Category: Finance

Turning Market Lemons into Tax Lemonade

Cyndi

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

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

By Sarah Hite, MBA, Northwestern Mutual Wealth Management Company

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

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

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

What Is Tax-Loss Harvesting?

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

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

For example:

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

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

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

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

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

Losses Can Offset More Than Gains

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

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

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

Even better: unused losses carry forward indefinitely.

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

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

Why Business Owners Should Pay Attention

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

•     Salary or guaranteed payments

•     Profit distributions

•     Capital gains from

       investments

•     Real estate income

•     Other business interests

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

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

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

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

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

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

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

  Instead, the process often looks more like this:

1.  Identify an investment currently trading below its purchase price

2.  Sell the position to realize the tax loss

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

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

  The Wash Sale Rule: The Buzzkill of Tax Planning

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

Here’s a simple example:

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

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

For example:

•     A brokerage account

•     A spouse’s account

•     An automatic dividend reinvestment plan

•     A retirement account

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

Why Business

Owners Should

Involve Their

Financial Advisor

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

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

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

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

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

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

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

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

Now What?

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

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

Better Than the Cool Kids

Cyndi

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

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

By Hanifa Sekandi

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

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

The Odd Brand Out

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

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

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

Be Bold Without Hesitation

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

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

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

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

You’ve Got to Have Faith

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

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

With Great Reward Comes Great Risk

Cyndi

Top things that make craft beer bars, bottle shops and distilleries insurable (and uninsurable)

a woman on the brewery production floor holding her head while looking at insurance documents on a table

By David DeLorenzo

The hospitality industry is big business. The National Restaurant Association reported in February of this year that in December 2025 alone, “eating and drinking places” registered total sales of $100.2 billion on a seasonally adjusted basis, with a fourth quarter outcome topping $300 billion. The organization calls this sector “the primary component of the U.S. restaurant and foodservice industry.”

  But often with great reward comes great risk. In 2025, the National Restaurant Association estimated 30% of bars and restaurants fail in the first year. While thin margins and stiff competition are among the reasons these types of establishments quickly close up shop, another main reason is complex operational demands.

  While craft beer brewers and fine spirits developers may be passionate about their craft, they may not be well-educated on the business end of, well, business. Particularly when it comes to licensing and insurance, craft beer breweries, distilleries and other establishments making and serving liquor need to know the ins and outs of what makes them insurable — and more importantly, what doesn’t.

  Being properly licensed and insured is an absolutely critical factor to the success of any business, particularly in the hospitality industry. This article focuses the lens on insurance and what insurance carriers are looking for. An establishment can end up paying a lot more for its premiums or be locked out of an insurance policy altogether, and it comes down to best practices.

  There are three major components that insurance carriers are looking at when it comes to covering a policy for establishments like craft beer bars, bottle shops, distilleries and other places that serve liquor. The “big three” are the amount of liquor or beer volume being served, entertainment, games and late hours, and procedures for overserving prevention, training and documentation.

  The amount of liquor or beer volume being served: The percentage of alcohol sales is a defining factor when it comes to insurance. Exposure is a definitive factor when it comes to how much an establishment should expect to pay for its coverage. For example, a restaurant with 10% liquor sales will very likely pay less than a bottle shop with 40% liquor sales or more. In addition to the liquor sales, the industry category will also have an impact on rates. This is due to the risks that the business encounters. Rates will vary based on the risk that the insurance carrier expects to take on with any given business that serves alcohol.

  Entertainment, games and late hours: They say nothing good happens after midnight. And while there may be some debate on that, depending on who’s at the receiving end of that sentence, when it comes to insurance companies, late nights are a red flag. This comes down to the fact that the longer patrons linger in a place serving alcohol and the more they order, the more likely they are to become intoxicated and therefore a risk to the establishment, to themselves and to others. Late-night happy hours or last-call specials offered by establishments may also be looked at as a red flag. It could be construed as “encouraging” patrons to drink up as it gets closer to closing time, when they will then potentially get in their cars to drive home — big red flag.

  Entertainment and games could also impact rates and coverage, once again, based on the risk that the insurance carrier is willing to accept. Certain entertainment and games hold less risk than others, depending on their nature.

  Procedures for overserving prevention, training and documentation: Poorly or undocumented procedures, negative culture in the employee environment and lack of experience can be indicators that will make an insurance carrier turn away. Another big red flag is if an establishment has claims that are open or have reserves on them. This makes it extremely difficult for a new carrier to want to write the coverage on it.

  Having proper training and procedures in place is one of the most important things an establishment serving liquor can do to enhance the safety of staff and patrons, to mitigate their risk for getting caught up in a lawsuit and also to obtain reasonable insurance rates.

  Risks that establishments serving alcohol face:  No matter how it’s looked at, liquor liability will always be a challenge that establishments serving alcohol will face, regardless of the state in which they are operating. However, that is not where the risk ends. There are also lesser-known or not-often-considered liabilities including product liability, contamination of product or product recall. There are risks such as fire or explosions from open flames and vapors, particularly in distilleries. Equipment breakdowns can cause a major business interruption and losses.

  Best practices to become more insurable: The number one thing a business can do to keep its insurance rates lower is invest in safety protocols and meticulous standard operating procedures. The fewer claims businesses have and the more they can prove to the carrier that they run professional operations that abide by the rules, the more “insurable” they become. Some standard operating procedures to consider include.

  Document it:  Having air-tight documentation records and licensing is vital for any business, whether they are serving alcohol or not. But it is even more important for those who do. Documentation and licenses should also be easily accessible if they are needed in an instant.

  Record it: Security and video footage are also crucial. Having a time-stamped video can be the very thing that protects a business if a lawsuit arises.

  Train them: Keep excellent, well-documented records of employee training with alcohol, from service to batch tracking and other procedures regarding alcohol. For example, instill strict policies on checking IDs and make sure employees are educated on determining if a patron is perhaps already inebriated before serving them any alcohol. Make it common practice never to overserve anyone. 

  Clean it up: This goes beyond the physical appearance of the establishment. Owners should take care of how they are presenting themselves through their website, social media, branding and marketing. If the online presence looks disheveled and disorderly, the underwriter will assume that of the business itself and may be hesitant to cover a business for that reason. This also goes for the entertainment and experiences being promoted. Offering crazy activities in an attempt to attract new customers may end up costing establishment owners by way of higher rates or none at all.

  Out of his passion for serving the restaurant and hospitality industry, David DeLorenzo created the Bar and Restaurant Insurance niche division of his father’s company, The Ambassador Group, which he purchased in 2009. For more than 20 years, he has been dedicated to helping protect and connect the hospitality industry in Arizona. For more: barandrestaurantinsurance.cohttp://www.barandrestaurantinsurance.comm.

10 Ways Technology Buyers Get It Wrong (Before They Ever Issue the RFP)

Cyndi

Why strategy (not software) determines whether technology investments actually deliver value

three people sitting at their desks holding their heads in confusion

By Tara Buchler

Technology buying failures rarely happen because a team chose the “wrong” software. They happen earlier when beverage manufacturers or distributors enter the RFP process without the strategy, clarity, or alignment required to make a good decision.

  Most technology buyers in beverage production only see a handful of production lines, bottling plants, or distribution operations over the course of their careers—often within the same company, sometimes within the same operating model. That means they know what their world looks like, but they have limited visibility into what “good” looks like across product categories, growth stages, or operating models. At the same time, technology is accelerating, vendors are proliferating and consolidating, and marketing claims are getting louder—especially around automation, AI-driven production planning, and end-to-end supply chain platforms.

  Against that backdrop, many buyers treat the RFP as a starting point. They move quickly, rely on familiar signals, and focus requirements on the most immediate problems in front of them. Unfortunately, those instincts often lead to predictable and expensive mistakes.

  Here are 10 common ways technology buyers get it wrong before the RFP ever hits the street—and what a strategy-first approach does differently.

1. Starting With a System Instead of a Business Outcome: Most initiatives begin with a conclusion rather than a question: “We need a new ERP, MES, or production management system.” That belief may come from increased production volume, a new product line, expansion into new markets, or the sense that current tools have been outgrown. However, once the system is assumed, the rest of the process becomes backward.

Why it fails: When technology is treated as the objective, requirements focus on functionality instead of outcomes. Buyers spend their time documenting what the system should do—track batches, schedule bottling lines, manage inventory, or monitor quality—instead of what the business needs to achieve: consistent product quality, lower production costs, reliable traceability, or scalable growth. Vendors respond accordingly with polished demos and confident roadmaps, but no one is accountable for whether those capabilities translate into measurable business impact.

a man standing on the brewery production floor looking at a computer screen

Strategy-first alternative:

Start with the outcomes the business needs to deliver and work backward. Let those outcomes determine whether technology is required at all, what role it should play, and which tradeoffs matter. Technology should be a consequence of strategy, not a substitute for it.

2. Treating Today’s Pain as the Real Problem: Manual workarounds, missed production targets, spreadsheet dependency, and poor reporting often dominate early discussions because they are visible and painful. But they are rarely the underlying issue.

Why it fails: Pain points are symptoms of deeper structural problems: misaligned processes, unclear decision rights, weak data foundations, or operating models that no longer fit the production or distribution business. When these conditions exist, technology is often used to compensate. Workflows get manually overridden, rules get bypassed, and “temporary” workarounds become standard practice. When buyers select new technology to fix a pain instead of addressing the underlying problem, they often embed the same behavior into a new system.

Strategy-first alternative:

Treat pain as a signal, not a diagnosis. Step back and understand why the organization is struggling before deciding how to fix it. Otherwise, technology becomes an expensive way to mask deeper issues.

3. Assuming Technology Will Fix Broken Processes:

RFPs frequently document the current state in extreme detail with the implicit belief that “modern software” will somehow make those processes better.

Why it fails: Technology does not fix broken processes—it accelerates them. Automating a flawed workflow only increases the speed and visibility of inefficiency, now accompanied by dashboards and alerts. Teams end up locked into faster execution of work that no longer makes sense, whether that means inefficient production scheduling, unnecessary manual checks, or poor coordination between production and distribution.

Strategy-first alternative:

Redesign processes based on how the business should operate in the future, then select technology that supports that design. Technology is an amplifier. Without process discipline, it amplifies the wrong things.

4. Skipping the Target Operating Model: Many beverage companies cannot clearly articulate how they want to operate three to five years from now. As a result, requirements blend legacy behaviors with aspirational goals.

Why it fails: Without a defined target operating model, technology decisions lack direction. Vendors are asked to reconcile competing objectives—standardization and customization, automation and manual control—without clear guidance. Fundamental questions remain unanswered: who owns decisions, when automation should intervene, and when human override is expected. These ambiguities resurface during implementation, when tradeoffs become costly and hard to reverse.

Strategy-first alternative:

Define the target operating model upfront: roles, decision rights, escalation paths, and performance expectations. When the operating model is clear, technology requirements become coherent and comparable.

5. Letting One Function Drive the RFP:

Technology buying is often led by a single function—IT, production, quality, or supply chain—based on where the pain feels most acute or who has budget available.

Why it fails: Optimizing from one functional perspective frequently creates friction elsewhere. Systems that work well locally can degrade end-to-end performance, introduce handoff issues, or misalign incentives across the broader operation.

Strategy-first alternative:

Design requirements cross-functionally, anchored in end-to-end operational outcomes. Input should reflect the needs of all impacted stakeholders—from production and quality assurance to logistics and distribution—not just primary users. Technology should serve the organization as a whole, not the loudest stakeholder in the room.

6. Overloading Feature Lists Instead of Decision Support: Many buyers rely on exhaustive requirement lists, sometimes sourced from third parties without tailoring them to their own business, to demonstrate rigor.

Why it fails:  Feature checklists do little to improve decision quality. Buyers end up with platforms that can do many things but do not materially improve production planning, quality monitoring, or responsiveness to demand changes. The system becomes a tool for compliance rather than better decision-making.

Strategy-first alternative:

Anchor requirements around decisions and use cases: what decisions need to be made, under what conditions, and with what balance of automation and human judgment. When requirements reflect how the business actually operates, responses become a valuable gauge of whether the technology is designed to support and improve those operations. Decision quality—not feature count—is what drives value.

7. Ignoring Change Management Until After Selection: Change management is often treated as an “implementation issue” rather than a strategic input.

Why it fails: Solutions exceed the organization’s readiness, skills, or appetite for change. Advanced capabilities are quietly shelved, workarounds proliferate, and adoption stalls without anyone formally declaring failure.

Strategy-first alternative: Assess organizational maturity early and align technology ambition accordingly. A solution that the organization can fully adopt will outperform a more sophisticated one it cannot.

8. Assuming Data Is “Good Enough”: RFPs often assume optimal conditions: clean master data, consistent processes, and disciplined data governance—even when reality says otherwise.

Why it fails: Technology performs well in demos and poorly in production not because the software breaks, but because the data feeding it is unreliable. In beverage production, this might include inconsistent batch records, incomplete supplier data, or inaccurate inventory counts. When data readiness is not assessed upfront, organizations expect the system to compensate for weak inputs. Technology cannot correct these behaviors—it will simply reflect them.

Strategy-first alternative: Evaluate data maturity explicitly and early. Identify which elements are critical to system performance, how they are created and maintained, and where ownership sits. Standardize foundational data where possible and align expectations with vendors around data requirements. Addressing gaps upfront allows organizations to plan remediation intentionally rather than discovering limitations after technology is already in place.

9. Treating the RFP as a Documentation Exercise: Many organizations measure RFP success by participation rather than insight.

Why it fails: The RFP becomes a static artifact instead of a decision-making tool. Assumptions go untested, tradeoffs remain implicit, and real priorities stay hidden.

Strategy-first alternative: Use the RFP to challenge thinking, surface priorities and tradeoffs, and sharpen decisions. The goal is clarity and strategic alignment, not volume.

10. Rushing to “Show Progress”: Leadership pressure to move quickly often drives teams to issue an RFP or select a solution before alignment exists.

Why it fails: Shortcuts upfront create delays downstream: re-scoping, mid-implementation resets, and missed ROI. What looks like speed becomes drag.

Strategy-first alternative: Recognize that strategy accelerates execution. Alignment eliminates false starts and reduces long-term risk.

The Bottom Line: Most technology failures are not the result of poor vendor selection. They are the result of organizations being unprepared to buy technology in an increasingly complex, hype-driven market.

  A strategy-first approach doesn’t slow technology selection. It ensures buyers are solving the right problems, setting realistic expectations, and using technology as a tool—not a crutch—to deliver real business outcomes.

  About the Author

  Tara Buchler is Principal, Strategy at JBF Consulting, a leading logistics strategy advisory and technology integration firm. She brings more than 20 years of experience at the intersection of logistics operations and enterprise supply chain software. For more information, please visit www.jbf-consulting.com.  

The Big Beautiful Bill on Your Beverage Business

Cyndi

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

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

By Raj Tulshan, Founder & Managing Partner, Loan Mantra

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

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

Tax Relief Extension

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

Larger, Immediate Expense Limits

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

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

Expanded Deductions

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

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

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

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

No Tax on Tips

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

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

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

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

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

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

The Tipping Point

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

YES, RULE APPLIES:

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

•     Bartenders

•     Servers / waitstaff

•     Cocktail servers

•     Barbacks

•     Tipped food runners

•     Sommeliers / wine stewards

•     Counter service staff who receive tips

      •Food delivery drivers

•     Catering service staff

•     Event bartenders

•     Valet attendants

MAYBE RULE APPLIES:

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

•     Brewery taproom staff

•     Tasting room hosts

•     Coffee baristas

•     Food truck operators (employees, not owners)

•     Tour guides (brewery/distillery tours)

NO RULE APPLIES:

•     Owners and partners

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

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

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

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

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

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

Sustainability or Survival?

Cyndi

When wastewater projects actually pay for themselves

a wastewater treatment plan processing the waster water in a brewery

By Frances Tietje Wang

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

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

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

Defining “Payback” in Wastewater Projects

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

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

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

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

High-ROI Wastewater Projects Breweries and Distilleries Are Actually Using

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

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

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

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

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

Anaerobic Digestion (When It Makes Sense)

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

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

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

Water Reuse and Process Water Reduction

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

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

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

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

Grants, Incentives, and Financing: The Hidden ROI Multiplier

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

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

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

Case Study Patterns: Making the Math Work, Not Waste

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

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

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

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

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

Wastewater as Strategic Infrastructure

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

Resources

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

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

Planning Your Capacity

Cyndi

Starting your brewery on sound footing  

a black and silver photo showing a row of brewery tanks and components

By Erik Lars Myers

One of the biggest challenges a new brewery owner has when starting up seems like the simplest question of all: What size brewery am I starting?

There’s no fool-proof method to get this crystal ball prediction perfectly correct, but a commonsense approach can help target the outcome so that you can plan your investments wisely.

  The first decision begins with determining the size of your market. Ask yourself: Are you in a small town or a big city? Are you in a location that people can walk to, or do they have to drive? Do you have parking space? How much? How many seats do you have in your establishment? How many hours are you open? Are you distributing your product in kegs? Cans? Bottles? How many distribution customers exist within a half-hour drive of your location? How many of those will realistically put one new beer on tap?

  There are no easy answers or simple math, but going through those questions can give you the first gut check: Realistically – is this a relatively small operation serving your own neighborhood? Or are you building a manufacturing plant with plans to service a large metro area?

  When in doubt, don’t be afraid to undershoot a little. While you want to be able to make enough product to cover cost of goods, overhead and debt service, having to increase capacity because you have a high demand and great sales is a much easier – and nicer – problem to solve than having too much product or, worse, old product moving into the market because your brewing capacity and inventory outstrips demand. This is 2026, and we’re no longer in a market in which “if you brew it, they will drink.”

  However, be wary of 1- to 2-barrel operations which put a high demand on factory time without creating a reasonable amount of product. Making one barrel of beer takes roughly the same amount of work as making ten barrels of beer or thirty barrels of beer. The difference is economy of scale. For any commercial operation, even an exceedingly small one, be wary of anything smaller than five barrels.

  Once you determine your relative market demand, the first limiting factor you must consider is the size of your production floor. As a rule of thumb, the maximum yearly capacity of your brewery will equal one barrel per square foot of floor space. For example, if you have a building which – after offices, storage space, loading dock, and forklift parking – has roughly 2,000 square feet of space dedicated to your production floor (brewery, cellar, packaging), the most you’ll be able to get out of that space is approximately 2,000 barrels per year. Note! You will definitely make less than that, but over time you probably won’t squeeze out more.

  Next, it’s time to figure out the balance of system size to production space and what you’re planning to offer. If you intend to sell a couple of solid and consistent offerings in a planned distribution, you can lean towards a larger system that will allow you to make a higher volume of those few offerings while brewing less frequently. If you are planning a wide slate of varietal, seasonal beers – or less traditional beers with experimental ingredients – consider a smaller system with higher turn capacity.

  In today’s market, shooting smaller is not necessarily a bad idea. The difference between a 7-barrel brewhouse and a 15-barrel brewhouse can be measured in hours. In other words, a 7-barrel brewhouse can be used to create 15 barrels of the same beer but it will take twice as long on the brew deck to do it. On the other hand, the difference between a 15-barrel brewhouse and a 7-barrel brewhouse can be measured in days. As in, the number of days you will have stock to sell from a 15 barrel batch is twice that of a 7-barrel batch.

  Unless you are the only game in town, incredibly lucky, or exceptionally good, sales will be your largest production bottleneck.  When it comes to figuring out how many fermenters and brite tanks to purchase, and what size, start by looking back over all the other decisions and considering turn time.

  On average, a good rule of thumb is approximately 16 – 18 days between a beer being brewed and it being ready for market. That is one day in the brewhouse, 10 – 14 days in the fermenter including cold crashing, 1 – 2 days in a brite tank, and 1 – 2 days for packaging. That timeline can be extended for lagers by a few days or a few weeks.

  Can beer be produced faster than that? Without question. But as a rule of thumb, at start up, plan to take your time. Give yourself time to get it right.

  Now take a moment to revisit the idea of throughput and your market size and how quickly you might move through product.

1 barrel of beer = 31 gallons = 2 half barrel kegs = 6 sixth barrel kegs = ~240 pints.

With a 15-barrel brewhouse every batch would produce

465 gallons OR 30 half barrel kegs OR 90 sixth barrel or most realistically a combination thereof.  All that equals 3600 pints of one sole product.

  In a regular taproom setting you can expect to sell, on average, 1.5 to 2 beers per customer on a visit. In a 150-seat taproom at maximum capacity, if all the seats turn over twice per night you can expect to sell approximately 300 pints, or just over 1 barrel of beer. Over the course of any given week, in a high-volume taproom, you should aim to turn over a minimum of 1 turn of your brewhouse in a 1-week period. In other words, plan to brew at least once per week, on average, to begin with. Again – as you grow, you can always add more brew days and more fermenters.

  It is also good to remember that the numbers of beers that you offer will not correspond to a higher volume of sales, but rather it will spread those sales across a wider number of products with the largest volume concentrated on 2 – 3 beers, probably your IPAs and Pilsener (or Pilsener analog). To put this another way: if you have 6 beers on tap or 12 beers on tap, you will still sell the roughly same amount of beer per week, but all of the beers will move more slowly, with the possible exception of your fastest selling beers.

  This all means that a mix of fermenter and brite sizes can be helpful when planning capacity. A mix of fermenters that match your brewhouse size and fermenters that are double your brewhouse size is a good idea. Double-batch your high-volume beers and single-batch your slower moving offerings to manage inventory well. If something turns into a high-volume beer, you can always make more. If something is moving slowly, there’s nothing worse than having so much that it isn’t just unpopular, but also old and stale.

  If you are brewing at least once per week and have a 16-day turn on your fermenters, then you should have a minimum of 4 fermenters. However, give yourself room to get ahead of inventory and take your time with beer, or the option to make more of your high-volume beers. An easy recommendation is 4 fermenters that match your brewhouse size and 2 fermenters that are twice your brewhouse size. Thus, a startup with a 5-barrel brewhouse might start with four 5-barrel fermenters and two 10-barrel fermenters. 

  Since turn time in a brite tank is much smaller than in a fermenter, you need fewer brites. You will want one brite tank for every 3 – 4 fermenters of any give size. In this scenario, two 5-barrel brites and one 10-barrel brite would be sufficient. At a 16-day turn on each fermenter (a little under two turns per month) that gives you an initial maximum brewing capacity of approximately 700 barrels per year, depending on fermentation efficiency, work weeks, holidays, and sales. Your final volume for the year will almost certainly be less than that.

  Finally, the last piece to consider is cooperage. Kegs are one of the highest cost, highest value assets in your operation and are often overlooked. To begin with, if you are only providing beer to your own taproom and you are not using serving tanks, you need enough cooperage to hold all your volume in inventory… and then some. For every individual product you offer you will need empty kegs waiting to be filled, kegs filled with beer waiting to go on tap or be sold, kegs on tap, and empty/dirty kegs waiting to be cleaned. If you are in distribution you will need to add two more scenarios: kegs at the customer waiting to go on tap and empty kegs at the customer waiting to be picked up. You will also lose a small percentage of your kegs each year in the marketplace as they get lost or stolen.

  For each 5-barrel batch of beer, you need the equivalent volume of 20 – 30 barrels in cooperage. Half-barrel kegs (120 pints) are much more efficient but take up much more space and are clumsy to work with. They also typically sell at a lower price per pint than alternatives. Sixth-barrel kegs (40 pints), or sixtels, are much easier to work with and allow for more variety but are much less efficient on the production floor. You will probably maintain an inventory of both halves and sixtels at roughly an equivalent internal volume. For each half barrel keg, keep three sixth barrel kegs. For a 5-barrel startup brewery offering four distinct brands out of the gate, with limited distribution, starting with 100 half-barrel kegs and 300 sixth-barrel kegs would not be out of line.

  Of course, if there is a plan to do packaging in other formats (bottles or cans) that reduces the need for cooperage, so plan accordingly.  It is better to have more kegs than you need and have the luxury of cleaning them when you can – remember, each keg takes three minutes minimum on the keg washer – than to have too few kegs and not be able to package beer or brew because you are short on cooperage and have nowhere to put ready product.

  There is no perfect answer to what equipment you will need in a startup scenario – every brewery, location, taproom, and distribution model will create diverse needs, but a good examination of these points can start you off on the right foot. Breweries are expensive, particularly at initial stages, but it is worth the money to have the right assets in place rather than to spend the life of your business trying to catch up.

Have You Considered Co-packing?

Cyndi

How to fast track your new spirits brand

a bottle of Velocity spirits

By Kris Bohm, Distillery Now Consulting

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

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

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

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

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

12 simple steps to creating your own bottles of whiskey

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

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

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

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

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

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

•    Take a break and enjoy a tasty cocktail

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

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

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

•    Co-packer will bottle and package the whiskey

•    Launch your brand.

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

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

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

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

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

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

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

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

Bar vs. Restaurant: The Difference is in the Details

Cyndi

What owners need to know when opening a liquor-focused concept

photo of Still Barrel bourbon bar in phoenix az

By Eric Butrull, Knife and Fork Media Group

Across the country, the hospitality industry continues to be a major economic powerhouse. As 2025 came to a close, the National Restaurant Association reported that restaurants alone added 150,000 jobs in 2025, and eating and drinking places added a net 27,200 in December (on a seasonally-adjusted basis, per the Bureau of Labor Statistics).

  Most hospitality personnel — from owners to staff — know that operating a business in this industry is not for the faint of heart. Whether a bar, brewery or distillery, the hours can be long, fast-paced, stressful and exhausting. However, owning and operating a bar or restaurant can also be extremely fulfilling and rewarding.

  Repeat customers of these types of establishments are often extremely loyal, finding solace and a “home away from home” at their favorite neighborhood bar or brewery. But there are some rather distinct differences in owning and operating a food service establishment and a bar, brewery or distillery, where liquor is the focus of sales.

  Dennis Shaw, owner of Phoenix City Grille, a successful restaurant in Phoenix, Arizona, since 1997, and co-founder of the soon-to-be-opened Still & Barrel bourbon bar in Phoenix, Arizona, offers some insight, based on his more than four decades in the hospitality industry, working across restaurant and bar operations, in leadership and ownership positions.

  “A liquor-focused bar is much more about curation, education and experience than volume. With a restaurant, food drives the visit; with a bourbon bar, the spirit selection and the story behind it are the draw,” said Shaw. “Inventory management is more complex, pricing strategy is critical and staff knowledge has to go much deeper. Every bottle has a purpose, and every pour should feel intentional.” Intention is key in any business, of course. However, Shaw notes that when it comes to bar businesses in particular, patience and relationships matter more than anything.

  “Whether it’s securing rare bottles, navigating licensing or building the right team, nothing happens overnight,” he said. “I’ve also learned that guests today want authenticity — they want to know why a bottle is on the shelf and what makes it special.”

  Still & Barrel’s General Manager Cliff Cragg, who has been in the hospitality industry for more than 20 years, echoed those sentiments.

  When it comes to his takeaway while building Still & Barrel, he said: “I have learned that patience and relationships matter more than speed. Building a strong spirits program takes time, trust and consistency. There are no shortcuts.”

  Prior to helping open Still & Barrel, Cragg previously operated a concept where he built the whiskey program from the ground up, which was recognized as one of the top whiskey programs in the United States by the time he left. Over the last few years, he has focused on building and managing spirits-forward beverage programs, barrel selections, and restaurant and bar operations.

  One crucial factor to keep in mind is that today’s customers are knowledgeable and yet thirsty for more. Rather than simply ordering a fine spirit or rare wine, customers want to feel connected — to the establishment, to their experience and to the spirit itself. Providing them with knowledge or history about what the bottle holds can provide value for guests beyond what’s in the glass.

bottle of straight bourbon whiskey from Gallery

  When opening a bar in today’s market, Cragg emphasized the importance of having a clear vision from the start — and remaining disciplined.

  “Understand your costs and invest in your staff,” he said. “A great bottle does not mean much if the service and execution are not there.”

  Knapp followed that advice up with his own: “Educate yourself relentlessly, invest in your staff’s knowledge and understand your market before you buy a single bottle. And be prepared: capital requirements, licensing timelines and inventory costs are often underestimated.”

It is of the utmost importance to ensure proper liquor licensing and air-tight insurance policies. Most knowledgeable, highly credible insurance brokers will advise bar and restaurant owners to work closely with an agent that is well-versed specifically in the language, the inclusions and more importantly, the exclusions that are often written into policies for establishments that serve alcohol.

  One of the key differences that surprised Knapp during the process of opening Still & Barrel is how complex and restrictive liquor licensing and insurance can be, especially when dealing with high-value inventory.

  “People are also surprised by how much capital is tied up on the shelves,” he said. “Some bottles sit for months or years, but they’re essential to the identity of the bar.”

  Knapp encourages new bar owners not to chase trends but rather build a point of view. Upon developing the concept and the inventory for Still & Barrel, for example, Knapp said he largely relied on Cragg’s extensive knowledge of whiskey to build the brand’s inventory around balance — allocated and rare bourbons alongside exceptional everyday pours.

  “We focused on producers with strong heritage, craftsmanship and consistency,” he said. “Some of the bottles we’re most proud of are those that are nearly impossible to find on-premise, paired with staff who can explain why they’re special, not just expensive.”

  This explanation of importance or rarity, rather than price, further adds value to the product being sold and gives more meaning to the drinker.

  For Cragg, that meant building the bar list at Still & Barrel with balance in mind, including approachable pours, premium options and a small number of truly special bottles.

  “The ones I am most proud of are our private barrel selections because we tasted and chose them ourselves,” he said, adding, “They reflect what we actually like to drink.”

  Offering rare and hard-to-find bottles gives a bar an edge. Offering something that not everyone has on their bar list makes it feel exclusive, even if the environment is as casual and welcoming as any other neighborhood bar on the block. Creating the proper connections in order to obtain those special pours is a key part of the business.

  “Sourcing rare bottles is mostly relationship-driven. Allocations are earned through long-term support and trust with distributors and suppliers,” said Cragg. “Private barrels take time, travel and a lot of tasting before the right one is selected.”

  Knapp agreed that long-term distributor relationships, purchase history and trust are essential.

  “Allocations aren’t something you can buy your way into overnight — you earn them over time,” he said. “We stay engaged with distilleries, tastings and industry events, which helps us identify unique opportunities before they hit the broader market.”

  This goes back to the idea of intention.

  “In a liquor-focused concept, the bar is the point, not the support,” Cragg said. “The selection is tighter and more intentional. With fewer options, consistency and attention to detail matter even more than they do in a traditional restaurant.”

  Ultimately, there are nuances with each individual establishment. However, overall success comes with putting hospitality first.

  “Great bars and restaurants aren’t built on menus or bottles alone,” said Knapp. They’re built on people, consistency and attention to detail. If you get those things right, everything else follows.”

  Cragg added, “I have learned that consistency and honesty go a long way. Trends change, but good hospitality, a well-run bar and a team that cares will always matter.”

  Dennis Shaw took ownership of Phoenix City Grille (PCG), continuing the legacy that founder Sheldon Knapp built when he opened the restaurant in 1997, while elevating the guest experience through food, service and beverage programs. Shaw co-owns Still & Barrel with Knapp. He calls the opening a natural extension of that journey—taking everything they have learned at PCG and applying it to a more focused, spirit-driven concept.

  Cliff Cragg is the general manager of Still & Barrel. He has more than 20 years of hospitality experience, previously operating a concept where he built the whiskey program from the ground up, which was recognized as one of the top whiskey programs in the United States by the time he left.

“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.