to entrepreneurs, small and medium sized businesses. Connect with Raj and Team Loan Mantra at 855-700-2583 (BLUE) or info@loanmantra.com.

Hiring the Right Distillery Consultant

Cyndi
Kindred Spirits Consulting: Stephen Tomori
Kindred Spirits Consulting: Stephen Tomori

By: Gerald Dlubala

Distillery consultants aim to help their clients make smarter decisions and save money while assisting them to get their distillery operational. But how do you find the correct distillery consultant for your needs?

  Referrals and research are highly recommended but may not tell the whole story. Hiring a distillery consultant means bringing in someone who will sometimes become a business partner for up to three years. So, in addition to having the experience and history to help with your distillery, it is essential to hire a consultant who you are comfortable working with on a personality level. The following are some helpful tips from experienced distillery consultants on hiring the correct consultant and turning your distilling dream into reality.

Kindred Spirits Consulting: Stephen Tomori (Lead Photo)

  Kindred Spirits Consulting works with distilleries of all sizes, from nano-distilleries with 50-gallon stills to large, full-scale production facilities with continuous or multi-large batch capabilities. Owner and lead consultant Stephen Tomori got his start as a mechanical engineer, telling Beverage Master Magazine that he has always been intrigued by how and why things worked and how they could work better.

  Years of fitting large mechanical systems into residential and commercial buildings, including ducting and piping, made distillery consulting a natural transition. Tomori’s natural curiosity, distilling experience and drive to improve things helped him win over 30 awards in his first distillery build with spirits he developed and personally distilled. He has designed over 40 distilleries, with more coming nationally and internationally. As a master distiller, Tomori’s unique skill base has led him to help his clients win 108 awards, including golds, double golds, and platinum.

  “No project is too small or too large,” said Tomori. “We’ve done a good job getting our clients recognition, and that happens because we help them put out the best product possible.”

  Tomori encourages potential clients to contact a consultant as early in the process as possible because although starting any new business is an expensive endeavor, doing things yourself and spending upfront money unnecessarily within a distillery can be disastrous to the prosperity of the business.

A Consultant That Fills Your Needs

  “We understand that each distillery project is different,” said Tomori. “Each distillery has a different location, budget and goals, so whatever the client’s needs are, our consultation is adjusted to match those needs. If you need us every step of the way, we can meet multiple times a week and be on call to get you from the initial idea to the finished product. If you want to do some things on your own but want assurances that you’re taking the right steps, we can set up those communications as needed.”

  Kindred Spirits Consulting works on an hourly or retainer basis. There is a minimum point of engagement of 15 hours and a 30 percent rate reduction over other flat-rate project prices. Other services are priced on a case-by-case basis.

  “It wouldn’t be fair to charge a small distillery the same price for a layout in a building five times its size, so each design, product development trial or hands-on training trip is customized to the client’s specific needs,” said Tomori. “Having us on retainer is a big advantage because typically when something goes wrong or needs attention in a distillery, the problems, troubleshooting and decisions can’t wait. You need someone to pick up the phone and be there for help right now. Sometimes, that’s through a phone or Zoom call, while other things regarding installation demand in-person assistance. That’s all decided on a case-by-case basis.”

  “Since I’m a mechanical engineer, we can generate an AutoCAD drawing for the layout of your distillery accurate to within an inch, showing the location of all equipment, things like fermenters, tanks and ancillary equipment, including water treatment and empty bottles,” he continued. “Everything gets a place to keep your distillery running efficiently and safely while prioritizing aesthetics and impressing your visitors.”

Find Your Consultant

  Tomori urges those seeking help to question potential consultants to determine their qualifications and get a feel for their personality. Qualified consultants may not know how to do everything, but they should be able to point you to competent and vetted partners.

  Ask about their overall background and experience and delve into specifics. What is their design mentality? Do they cater to specific needs and goals or offer flat, cookie-cutter options? Do they answer questions confidently and knowledgeably about specifics like proofing, fermentation, and recipe development? Can they take your goals and the spirits you want to produce and recommend the right-sized equipment to match those specifics? Has their design and recipe development experience produced award-winning spirits? Quality consultants will use your questions, budget, and goals to formulate a unique distillery plan for you.

  As an engineer and fabricator, Tomori always ensures his equipment recommendations are constructed and assembled using the correct copper and quality stainless steel thickness. The fit and finish have to be perfect to get his recommendation.

  “A lot of our work involves distillery audits, expansions and working with existing equipment,” said Tomori. “Regarding audits, we can perform a start-to-finish assessment of your process. Unfortunately, just because you’ve been open for a long time doesn’t mean you’re doing things the best way. We can almost always pick up a percentage point or two within a specific process that can help increase yield. By doing that in several processes, we’ve increased a distillery’s yield by five, 10 and even 25 percent in some cases. Over the course of a year, that’s saving our clients a lot of money. Likewise, we get upgrades, expansions or new spirit lines operational to meet the client’s goals.”

Working with Kindred Spirits Consulting

  Tomori said it starts with a call or contact form submission that identifies the client, their background, goals versus budget and three-to-five-year projections. An initial call also determines if both parties are a good fit for each other.

  “Sometimes we’re not,” said Tomori. “We want you to succeed, so we must be able to communicate comfortably. If we decide to work together, we’ll determine the level of involvement and services you expect and whether it’ll be on an hourly basis, a retainer or just a one-off trip or trial. Clients’ needs differ wildly, so flexibility in handling things is good.”

  “Suppose you’re coming from a non-distillery-related industry,” he said. “In that case, you’ll need a distillery plan to submit to your jurisdiction authority and the TTB, which has its own requirements. We can also help find suppliers, such as bottles, caps, closures, sourced spirits, or raw materials. We collaborate with local architects and engineers, ensure you’re okay with local authorities and help with equipment and setup. Once approved, we provide onsite, hands-on training for safely operating your equipment to produce your spirits. We can help with test runs and more, down to the recommendation of quality marketing and branding companies to help your product stand out.”

  To learn more about Kindred Spirits Consulting visit their website: www.KindredSpiritsCSG.com

Distillery Now Consulting: Kris Bohm (Photo on Page 39)

Distillery Now Consulting photo of Kris Bohm
Distillery Now Consulting: Kris Bohm

  Distillery Now Consulting owner Kris Bohm is an award-winning distiller who has built and managed multiple distilleries across the world. Through his consulting services, he helps future distillers clear hurdles quicker to get their distillery operational in less time.

  “Hiring a consultant can be expensive,” said Bohm. “So, I first like to ask potential clients if they feel they need a consultant. I can always make a case for hiring a consultant, but are you, as the owner, able to recognize the value a consultant brings to the table? Are you comfortable listening to and implementing a consultant’s suggestions and recommendations? You have to be real about your confidence level and expertise in the industry and then recognize that there are things you don’t know. Of course, you want to ensure you’re doing things right and as efficiently as possible, but you can have the best consultant in the world, and if you’re not willing to implement at least some of their suggestions, you’re throwing good money at bad. That may sound harsh, but you have to be willing to be guided, and that can be hard for someone with an entrepreneurial mindset.”

The Unintentional Distillery Consultant

  Bohm started consulting full-time by chance after overseeing the construction of a distillery in Austin, Texas.

  “We were installing a high volume, high-throughput continuous column still, which was relatively new technology in the craft spirits world,” said Bohm. “After that project, people came to me for my expertise and opinion on these types of stills. For about a year and a half, I voluntarily helped a handful of craft distilleries with continuous column installations. I approached it as being an open source and helping other distillers. My partner gave me a kick in the pants when she explained that if I was going to be away so much doing what I love, I might at least consider charging for my time. I did that, and my consulting evolved to the point where I was making more consulting than my job as vice president of another Texas distillery. I had to make a choice, so consulting was the way to go for me.”

  The bulk of Bohm’s expertise is within the first five years of the lifecycle of a distillery, meaning design, operation, and optimization. He helps design and outfit a facility with the proper equipment to get them to the point of having a well-running distillery that meets their expectations. Bohm also works in expansions, having been involved in adding continuous column stills or larger pot stills to distilleries that needed to expand their operation or production.

  “I also broker the sale of businesses and help sell, remove or relocate used equipment,” said Bohm. “I’ll also perform business valuations for those who genuinely need to know how much their distillery or business is worth and want a fair, non-emotionally attached valuation.”

Working with Distillery Now

  Bohm prefers to be less structured than other, larger consulting companies. He builds his approach using information from his clients while ensuring that their personalities are compatible to build a trusting, prosperous relationship.

  “I need to understand my client’s budget and goals,” said Bohm. “Through an informal discussion, I’ll build a program that works for them and share how I work and what they can expect from me. I have clients I meet twice a week and others that touch base once a month to ensure things are going in the right direction. Most work, sometimes up to 80 percent, can be done remotely, keeping costs down while allowing me to work quickly and on time. I don’t want customers’ projects mired up in lost or unavailable information.”

  Bohm continued, “In most projects I am involved with, clients start with an idea, some goals, and a rough budget, and they want to see what they can achieve with that. Under those circumstances, I may work as a consultant for them for two to three years, from the idea to filling their first barrels of whiskey and bottled vodka. That’s when they typically have a running program and no longer need someone like me.”

  Bohm said that he has been able to help start some great distilleries, and no two have been the same. Each distiller has different consulting needs. While some want guidance that they are making proper choices, others want a more hand-in-hand approach to getting their distillery up and running. Bohm is typically compensated for his time on an hourly basis. However, specific tasks, such as getting a Federal Distiller’s License, have specified rates because he knows what it takes to get that completed.

Distillery Now Brings Value and Experience

  “The value I bring as a consultant over more specialized consulting firms is 10+ years of experience as a distiller and distillery manager in some great distilleries, along with overseeing the buildout of over 20 successful distilleries from idea to an operating business,” said Bohm. “I can’t say I’ve seen everything, but I’ve seen more than most. I’ve been in most distillery situations and have seen things handled the hard way, as most first-time distillers would do. To have my resources a phone call away expedites all processes and decisions. It saves a client several months and sometimes thousands of dollars in savings, and it gets their distillery open and operational sooner.”

  To work with Kris Bohm and Distillery Now Consulting, head to the website or send Bohm an email. Bohm offers a free initial consultation by phone or Zoom to see if he is the best consultant to bring the most value to your project.

  “I help people get their business operating quicker while spending less money,” said Bohm. “It’s about setting them up for success – even down to picking out the perfect distillery cat for them if they want.”

For more information about Kris visit: www.distillery-now.com

  

Can AI Boost Beverage Marketing Strategies?

Cyndi
futuristic robot with chin in hand

By: Hanifa Sekandi

In a world where technology is the gateway to success, it is unsurprising that people are looking at the new kid on the block, AI. For some, this tool is controversial. It lacks the human touch, a true statement. People value connection, something that AI cannot replicate.

  Regardless of these sentiments, it is a tool that must be understood even if you choose not to utilize it. So, what place does it have in beverage marketing? The place it holds for your beverage brand is up to you. Many marketing experts across industries have implemented AI software into their strategies to streamline processes. Some companies see it as a tool to cut costs—an excellent opportunity to allocate a budget to marketing initiatives rather than large marketing teams.

  Although this new frontier is popular right now, this will likely level out. AI cannot completely replace an experienced marketing team, nor can it brainstorm creative ideas. But it can take your ideas and organize them. It can help bring the story together and devise a plan that is easy to digest across teams. However, there are limitations.

  Before you consider using AI to market your beverage brand, it is essential to have a goal in mind. Why is this tool useful for your company? What gap is it filling? If you have been following along, we often mention the importance of understanding your audience and researching before you market your beverage.

  Once you have solidified your why and brand messaging, the next step is who. Who is your consumer? How can you reach them? How do they make their buying decisions? The market research stage is fundamental to your long-term success. It precedes determining the what and how to market to your consumer. 

AI & Market Research

Fortunately, many AI tools can help you conduct market research. With these tools, you can take a deep dive into your consumers’ behavior. AI software can analyze what actions your targeted consumer makes. It can also zero in on key demographic markers, such as age, gender, location and income. Brands can see who their competitors are and how their audience responds to their marketing initiatives—a great way for a new beverage brand to understand how they might measure up to the best. AI, if utilized correctly, can give brands a competitive edge.

  With that said, there are downsides to using AI. One downside is that your plan can be widely used if you do not provide a detailed and concise query. You ask AI questions, and AI does its best to answer them. Generic questions get basic answers. The more details, the better. Avoid obvious questions that most people would ask.

  For example, asking AI to help you by using generic market research strategies will not provide you with a customized plan exclusive to your brands. An example is asking an AI tool how to market to men who play hockey. Just asking about this demographic your competitor may be targeting will provide you with a basic strategy—a strategy that will be similar if several other brands ask the same question. AI is not the be-all and end-all. You cannot just sit back, let it do the work and then let the magic happen.

  Marketing teams who have adopted this tool understand this quite well. They know the limitations of their teams and recognize the limitations of AI tools. They know how to cut through the marketing fluff with AI. AI helps marketers zero in on a targeted audience and highlight information that would take hours to uncover through conventional market research strategies. With AI, every stone unturned will be flipped over, revealing little marketing gold nuggets. Rather than focusing on just one aspect of your demographic, you may discover that your consumer is more than just a hockey fan. Their desire for a beverage is not isolated to watching the sport.

  Discovering the complexities of your consumers will allow you to explore other ways to reach them. You do not have to spend so much time focusing on what your competitor is doing and trying to do it better. Your brand can do what has not been done yet, opening a new viewpoint of how this consumer is viewed.

Streamline Your Marketing Plan

  What can you do as a marketing team? This is the first obstacle that needs to be tackled. Becoming a successful beverage brand still requires active participation. You will have to roll up your sleeves. You cannot close your eyes and hope that a few AI tools and strategies will do the work. When you hit the ground running, know your strengths and weaknesses. From here, you can discern where AI fits in and how it enhances your marketing goals.

  Many people use AI to condense their marketing plans. A 30-page deck can be overwhelming. With the help of a good AI tool, you can break down your strategy into segments. Upload your document and select areas your team would like to focus on. You may also break your plan into segments that can be assigned to individuals on your team. AI can take a large-scale plan and turn it into actionable goals. This is where AI can shine.

  An AI-generated workflow diagram provides a useful map to follow. As business picks up, it is good to know where you are heading since the unexpected is always at play in beverage marketing. There will be times when you need to pivot or modify aspects of your marketing strategies. What is important is that you do not lose sight of where you are going.

AI Can Automate Social Campaigns

  Most brands have a love-hate relationship with social media. There are so many different platforms, and each one has different requirements. This is where AI can shine for many brands. Social media can be demanding, as it is a full-time commitment, particularly when trying to break a brand. Your team is small, and there is only so much one marketing manager can do. As of late, most social platforms have also implemented AI tools to help you with effective social media marketing. Yes, authenticity is always best. But if you are not a writing savant, a skilled video editor or cannot create a visually appealing post, there are AI offerings for this on most platforms. Smartphones are also useful for this because they offer AI tools for photo and video editing.

  For example, AI-powered content creation tools like Blaze AI save you time and make it look like you’re an expert. These tools give you a framework to work with to get you started to support current efforts. Bigger brands can afford to hire a few social media managers, whereas smaller brands may have a marketing manager who is a jack of all trades. Unfortunately, this is not beneficial in the long run. An overworked marketing manager cannot be or do all things at once and will often miss marketing opportunities.

  These AI tools can also assist with newsletters. Some people opt to use AI for blogs. This is one of those sticky areas. It is always a good idea to write your content in-house, particularly content that will live on your website. A human touch and authentic brand voice shine above all. AI tools can help you brainstorm ideas or create an editorial calendar but cannot replace a copywriter. Hire a copywriter, and this should be part of your marketing budget.

Simply put, people can tell. We are in an era of information overload. So proceed with caution when utilizing AI for content.

  Your blogs are the only place where you can tell your story, something you know more than AI. Once you have your audience’s attention on social media, where are you directing them? If it is not the local beer store, it is your website. Consistent newsletters and blogs are a must for brands that sell beverages from their websites.

  So, what’s the overall verdict of AI in beverage marketing? Err on the side of caution; do not overdo it. But give it a try and see where it takes your brand.

Pack Expo logo

Variety of needs prompt changes in packaging choices

Cyndi

By Rebecca Marquez, Director, Custom Research, PMMI

Transitions in packaging materials are not uncommon for consumer packaged goods (CPG) companies. Nearly half have transitioned materials in their operations within the last 12 months, and 35% say transitioning has increased, according to Transitioning Flexible Materials Best Practice, a report prepared by PMMI Media Group Custom Research, the proprietary research arm of PMMI, The Association for Packaging and Processing Technologies.

Transitioning decisions are driven by the need to meet sustainability goals, cut costs, enhance product quality and safety, comply with regulations, overcome supply chain issues, and meet changing consumer preferences.  

The Best Practice document, prepared in conjunction with the Flexible Packaging Association and PMMI’s OpX Leadership Network, serves as a guide to transitioning flexible films for CPG companies and their OEMs. The transitioning process requires careful planning, testing, and evaluation to determine whether the new materials are compatible with existing machines or require new machines. A flow chart defines tasks required for transitioning flexible films, and a RACI matrix shows the responsibilities of the groups that should be involved in the process, including Packaging Design and Development, Operations and Engineering, Marketing/Brand Owner, OEMs, and Materials Suppliers/Converters. Step-by-step guidance leads the transition through feasibility; design and development; pilot testing; tracks for legacy or new equipment; commissioning, qualification, verification; supply chain scale-up/commercialization; and evaluation.

A related resource, the PMMI Material Transitioning Dashboard, provides insight into what materials are being used in 44 industry categories, the top 10 materials being phased out, and what replacements will most be in demand during the next three to five years. The fully customizable tool evolved from a PMMI report prepared in collaboration with Ameripen, 2023 PACKAGING COMPASS: Evaluating Trends in U.S. Packaging Design Over the Next Decade and Implications for the Future of a Circular Packaging System and enables users to tailor the data to their industry and business.

For example, the Dashboard reveals the materials most likely to be phased out in the Food and Beverage industry during the next three to five years include polystyrene (PS); polyurethane (PU) and PS foams; polyvinyl chloride (PVC); molded pulp; rigid polyethylene (PE), low-density PE, and polypropylene; and multi-material structures, both rigid and flexible. At the same time, the most likely replacements include post-consumer-recycled (PCR) rigid and flexible formats, recycled materials, reusable packaging, and compostable structures, followed by molded pulp, solid-bleached-sulfate paperboard, bio-based substrates, and flexible and rigid PE.

The top five material phaseouts in the Life Sciences/Pharma/Healthcare sector are molded pulp, PS, PVC, PU and PS foams, and multi-material structures. Favored replacements in this category include PCR rigid and flexible packaging, and materials with recycled, compostable, or bio-based content.

CPG companies planning material transitions have a new resource to tap, the inaugural PACK EXPO Southeast (March 10–12, 2025; Georgia World Congress Center, Atlanta). With 400 exhibitors spread over 100,000 net square feet, the show will present machinery in operation and the latest materials to enhance manufacturing operations, PACK EXPO Southeast ranks as the most comprehensive show in the region offering crossover solutions for today’s biggest packaging and processing challenges for 40+ vertical markets, including Food & Beverage, Household & Automotive, Life Sciences/Pharma/Medical Devices, Cosmetics/Personal Care, Pet Food & Pet Care, and Chemical (household and industrial).

With opportunities for innovation, education, and connection, the debut event is packed with exciting features, including sustainable solutions such as mono-material design and reusable options, expert-led sessions on industry trends, and presentation of cutting-edge technologies such as automation, robots and cobots, AI, augmented reality, virtual reality, and preventative maintenance, as well as innovations for anticounterfeiting, smart packaging, e-commerce, food safety, cold-chain packaging, and life sciences operations. Attendees will be able to explore new technologies, find new packaging materials, meet key partners, observe equipment in action, and compare multiple machinery options.

The Reusable Packaging Pavilion, sponsored by the Reusable Packaging Association, will highlight how reusable transport packaging products and services can reduce waste, lower costs, and enhance supply chain efficiency. Whether optimizing operations or adopting more eco-friendly practices, this pavilion will serve as a gateway to a more sustainable supply chain, which achieves a smaller carbon footprint and supports a circular economy.

The Association Partner Pavilion connects attendees with leading associations that drive innovation and excellence in packaging and processing. This central locale offers a wealth of resources, insights, and expertise and provides access to tools and knowledge to stay ahead of industry trends.

A one-stop shop for resources to strengthen and grow the workforce, the Workforce Development Pavilion showcases the dynamic opportunities offered by PMMI U, including popular training workshops designed to enhance skills and meet industry needs. It’s also the place to observe the impressive mechatronics and packaging programs presented by leading schools. Plus, it provides an opportunity to connect with talented students eager to embark on careers in packaging and processing, making it the perfect platform for networking, talent acquisition, and building strong industry partnerships.

Educational sessions at PACK EXPO Southeast include Industry Speaks and the Innovation Stage. At Industry Speaks experts from the PACK EXPO Partner Program will share valuable insights on the latest industry trends and pressing topics. Representing diverse verticals, these thought leaders will explore key themes and offer actionable knowledge about workforce development, scale-up strategies for emerging brands, advancements in remote services and monitoring, cybersecurity, and evolving industry standards.

The Innovation Stage features free, 30-minute seminars presented each day by industry experts. Discover breakthrough technologies, explore innovative applications, and gain insights into proven strategies to enhance productivity, efficiency, and safety.

PACK EXPO Southeast also offers ample opportunities to connect, collaborate, and build relationships via events such as the Taste of Atlanta sponsored by Multi-Conveyor LLC (4:00–5:30 p.m., Monday, March 10). Open to registrants of the show. Show badge required for entry. 

Later that evening, the next generation of industry leaders will be able to network and learn more about working in the packaging and processing sectors at the Young Professionals Networking Reception at Wild Leap Atlanta (7:00–10:00 p.m., Monday, March 10). RSVP required. Must be registered for the show.

The Packaging & Processing Women’s Leadership Network also will host a reception. Sponsored by Morrison Container Handling Solutions, it will take place from 4:00–6:00 p.m. on Tuesday, March 11, and provide an opportunity to connect with influential women in the packaging and processing industry. RSVP required. Must be registered for the show.

Like all PACK EXPO shows, PACK EXPO Southeast will offer programs and activities just for students to promote careers in packaging.

Attendees have access to a host of tools and resources to help them make the most of their time at PACK EXPO Southeast. My Show Planner, a personalized collection of “must-sees,” tracks interests before, during, and after the show. In addition to providing a personalized resource planning tool and directory of exhibitors and sessions, My Show Planner offers appointment scheduling capabilities.

Personal agendas also can be created and saved in the PACK EXPO Southeast Mobile App, sponsored by ProMach. This free app streamlines show floor navigation with interactive maps, provides access to exhibitor, product, and educational session listings, and delivers show news and information about demos, giveaways, and other activities.  

To help pinpoint prospective suppliers before the show, the PACK Match Program offers PACK EXPO Southeast registrants the opportunity to schedule a free, 30-minute, virtual consultation with an unbiased industry expert. This consultation will generate a list of suppliers capable of addressing the registrant’s specific business challenge(s). Register for an appointment by Feb. 25.

Discover the future of packaging and processing at the new PACK EXPO Southeast (March 10-12, 2025; Georgia World Congress Center, Atlanta), the most comprehensive show in the region offering crossover solutions for today’s biggest manufacturing needs for 40+ vertical markets. Attendees will find the Atlanta location, a manufacturing hub of the region, convenient and easy to access for teams to attend, assess the latest technologies, learn from leading industry experts, and make valuable connections to meet current or upcoming project requirements. Registration is $30 through Feb. 14, after which the price increases to $130. For more information and to register online, visit packexposoutheast.com.

book titled business lessons with two hands holding 2 beer mugs full of beer

Top 10 Business Lessons from 2024

Cyndi

Insights to Craft a New Path Forward in 2025

By: Raj Tulshan – Founder and Managing Partner at Loanmantra

As we look back at 2024, beverage businesses reflect on the past year that tested their adaptability, resilience and creativity. Navigating economic uncertainties and leveraging new forms of technology, business owners demonstrated remarkable ingenuity in a post-Covid business world. Here’s a look at the top ten small business lessons. What we’ve learned—and real-world examples of how to put these insights into action.

1. Adaptability and Flexibility can lead to Economic Sustainability.

Small businesses in 2024 faced fluctuating interest rates and inflation. Their sound financial management and steady operations kept them afloat.

Navigating Economic Volatility: One bakery in Chicago got creative with the changes in the market. Sweet Spot Bakery adjusted its pricing model to account for rising ingredient costs. By introducing dynamic pricing based on their real-time expenses, they maintained profitability without alienating customers. Puesto, an Italian restaurant chain from La Jolla, California raised prices 8% during busy periods and reduced them 20% during slower periods. A case study shows they boosted sales by 12% while retaining their employees.

Strategic Cost Management: A small retail store in Atlanta reduced their costs by renegotiating contracts with suppliers. By switching to energy-efficient lighting they saved 15% on monthly operational expenses. Green upgrades to a business may not only offer cost savings but can help businesses qualify for tax breaks and incentives in some cases.

2. Embraced Technology like AI, Automation and Augmented Reality.

  Businesses that found a way to incorporate technology and embrace digital tools and AI flourished. They improved their efficiency, reached new audiences and gave customers a more ways to interact with products, services and brands.

Adopting AI and Automation: Many business owners turned to AI to reduce manual and repetitive tasks. AI-driven software automates bookkeeping, scheduling, customer interactions, and even some marketing jobs. For example, a small law firm in Denver implemented AI-driven document review software and cut their case preparation time by a staggering 30%.

Augmented Reality: Lush Looks Boutique in New York integrated an augmented reality (AR) feature for virtual try-ons on their Shopify store, which increased online sales by 40%. Industries including tourism, real estate and even education are using AR to help consumers visualize themselves in various settings. This is especially important as a new generation of consumers place more value on having authentic experiences and will spend money for higher levels of quality of drinks, foods and experiences.

3. Focused on Customer – Centric Approaches.

  Better understanding and catering to customer needs proved vital for growth this year. And that means establishing a two-way dialogue between beverage companies and their patrons and taking that feedback to put a plan into action. People want to feel acknowledged, taken care of and treated well.

Personalization Matters: FlexFit Studio in Los Angeles used CRM software to send personalized workout tips and promotions, boosting membership renewals by 20%.

Customer Feedback as a Guide: Green Bean Café in Portland added vegan options to their menu after analyzing online reviews and feedback from their clients. Understanding this new consumer segment brought in a 25% increase in local visits.

4. Adopted Shifting Workforce Trends.

  Retaining top talent required flexibility and a greater focus on the employee’s well-being.

Flexibility Retains Talent: Numerous small businesses juggled the balance of remote and hybrid work models, aiming to strike the right balance for their business. In one example, CreativeHive Agency in Austin retained their top performers by offering remote work options and subsidizing their employee’s coworking memberships. This resulted in a 10% productivity boost.

Employee Well-Being is Non-Negotiable: A small landscaping business in Miami introduced mental health days for their staff and even partnered with local mental health experts for their people. This initiative is estimated to have reduced turnover by 30%.

5. Boosted Online Security.

  Protecting sensitive information has become critical in a digital-first world. This is one of the business lessons that will be essential for the future.

Protecting Against Cyber Threats: Many businesses implemented multi-factor authentication and regular employee trainings to reduce cyber-attacks. These proactive approaches helped stave potential data breaches and strengthen client trust. The U .S. Chamber of Commerce has taken a more active role in educating companies on how to ensure their businesses are secure in a digital, online world.

Steps to Boost Cybersecurity: The Chamber advises taking these steps boost security. Use antivirus software and keep all software updated, enable Multi-Factor Authentication, manage Cloud Service Provider (CSP) accounts, secure, protect, and back up sensitive data, secure payment processing, control physical access, back up your data and control access to company data.

6. Made Sustainability and Community Affairs top Priorities.

  Customers increasingly value purpose-driven businesses that prioritize sustainability.

Consumers Value Purpose-Driven Brands: Younger customers put their money where their values are. Many small businesses, like EcoBrewery Co. in Asheville, stood behind their mission and values to attract new customers by introducing recyclable packaging.

Social Responsibility Focus: According to Nielseniq, Gen Z prioritizes brands that align with their ethical and social principles: environmental sustainability, social justice and corporate transparency. Supporting brands that demonstrate sustainable sourcing, eco-friendly packaging and corporate social responsibility initiatives. For this generation, buying a product is not just a transaction but a statement of their personal values and beliefs.

Investing in Sustainable Changes: Businesses turned to local grants and funding to help them create greater value. BrightTech Manufacturing in Dallas installed solar panels on their physical space, reducing energy costs by 20% and earning a sustainability award from a local business association.

7. Adapted to Capitalize on New Opportunities.

  If the past several years has taught business owners anything, it’s that being able to pivot quickly is what can enable them to thrive sometimes.

Pivoting Pays Off: Finding the white space in the market isn’t always about the product or cost. Sometimes innovation comes by way of constraint. A photographer offered virtual photo shoots. unlocking new revenue streams and client base.

Global Opportunities: A startup with large amounts of overhead sourced parts throughout the world reducing their production costs by 25%.

8. Leveraged Support Network Partners.

  Strong partnerships and mentorship provided essential support this year.

Collaboration Over Competition: In St. Louis, several small boutiques banded together for a holiday market, increasing foot traffic and boosting sales for their collective audience.

Seeking Expert Advice: SmartStart Co. in Atlanta was one of many SMEs to join their local chamber of commerce mentorship program. Through their participation, they gained insights that grew their revenue up to 15%.

9. Secured Needed Access to Capital.

  One of the top concerns for small business owners is securing capital. Access to capital is a prime barrier that keeps business owners from starting or expanding their business. This will continue to be a top concern heading into the new year. How important is access to capital for small businesses?

  A study by US Bank found that 82% of businesses fail due to cash flow mismanagement. Almost half (43%) of small businesses applied for a loan last year according to Fed Small Business.

Ready Paperwork for Steady Financing: Business owners plan ahead by gathering documents that are required for financing before funds are needed. For example, many business owners set up a free, secure account at loanmantra.com so that everything needed to secure funding is ready.

Building Relationships with Lenders: Sometimes a line of credit through a local community bank or credit union can enable a business to grow and expand.

Government Programs Are Valuable: Small Business Administration loans grow communities, particularly underserved communities, through small businesses.

10. Small Business Lessons Continue

  These lessons from 2024 highlight the resilience and creativity of small business owners. Applying strategies–from dynamic pricing to customer loyalty programs–businesses are surviving and growing. Carrying these insights forward into 2025 can help craft a roadmap to navigate the new challenges and opportunities ahead.

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