Category: Archived Articles

Greenbar Distillery: Going Beyond the Spirit

Cyndi
cozy cabin lounge

By: Gerald Dlubala

Located in the arts district of Los Angeles, the Greenbar Distillery operates in a historic brick building built in 1905 and positioned in the same diverse neighborhood that houses iconic residents like Warner Brothers Music, Soho House and Hyperloop. Intermingled with high-end coffee shops, trendy barbershops and homeless tents, husband-and-wife team Melkon Khosrovian and Litty Matthews transformed an old strip club into the Greenbar Distillery in 2011.

  “Our space is colorful, modern, vibrant and warm,” said Khosrovian. “It is multicultural and optimistic, invoking the classic positive vibe of LA, where people come to fulfill their dreams, whatever they may be. There are giant windows overlooking our production floor, so customers can see and understand what we’re all about. We were the first distillery in Los Angeles since at least the Prohibition Era. For the true cocktail lover, Greenbar Distillery was the only exposure to the industry for at least a decade, so we wanted to make sure that if cocktail lovers found us, we did the best possible job to make their cocktail experience positive and up to all of their expectations, while showing them what goes into running a distillery.”

  Khosrovian tells Beverage Master Magazine that the distillery came about out of necessity to keep up with the demand for their homemade spirits beginning in 2004. Neither Khosrovian nor Matthews had any actual distilling or spirits experience. They met in graduate school, and their experience with spirits was only from the consumer side of the bar. But within two years, their home distilling hobby blossomed and became more work than a hobby.

  “We were engaged and doing the normal family circuit, meeting each other’s families, relatives and friends,” said Khosrovian. “For us and our heritage, that meant hosting big gatherings with big meals and frequent toasts featuring our homemade, fruit-based, high-proof alcohol. Litty is a trained chef and foodie with an educated palette, and she considered our homemade alcohol to be slightly medicinal and, frankly, not very good. She would politely pick up her glass for the toast but set it down again without drinking. That was awkward for me, so I set out to make something she would enjoy by incorporating the same culinary skills and techniques she used to produce her amazing food. Additionally, we took trips to the farmers’ markets to find ingredients to add in different ways and improve our alcohol’s flavor and aroma. We had some success, which we quickly bottled for future family gatherings using homemade printed labels. The ultimate feeling of success was when family and friends asked for more, and then friends of friends started requesting bottles of our product.”

  Khosrovian said that interest in their homemade spirits sparked a serious conversation about which direction to take their success. Luckily for all of us, they chose to start distilling on a larger scale. The first step was renting a small space in a nearby town that allowed a slightly larger scale of production to satisfy the demand from friends and relatives but also allowed them to be able to connect with and supply some of the local bars, hotels and restaurants that had an interest in using their products.

  “This was pre-pandemic when 80 percent of our business was related to being used as a bartender brand in restaurants, bars and hotels,” said Khosrovian. “We had tried to gain the home drinker’s interest by putting recipes on our labels, setting up stands at stores with recipes that they could make at home and hosting classes and tastings to try and see where we could improve our marketing and increase bottle sales, but nothing seemed to work. Actually, the reverse happened, even though our drinks received rave reviews. We were totally baffled but finally realized the only way to pursue our dream of showing customers how to drink better and more interesting things using our products was to make it easier for the consumer and provide ready-to-drink (RTD) cocktails.”

  So, Greenbar started offering three spritz cocktails in cans, and as Khosrovian would later admit, that timing was crucial because shortly after, the pandemic closed the bars, hotels and restaurants, literally all of their income sources.

couple drinking happily together
SONY DSC

Pandemic Problems Lead to Successful Solutions

  “The pandemic took away our revenue stream, and since we already found that consumers were unwilling to put in the work to make our cocktails at home, our only choice at this point was to can our cocktails and provide them as additional RTD options,” said Khosrovian. “Initially, we made everything in-house, including vodka, but now our base alcohol is made to our standards off-site. We use the base alcohols to ferment things like rum and whiskey on site and then redistill things like gin, liqueurs and amaro using our unique flavorings. We initially made and carbonated our RTDs in-house and used mobile canners for packaging, but it became very costly and difficult to get on their schedule and adhere to their specified run sizes. Forecasting our needs that far in advance was also a challenge, so about two and a half years ago, we invested in a medium-speed canning line that allows us to do 100 cans per minute in-house, on-site. With a two-million-dollar investment in additional accessories, we can do everything in-house, from creating the spirits to creating carbonated beverages to packaging.”

  “Today, the RTD market remains about 75 percent of our business, and surprisingly, most of it is in the NA (no alcohol) market,” said Khosrovian. “That fact initially humbled us, but as we began to work with markets, who were quite literally our lifeline to the public, we saw that they were getting a lot of questions about NA or LA (low alcohol) options. Those markets were rapidly growing, but consumers wanted something different than only the juice additives or normally available seltzers.”

  Khosrovian said they dove into the NA topic to see if it was a legitimate option because the idea of cocktails without alcohol was unfamiliar to him.

  “We needed to know what the consumers were really after in these types of drinks,” said Khosrovian. “So, we talked to consumers who either drank alcohol minimally or not at all and found the qualities consumers were after in these types of cocktails were related more to the experience of drinking the cocktail than the actual effects of the alcohol.”

•   They wanted something that changed their mood. With proper flavoring and layering, consumers will respond to NA cocktails in the same ways they do to complex, layered, alcohol-based cocktails.

•   Consumers wanted something that reengineered their brains and jolted them out of work mode and into a more social mode, similar to the vibe that alcohol-based counterparts do.

•   They wanted something they could drink comfortably and slowly, changing the tempo and brain function to initiate a slower pace to their mental state and social interactions.

  “We began to ask ourselves if we could provide these things with NA cocktails and have them function and deliver the overall experience similar to their alcohol-based counterparts. The answer was obviously yes, because consumers are looking for more of these types of options. As a result, NA cocktails can be enjoyed more often and in more situations without the limitations or consequences of alcohol consumption.

Organics, Sustainability and One-Bottle-One-Tree

  Khosrovian tells Beverage Master Magazine that sustainability wasn’t a primary goal of Greenbar Distillery but rather an accidental, fortunate outcome of their business philosophy. In California, where the growing season is year-round, Khosrovian always requests the best aromatic and flavorful produce from partnering farmers. When he inadvertently received a harvest from a certified organic orchard without his knowledge, a batch of chocolate orange vodka was noticeably different. It was better, as in more aromatic and more flavorful, but different. That experience from a grower growing organic to make sure his farm would be a lasting legacy for future generations made such an impression because of the increased flavor and aroma that Khosrovian and Matthews immediately decided to use only organic ingredients from that day forward. But they also researched and learned more about implementing organic and sustainable practices in other production areas.

  “We applied this same way of thinking to our packaging, including bottles, printing, labeling, capsules and so on,” said Khosrovian. “We traditionally used heavyweight bottles with laminated labels on virgin paper that would last 100 years. But who would actually want to keep these things that long? We continually asked ourselves what else we could do to help. Both of our heritages have a tradition of planting a tree for every baby born in the family, and in a way, these bottles are our kids. So, we started a program to plant a tree for every bottle we sold, and the Greenbar name was born. It just felt right to give back for our success. We communicated this to all of our customers, and it sounded noble, but no one knew what it actually meant. We needed verifiable results, so after the first year, we hired agencies to determine what effect this action of planting high-canopy trees in return for bottle sales really had on our carbon footprint. In consumer terms, the results showed that if the average American drinks one and a half ounces of our spirits in a day, they are carbon negative for that day. It’s a little thing, but eventually, it adds up and makes a difference. Since 2008, we’ve planted over a million trees, equating to 10 to 12 million carbon-neutral people daily.”

  “So, now we ask, what has your drink done for you?” said Khosrovian. “We’re not revolutionizing or stopping climate change, but it’s something for the consumer to consider. We still have to deliver on our promise of drinking better and more interesting things with great taste, but if the consumer has a choice between products that give them the same or better experience, then maybe they can look towards products that go beyond the spirit and help out in other ways.”

Staying Within Yourself

  “I would tell anyone starting in this business first to get to know yourself and be true to your feelings because, in the end, that’s what you’ll end up doing,” said Khosrovian. “Don’t shortchange yourself or your possibilities because you don’t have to follow anyone’s footsteps in distilling. Grab your chance to be creative, and whatever you do will work and be satisfying. Some will like it, some won’t and that’s okay, but fakes usually don’t last. We’ve evolved over 18 years from helping restaurant, bar and hotel industries serve those who prefer to drink better outside of the home to helping customers drink better wherever they want to consume our products. We’ve learned things the hard way, but frankly, we got lucky on many business fronts as well. We are very good at manipulating and layering flavors to make our products delicious, flavorful and interesting to the consumer. In return, they appreciated and wanted more. Our love and passion come through in our products, so much so that as a loving gesture to my wife, Litty, there is a heart on nearly every one of our products, signifying how we got all of this started.”

  Khosrovian and Matthews also look for that same creativity, passion and willingness to play and learn in their employees. The freedom to express oneself and occasionally screw up is part of being a Greenbar Distillery employee. Khosrovian says mistakes happen and are okay because that learning experience will lead to improvements and ultimately result in happy customers.

Consumers Drive Future Goals

  “We will be going more towards the whole cocktail as our product versus only ingredients,” said Khosrovian. “This includes looking at RTDs in every format available, versus only base spirits. Our experience has opened our eyes to how much the customer is willing to embrace cocktails outside of the bar atmosphere, provided we can give them a similar experience and level of comfort. As happy as we are that the restaurant and bar world has returned, regularly going out to a bar can be inconvenient and expensive. We provide the best of the bar experience for consumers in every format possible, wherever they choose to drink better and more interestingly to enjoy our products”.

  Greenbar Distillery now makes the most extensive portfolio of organic spirits globally. Joining their TRU Vodkas are CRUSOE Rums, IXA Tequilas, SLOW HAND Whiskeys, FRUITLAB Liqueurs, CITY Gins, GRAND POPPY and GRAND HOPS Amari and BAR KEEP Bitters.

  “As a craft distiller, we always strive to meet the consumers where they are to ensure their craft cocktail experience is better, easier and more interesting.”

  For more product information, or to learn more about Greenbar Distillery, visit or call: Greenbar Distillery, 2459 E 8th Street, Los Angeles, CA  90021, (213) 375-3668, www.greenbardistillery.com

The Return of Community Ciders 

Cyndi
2 containers filled with apples

By: Becky Garrison

In the Pacific Northwest, some cideries take local apples and use them to create community cider-based ciders, with the profits often donated to a designated local charity. Following are some examples of PNW cideries’ community cider programs.

Art+Science (Sheridan, Oregon) –  While Kim Hamblin sees quite a bit of fruit go to waste, she also observes how people tend not to mind picking fruit, especially if it goes to a good cause. Launching a community cider program was a natural fit, given her focus on foraging.

After launching this program in 2022, her hopes were dashed with a very low yield because of a flukish April snow that affected blossoms and pollinators. As they are just beginning this program, they have yet to receive enough apples to make a cider, though she remains optimistic that the 2023 harvest will be significantly better. Once she has a cider in hand, she plans to donate to her favorite local groups, such as the community campus for their music program, the food bank or a local arts group. “It might be fun to have a list and let contributors pick their favorites,” she reflects. 

Lockhorn Hard Cider (Bozeman, Montana) – Owner Anna Deal loves the idea of turning something that would otherwise go to waste into something valuable, like great-tasting cider. Lockhorn Hard Cider planted an orchard five years ago with the hopes of growing cider apples to complement their cider production. Soon, they realized there was a “mature orchard” full of an incredible variety of heirloom varietal apples scattered throughout the backyards and homesteads of the Gallatin Valley.

  When it announced it was collecting excess backyard apples to press into cider, the community responded with 14,000 pounds of apples that produced 1,000 gallons of cider. Subsequent years have been more challenging, with hard frosts in the fall before the trees are dormant, which damages next year’s bud, as well as snow and wind during blossom.

  People bring apples from their backyards to the Cider House in the fall, which they trade for a pint or can of cider for every 25 pounds of fruit. In addition, the Deals and volunteers help pick fruit for people who cannot pick themselves. “It has become a really beautiful fall tradition going back to these trees and small orchards with community members who have become friends to pick apples each fall. Conversation and the smell of apples in the golden fall sunshine is really magical,” Deal opines.

  Currently, Lockhorn partners with three local non-profits: Haven Montana (which provides domestic abuse support), the Gallatin Valley Watershed Council and the Bozeman Symphony. So far, it has raised nearly $3,000 for these local groups, with volunteers from each group helping pick apples when they can. 

Madrone Cellars & Cider (Friday Harbor, Washington) – According to Shaun Salamida, co-owner and winemaker, Madrone’s community-sourced cider program evolved naturally by connecting and talking with people who had old trees or knew local landowners who did. With the absence of land, it was driven to connect with locals who had abandoned orchards or orchards where there was just too much fruit for a single family to utilize. They pick about 80 percent of the apples themselves, as the old orchards are large, with even standard trees requiring special ladders. The rest are picked for them by generous property owners.

  Madrone Cellars & Cider has partnered with a local organization called the San Juan Islands Pomona, which aims to preserve, identify and evaluate local heritage varieties. Through this partnership, it has been able to help preserve and expand the culture of local apple and pear varieties and help restore old heritage orchards in the San Juans. So far, it has received scionwood from local heritage varieties to propagate about 30 trees.

  Since the program’s inception, it has grown from working with five local landowners to around 20. When it started, it was easy to jump around and get the apples without much difficulty. As it added more orchards, Salamida found that Madrone needed to set up charts and a calendar so it could schedule the picks. Also, as most picks are small and come in staggered throughout the harvest season, it had to find a way to press small lots.

  As it are only a two-person operation, its production was not impacted during COVID since apples could be dropped off or picked up using appropriate safety measures. With its tasting room and local restaurants closed, it had to pivot to grocery store and delivery sales. “There was a definite negative impact on our sales during that time, as most customers want to try their craft beverage before purchasing,” Salamida notes. 

Meriwether Cider (Boise, Idaho) – Since one of Meriwether Cider’s core company values is the community, it jumps on anything it can do to get closer and involve the local community, as well as help the area’s local agriculture and fruit trees.

 After launching its first Community Crush in 2016, it continues to issue an annual call to action to the local community through its website, social media and a press release to local news sources. Folks bring apples to the facility for about a month in August. Meriwether hosts a “Crushing Party” where folks come to help wash, crush and press the apples. In particular, children especially loved helping out. About a month later, it hosts a “Drinking Party.”

  Initially, Meriwether donated all proceeds to the Treasure Valley Food Coalition, a locally based non-profit focused on healthy and sustainable food production. During COVID, this organization went under and Meriwether Cider did not do a Community Crush in 2020 or 2021. When it brought the program back in 2022, it donated the proceeds to The Lost Apple Project, a non-profit that finds, identifies and protects wild apple varieties. 

Portland Cider Company (Clackamas, Oregon) –

As a two-person operation, founder Jeff Parrish and his wife, Lynda, wanted to create a community cider program but lacked time to make that happen. Then in the spring of 2016, they moved into their current location and hired staff to help them with marketing and events. Armed with the resources to give this program a start, they launched Portland Community Cider that fall. Since 2018, they’ve partnered with Hunger Free Oregon in this venture. 

  Despite COVID restrictions, they were able to remain in full operation and continue their community cider program. Their donations exploded in 2020 and 2021, a fact Parrish attributed to the fact that with so many people working from home, there was simply more time for them to harvest apples. They established a no-contact process for dropping off the apples and pears, and the community responded in a big way. Also, their large open warehouse was akin to working outside due to its airy space and constant ventilation. In addition, all of their marketing and sales staff transitioned to primarily working from home.

 With over 100 varieties of apples available in the Greater Portland area, they have a wide range of fruit available. Their 2022 community cider was unique, as the percentage of pears donated appeared to be higher than in years past, which changed the character of the cider. Also, their cidermakers decided to use Scottish ale yeast to ferment the juice this year instead of wine yeast.

Seattle Cider (Seattle, Washington) – While apples are at the center of what Seattle Cider does as a company, it is not an orchard-based cidery. Its production facility and tasting room are located in SODO, one of the more industrial areas of Seattle. But as Maura Hardman, PR and marketing manager, observes, “Partnering with City Fruit since 2014 affords us an opportunity to keep our cidermakers connected with the most important ingredient we use.” 

  In 2015, Seattle Cider took City Fruits’ harvest viability from 68 percent to 98 percent by creating a product that benefited from the use of crab apples and other apples that were not fit for donation to local food banks and couldn’t be used for City Fruit’s CSA program. To date, its largest remaining harvest was a little over nine tons of upcycled fruit in 2016.

  All the apples used in making City Fruit Cider are harvested within the urban canopy of Seattle, from community food forests to neighborhood backyards. It even presses the apples in-house at the cidery, so from harvest to ferment, City Fruit is truly a “Seattle cider.”

  When the partnership first launched, the cider was available at a few select grocery stores and in the tasting room, The Woods. City Fruit is now available in the SODO tasting room and online, shipping directly to consumers in 39 states. Since the start of the program, Seattle Cider has donated $18,500 to City Fruit.

  The quantity of each varietal changes from year to year, so each City Fruit Cider is unique. As Hardman states, the company plans to release the cider on Earth Day, which lines up nicely with City Fruit’s mission. “It’s a great time for us to share the story of our continued partnership with City Fruit and help bring visibility to City Fruit’s important work in stewarding and harvesting from urban fruit trees to nourish people, build community and protect the environment.”

Western Cider (Missoula, Montana) – Western Cider founder Matthew LaRubbio decided to launch a cider program based on his experience as a caretaker at a historic ranch in Missoula, Moon-Randolph Homestead, which had a 130-year-old orchard. As part of the program, they would pick the fruit and press it at the annual fundraiser every year. “These connections to the places we harvest fruit is integral to our experience in making cider and has significance to our customers that drink the cider,” he observes.

  Since the programs’ inception, it has partnered with the Great Bear Foundation, which works to mitigate the confrontations between humans and bears in the urban wildlife interface. The Great Bear Apple Drive brings people from all around their region. A five-dollar voucher for cider is given for every forty pounds of apples, with 20,000 pounds of apples collected during their first year.

  Moving forward, Western Cider plans to use their community cider primarily for making ice ciders through a process known as cryoconcentration. This process involves freezing apple juice in a suspended container, allowing the sugars to slowly separate and drain into a lower vessel, and then fermenting that very sweet juice into a high-ABV cider. Western Cider ages it in oak barrels for one year and matures it in kegs for another year. The result is a plush aperitif clocking in at 16 percent ABV.

The Growth of Community Cider Programs

  Leadbetter encourages other cideries to just do it. “If you have even a small capacity macerator and press, you can have a community crush!” As Parrish observes other cideries outside the Northwest starting their community cider programs, he stresses how you can’t go wrong with engaging with your local community. “I don’t think there’s only one way to make a program like this work, so I would encourage any cidery wanting to make a community cider to follow a path that feels good to them and fits their values and capabilities.”

Carbon Dioxide & Nitrogen Play Important Roles in Craft Beverage Production

Cyndi
4 gas tanks

By: Gerald Dlubala

The production, delivery and packaging of beer and the use of gases like carbon dioxide (CO2) and nitrogen (N2) are inseparable. But because CO2 is also a natural byproduct of the brewing process, monitoring its levels during and in the delivery of draught beer is critical. Carbon dioxide has flavor characteristics that could cause your beer to undergo flavor changes if left unmonitored. Additionally, if pressures are left unchecked and become too low in the draught beer delivery system, the CO2 is allowed to leave the beer, causing the pour to be flat. Conversely, too high CO2 pressure results in over-carbonation, causing flavor flaws and a foamy pour. Either problem causes increased product usage and waste, increasing the brewery’s costs and decreasing an already thin profit margin.

Inline CO2 Sensors: Mettler-Toledo, LLC

  Dissolved CO2 sensors are inline sensors that continuously monitor dissolved CO2 in numerous applications, including the beer brewing process. Using dissolved CO2 sensors allows brewers to monitor key quality attributes of their product, ensuring a consistent product and all-important mouthfeel to their craft beers.

  Mettler Toledo offers its InPro5500i inline sensors, thermal conductivity sensors optimized for brewing quality control and monitoring the carbonation levels of the beer. The InPro5500i line uses digital technology to simplify handling, provide durable performance and offer increased product life, reducing lifetime sensor costs.

  Additional benefits and characteristics of Mettler-Toledo’s inline sensors include the following:

•   Helping the brewer maintain consistency and overall beverage quality control

•   Sensors are manufactured with a food grade, hygienic, intelligent design and diagnostics

•   The use of proven technology to accurately provide trusted CO2 measurement

•   Maintenance predictability

•   Process connection compatibility, available with three process connections: Variant Type N, TriClamp 2 inch and 29 mm with cap nut M42

For more information on Mettler-Toledo’s CO2 sensors, visit www.mt.com/analytical

Nitrogen Dosing for Shelf Life, Stability and Packaging Excellence: Vacuum Barrier Corporation

  While the applications for nitrogen dosing in the beverage industry have remained consistent, the products that benefit from being dosed have and will continue to grow. Cannabis-based beverages, the dramatic growth and variety of available RTD (ready-to-drink) cocktails and all nitro-style beers, coffees and teas benefit from nitrogen dosing in one way or another. Through its preservation and pressurization qualities, nitrogen dosing has allowed the explosion of new and flavorful RTDs to be distributed on a widespread basis to more markets. Pressurizing a can or PET (Polyethylene Terephthalate) bottle with nitrogen adds stability to the container, allowing for easier, more efficient and effective stacking and shipping. Additionally, the fact that nitrogen is inert and will not react with other substances or ingredients makes it ideal for use in beverage applications and industry because it doesn’t impact the aroma or flavor of the packaged liquid.

  “Adding a nitrogen doser to a filling line is a pretty simple process,” said Jim Fallon, international sales manager for Vacuum Barrier Corporation (VBC). “Our VBC dosers are designed to be bolt-on additions to a filler, with no requirement for complicated electrical or control integration. After determining the proper application for dosing, meaning pressurization, inerting or nitrogenating, the next step is to find the optimal location on the filler for installation. VBC application engineers also determine the appropriate dosing unit based on the available filler space, the brewer’s line speeds and the dimensions of the container that the brewer is using. Then, along with the doser, sensors and control panel, all that’s needed to start dosing is your power supply or compressed air supply, depending on the models used.”

  Fallon tells Beverage Master Magazine that the optimal amount of nitrogen dosing recommended for any application is found by looking at the associated needs.

  “In the beverage industry, these applications vary from pressurizing non-carbonated drinks for container rigidity to purging oxygen from the headspace for extended shelf life and nitrogenating a cold brew coffee or beer,” said Fallon. “VBC engineers collect necessary details about the container volume and dimensions, fill heights, line speeds and the brewery’s target specifications and goals. Equipped with that information, we can guide customers to the appropriate settings to ensure the dose is sized properly and, just as importantly, makes it into the container in a timely and consistent manner.”

  Fallon says that for many years, the only new advances in nitrogen dosing had to do with the availability of increased dosing speeds. But today, VBC dosing units can consistently and reliably dose up to 2,000 containers a minute, more than enough for most filling lines. Because of this achievement, VBC was allowed to shift its focus on advancing and improving the reliability and ease of adjustability of its dosers.

  “We’ve continued to build out the functionality of our Servodoser that we initially released in 2016,” said Fallon. “We’ve reduced the parts prone to wear along with maintenance needs of the long-life servo actuator, which has a cycle life into the billions. In addition, a servomotor on the valve stem allows for dose amount adjustment without changing any mechanical parts. These improvements reduce downtime and allow on-the-fly adjustment of dosing parameters. Vacuum Barrier’s modular aseptic dosing systems are quickly becoming the go-to design with OEM (Original Equipment Manufacturer) fillers integrating aseptic filling lines.”

  For more information on Vacuum Barrier Corporation and nitrogen dosing, visit www.vacuumbarrier.com

Gas Blenders for Draught Beer Delivery Solutions: McDantim, Inc

  To successfully dispense draught beer, you need pressure, and that necessary pressure generally goes unnoticed until something goes wrong. As far back as the early 1800s, that pressure was supplied by compressed air, but as all brewers know, oxygen doesn’t play well with beer. The solution to this dilemma was to use CO2, which was good unless you tried to use 100 percent CO2 in draught beer delivery systems that needed to push the beer over long distances from huge brite tanks that were only safety-rated for up to 15 pounds of pressure. Unfortunately, increasing pressure to push more beer only puts the tank over the intended safety rating or puts the brewer at risk of over-carbonating the beer.

  But by using blended CO2 and nitrogen gas technology in the appropriate amounts, breweries and taprooms can maintain and balance their beer storage and delivery systems to ensure the integrity of their draught beers glass after glass, maintaining product integrity without losing any quality of taste, aroma or mouthfeel, just as the brewer intended. However, premixed cylinders were found to be expensive and generally offered the wrong blend for the beer industry. McDantim Gas Blending Technologies was the first company to introduce a gas blender that was technically sound enough and appropriate for the beer industry. 

  “It started in the late 1980s,” said Kayla Mann, sales and marketing director for McDantim, Inc. “McDantim’s previous owner’s father was approached by Guinness to develop an on-site gas dispenser. Unfortunately, industrial blenders wouldn’t work well because they couldn’t handle low-flow needs. So, McDantim devised a blender optimized for low flow rates to ensure that the beer secured in your keg or brite tank is the same beer dispensed into the glass for your thirsty customers. Our goal is to improve draught beer consistently and continuously worldwide.”

  Mann said that McDantim Trumix® Blenders are generally maintenance-free, with a plug-and-play mentality that demands no electricity or cumbersome maintenance schedules.

  “The goal here is to set it and forget it,” said Mann. “Brewery or taproom managers already have enough on their plate without having to worry about gas blending. Trumix® Blenders are easy to install and set up with regulators and can be nestled in wherever a brewer decides to locate their gas storage. All our products are customizable for different CO2 and nitrogen blending needs, so no matter what beer you are brewing and serving, you’ll get what you need. We use six eager and local breweries as our testing grounds with our products, so we receive real-life and real-time situational help to ensure our blenders and products do what breweries need them to do. Our custom-configured blender solutions improve efficiency and decrease waste and are based on useable volume, including the length of delivery lines, the number of available taps and servers and the forecasted number of kegs per hour you can expect to use at any given time. It comes down to how many servers will be drawing out of how many taps simultaneously. Busy, large taprooms with several servers that stay busy for lengthy amounts of time will need a higher flow rate than the smaller craft breweries.”

  Mann tells Beverage Master Magazine that McDantim also offers a free downloadable app that can be used anywhere within the depths of a brewery because it needs no internet connection.

  “We’re all about education to improve the quality of the draft beer industry across the board,” said Mann. “The app is there for you to know what blend of gases is optimal for the beer you are producing or if you are struggling with pressure or specific lines. We can easily walk you through the app and teach you how it can help and improve your draught beer. It’s just another tool for everyone from the beginner through the seasoned professional, and it is valuable for those that may be hesitant to ask for help as well.”

Conditions included in the calculations are:

•    The beverage temperature in the keg.

•    The required keg pressure.

•    The CO2 content of the beverage.

•    Elevation above sea level.

•    The gas blend (CO2 percentage) of existing blender.

Your input conditions help determine the following:

•     The optimal CO2/N2 blend for your specific location and conditions.

•     What range of pressures you can safely apply to your beverages for optimal carbonation.

•     Easy U.S. and metric unit conversions.

•     The predicted CO2 content that will be maintained under unusual conditions, like high elevation production.

Additionally, McDantim’s free gas blend app includes helpful calculators for other areas of your draught beer process, including these:

•    The cost analysis calculator provides insight into how on-site gas blending with Trumix® blenders can save you money.

•    The gas usage calculator will forecast and determine how many kegs of beer you can expect to dispense using Trumix® Blenders or premixed cylinder gas.

•    The line restriction calculator helps brewers with their draught system design to get the correct restriction values to keep the beer from under or over-carbonation.

  McDantim’s Trumix® Blenders can be used equally well with all clean CO2 and nitrogen sources, including high-pressure cylinders, bulk tanks and separators. 

To contact McDantim or get more information on gas blenders, visit www.mcdantim.com

More Than a Pretty Face

Cyndi

Image Is Important, but so is Safety and Productivity

beer can lying on a flat surface

By: Cheryl Gray

While attractive packaging can draw new business for craft brewers, protecting what’s inside that packaging can make or break the bottom line. The same detailed attention is required to move products to store shelves swiftly. Fortunately, there are companies with specializations in each of these production areas.

  Among them is Industrial Physics, a test and inspection company considered to be a global leader in its field. Industrial Physics operates across a wide range of testing brands, each cornering a specialty. Those brands include CMC-KUHNKE, Steinfurth, Quality By Vision, Eagle Vision and TQC Sheen. Although it offers its customers multiple options, the company has a singular purpose: to guard the integrity of brands and products for manufacturers, production lines and laboratories across multiple industries worldwide.

  Steve Davis is the global product line director at Industrial Physics. He leads a team of experts who ensure that the company’s equipment protects the integrity of its customers’ metal packaging. Davis brings more than 20 years of engineering experience, with particular expertise in designing and developing metal packaging testing systems. He describes how Industrial Physics provides practical solutions for breweries large and small.

  “From seam inspection to label inspection, leak detection, code reading and abrasion testing, we’re here to protect the integrity of our customer’s beverage product.”

  Industrial Physics offers 40 testing applications and 2,500 products for a vast array of manufacturers, including breweries. Davis explains how the company leverages industry leadership to benefit its brewery clients:

  “The power and versatility of Industrial Physics allow us to support a broad range of breweries all over the world. And that really sets us apart from any other test and inspection provider. No matter the size of your brewery or the type of test you need to conduct, we can support you.

  The equipment allows organizations to test across a multitude of applications. Whether that’s ensuring that a can containing a fizzy drink won’t leak or that a cardboard box is strong enough to survive the turbulence of transit, the solutions are extremely diverse. We have a wealth of solutions available for the beverage space. From bottles to cans and kegs, we support beverage manufacturers of all sizes.

  But we don’t just provide equipment. At Industrial Physics, we’re equipped with some of the world’s finest minds within the world of beverage packaging and metal packaging. With an unrivaled portfolio of products that span so many specialties, we speak with our customers to ensure they’re discovering a solution that is suitable for their unique needs. With our equipment, we can help customers take their production and testing to the next level by investing in an instrument that will allow them to enhance their current setup and ultimately grow their offering by reducing waste and costs significantly.

  We also offer service solutions for our instruments, supporting customers with installation, calibration, preventative maintenance and repairs. No matter where you are in the world, we have local experts on the ground who can support your needs to ensure your instruments are operating efficiently.”

  One of the Industrial Physics brands is CMC KUHNKE. Davis describes its versatile options, all designed to save time and money:

  “Whether you’re a small brewery needing a compact and cost-effective solution like our useful CMC-KUHNKE seam saw, or a global giant within the world of beer looking for a more advanced, automated solution such as our CMC-KUHNKE Auto XTS, we can help you with this and everything in between!”

  Safeguarding the integrity of brewery products requires thought in every step of production. When it comes to keeping production lines moving swiftly and efficiently, Custom Conveyor Concepts promises to meet the needs of virtually any brewery. Matthew Gill, a co-founder of the company, has been in the packaging industry for some 40 years, working various floor positions before moving into management, sales and consulting. Gill explains how Custom Conveyor Concepts evolved:

  “In terms of the number of years in business, we are relatively new, as we were founded in 2015. However, Custom Conveyor Concepts (CCC) was formed after having been producing conveyors for more than 10 years for Exchange Team Advantage (ETA) and their customers. ETA was founded in 2005 as a used equipment supplier and OEM rep for virtually all aspects of liquid and powder packaging – depalletizing/unscrambling, filling, capping, labeling, coding, case packing and palletizing – literally, start-to-finish, turn-key applications. In doing so, we were requested to provide the connecting, often challenging, conveyor. After years of producing it for specific applications, the decision was made to make it available as its own commodity, and Custom Conveyor Concepts was born.”

  Gill emphasizes that his company’s products are designed to solve problems confronting breweries, whether accommodating tight spaces or tight deadlines.

  “We provide solutions. Whether it is space limitations, the need to expedite size changes or how to increase output, the only essentials required are your needs. Tell us what you want to do, and we will work with you to make it happen. We have worked with many startup companies, as well as very large, universally recognizable companies, and helped them grow. Our conveyors are versatile and expandable, as you can easily add, remove or re-route them. We only offer stainless steel, and our conveyors are constructed out of 11 ga., providing solid, durable equipment that will stand up to the harsh cleaning chemicals and offer ease in cleaning.”

  Gill adds that Custom Conveyor Concepts understands how to help breweries maximize their equipment investment while, at the same time, staying within budget.

  “We have worked with 600 cpm breweries down to 3 hd. fillers and manual crowners, when bottles were more prevalent. Our defining quality, in addition to the quality product we provide, is the attention we give to our customers and helping them achieve their needs, often providing options to help them stay within or define their budgets. We provide specialty equipment and service at ‘regular’ pricing. We don’t charge extra for non-stock items or detailed line layouts for placing the equipment. 

Our entire team’s product knowledge and industry experience are irreplaceable for providing application solutions. We do where others say it can’t be done. Many of our competitors don’t want to be bothered with small, low-dollar projects or small projects that require you to seek a solution. We excel at those.”

  Among the most popular products from Custom Conveyor Concepts are its serpentine conveyor and accumulation tables. Gill explains that while space is at a premium in most production facilities, it is more so in smaller operations. These two items, he says, offer ready solutions.

  “Utilizing a serpentine conveyor can convert the space a 5-foot conveyor consumes into 15 feet. The ability to make a roll change on a labeler without shutting off the filler makes the ROI for inline accumulation tables worth every penny.”

  Creating the bottling for breweries worldwide is the role of BPS Glass, a company based in Panama City, Panama, with its U.S. office in Atlanta, Georgia. As a family-owned business that began some 60 years ago, BPS Glass now boasts a reputation as one of the leading suppliers in the glass packaging industry. At its core is an emphasis on investing time, resources and effort in training its team members to create viable, innovative solutions for clients. Isidoro Cherem, a spokesperson for BPS Glass, says that the company works with breweries and distilleries that range from small craft operations to large commercial facilities. Cherem adds that dedication to optimal customer service sets the company apart from its competitors.

  “Thanks to our amazing team of experts and our commitment to excellence and creating long lasting relationships with our customers, we have grown to be the largest packaging supplier in the South and Central American region. We are constantly working towards expanding into the USA, and we are sure that we can replicate our success in the North American region.”

  BPS Glass offers more than 150 types of glass bottles for multiple industries, along with custom bottle designs. It also promotes services that include client-specific packaging and assistance with logistics to ensure timely, secure delivery of orders at the most cost-effective rates.

  Label design is another service BPS Glass provides its clients, with a focus on label colors and shapes, materials, textures and other aesthetic components. The company adds that it equips its clients with real-time marketing analysis, keeping an eye on marketing trends to help clients choose the right bottle, label and packaging for a product.

  Multiple choices in bottle closures are also on the company’s product roster. It points to its decades of knowledge in the chemical processes, physical considerations and industry safety standards to help clients safely package a product for consumers.  

  Whether using cans or bottles, breweries must factor in how best to protect the integrity of their product, both in terms of taste and safety of consumption. In addition, the efficiency of a production line depends upon investment in the right equipment that can move products swiftly and safely to store shelves. These considerations require the expertise of companies that know how to help breweries achieve these goals on time and within budget. 

Good Beer Makes Great Whiskey

Cyndi

By: Kris Bohm, Owner of Distillery Now Consulting

The idea to start a craft distillery can come from many places. If you talk with almost any brewer they will tell you the idea of a distillery is one they have considered. The tools needed to start a distillery are so similar to a brewery that much brewery equipment is identical to the equipment found in a distillery. Brewers who want to jump into making distilled spirits have most of the knowledge, tools and skills needed to manufacture spirits. One skillset brewers lack is in the art of operating a still but have no fear we are here to help. Let’s talk about selecting the right still for a brewery to make amazing, distilled spirits. Afterall good beer makes great whiskey so if you have a brewery why wouldn’t you do it?

Designing a Distillery

  As the dream is put down on paper and planned for the specifics start to come into play. Are you going to make whiskey, vodka, gin , rum or do you plan to make all of them? What do you want your still to look like? Will it be a shiny copper showpiece or a stainless economical work horse? What ingredients you plan to utilize to produce distilled spirits is very important to consider when selecting the right still design. The equipment for distilling potato vodka is very different from that used to distill malt whiskey. If you are unsure where to start here, this may be a good point to bring in an expert to help you make these choices.

Selecting the Right Still Size

  The first question many folks ask when selecting a still is something like how big of a still should I get? Should I get a column still or a pot still? What is more important to consider about how big is how small is too small? A common issue with many new distilleries is that they start off far too small. In fact some distilleries start so small that they outgrow the capacity to produce enough product within a year. The opinion held by most whiskey distillers is that a still any smaller than a 250 gallon will hinder your distillery from growing. Depending on the configuration of a still and the ABV of the wash a 250 gallon still can produce a single whiskey barrel per day. This key number is important to consider. Why this matters is that a larger still only costs slightly more than a smaller still. Secondly the larger your still is the less you will spend on labor per gallon of spirits produced.

Key Considerations

  It can be easy to underestimate the real quantities of spirits a distillery needs to produce to be successful. This is especially true if you plan to distill any spirits like whiskey or brandy that need to age for years before they are ready to bottle.

Some of the best whiskies from around the world like bourbon, or single malt whiskey spent years in the barrel before they were bottled. If the products you plan to make are going to taste as good as other products on the market they will need to age as well. There are no proven shortcuts to age spirits faster, but there are plenty of examples of so called “rapid aged” products that were not successful. The point of all this is that you have to plan years into the future. If you buy a still that can only produce enough spirits to meet the demand you are planning for today this still will not be able to make enough spirits to age to meet your demand several years down the road. The more whiskey you are putting in barrels every day the more potential you have to grow. To put a cap on growth by selecting too small of equipment can be a costly mistake.

  Selecting the perfect size still or stills is not an easy decision to make. There are a multitude of  factors that must be carefully considered to make these decisions with confidence.

Budget is the critical factor. Budget not only for the cost of the still but also other equipment needed to support the still is important.  A budget for operating expenses is also helpful as once you get the still it takes capital for raw materials, labor and overhead to operate the equipment.

  Another consideration to take in is the size of the facility.. If you only have 500 square feet of space for your equipment, then it is unlikely that a 500 gallons still is going to fit well into your building and still leave room for the operation to function. You should not select your equipment until you know the amount of space you have for the equipment.

  Production Goals are a critical factor that must be given thought and planning. If you want your distillery to be producing 1000 barrels of whiskey every year then there is no way a 250 gallon still can get the job done. Sizing the still for the long term production goals of a distillery will help you stay ahead of your growing pains. The size of the still will directly determine the quantities of spirits you can distill.

  Skilled labor is an essential part of the equation. For a brewery to make the best spirits possible it is a wise investment to bring in an experienced distiller to help guide the process and handle the distilling. Although there are many similarities between the brewing and distilling, there are also vast differences in the process and in the regulation of the industries. A skilled distiller will bring the knowledge and experience to the table to help you make the best whiskeys possible and also ensure it is done in a way that is compliant with regulations.

Lets Make Whiskey!

  Building a brewery is an expensive endeavor and most brewhouses in a brewery are not run constantly. The addition of a still can create the opportunity for a brewery to run its brewhouse more often to create distillers’ beer to be distilled into whiskey. This is good for the business as it can create greater economies of scale. To do this effectively is it paramount to select the right size still to meet your goals. This is a huge opportunity for most breweries and one that can create immense new value and also open new markets for a brewery. If your brewery is ready to take the leap into distilled spirits now is the time to do it. After All most brewers love a good whiskey and good beer can be transformed into great whiskey.

Three Commonly Overlooked Legal Issues for Breweries

Cyndi
beer rest on a flat surface beside a gavel

By: Brian D. Kaider, Esq.

Breweries have to deal with many legal issues, including licensing requirements from various federal and state agencies, formation of a corporate entity, negotiating contracts, and registering trademarks.  With so many new skills and requirements to learn, it can be easy to miss something.  Below are examples of three legal issues that are often overlooked.

Failing to Require Employment Agreements

  There are a million things to do when starting a brewery.  Finding and hiring staff checks off a significant box on the list and it can be easy to overlook the need for an employment agreement for these early hires.  Later, there is little enthusiasm to impose these agreements retroactively or to apply them to new hires when they were not required for original employees.   Yet, employment agreements serve a variety of functions that are so essential that their omission can cause substantial problems down the line.  

  As a preliminary matter, an employment agreement defines the relationship between the parties.  Often breweries will try to categorize workers as independent contractors as opposed to employees, because this distinction allows the brewery to avoid providing certain benefits that are required for

employees.  But, the IRS does not care about the brewery’s characterization, it cares how the worker is treated, and the key determination is control.  An independent contractor is hired to provide a function, but has significant autonomy to perform that function when, where, and how they see fit.  Often they will provide their own equipment and set their own hours.  By contrast, if the brewery exercises control over the worker by imposing certain work hours, requiring the job to be performed in a certain way, and providing the equipment used, the worker is considered an employee.

  There are many important sections of an employment agreement, including designation of at-will employment, requirement to abide by rules set forth in the employee handbook, etc.  But two often-overlooked sections relate to confidentiality and assignment of intellectual property.  Although the brewing industry is far more collaborative and congenial than most, it is still a competitive business and certain information should be treated as confidential and/or trade secret.  Employees should be made aware that unauthorized disclosure of business plans, growth plans, customer and supplier lists, recipes, and marketing ideas, to name a few, can cause harm to the business.  This section of the employment agreement not only serves that notice function, but can set up more enforceable consequences if the terms of the agreement are breached.

  Breweries generate a significant amount of material that can be protected by trademark or copyright registration.  Label designs, beer names, domain names, and social media accounts are all valuable assets that should belong strictly to the business.  An assignment of intellectual property section in an employment agreement sets forth the understanding that anything created during the term of employment is the sole property of the business.  As an example, if an employee has artistic talents that are used to develop designs for labels, those artistic designs should be assigned to the company.  Otherwise, the employee would have the right to sell the same designs to other companies or individuals who may use them in a way that is detrimental to the brewery’s brand.

Failing to Secure Music Licenses

  Music is such a common part of the brewery experience that many people take it for granted.  However, breweries must obtain the proper licensing to play copyrighted music in their establishments or they could face a copyright infringement suit and potentially crippling statutory damages that could be as much as $150,000 per instance.

  Under U.S. copyright law, the owner of a piece of music has the exclusive right to control its use, including whether or not it may be played in a public setting.  Typically, however, while the artist may own the copyright, s/he delegates the task of licensing its use to a Performing Rights Organization (PRO) such as the American Society of Composers, Authors, and Publishers (ASCAP) and Broadcast Music, Inc. (BMI).  In some cases, a single artist may have some of its songs licensed by one PRO and others licensed by another.

  So, is a license required for every song played in a brewery?  Generally, yes, in order to publicly play any piece of music, a brewery must obtain a license from the PRO that has the piece in its catalog.  Below are some common situations where a license is required, followed by some exceptions to the general rule, and one very simple way to stay in compliance.

  Disk Jockeys by their very nature play a variety of pre-recorded music.  Although it may be the DJ that selects the pieces it plays, because the venue derives the benefit of the music, it is responsible for obtaining all necessary licenses. 

  Bands that play “cover songs” written by another artist fall under the same category as DJs.  But, what about bands that play only original songs?  The brewery should ask the band whether it is affiliated with a PRO.  If so, even if the band is playing its own music, the venue needs a license for the performance.

  Purchased music is only licensed for private use.  Many people assume that when they buy a record, CD, or digital audio file that they own the music and can do anything they want with it.  In reality, the purchase price of that music only covers private use and does not entitle the owner of that copy to broadcast it to the public.  So, even if the brewery owner brings in her own collection of vintage vinyl, she must obtain a license to play the records in the taproom.

  Generally, music licensing fees are not terribly expensive, but vary according to the size of the establishment and the type of music being played.  In some cases, discounts may be available.  For example, the Brewers Association has negotiated a discount with BMI of up to 20% for its members.  

  There are a few exceptions that will enable music to be played without a license, but they are narrowly construed and must be followed carefully.  Music that is broadcast to the general public over the radio, television, cable, or satellite services may be played in a brewery without further license if the establishment is smaller than 3,750 gross square feet, including all interior and exterior spaces used for customer service.  Larger spaces may also qualify for license-free performance, but other restrictions apply, such as: the music may not be played over more than six loud-speakers or more than four in one room; there may not be a cover charge to enter the establishment; and audiovisual content may not broadcast over more than four televisions or more than one in a single room.  Music may also be played in the brewing space or offices for the benefit of employees, as long as it is not audible to the patrons in the tasting room.

  By far, the simplest way to get music in the brewery is to use a commercial streaming service, such as Pandora For Business or Sirius XM For Business.  The fees for these services include performance royalties and do not require any additional license.

Failing to Report Changes in Proprietorship or Control

  It should come as no surprise that when forming a brewery the TTB will want to know exactly who owns the business and who is in charge.  It should be equally unsurprising, then, that if there is a change in ownership or control of the business, the TTB must be informed.  Yet, this is an often-neglected requirement and failure to adhere to the letter of the law can have serious consequences. 

  It is important to understand the distinction between a change in proprietorship and a change in control.  A change in proprietorship occurs when there is a change in the entity that owns and operates the brewery.  The obvious example is if the brewery is sold to a new company.  Clearly in that situation, the TTB must be made aware of the new ownership and the law requires that the notification be made well in advance of the proposed change.  Specifically, 27 C.F.R. §25.72 requires that the successor brewer “qualify in the same manner as the proprietor of a new brewery” before beginning operations.  Less obvious examples might be the conversion of an LLC to an S-Corporation or the folding of the brewery business under the umbrella of a parent corporation that has the same owners and officers as the brewery business.  Both those situations involve changes to the proprietorship and must be cleared with the TTB before operating under the new structure.

  By contrast, a change in control occurs when there are changes in stock ownership, LLC membership unit ownership, or major changes in the corporate officers or directors of a corporation.  The same business entity continues to operate the business, so there is no change in proprietorship, but there is a change in who controls the business within that entity.  In this situation, an amended Brewer’s Notice is required to be submitted within 30 days of the change.  Further, if a new LLC member or stockholder holds more than 10% interest in the business, a new Personnel Questionnaire must also be filed.  Common situations that involve a change of control may include the removal of a founder, death of a member, addition of a new corporate officer with ownership interest, addition of new members through a round of fund-raising investments, or the buy-out of previous investors.

  Failure to abide by the notice requirements for changes in proprietorship or control can have serious consequences, including forced shutdown of operations until the licensing matters are resolved and possible monetary penalties.

Conclusion

  These are just three of the legal issues that breweries often overlook.  There are, of course, many more.  Engaging an attorney that understands the industry early in the process of starting a brewery and maintaining the relationship throughout the life of the business is the best practice to ensure compliance with all requirements.

  Brian Kaider is the principal of KaiderLaw, a law firm with extensive experience in the craft beverage industry. He has represented clients from the smallest of start-up breweries to Fortune 500 corporations in the navigation of regulatory requirements, drafting and negotiating contracts, prosecuting trademark and patent applications, and complex commercial litigation.

Inside the Heritage Distilling Company

Cyndi
people inside a winery

By: Gerald Dlubala

At six years old, Justin Stiefel, CEO of Heritage Distilling Company (HDC), was watching reruns of MASH with his father and wanted to know what the contraption was that the characters were constantly hanging around and pouring drinks from in their army tent. That contraption was a hand-made still, and among other things, it fueled Stiefel’s interest in chemistry and engineering. His interest culminated in Stiefel submitting a working model of a still for his seventh-grade chemistry class experiment. While he obviously couldn’t partake in any experiments from his submission, his teacher happily accepted the challenge, deeming it a worthy working model and giving Stiefel top grades for his project.

  “That accomplishment felt good,” said Stiefel. “I became interested in chemistry in that process, and since distilling is a chemical process at its basic level, my interest in distilling naturally grew.”

  After adding a degree in chemical engineering, he and his wife Jennifer, president of HDC, founded Heritage Distilling Company in 2011 while sitting around a campfire with whiskey, cigars, good friends and family. The name Heritage came from Stiefel’s belief that no matter who we are, where we are or where we’re from, our story, state or background, we all have a shared heritage as a country and an individual heritage based on our experiences. So the word “heritage” captures all those spirits and everything around us into one customer experience that we provide.

  Later, as he and Jennifer both gained experience working in the U.S. Senate, Justin attended Law School and was ultimately put in charge of negotiating important issues and subsets related to native tribes, including reviewing past policies, academic advancement, job creation, investment issues and more.

  “Subsequently, Jennifer and I  enjoyed visiting the breweries and wineries for the relaxing vibe and experience, but it was never legal at that point to open distilleries until 2009 when the state of Washington legalized the process. It was noticeable from the brewery and winery experiences what benefits were available in agricultural and economic factors using local resources by allowing folks like us to open craft distilleries. Then, in 2011, when we moved back to Washington, where we grew up, Washington voters approved privatizing liquor distribution systems.”

  The Stiefels’ approach to opening a craft distillery is first to consider what consumers want rather than what they prefer to drink.

  “A distiller can’t fall in love with their own products,” said Justin. “If you’re opening a brewery, winery, or distillery because you love your beer, wine or spirits, that can be a recipe for disaster. If you enjoy the product that much, be satisfied with being a consumer and drink the things you like. We use a consumer-led, high-technology approach to every aspect of our distilling process, start to finish. We want to focus on what compels a consumer to choose any particular product because you only get that one shot with a consumer to trigger repeat purchases. No matter our approach, it always started and ended with the product’s taste and flavor profile. Using this approach, we’ve become the most awarded craft distillery for nine years running, per the American Distilling Institute.”

  “We like to say that if it isn’t in the bottle, it doesn’t belong on the shelf,” said Jennifer. “The final products are determined in double-blind taste tests, and our spirits’ taste profiles can take up to two years to reach the point of release. We include natural ingredients and processes, including our grain and mash, and tailor them to the consumer’s needs. We have experienced, trustworthy palettes and pride ourselves on our spirits’ taste, flavors and profiles. We have internal and external protocols for testing, including blind taste tests with unknowing consumers. Those consumers are the final gatekeepers of our products, and they’ll let us know when our product is ready. We import all of our distilling equipment from Italy simply because we’ve found that equipment produces the most amazing flavor profiles for us.”

  Stiefel tells Beverage Master Magazine that the six distilleries and tasting rooms HDC owns throughout Washington and Oregon serve as testing grounds for all products, including their homemade RTDs (Ready to Drink).

  “We get our consumers in the door, have them do a taste trial, and hopefully convert those tastings to purchases or membership program subscriptions,” said Stiefel. “For example, we offered free samples of our newly launched RTDs in our tasting rooms in return for an in-house completion of a 27-part questionnaire regarding their honest thoughts on the products. Our guests took an average of 27 minutes to complete those questionnaires. They provided informative and thoughtful responses and proved they were interested in helping us make product decisions and being part of the consumer journey with us.”

  Stiefel says that HDC has streamlined its processes and protocols for consistency, record keeping, compliance, and general tracking in case of a problem. They can track back to the particular release’s specifics and find the issue’s where, when and why.

  “It’s a personal development journey as well as a consumer journey,” said Steifel. “We have 10 years of experience in consistent production, successful policies and responsible behaviors. And we believe everyone opening a craft distillery is obliged to the industry, striving to provide excellence and total responsibility within this still-young industry.

Tribal Beverage Network: Turnkey Solutions with Individual Branding

  “There are 270 tribal, sovereign nations in the lower 48 states,” said Stiefel. “Because of our record of successful practices and responsible policies in opening craft distilleries, the Chehalis Tribe in Southwest Washington approached us to see if we would help them open a craft brewery and taproom with a new hotel development they had in the works. We explained that we are craft spirits producers, not brewery professionals. Additionally, we explained that, in our informed opinion, the craft brewery market is beginning to downsize, so if they wanted to pursue that market, we recommended that they go with a dual component facility that includes craft spirits.”

  The Chehalis Tribe agreed, and in partnership with HDC, they were on their way to an exciting and extensive 25 million, 36,000-square-foot project when the unthinkable occurred.

  “We were due for groundbreaking in February 2018 and 24 hours away from issuing the contract, complete with equipment on site ready to begin when we were issued a letter halting the project,” said Stiefel. “Citing a 1934 statute from the Andrew Jackson era, the letter stated that a distillery cannot be built on tribal land, and if it were, we would not only be subject to a $1,000 fine (a great amount back then), but the government had the right to destroy all related equipment, including the stills legally.”

  “Fast forward 184 years, and we now see that many tribes own and operate casinos, bingo halls, golf courses, resorts, entertainment venues and arenas,” said Stiefel. “In fact, there are currently 524 tribally owned casinos in the lower 48 states, including some of the biggest properties and wine and beer distributors in their respective cities. They are the largest operators in their respective areas except for some Vegas casinos, but in many cases, tribal casinos are bigger than their Vegas counterparts. So, we felt that this 1934 era statute was no longer applicable and decided to do something about it.”

  In April, the Stiefels introduced a bill to repeal the antiquated statute, and it was passed and signed into law by December of the same year. Their argument was simple and on point. Craft distilling is poised to take off nationally, yet only Indians are not allowed to participate in the benefits, which seems quite racist.

  “It was an extremely proud moment for us,” said Stiefel. “Our project with the Chehalis Tribe, Heritage Distilling at Talking Cedar, opened in 2020. As a result, HDC is working with five more tribes and soon a sixth to open craft distilleries in multiple locations, including Oklahoma, Arizona, Washington, Oregon and Idaho. We’re also involved in talks with tribes across the U.S. in Wisconsin and along the East Coast.”

  Talking Cedar is a destination brewery, distillery, taproom, tasting room and restaurant, and it also serves as the hub of HDC’s Northwest operations. All craft beverages at Talking Cedar are made on the premises by the Chehalis Indian Tribe and Heritage Distilling Company. Here, the HDC’s liquid base is distilled before being transferred to the individual tribal distilleries for final finishing, aging and any maturation necessary to get the final product the tribe deems worthy enough to reflect their heritage.

  “Tribal distilleries sound like a cool venture,” said Stiefel. “But the process is costly, time-consuming and time-sensitive regarding the reports involving the TTB (Alcohol Tax and Trade Bureau). With our franchise-like, autonomous hub and spoke model, we help the tribes set up a small bottling operation with different production levels, aging and maturation levels. By getting the liquid base from Talking Cedar, we accelerate the process of perfecting spirits, putting the necessary, timely information before the TTB and gaining important brand consistency. We also negate the enormous expenditure involved in the engineering process needed to size each distillery’s equipment. It’s similar to how the tribes handle their casino openings, partnering with and using the management operations of larger casino operators for new products, support and marketing. Day one is often good because of the grand opening; we are there from the beginning. But by day two, you better be hustling and educating the consumer. Branding and marketing often get overlooked but can be a huge expense. HDC provides a marketing budget and team to create a halo marketing effort to drive customers to the locations and get products out the door.”

  Through HDC’s cohesive brand advantage, tribes receive pre-opening design and construction assistance, hiring help and applicable compliance and trademark assistance. HDC is there from before opening and along the way to help with product development, new marketing support, trademark research and support and TTB compliance reporting. The entire process is streamlined to get to the ribbon cutting and being ready to go with a full-scale operation, complete with a distinctive, retail-branded location (similar to Starbucks locations nestled in or next to grocers, retail outlets or hotels) and fully constructed tasting rooms, complete with 20 different flavored spirits.

  “Simultaneously, we are working with the tribes on what they want their products to be and signify to the consumer,” said Jennifer. “Each tribe has its own story comprised of its journey and history. When you visit their cultural centers, you see the beautiful and distinctive artwork, stories and historical imagery attached to the different tribes. These are all things that are not only important but need to be ingrained into their brand. You see the word ‘heritage’ used repeatedly, making HDC the perfect anchor partner.”

  “As an experienced partner, we can help limit mistakes that may typically happen throughout the initial distilling journey while also providing the tribes the immediate opportunity to start aging and creating their unique products,” said Jennifer. “The tribes can promote and label their distinctive products while receiving unmatched support from our Heritage brand portfolio. Visitors can expect to be immersed and recognize each tribe’s distinctively branded spirits, including the grains, flavor profiles, and cultural attributes that reflect their heritage, culture and history.”

  Stiefel says craft distilleries are significant earning opportunities for tribes when their revenues from tobacco and fuel are disappearing. Additionally, the current visitor demographic for these casinos is between 50 and 70 years of age. If the casino owners don’t have a plan for complementing and replacing the older demographic, revenues will naturally dwindle to the detriment of the business. Quality craft cocktails are a proven successful way to capture margin and tax revenue while gaining increased and repeat business from the desired 20- to 30-year-old consumer demographic.

  “And the best thing about these tribal spirits is that they can go national when they become popular and resonate with consumers outside the distillery’s four walls,” said Stiefel. “We have a national distribution agreement with the largest U.S. distributor. They are always hungry for these types of unique products. We’d love to see multiple tribal products hit multiple markets across our states, regions and nation. It would truly be a fantastic and monumental day for tribal-produced brands.”

Head to Tribal Beverage Network for more information.

From Publicly Traded Status to Special Whiskey Releases, HDC Barrels Towards the Future

  “With respect to our future, we’re looking at adding and nurturing more tribal partnerships and locations while focusing on our core wholesale products and expanding distribution out of the Northwest,” said Stiefel. “But while all of these other events have been happening, we’ve also been secretly distilling and aging whiskeys of our own over the last ten years and are releasing our line of Stiefel Select line of Ultra-premium single barrel picks, including a four-grain bourbon, a high rye bourbon, wheated bourbon, 100-percent rye whiskey, unmalted, which is very difficult to make, some single malt selections and some 100-percent wheat whiskeys. We didn’t want to be one of those distilleries promising to release something special in the future. We want to announce it when it’s ready to cut the ribbon and be consumed. So we decided that 2022, our 10th anniversary, was a great time to start releasing these in-house produced spirits to select markets in partnerships with retailers or directly to the consumer. Last year was five barrels, with a goal of 100 barrels released this year. They are all single barrel selections, with a few being small-batch, where we take the same barrel from the same distillation day and make a small batch, maybe a three-barrel combination individually numbered.”

  But the biggest news is that Heritage Distilling Holding Company has entered into a business combination transaction with Better World Acquisition Corporation to become a publicly traded company. Heritage Distilling Group will be the corporate name of the newly public company and will be traded on the NASDAQ in the late second quarter under the ticker symbol CASK.

  By the time you read this, the S-4 SEC form will have been filed, detailing an impressive, world-class board of directors that includes many well-recognized names from major corporations.

  “No one in the craft space can claim this type of expertise on their board,” said Stiefel. “I want to say that this board has previously handled over 150 billion in annual revenues and is simply unmatched in expertise and knowledge related to operational expertise, marketing excellence, consumer-based product development, global general counsel experience, extensive mergers and acquisitions experience and tribal economic development.”

Craft Beverage Philanthropy: Brewing with Purpose While Giving Back

Cyndi
person giving alms

By: Alyssa L. Ochs

Of course, the primary goals in the craft beverage industry are to drive a profit, make money and sustainably secure the business. However, an increasing number of breweries and distilleries have become so entrenched in their local communities that it only makes sense to give back to charitable causes when possible.

  Craft beverage philanthropy is on the rise in the U.S., and there are many creative ways in which brewers and distillers can embrace this trend of doing good while drinking well. There are some valuable lessons to learn from beverage businesses that are focusing a portion of their efforts on philanthropy, which are inspiring if you are looking to host a charity event or donate a portion of sale proceeds to raise money for local causes in your community.

How Breweries & Distilleries Can Approach Philanthropy

  Breweries and distilleries can take a variety of approaches to add a charitable element to their operations. The level of community involvement may vary based on the owner’s interests, the size of the craft beverage establishment and the number of staff members available to help with projects outside the realm of making beer and spirits.

  Some craft beverage businesses are skilled at hosting events, partnering with local nonprofits and using social media to get the word out about needs in the community. Other establishments are willing to try profit sharing with partner charities and give direct donations to organizations working in specific fields of interest, such as early childhood education, homelessness or workforce development. A craft beverage producer can also give back to the community through beer or spirit collaborations, supporting local growers by purchasing homegrown ingredients and hosting art shows featuring local artists. Meanwhile, some beverage producers choose to focus on their own internal sustainability practices instead to make their operations eco-friendlier through recycling, water conservation and energy-saving programs.

  Besides just feeling good about what you do and what you brew, there are many benefits to embracing philanthropy in the craft beverage industry. Getting more involved with local causes increases exposure to a business and builds brand awareness. A brewery or distillery can build greater support among like-minded and community-supporting patrons while engaging with customers on a deeper level. Adding a philanthropic element to a business can help create a more community-centered taproom, generate good press to compensate for a past issue and even result in valuable tax benefits at the end of the fiscal year.

Examples of Craft Beverage Philanthropy

  All across the country, you can find excellent examples of how craft beverage businesses engage in philanthropy without sacrificing product quality or putting a compromising strain on their budget. For instance, Ex Novo Brewing, which launched in Portland, Oregon and also has a presence in New Mexico, was the first nonprofit craft brewery in America and has referred to itself as a “permanent fundraiser to support causes.” Charitable causes supported by Ex Novo include Oregon Wild, Friends of the Children, Mercy Corps and Impact NW.

  Deschutes Brewery in Portland, Oregon, teamed up with Dovetail Workwear to support women’s success in pursuing non-traditional occupations.

  The Phoenix Brewing Company in Mansfield, Ohio, has been involved in philanthropy since it opened in 2014 through special beer releases, apparel sales, sponsorships and fundraising events. It has supported summer camps for children with special challenges, a community theater, a winter coat drive, a homelessness initiative and a brain cancer research organization. Phoenix Brewing is unique in that it accepts requests for donations and sponsorships directly through its website and is a non-tipping establishment. If customers leave cash behind as a tip, the brewery donates it to a designated charity each month.

  Pennsylvania’s Tired Hands Brewing Company is another beverage business that streamlines the funding process and outlines its donation guidelines and application protocols on its website to be refreshingly accessible to local charities.

  Service Brewing, started by an army veteran who served in Iraq, is a Savannah, Georgia brewery that has donated a portion of brewery tour profits and promoted charities that include police, fire and first-responder organizations. Over the years, the brewery has raised over $110,000 for local, regional and national groups.

  Franklins, a family-friendly brewery in Hyattsville, Maryland, is dedicated to giving back to its local community and donated over $200,000 through a fundraiser program for local schools, environmental groups and progressive advocacy organizations. It also supports its community by partnering with local farms to source ingredients and the town’s art alliance organization to showcase the work of local artists.

  Finnegans Brewing Company in Minneapolis, Minnesota, has a policy of supporting local food banks and helping food banks work with farmers in the area.

  In Milton, Delaware, Dogfish Head is a large and well-known brewery that launched a Beer & Benevolence program to support over 150 nonprofits annually. Funded organizations include the Delaware Historical Society, Delaware Nature Society and Nature Conservancy.

  To dip a toe into the realm of philanthropy without going overboard right away, breweries and distilleries might consider centering giving around just one special, limited-release beverage.

  For example, an Ashland, Virginia brewery, Center of the Universe Brewing, made a Homefront IPA and donated all proceeds of the beer to a nonprofit that helps military troops and veterans. It often makes the most sense to link a beverage company’s history and the founders’ interests to philanthropic engagement.

  An example is SweetWater Brewing Company in Atlanta, Georgia, which started a long-term, multi-year clean water campaign to improve the local water supply and focuses its giving on environmental groups in the region.

  You might also tap into the intersection of craft beverages and art, like Horse Thief Hollow in Chicago, Illinois, which has partnered with a neighborhood art alliance to turn the business walls into an impromptu art gallery that displays the works of local artists. 

  Another way beverage businesses can boost community involvement is to partner with local sports teams. In Indianapolis, Indiana, craft breweries have created beers that pair with the charitable efforts of local sports teams, including the NFL’s Indianapolis Colts. The local brewery and bistro, Triton, created a Pink Ribbon Saison with pink and white peppercorns to celebrate Women’s History Month and compliment the breast cancer research funding of the city’s professional football team.

Creative Ideas and Looking Ahead

  For breweries and distilleries that have a handle on their essential operations and are ready to take the next step in community involvement, now is a great time to establish partnerships with local charities. Business owners can harness the trendiness and popularity of craft beer to spark awareness about people, animals and natural resources in need of attention.

  Yet there is no shortage of challenges that come with pairing craft beer and spirits with philanthropy. Selling products must always remain the top priority for these businesses to stay operational, and there will always be public scrutiny about which charities they support and transparency with regard to how the money is used. The quality of the beer and spirits produced must come first so that customers keep coming back and supporting the business and the affiliated charities. If the quality declines, craft beer fans may just as well donate to charities on their own without any craft beverage connection.

  There are also challenges with finding staff members who can manage charitable work, getting the word out about philanthropic efforts, establishing donation guidelines and having enough money to go around. However, this is an exciting time to get involved in the world of craft beverage philanthropy because of how prominent beverage producers have become in their local communities and the potential power and influence they hold for rallying community members to enjoy their favorite drinks with a greater purpose.

  As a craft beverage producer, one of the best ways to launch a philanthropic campaign is to learn from the examples of what other breweries and distilleries have done in the past and contact their teams for details, feedback and mentorship. If corporate philanthropy is an interest within your ownership and staff, it may also be worth reaching out to the local community foundation in your area to discuss options for opening up a fund, donating to specific programs or starting an endowment. Most major cities and even broader regions serving multiple counties have well-established community foundations that can offer advice, resources and training about taking a more philanthropic angle as a charitable side venture.

  Despite hard hits from the pandemic, recession and labor crisis, specialized companies are also emerging to connect the business industry to the nonprofit sector. One example is Positive Legacy, a collective group of nonprofit and event industry professionals that created the Pours for Positive campaign to engage craft beverage companies in nonprofit engagement and outreach for mutually beneficial results and a more vibrant and sustainable community. The Brewers Association also provides resources and tips for producers navigating the complex world of philanthropy. Industry-specific recommendations include adding an online donation request form to your website, hosting events that bring a charity into your business and ensuring donations boost taproom sales with silent auctions and gift cards that draw more business to your doorstep.

Beverage Development on a Bootstrap Budget

Cyndi
man in glasses thinking

By: Jorge Olson — Co-founder & CMO of Hempacco and Green Globe International

Starting a beverage business can be a daunting undertaking, especially for the uninitiated. One of the biggest challenges for someone wanting to bring their beverage idea to the market can be budget. The cost of starting and scaling any business can be high, and when one is developing a new consumable product, the costs can be astronomical if they are not privy to the ways of bootstrapping their new business.

  Regardless of the reason one has behind bootstrapping their business, it is a valid way of building any new venture from the ground up. By being savvy with one’s budget and careful to avoid overspending pitfalls, anyone can build a wildly successful beverage business.

Bringing One’s Vision to Life

  Any great beverage company needs to start with an idea. If one wants to build a business around a beverage, the idea needs to be solid, and it needs to be able to be created with consistency, meaning the formula being used should be set before bringing a beverage to the market. Seeking out the opinions and assistance of industry experts can help one avoid costly formulation mistakes. New entrepreneurs should also do their due diligence in researching the market and ensuring their beverage idea has a strong place in the market. While friends and family may all love what an entrepreneur comes up with, that particular product may not translate to a beverage that could find traction with the market at large.

  The formulation stage could lead to out-of-control costs if one is not going in well-researched and prepared. There can be a good amount of information online to help one research the industry, as well as quite a few books and workshops available that can help people with their beginning stages of business building — all for an affordable cost.

Estimating Startup Costs

  Even when one is bootstrapping a business, costs can very often exceed expectations. When diving into initial market research, a new beverage business entrepreneur needs to be realistic about how much it will cost to bring their beverage to the masses.

  To professionally formulate a beverage can cost upwards of $20,000 to $45,000. If one is planning multiple SKUs (stock-keeping units), costs can compound quickly. There are packaging costs, ingredients, shipping, and stocking costs to consider, all of which will add dollars to one’s budget and cut into their profits.

  Bootstrapping this amount requires careful planning and budgeting. Many entrepreneurs have started small and put any money they make back into their businesses. They set up booths at farmer’s markets and sell their beverages piecemeal to raise capital for professional formulation and growing the brand. Though this approach can take time, it is a great way to slowly build a brand without accruing any significant debt.

  Any business, regardless of budget, will often seek out cost-saving measures when it can. Overspending on aspects of the business that do not ultimately move the needle can spell disaster for any startup. Areas where a beverage startup can save include seeking out inexpensive ingredients, packaging options, or distribution avenues.

  Being that costs will rise as the business expands, how does one fund their business if they wish to create a national (or international) beverage brand? Several options are available, from personal loans, investors, and small business loans. Whatever funding options one chooses, entrepreneurs should always weigh all pros and cons to ensure the selected option is the right fit.

Finding the Right Source of Capital

  Any startup is going to need funding, and there are a number of options for receiving this funding. Bootstrapping typically involves forging relationships directly with retailers in order to get your beverage on shelves. This approach can be a slow burn but ultimately successful, depending on how much pavement-pounding you are willing to do on your startup’s behalf. When one doesn’t have the financial resources to fund thousands of dollars of marketing or development costs, that momentum has to be built bit by bit. Those entering the market with a bootstrap mentality must understand that patience is a virtue and that building the brand will take more time.

  Even if one begins with a bootstrap mentality, the fundraising stage may get to a point where one also wants to consider the investor route. However, finding the right investor deal for an idea can also be a long road. Going into pitch meetings with a robust business plan and vision for the future of the product can help entrepreneurs land the best investor partnership for their venture. Any pitch meeting should include samples of your beverage and an idea of how the packaging and the marketing will look.

  One of the best ideas for a small startup is to consider a larger pool of smaller investors instead of putting all of their eggs in the angel investor basket. For example, instead of trying to secure a few million dollars from one investor, work on securing $10,000 in investments from a collection of smaller investors. With those combined investments, one will not only have enough money to get their beverage idea off the ground but will also have a built-in support system from a variety of enthusiastic backers. Smaller investors ride out shifts in the stock market easier than large investment firms and venture capitalists. Individual investors also may request less control over a business than large investors often require.

  Finding the right investor(s) or funding route can make or break a new beverage business. As such, one should consider all options before choosing how they plan to fund their startup.

  With over 2,400 beverage companies operating in the US alone, startups will really need to communicate what makes their product special in order to court solid investment opportunities. Coming at the investor search with passion and an educated approach to the market will increase a startup’s chances of landing dedicated investors in it for the long haul.

The Beverage Industry has Changed

  The pandemic changed many industries, and the beverage industry has not escaped the post-Covid shift towards more direct-to-consumer sales and social media marketing. When the world shut down, beverage entrepreneurs could no longer visit investors or retail partners in person.

  With this in mind, those now seeking to step into the beverage industry with a great idea need to consider how reaching a target market has changed. Anyone looking to break into the somewhat crowded beverage market should work on establishing an online presence right away. Today, word-of-mouth marketing includes chatter online, meaning entrepreneurs could be leaving a lot of money on the table by failing to put effort into their digital marketing presence.

  Any startup should have a website that can be built for a small out-of-pocket cost. The brand’s website is its handshake and introduction to the market and should reflect its feel and personality. Along with a website, the brand’s social media profiles should tie into the entrepreneur’s overall marketing approach. Engaging with one’s target market is a low-cost way to build a buzz around their beverage.

  When building an online presence, one needs to consider what message their beverage and brand are sending. For instance, is the brand being built based on natural ingredients and a sustainable manufacturing approach? If so, its marketing is going to be different from a brand seeking to bring an energy drink to the market.

  Marketing is all about tapping into who the entrepreneur is as a brand, as a business founder, and who their consumers are. Authentic connection with one’s market can go a long way in building a brand, especially when one is not starting with a large amount of capital.

Fight Off Failure

  A staggering 42% of startups fail. With those numbers, it’s a wonder why anyone dives into the murky waters of entrepreneurship. Still, many do and succeed, but not without some hard work and research.

  For instance, many startups fail because they don’t research their target market. They bring a product to the market that no one is interested in or too closely resembles another product. Other startups simply run out of money, which is why it is so important to have patience while one is bootstrapping, thoughtfully invest capital, and seek out partnerships with investors that best align with the product and brand being brought to market.

  Bootstrapping any business starts with believing in a vision, first and foremost. When one is self-funding their startup, the passion for and belief in their product keeps them moving through the most difficult steps of the scaling process.

  The entire concept of bootstrapping is about hard work and perseverance. If market research tells the entrepreneur that their beverage idea is a winner, then it is time for them to roll up their sleeves and get in the trenches. This willingness to get one’s hands dirty sends a message that they are willing to stick with their idea, put in the hard work, and do what it takes to see their beverage hit shelves.

  Starting any business is not for the faint of heart. Bootstrapping a business could be considered insanity by some, given the difficulty of that journey. However, when the business ultimately succeeds and people all over the country — or even the world — are enjoying the beverage you created, all the hard work of bootstrapping will have been worth it.

  Jorge S. Olson is the author of “Build Your Beverage Empire.” He’s a beverage industry mentor and consultant who has launched over 1,000 consumer packaged goods and worked with over 100 beverage entrepreneurs, large and small. Jorge has owned companies in the beverage industry, wholesale distribution, import and export, and beverage development and sales. His over 300,000 newsletter subscribers share his insight into beverages, marketing, and growth. Jorge now mentors beverage executives and lives in San Diego, California.

How to Recession Proof Your Beverage Business

Cyndi
recession proof statement

By: Raj Tulshan, founder of Loanmantra.com

Despite a recent pandemic, record-high inflation, and several years of economic uncertainty, entrepreneurship continues to thrive, with more than 31 million entrepreneurs in the U.S. In fact, Americans’ confidence in small businesses has reached record highs, even exceeding confidence in the military, the medical system, public schools, and the U.S. Supreme Court. But is your business recession-proof?

  Since World War II, the U.S. has experienced 12 recessions, averaging one every six years. Recessions are more common than most people realize, and most people will encounter several over the course of their careers. Therefore, it’s crucial for business owners to prepare to survive the next (inevitable) recession.

  A recession is defined as a significant decline in economic activity – including gross domestic product (GDP), income, employment, industrial production, and wholesale-retail sales – and can last anywhere from two and 18 months. While recessions are common, they can be incredibly stressful for business owners, who will very likely experience some business disruptions. The key to surviving the disruption is to plan, differentiate your business from the competition, cut spending, and create additional revenue streams.

  In addition, here are ten tips to survive – and thrive – during a recession.

1. A downturn doesn’t mean doom and gloom for every business. Nearly 75% of public companies with $50 million or more in annual sales had declining revenue growth during the last four economic downturns, but 14% actually accelerated revenue growth and increased profitability. The different outcomes depended largely on the type of products or services the companies sold and how well (or poorly) they met customers’ needs. Remember that even during economic downturns, customers still buy essentials (e.g., food, utilities, household items, etc.) and need certain services (e.g., healthcare, car repairs, etc.). “Recession-proof” your business, providing what people will continuously need, to maintain sales.

2. Plan for a recession. Ebbs and flows are a normal part of the business cycle, so plan accordingly. Focus on maintaining revenue, preserving cash flow, and generating demand. For instance, running out of cash is a major concern for business owners, so assess your cash balances, expenses, and incoming cash flow. Work within your budget. Track your key performance indicators and adjust if you aren’t meeting target metrics. Pay down debt. Reduce financial waste.

3. Prepare for the unexpected. You’ve likely heard the advice to establish an emergency fund to cover personal expenses, and this is a wise move for businesses, as well. Create an emergency fund that can cover up to six months of essential costs, including payroll, inventory, rent, and utilities. Proactively collect outstanding receivables. Talk to a financial advisor about whether you should consider revolving loans, alternative financing, small business loans, and/or other options.

4. Operate efficiently. Reducing operating expenses can be a challenging task, especially as you must continue providing extraordinary products and services. Whatever expenses you cut should be invisible to customers. Determine where you can make small tweaks that can add up to big reductions, such as leveraging early pay discounts from suppliers, automating manual tasks, and renegotiating supplier contracts.

5. Multiply revenue opportunities. This strategy will require some creative thinking. Brainstorm ways to capture new revenue without making any major investments. For instance, expand your brick-and-mortar retail store’s reach by selling goods online. Adjust your business model. For example, a bakery could start offering take-home kits for birthday parties. Or a bar could sell merchandise and specialized beer onsite and online, in addition to selling drinks and food.

6. Modify offerings. Adjust what you’re selling to make it more attractive to customers and prospects during tough economic times. Think of how restaurants changed their business models during the COVID pandemic to sell to people when they couldn’t dine onsite. To adjust to the changing climate, restaurants started offering more delivery, takeout, and curbside pickup options. And, as more people worked from home, clothing retailers adjusted, offering more loungewear instead of formal suits. During a recession, pivot accordingly. In addition to altering your business model, consider changing your pricing structure and offering more incentives to entice people to buy, even if they have less disposable income during a recession.

7. Strengthen relationships. Acquiring a new customer can cost five times more than retaining an existing customer. Create and maintain strong customer relationships. Understand their changing needs and give them what they want. Offer the “value add” that they can’t get from your competitors, whether that’s free shipping, personal shopping, or a willingness to place special orders on their behalf. At the same time don’t forget your valued vendors, partners and associates. When times get tough those relationships could save the business. Or you could help save someone else’s business. Whether it’s extra time on a delivery due to supply chain issues or just a pep talk, remembering those relationships is essential.

8. Stretch your tech. Most businesses purchase technology to be more efficient and productive but haven’t taken the time to maximize the full benefits of the system or appoint an expert that can fully leverage its benefits. Before you are investing in new systems, stretch your current tech. Tech tools can also help you change distribution methods, such as pivoting from in-person tutoring, which limits you to a specific geographic radius, to online tutoring, which expands your reach.

9. Continue marketing. You may consider cutting marketing to save a few bucks but resist that urge. To maintain revenue, you’ll need to stay in front of your key audiences with social media efforts, online ads, positive news stories, compelling blogs, etc. Launch (or continue) loyalty campaigns to recapture past customers and increase touchpoints with your current customer base. Target your messages to align with customer pain points in an uncomfortable economic climate. Spotlight loyalty programs. Incentivize customers and prospects with discounts, BOGO, and other deals. Maintaining visibility via marketing can help you increase market share, particularly if your competitors pause their efforts.

10. Insulate Finances. Consult financial experts, like those at Loanmantra.com, to develop a plan to become recession-proof. They’ll help you determine how to cut costs, adjust your business model, and secure any necessary loans. If you need a loan to boost your company’s financial health, they’ll help you calculate how much of a loan you’ll need (and qualify for). Financial experts can advise you on all aspects of the loan, including the application process and what types of information you’ll be required to provide.

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