Category: General

Mixology Meets Technology: Delivering Value Through Flavor Innovation

Cyndi

By: Doug Resh – Director, Commercial Marketing at T. Hasegawa USA

The alcoholic beverage industry has evolved in many ways in recent years, adapting to drastic changes in what consumers are looking for in their drink choices and the role that alcoholic beverages play in their lives. After years of the pandemic disrupting and influencing their relationship with alcohol, such as the growth of RTD beverages, at-home mixology and even a ‘drysolation’ low-ABV movement, consumers are cautious in their purchase decisions due to perceived economic challenges – yet still seek excitement and experience from beverages.  As consumers tighten their discretionary spending on restaurant dining and drinking, they are looking for the most value possible in their alcoholic beverage choices. The role of the flavor industry is evolving and becoming more critical than ever in encouraging product trial and experimentation through exceptional taste.

  According to Mintel research1, 80 percent of U.S. consumers feel that financial challenges would affect their alcohol purchase behavior, with more than a third of consumers citing reduced alcohol consumption in general and more than a quarter citing less alcohol purchase in foodservice. Decreasing patronage of bars and restaurants in favor of at-home mixology and drinking is a natural reaction to economic uncertainty, and North Americans are likely to continue increasing their consumption of beers, RTD cocktails, mixes and spirits at home in the future. To retain or grow their user base, brands need to continually explore creative new ways to demonstrate value to alcohol consumers, in the form of new flavors and products.

Premiumization Through Exciting Flavors

  One of the biggest shifts in alcoholic beverages resulting from economic concerns is that consumers have heightened expectations for the experience and flavor of their beverages and demand more from the category, especially when dining out. 

  In response to this shift, the prevailing trend within the alcohol industry is premiumization. Consumers are opting for ‘less, but better’ spirits, wines, beers and RTDs, and focusing on quality – buying fewer beverages to save money, but splurging for more expensive, premium brands and flavors. To many consumers, high-quality cocktails and RTDs are seen as ‘affordable luxury’ and an accessible way to treat themselves.

  One area that continually defines premiumization is compelling flavors, especially among cocktails, hard seltzers and RTD beverages. Consumer interest has never been greater in adventurous flavors,  many of which focus on delivering maximum flavor with minimum sugar. Foodservice mixologists are the forerunners of this trend, offering a broad range of sophisticated cocktails that go beyond the traditional citrus, berry and stone fruit flavors, exploring the exotic taste of botanical and floral notes and seasonal ingredients, spices and fresh herbs. Savory flavors have also grown in popularity, including chili pepper, basil and turmeric, since they help balance the sweet nature of many fruit-flavored beverages. Flavor manufacturers are focusing technology and resources on finely crafting these unconventional ingredients to produce great-tasting spirits that deliver the excitement that consumers are thirsty for in beers, RTD retail beverages or foodservice cocktails. 

  Beyond adventurous ingredients, both packaged beverage brands and foodservice operators are leveraging the power of nostalgia and fun in new flavor development. Indulgent ‘dessert’ cocktail flavors that tap-into nostalgia are growing increasingly popular, including s’mores, apple pie, churro, chocolate brownie and orange vanilla milkshake. Coffee has also experienced a major shift in demand over the last few years and is growing directionally in new product launches, including RTD “hard coffee” beverages, a fast-growing segment that is primed to appeal to younger adult consumers. Gen Z and Millennials are already decreasing their away-from-home coffee purchases and limiting alcohol intake, plus they are influenced by the influx of espresso-flavored martinis in bars and restaurants in recent years, which creates an ideal opportunity for brands to capitalize on with alcoholic RTD coffee products.

  While it’s no surprise that fruit flavors are popular across all beverage categories, the growth potential for fruity alcoholic beverages is in exotic varietals. To appeal to consumers who are seeking premium beverages, brands are going beyond traditional citrus and berry ingredients and tapping into the potential of international fruits in alcoholic product launches, such as Asian-inspired mango, papaya or dragon fruit. These unexpected ingredients encourage exploration and trial among consumers and brands are eagerly incorporating these tropical fruits in RTD spritzers, coolers and cocktails and specifically marketing these products for use in social occasions.

Leveraging Flavor Science to Deliver Value in Alcoholic Beverages

  The path to premiumization is paved by flavor enhancement technology, which is especially pronounced within the alcoholic beverage category. In recent years, several new technologies have advanced the science of beverage flavors, producing alcohol concepts with complex, intriguing flavor profiles.  California-based T. Hasegawa USA, a subsidiary of one of the world’s top food and beverage flavor manufacturers, is leading the industry in technology designed to optimize the way that alcoholic beverages taste, and even replicate the complex flavors of nature itself.

  Recently, T. Hasegawa introduced HASEAROMATM to the North American market. HASEAROMA is a proprietary novel technology that creates authentic sweet and savory flavors that reproduce the ‘first bite’ sensation of experiencing a food for the first time, packed with intricacy and nuances of flavor.

  “One of the many benefits of this technology is that it enables a higher level of specificity than other compounded flavors,” said Toshifumi Nozawa, associate director, sweet technology at T. Hasegawa USA. “While many brands in the past may have opted for a simple mango or peach flavor in product development, HASEAROMA can reproduce the specific flavor profile of an Alphonso mango or Ataulfo mango, or accurately reproduce the distinct taste of a white peach or Golden Jubilee peach. The expertise of our flavor chemists creating HASEAROMA allows us to refine flavors on a molecular level and develop products that stand out within the market and deliver value to consumers.”

  Development of HASEAROMA flavors includes an extensive sensory analysis process which isolates specific flavor molecules within food and beverages. Chemists then assemble these molecules to add depth of flavor, long-lasting mouthfeel and authentic aroma.

Lighter Libations: A Healthier Approach to Drinking

  Another major outcome of the pandemic was a notable increase in alcohol consumption for some consumers, juxtaposed with the complete opposite for others. According to a 2023 Mintel report, 17 percent of U.S. consumers are aware of and interested in a sober curious lifestyle, up four points from last year2.  More than 43 percent of U.S. consumers cited “a personal lifestyle change” as their reason for drinking less spirits, even above saving money (40 percent) or physical health (32 percent)3.

  While many of these consumers still partake in alcoholic beverages, lifestyle changes resulting from the pandemic have created lasting changes in their consumption patterns and tastes.  Despite impressive growth of non-alcoholic beverages – with more than 149 percent growth in mocktails on menus between 2020 and 2023, according to Mintel data4 – non-alcoholic beverages are not taking over. Consumers are simply taking a lighter approach to drinking by choosing low-ABV beverages that offer the intense flavor of favorite cocktails, wine and beer with less alcohol content. These options encourage moderation while still delivering enjoyment and refreshment, especially among younger consumers. Mintel research5 indicates that nearly 31 percent of adults who buy alcohol in the U.S. aged 22-44 seek out ‘healthier’ alcohol options, such as low-calorie and light beer, hard seltzer and lighter cocktails. The appeal in these products is a robust beverage flavor, often with lowered alcohol levels, for consumers who want to moderate their alcohol consumption or products with reduced sugar and carbohydrates.  

  This renewed interest in health and wellness has boosted demand for BFY (better-for-you) products, across all food and beverage categories – including alcoholic drinks in the form of low-calorie and light beer, hard seltzer and lighter cocktails. The appeal in these products is a robust beverage flavor, with lowered alcohol levels, for consumers who want to moderate their alcohol consumption while also reducing sugar and carbohydrates.  In addition to limiting sugar and carbohydrate intake, many consumers are interested in alcoholic beverages that offer functional ingredients with some type of health benefit. For example, numerous beer brands are exploring the use of adaptogenic mushroom ingredients, which claim to have anti-inflammatory benefits, while many RTD cocktails are leveraging green tea, berries and other superfoods that provide antioxidants and other tangible benefits.

  A key result of the moderation trend and shift toward healthier options is that consumers are more selective in their alcoholic beverages than ever before, which puts emphasis on delivering a heightened experience. When consumers are reducing their intake of alcohol, flavor becomes the key differentiator that leads to trial and continued purchase. The challenge that many brands face is creating clean-label alcoholic beverages that taste great with minimal sugar content while still masking the burning astringency of alcohol. Flavor manufacturers are leveraging innovative technologies and unique development processes to balance the requirements of a low-ABV and often low-calorie beverage.

  “When you remove an ingredient such as sugar or other sweeteners, the other flavors in a beverage become more pronounced or even modified,” explained Briana Tran, beverage applications technologist at T. Hasegawa USA. “Our task is to reformulate the beverage to recover the optimal flavor profile, using technologies that either mask certain unwanted notes, or amplify desirable flavors that are already in the beverage.”

  One such innovation that is being leveraged in the production of alcoholic beverages is T. Hasegawa’s BOOSTRACT®, which is a proprietary flavor modulation technology that recovers the kokumi mouthfeel and full-bodied richness. This rich mouthfeel is often lost in the filtration and distillation processes necessary to produce low-calorie fermented alcoholic beverages such as beer, wine, hard kombucha and malted liquor.

  “With this new technology, we’re able to isolate the most desirable flavors in a beverage and produce the ideal representation of that flavor,” said Tran. “For example, if we’re working on a strawberry profile, we can amplify the natural flavor that’s already there and produce a much bolder, true-to-life strawberry taste – even with low-sugar alcoholic beverages.”

RTDs and Hard Seltzers – the Epicenter of Flavor Innovation

  RTD alcoholic beverages have been on a growth trajectory since early in the pandemic, as consumers at home were looking for convenient variety and were willing to explore new products withing the RTD cocktail and hard seltzer categories. While many RTDs do focus on reduced sugar and other tangible health benefits, these products are typically outliers within the trend of reduced ABV beverages. Hard seltzers are one of the fastest-growing segments in the alcoholic RTD category, and the combination of flavored sparkling waters with fermented alcohol has grown enormously popular among younger consumers in recent years as a BFY option that still offers a convenient way to add variety to at-home drinking.

  RTDs are a prime source for flavor innovation. Since they are seen as “lower stakes” in price and offer ultra convenience, consumers are willing to explore flavors in the RTD alcoholic beverages category. Flavor innovation is especially welcome within this category, including bold profiles and special offerings. Nearly half of all U.S. consumers in a 2023 Mintel survey cited limited time seasonal flavors as the motivating reason for new flavor trial in RTD alcoholic beverages, including premixed cocktails, alcoholic teas, flavored malt beverages and hard seltzers4. More than a third of participants cited bold internationally inspired flavors such as horchata or mango lassi as their motivation for trying a new alcoholic beverage within these same RTD categories. 

  Regardless of changing consumer patterns, alcoholic beverages need to deliver excitement and refreshment. As consumers seek more from their cocktails, wine, beer and spirits, the flavor industry continues to innovate and meet this demand – helping brands adapt to shifting consumer preferences with attention-grabbing flavors which deliver an immersive taste experience.

Abita Brewing: Louisiana Life, in a Can

Cyndi
can of Abita beer on table with crawdads and corn cobs

By: Gerald Dlubala

About 30 miles north of New Orleans, in Abita Springs, Louisiana, the Abita Brew Pub sits on the original site of Abita Brewing, which opened its doors in 1986. The brewery quickly outgrew this site, and in 1994, Abita Brewing moved about three miles up the road into a state-of-the-art brewery that now produces over 151,000 barrels of beer and 9,100 barrels of their famous root beer. Their popular lagers and ales are still brewed in small, hand-crafted batches. Quite the success story, it is the perfect example of how a dedicated and passionate team of brewery professionals combines quality, community and pride in what they do to continually grow and increase demand for their unique, hand-crafted beers and sodas.

  The Abita Brew Pub is now family-run but remains closely connected to the brewery. The brewpub serves all traditional Abita offerings and is a priority account for new releases. Additionally, the brewpub serves food, some containing Abita beers in the recipes, while also providing expert advice on pairing Abita beers with different foods. Visitors can experience Abita Brewing’s historical roots while enjoying live music, great food and patio games, and they can also sign up for interactive events like Abita’s Painting on the Patio. 

  “It really is a museum of Abita’s history, and just like walking back into 1986,” said Heidi Guerra, vice president of marketing for Abita Brewing. “The brewpub still contains Abita’s original tanks, signage and historical memorabilia, and all of the photos, articles and signage on the walls illustrate Abita’s roots. It’s a really cool vibe and kept fresh while maintaining and paying homage to Abita’s beginnings. Then, you can drive probably less than three miles down the street to see the full brewery as it is today. The brewpub has all our beers on tap and in bottles and offers a wide selection of our brands. Unlike the brewery, where we bring in rotating local food trucks, the brewpub can pair your choice of beer with food from their full kitchen. The brewpub also uses our beer in its recipes and dressings. It’s a great way to learn about the styles of beer and experience how different beers pair with different foods. The brewpub is located directly in the town square, so it’s really a cute place to visit and just step back in time.”

Local Ingredients, Artesian Spring Water and Community Involvement Are Key

  “Hands down, we will always use local farmers and source ingredients locally where we can,” said Guerra. “This community has made us what we are, so there’s no question that we will help our community whenever and wherever possible. We use local produce like Louisiana strawberries and pecans in our beers. And I think that makes us unique in some ways, that we brew these high-quantity beers while continually sourcing local ingredients and helping our local farmers. It’s true to our roots. We like to consider ourselves Louisiana through and through, so one of our initiatives is to source locally. We’ve used Louisiana oysters in our oyster stout and Louisiana coffee beans in our coffee beers. Using pure, local ingredients in our beers and craft beverages instead of flavorings keeps our products exceptionally fresh. By sticking with natural ingredients, we don’t get that sugary, fruity, hard candy-type of flavor profile that some others do.”

  “And, of course, the water,” said Guerra. “Who could forget our water? It’s pristine, pure Artesian spring water drawn from our Southern Hills Aquifer. It’s a unique point of difference for us. We drill straight down into the system. The water is amazing. It’s the perfect pH for brewing. It’s also untreated, and when you research Abita and the water, you’ll run across stories about the water containing healing and medicinal properties. It really is a difference-maker, and here in Louisiana, we know how important the water is, so it leads us into being good environment stewards for the community.”

  Abita Brewing is proud to be a good steward of the environment and its community. Guerra says they regularly offer special releases in support of different causes and initiatives close to home.

  “We were one of the first breweries to donate money from beer sales after Hurricane Katrina happened, in the amount of a half million dollars,” said Guerra. “And we have rotating beer taps at our brewery for our Son-of-a-Saint initiative, helping fatherless boys in our city. That one is always on rotation in the brewery. But suppose someone comes to us with a cause. In that case, we will support that initiative, whether it’s donating beer, letting them use our facility for a fundraiser or in some other way. We brewed beer to raise funds to support Sierra Nevada during wildfires. We’ve supported the Pink Boots Society. We consider all initiatives brought to us and look to give back to the community. They’re the reason we are here.”

Passionate Employees & Open-Door Policies Keep Abita Brewing Fresh and Innovative

  Abita Brewing remains locally owned and operated throughout its tremendous success and continued growth. The passion and success of its employees are reflected in the diverse products and in-demand Abita beverage options.

  “We have a complete open-door policy,” said Guerra. “All ideas are welcome, no matter how far-reaching they may be. Employees can always text or call me. I have a whiteboard in my office where employees are free to jot down ideas for beers, names or whatever. And they do that. Our employees have a passion for craft brewing and for the industry. We have a Culture on Tap committee to ensure we’re listening to employees and giving back to them. We buy into them and their goals just as much as they buy into us and our goals. We meet every month and hear their ideas about everything, including employee appreciation, but it’s all about having a team that’s passionate about the industry. We work hard to play hard, and our team, from top to bottom, is always ready and willing to explore new ideas, packaging designs, flavor profiles and more. Our employees get excited about new things. Pictures get circulated as soon as someone sees something new in the brewery, and text messages fly around. We have really great communication amongst all of the employees.”

  Guerra says that problems are met with an all-hands-on-deck approach, which is demonstrated by the fact that she keeps her safety gear nearby in case there is a problem in the brewery that requires more hands.

The Ability to Play While Remaining True to the Brand Are Core Principles

  “Our brewers love playing around with things,” said Guerra. “Abita has a pilot brew system that we call the brewer’s playground, where they can play and experiment with different taste and flavor profiles or styles they want to explore. They are very creative and make time to work through whatever whim or idea pops into their head. They are also very open to whatever ideas others bring to them.

  “The Fluffernutter beer was an idea that stemmed from my son having a Fluffernutter sandwich at a friend’s house,” said Guerra. “They got to making it into a beer and putting it on tap, and people loved it in the taproom, so our Fluffernutter beer went into production. That shows how open and reactive our brewers are to new ideas. They listen, but then they get to work to make the ideas come to life and see if they work. You know, we were brewing fruit and high ABV beers in the 90s before it was cool, so we don’t mind taking a risk on certain things. But we do it in the format of playing around with it in the brewery, putting it on tap and seeing how people react to it. But at the end of the day, we still want to focus on our core brands for mass production because that’s what got us here, and that happens to be our fruited beers like Purple Haze, Strawberry Lager and our high ABV beers like Andygator®.”

  Guerra tells Beverage Master Magazine that they’ve been brewing their root beer since the 90s, and it remains their most sought-after soda. “Root beer is perfect for brewing,” said Guerra. “We use Louisiana sugar cane for an authentic Louisiana flavor and great taste. It’s really a great product, and it’s gone international, which is great and crazy at the same time. The root beer is our main soda, but we also do a vanilla crème soda as our root beer’s wingman. During seasonal times, we’ll make a King Cake soda. We do soda tours so kids can have a soda flight and feel involved when their family is here. We also have an NA option, our Hop Water, so we do dabble in other things. It’s available on our website and locally here in Louisiana, but for the most part, we like to stay within ourselves, creating brand extensions off of the products that we know and love.”

Sustainability and Green Principles Are Included in Every Facet of Abita’s Brewing Process

  Abita has a long history of energy conservation, recovery and reuse. Its brewhouse utilizes a self-sustaining EquiTherm system, wherein they capture the heat of their brew kettle exhaust system and combine it with heat produced during the wort cool down. That recaptured heat gets reused to heat water, creating an efficient cycle without biogas. Abita also has its own industrial wastewater treatment plant that generates energy. They use a Bio-Energy Recovery System (BERS) to treat their wastewater, resulting in a 95 percent reduction of load on the local sewage system and a reduction of solid landfill waste.

  From Abita’s glass packaging to its truck delivery fleet, Abita uses processes to reduce materials and decrease emissions. Local farmers utilize the spent grain and hops from the brewing process as feed for their cattle.

Abita’s Future Is Exciting, Innovative & Tasty

  “A lot is happening at the brewery right now,” said Guerra. “We just completed a brand refresh for our Strawberry Lager. We have our Beeracuda coming out in cans now rather than just bottles. And we’ve deemed this year “The Year of the Gator.” So, the focus is on our Andygator®, an easy-drinking, high ABV Helles Doppelbock, our Strawgator, a combination of our Strawberry Lager and Andygator®, resulting in another flavored high ABV and Alphagator, our nine percent ABV double IPA. This gives us an awesome gator trio to offer to consumers.”

Guerra said that because Abita Brewing is known for its fruit beers, it just makes sense that it also offers a new berry variety pack. The new pack includes their popular Purple Haze®, Barney, Strawberry and Blueberry flavors in a 12-ounce can variety package.

  “Other than that, we’ll continue to play around and see if something hits,” said Guerra. “We’ve been at this craft brewing stuff for about four decades, and we’re still excited about being in the industry and hope to be involved for another four decades, at least, because we truly love what we do. Not only are we a craft brewery but also a Louisiana craft brewery, so our big thing is just putting Louisiana life in a bottle. For those who are here, have visited Louisiana or want a taste of Louisiana, we continue to try to put it out there for them. We are a craft brewery, but we are also an advocate for the state.”

  To contact Abita Brewing, view a schedule of events, schedule a tour or plan a visit:

Abita Brewing Company

21084 Hwy 36 • Covington, LA. 70433

(985) 893-3143 • www.abita.com

Uncorking Accessibility:  Ensuring Your Website Complies with the ADA

Cyndi

By: Vanessa Ing, Farella Braun + Martel

In today’s digital age, having an online presence is crucial for businesses, including wineries, breweries, and other beverage companies. Accordingly, it’s essential to ensure that your beverage website meets federal standards for accessibility to avoid lawsuits and fines. In this article, we will help beverage companies understand how to comply with federal law and implement accessible features on their websites.

Why is web accessibility important?

In 1990, Congress enacted the Americans with Disabilities Act (ADA). It prohibits businesses open to the public (otherwise known as “public accommodations”) from discriminating against people with disabilities in everyday activities. These everyday activities can include purchasing goods and services, or offering employment opportunities. 

In March 2022, the U.S. Department of Justice issued web accessibility guidance, reiterating that ensuring web accessibility for people with disabilities is a priority for the Department. Relying on the ADA’s prohibition against discrimination and its mandate to provide equal access, Department of Justice emphasized that the ADA’s requirements apply to all the goods, services, privileges, or activities offered by public accommodations, including those offered on the web. The Department of Justice’s guidance was particularly timely given that many services moved online during the pandemic. 

In its guidance, the Department of Justice explained that people with disabilities navigate the web in different ways: for example, those with visual impairments might require a screen reader that reads aloud text to the audience.  Those with auditory impairments might require closed-captioning software, while those with impaired motor skills might require voice recognition software.  A website, therefore, should be compatible with the full range of such software. 

Is your beverage company a “public accommodation” business?

Public accommodations include businesses that sell goods and services, establishments serving food and drink, and places of recreation or public gathering.  Companies that sell drinks, wineries that offer a tasting room, or breweries that host events are all considered public accommodations.  Thus, those businesses’ websites must comply with the ADA by being accessible to people with disabilities.  

It is an open question whether beverage companies without a physical location open to the public must still have ADA-compliant websites. Some jurisdictions, like the Ninth Circuit (which has jurisdiction over Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington), have tied the necessity of ADA-compliant websites to the existence of a brick-and-mortar location (Robles v. Domino’s Pizza, LLC). However, the Department of Justice, along with several federal circuit courts of appeals, has taken the position that even a public accommodation business without a physical location must have an ADA-compliant website.  

Given the increased prevalence of online-only services open to the public, it is very likely that litigation over the next few years may resolve this open question.  In the meantime, it is wise for beverage companies to take preventative caution and ensure that their websites are accessible.  

What are some website accessibility barriers?

To ensure ADA compliance, beverage companies must be aware of common website accessibility barriers.  These include poor color contrast, lack of descriptive text on images and videos, mouse-only navigation, and more.  By addressing these barriers, beverage companies can enhance the user experience for people with disabilities.

Six examples of website accessibility barriers highlighted in the DOJ’s accessibility guidance include:

  • Poor Color Contrast: Ensure sufficient color contrast between text and background to aid individuals with visual impairments or color blindness. Use color combinations that are easy to distinguish.
Low/High Color Contrast
  • Use of Color Alone to Give Information:  Avoid using color alone to provide information.  Using color alone can be very disorienting for someone who is visually impaired or colorblind.  Someone who is colorblind might not be able to distinguish between shades of gray.  One solution might be to ensure that symbols conveying information are differently shaped.  
Graph showing the use of color alone
  • Lack of Descriptive Alternative Text for Images and Videos: Provide descriptive text (alt text) for images and videos, allowing screen readers to convey the information to visually impaired users. This makes your content more accessible and inclusive.
  • No Closed Captions on Videos: Include closed captions for videos to accommodate individuals with hearing impairments. Utilize manual or automatic captioning options and review the captions for accuracy.  Free options are available on the web.
  • Inaccessible Online Forms: Make online forms user-friendly for people with disabilities. Provide clear instructions before the form, ensure that a screen reader could recognize required fields and fields with special formatting, ensure keyboard-only navigation, use accessible labels for inputs, and display clear error messages.  Note that an image-based CAPTCHA is not a fully accessible way to secure your form; your CAPTCHA should offer users who are visually impaired an audio alternative.
  • Mouse-Only Navigation: Enable keyboard-only navigation on your website to assist individuals with motor skill impairments or those who cannot use a mouse or see a mouse pointer on the screen.  Make sure all interactive elements can be accessed using the tab, enter, spacebar, or arrow keys.  Use a “Skip to Main Content” link to ensure that users employing only a keyboard can easily navigate the website’s primary content. 

To implement these features, beverage companies should discuss accessibility concerns upfront with the web developer.  Beverage companies should keep in mind that posting a phone number on a website to call for assistance, as commonly utilized by businesses, does not sufficiently provide equal access to the website and the services or goods provided.

Who can sue beverage companies?

Non-compliance with ADA standards can lead to potential lawsuits.  Although some courts have held that a nexus must exist between a private plaintiff’s disability and the web accessibility barrier claimed, a private plaintiff may easily surf the web for websites that are inaccessible.  A private plaintiff may then file a lawsuit in federal court without first notifying the business.  Further, liability under the ADA is strict, which means that the intent of the business to comply is immaterial.  Thus, it is prudent for beverage companies to proactively address accessibility issues to avoid potential legal troubles.  

Private lawsuits under the ADA can result in injunctive relief (a court order to comply with the ADA) and attorney fees.  And in some states, like California, the state law version of the ADA may enable plaintiffs to demand monetary damages ($4,000 per violation of the ADA). 

Government involvement, while less frequent, is possible in cases involving national retailers.  If the Department of Justice observes a pattern or practice of discrimination, the Department will attempt to negotiate a settlement, and may bring suit on behalf of the United States. At stake are fines of up to $75,000 for the first ADA violation, and up to $150,000 for each subsequent violation.

What are the rules for website accessibility?

Although the ADA itself does not spell out the rules for website accessibility, several sources provide detailed rules that can aid beverage companies in building accessible websites. 

First, the ADA authorizes the Department of Justice to enforce the statute.  Accordingly, the Department develops and issues regulations explaining how businesses must comply.  Specifically, § 36.303 of the Electronic Code of Federal Regulations specifies that a public accommodation shall provide auxiliary aids and services when necessary to ensure effective communication with people with disabilities, and that a public accommodation should consult with people with disabilities whenever possible.  The Department also issues administrative guidance, such as its March 2022 guidance described above.  

Second, Section 508 of the Rehabilitation Act of 1973, which requires federal agencies to make their electronic and information technology accessible to people with disabilities, provides detailed guidance concerning the display screen ratios, status indicators, audio signals, and other accessibility features. 

Third, the Web Content Accessibility Guidelines 2.1 (WCAG 2.1), which were originally designed by a consortium of four universities, provide highly specific web accessibility guidelines grounded on the idea that information on the web must be perceivable, operable, understandable, and robust.  These guidelines are widely referenced in court cases and settlements with the Department of Justice, as the guidelines address numerous aspects of web accessibility and offer three different levels of conformance (A, AA, AAA). Beverage companies can consult the WCAG 2.1 guidelines (including a customizable quick reference guide, at https://www.w3.org/WAI/WCAG21/quickref/) to ensure their websites meet ADA compliance. 

Looking Ahead

Web accessibility standards evolve over time, with updates being released periodically. Beverage companies should stay informed about changes and updates to ADA compliance regulations. For example, the WCAG 3.0 is scheduled for release in the latter half of 2023, further refining accessibility guidelines.

In sum, by understanding and identifying web accessibility barriers, and implementing necessary accessibility features, beverage companies can enhance user experiences and minimize the risk of legal repercussions. Embracing web accessibility is not only legally required but economically prudent in the long run, as it enables beverage companies to cater to a broad and varied audience, and demonstrates a commitment to inclusivity in the digital realm.

Vannesa Ing headshot

Vanessa Ing is a litigation associate with Farella Braun + Martel and can be reached at ving@fbm.com. Farella is a Northern California law firm representing corporate and private clients in sophisticated business and real estate transactions and complex commercial, civil and criminal litigation. The firm is headquartered in San Francisco with an office in the Napa Valley that is focused on the wine industry.

Women Preserve History While Creating Their Own   

Cyndi
photo of two women pouring whiskey into glasses

By: Cheryl Gray

They own distilleries, take charge of day-to-day operations and hold court as master distillers around the globe. We’re talking about women in the spirits industry, breaking barriers and making it possible for other women to do the same.

  In this largely male-dominated industry, there is an increasing number of women who have earned major roles, from building distilleries to creating the blends that put those distilleries on the map. Those blends are either passed on from generation to generation or come in the form of new taste sensations. All are designed to appeal to an unquenchable consumer demand for innovation and tradition.

woman in front of a beer bar

Victoria Eady Butler can speak with authority on both subjects. She is the great-great-granddaughter of Nathan “Nearest” Green, a former slave and the first-known African American master distiller who taught Jack Daniel – yes, that Jack Daniel—how to make the legendary Tennessee whiskey that bears the Jack Daniel’s brand name. Daniel would later hire Green to be his master distiller, a historical link between the two men widely acknowledged by Jack Daniel’s parent company, Brown-Forman.

  Five generations later, it is Eady Butler’s turn at making history. She is the first African American master blender for a major spirits brand, Uncle Nearest Premium Whiskey, named after her great-great-grandfather. Eady Butler’s legacy is the foundation for award-winning bourbons and whiskeys branded by Nearest Green Distillery in Shelbyville, Tennessee. Since its brand launch in 2017 by founder and CEO Fawn Weaver, the company reports it has generated more than $100 million in sales, with products sold in all 50 states and 12 countries around the world.

  Eady Butler explains how Weaver brought her on as part of the company’s leadership team, first as the vice president of administration but soon thereafter, as its master blender.

  “I had no idea that this was down the road for me. Fawn Weaver, our CEO and founder, and I talked and she knew that I was considering retirement. Everything unfolded from that conversation. I retired from my previous career and started with Uncle Nearest within a few days. Now that I’m here, I fully get it. Whiskey truly is in my blood. To carry on a legacy that lay dormant for more than 160 years, it’s just unbelievable.” 

  Under the discerning palate of Eady Butler, the Uncle Nearest brand has won multiple industry awards while she has won consecutive top honors bestowed upon her by industry peers.

  “When our 1884 Small Batch launched in July 2019, the whiskey family took to it immediately and we started winning awards right out of the gate. So, I blended the second batch. The awards and accolades kept coming. Soon thereafter, I was elevated to master blender and have blended every batch since. Also, when I was named ‘Master Blender of the Year’ by the American Icons of Whisky Awards, I was the first female to ever earn the title.”

  Preserving the heritage surrounding one of Puerto Rico’s most famous exports, rum, is partly what drew Liza Cordero to the spirits industry. Cordero used her background as a chemical engineer to become master blender of the world-renowned Destilería Serrallés and oversee the distillation process of its Don Q rum, made in Puerto Rico for more than 150 years.

  Born in San Juan, Cordero knew early on that she wanted to be engaged in chemical engineering and was involved in both the petrochemical and biotechnology industries. She says that she found her true passion, though, in working with rums. For more than two decades, Cordera has been directly involved in the fermentation and distillation processes and is responsible for quality control at the landmark distillery. She describes how taking a chance turned into a rewarding new career.

  “The company was recruiting an assistant manager for the distillation and fermentation process area. As soon as I saw this, I did not hesitate to accept the challenge to work for the best distillery in Puerto Rico, which produces the best and most authentic Puerto Rican rum. In the 21 years that I have been working here, I can truly say that my decision was the right one!”

  Cordero describes her role at the distillery.

“I am the rum distillery master blender and work hand-in-hand with the First Maestra Ronera (Master Teacher), Silvia Santiago, who has been with the company for 50 years. I am responsible for developing Don Q products that follow today’s market trends, which can be enjoyed in cocktails and sipping rums, all while honoring Don Q’s origins. These products need to be different from others in the market, which we achieve by carefully selecting blends that will be part of our premium and flavored rums and choosing natural ingredients that will guarantee an outstanding tasting experience. In order for me to achieve what we want for rum aficionados, it is important to understand the differences among the aged rums that we have available. Each one has its own characteristic taste and aroma.”

  Cordero says her mentors include other women like Santiago, who have helped to guide her through the industry. The advice she gives to other women who want to enter the business is to the point.

  “Throughout my career, I have learned that in order to prove that women can equally execute and be involved in the same tasks and assignments that are performed by men, it’s important to employ your knowledge and experience, to prove your point and to take a position on matters. It is crucial that decisions are made based on something solid that can withstand any questions or critical analysis. They cannot be made based on opinions or personal points of views. It is in this way that women can earn respect, and that we get assigned to key decision teams and positions in organizations.”

  Valerie Colella is an award-winning single barrel specialist and national ambassador for Castle & Key Distillery. Most recently, Colella was recognized by the Bourbon Women Association as a finalist for the “2023 Brand Ambassador of The Year.”

  “As single barrel specialist, I help execute our single barrel program along with our very talented team in Frankfort, Kentucky, and I also have the pleasure of hosting our VIP industry and trade groups. As national brand ambassador, I help support our sales team across 24 markets by creating fun educational and pairing experiences for our partners and consumers.”

  Colella relocated to Kentucky after working in West Virginia at Smooth Ambler Distillery. Collela cites a key mentor who helped her to get her footing in the industry.

  “Most of my foundational understanding about what makes a craft distillery tick, I learned in my eight years from Smooth Ambler under head distiller John Little. He demanded a very high level of dedication and execution from all of us. He took great pride in the spirits we were producing in West Virginia, and so did we. Whether it was the retail or consumer-facing side of the business, distribution, sensory, analysis or branding strategy, he gave me so many opportunities to work really hard, learn and grow personally and professionally.”

  Collela points to women mentors that include Lisa Wicker, president and head distiller for Widow Jane of Brooklyn, New York, Sherri Carter, master blender and co-founder of Old Carter Whiskey Company based in Louisville, Kentucky and Jackie Zykan, former master taster for Brown Forman’s Old Forester and creator of the newly launched whiskey, Hidden Barn. Collela says the work these women have accomplished in blending and maturation inspires her.

  “When you’re navigating your own professional growth and you’re trying to find your footing or voice in a male-dominated industry, no one understands the challenges that come with being a woman in spirits except the ones who walked through the fire and helped pave that path. From Iron Root Republic to Milam & Greene and Uncle Nearest, so many ridiculously talented female master distillers, blenders and owner-operators are absolutely blazing all kinds of trails. It’s such an exciting time to draw inspiration from.”

  The number of women in the spirits industry keeps growing, Collela says, and the industry’s expansion requires new talent.

  “That being said, I think we’re going to see a diverse new generation of whiskey-makers, and spirit-blenders into the next decade. What we see across all aspects of the aged spirits industry is that there still continues to be an incredible demand for whiskey. There doesn’t seem to be a saturation point. NDP’s and distilleries keep on expanding, and there’s a whiskey for every palate. There’s not just the collector and the enthusiast anymore. Whiskey is becoming a multi- dimensional demographic.”

  Eady Butler of Nearest Green says that for women entering the business, tenacity is particularly important.

  “The key is to be committed, dedicated, eager to learn and put everything you hold dear into it. In addition, it’s imperative that you surround yourself with people who are knowledgeable, patient and in my case, willing to share their experiences and wisdom. The biggest thing is setting aside your fear of failure and just go for it.”   

Hand Barrel Bourbon: Three Friends, One Idea and the Perfect Partnership

Cyndi
photo of 3 small hand barrel bottles in different colors

By Gerald Dlubala

We’ve all heard the phrase about loving it when a plan comes together. When it’s a plan that three friends come up and run with, we love it all the more. And that’s just what happened to Jim Hand, Scott Pirello and Beorn Brueckner, founding members of Hand Barrel Bourbon Company.

“It kind of started when I got recruited by Scott Pirello, a college friend, to play on a men’s softball team,” said Hand. “Scott was working on a project to make cool bottles for packaging. I thought it might be cool to make a whiskey bottle that resembles a real barrel and fill it with quality whiskey to sell. The initial idea was honestly as simple as that.”

Hand and Pirello were both fans of brown spirits and always considered the whiskey industry an exciting arena. They also believed that their bottle idea might just be good enough to attain what would become their first goal of surviving their first year in business. Well, they’ve not only reached that goal, which occurred the last week of October 2023, but they’ve done very well in their first year with an idea that admittedly seemed backward.

“Our approach was different, going from packaging first to the product inside,” said Hand. “But getting into the spirits market without some huge backing is tough. We brought in a third partner, Beorn Brueckner, who attended high school with Scott. Beorn was the GM of a bar in Boston during the pandemic and was now looking for something else. His industry experience fits in perfectly with what we needed, and he currently runs many operations within the company. Scott is our CEO and numbers guy. Additionally, Scott has an entrepreneurial background and experience starting and selling businesses. Without him, there would be no Hand Barrel Bourbon. He had the know-how to start this thing up and run with it. I come from a software sales background and now handle the sales and marketing aspects of the business. So, that’s the whole company, three friends and equal partners.”

Using Unique Packaging to Tell a Story

Hand tells Beverage Master Magazine that it came down to three friends getting together with an idea for a different and unique packaging idea and decided to put premium bourbon into it to sell to the public. Hand says that they knew they would run the risk of consumers thinking their bottle may just be a gimmick to sell their product. But the Hand Barrel Bourbon bottles are instead a motif, providing packaging that tells a story of what is inside the bottle. 

“We sell our single barrel, small batch in the white barrel bottle, signifying the unique minerals and deposits found in the Kentucky water,” said Hand. “Our double-oaked comes in a black, charred finish bottle, signifying the barrels and type of exposure the spirit encounters along its journey. These are specific ingredients and attributes to Kentucky bourbon whiskey, and we want to recognize, respect and make note of those attributes through our packaging.”

Partnering with the Right Contract Distiller is Key

After settling on the bottles, packaging, and message they wanted to send, the group had to find a contract distiller. Hand says they didn’t have the time or capital to start up and wait five or six years, so the search was on to find the best partner for them and their situation.

“We happened into Bardstown Bourbon Company in Bardstown, Kentucky,” said Hand. “We tried their products, looked at their facilities and met the people behind the brand. From that day forward, they became the perfect partner and our contract distillery. It really was a slam dunk for us, and we are now completely vertically integrated with them. They are a state-of-the-art distiller with the best column in the industry. It is our mash bill that we use, a 64-24-12 sweet mash recipe. It’s not the traditional higher corn content (70 to 78 percent) of many bourbons. We wanted to try something a little different. There aren’t as many high-rye mash bills out in the market. We come in at 105 proof, which we believe is the sweet spot for bourbon and the perfect place to land. And because our bottles are preprinted, we don’t deviate from that number. Our barrels age at Bardstown’s facilities, and we use their blending team and bottling line. Our responsibility is to provide the mashbill, the marketing and the cool bottles to package our product.”

Hand says its goal is to provide a bourbon experience that positively appeals to all the senses, including touch, sight, hearing, smell and taste.

“We want our bourbon to be a total experience,” said Hand. “It’s an excellent-tasting, authentic Kentucky bourbon whiskey wrapped in a unique bottle that consumers will proudly display in their home or on their bar.”

One of those unique bottles was a special-release camouflage bottle.

“All three of us have connections or ties to the military somehow,” said Hand. “The camouflage bottle was our first special release and offered us the opportunity to give back 10 percent of sales to the Special Operations Warrior Foundation (SWOF) to benefit families of our fallen Special Operators. We feel that anytime we can give back to one of our military organizations, it’s absolutely worth it. It was a huge success, and we’re looking into other partnership releases. We’re considering things like NCAA or professional sports teams as well as personalized bottles for special occasions”.

Hand says their bottles would make perfect gifts for weddings, groomsmen’s and bridesmaids’ gifts or to celebrate and commemorate special occasions for clubs, groups and organizations. He also mentioned single-barrel picks to make the occasion even more distinctive.

“The bottle is one thing we can change to meet our customer’s special occasion needs,” said Hand. “That’s our edge in the marketplace. You can really only stretch one mash bill about three different ways, ending in a small batch, single barrel and double-oaked, similar to what we did. But we can also change the bottle to create something unique, distinctive and special for our customers.”

Pinpoint Focus and Smart Decisions Will Shape the Future

“We’ve been in business and on shelves for over a year now,” said Hand. “We started in just two states, Massachusetts and Kentucky. We had a minimal release our first year, maybe 6,000 bottles, and sold out within the first two to three months. That was a testament to the acceptance of our idea and gave us the confidence to try to gain market share. We’ve since added 19 more states to our distribution areas and are looking toward expansion and continued growth. We’ve had talks with Canada, South Korea and Japan, who all have interest in our bottles.”

“You know, we have a potentially wide footprint with customized bottles,” said Hand. “It’s a lot of fun, but it’s also very daunting because we can go in many different directions. Since our path can go in so many different and diverse ways, we, especially as a small business, must focus on the best opportunities for us. If we have so much as a flop of 2,000 to 3,000 bottles, it would be very detrimental to us. We have to be careful about our choices and focus on what we need to do to build our business and gain customer commitment. We have to focus on who can commit to the best volumes early to get that extra volume and padding for us as a business. We’d love to eventually be able to do as little as six to 12 bottle orders for weddings or parties with names and dates, offering that custom gift for the guy or girl who has everything.”

Joining the Welcoming Community of Distilled Spirits

“The biggest surprise I’ve had along this journey is the general welcomeness of the bourbon industry. I mean, it really has been noticeable,” Hand said. “I was sitting with other bourbon reps trying to launch a market, and we were all sharing drinks, ideas and information. Unlike some other businesses, there weren’t any highly secretive behaviors or unwillingness to share our experiences. It helps everyone to grow with a better chance of success. This industry uniquely welcomes newcomers; everyone I’ve come into contact with has been willing to help and give quality advice. This industry is such a big piece of the overall spirits pie that we can all succeed. It doesn’t have to be one or the other, which is a truly refreshing and beneficial approach. Spirits consumers traditionally welcome variety. We love to build our bar cart with a variety of diverse brands. It’s just fun to build your display to share with friends, whether for a hobbyist or a serious collector. It’s a pretty straightforward sales approach.”

Displaying Products Together Boosts Sales

Hand tells Beverage Master Magazine that he learned a ton about the industry, which was expected. What sticks out for Hand and the other founders of Hand Barrel Bourbon is that along their path, they’ve noticed a distinct advantage to having all their products together on a shelf displayed as a suite or grouping. Because of their unique bottles and the meanings behind those bottles, when the products all stand together in unison on a shelf display, they combine to show and tell a story that ultimately leads to an increase in sales. Hand Barrel Bourbon’s sales are better when their products stand together, even if that means giving up less width on the shelf in return.

“When it comes down to it, we are just three friends who raised a little bit of money and came up with an idea that we thought was pretty cool, and we want to make an impact on the market with quality products that we are proud to offer, and that consumers are equally proud to own.”

Find more information on Hand Barrel Bourbon at www.handbarrel.com.

Flavored Malt Beverages: Origins and Applicable Federal Regulations

Cyndi
6 bottles of different beers lined up on a table

By: Brad Berkman and Louis Terminello, Greenspoon Marder

There is a strange concoction that lurks within the bowels of the brewer’s tank. It is formed with malt, but is not beer, it is something other whose mere mention may frighten beer aficionados to the essence of their being. This mysterious liquid soon slithers through tubes and to the bottling line where 12oz bottles are filled with this ethereal liquid. The bottles make their way to the grocery shelf where it is soon removed from its cold box perch to the refrigerators of eager consumers. There the potion rests until its top is popped and it’s brought to the lips of the drinker. A first sip and this bottled creature metamorphizes to a glorious nectar, causing a love affair that is reflected in astounding Nielsen numbers. To the disappointment of any beer geeks, the flavored malt beverage or FMB is a darling of the brewing industry, not for its purist nature but for the sound of jingling coin that comes from the brewer’s pocketbook after each batch is made and sold and drank and asked for more of. The FMB is a clear consumer favorite.

  The FMB as a category, has an Alcohol and Tobacco Tax and Trade Bureau (TTB), codified definition. Before we get there, however, the reader should be aware that the style of drink isn’t a new phenomenon. The drink made its way first on to the shelves of certain European countries in the late 1990’s, among other places, and caused quite a bit of controversy for its generally sweet flavor profile, small bottle size, and perceived target audience.

Of course, it bears refreshing the memory that these drinks were and are offered as beer alternatives. They are meant to be, in most iterations, a light, flavorful alternative to traditional beers. Initially, they were referred to as alcopops, and now are more commonly called Ready-to Drinks or RTD’s (there are many drinks formulas that fall into the RTD category, including spirits based and non-malt based (see hard seltzer), but certainly FMB’s are a leader in that general category. Another publication reports that beer RTD’s “make up the vast majority of overall RTD’s sales with 42.7% of RTD dollar sales coming from FMB’s.  

  Some early precursors to contemporary FMB’s, the reader may recall, were Smirnoff Ice, WKD and Hoopers Hooch. In fact, this writer recalls from his prior career in “the industry”, travelling to the UK and witnessing the small cold-boxes stationed below virtually every back bar and thinking that the English will drink anything and wondering how long it will take before these drinks make their way across the Atlantic to the shores of the United Sates. Woe is me, if I only had bought stock.

  Well, the answer to the above question is, arguably 1993 with the introduction of Zima by the Coors Brewing Company. Buffs of the history of the drink will clearly remember Zima, (and the pun is intended), as the first clear, citrus-like malt-based beverage to make its way onto the beer shelf. Offered as a light alternative to beer, it had a modicum of success at introduction, but its popularity faded quickly (it was in fact re-introduced in 2017 but sales quickly sputtered out).

  The origins of RTD’s likely stemmed from restrictions on the activities permitted on the brewing premises by federal law. Creative brewers looked to unique formulations using permitted brewers’ ingredients only. A driving force behind limiting ingredients and production processes at a brewery is to ensure that tax revenue generation is not jeopardized. As the reader likely knows, malt is taxed at a different rate than wine which is taxed at a different rate than spirits and never shall the thrice be combined.  I point the reader to the following section of the Internal Revenue Code (the IRC):

26 USC 5411:

  The brewery shall be used under regulations prescribed… for the purpose of producing, packaging, and storing beer, cereal beverages containing less than one-half of 1 percent of alcohol by volume, vitamins, ice, malt, malt sirup, and other byproducts and of soft drinks; for the purpose of processing spent grain, carbon dioxide, and yeast… and for such other purposes as the Secretary by regulation may find will not jeopardize the revenue.

  As we see from the above the purpose of the brewery premises is limited to the production of beer and storing certain brewing materials. Also, the code section below has arguably a more profound limiting effect on the materials permitted on the premises. But here, I caution the reader to pay careful attention to subpart (b) of the following and different code section. It is here that lays the codified origin of the FMB.

 § 25.15 Materials for the Production of Beer

(a) Beer must be brewed from malt or from substitutes for malt. Only rice, grain of any kind, bran, glucose, sugar, and molasses are substitutes for malt. In addition, you may also use the following materials as adjuncts in fermenting beer: honey, fruit, fruit juice, fruit concentrate, herbs, spices, and other food materials.

(b) You may use flavors and other nonbeverage ingredients containing alcohol in producing beer. Flavors and other nonbeverage ingredients containing alcohol may contribute no more than 49% of the overall alcohol content of the finished beer. For example, a finished beer that contains 5.0% alcohol by volume must derive a minimum of 2.55% alcohol by volume from the fermentation of ingredients at the brewery and may derive not more than 2.45% alcohol by volume from the addition of flavors and other nonbeverage ingredients containing alcohol. In the case of beer with an alcohol content of more than 6% by volume, no more than 1.5% of the volume of the beer may consist of alcohol derived from added flavors and other nonbeverage ingredients containing alcohol.

  The above code section limited the amount of alcohol from flavors and nonbeverage ingredients containing alcohol to 49% but that didn’t stop brewers and drinks makers from creating unique products with malt base and taxed at the beer rate, making for a competitively priced product on the beer shelf. In fact, TTB permits the use of mixed cocktail names such as Margarita or Moscow Mule on malt-based products that resemble these cocktails. Many brewers have done a fine job of emulating these mixed drinks flavors under the FMB rubric. Of course, that hasn’t stopped consumers from bringing civil actions against producers arguing that these drinks have been mislabeled and are untruthful but that is a topic for another days.

  I’m sure it’s obvious to the reader that the hard seltzer craze finds its origins in the FMB category, many of which, but not all are malt based. The bottom line here is that this category of malt beverage finds its roots in three factors; consumer demand for variety of taste profiles, the brewer’s ability to create these brews within the confines of government tax revenue regulations and using ingredients that do not jeopardize revenue collection w maintaining the desired shelf price. This writer for one looks forward to watching how consumer demand for unique flavors pushes brewers to come up with creative FMB formulas which surely will lead to greater excitement in the category.

Technical Break Down for Single Malt Whiskey Production

Cyndi
Photo of whiskey decanter half filled with whisky with 2 whiskey glasses partially filled with whiskey on a table

By: Kris Bohm of Distillery Now Consulting

Single Malt whiskey is a lively distilled spirit that is produced in countries all around the world. There are many ways to make single malt, and in this two-part article we discuss, in depth, just one of those ways. Distillers have very creative processes, and this is the reason that when you taste whiskey at different distilleries, they rarely taste the same.  In this two-part article we will go through the start to finish process of making malt whiskey and break down the classic method of the production of single malt whiskey.

  Single malt whiskey production was first developed and refined in Scotland over several hundred years and the results of that production method produced some of the finest single malt Whiskey in the world. We will now break down step-by-step this method to better understand the processes that were developed by distillers who came before us.   First, let us define American single malt whiskey as it does have legal definitions and requirements on how this whiskey can be made.

  American single malt is made from 100% malted barley. This precludes malt whiskey from being made with corn, rye, wheat, or any raw barley that has not been malted. The malted grain contributes considerably to the overall character and flavor of the spirit and is what differentiates this whiskey from American bourbon or rye whiskey.

  The second aspect of American single malt whiskey that differentiates it from American whiskey is that single malt can be aged in used barrels or new barrels. Used barrels contribute far less flavor and character to a spirit than new American oak barrels do, such as those used for bourbon production. Single malt whiskey is required to be distilled entirely at one distillery.

table showing the malt whiskey ingredients and its corresponding quantity and information

  Now that we have defined single malt, let us break down the steps of how single malt whiskey is made and how they emulate the methods used for its production in Scotland.

  The specific types of equipment that are used in the production of single malt play a strong role in the flavors that exist in malt whiskey. A mill is used to crack the malted barley into smaller pieces to aid in sugar extraction and this is typically done by a roller mill. While most whiskey mashing uses a cooker to process the grain in malt whiskey production a lauter tun is used instead of a cooker. The lauter allows for separation of the malted barley from the liquid that the grain is steeped in. The product produced by a lauter is a clean fermentable liquid that is free of grains known as wort. The wort is transferred from the lauter through a pump and through a heat exchanger.  This transfer removes all the wort from the lauter and cools it off in the process then further pumps the wort to a fermenter. There are multiple diverse types of fermenters that can be found in distilleries from open top to closed, stainless, wood and everything in between. The most critical part of a fermenter is that it is sized appropriately to hold all the wort that is produced from the lauter.  The fermenter serves to hold the wort while the yeast ferments it and converts the sugar into alcohol to produce a beer suitable for distilling.

  It is important to point out details about the lauter before we move on to the nuances of production methods. Use of a lauter is essential as opposed to a cooker in malt whiskey production. When a malt whiskey is produced in the grain on method such as how bourbon is produced, the tannins in the barley husk will negatively impact the flavor of the whiskey.

  First is the process of the production of single malt from a bag of malted barley to a distiller’s beer ready for distillation. This recipe example has the potential to produce a single full-size barrel of whiskey. (See Recipe Breakdown chart above)

  Now, we will go over the details on how this process is completed in a single vessel lauter tun. It is important to stress that these quantities and numbers are wholly dependent on the specific equipment being used. It will take testing and trials to determine optimal water quantity, temperatures, and minerals to optimize operation of the equipment. It is best to assess and confirm the operation of equipment and holding temperatures prior to your first mash. If everything is fully assessed before mashing, you should be able to have a successful first mash to make single malt whiskey. It is extremely helpful to develop written operating procedures on your mashing process to create replicable results for every single mash.

Malt Whiskey Mash Operating Procedures

•    Mill in grain per mash bill, Check quality of grind to insure proper crack

•    Add 50 gal of 160-degree water to lauter tun cover false bottom plus minerals for Ph adjustment

•    Turn rakes on and add grain to lauter with 300 gallons of water through hydrator

•    Once fully grained, check temperature of mash and adjust as needed. Target temperature is 150

•    Turn rakes off and let mash rest for 30 minutes

•    Slowly start run-off of wort into grant, but do not rush this process or the mash may get stuck

•    Run-off wort till grant clears, then reconfigure manifold to run off wort to kettle

•    Confirm cooling is functional on heat exchanger

•    Start run-off of wort from lauter tun through heat ex and to fermenter

•    When 50% of wort is run off start sparging with 165-degree water

•    Continue to run of wort slowly till lauter tun is empty of wort or fermentor is full

•    Aerate wort prior to pitching yeast and check plato or brix now

•    Pitch 500 grams Yeast into each fermentor per manufacturer’s instructions

•    Set temperature controllers on fermentor to maintain temperature

•    Check plato daily till ferment is complete, (should take 3-5 days)

  When the distiller’s beer has completed fermentation, then it is ready to be distilled.

  There are more steps involved in the distillation process we must complete before we reach a delicious dram of whiskey. In the second part of our article we will cover the process of distillation and maturation methods of malt whiskey in depth as we finish taking this distillers beer and turning it into whiskey. Single Malt whiskey is a fast-growing category of spirits in North America and has ample space for your distillery to contribute to. If you are considering making single malt whiskey, now is the time to do it.

Top Sustainability Practices for Breweries and Distilleries

Cyndi
2 beer mugs full of beer in front of a sunset

By: Alyssa L. Ochs

Protecting the environment and conserving resources have been topics of increasing interest and importance in the craft beverage industry lately. Although these considerations may take a little extra time and effort for business owners and staff, implementing eco-friendly practices has many long-term benefits, such as attracting like-minded consumers, saving money and contributing to a healthier planet.

  Some sustainability practices appeal to craft beverage producers more than others because of their ease of setting up, affordability and projected impact. Review these ideas and examples with your team to discuss a new and improved approach in the new year and to determine whether they might complement your future brewing or distilling practices.

The Importance of Craft Beverage Sustainability

  Unfortunately, the traditional processes of brewing and distillery are not inherently eco-friendly. It takes significant water, energy and other resources to make just a single batch of beer or spirits. Yet there are ways for producers to get creative and offset their costs while being responsible community businesses, too. This concept is critical because the continual production of high-quality beverages depends upon reliable waste elimination and efficient resource utilization.

  In addition to simply feeling good about the beverage production process and attracting consumers who care about the environment, sustainability can have unexpected effects in a craft beverage setting. Producers can increase profits and protect supply chain ingredients by conserving resources and reducing waste. Sustainability measures can contribute to a safer work environment if fewer potential toxins are in workspaces. Additionally, breweries and distilleries can minimize their usage of natural resources, add value to the local community and partner with environmentally conscious groups to create a greater culture in the community around sustainability.

Ideas for Your Brewery or Distillery

  Following the examples of other craft beverage producers and brainstorming your own ideas, there are many ways to take an eco-friendly turn in production for the new year. For example, producers can upgrade their packaging systems to use biodegradable six-pack rings for cans. They can prioritize using local ingredients, reuse waste water and inquire into the costs of solar panels. Waste reduction projects, water-saving technologies and land stewardship programs can promote sustainability in a distillery or brewery. A couple of ideas that incorporate sustainability, philanthropy and community involvement are donating spent grain and hops to feed local livestock and participating in a tree-planting effort.

  Brewers and distillers work with various vendors and suppliers in the course of regular business. Therefore, one idea is to vet all companies about their internal sustainability guidelines to address the broader impacts of packaging, transportation, water and emissions. Distilleries can focus on sourcing local ingredients by purchasing barley and rye close to home, partnering with local farms to send spent grain to feed cattle on nearby farms and installing closed water systems that recirculate water to operate stills. Including a page dedicated to sustainability on your brewery or distillery website can help consumers learn more about the eco-friendly efforts you are working on and connect with your brand on a more personal level based on shared interests.

  Here are some additional ideas to inspire your internal conversations about becoming a more sustainable producer:

•    Train staff how to read the water meter and about water usage

•    Monitor groundwater with annual water quality testing

•    Check for plumbing leaks regularly

•    Install a closed-loop cooling system for the fermenter

•    Use low-flow toilets and auto-flush sensors in taproom bathrooms

•    Use a nitrogen generator to clear hoses and lines instead of carbon dioxide

•    Utilize low volatile organic compound (VOC) paint, flooring, and furniture

•    Use LED lighting throughout the brewery or distillery

•    Install energy-efficient windows, doors and skylights

•    Install insulation jackets on hot water pipes and water heaters

•    Recycle as many materials as possible during production

•    Offer employees incentives for biking, walking, or using public transportation to work

Examples of Sustainability Practices

  One example of a producer prioritizing sustainability is New Belgium Brewing in Fort Collins, Colorado. This prominent producer was the first brewery to join 1% for the Planet and commit a percentage of annual sales to environmental causes. It also became the first carbon-neutral-certified major brewer and is a Certified B Corporation, a designation that holds organizations to high environmental and social standards. Another notable Colorado brewery is Mountain Tap Brewery, which has worked to lower its carbon footprint by buying malt and hops from local growers so that ingredients don’t have to travel as far to reach them.

  Meanwhile, Beerburg in Austin, Texas, is committed to responsible sourcing ingredients through partnerships and land conservation. Beerburg’s beers feature ingredients foraged from its own land. It also has committed to creating a zero liquid and solid waste facility that provides its own water and energy. Some breweries, such as Alaskan Brewing Company in Juneau, Alaska, have used CO2 recovery programs to address the issue of carbon dioxide produced during the production processes. To promote the oceans and waterways around Alaska, this brewery donates a portion of its Icy Bay IPA to water and coastline cleanup efforts across the markets it serves.

  Moving across the country, many breweries and distilleries in Virginia have added eco-friendly practices into their operations. For example, Lickinghole Creek Craft Brewery sources its water onsite, contributes to river cleanup efforts and collaborates with organizations to build wells in other countries with water supply issues. At Virginia’s Catoctin Creek Distillery, a large percentage of electrical usage comes from solar energy, and excess solar power generated goes back to the local grid to support other homes and businesses.

  The Appalachian Gap Distillery’s sustainability efforts extend to utilizing a solar array and donating liquid stillage and waste grains for cattle feed on local farms. Located in Middlebury, Vermont, Appalachian Gap became America’s first climate-neutral distillery and also promotes sustainability with its insulation, windows, doors, heaters and water conservation process. Other producers that serve as sustainability models include Bozeman Spirits Distillery in Montana, which sources water from the local snowmelt, and Five & 20 Spirits and Brewing in Westfield, New York. Five & 20 is the state’s first combination brewery/winery/distillery. Industry leaders have recognized the producer for combining stillage, spent grains and wash water byproducts with wood chips to create a protein source to feed various types of fish. There’s also Frey Ranch Farmers & Distillers in Fallon, Nevada, which practices a 100 percent farm-to-glass model. Frey Ranch sustainably grows 100 percent of its whiskey grains onsite and offers behind-the-scenes tours for visitors to learn how whiskey is created from these homegrown grains.

Sustainability Resources for Producers

  If your brewery or distillery is interested in trying out some new sustainability practices, numerous companies, government agencies and consultants are available to help. For example, the Connecticut Department of Energy & Environmental Protection is committed to assisting statewide breweries with their interests in reducing pollution, promoting energy efficiency, lowering greenhouse gas emissions, minimizing waste and using less toxic cleaning products. The agency offers a free and voluntary Connecticut/New England Environmentally Sustainable Craft Beverage Program that extends beyond just Connecticut and involves partnerships throughout New Hampshire, Maine, Massachusetts and Rhode Island. Local government resources are also available to learn about preventing pollution, applying for small business energy saving programs and free assistance for reducing waste in a brewery or brewpub.

  The Brewers Association, a nationwide nonprofit trade organization, is a source for craft beer research and service grants to help breweries improve their sustainable growth. Specific sustainability priorities for its industry grants include the following:

•    Understand best practices and payback in hop and barley production, which enhance soil sequestration of greenhouse gases

•    Innovate packaging materials, including reduction of plastic, materials collection or recycling and reusable containers that reduce greenhouse gases

•    Benchmark malt house water and energy utility intensity rates

•    Develop new materials and compare the quality outcomes of hops packaged and stored in recyclable alternatives to Mylar foils over time

•    Study climate resiliency of North American hop and barley production, especially as crops broaden and diversify into minor growing regions and breeding efforts that address climate adaptation

•    Research environmentally safe alternatives to current clean-in-place chemicals commonly used in the brewing industry

•    Identify areas of efficiency improvements for small-scale carbon dioxide recovery and direct air capture

  Meanwhile, the Distilled Spirits Council of the United States is an Energy Star partner and offers member-spearheaded environmental sustainability efforts through a taskforce focused on advocacy and policy reform. This organization’s current strategies include land stewardship, responsible water use, energy reduction, circular material syncing, waste reduction and evaluating transport burdens.

For further assistance with “going green” as a brewery or distillery, you may want to look into these resources to make a connection or find inspiration:

•    First Key, consultants to the brewing and beverage industry

•    Green Brewery Project, a nonprofit sustainability consulting venture

•    Lueders Consulting, expertise for the brewing industry

•    Cornell Sustainability Consultants, sustainability-focused student group

•    Heather Paulsen Consulting, sustainable business consulting

•    Campden BRI, brewing environmental services

•    Pure Water Brewing Alliance, dedicated to brewing beer with recycled water

•    Brew Recruit, brewing and beverage manufacturing consulting services

Company Distilling: Gather, Eat and Drink

Cyndi
Photo of Company Distilling's building from the front

By: Gerald Dlubala

Strolling into Townsend, Tennessee, on the peaceful side of the Smokies, you can’t help but notice the relaxed atmosphere. Located at the base of the Smoky Mountains, Townsend is an outdoor activity hotbed featuring some of the best hiking, mountain biking and camping you’ll find. Along the main parkway, you’ll also come across a unique, welcoming, 4,000-square-foot glass-enclosed building with a back patio with games and outdoor seating. Look a little closer, and you’ll recognize the shimmer of distilling and brewing equipment gleaming through the massive windows. This is the home of Company Distilling, and we’re all invited inside.

  Jeff Arnett, the Master Distiller of Company Distilling, was with Jack Daniels for 20 years, 12 of those as a master distiller. Although demanding, it was a dream job, and he loved the people he worked with. But after expanding the Jack Daniels portfolio from three to 11 products and winning “Master Distiller of the Year” in 2017, Arnett felt the urge to build his own brand from the ground up. At Townsend’s annual Grains and Grits Festival, a yearly event on the first Saturday of November featuring locally produced spirits and food, that urge began to pick up steam.

Photo of Jeff Arnett, Mater Distiller of Company Distilling

Great Location & Great People Produce Great Products

  “I thought Townsend was a beautiful location,” said Arnett. “I knew the people there, and I knew they were interested in having a distillery in Blount

County. I knew that you need great people to produce a great product. After talking with other distillers, they all pushed their chips in, so we had distillers who could make whiskey, gin and beer. We also had GM experience within the group, so as friends with a common goal, we decided to take a leap of faith and create Company Distilling. We’re not the first distillery in Blount County, just the first legal one.”

  “The name for Company Distilling was inspired by the pandemic when we all had to rethink how we were gathering and how we could get together with our families,” said Arnett. “We couldn’t just go to restaurants or bars and order what we wanted anymore. We entertained and gathered in our homes with those we held dearest. They were moments to be cherished and shared, so we wanted to make a product that reflected that sentiment here at Company Distilling. When I was little, my mom told me to clean my room and shower when company came. You put your best foot forward for the guests that come to your home. We made a product that, once discovered, you want to share with your closest friends and family. It was natural that we call ourselves Company Distilling to reflect that attitude. It became our inspiration.”

  Arnett wanted to explore wood finishing. He started doing it at Jack Daniels on a small-scale distiller series. One of the eight new products he brought into Jack Daniels’ portfolio was the No. 27 Gold. It was double-barreled and double-mellowed using maple barrels and charcoal, along with the original white oak barrel. Arnett said that it was one of the best products that they made. However, the maple barrels tended to leak more, losing more liquid and driving costs up. The process needed improving. Arnett worked to modify the process, and after several years of development, it has created additional opportunities to replicate a double-barreling method using non-traditional barrel woods. This proprietary process allows Arnett to offer products containing a new and natural range of character and flavor without additional additives.

  “As a distiller, you want to work with water, grains, yeast, oak barrels and woods as much as possible to create nuance and character,” said Arnett. “There are three native forms of American whiskey known to be created in the United States: Tennessee whiskey, bourbon whiskey and rye whiskey. We wanted to respect and reflect that history with three successful, wood-finished products and offer flights for comparison. Our first product was our straight bourbon whiskey finished with maple, and now we offer our straight rye whiskey finished with cherrywood and our straight Tennessee whiskey finished with applewood. These perfectly demonstrate how our natural, wood finishing process builds unique character and flavor enhancements.”

Company Products for All Tastes and Occasions

  Company Distilling also produces the Ace Gap brand of flavored spirits. Although Company’s brand is not about mason jar moonshine, East Tennessee is a hotbed for it. With Ace Gap flavored spirits, Company stays true to the Smokey Mountains history and Tennessee’s moonshine roots.

  “Before forming the Smokey Mountains National Park, loggers were cutting trees in what is now known as the Ace Gap Trail,” said Arnett. “There was a still out there, and the loggers would sit around, play cards and drink their shine. To honor that, the GPS coordinates for Ace Gap are on the back of the Ace Gap bottles. Our flavored spirits are available in eight flavors and, more importantly, are very cocktail-friendly in contrast to true moonshine. When Townsend is full, there are about 15,000 people in the campgrounds, including many families. We wanted to offer a product that allowed the campers to make a simple cocktail in the campground with ingredients they may already have or could easily pick up at the market, like lemonade, limeade, cream, tea, milk or whatever. Our flavored spirits taste like what the labels say they taste like, without the traditional corn nose and note of traditional moonshine.”

  In addition to the Townsend location, Company Distilling has a smaller site in Thompson’s Station, south of Nashville. The Thompson’s Station location distills their Ghost Rail Gin, which won “Best Gin” at the 2021 Ascot Awards.

  Company Distilling is a true brewstillery, offering six beers brewed in-house and on tap for visitors, thirsty campers and parched mountain bikers. For those that prefer a cold, refreshing, locally made, great beer, choices include Fest Bier, Kolsch, American Lager, Black Rye IPA, American IPA and a New England IPA.

  “We took out the traditional mash cooker and fermenter system and replaced it with Deutsche equipment to make 3 ½-barrel batches of beer,” said Arnett. “You have to make beer first and then distill it into whiskey anyway. The two processes are pretty well tied together, but we included lagering tanks, a boiling kettle, the lauter tun and everything you need to get grain solids out and pasteurize and make high-quality beer.”

You’re Not Just a Visitor, You’re Company

  Walking into Company Distilling in Townsend, you are immediately taken by the massive windows looking into the production area and providing spectacular views of the surrounding landscape and mountains. Live music enhances the experience on weekends. Of Company Distilling’s 4,000 square feet, one quarter of it is production space viewable through large glass panels. Here, you’ll likely spot Arnett and his team hard at work getting things just right. Both locations feature tasting rooms, bottle shops and cocktail menus.

  Along with regular tastings, visitors can fill a bottle and enjoy a premium tasting with the master distiller experience at the Townsend location. A small service kitchen, the Amico Deli, provides hot and cold food. Having had lunch and experiencing the exceptional folks and customer service at the Townsend location, I can tell you that they really do treat everyone as welcome and cherished company, and the food is on par with their handcrafted spirits and beer.

  “We want to share our success with everyone else around here because, ultimately, that’s what it is all about,” said Arnett. “Townsend has a lot of green space, where people come to tube the river, mountain bike and hike. We cater to outdoor enthusiasts by making our distillery a glass box that connects to the outdoor landscape and beauty. Townsend experiences precipitation that gets pushed here from the mountains an average of 100 days a year, so connecting with the outdoors is important even on those less-than-perfect days. We create our spirits thoughtfully on the peaceful side of the Smokies so our customers can enjoy them surrounded by spruce, fir and hardwood. We make our bourbon with a proprietary, toasted maple wood finishing process. We take hard sugar maple and toast it, caramelizing the natural sugars in the wood. We reduce the maple for entry into the oak barrel and then pull periodic samples to determine when the liquid is ready for bottling. Our products are ready when they’re ready, determined only by taste and time.”

Looking Ahead

  “Besides our two locations, we have a 30+-acre property in Alcoa, near Knoxville airport,” said Arnett. “It’s an old brick plant that made the brick for the Alcoa Aluminum plant. It would be able to hold up to 10,000 barrels. We hope to build our main distillery adjacent to it if we can purchase an adjoining five-acre tract of land. We’re working on it. Until then, it’ll be another year or so for us to have our main facility up and running.”

  Arnett tells Beverage Master Magazine that he plans to develop a new product yearly. The release date will coincide with Townsend’s annual Grains to Grits Festival, when Townsend hosts 1,000-1,500 spirits lovers ready to experience new and innovative products.

Enjoying the Work Makes it Worthwhile

  “It’s been a slow process, and we’re pushing it uphill, making progress,” said Arnett. “It’s good to see. Distilling is a lot of work, but it’s enjoyable work. I’m super hands-on right now, still toasting my own wood with a proprietary process. You have to love and do what you do for the right reasons. Townsend was the first facility we built, with the new build being in the same location with the same grandfathered-in footprint. All our town has is electricity and septic, so we won’t build a national brand out of here. But we are close to Cades Cove, the most visited spot within the most visited national park. Our location allows visitors to get to know who we are. We have nearly two million cars passing us annually and are within a day’s drive of half the U.S. population. We directly distribute to six states and look to double that soon. Others can get our products through Seelbach’s online.”

  Arnett says that Company Distilling tests and tunes its products before moving them into the recognizable Company signature bottle. Their Cherrywood Finished Rye won double platinum this year and entered the Company lineup. The Applewood Finished Tennessee Whiskey was released on International Tennessee Whiskey Day, May 21, commemorating the day Tennessee repealed prohibition in 1937. Arnett said they lost out on the award cycle by holding it back. But because the product has been so welcomed and is now one of their most popular, it was also moved into the Company lineup, fulfilling Arnett’s initial goal of offering wood-finished versions of the first three spirits made in the U.S. In addition to the tasting flights and master distiller experience, Arnett will begin hosting whiskey dinners and working to get his products available in nearby restaurants and country clubs.

  Take it from me: visiting is a must if you’re anywhere within reach of Company Distilling. After all, you’re always invited because you’re company.

Company Distilling

8351 TN-73, Townsend, TN 37882

www.companydistilling.com

(865) 366-4360

info@companydistilling.com

2023 – Quarter Three Lender Update on the Craft Brewing Market

Cyndi
Man standing by brewery tanks holding up and looking at a glass of beer with foam

By: Adam Stump – Managing Director at Hilco Valuation Services

Since our previous Craft Brewing article published back in mid 2020, fear of mass closures in the craft brewing industry has subsided, and the industry as a whole seems to have largely recovered.

  As of 2023 – Quarter Three, we have seen microbreweries faring somewhat better than brew pubs when comparing openings vs closings. This can be largely attributed to the higher food cost and lower margins associated with the pubs. The labor market, which continues to present challenges across all areas of customer service, also remains an impediment to brew pub operational efficiency and profitability.

  Closings of small breweries rose in 2022 as compared with 2021, but were only around 3% of the market, which is relatively low and further signifies that the industry is maturing. Meanwhile, the overall U.S. brewery count increased from 9,384 in 2021 to 9,709 in 2022.

  U.S. beer volume was also down just over 3% last year. While craft volume was up slightly, it is worth noting that total Craft volume stood at 21MM BBLs in 2014 and has grown by only 3MM BBLS over nine years to reach a level of 24MM BBLs in 2022, with quite a few ups and downs in between. Many in the industry and across the associated supply chain had hoped and, in some cases, banked on more significant growth.

  Year-over-year craft beer production volume was relatively flat in 2022 when compared with the previous year, while draft and distributed sales were down somewhat. We expect that this will require breweries to refocus on stronger brands and geographies while still innovating new products moving ahead.

  Craft breweries have continued to diversify their portfolios in an attempt to reach a broader audience via a variety of beverage offerings. These include items such as seltzer, canned cocktails, hard kombucha, and other creative options designed for today’s palate. Most are targeted at those who do not regularly drink beer, producers’ core offering. This year we have also seen greater numbers of operators with excess capacity more proactively seeking out and providing contract brewing services to third parties. While this practice can help generate necessary cash flow in the short term, it can have the unintended consequence of stalling out an operator’s longer-term planned growth strategy. In some cases, both in this and other industries, we have seen this lead to a lack of investor confidence and cascading funding issues.

  These factors, combined with the nature of a maturing industry with increased competition, make for an environment conducive to acquisition and consolidation. Accordingly, a number of deals have taken place recently. Already in 2023, Stoup Brewing acquired Optimism Brewing and Lucky Bucket was bought back by its original co-founder, now the owner of Brickway Brewery and Distillery. These transactions follow other notable sales that have taken place over the past couple of years, including the Bell’s Brewery sale to Australia/New Zealand-based Lion, a division of Kirin Brewing Company and Stone Brewing’s sale to Sapporo Breweries.

  As always, Industry-backed engagement with state regulators and legislators has been active this year. The emphasis of these efforts now is on further loosening laws such as those for differentiating malt-based and spirit based tax rates, direct-to-consumer shipping and self-distribution, as well as sports and entertainment sponsorships that result in near exclusivity. These are important issues for many operators that stand to directly affect their market share and profitability moving ahead.

Photo of 4 different beers in glasses with caption saying by 2025 47% of spending and 25% of volume consumption of beer will be attributed to bars, restaurants, and breweries

  While supply chains have continued to ease, enabling faster access to new equipment, the cost of acquiring those new assets has risen notably as a result of inflation, the tight labor market, and higher raw material costs. Additionally, a continued CO2 shortage has impacted the industry. Because brewers use CO2 to purge oxygen levels during certain critical processes and for pressurizing tanks and moving beer through lines, some have taken to recapturing the gas during the fermentation process, for later reuse. The good news is that overall, import shipping and delivery costs have decreased by nearly 50 percent since the peak of the pandemic-driven commercial transportation crisis and fewer manufacturers are reporting cancellations on existing orders.

  With government assistance well behind us and capital harder to come by, producers and marketers across the beer market are having to refocus their efforts on their best performing brands. We are seeing this play out in many ways, perhaps most notably with Constellation brands which first signaled its exit from craft beer via the sale of Ballast Point to Kings and Convicts Brewing in 2019 for a fraction of its purchase price, and more recently with the divestiture of both Funky Buddha Brewery and Four Corners Brewing, presumably also at a significant loss.

  Lastly, it is important to point out a variety of trends that have been pervasive in the craft beer industry over the past year. Some of the most notable of these are summarized below:

•    Sour beers have continued to gain popularity, transitioning from niche to mainstream and driving impressive sales for many of those brewers who have embraced the trend.

•    After being largely disregarded on the craft scene, lagers are enjoying a healthy resurgence alongside dominant IPAs.

•    The rise of CBD’s popularity has resulted in many craft breweries experimenting with CBD-infused beers targeted at those likely to appreciate their relaxing properties.

•    Appealing to those who prefer or frequently drink wine, the wine-like notes of rosé beer are growing in acceptance and popularity.

•    Greater access to hops is allowing more breweries to produce fresh hop beers that are generating solid enthusiasm from customers.

•    Hazy, fruity beers are continuing to thrive, attracting first-time and experienced beer drinkers to their ranks.

Concluding Thoughts for Lenders with Industry Exposure

  Because craft brewers specialize in regional, unique beer styles such as ales, stouts, and wheat beers, these smaller enterprises tend to encounter certain challenges that are unlike those faced by their large scale, mass production brewer counterparts. For example, craft breweries rely heavily on local water quality, which affects the flavor of their beer. The specific mineral content in water is also crucial for certain varieties. Importantly, for every gallon of craft beer produced, up to seven gallons of water may be used. This makes access to pure water sources critical and any disruption to that access potentially catastrophic.

  While craft beer aficionados appreciate a variety of flavors, brand loyalty can be fleeting. To remain relevant and successful, craft breweries must constantly be innovating and introducing new offerings. The cost of this type of constant innovation can be significant, particularly when the market does not respond well to one or more of a brewer’s releases. In addition to the industry lobbying efforts referenced earlier in this article, the Brewers Association is actively supporting pending legislation that would allow craft brewers and others to immediately deduct research and experimental (R&E) expenditures in the year these costs are incurred.

  Additionally, with thousands of players vying for market share, attracting skilled employees and standing out from the crowd has become difficult, particularly given the shortage of applicants that this and many other industries have been facing since the pandemic.

  With these thoughts in mind, we encourage lenders with exposure to the craft beer market to remain in close contact with, and provide guidance to borrowers. From margin pressure to inventory aging, it is important, as always, to understand the many distinct challenges that those borrowers now face– only some of which have been outlined here. Doing so can help build a strong, mutually beneficial relationship while serving to help limit downside risk.

  Hilco has engaged with multiple craft brewers and suppliers over the past year and we welcome the opportunity to share the many insights we have gained through those efforts. Accordingly, we encourage you to reach out to our team to discuss any current or imminent needs you may have. We are here to help.

  Hilco Valuation Services is the world’s leading provider of asset appraisals with a proven, decades-long track record of providing the most accurate appraisals across all asset categories. The scope of the valuations we deliver ranges from a single asset in one domestic location to millions of assets located around the world. We are able to affirm current asset value through proprietary market data sourced from the collective worldwide asset disposition and acquisition experiences of Hilco Global over time. In contrast to the aged data relied upon by others in the industry, access to this cumulative, real-time information ensures delivery of the most reliable valuations for our clients. From brewing, distilling and chemical processing, to aerospace, financial services, retail, energy, healthcare and technology, we have delivered valuations for all industries. Additionally, the breadth and depth of our team’s expertise enables us to provide services ranging from Lending and Financial Reporting to Enterprise Planning and Litigation Support.

  Adam Stump is a managing director at Hilco Valuation Services and has been active in the auction, liquidation and appraisal industries since 1998. He frequently consults with financial institutions on asset-based loans and recovery, and over the past 12 months has been instrumental in delivering appraisal and advisory pertaining to dozens of craft brewers. During the course of his career, Adam has conducted or managed thousands of valuations across a wide spectrum of M&E categories including Metalworking, Fabricating, Plastics Manufacturing, Production & Assembly, Packaging, Distribution, Fulfillment, Food and Beverage, Chemical Processing, among others. He also has testified as an expert witness in numerous litigation cases. He is an avid home brewer as well. Adam earned his Bachelor of Science Degree in Computer Sciences from Bowling Green State University and his Associate of Arts Degree from Colorado Mountain College. Contact Adam at 847.849.2953 or astump@hilcoglobal.com.