Cover Feature: Water Sustainability in the Distillery

water feature shown inside Ole Smoky Moonshine Holler distillery

By: Becky Garrison

From cooling and cleaning equipment to diluting spirits, access to water remains a critical component for any distillery. For those distilleries looking to reduce their environmental impact while delivering the highest quality spirits, the following are some suggestions for how to improve the use of water in the distillery.

Securing Water Source

  When possible, start with the most pristine water available. Hood River Distillers (Hood River, OR) has been using the same water source for the last 90 years, all coming from the Elliot and Coe Glaciers on the Northern Side of Mt. Hood. To ensure that they can continue to access this water source, they partnered with Freshwater Trust. Caitlin Bartlemay, Master Distiller for Clear Creek Distillery and Hood River Distillers, Inc., /describes the benefits of this partnership. “With our growing donation through the Timberline Vodka brand, we can help them perform science and data-driven research on what our freshwater ways in the Pacific Northwest need to be repaired and restored.

  When looking for a pure water source for a distillery, Bartlemay notes a few considerations that need to be taken into account. First, send in a water sample for testing, Keep an eye out for numbers for factors such as the mineral content, pH, and chlorine. If the distillery uses municipal water, ask where they are sourcing the water and if they have multiple sources that they switch between. This will give an idea of how often they switch and what the chemical and organoleptic qualities of each source are. 

  As Bartlemay observes, “At the end of the day, nothing is better than good old-fashioned taste testing.  Taste your water against quality bottled water brands and see what you taste.” Next water down a spirit sample with distilled water and then water down another spirit sample with the water you want to use. Then compare how they both taste. Hold these samples at the new dilution for a few days and taste them again.  Have lots of people taste these samples and collect quantitative answers on the flavor and aroma of the various spirits sampled. “What your water test says and what you learn from your taste tests will help determine what treatments you may need to explore if you need to explore any at all,” Bartlemay opines.

Conserve Water by Sourcing Grains

  For Jason Parker, Co-founder of Copperworks Distilling Co. (Seattle, WA), sustainability begins at the farms where he sources the grains used in his spirits. He supports those farmers who engage in good farming practices such as dry farming along with soil conservation efforts like growing cover crops and limited or no-till farming. As these environmental initiatives tend to produce a lower yield per acre than conversational farming, Parker ensures these farmers will receive the same price for their grains by paying them per acre planted rather than per bushel.

Saving Water Through Temperature Regulation

  Mike Gifford of Blackfish Distillery (Auburn, WA) reported they were able to reduce their water usage by 95% last year by carefully refining their water usage against their distillation process. He described the cooling management for the condenser components of their column as a balance between incoming water temperature, outgoing water temperature, water flow rate in Gallons per minute, and proof output at each stage of distilling. According to Gifford, “Distillers can operate a still just fine with crude valves and produce acceptable alcohol output, but they’ll have no real management of the above variables until they add gauges, valves, and temperature monitoring of the output water.”

  In his estimation, adding precise valves with flow meters built in is inexpensive and is the starting point for reducing water usage. Also, monitoring the temperature of the output water enables them to use the maximum heat capacity of the water without over-cooling their distillation column. Through this process, they were able to go from 3 to 5 gallons per minute down to .5 gallons per minute very quickly.  Plans include recycling their coolant water by combining off-the-shelf water sanitizers and taking advantage of the natural cooling that occurs at night.

  According to Ayisha Mares, Assistant Distiller, VARA Winery & Distillery (Albuquerque, New Mexico), the most important thing they do to help reduce their water use is the chilled water loop system. “This recirculates water through heat exchangers and a holding tank, saving approximately 3,000 gallons of water per distillation cycle,” she observes. The loop consists of heat exchangers, a big holding tank (water reservoir), and a pump to move the system.

  Stephen Hopkins of Aimsir Distilling Company (Portland, OR) points to the challenges of obtaining a permit for a closed-loop cooling tower from the city of Portland. “I often wonder if both the city and we would have been better if we had gotten some help in the permit process to get a cooling tower. The city would also get a good ROI on helping to fund projects like that,” he notes.

Purifying Water Using More Sustainable Practices

  Rick Stillwagon of Stillwagon Spirits (Charleston, OR) stresses how municipal water systems are under attack and are becoming compromised. “All water should be treated as suspect and go through some purification process before drinking or cooking. It isn’t difficult or too expensive to make sure the water you have access to is safe to use. It does require a bit of effort,” he opines.

  To prevent their spent wash from contaminating the local water supply, they adjust the pH of their spent wash before disposal. In the future, they hope to partner with local farmers who can use this spent wash to irrigate their fields.

  Stillwagon finds that ozone can be more effective than chlorination in disinfecting water against bacteria and viruses. When ozone decomposes in water, it creates free radicals that oxidize organic material in the membranes of bacteria, viruses, and parasites, which weaken, rupture and kill their cells. Also, Stillwagon observes how ozone can remove trace amounts of dissolved metals like iron, manganese, and copper by oxidizing them into solid particles that can be filtered out, as well as reducing or eliminating tastes and odors caused by chlorine.

  After the ozone treatment, Stillwagon passes the water through sediment filters and then through a series of regularly maintained activated carbon filters. This makes sure the water is as pure and good-tasting as possible.

Reclaim and Recycle Water

  As collecting rain in Oregon is legal, Stillwagon seeks to capture some of Oregon’s liquid bounty. As he noted, “Collection, storage, filtration and purification isn’t difficult or expensive.”

  Also, Stillwagon finds recycling gray water isn’t difficult as mechanical filters can remove solids and sediment. Carbon filtration can remove several problem compounds, and biological slow sand filters can remove most pathogens. In Stillwagon’s estimation, these systems require a bit of effort and hardware to set up, but they are robust and hardy can can last for decades with proper maintenance. He finds that processing black water is a bit more complex but can be processed through mechanical and biological systems like “The Living Machine.”

Other Methods to Reduce Water Use in the Distillery

  Other practices implemented byVARA Winery & Distillery to reduce their water use include installing high-efficiency cleaning systems called CIP (Clean-In-Place) that use less water by utilizing more efficient cleaning agents, as well as regularly maintaining and repairing any leaks that they have incurred to prevent unnecessary water loss.

  In a similar vein, Kim Karrick, Owner and Distiller of Scratch Distillery (Edmonds, WA), plumbed a pipe to help reclaim some water from the distillation process to use for their mash water. This action diminished the amount of water required, as well as reduced the amount of heat required.

  In 2023, the EPA recognized eight distilleries for being the first to earn EPA’s ENERGY STAR certification for superior energy performance. Their energy-saving recommendations include conserving water with a focus on the steam and cooling systems. For more information about ENERGY STAR certification for distilleries, log on to their website at https://www.energystar.gov/industrial_plants/improve/distilledspiritsfocus.

Top 10 Reasons to Automate Your Brewery

man holding cell phone gathering data from brewery equipment

By: Aaron Ganick, BrewOps

Brewery equipment is expensive and must be carefully maintained. Downtime is even more expensive. That’s why brewers are searching for ways to streamline operations, compile useful data, and keep eyes on their critical equipment 24/7.

  In the recent past, small- to medium-sized craft breweries relied on pen and paper methods for record-keeping and data collection. Only the largest breweries had access to real-time, actionable sensor-based intelligence. But even then, the automated intelligence was expensive, inflexible, and difficult to modify. The craft brewing industry requires technology that matches its creativity and ingenuity—automation that is intuitive, nimble, easy to install and use, and solves real problems that all brewers face daily.

  With a streamlined ecosystem and affordable sensor technology, even the smallest breweries can automate their equipment in a day and immediately receive critical benefits like reducing purge times, increasing operator and product consistency, preventing chiller failure, monitoring glycol temperatures entering and exiting the chiller, preventing product loss, and monitoring dissolved oxygen levels at any part of the brewing process—all while receiving alarms and notifications that save the brewing operators from an unexpected bad Monday morning.

  The benefits of implementing automation in a brewery environment are numerous. Here are the top 10 reasons to use sensor technology to enhance various aspects of the brewing process.

1. Ease of Mind:  When it comes to monitoring crucial equipment throughout the brew house, sensor technology provides confidence that the utilities are acting the way they should. When anything goes wrong, operators receive instant notifications so they can react as quickly as possible with a minimum amount of downtime or disruption to the product. Automation provides “eyes on the equipment” 24/7 and allows operators to focus on the myriad of other responsibilities throughout the facility.

2. Actionable Data and Insight:  Sensor technology provides a communication methodology that enables long-range and high-speed data transmission from sensors to either a mobile app for local access or to a gateway that relays information to a cloud-hosted solution viewable from anywhere in the world. For example, vibration sensors notify operators if a motor is failing and requires service.

  Temperature sensors provide alerts when critical processes deviate from set parameters, and pressure sensors arm operators with essential tank level and utilization data. By continuously monitoring and analyzing data on variables such as fermentation gravity and pH, brewers can optimize processes to improve the quality and consistency of future batches. Additionally, monitoring purge gas usage and CIP water waste helps reduce consumption and costs, enhancing both efficiency and sustainability.

3. Ease of Installation: Sensor technology is plug-and-play, requiring no IT support or complicated systems integration. Installation takes only a few minutes, and sensors start delivering data immediately once they are digitally activated. Modern sensing technology is extremely rugged, does not require professional installation, and requires minimal space. Additionally, they are battery-powered with a replaceable, long-lasting industrial power source.

4. Ease of Use:  The technology is sophisticated yet simple to use, requiring minimal training. It enables brewery operators to quickly respond to alerts and make necessary adjustments to ensure equipment efficiency and product consistency. The user-friendly interface allows operators at any skill level to monitor and manage processes effortlessly, ensuring smooth operations and high-quality production standards.

5. Time, Money, and Downtime Savings:  Brewery equipment is expensive and must be carefully maintained, but downtime can be even more costly. Alerts enable operators to take appropriate actions to keep systems operational. Reduced tank purge time saves money and decreases CO2 consumption.

  Consistent steam production from the boiler significantly impacts beer quality in the brewhouse. Sensor technology ensures consistent fermentation temperatures, which can be challenging to maintain in the cellar. A failing chiller can cause rising temperatures that lead to off-flavors, off-aromas, and potentially wasted batches of beer that are unable to be sent to packaging. Some brewers report that an unnoticed chiller failure can result in the loss of a thousand gallons of beer.

  Automated systems optimize the use of energy, water, and raw materials, reducing waste and lowering the brewery’s environmental footprint.

6. Consistency and Quality Control:  When each batch of beer is brewed under consistent conditions, variability is reduced and high-quality standards are maintained. Sensor technology provides granular data that ensures that the quality of the final product is controlled. Automation enhances precision in timings, temperature, and other variable measurements to ensure that ingredients are added at the right moments in the correct quantities—which is crucial for achieving the desired flavors and aromas of craft beer.

7. Efficiency and Productivity:  Automated systems streamline the brewing process. This leads to higher production rates, brewery tasks to be completed more efficiently, and the ability to meet growing demand without compromising quality. Significant cost savings with regard to wages and associated expenses can be realized by automating repetitive and labor-intensive manual tasks.

8. Improved Safety and Regulatory Compliance:

  Automation is crucial to reducing the risk of human error and minimizing exposure to hazardous conditions. For example, the Clean-in-Place process that is used on most brewery equipment can be automated to keep workers less exposed to boiling hot water and harmful chemicals. Sensor technology also helps to ensure that brewery operations comply with industry regulations and standards by maintaining accurate records and consistent practices.

9. Innovation and Adaptability:  Automation enhances the creativity and ingenuity that already exists in the brewing industry. Brewers can quickly implement new techniques and recipes with flexible automation that allows them to experiment with different styles and flavors.

10. Scalability:  Even the smallest brewers can automate quickly and inexpensively by utilizing sensor technology. One sensor on one piece of equipment can be an immediate game changer. Breweries can scale up as significant savings are realized through more efficient processes and reduced downtime. Automated systems can be adjusted to handle larger volumes without the need for extensive manual intervention.

The Value of Brewery Automation

  Sensor technology does more than just solve problems—it helps to anticipate problems before they occur. It provides flexibility and agility to the brewing process. With automation, breweries can achieve greater efficiency, consistency, and quality while also enhancing safety and sustainability in their operations.

  Automation and sensing technology are now accessible to all breweries. Fast and easy-to-install systems can get brewers up and running quickly, even for older infrastructure that was designed with “day one” operation in mind and not the future. All types of brewing equipment can be easily and affordably outfitted with sensor technology.

  These sensors can reduce total capital expenditure while also minimizing waste streams. Most importantly, from day one, actionable data provides real results to solve problems, benefiting even the smallest breweries.

About the Author

   Aaron Ganick is a serial technology entrepreneur and the founder and CEO of Preddio Technologies, the parent company of BrewOps.  Aaron holds a degree in electrical engineering from Boston University and has authored dozens of granted patents in the fields of optical networking, telecommunications, and automation systems. He can be reached at aaron.ganick@brewops.com. For more information on BrewOps, the fast and easy-to-install brewery automation platform. For more information please visit www.brewops.com

Become Aware and Prepare for National Preparedness Month in September

flooding waters surrounding businesses in a city

By: Raj Tulshan, founder of Loanmantra.com

June kicked off the official start of hurricane season with the National Oceanic and Atmospheric Administration (NOAA) announcing that the Atlantic region will have an above-normal amount of hurricane activity1. Whether or not your business is in a coastal area, natural disaster can and does, strike anywhere. In recognition of National Preparedness Month in September, we’ll discuss how businesses can become more aware and prepare for natural disasters.

  Natural disasters such as hurricanes, wildfires, floods, earthquakes and tornadoes can have devastating effects on beverage businesses from damaged infrastructure, facilities and inventory to supply chain disruptions, shuttered operations and financial loss. A small business credit survey2 finds that more than 1 in 10 small businesses suffer losses from a natural disaster each year. And for those small businesses that do endure disaster, almost half (43%) never reopen and an additional 29% percent go out of business within 2 years of the disaster3. At the same time, less than half of businesses plan for such events.

  That’s why planning for natural disasters is crucial for businesses to minimize costly disruptions and stay in business. A disaster preparedness plan facilitates and organizes employer and worker actions to prepare for emergencies while a business continuity plan determines how the business and its employees will continue operations during a time of disaster.

Here are Some Key Steps to Take for Preparedness

Assess the Risks: Conduct a thorough risk assessment to identify potential natural disasters based on the geographic location(s) of workplaces, offices, business sites, retail/restaurant/bars, headquarters, distribution, manufacturing plants and even hops fields. The risk assessment will form the basis of a disaster preparedness plan. This plan includes procedures for evacuation, sheltering, communication and recovery steps. Once this step is taken, it is a good idea to review current insurance policies to ensure they include relevant natural disasters and their potential outcomes. Consider additional coverage, if necessary, to protect against specific risks facing the business. Also look at the financial risks including current credit rating and access to loans, capital and financing available today. These financial resources may be needed in the case of business disruption, damages or significant business losses.

Business Continuity Plan (BCP): Create a business continuity plan that outlines how your business will continue to operate during and after a disaster. This includes identifying critical functions, establishing backup systems for data and recovery, alternative power sources (during outages) and ensuring employees know their roles. Ready.gov4 contains comprehensive planning and disaster recovery materials including situation manuals, test exercises, video training, emergency response plans, toolkits and more. Another resource for business continuity planning is a  toolkit5 for each type of natural disaster, from the Insurance Institute for Business & Home Safety (IBHS).

Choose Teams: Designate the company stakeholders who should serve as emergency response team leaders and will be responsible for implementing the plan. Team leaders could be based on specific functions, areas of expertise or critical assets. For instance, a team leader could be chosen from job category like executive leadership, operations, production, safety/quality, IT, sales, marketing, distribution, finance and administration. Make sure that leaders are willing and able to serve in these roles. Next decide the critical hierarchy of functions and where each team leader fits.

  Meet with stakeholders to discuss the responsibilities of each role in the recovery process and gain buy-in. Detail specific tasks required to restore business operations in each area. Discuss among group members to decide what each team requires to meet expectations. Identify staff members who will be part of each response team. Go with individuals who have necessary skills, knowledge, and authority to coordinate the staff during a disaster. Remember to assign backup team members to address any absences or overlapping duties. Provide resources and training to team leaders and members to familiarize them with roles, recovery procedures and tools.

Communication is Key: It is important to keep an updated directory list of company and supplier contacts with name and address location information, cellphone numbers, email addresses, home address and alternative contacts. Store the contact database securely and ensure its easily accessible to authorized personnel. Determine ways for employees to report their status and location in case of emergency.

  Establish communication protocols for employees, customers, suppliers and stakeholders before, during and after a disaster. Determine which communication channels will be used during a crisis. For instance: text, phone calls, SMS, e-mail, company-wide platforms, social media platforms and emergency notification systems.

  Create communication trees outlining the communication order and assigned leaders for each response team. That way a clear and efficient flow of info during a crisis. Using multiple communication channels helps team reach each other during a crisis. Develop incident-specific protocols that outline how teams share information during a disruption for guidelines on the frequency of updates, the level of reported detail, and the escalation process for urgent matters.

Check Facilities: Ensure your physical facilities are structurally sound and prepared for disasters. This may involve retrofitting buildings, securing equipment, and implementing safety measures. Conduct an audit of any back up energy sources and satellite communications in case of power and phone outages. Also communicate and distribute important safety information ahead of disasters like evacuation routes, fire escapes, location of important equipment controls, the water main valve shut off and the location of energy and gas lines. Conduct regular training sessions and drills so employees know how to respond to emergencies.

  Ensure important data is backed up and stored offsite that is needed for operations like transactions, formulations, customer data, transactions, assets, company and employee files, operating systems, applications and software that power business capabilities. If digital systems malfunction, data or information is compromised systems may break down and the ability to conduct business may be lost.

  Evaluate the vulnerability of your supply chain and identify workarounds if key vendors are unable to meet commitments during this time. Develop contingency plans with alternative suppliers and logistics solutions to minimize disruption and channel resources accordingly.

Financial Preparedness: Maintain enough financial reserves to cover immediate expenses after a disaster, such as repairs, employee salaries and operational costs during downtime. If this is not possible, assess your access to available credit and capital by talking with a financial professional. Make sure important documents are secure and available. For instance, at Loan Mantra business owners can set up a free account6 and keep copies of financial records in a safe, secure and encrypted environment. The IRS suggests that every plan should include copies of vital business records and financial documents: Bank statements, tax returns and insurance policies. They also suggest documentation of valuables through photos or videos that are stored in a safe location. Information on disaster assistance and emergency relief for individuals and businesses is available at IRS.gov7.

Community for Continuity: Businesses that respond to employee and community needs with expediency can profit during times of disaster and have a greater chance of staying and remaining in business. Harvard Business School Professor, Hirotaka Takeuchi, and 300 of his students spent 9 years studying why Japanese businesses not only survived disasters but thrived versus U.S. companies. As a country, Japan stands out for corporate longevity; 40 percent of companies that have remained in existence more than 300 years are in Japan despite devastating disasters8. These companies consistently focus on serving the common good versus pursuing layoffs and other cost-cutting measures in the face of a crippled economy.

Review and Renew: Natural disaster risks and business operations may change over time. Regularly review and update your preparedness measures accordingly. Using a disaster recovery plan checklist9 can help outline the essential aspects of a disaster plan for testing, training, planning and the recovery process. Once an emergency plan has been prepared, it should be reviewed and updated yearly.

  By taking steps to create a disaster preparedness plan to assess risks, plan for business continuity, choose the right team members, establish communication protocols, check and harden facilities, build up financial resources and remember to focus on community, businesses can enhance their resilience to natural disasters and mitigate potential impacts on operations, employees and customers.

  Raj Tulshan is the founder and managing member of Loan Mantra, a one-stop fintech and loan advisory platform that democratizes the loan process by providing corporate sized services and access to entrepreneurs, small and medium sized businesses. Connect with Raj and Team Loan Mantra at 1.855. 700.BLUE (2583) or info@loanmantra.com

1.“NOAA Predicts Above-Normal 2024 Atlantic Hurricane Season.” National Oceanic and Atmospheric Administration U.S. Department of Commerce, 23 May 2024, https://www.noaa.gov/news-release/noaa-predicts-above-normal-2024-atlantic-hurricane-season.

2. https://www.fedsmallbusiness.org/topics/natural-disasters. Accessed 7 Feb. 2024.

3 https://emilms.fema.gov/is_0111a/groups/23.html. Accessed 7 Feb. 2024.

4. “Business Continuity Planning.” Ready Logo, 21 Dec. 2023, https://www.ready.gov/business/emergency-plans/continuity-planning.

5. “Business Disaster Recovery Plan.” Insurance Institute for Business & Home Safety, https://ibhs.org/businessdisasterrecovery/. Accessed 7 Feb. 2024.

6. Loan Mantra. https://users.loanmantra.com/Home/Register. Accessed 7 Feb. 2024.

7. “Disaster Assistance and Emergency Relief for Individuals and Businesses | Internal Revenue Service.” Home, https://www.irs.gov/businesses/small-businesses-self-employed/disaster-assistance-and-emergency-relief-for-individuals-and-businesses. Accessed 7 Feb. 2024.

8. “Why Japanese Businesses Are So Good at Surviving Crises.” HBS Working Knowledge, 26 June 2020, http://hbswk.hbs.edu/item/why-japan-s-businesses-are-so-good-at-surviving-crises.

9 Velimirovic, Andreja. “Disaster Recovery Plan Checklist – 13 Critical Points.” PhoenixNAP Blog, 29 June 2023, https://phoenixnap.com/blog/disaster-recovery-plan-checklist.

Whiskey Investing

Considerations in Creating the Proper Legal “Mash Bill” to Protect Your Collateral

In 2024, the global whiskey market’s worth has swelled to around $70 billion and is forecast to hit $125 billion by 2032. https://www.gminsights.com/industry-analysis/whiskey-market. This has made some look to whiskey as an attractive target for private investment.

  Often, such investments are secured by the whiskey and related assets, as collateral. Here are tips on at least some of the considerations in creating the right recipe for such an endeavor.

Secure Your Interest in the Collateral

  The investor should ensure that it accurately secures its interest in the collateral by entering a written security agreement with the whiskey producer. A security interest attaches to the collateral and is enforceable against the debtor and third parties if: (1) value is given; (2) the debtor has rights to the collateral (i.e., the owner of the collateral or the right to transfer the collateral to the secured party); and (3) the debtor executes a security agreement. See UCC § 9.203(a).

Common Considerations in Entering a Security Agreement

Collateral Owner Identification: You will typically want the security agreement to correctly name the owner of the collateral. Among other things, confirm the name of the legal entity on the applicable secretary of state’s website; request and verify documentary proof that that party actually owns the collateral; include recitals of ownership in the security agreement; define the owner (once identified) in the agreement to include parents, subsidiaries, related companies, companies under common ownership, and the like; and take similar steps.

Non-Transfer:  It can also be helpful for the security agreement to include language that prohibits the owner of the collateral from conveying, transferring, or assigning the collateral without your written consent, and affirmatively states that the owner will not do so.

Successor Liability:  Consider including a successor liability clause that extends the security interest in the collateral to any subsequent owners in the event of an unauthorized conveyance, transfer, or assignment of the collateral. George W. Kuney, A Taxonomy and Evaluation of Successor Liability, 6 FLA. ST. U. BUS. L. REV. 9, 11 (2007) (“Successor liability is an exception to the general rule that, when one corporate or other juridical person sells assets to another entity, the assets are transferred free and clear of all but valid liens and security interests.”). Such a clause may also affirmatively require the named owner to take all affirmative steps reasonably necessary to cooperate with you (including, but not limited to, providing and signing any and all requested documentation) in recouping the collateral, should such an unauthorized transfer occur.

Describe the Collateral Correctly:  The collateral needs to be described such that a third party can reasonably identify it. What that means is the subject of a lot of law and “magic words.”

  As of July 1, 2001, all 50 states had adopted Article 9 of the Uniform Commercial Code, which governs secured transactions. While each state may differ in its interpretation and application of its implementation of Article 9, all will typically require that the description of the collateral be sufficient so that it reasonably identifies what is described. See UCC § 9.108(a). Particularly, a description of the collateral will reasonably identify the collateral and be sufficient if it identifies the collateral by specific listing, category, a type of collateral identified by UCC Article 9 as enacted by the state in question (such as inventory, equipment, deposit accounts, etc.), quantity, formula, or the catchall—any other method, if the identity of the collateral is “objectively determinable.” See UCC § 9.108(b). A general description of the collateral as “all the debtor’s assets” or “all the debtor’s personal property” is not (alone) typically sufficient. See UCC § 9.108(c). It may also help to include in the description that the collateral is “investment property,” “inventory,” “accounts,” “contracts,” “proceeds,” if those descriptions are accurate, and always include certain “after-acquired property” language. See, e.g., UCC §§ 9.108(d), 9.204.

  So, what does all that mean? It depends on the circumstances, and this is especially an area where pennywise legal advice in the drafting stage can have tremendous value down the line.

Perfect Your Security Interest:  “Perfection” of a security interest is the process of publicly establishing a security interest in collateral for purposes of gaining priority among other interest holders. https://www.law.cornell.edu/wex/perfection. Among competing security interests, one that is perfected will prevail over those that are unperfected. See UCC § 9.301.

  Perfection typically requires filing a UCC financing statement with the appliable secretary of state. A UCC financing statement is a document that includes basic information regarding your security interest, including the debtor’s name and mailing address, the secured party’s name and mailing address and that key description of the collateral. A primary purpose of all of this is to give the world notice of your security interest in the collateral you hope to lock down to protect your investment. You’ll want to file the UCC financing statement as soon as possible, and keep it current.

Other Typical Considerations

  Beyond the security agreement, there are many other considerations to take into account. A couple common ones are interest and warehouseman relations.

Interest—Hogs Get Slaughtered:  Of course, you may wish to charge interest on your investment. It is imperative that you be precise and conservative about the interest rate and the terms of the interest calculation to avoid committing usury, which carries severe penalties.

  Make sure that you know the maximum pre-judgment interest rate allowed by your state. Any percentage above that percentage, whether as stated or as calculated based on the agreement’s terms, can be usurious. And fixing an error there is often not as simple as correcting it after it has been called out—that is often too late.

  When calculating interest, good practices include always rounding down, never up; excluding the start and end days of interest; and being careful about including and wording compounding provisions, as the law around those can vary widely.

Make Friends with the Warehouseman:  In the craft whiskey space, it is likely that the barrels will be stored in a bonded warehouse, or else the distiller may be losing money by having to pay the taxes off the still, rather than after absorption and evaporation has occurred.

  Bonded warehouses were first created by Federal law passed on Aug. 1, 1862; were taken advantage of to create Bottled-in-Bond spirits with the passage of the Bottled-in-Bond Act of 1897; and had their current bonding period structure set by the passage of the Forand Act of September 2, 1958.

  In addition to the primary tax concerns addressed by all of these laws, the Bottled-in-Bond Act was passed to help ensure the authenticity and quality of the whiskey that the customers were drinking, in a time when many whiskeys and spirits contained unhealthy additives used by certain unscrupulous “Rectifiers.” Bonded warehouses are registered with, regulated and controlled by the federal government and their gaugers and provide a government-backed storage space for producers of craft whiskey to store their products.

  Whether the storage facility of the collateral is a bonded warehouse or not, it is important for the investor to maintain a good working relationship and a steady stream of communication with the individuals who run the particular warehouse. Having this rapport with the warehouseman will be important to help monitor the collateral to ensure that (when the collateral is whiskey), it is kept properly, doesn’t “walk out the door” randomly, and can be reliably held if there is a default or dispute that may implicate the investor’s rights in the collateral.

Summary

  In sum, if you are looking to invest in the craft whiskey industry, remember these tips to ensure that your investment is secured:

•   Make sure the owner of the collateral is properly identified in the security agreement;

•   Prohibit unauthorized transfers of the collateral and include a successor liability clause and/or a clause that requires your signature to authorize a transfer of the collateral in the security agreement;

•   Be thoughtful, careful and precise in your description of the collateral, taking into account the legal requirements and legal meaning of the language you use (or don’t use);

•   Perfect your security interest in the collateral by filing a UCC financing statement with the secretary of state as soon as possible to have priority over other creditors;

•   Don’t be greedy when it comes to providing for and calculating interest;

•   Build and maintain good relationships with the warehousemen where the collateral whiskey is stored for aging so that you can make sure that the whiskey is properly maintained, remains in good condition and is there when you need to foreclose on it.

  Ross Williams (rwilliams@bellnunnally.com) and Ty Johnson (tjohnson@bellnunnally.com) are partners, and Catherine Baldo (cbaldo@bellnunnally.com) is an associate, at Bell Nunnally & Martin LLP, a full-service business law firm based in Dallas, Texas. This article is for informational purposes only, and neither constitutes, nor should be taken as, legal advice or legal opinion.

Elevating Beverage Distribution

The Case for AI-Driven Systems Over Legacy Platforms

android robot standing behind a bar serving a glass of alcoholic beverage

By: Ian Padrick – Co-founder and CEO of Ohanafy

The beverage industry in 2024 is characterized by rapid evolution, driven by shifting consumer preferences, technological advancements, and new market dynamics. As consumers increasingly demand healthier and more customized beverage options, the industry is witnessing significant changes in product offerings and business operations. This landscape presents unique challenges and opportunities for beverage distributors, particularly those operating on outdated legacy systems.

  Legacy systems, which have been the backbone of distribution operations for many years, are increasingly becoming a liability. These systems are often inflexible, unable to scale with business growth, and lack the advanced analytics capabilities required to respond effectively to fast-changing market conditions. They struggle with integrating new data streams and automating processes, leading to inefficiencies in inventory management, customer relationship management, and overall supply chain operations.

  A recent study by Aberdeen highlights a stark reality: businesses that spend 12% of employee time searching for data can incur up to $1.2 million in unnecessary costs annually for a company with 200 employees. This underscores the critical need for systems that enhance efficiency and profitability by reducing wasted time and resources on inefficient data management.

  In contrast, AI-driven systems offer robust solutions by harnessing the power of data analytics and machine learning. These modern platforms can integrate diverse data sources, providing a holistic view of business operations and consumer trends. This integration enables more informed decision-making and faster response times. Therefore, transitioning to AI-driven systems is not just about keeping pace with technological trends but fundamentally enhancing beverage distributors’ strategic capabilities.

The Risks of Legacy Systems

  One of the primary risks associated with legacy systems is their inherent lack of integration capabilities. These systems often operate in isolation, meaning that data silos are typical. When information cannot flow seamlessly between sales, inventory management, and customer relations, inefficiencies abound. This can include delayed order processing, inventory discrepancies, and a poor customer service experience, which can erode trust and reduce client retention.

  Moreover, legacy systems typically lack scalability. As businesses grow and market demands shift, these systems struggle to adapt. This inflexibility can stifle innovation, as adding new features or expanding into new markets might require extensive manual intervention or even complete system overhauls, which are costly and time-consuming.

  Another significant risk is the absence of robust analytics. Legacy systems do not utilize the power of modern data analytics, which is crucial for making informed decisions. Without these insights, companies may make choices based on outdated or incomplete data, potentially leading to a general lack of strategic decisions.

The AI-Driven Solution

  Transitioning to AI-driven systems can effectively address these risks. AI-enabled platforms offer integrated tooling where data from various departments is consolidated, providing a unified view of the business. This integration enables more streamlined operations, from inventory management to customer relationship management, ensuring that all parts of the business are aligned and efficient.

  AI-driven systems are inherently scalable. They are designed to grow with the business, easily accommodating new functionalities or market expansions without the need for disruptive overhauls. This flexibility ensures that beverage distributors can respond quickly to market changes, a crucial capability in an industry as dynamic as beverage distribution.

  Perhaps most importantly, AI-enabled solutions have advanced analytics and machine learning capabilities. These tools can analyze large datasets to uncover trends and patterns that might not be visible otherwise. For instance, predictive analytics can forecast demand more accurately, enabling better inventory control and reducing overstock and stockouts. Similarly, machine learning algorithms can enhance customer segmentation and personalize marketing efforts, increasing sales and customer loyalty.

Applications of AI in Beverage Distribution

  The transition to AI-driven systems in the beverage distribution industry represents a significant leap forward in operational efficiency and market responsiveness. Here are several systems that stand to benefit from leveraging artificial intelligence to enhance various aspects of the distribution process.

Inventory Management: AI significantly improves inventory accuracy and efficiency. By analyzing patterns in sales data, AI can predict future demand more accurately, enabling distributors to optimize their stock levels. This reduces the risk of overstock, which unnecessarily ties up capital, and understock, which can lead to missed sales opportunities. For example, AI systems can integrate historical sales data with seasonal trends and promotional schedules to adjust inventory levels in real-time.

Route Optimization: AI-driven logistics applications can dramatically improve delivery efficiency by optimizing delivery routes and schedules. These systems analyze traffic data, weather conditions, and delivery windows to suggest the most efficient routes, reducing fuel consumption and delivery times. This cuts costs and enhances customer satisfaction through faster, more reliable service.

Customer Relationship Management (CRM): AI enhances CRM systems by providing deeper insights into customer behaviors and preferences. This enables personalized marketing strategies, such as targeted promotions and product recommendations based on data-driven insights. For instance, an AI-enhanced CRM system can identify purchasing patterns and predict when customers might be ready to reorder or suggest new products they are likely interested in, thereby increasing the potential for upselling and cross-selling.

Sales Forecasting: AI algorithms excel at processing large datasets to identify trends that would be difficult for humans to spot. In beverage distribution, AI can analyze data across multiple channels to forecast sales with a high degree of accuracy. This allows distributors to better align their schedules and marketing strategies with anticipated market demand, reducing the risk of surplus and shortages.

Operational Efficiency: Beyond these specific applications, AI drives overall operational efficiency by automating routine tasks, such as order processing and payment transactions. Automation reduces the likelihood of human error and frees staff to focus on more strategic tasks requiring human oversight, such as customer service and business development.

Security and Compliance: With increasing data breaches and stringent data protection regulations, AI systems can also provide advanced security measures to protect sensitive information. Moreover, AI can help ensure compliance with industry regulations by monitoring and reporting deviations in real-time, thus avoiding potential legal and financial penalties.

Embracing the Transition to AI-Driven Distribution

Distributors that have switched to AI-driven systems often report substantial improvements in operational efficiency and customer satisfaction. However, transitioning to a new system is not without challenges. It requires careful planning and a clear understanding of business needs. The key to a successful transition lies in choosing a platform that is not only powerful but also aligned with the business’s specific needs and goals.

  While legacy systems have served the beverage distribution industry well for many years, the rapid pace of technological advancement and changing market dynamics make it clear that the future belongs to AI-driven solutions. By embracing these modern systems, distributors can remain competitive in an increasingly complex and fast-moving marketplace.

About the Author

  Ian Padrick is co-founder and CEO of Ohanafy, the leading distribution management platform built on Salesforce. Before Ohanafy, Padrick has served in strategic roles at Salesforce, Veeva, nCino, Accenture, and Capgemini. He is highly regarded for his strategic vision and leadership within the Salesforce community and for continually advocating for the integration of AI-enabled technologies to enhance business operations and customer engagement. To get in touch, visit ohanafy.com/contact.

Best Practices for Barrel Aging

stacks of distillery barrels

By: Kris Bohm – Owner of Distillery Now Consulting

The process of putting distilled spirits into barrels whether it be for transportation or maturation is a centuries-old process.

  There is a wonderful transformation that occurs when spirits spend time in a wooden barrel. Among the general public there’s a perception that time is the only factor that matters when it comes to the quality of a matured spirit whether it be whiskey brandy or rum. It is known among distillers that age is only one of a multitude of factors that actually determine the flavor of the spirit when it comes out of the barrel. In this article I’ll break down some of the most critical factors that affect the transformation of spirits in a barrel. Lets jump in and break down the barrel aging and the best practices for it.

Distillation and Congeners

  Distilling is the first step that will affect how a spirit matures. In the process of distilling the heads and tails cuts that are made by the distiller have a massive effect on the character of  the spirit. Whiskeys that are distilled with very tight cuts when matured for a long time will often come out of the barrel rather flat and often have a strong oak flavor. Whiskeys that are distilled with very broad cuts with a considerable amount of tails and oils left in the distillate often need a long time to mature but also will have much more depth than complexity to the finished whiskey.

Barrel Choice

  When it comes to aging whiskey such as bourbon or rye in America it is a legal requirement to use new American Oak. There are still a multitude of options within the legal requirement of new oak. Barrels can come in many different sizes and also char or toast levels. All of these have a strong effect on the change in the flavor of the spirit. It is a bit of a misconception that smaller barrels tend to mature spirits quicker. Smaller Barrels have a larger surface area ratio to the amount of whiskey in the barrel. This increase in surface area forces the whiskey to take on more intense oak characteristics faster. While a small barrel may give the impression of a more mature spirit faster it is often overly tannic and not as well balanced in flavor as a whiskey that comes out of a full size 53 gallon barrel.

Storage Location

  When barrels are being stored (commonly for several years) the location where the barrel is stored has a strong effect on the flavor of the whiskey. The environment where a barrel is stored also affects how much loss (evaporation) will come out of the barrel. Temperature range and humidity are two critical factors to consider when selecting a location for storing barrels. Barrels that are stored in a location that is relatively hot will typically see higher rates of evaporation compared to barrels that are stored in a colder location. The same goes for humidity when barrels are stored in an area that is humid they typically see much lower rates of evaporation then barrels stored in areas that are dry. This is not to say that the ideal location to store barrels is cold and humid as barrels stored in this type of climate such like the climate of Scotland have very slow maturation rates.

   It is important to consider the overall climate and how it can be affected or changed to better control the maturation of spirits. There are many distilleries located in colder climates that will heat their barrel storage warehouse to help speed up the maturation of the spirits. Some distilleries even go so far as to heat and humidify the air in a barrel storage space to speed the maturation while minimizing the evaporative loss of spirits from the barrels.

Air Flow

  While temperature and humidity are two of the most important factors in barrel maturation, air currents also play a role in how spirits mature. It has been found that barrels that are stored in drafty buildings or near doors and windows that see air flow around barrels will often have much higher evaporative losses compared to barrels stored in a location that has minimal air flow or air exchange around the barrel.

What Happens in the Barrel

  The maturation of spirits within a barrel is said to be both an additive and subtractive process. It is additive in that characteristics from the wood and the charring of the wood add tannins and lignins to the alcohol. The process of maturation in a barrel is also subtractive in that some of the less desirable components of distilled spirits evaporate out of the barrel as the spirit matures. When alcohol is placed within a wooden barrel the alcohol reacts with oxygen and is partially transformed into aldehydes. The continual exposure of the aldehydes to oxygen eventually transforms them into acids. These acids undergo esterification in the maturation process which can change the mouthfeel of the whiskey. This change adds to the complexity of flavor within the spirit.

Barrel Management

  Creating consistent world class spirits is only possible through excellent barrel management. This is achieved through concise record-keeping and traceability. All barrels should be clearly labeled and identified. Clear identification allows the management handling the barrels to know the contents, age and trace information back to the distillation records of the spirit. There are great modern ways and technology to track and identify barrels but good record keeping of every time a barrel is sampled and or moved can be the difference between good and great spirits.

Age Statements

  The statement of the age on the label of a bottle of whiskey will often be one of the defining factors in the perception by the consumer of the “quality” of the spirit. This perception can be extremely hard to overcome and will often push distillers to age their spirits to an age that is perceived as high quality.

  To consistently produce a spirit that is of a certain age can be challenging or in some cases even impossible if there is not enough distilled spirits that is of the acceptable age to meet the age statement on the label. Consideration should be given early on to the quantity of barrels being produced to ensure adequate stock of spirits when the time comes to sell those aged spirits.

Pricing Modeling

  Careful consideration and planning should be given to the expected final retail price of the spirits you intend to age in barrels. Nothing could be more detrimental to launching a new brand than being priced far above comparable competitors due to your cost of manufacturing being higher than anticipated.

  A cost analysis must be done before investing money into aging spirits to ensure that the all cost of manufacturing including anticipated evaporative loss can be recouped with a profit in the manufacturing of those distilled spirits.

Building Your System

  The perfect way to effectively mature and manage barrels of spirit is going to be different for every person. It takes a considerable level of planning preparation and continual execution to create consistent spirits. Planning your process before you start it and creating a system to effectively implement the plan is the best way to ensure when the time comes to bottle and sell your spirits the quality of the product will be top notch.

Event-Season Tips for Restaurateurs & Vendors

man and women with beer glasses sitting outside with other people

By: David DeLorenzo

Summertime often equates to weddings, events, festivals, outdoor concerts and more where a variety of vendors converge to serve food, drinks and more. Establishments and vendors have a unique opportunity through these events to promote their businesses to a whole new demographic. However, these types of events come with their own set of specific circumstances in which restaurants and vendors need to be prepared for — and that they need to protect themselves from.

  First off, the more you know about the situation you’re going into or the event you’re scheduled to participate in, the better. This is key because your extended coverage for these events will depend on exactly what is going on during the event. You’ll want to make sure that you have your own insurance and understand exactly what that insurance will cover and what it won’t for any off-premises event.

  This will depend on not only your carrier but also on whether your current coverage will extend to the event. The extension of the premise may not. Some carriers have a designated premise of the endorsement, which will not allow their policy to cover the business at an event.

  It also depends on the role your business is playing at the event. For example, if you are a vendor of the event and not the host, the coverage requirements needed will be up to the host of that specific event and the city in which the event is being held, if it is held on city property.

  If the host has insurance for their event, it doesn’t necessarily mean that if a vendor shows up there they would have coverage if they were pulled into a lawsuit. So before committing to an event, check with your broker or insurance company to see if that coverage extends.

  Additional event coverage may require an added fee and your carrier will probably want to know the exposure basis of the event. This can include the size of the event and how many people are expected. This includes not only the total attendance count but also what percentage of those ticket sales include alcohol sales.

  The carrier will likely specifically want to know the event’s estimated attendance count of people consuming liquor. That number will be taken into account differently than the total attendance count.

  The carrier will also want to know what exactly is taking place at the event because anything from bouncy houses to ax throwing can become liabilities. It’s important to note that 99% of the time, these types of things are automatically excluded from a policy anyway.

  For example, consider if you’re a vendor participating in an event and you have your own insurance coverage that protects you from liquor liability for serving people at the event. If there happened to be an accident due to ax throwing and they were to get sued based on the ax injury because of alcohol, there would be an exclusion altogether.

  It is highly unlikely that a carrier will cover a vendor for those instances. That’s why it’s essential to recognize that in many cases, events with dangerous activities should be approached with a “buyer beware” attitude. You need to be cognizant that at these types of events, your company could be pulled into a claim or lawsuit that you may not have coverage for.

  Major events and festivals are often seen as opportunities to make more money, get additional exposure and get your name out there. However, if you aren’t fully aware of all the details of the event and all the things happening during it, you could be putting yourself at risk.

  It’s also important to recognize that with proper coverage, your carrier should cover your business for the normal instances of serving alcohol at the event. But with exclusions for things like the examples of a bouncy house or ax throwing, you would not be covered. If there was a claim due to an accident that was excluded on the premises policy, then anyone and everyone participating in the event would be on their own to defend themselves in the case of a lawsuit.

  However, if a person who consumed too much alcohol then decided to get into the bouncy house and broke both their legs may try to go after the vendors that served alcohol at the event, that would likely come out of their pocket, as an insurance would likely automatically decline it. On the other hand, if a patron drinks too much at the event and gets into a car accident, the vendor’s liquor liability coverage would likely protect them in that instance.

  It’s also wise to look for assault and battery exclusions on event coverage policies. Many of these events have assault and battery exclusions, meaning that if someone gets beat up at the event and wants to sue the host or a vendor, they will not have coverage for that.

  While event season is heating up, we’ve continued to see pretty steady and fair market premiums for event and off-premises coverage. This is highly situational and also depends greatly on what the host city or venue requires in terms of coverage.

  In many instances, two different coverages may be required — one from the city and one from the venue. Some cities may require coverages that are through the roof while others may only require a minimum limit. It is vital to understand what the municipality where the event is taking place is asking for in terms of limits on insurance.

  For example, they may ask for $1 million or they may ask for $5 million. However, if they ask for the latter, this can be discouraging for vendors to participate. At that point, it becomes very difficult for a company to see the value in signing a piece of paper for $1,500 for one day of $5M worth of coverage. It’s overkill, quite honestly because you already have all these participants carrying their own insurance, plus the venue, the event promoter and the city, which all have their own insurance as well.

  To foster and encourage a sense of community through local festivals and events, the municipalities really have to keep it reasonable. On the flip side, the insured parties have to understand exactly what it is they are being insured for — and even more importantly, what they are not insured for. That will be determined on a situation-by-situation basis by the carrier.

  Weddings can also create unique circumstances in terms of coverage. What falls on the venue and what falls on the vendor may depend on the venue and the situation as well. In many cases, we recommend that the client gets coverage for general liability and liquor liability. However, liability will likely fall on the venue itself if they are the ones serving alcohol.

  It all comes down to making sure that whoever is serving the alcohol, whether the venue or the vendor, is well-trained and certified in liquor training. This is a key way to protect your business while also keeping staff and patrons safe throughout event season.

  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 information visit barandrestaurantinsurance.com.

Braxton Brewing Company

Beer, Bourbon Barrel Aging and the Path Forward

many people surrounding the bar in Braxton Brewing Company

By: Gerald Dlubala

We never know when the entrepreneurial spirit may hit. For Evan Rouse, co-founder and CPO of Braxton Brewing Company, it hit while he was still in his teens.

  But he was interested in something other than the businesses many teens jump into, like grass-cutting or retail careers. Rouse’s interest was the business and art of craft beer and brewing. Even though he was only 16 years old at the time, nowhere near the legal age to enjoy a craft brew, that didn’t stop him from following his passion and building his first home brewery in his family’s garage on Braxton Drive. Yes, you read that right. Evan Rouse was brewing craft beer in his garage years before he could legally enjoy the fruits of his labor.

  But he wasn’t finished there. Rouse had a vision of what the perfect craft brewery would be like. He envisioned a comfortable place that brought folks together to relax while enjoying whatever style and type of beer they preferred. With that vision in mind, Rouse and his brother opened Braxton Brewing Company. Braxton Brewing Company celebrates the Rouse family’s determination, knowledge and pride while being a brewery everyone can enjoy, regardless of taste and style preferences.

From Family Garage to Multiple Locations

  “We opened in March 2015,” said Jake Rouse, Evan’s brother and the co-founder and CEO of Braxton Brewing Company. “Opening a craft brewery was the natural progression and conversion of my brother’s initial interest in craft brewing back in our garage on Braxton Drive. I was fortunate to be able to sell my successful technology company at the time, and we decided to look at the craft brewing landscape. Evan was more than ready to jump into the industry, so we basically took a leap of faith and opened Braxton Brewing Company in Covington. That’s our original spot. We later opened another location in Cincinnati after the pandemic. When the pandemic went through, the owner of a closing Cincinnati taproom reached out to us based on our experience and expertise to see if we wanted to take over the location. We did, and now have taprooms there, at CVG International Airport and in Fort Mitchell, Kentucky.”

  The Rouses are planning a fifth location in Union, Kentucky, just around the corner and a few blocks from the garage where Evan first set out on his brewing journey. Slated to open this fall, the Union location pays homage to the memories and location of where everything started on Braxton Drive. The 20,000-square-foot greenspace and beer garden will be home to three local favorites, Braxton Brewing Company, Dewey’s Pizza and Graeter’s Ice Cream – all in an inclusive, one-of-a-kind family destination. It’s a place to come together in the heart of Union, Kentucky, and enjoy pizza, drinks, ice cream, specialty programming, music, events and more, all in one location.

  Braxton Brewing’s Union location will also feature a full craft cocktail bar in addition to its diverse and distinctive beer list.

  “We’re excited to announce a new cocktail and bourbon partnership to appeal to our non-beer drinking customers,” said Rouse. “That bourbon partnership is helping us to create a one-of-a-kind, beyond-the-beer space in our taprooms. We also partnered with one of the best mixologists in the country to craft a unique cocktail menu that allows our cocktail-loving friends and visitors to enjoy and experience unique cocktails and quality bourbon just as if they were at their favorite distillery. We combine great spirits and a modern, comfortable setting to provide an authentic distillery experience at our taprooms.”

  Rouse tells Beverage Master Magazine that all Braxton beers are brewed in their original Coventry location, where they’ve always looked to create craft beer that appeals to the masses.

  “We want everyone to find something they like across several styles,” said Rouse. “Our brand, so to speak, is brewing and serving customer-driven beers so everyone can feel welcome and included when they walk through our doors. Whatever types and styles of beer our customers love, we want those included in our lineup, if that makes sense. We listen and try to include our customers’ preferences in our product lineups as much as possible.”

  The diverse beer menu of their Union Barrel House is typical of what is available at any one time.

  The expansive list includes variations on their signature barrel-aged beers, lagers, doppelbock, pilsners, shandies, sours, cream ales, stouts, hefeweizens and more. And, of course, you’ll always find their Garage Beer on the menu, an easy-drinking classic American light lager available in regular or lime.

Barrel Aging from the Beginning, Braxton Now Offers Private Barrel Program

  “From day one, we’ve always had a robust barrel-aging program,” said Rouse. “And when you’re a Kentucky-born brewery, you have to take pride in that program. It’s all about the beer we come up with, but it’s also about what that whole process looks like. And then we celebrate our barrel aging program with our friends and visitors at our signature end-of-year event called Dark Charge Day.”

  Dark Charge Day is a highly anticipated, end-of-year annual event created by Braxton Brewing to celebrate, showcase and sample their barrel-aged beers for the year.

  “We’ve done it from day one,” said Rouse. “This is our 10th year hosting our Dark Charge Day for our community. We shut down the street and release our bourbon-aged beers, including our bourbon-aged imperial stout. During the celebration, our visitors can enjoy and sample our offerings in an event-style atmosphere rather than maneuvering a specific single-beer release. It’s a great way to connect with our community while allowing them to taste things that they may not have had the opportunity to experience previously. It’s a way to gain new insight and knowledge about what we do and who we are, but it’s also a way to find out what releases and profiles resonate with our customers. The aging barrels are all acquired through our bourbon partnership, and we always have a large amount of them in the process of being filled for future releases. It’s always exciting to see the results and where future releases will take us.”

  Braxton Brewing offers a private barrel-aging program for those beer enthusiasts who have always dreamt of creating their own beer style. In perhaps the country’s first such experience, Braxton Brewing’s private barrel program allows customers to literally take the controls and create their own unique barrel-aged beer. Customers choose the beer style, the packaging and can even use that catchy beer name that they’ve had rattling around in their head should they ever come up with their own craft beer.

  “The private barrel program is just another option for our customers to do something different and unique,” said Rouse. “It may not be the main core of what we do, but it’s a great opportunity to experience and be part of the journey that a barrel-aged beer goes through.”

As the Industry Changes, So Must Craft Brewers

  “Realistically, the craft beer industry is changing,” said Rouse. “I think the modern craft brewer has to appeal to the varied tastes and expectations of the modern consumer. We focus on delivering an experience upon entering our taprooms that reflects customer expectations. Far too often, a brewery or taproom is delivering the same experience as multiple others nearby, and that’s just not going to work anymore. There are just too many breweries that are similar to the next brewery that may be down the street. With Braxton Brewing, any drinker can come into our brewery and taproom and have the experience that they were expecting.”

  Rouse said that the main thing for craft brewers to remember is to stay true to themselves while providing for their customers’ needs. By doing this, a craft brewer will take care of his customer base, be attractive to new customers and ultimately figure out a path forward from there.

  “Just like with us and our barrel-aging program, brand identity and customer focus,” said Rouse. “We’re doing what we think makes sense, and we’re excited to see the outcome and future path forward. But just like the majority of craft brewers have to do right now, we’re adapting, changing, focusing on what our customers want and expect and using that as a guide for future growth.”

  To find out more about Braxton Brewing Company and their locations, or to reserve a space for your next get-together, visit their website or contact them at:

Braxton Brewing Company

27 West 7th Street • Covington, KY 41011

(859) 261-5600 • social@braxtonbrewing.com

Sourcing Grains for Craft Distilled Spirits

two men standing at bag with grains in their palm

By: Becky Garrison

According to Michael Swanson, co-founder, farmer and distiller for Far North Spirits (Hallock, Minnesota), craft distillers have an excellent opportunity to highlight the difference between a crop grown for flavor compared to a crop grown solely for yield. This distinction affords them unique opportunities to explore how to source the specific grains that will produce a spirit with a particular desired flavor profile.

  Swanson cites rye as an example, as that’s the primary grain he utilizes in his whiskeys, and he observed how this scenario plays out similarly to many crops. As he observes, historically and across multiple countries, winter rye has been grown and sold as a commodity. There are exceptions to this, particularly in pre-prohibition Pennsylvania, where rye was grown specifically for use by the many distilleries across the state. But for the most part, rye was and still is treated as a commodity. However, when they started growing rye to distill into whiskey, they realized that their particular variety had a distinctive flavor profile.

  So, Swanson and his team conducted a three-year crop research study that was the first of its kind. In this study, they grew 15 different varieties of rye and then milled-mashed-fermented-distilled them individually. From this, they could determine that all other things are equal, the variety of rye alone affects the flavor of the whiskey. Also, after barrel aging the whiskey, they found that the aging process amplified the differences in flavor between the varieties. In particular, the open-pollinated varieties showed a much broader flavor spectrum than the hybrid varieties.

  Despite the increase in flavor in the open-pollinated varieties, the hybrid varieties have been quickly gaining acreage across the U.S., Canada and Europe because of their much higher yields. These high yields enable farmers to increase their gross revenue to the point that growing hybrid rye can be almost as profitable as a corn/soybean rotation, with much lower input costs. But growing the majority of open-pollinated varieties at this price point isn’t profitable. Hence, mass producers of whiskey aren’t willing to pay more for open-pollinated rye due to the massive number of bushels that they consume in a year.

Talking About Terroir

  Swanson has observed that craft producers who focus on producing products based on flavor rather than yield are willing to pay more for grains with a broader spectrum of flavor. To this end, craft distillers have started conversations about terroir that are very similar to defining a wine by taking into account factors such as the vineyard where the grapes came from and the AVA where this vineyard is located. Simply put, place matters, with regional differences emerging among whiskeys produced by craft distillers based on where the grains are grown.

  Miles Munroe, master blender for the Portland, Oregon-based Westward Whiskey, views barley similar to how a winemaker considers different wine styles, the different grape varietals and the various climates in which they’re grown.

  “We know that barley types, soil, and climate bring diversity and complex flavors to whiskey. The shape of our custom pot stills and the way we approach distillation allows for the most amount of grain character to come through, so we’re focused on high-quality barley that has a sense of place,” he reflects.

  In recent years, the Skagit Valley in Western Washington State, situated along the same latitude as the Scottish Highlands, has emerged as a major agricultural hub. This distinction led to Copperworks Distilling Company (Seattle, Washington), Westland Distillery (Seattle, Washington) and Westward Whiskey emerging as leading players in the evolution of the creation of American Single Malt as a new spirits category.

Sourcing from Malthouses or Direct to Farmers

  Except for a select number of distilleries that malt their grains in-house, distillers work with a malt house to source and then malt the grains according to the distiller’s particular specifications for a given spirit. These malt houses can ensure that the grain meets minimum specifications so that it can be malted.

  Some craft distillers follow the model of distilleries like Westward Whiskey, where they work with malt houses that source local barley, which gives their spirits a sense of where the grain is from. Miles Munroe, master blender for Westward, chooses two-row barley because it meets the standards of what craft brewers also expect. So, they select their malt houses with these criteria in mind.

  Others, like Tyler Pederson, master distiller at Westland Distilling, work with a network of local malt houses and brokers to source their malted barley. These partners work with regional farmers to select and procure the raw barley they malt to their specifications. Pederson describes this process, “It’s a very involved effort, and we collaborate with everyone throughout our supply chain, even going so far as funding a barley breeding program to develop new varieties for the whiskey industry.”

  Westland’s Colere editions were created specifically to reflect how different varieties of barley offer different flavors. To date, they’ve released three expressions: Colere #1, made with Alba, #2, made with Talisman and their current expression and #3, made with Pilot. How Westland sources its grains was one contributing factor to its achieving B-Corp Certification in 2024.

  A small but growing number of distillers like Far North Spirits purchase their grains directly from the farmer. According to Jason Parker, co-founder of Copperworks Distilling Company, “This represents a new way of doing business where a customer is getting better flavor, sometimes at the expense of a good yield.” He cites his experience sourcing a barley variety named Alba as an example. After they created a delicious whiskey using Alba, they found their local malt house had encouraged their supplying farmers to quit growing it because they found another barley that was easier to malt and produced a higher yield. But it didn’t taste like Alba, and now the flavor it produced is no longer possible to produce.

  To convince farmers to grow specialty grains like Alba that may yield fewer bushels per acre or perform less efficiently in the malthouse, they put the word out to farmers that they were willing to pay the farmers per acre instead of per bushel. Once they contract with farmers to bill by the user rather than the bushel, thereby sharing the risk with the distillery of planting grains for flavor rather than yield, they will contract with a local malt house, such as Link Foods, to malt the barley.

  Before contacting farmers, Swanson recommends doing research into the specific varieties of grains that grow best in one’s particular area. This knowledge will help ensure that the farmer can grow this particular grain variety in a large enough quantity without sacrificing quality such that the farmer can make a profit and the distiller can produce a quality spirit.

  Gabe Toth, lead distiller for The Family Jones (Loveland, Colorado), describes how working with Olander Farms/Root Shoot Malting, which is less than five miles from their production distillery, affords them multiple opportunities. “We can develop local, unique flavor, keep our dollars local and support local businesses. We can also reduce our supply chain footprint, reducing both our vulnerability to disruption and our carbon usage via transit and work directly with our farmers to experiment with new grain varietals. This helps us support on-farm sustainability initiatives or collaborate on other projects that are a result of having direct relationships and even friendships with them.”

Challenges in Sourcing Grain Directly from Farmers

  In Toth’s estimation, price is probably the major factor working against this approach, followed by uniformity. As he reflects, “Commodity agriculture over the last several decades has increasingly squeezed small farmers out of the market, and the relatively small farms we work with don’t have the economies of scale to leverage for competitive pricing. Local grain can also be more prone to variability compared to a large processor that can over-contract and be more selective or blend away variation.”

  However, Parker reminds craft distillers that focus on making value-priced whiskeys, as opposed to flavor-driven whiskeys, that they can’t compete with the big producers on price. Big companies have economies of scale and contracts that are not available to craft distilleries. “So, you might as well chase the one thing you can control, which is good, unique flavor. To do that, you probably don’t want to be putting the cheapest ingredients in but rather use grains and other products that make a real flavor difference.”

Ready To Drink Cocktails are Here to Stay

canned cocktail cans with one being opened and exploding with spray

By: Kris Bohm – Owner of Distillery Now Consulting

Canned cocktails also known as ready to drink cocktails (RTDs) are taking the distilled spirits market by storm. RTD sales in the US grew 24% from 2022 to 2023. (Neilson) Part of this growth came from breweries branching out into spirits by canning cocktails using their existing packaging equipment. There are many ways to create canned cocktails and an abundance of variety in flavors of canned cocktails. Moving from an idea to a finished product is a lengthy and challenging venture but there is immense potential in the RTD market. This article will take a dive into how breweries are producing RTDs and the lessons learned from launching ready to drink cocktails for a few different companies. Let’s learn about canned cocktails!

  Many breweries are looking to the next trend in beverages to grow their business. While some folks say non-alcoholic drinks are the upcoming trend, we believe RTDs are the answer. 5 years ago, RTDs had a sense of uncertainty among those working in the distilled spirits industry. The uncertainty came from the fact that the perceived price point was too high for canned cocktails compared to beer and retailers were not willing to give RTDs space on their shelves. Flash forward to today and canned cocktails are thriving and selling at a much higher price point per unit than beer. Consumers have become more health conscious of what they drink and low calorie spirit based drinks fit that bill. If your brewery is debating between getting into producing seltzers or RTDs there is no question that RTDs are the way to go. Before you jump right into making your own RTDs let’s talk about how to develop a product.

Product and Process Development

  Whether you are a distiller or a brewer looking to produce RTDs there are many aspects to consider to achieve the goal of creating an RTD. Below is a list of the questions that you should answer before putting a product into a can.

•   What kind of flavor or style of cocktail?

•   What is the desired ABV and what kind of spirits will go into the cocktail?

•   What will flavor the product? Extract flavors or raw ingredients?

•   Will there be sugar in the product?

•   Will there be juice or other natural ingredients and are they readily available?

•   Is the recipe and product shelf stable?

•   How long of a shelf life can you expect?

•   Does the product require refrigeration once packaged?

•   Will the product be highly carbonated, lightly carbonated or noncarbonated?

•   How will the product be branded and marketed?

  It is essential to answer these questions early in development. RTDs are a very different product than beer or distilled spirits. Take the time and diligence to give careful consideration to the product formula, flavor, cost, packaging process and shelf life. Time spent in development will save you money and avoid problems as your project moves from idea to a finished product. 

  Selection of the packaging itself is important to give consideration to early during the planning and development phase of creating an RTD. The package itself will dictate the equipment used, the label on the package and many other key factors. Cans are by far the most common and affordable choice for packaging. Cans come in a variety of sizes, shapes and different liner types. A second option for RTD packaging is aluminum bottles. Aluminum bottles are closed with a screw cap or crown top. Aluminum bottles cost more than cans but aluminum bottles also are unique and provide differentiation to stand out in the sea of canned beverages. Volume and shape of the packaging must be selected early, as part of the TTB formula and label approval process must include this information. The options are numerous for packaging in most instances the best choice is to package in containers that are compatible with your existing equipment.

Packaging Lines

  Hopefully your business already has most of the equipment for packaging of RTDs. If you do not have all the equipment there are numerous vendors who build the equipment necessary to package RTDs. A few key components and pieces of equipment are essential to transform distilled spirits into canned cocktails. Below we have detailed equipment and steps needed to produce a carbonated canned vodka soda.

  A water filter is a key tool to produce clean and sterile good tasting to make a good cocktail.

A chiller and a brite tank are essential to build the product. The chiller provides the cooling capacity to bring a liquid down in the tank to the proper cold temperature, which makes it possible to carbonate the beverage and fill cans with minimal foaming. The product is transferred from a brite tank to a packaging line anywhere from 34 to 40 degrees F. A canning line is a complex piece of equipment that handles the movement of the liquid and cans in sequence to clean the cans, purge cans of oxygen, fill with liquid, then place a lid on the can and seal the can. Canning lines can vary in speed from producing a few cans a minute to over 100 cans a minute.

  Several manufacturers build reputable canning lines suited to canning or bottling RTDs. A critical component to consider before selecting your canning line manufacture is the beverage itself. Some packaging equipment is built to handle high levels of carbonation, while some equipment will only work with lower levels of carbonation. Determining the complete formula of your RTD is important to do before producing the product on the packaging line. It is prudent to discuss the specifics of your concept product with the equipment manufacturer, including product PH, carbonation level, gravity. 

  An alternative option to buying a packaging line for canning cocktails is to partner with a mobile canning company. Nearly every large city in the US has at least one company who offers mobile canning service. A mobile canner will come to your facility with all of the equipment needed to can cocktails. Mobile canning is an excellent choice if your business is looking to quickly produce products but might not have the space and or resources to install packaging equipment. It is important to consider the downside to mobile canning is the additional cost per item. The cost of packaging through a mobile canner is typically twice as expensive as canning using equipment that is owned.   

  There is also sometimes a cost per unit added to the total cost to hire a mobile canning company. The plus side of utilizing mobile canning is that there is no major capital investment in equipment required to get started which means you can start canning cocktails sooner rather than later.

  Creating canned cocktails is a challenging endeavor with strong potential for success if done well. There are many steps and much complexity to producing RTDs.  Developing a successful RTD will certainly be a challenging and serious project. Good equipment and knowledgeable people are the two most important things needed to get it done. Sales of canned cocktails are growing tremendously year over year. Take the leap and join the RTD revolution. Canned cocktails are the future of spirits and can be the key product to grow your beverage business.

  Kris Bohm is the owner of Distillery Now Consulting, who loves pursuing outrageous adventures. Bohm has also helped to create successful RTD products for Grand Canyon Distillery and Toddi Cocktails. He can be reached at distillerynow@gmail.com