Category: Finance
The Return of In-Person Beer and Cider Festivals
By: Becky Garrison
As Ann Obenchain, marketing director of the Brewers Association, keenly observed, “The past two years have been tumultuous for the craft brewing community, and COVID-19 has had ripple effects in many aspects of life.” Once COVID hit in March 2020, the Brewers Association placed the health and wellbeing of their industry peers at the forefront of all decision-making for their events. This led to the cancellation of all in-person events and festivals, including The Great American Beer Festival (GABF), Craft Brewers Conference (CBC), SAVOR: An American Craft Beer and Food Pairing Experience, Homebrew Con and the World Beer Cup (WBC).
Early on in the pandemic, their Homebrew Con went virtual for 2020. In addition, the Craft Brewers Conference (CBC) launched an online version, bringing five weeks of conference talks available and free through May 2020 while everyone was in lockdown. Also, they hosted a virtual hill climb for brewers to meet with elected officials and staff. However, other festivals, such as GABF and SAVOR, could not be retooled for a virtual experience.
With the return of GABF in Denver (October 6-8, 2022), Obenchain notes they must be ready for anything, given they host events across the country. “Each location has different safety requirements, which are subject to change at any time. Our team has learned to be nimble and flexible in providing event attendees with the best experience possible at any moment.”
Among the offerings for the 40th Anniversary of GABF are hangouts for entertainment, live music, games, a brewers’ studio to meet with industry experts and brewers, a designated driver lounge and PAIRED, a ticketed event pairing food from award-winning chefs and beer that includes unlimited tastings of unique beers not found in the festival hall.
Cider Summit Returns to the National Stage
Pre-COVID, Alan Shapiro spearheaded regional Cider Summit festivals in Seattle, Portland and San Francisco, as well as a national cider summit in Chicago that coincided with CiderCon. All these events were canceled effective March 2020.
In 2020 and 2021, they experimented with giving festival-goers an at-home festival courtesy of their “festival-to-go tasting kits.” These kits featured a range of two-to-three packages at different price points and cider selections ranging from modern to artisanal, with some packages including international ciders.
The tasting kits were tailor-made for each specific festival and released in the same month as the in-person festival for that region. For example, the kits released in June featured Oregon cideries. Then they highlighted Washington ciders in September and California ciders in April. According to Shapiro, the Chicago tasting kit was a bit harder to navigate, given this festival’s initial national focus. “We had had ciders from all parts of the country or as best as we could,” he observed.
They distributed these kits via their partnership with Seattle-based Press Then Press, an online retailer of rare, independent, local and craft ciders. Consumers living within a particular festival’s geographic area could pick up their kit or arrange for local delivery. Nationwide shipping was available for those living outside of these areas.
Included in these tasting kits were promotional items and an invitation to a virtual tasting with several of the cidermakers whose wares were included in these kits. Shapiro estimates that about 20 to 30 percent of those purchasing the tasting kits tuned in to the virtual tasting. Over time, they developed a loyal and passionate following, especially as they got better at producing virtual events.
Shapiro hoped he could return to in-person events in 2021 and announced the dates for the Seattle Cider Summit held in September. Even though this festival would be outdoors, they chose to cancel it due to an uptick in COVID cases and the ensuing governmental restrictions.
The Portland Cider Summit, held June 10-11, 2022, marked their return to in-person events. Audience anticipation was high, with a much stronger selling of pre-sale tickets than in prior years, though the monsoon-like rains that pummeled the city lessened the expected attendance. Also, the number of participating cideries was down from around 50 to 43, a dip Shapiro attributes to cideries that are no longer in business, as well as staffing issues.
They will be hosting the Seattle Cider Summit on September 9-10 at South Lake Park, with plans to launch the San Francisco Cider Summit in 2023. As the Chicago Cider Summit is their one indoor event, they will decide in November 2022 if they can host this in February. Also, they will continue their partnership with Press Then Press to offer tasting kits to those who cannot attend their in-person events.
The Oregon Brewers Festival Reopens with a Leaner Look
Editor: As per an announcement on their home page, the Oregon Brewers Festival organizers decided to cancel the 2023 festival. They plan to bring the festival back when the timing is right. See https://oregonbrewfest.com/
Since its founding in 1988, the Oregon Brewers Festival has emerged as the largest beer festival in Oregon and draws in over 50,000 people from across the United States. Hence, co-founder Art Larrance felt the need to maintain its reputation. So, they focused on quality, not quantity, as they relaunched this festival in 2022 after a two-year absence.
To ensure a successful beer festival, they reduced the number of taps to 40 beers and two cideries. They also limited the size of the overall festival footprint and scaled back the number of days. In addition, they did not offer the brewers’ parade live music acts, and they had a more limited selection of vendors. They plan to keep the festival at about the same scale in 2023.
While past festivals have spotlighted international beers or beers from specific states, they chose to focus this year on award-winning Oregon beers. They made this decision to focus on craft breweries with local distribution channels, in large part due to shipping issues. According to Larrance, “I’m glad that we made that decision because while I was looking for 27,000 to 30,000 people, we only had 23,500 people. Had we not scaled down, we would have been spending a lot of money and not broken even.” Also, at the conclusion of the festival, they were able to donate $10,000 to their nonprofit partner, Doernbecher Children’s Hospital.
While the beers remained Oregon-specific, preliminary data from the festival survey shows that 36.8 percent of attendees came from outside the Portland Metro Area. In this regard, they were very close to their pre-COVID percentages of local versus out-of-town attendees.
In addition to a heatwave and concerns about COVID that somewhat reduced attendance, the festival’s location along the Tom McCall Waterfront Park in downtown Portland continues to experience challenges due to the uptick in homeless camps and civil disobedience. These ongoing issues led to a 15 percent occupancy of downtown office buildings, thus significantly reducing the number of local people working downtown who would stop by the festival after work. Typically, they would get about 40 percent of their business from out of town, a number Larrance estimated was down to about 20 percent for this year.
Despite the lower than projected attendance, brewers and beer lovers appeared ecstatic with the return of OBG. As Dan Malech, co-founder of Stormbreaker Brewing in Portland, Oregon, proclaimed, “It was so good to see so many people enjoying fantastic beer. We’ve been a part of OBF every year since we opened, and we hope to continue every year.” John Harris, owner and brewmaster of Ecliptic Brewing, also based in Portland, Oregon, concurred. “It was great to have OBF back. I’ve always enjoyed all the special beers that brewers make for the fest. The smaller size was a great way to bring the fest back.”
The Return of Local Pacific Northwest Beer Festivals
Pre-COVID, the Craft Beer & Wine Fest of Vancouver (Washington), featured 60 beer taps, 80 wines and 35 craft vendors, along with live music all weekend and people traveling to the event from afar. While COVID restrictions prevented them from offering an outdoor festival in 2020, Rusty Hoyle, owner of Craft Nation, noted they were the only in-person Pacific Northwest festival of this type in Summer 2022. “We were really busy with the local people who were itching to get out and do stuff.” In keeping in line with consumer demand for personal safety, they offered hand wash stations, an expanded fence line that provided more room for people to be comfortable and new microphone covers for each singer. They plan on continuing these measures at future festivals.
While many of their prior vendors are no longer in business, Hoyle observed how they are now seeing new craft vendors and also people traveling to this festival from outside the area. Each year, Heathen Brewing of Vancouver, Washington brings a fire truck with seven tap handles that contributes to the festival atmosphere.
The 2022 festival featured over 100 wines and about 30 craft vendors, a number that Hoyle predicts will increase. Also, they narrowed their beer selection to showcase the breweries that align with their values. “We want them to be a part of this event and talk to our customers, not just drop off their beer. It allows fewer hands to touch the product while giving a better customer experience,” Hoyle opines.
Among the other events that Hoyle organizes is Gorge Blues & Brews in Stevenson, Washington, which is held in late June with RV and tent camping available. This year’s event pulled in 2,500 people, shattering their prior attendance record by 1,000. The event features world-renowned blues artists on two stages with local craft beer, wine and spirits.
In February 2022, Larrance launched the inaugural Over the Hills to Hillsbrew, a new local beer festival designed to highlight Washington Country and Portland breweries, along with a few other Oregon-based breweries. He believed that the local people felt cooped up and thought that a beer festival would help lift their spirits. While he anticipated around 5,000 people to attend, approximately 2,800 came to sample beers from 25 to 30 breweries. This was an inside event held during the winter months when COVID was on the rise, so proof of a COVID vaccination was required.
In addition, the Oregon Trails Brew Fest, traditionally held the weekend before the Oregon Brewers Festival, returned in 2022. Hosted by the Oregon City Brewing Company in Oregon City, Oregon since 2019, this all-ages outdoor brews festival is a community-based event with lawn games, live music, 32 breweries, and three cideries. While they had a few more breweries in 2019, their ticket sales remained consistent with their pre-COVID statistics.
In the Pacific Northwest, an area with some of the strictest COVID restrictions in the United States, major festivals with a beer component that attract a national crowd, such as Feast Portland, are not slated to return until 2023, and festival plans are still in development. Some local breweries have begun to offer festivals, albeit often in a modified format, while others have chosen for now to focus on rebuilding their businesses.
How Your Bar/Restaurant Can Make Money in a Nation of Inflation
By: Raj Tulshan, Founder of Loan Mantra
There’s no doubt that the past few years have been tremendously disruptive for the restaurant industry. Now that your bar or restaurant has survived a global pandemic and its long-lasting, widespread ramifications – including labor and product shortages, supply chain disruptions, etc. – you’re also facing historic inflation and tremendous price hikes on the things you need to run your business. How can you face yet another challenge after all your business has already been through?
This is a great time to plan a business strategy, especially as you may be feeling financially insecure. The annual inflation rate in the US accelerated to 9.1% in June 2022, the highest it’s been since November 1981. Prices for things like energy, food, and rent have skyrocketed, while stocks plummeted. Now that inflation is at a 40-year high and economists are hinting at a possible recession later this year or in early 2023, what can business owners do now to survive?
The first half of 2022 was challenging, with soaring inflation, the biggest selloff of bonds in 40 years, a huge decline stocks, and the implosion of crypto. The challenging economic situation includes supply chain disruptions and the Russian/Ukrainian conflict. According to July National Federation of Independent Businesses (NFIB) Research, 34% of business owners report that inflation is the most important pressing business issue. And 61% of owners do not expecting business conditions to improve.
While the volatile economy can be nerve-wracking for business owners nationwide, there are concrete things you can do to get a handle on your company’s finances. For instance, get an annual financial checkup. This means assessing how your business is doing, determining what’s going well, identifying what needs improvement and setting concrete financial goals for the coming year. The experts at Loan Mantra are helping companies boost their financial health, making the process simple, transparent and effective.
Here Are Some Tips to Get Started
Review Records: Recognize there are certain things you can’t control (such as whether the U.S. tips into a recession), and certain things that you can. Make a proactive effort to get your finances under control. Update your business plans, pull your current credit report, and talk to an expert about your financial health, including your money goals. Organize and file your paperwork, ideally in a secure, online system, like Loan Mantra’s vault, so you’re able to access necessary financial information instantly and easily whenever you need it.
Think Through: Be strong and remember this, too, shall pass. On average, recessions last 11 months. The shortest one on record was in 2020, when the pandemic spurred a recession that lasted only three months. And while stocks are currently low, they’ve historically bounced back after recessions. This is a good time to talk to a financial advisor about how (and where) to invest so you can take advantage of the eventual recovery. Your business has gotten through a few difficult years – stay strong, flexible, and resilient, and you’ll get through the heightened inflation, as well.
Audit Your Business: Businesses should regularly audit their spending, but this exercise is especially important during tough economic times like these. Consider whether there are any services or resources that you can reduce or eliminate. Comparison shop for any products that you use regularly to try and get a better price. Consider switching suppliers to get better deals.
Borrow Smart: Pay off credit card balances and other debts as soon as possible. With interest rates rising and a possible recession coming, this becomes even more critical. Get a low-interest business loan or consolidate debt. You’ll pay off your credit card debt much faster if you transfer high-interest debt to a credit card with a 0 percent rate. If you don’t qualify for a 0 percent credit card, call your current credit card company, and request an interest rate reduction. Ask a financial expert for advice on the best and fastest ways to pay down your debts.
Invest for Returns: Acquiring a new customer costs, on average, five times more than retaining an existing customer. The cost of recruiting new customers is even more costly and difficult during a recession, when people are trying to minimize their spending and are, therefore, less likely to buy new products or services. Your current customers already know how great your organization is, but during tough times, you’ll need to maintain (or increase) standards to keep them happy, satisfied, and loyal. Consider adding (or enhancing) customer loyalty programs, offer incentives or discounts for loyal customers, hold an industry night where you give a percentage off the bill for first responders, teachers, healthcare workers, etc. Donate gift cards or sponsorships to worthy charity events in your community to generate awareness and goodwill. And, of course, hold yourself (and your employees) to the highest quality and safety standards to keep customers coming back.
Focus on Favorites: As you take an honest assessment of your organization’s finances, consider whether you’re still offering products that are no longer performing well. It’s wise to eliminate anything on your menu that is underperforming and no longer generating high sales or profits. Consider reducing your menu to focus on fewer, beloved, high profit items, and eliminate any complicated or overly expensive dishes. Spotlight a few signature drinks instead of a huge array of alcoholic offerings. Use last night’s leftovers to create intriguing specials for tonight’s dinner menu. Trimming underperforming areas can help you focus on the more profitable ones. This will allow you to put time, money, and energy into your top sellers and innovate promising new offerings.
Be Authentic: As a business leader, your team is looking to you for guidance during economic uncertainty. Transparency is the best way to give that to them. While it may be tempting to be overly positive, your team craves honesty and authenticity. Your employees don’t want to see their leaders presenting a fake facade that everything’s fine when it’s not. They want to see that the people in charge can lead confidently and strategically, particularly during difficult times. Be honest and your team will respect you for it.
Stay Out There: While your company might be looking for areas to reduce spending, marketing shouldn’t be one of them. With a turbulent economy – and a recession looming – do whatever you can to stay top-of-mind among customers and prospects to boost sales. As consumers become more careful with their spending, remind them why your bar or restaurant is still an essential part of their lives. While other companies may reduce or eliminate marketing efforts to cut costs, you should do the opposite. If you maintain (or even increase) your marketing spend, you’ll stand out in the marketplace and reach a wider audience. While this may not pay off immediately, it will be beneficial over the long-term, as people start spending more in the post-recession months and years to come. Look for cost-effective tactics, like social marketing efforts and online advertising, to expand your reach without breaking the bank.
Think Local: Invest (or re-invest) in local infrastructures that support your own communities and encourage these local businesses to support your company, as well. Support local farms, bakeries, wineries, etc. Invest locally to strengthen your community’s business ecosystem. When you support local, those vendors will be loyal to you and send more business your way.
Co-Promote: Some common adages are true in our current economic climate. There is strength in numbers, and we’re all in this together. It’s wise to network and find like-minded business owners to share ideas and best practices. Support one another. Cross-promote your goods and services whenever possible. Hold joint promotions – such as dinner and a movie deals with a local theater. Serve and sell local wines and have the local winery offer discount cards to drive their customers to your bar.
Strive for the Long Haul: In any economic environment, it’s smart to hope for the best but prepare for the worst. If the past two years have taught us anything, it’s that life can be unpredictable. Therefore, it’s important to plan for the unexpected. While it may be unpleasant to consider, have a succession plan in place in case your owners or managers are injured, incapacitated, or even die. Decide who will fill these roles temporarily or permanently in an emergency. Prepare top performers for future leadership roles. Ensure they have plenty of training, mentoring, and experiences so they can successfully grow upward in your organization. Consider how you’d handle a variety of crisis scenarios to ensure your business remains successful, seamless, and uninterrupted.
Working with a financial expert, restructuring debt, becoming agile, analyzing your business processes and reducing expenses can help your business succeed and become more financially stable. Not sure if your business is fiscally fit? Take our test today!
About the Author
Neeraj (Raj) Tulshan is the Founder and Managing Member of Loan Mantra, a financial advisory firm with best-in-class and proprietary fintech, BLUE (“Borrower Lender Underwriting Environment”). Loan Mantra, Powered by BLUE, is next-level finance: a one-stop-shop for business borrowers to secure traditional, SBA or MCA financing from trusted lenders in a secure, collaborative, and transparent platform. Clients turn to Raj because they know he will always pick up the phone and offer unparalleled financial counsel in a remarkably human—even friendly—way.
About Loan Mantra
Loan Mantra is a one-stop FinTech business portal that democratizes the loan process by providing corporate sized services and access to new entrepreneurs, small and medium sized businesses. Loanmantra.com provides access to numerous loans and lenders, government programs and small business services all through one easy application process and upload of business information ONE time. Business accounts are free and secure. But most of all you won’t be served by a blog of bots after you sign up. Service is provided by friendly, responsive agents that will answer the phone and listen respectfully while serving accounts through one of three locations in the US. And as a minority-owned business, we understand the challenges of underserved groups and we encourage diverse businesses to apply. We speak English, Spanish, Hindi, Bengal and many industry lingos, but if we don’t speak your language we’ll learn, so connect with us today at www.loanmantra.com or call 1.855. 700.BLUE (2583).
Enhanced Single-Serve and Ready-to-Drink Markets Need Updated Point-of-Sale Systems
By: Gerald Dlubala
Whether online ordering for pick up, requesting additional items to-go or purchasing single-serve containers from a local market, these options reflect the alternative and increasingly essential revenue streams for craft beverage producers. Additionally, they have proved to be a popular and effective way for craft producers to get their products into the hands of new and potential consumers. According to data supplied by Arryved, a leader in Point-of-Sale (POS) systems for food and drink businesses, many of the consumers that participate in the online and to-go craft beverage markets are different than those that choose to frequent brewpubs, tasting rooms and taprooms in person.
The good news for craft beverage producers is that participation in the single-serve, ready-to-drink and to-go markets continues to grow. Consequently, it makes sense to nurture those relationships and make the off-premises consumer experience an event that provides value and enjoyment while enhancing your bottom line. The proper POS system can do that.
Your Business, Your Point-of-Sale System: Arryved
“Of course, there was a sea of change beginning with the pandemic,” said Nancy Trigg, chief people officer for Arryved. “It seemed like, over the course of one night, the brewpubs, wineries and taprooms all had to scramble and pivot business models to come up with a functioning online and to-go ordering system, as well as a safe and viable delivery or customer pickup option. Point-of-Sale systems had to evolve and quickly match that change in direction. In haste, many businesses simply installed a separate system for this newfound revenue stream. It all seemed good until the businesses realized that, in reality, they were using two separate systems pulling out of a single inventory base, causing supply confusion and accountability problems. Point-of-sale systems, like Arryved, that looked at the situation and responded in a more business-sensitive, proper way were the ones that not only helped their clients survive but also helped them grow their consumer base during the uncertainty and shutdowns.”
Trigg says that a proper POS system is one of the most crucial tools a craft producer has to understand and analyze for how they are doing business, and she urges owners to approach their businesses with that exact mindset.
“If you have the proper POS system set up for all of your revenue streams, including on-premises, single-serve purchases and online ordering with customer pickup, you will immediately receive valuable insights into what you are selling, when you are selling it and how your products are being used,” said Trigg. “Are some products more popular at certain times, like lunch or dinner? Are some being consumed more with food? Which beverages are more popular at which times? Are they being sold in smaller pours? Larger pours? Are certain products more popular for carryout over in-house consumption? For flight purchases? So much data related to your specific craft products concerning single-serve and online-ordering revenue streams can be harvested from the right POS system.”
Trigg told Beverage Master Magazine that the applicable laws about these types of sales will generally stick around because of the great work from the guilds, communities and cities to help food and drink businesses remain afloat during the height of the pandemic. Now, craft beverage producers must have a POS system that integrates these transactions into their daily business practices by highlighting and providing data tailored to their specific products, customer profiles and unique business situations.
“When craft beverage producers start packaging their products, the inherent level of their risk rises, if only based on the costs of packaging,” said Trigg. “That little extra risk can be just enough to inhibit the creative experimentation that makes up the backbone of what a brewpub, taproom or tasting room is supposed to be. But with the right information derived from an inclusive and detailed POS system, that risk is minimized. Now they can offer the right products to the right consumers at the right time, including single-serves, ready-to-drink varieties or a wide range of to-go flight-type options or mix-and-match packs tailored to specific tastes. Unfortunately, not many POS systems properly provide these types of flight tools or pick-six options within their makeup. Arryved does just that, providing the craft producer meaningful insights into what is and isn’t working, and when.”
Trigg said that Arryved is a POS system genuinely built to care for an all-inclusive beverage program, including those that, either now or in the future, want the option to offer food sales. In addition, Arryved enhances brewpub or tasting room atmospheres by allowing its customers to order drinks to-go, online or in single-serve, ready-to-drink options.
“There are always developing options within the single-serve and ready-to-drink markets that craft beverage producers need to stay aware of,” said Trigg. “This includes the growing popularity of flight options and different sizes of mix-and-match take-home packs that the customer can customize. Craft producers need a POS system that recognizes these trends and supports mobile guests just as well as it does with on-premises guests. Arryved supports craft beverage producers in all facets of their revenue streams, while featuring unmatched support for the industry. In addition, we stay engaged in the business sector and always have someone available to speak with directly.”
Ready-to-Drink, Single Serve and To-Go Markets Thriving
The ability to try and enjoy craft beverage products off-premises was, and still is, a game-changer for many craft brewers, winemakers and distillers. For the past couple of years, these markets have helped many establishments remain open and proved they could be a robust, new revenue stream. Breweries have traditionally offered their products in growlers and crowlers so their consumers could enjoy the beer at home. Additionally, the popularity of individual can seaming devices, like those offered by Oktober Can Seamers, gives craft beverage producers more flexibility in to-go offerings and allows consumers more flexibility in how and where they choose to use the beverage.
In its primary function, can seamers allow craft beverage producers to get their product out the door and into the hands of consumers for off-premises enjoyment. But Dennis Grumm, CEO and lead engineer for Oktober Can Seamers, told Beverage Master Magazine that many clients realize additional untapped revenue possibilities by canning beer, mixed drinks and specialty cocktails for to-go orders. Brewpubs, distilleries, and wineries can all use a can seamer to offer their beverages, unique brews and house cocktails on a to-go basis. It’s an economical and very effective way to get new customers to try your products while satisfying your current customer base. Distillers have had great success canning their best-known, ready-to-drink cocktails, but canning is also an effective way to offer seasonal or limited-release drinks and cocktails.
Pouches are another way to get your product in the hands of consumers that would not normally spend time in your place of business or would just like to take your crafted offerings with them on the go. Pouches range from those in the refrigerator for individual pours of wine to the single-serve cocktail and wine pouches that resemble the child-friendly juice pouches. The benefits of using pouches include offering a resealable, portion-controlled package that reduces packaging weight by up to 94 percent and can be shipped and packed using fewer resources.
Enhancing the Single-Serve and Ready-to-Drink Market: O-I Glass
O-I Glass, based in Perrysburg, Ohio, is looking to elevate the single-serve, to-go and ready-to-drink markets to better reflect the on-premises, brewpub and tasting room experience. Megan Henry is the global marketing communications business partner for O-I Glass. She told Beverage Master Magazine that they are transforming the to-go, single-serve and ready-to-drink markets by offering a new glass packaging alternative called the Drinktainer™ for these markets.
“In an increasingly common world of to-go packaging, we feel that it’s time for craft beverage producers to elevate that part of their business and the consumer experience,” said Henry. “Growlers and crowlers are great, but they have limitations. As soon as you open them, you’re under a time constraint as to how long that product will be good. Using our wide-mouthed Drinktainer™, you’re promoting a sustainable packaging option with the recyclable glass and RipCap® closure, and you’re allowing the consumer to enjoy your products as if they were in your brewpub, taproom or tasting room.”
Henry said that capacity and shortage concerns still affect many industry players, but those worries are not an issue with Drinktainer™, which is currently available in inventory.
“We know that many beer aficionados prefer to consume their beer out of a glass, straight from the tap,” said Henry. “Offering to-go, single-serve options in a recyclable glass container is just a naturally better way to enjoy beer and craft beverages in general. Glass packaging provides great flavor retention in any environment and allows producers to feel more comfortable offering their consumers different types and combinations of products without the fear that alternative packaging, like plastics or pouches, will taint their beer, cocktails or wine. In addition, with the wide mouth (42mm), consumers get the deeper flavor and more robust aroma experience as if they would be drinking from a glass on premises.”
Sustainability is a significant issue of consideration in every phase of craft beverage production, and the Drinktainer™ is a fully sustainable product, available in clear that is customarily used for beer and in a flint tone that highlights the color combinations of cocktails and other beverages. It’s sealed using a RipCap®, an easily applied and highly secure closure that O-I Glass believes brings a nostalgic feel to the products. Drinktainer™ has been successfully used to offer pick-six trial packs and beer flights, and it requires no other glasses or barware to enjoy as the beverage maker intended.
Find more information on the Drinktainer™ at www.o-i.com
The Most Important Opportunity for Brewery Owners
Why So Many Are Missing It
By: Catherine Tindall
The Employee Retention Tax Credit (ERTC) is one of the best ways for those in the beverage industry to regain their footing in a post-COVID age. Unfortunately, according to current estimates, many eligible businesses are missing out on this historic opportunity. For those who received or may otherwise be familiar with the Paycheck Protection Program, also known as the PPP, the concept is similar, but there are key differences that make the ERTC a much more generous program overall. To understand why I will outline some of the key provisions and eligibility parameters, explain the process for claiming the credit, and answer some common questions I encounter in my own practice, such as “why haven’t I heard of this before?”
The ERTC is a tax refund credit entitling employers to up to $26,000 per employee, depending on the number of quarters a business qualifies for. Eligibility is determined by either revenue disruptions or government orders on a quarterly basis. Many breweries are unaware that they are eligible for the ERTC due to the capacity and operation restrictions on their indoor dining and/or tasting rooms that occurred during the pandemic. Financial disruptions to that aspect of the business trigger ERTC eligibility for all the divisions of the brewery, not just the restricted segment. We routinely see businesses qualify for six or seven-figure credits under these parameters.
There are a number of features that set this credit apart from other programs designed to aid businesses affected by the pandemic, like the PPP. Unlike the PPP, the credit itself comes back as paper checks from the IRS, and also unlike the PPP funds, which were restricted to certain uses, a business owner is free to use the ERTC however he or she sees fit. This is because the credit is actually a refund of wages and payroll taxes your organization has already paid. A consequence of this is that there is no overall program limit on the funds to be disbursed through the ERTC, in contrast to the PPP which had a limited fund pool. Businesses affected by government orders are entitled to every cent they qualify for. Taken together, all of these factors are what gives this program its power. The only limitation is time. This credit will begin to be phased out in April of 2023, meaning that business owners need to ensure they submit their claim as soon as possible.
Given the tremendous upsides, every business owner in the beverage space should try to see if their business qualifies, even if it seems doubtful. There is no need to become experts in the credit’s provisions, which can often be nuanced. The important thing is to find the right professional, and, to this point, one must be careful. There are unfortunately a lot of bad actors in this space looking to make a quick buck, and many of them are very good at seeming legitimate.
The following are some of the most asked questions associated with the ERTC.
Should I get a second opinion? Because of the substantial nature of these credits, it’s often worth speaking to multiple providers for the credit to get a sense of the relative merits of each, and to look to the expertise and experience of those working on your case rather than fancy marketing or smooth sales tactics.
Why haven’t I heard about this before? There are several reasons why many business owners have not heard of this important credit. One is that, in contrast to the PPP program, the ERTC has not been well advertised by the government (after all, since when did the IRS advertise refunds you’re entitled to). Another is that many tax practitioners are hesitant to pursue it given the sometimes complex nature of the claims, if this isn’t their area of expertise. Finally, we commonly find that too many CPAs mistakenly believe that their clients do not qualify for the credit, and so never bring up the possibility of claiming it with them.
I would encourage all brewery owners to actively explore eligibility. The potential benefits of qualification, hundreds of thousands of dollars in obligation-free money from the IRS, is one of the highest value things you could do for your business in the current environment of economic uncertainty.
There are certain pitfalls to avoid, such as dishonest companies operating in the space, but if you choose the right firm or professional to partner with, the process is remarkably painless. Just be mindful that this is an opportunity with a time limit attached. With less than a year before it begins to phase out, now is the time to claim the credit you’re entitled to.
Catherine Tindall is Partner & CPA, Dominion Enterprise Services (DES), a full-service CPA firm providing tax planning and consulting alongside specialty tax credit processing. The firm has more than 50 years of collective experience and recently announced the launch of its Employee Retention Tax Credit (ERC) Division to help restaurants assess their eligibility for the ERC and properly secure the maximum refund allowed. Learn more at…
Use This Idea to Save on Taxes
No one likes paying too much in taxes. In this post we’ll review an idea to use an outside service to reduce one of your tax obligations: the dreaded, and ever-increasing property tax.
Property tax is calculated by multiplying the tax rate by the assessed value of the property – land and buildings. For breweries, this can be a sizable expense.
Both the property tax rate and the assessed value change on a regular basis. Some years the rate goes up and the assessment goes down. In other years it’s just the opposite – the rate goes down and the assessment goes up.
The one thing that doesn’t change is that the total tax bill always goes up.
The process to assess the value of a property is subjective at best. Assessors will use comparable property sales and other metrics to gauge value, but rarely are two properties alike. Therefore, the value assigned to our properties is an approximation, an estimate, a best guess.
So, why not hire your own consultant to make a better estimate?
That’s what we did and the result was a savings of $20,000 per year on our tax bill.
The firm of DuCharme, McMillen and Associates guided us through the process, took up very little of our time, and saved us a lot of money in taxes.
DMA performs Assessment Reviews to identify opportunities for reducing real and personal property tax assessments. DMA’s comprehensive review is customized to your specific needs, and we focus on reducing both current and past assessments.
Our property tax professionals will review your entire portfolio of properties or individual properties of concern to you. Both real and personal property tax assessments are scrutinized to determine the accuracy of the data used by the taxing authority, valuation issues, state-specific treatment of property, and overlooked exemptions.
We communicate the results of each property’s review and, with your approval, take all necessary steps to implement the assessment reduction strategies available, including refund recovery. DMA’s property tax professionals have generated billions of dollars in real and personal property tax savings for our clients, many of which pertain to the beverage and bottling industry. We are leaders in identifying industry-specific issues having an impact on value.
Our property tax professionals have reviewed thousands of assessments in nearly every jurisdiction. DMA’s national scope and jurisdictional expertise means our clients realize the maximum benefit available.
If you’re interested in following in our footsteps, reach out to the folks at DMA. There are other firms that do similar work, but we had a good experience with these guys.
No one likes paying too much in taxes. Check out this idea and reduce property taxes in your beer business today.
New Brewery, Winery or Distillery Start Up
By: Kris Bohm: Distillery Now Consulting, LLC
Starting up a new beverage alcohol business is hard. Whether making beer, wine, or spirits, the challenges are daunting and upfront costs are huge. No one takes the leap to start a new business knowing it will fail, but many of them will. Based on industry data, up to 40% of new beverage alcohol businesses fail. To create a successful business, there is a common question that arises during the planning phase of launching a new beverage alcohol business.
What is the difference between a successful business and one that fails?
This massively important question should be answered early on for a new business. In doing so, key strategies will be defined for the business from the beginning as it ventures forward. In the following paragraphs, you will find not only the answer to this question, but also a further analysis of successful business practices.
Defining Success: Let’s take a moment to define and measure success in a beverage alcohol business. This definition applies whether in a brewery, winery, or a distillery. These measurements of success will allow us to look closer at the internal workings of the business. As you look closer you will find common traits among nearly every business that is successful. For the sake of this article we will narrowly define success using the specific individual metrics of profitability, sustainability and velocity.
Profitability: The first key metric and measurement of success is profitability. A business must either be profitable, or at a minimum near self-sustaining, with revenue covering the cost of operating the business. Achieving profitability is one of the biggest metrics that defines success. Reaching profitability is essential, as every successful business must be self-sustaining after a certain amount of time. If a business is not profitable for too long of time, it is almost certain to fail.
Sustainability: A successful business must be sustainable in the capacity to produce the products it intends to sell. To clarify, we do not mean sustainability from an environmental impact or energy usage standpoint. Sustainability in this model means the ability to sustain and meet demand for products through growth. For a business model to be sustainable the equipment must have the capacity to grow and meet new demand as the company grows. The reason this metric is so essential is that most businesses must grow to reach profitability. If your business cannot sustain growth it most likely can not grow to become profitable.
Velocity: A business needs to have regular sales to provide consistent revenue for the business. Velocity is a measurement of how quickly your business is turning raw materials into finished goods and selling those goods. High velocity of product means there will be more consistent cash flow for the business. As product velocity increases it is followed by increases in revenue and often economies of scale. Both of which help a business become successful.
Tripod Business Model: Most businesses achieve some of these measures of success, but not too many will achieve them all. Among those who do succeed in meeting all three, there is a common thread that these successful businesses share. They will usually have three separate divisions that perform distinct business activities. These three divisions are production, sales, and marketing. This concept we will refer to as the tripod business model. If the top of a tripod is a successful beverage alcohol business as measured by our success metrics, then there almost always exists these three divisions in the business that make up equally important legs that hold up the business. If you remove any of the three legs, it only leaves the business on two unstable legs, and in time the business will fall and is likely to fail. It is easy to take this observation and call it as incorrect, but if one was to look closely at established successful beverage alcohol businesses they would find truth in this observation.
When a sizable amount of time and resources are heavily invested into sales and marketing, the business has a strong probability that it will flourish. Often the business will flourish so strongly that production will often feel constrained in the resources it needs to meet the demand of the business. This is the correct way to invest time, financial resources and manpower to grow. If too many resources are dedicated to production in most instances production will have far too much capacity and there will not be enough demand for product to keep production running near its capacity.
Now that we have defined some measures of success and the business practices that support them, let’s look closer at the three practices that hold up a successful beverage alcohol business, through the lens of a distillery.
SALES: Sales is essential and paramount to the success of nearly any business that has a product they sell. It can be the easier path for a new distillery to focus on their production with a plan to only sell spirits through a tasting room or cocktail lounge that is part of the distillery. A business plan like this can work, but it has a low ceiling that will often restrict a distillery from growing to a successful level. Real sales of considerable volume come from a distillery selling products in the same market as its competitors. This means working to sell spirits in liquor stores, bars, restaurants and other venues. In this market there is immense competition. The only way to compete in the larger spirits market is by investing into sales. This means having people working for your business who are full time employees whose job is to pull your spirits through the market and drive sales.
MARKETING: Marketing is the driving force that directly links to the success of sales. Marketing can come in a multitude of forms, some obvious and some not so obvious. Public facing platforms, such as social media, websites, billboards, magazines, newspapers, and influencers are all forms of marketing in action. The more a consumer or target consumer encounters a brand, the higher the chance that the consumer will buy your brand. Without an active marketing plan in place, consumers will quickly lose sight of your brand. A strong marketing plan and the person or people to continually implement, monitor, and drive a marketing plan is paramount to achieving success. Marketing is the key difference that will take a brand to the next level and keep pulling it up from there. Although it can be easy to not put an emphasis on channeling resources to marketing, it would be a mistake to do so. Many businesses have launched with little to no resources committed to marketing. Often these launches feel successful, but by our measurements are in fact not truly successful. Oftentimes the business will get going and be selling some amounts of product but in most instances a lack of marketing will cause a business to plateau quickly.
PRODUCTION: This practice of manufacturing is easy to give too much focus in the business of distilling. Whether you are distilling whiskey from scratch or bottling sourced spirits, the production part of this business is extremely important. While production is absolutely paramount to the business, this does not mean that the bulk of resources the business has should be invested into the production of spirits, nor the labor or equipment to produce the spirits. If the bulk of resources go towards production thus starving sales and marketing, there will invariably be a lack of sales to cover the costs of production. Now the manufacturing of distilled spirits is in no way inexpensive. Considerable resources have to go to production for it to function. We are trying to urge you to consider all resources the business has and properly allocate them to all three practices.
The battle between the practices: If you ask most folks who work in this industry, whether they work in sales, marketing, or production, they will all likely tell you that their business function is the most important to the success of the business. To be fair, all these folks can probably make a reasonably sound argument to support that statement. It is normal that there is some friction between all three practices because they all have unique functions and priorities that often do not align with one another. For a business to be successful, production, sales, and marketing must work together to achieve the goals of the business. When common goals are shared it is much easier for each part of the business to work in harmony.
Beware the Franchise Law Lurking Behind Your Distribution Agreement
By: Louis J. Terminello, Esq. and Bradley Berkman, Esq
No party enters a contract with the expectation that its terms will be unfavorable to them. Having drafted innumerable agreements of all sorts, including beverage alcohol distribution agreements, we have learned that the underlying principle for successful contract negotiations and drafting is fairness. Put another way, the rights and duties of the contracting parties must be clear on the face of the agreement and the detriment or consequences to the non-performing party are clearly stated and actionable. Brewers and their distributors are no exception. Each has their own expectations and definitions of success.
Generally, for the brewer it’s to gain points of distribution at on and off premise venues with the goal of obtaining volume expectations. For the distributor it is to see the long terms benefits of their distribution efforts within its assigned territory. Distributors generally want a long-term relationship where they know their upfront efforts and costs will come back to them when any given brand attains a level of organic or self-sustained sales success. Brewers beware, however. Within the context of an ideal equitable agreement lies the malt-beverage franchise statute. These laws tend to favor the beer wholesaler and are superior in affect to any agreement executed between the parties. Many established brewers are aware of these statutes but many new brewers and brand owners are not. The purpose of this article is to introduce the new brewer and/or brand owner to franchise law basics and offer a few contract drafting suggestions that they can pass on to their contract lawyers that ultimately will create a brand success story that will benefit all parties to the agreement.
The Beer Franchise Law – the Basics
First, virtually every state has codified the concept of “franchise” into law. An informal and unscientific survey reveals that only three (3) states in the U.S. do not have beer franchise laws on their books. As a brewer, it’s best to assume, without research, that the new wholesaler you’re considering appointing has the benefit of the law and to negotiate any distribution agreement with that in mind. By now, you’re likely wondering what these laws are.
The National Beer Wholesalers Association (NBWA) rightfully states that that these laws are creatures of the 21st Amendment which grants the states the rights to regulate the distribution and sale of beverage alcohol within their borders. NBWA on its website states that these laws provide a number of positive regulatory contributions including providing consumers with beer choices by promoting the availability of diverse products, they allow brewers access to the marketplace while preserving the distributors’ independence and act as a public safeguard by requiring responsible sales through the three-tier system. These benefits indeed may be true.
But a closer look at the beer franchise laws also reveal that many statutory mandated provisions arguably benefit and favor the wholesaler operation and makes cancellation or termination of any brewer/distributor agreement an overwhelmingly difficult task for the brewer/brand owner. Broadly speaking, many beer franchise laws contain the following common elements:
• Franchise agreements can be made either orally or written.
• Franchise agreements appoint the distributor as the exclusive seller within an assigned territory and take effect at the time of first shipment by the brewer to distributor.
• A franchise agreement can only be terminated or cancelled on a showing of good cause and by the showing of a material breach by a party. Almost always, the brewer bears the burden of the showing of material breach by the distributor.
• Notice procedures and the timing of the same are explicitly stated in the statute(s) and must be complied with. Put another way, the brewer must notify the distributor that they are not performing according to the terms of the agreement.
• Opportunities to cure must be provided by brewer to distributors in accordance with the statutory timeframes.
• Buyout provisions and formulas to calculate brand buy-back are often included should the brewer desire to regain control over the brand.
The above provides the reader with a basic framework of a franchise law. Given that these authors concentrate their legal efforts in Florida, a closer look at the Florida franchise law follows and provides a good example of some of the language that a brewer will likely see in the laws of other states. Florida codifies its franchise law in Florida statute 563.022. That statute is entitled “Relations between beer distributors and manufacturers.” Florida Statute 563.022 is lengthy indeed with over twenty-one (21) parts. To address each part and its subparts exceed this publication’s length requirements for this article. As a caveat, though, to the brewer/brand owner reader, the statute is detailed, carefully drafted and will be relied upon by the courts of Florida in any breach of contract case likely brought by a distributor as Plaintiff and brewer as Defendant. A summary of the key points of the statute are offered below with an emphasis placed on unfair practices by the brewer/brand owner (supplier) and the grounds and procedures for terminating the distribution agreement.
Florida Statute 563.022
• “Franchise” means a contract or agreement, either expressed or implied, whether oral or written, for a definite or indefinite period of time in which a manufacturer grants to a beer distributor the right to purchase, resell, and distribute any brand or brands offered by the manufacturer.
• Any person who enters into agreement with beer distributors in Florida is subject to this section.
• It shall be deemed a violation by supplier to:
o Coerce or compel distributor to accept product they have not voluntarily ordered.
o For supplier not to deliver reasonable quantities within a reasonable time after receiving a distributors order.
o Coerce or compel or attempt to coerce or compel, a beer distributor to enter into any agreement (written or oral) supplementary to a franchise agreement by the threat of cancelling the franchise agreement.
o To fix or maintain the price at which a distributor must resell the beer.
• DISTRIBUTOR’S RESIGNATION, CANCELLATION, TERMINATION, FAILURE TO RENEW, OR REFUSAL TO CONTINUE. Notwithstanding any agreement a manufacturer shall not cause a distributor to resign from an agreement, or cancel, terminate, fail to renew, or refuse to continue under an agreement unless the manufacturer has complied with all of the following:
o Has satisfied the applicable notice requirements.
o Has acted in good faith.
o Has good cause for the cancellation, termination, nonrenewal, discontinuance, or forced resignation. Good cause is defined as all the below occurring:
• There is a failure by the distributor to comply with a provision of the agreement which is both reasonable and of material significance to the business relationship between the distributor and the manufacturer.
• The manufacturer first acquired knowledge of the failure described in paragraph (a) not more than 18 months before the date notification was given.
• The distributor was given written notice by the manufacturer of failure to comply with the agreement.
• The distributor was afforded a reasonable opportunity to assert good faith efforts to comply with the agreement within the time limits provided for.
• The distributor has been afforded 30 days in which to submit a plan of corrective action to comply with the agreement and an additional 90 days to cure such noncompliance in accordance with the plan or to sell his or her distributorship consistent with the provisions of this section.
• BURDEN OF PROOF.—For each termination, cancellation, nonrenewal, or discontinuance, the manufacturer shall have the burden of showing that it has acted in good faith, that the notice requirements under this section have been complied with, and that there was good cause for the termination, cancellation, nonrenewal, or discontinuance.
• The manufacturer shall furnish written notice of the termination, cancellation, nonrenewal, or discontinuance of an agreement to the distributor not less than 90 days before the effective date of the termination, cancellation, nonrenewal, or discontinuance; in no event shall the contractual term of any such franchise or selling agreement expire without the written consent of the beer distributor involved prior to the expiration of at least 90 days following such written notice. The notice shall be by certified mail and shall contain all of the following:
o A statement of intention to terminate, cancel, not renew, or discontinue the agreement.
o A statement of the reason for the termination, cancellation, nonrenewal, or discontinuance.
o The date on which the termination, cancellation, nonrenewal, or discontinuance takes effect.
General Applicability, Takeaways and Contract Drafting Suggestions
Although the above is specific to Florida, hopefully it provides the reader with a bit more knowledge concerning these franchise statutes. Once again, many of the concepts codified in Florida law can also be found in similar laws of other states. An essential term in the Florida law that will likely be found in the franchise laws of other states is “Good Cause.” A showing of good cause must be made by the brewer to terminate or cancel a distribution agreement with a wholesaler. In Florida all the elements noted above (see the italicized language) must be present to show good cause. Another essential element which will guide the next part of our discussion is this:
“There is a failure by the distributor to comply with a provision of the agreement which is both reasonable and of material significance to the business relationship between the distributor and the manufacturer.”
For the brewer, brand owner or manufacturer, it is elemental that the agreement contains provisions which are both reasonable and of material significance, which if breached and all other requirements are adhered to, may provide them with legally defensible grounds for termination or cancellation of the agreement. Many times distributors try to avoid the inclusion of material terms for obvious reasons by handing over boilerplate agreements for consideration by the brewer. These boilerplate agreements may look reasonable on their face but almost always lack “teeth” and rely solely on the statutory language that overwhelmingly favors the distributor. But the smart brewer’s attorney will include reasonable material terms such as volume or points of distribution goals over a stated time period. Such material terms may be as simple as stating that the distributor must sell 100,000 cases for the first twelve months from the effective date of an agreement or establishing points of distribution by stating, as a rudimentary example, the distributor will achieve 75 placements (defining “placements” in a reasonable manner) in the first three months of the agreement and another 75 placements in the second three month period. As a contract drafting suggestion it is important to state that if the distributor fails to meet these goals these will be treated by the Parties as a material breach.
The above recommendations are provided as suggestions only and are not intended as legal advice. The point of this article is to arm the new brewer with useful information so they may level the playing field to a limited degree with their wholesaler partners at the start of the sales and distribution relationship. After all, the goal is to draft a fair agreement for all parties with the reasonable expectations of all are clearly stated. As a final caveat, beer wholesalers are powerful actors on the state stage. It is of paramount importance that the new brewer hire an experienced alcohol beverage attorney to assist in negotiations and contract drafting.
Is it Time to Order More Brick-and-Mortar Locations for Your Bar or Restaurant?
By: Raj Tulshan, Founder of Loan Mantra
Is commercial real estate making a comeback in the hospitality industry? After several extremely disruptive years of a global pandemic – and the resulting lockdowns, inflation, supply chain disruptions, and staffing shortages – is the future finally brighter for hospitality and real estate? Is it time to invest in more bars and restaurants – and if so, where exactly should you invest and when do you know if it is the right time?
Investing in real estate is a major, long-term commitment requiring careful consideration. Business owners must do their homework before signing a real estate contract, thinking about a host of factors, including the building’s location, the economy, zoning laws, the projected value of the property, and its expected appreciation over the coming years.
Location is a huge factor. Is the property you’re considering in a good spot that will attract customers? Is the property attractive, in a safe, high-traffic location? Is the community vibrant and growing, with a history of economic stability? Is there easy access with ample parking, or is there a subway or bus stop nearby? What’s the neighborhood like? Is there considerable competition in your space, with tons of other bars and restaurants nearby? Is the neighborhood hungry (pardon the pun) for your type of establishment? Are the demographics right for your type of business? For instance, a heavy metal-themed bar might not flourish in a neighborhood with an older demographic.
Despite major difficulties in 2020 and 2021, the hospitality and commercial real estate industries are finally in growth phases again, and this growth is likely to continue in 2022. Some things to consider include:
People are going out again. Demand for in-person goods and services is rising again, as people want to eat at restaurants and go out for some beers. This pent-up demand is good for commercial real estate – and the bars, restaurants, and other businesses that occupy these buildings.
Hospitality is rebounding. Now that the worst of the pandemic is (hopefully) behind us, business and leisure travel will start increasing again, and people will be dining out more frequently. The growing travel demand means hotels, restaurants, and bars may take on renovation and expansion projects that stalled during COVID. And, increasingly, hospitality business owners will invest in real estate to house their bars and restaurants.
Secondary markets are growing. The evolution of remote and hybrid work means many employers and employees are moving out of high-rent cities into smaller markets that are more cost-effective. Recently, people have been leaving big, expensive cities like New York in droves, in favor of smaller, more affordable markets like Nashville and Tampa. If you’re thinking of opening a bar – or expanding your brand to new markets – consider these geographies.
Operators are opting for building ownership. Some restaurant and bar brands are opting to own real estate rather than leasing. When leasing, the building owner is making money, regardless of whether your business is profitable. However, when you own the property, you’ll be building equity regardless of how your business is performing. Many restaurateurs and bar owners are choosing to buy instead of lease because it makes more financial sense over the long term. If you’re the property owner, you won’t have to worry about surprise rent increases. You also won’t need to abide by your landlord’s rules, giving you more freedom with your business and your property.
Add new revenue streams to boost profitability. With labor shortages impacting the operating hours (and bottom lines) of hospitality businesses, restaurants and bars have realized the importance of having multiple revenue streams to increase profitability, especially if they’re working to cover the cost of their mortgage. Some brands are selling their own beers online or selling branded merchandise at their brick-and-mortar location and online. While people are finally coming back to dine and drink in-person, it’s wise to have additional revenue streams to keep a steady stream of revenue flowing – and so you can cover your mortgage and property taxes if you’re the building owner.
If you’re financially able to swing it, buying property for your bar or restaurant can be a wise move. As experts predict that the worst of the pandemic is behind us, it looks like the hospitality and commercial real estate industries are poised for a rebound. If you’re thinking about a real estate investment for your hospitality business, be thoughtful and consider the decision carefully before signing the contract.
About the Author:
Neeraj (Raj) Tulshan is the Founder and Managing Member of Loan Mantra, a financial advisory firm with best-in-class and proprietary fintech, BLUE (“Borrower Lender Underwriting Environment”). Loan Mantra, Powered by BLUE, is next-level finance: a one-stop-shop for business borrowers to secure traditional, SBA or MCA financing from trusted lenders in a secure, collaborative, and transparent platform. Clients turn to Raj because they know he will always pick up the phone and offer unparalleled financial counsel in a remarkably human—even friendly—way.
About Loan Mantra
Loan Mantra is a financial services company designed to serve small and medium businesses with offices in New Jersey, Charleston, SC and New York. At Loan Mantra your success is our success. This means that our attention, purpose, and intention are all focused on you, our client. We are your ally to overcome obstacles, bringing peace through uncertain times to achieve your highest goals and aspirations. Your friendly, responsive agent will listen respectfully, and service your account actively through one of three locations in the US. We speak your language whether it’s English, Spanish, Hindi, Bengal, Hospitality, Laundry or Manicure, let us help you today. Connect with us at…www.loanmantra.com or 855.700.BLUE (2583)
Optimizing Same Day At Home Beverage Delivery
By: Anar Mammadov
It’s not easy to make a beverage brand succeed. The marketing must be just right, including packaging, positioning, and placement of ads. Securing distribution is another step; hitting your sales numbers starts with getting your product in stores. Even when those two are achieved, brands still need to find a customer base that will adopt them, sharing their enthusiasm and spreading the word about their products.
In 2022, beverage brands that want to be successful can add another task to their to-do list: providing same-day delivery. Consumers, responding in large part to the stay-in-place culture that was inspired by the COVID-19 pandemic, have come to expect that most any item can be delivered to their door in a matter of hours, if not minutes. This is true of everything from bandages to burgers to big screen TVs. And it definitely includes beverages. When a customer realizes that they don’t have the beer they want for the cookout or decides a nice bottle of wine would go well with tonight’s dinner, they are looking more and more to same-day delivery options.
The Current State of Same-day Delivery
For beverage brands that want to meet the same-day delivery expectation, there are a handful of delivery services that can help them. Looking at the reviews for those companies, however, reveals they leave quite a bit to be desired for the brand that is concerned about providing service that consistently inspires glowing reviews.
Forbes recently ran an article rating alcohol delivery services. At the top of its list was Drizly, which is an online platform that allows users to get alcohol delivered from local retailers. Drizly promises delivery in less than 60 minutes and the “biggest selection for on-demand alcohol in the history of ever.”
Forbes rated Drizly as the “Best Alcohol Delivery Service Overall,” but reviews show it to be hit or miss. According to the consumer review website Trustpilot, Drizly needs to do some work to become a five-star service. While 39 percent of the reviews described Drizly as “excellent,” 46 percent labeled it “bad.” The most frequent complaints from users focused on delivery times and fees that could be improved.
Minibar is an online alcohol delivery platform that Forbes rated as “Best Quick Alcohol Delivery Service.” According to user reviews submitted to the online review site Influenster, Minibar provides better than four-star service, but still struggles in some areas, such as providing reliable ETA info.
If you are ordering alcohol with a takeout food order, Forbes says DoorDash is your best option. But users are not kind to DoorDash in their ratings on Trustpilot or Reviews.io.
The Issues That Make Same-day Delivery Challenging
What is keeping these companies from achieving consistently reliable delivery service? Anar Mammadov, CEO of Senpex, has some ideas. Senpex is a logistics company that provides safe and reliable on-demand pickup and delivery services for a wide range of companies, including beverage companies. Central to the service that Senpex provides is an AI-powered engine that ensures all of the delivery factors are considered and routes are optimized.
“There are a lot of factors that need to be considered if you are going to provide delivery in a timely, professional way,” explains Anar. “These include the volume of product, which dictates the size of the delivery vehicle needed, as well as traffic and other road conditions. When you have multiple drivers making multiple deliveries, it gets exponentially more difficult to plan. At Senpex, we rely on our route optimization algorithm to make sure that deliveries are possible and profitable.”
Sen has some experience in making deliveries. Having worked with more than 3,000 corporate clients, Senpex has more than 500,000 successful deliveries and a 98 percent customer satisfaction rate. And thanks to the help of AI, it is able to achieve that for as little as $7 per delivery stop.
Anar also highlights the need for reliable in-house logistics that simplify the delivery process by bringing inventory, ordering, and fulfillment together. In addition to partnering with companies to provide a delivery team, Senpex also offers its logistics platform as a SaaS solution for companies that want to increase the efficiency of their own delivery teams.
“Having your own delivery fleet is not enough to meet same-day delivery expectations,” Anar explains. “You need sophisticated logistics that convert delivery details into optimized delivery routes. The platform needs to keep drivers updated in real-time to make sure that deliveries are not delayed. Being able to stay on top of ETAs allows you streamline deliveries and keep customers informed.”
In its own operations, Senpex has found it essential to have an AI-empowered dispatch management tool that also provides drivers with an app to track and verify the delivery process.
“Customers have a lot of expectations when it comes to same-day delivery, regardless of what the product is,” Anar explains. “They want safe and transparent delivery, competitive pricing, and instant real-time status updates. And they want it all to be managed by a professional delivery team. Businesses that can’t meet these expectations are risking their reputations.”
Navigating the Risks Associated with Same-day Delivery
So what does all of this mean for beverage companies who are contemplating providing same-day delivery. The bottom line is that it is risky. There is a huge potential for craft beverage makers to grow their following through alcohol delivery, as the financial services platform Square recently reported. However, a bad delivery process can come across as a bad brand.
Is there a solution? The answer may be found in a delivery system that provides a brand with more control than what is typically available through a generalized delivery service like DoorDash. Professional delivery services like Senpex exist to take your delivery to the next level.
In addition to providing you with the tools that you need to do delivery well, a professional delivery service can also help you to scale that aspect of your business. They give you access to a large fleet while only requiring you to pay for the deliveries that you need. As the demand for delivery grows, you have additional drivers at the ready.
As you explore the possibilities that are available, here are a few things you will want to consider.
Work with Drivers Who Know Your Business
Delivering alcohol is not like delivering anything else. Several states have laws that regulate it. Before committing to working with a delivery service, make sure that they can provide drivers that comply with all applicable laws. In other words, choose a professional service that vets its drivers. Let them do the HR work for you.
Also, make sure that the delivery service has the type of vehicles that are needed to facilitate your deliveries. Not only should they have refrigerated vehicles when that is necessary, but they should also have the right size vehicle. Vehicles that are too small will not be able to handle the load. But vehicles that are too big will often cost you more than you need to be paying. Ensuring that the right vehicle is available is one of the functions of route optimization.
Work with Companies Who Understand Delivery Logistics
Whether you are partnering with a delivery company to utilize their drivers or simply taking advantage of their delivery logistics platform to optimize the efforts of your own delivery team, there are some things you should look for. For example, look for a platform that integrates with your existing ERP system. If you truly want to take advantage of delivery automation, it is better to avoid working with multiple systems.
Dispatch management functionality should include tools that allow for real-time fleet tracking. This includes automatic status updates, electronic proof of delivery, and secure driver chat through simple and intuitive apps that are native to both iOS and Android.
One often overlooked element of logistics optimization is deliveries that are managed by regular drivers on regular routes. Regular drivers know what to expect from both the route and the delivery destination, making them more capable of delivering the type of experience that will lead to repeat business. A company with a lot of driver turnover will not be the best option for businesses that want to provide a consistent customer experience.
Finally, tools that empower route optimization are critical to success. Last mile delivery is one of the biggest challenges facing businesses today. It takes the most time, it costs the most money, and it serves as the key point of contact between the customer and the brand. It should be a top priority for any delivery service with which you choose to work.
Overall, same-day delivery provides another revenue stream that beverage businesses should seriously consider tapping. The market clearly exists, even if the price that consumers are willing to pay has yet to be firmly established. Now is the time to explore the options that are available to create a system that can be profitable and provide a positive customer experience.
