Back on the (Rye) Ranch

By: Tod Stewart

Just close your eyes…“You can see Faith, Hope and Charity as they bank above the fields….” – Al Stewart, “Flying Sorcery,” from the album “Year of the Cat.”

  Stewart was likely referencing the nickname of the three Gloster Gladiator fighter planes flown during the Siege of Malta in WWII in that line. From 10,000 or so feet, I was looking down at a different, though similarly named, trio as my Bell 407, flown by Alpine Helicopters Inc., banked languidly port-side. Referred to as the “Three Sisters” (Faith, Hope, and Charity – or Big Sister, Little Sister and Middle Sister, respectively), their peaks jut skywards as part of the South Banff Range of the Canadian Rockies.

  The breathtaking flight was just one of the many memorable activities arranged by my host, Alberta Distillers Ltd. (ADL), as part of the “Rye Ranch” experience. Over the course of four days, I was to get an intimate look at all facets of Canadian whisky production. I would also have the honor of being one of the first “civilians” (i.e., not a member of the Bean Suntory, ADL’s parent company team) to taste ADL’s latest rye whisky expression. Both of these would go a long way in helping answer the question: what makes Canadian whisky unique?

  Founded in 1946, ADL has risen to become perhaps the most respected and significant distiller of rye whisky on the planet today. In fact, its Alberta Premium expression is the top-selling rye whisky in the world. Davin De Kergommeaux (DDK), who, as I mentioned in my previous Beverage Master Magazine story, literally wrote the book on Canadian whisky, doesn’t mince words. “I think ADL is my #1 Canadian distillery right now for quality whisky and straight-shooting staff. [It’s] the best rye distillery in the world, and they make so much else besides.”

  Seeing as how I had DDK on the line, I thought this might be as good an opportunity as any to get an expert’s opinion on what, precisely, makes whisky from Canada unique.

  “The key to making great Canadian whisky is blending many components to make a whisky with consistent flavor from batch to batch,” he began. “Each component is made to emphasize specific qualities which blenders then integrate batch by batch. The amount of each component used can be adjusted as needed for each new batch, to even out any differences in the grain from different growing seasons, and any differences among barrels.”

More about barrels in a bit. Carry on DDK….

  “Making individual components also allows distillers to tailor maturation to the specific distillate – charred oak for corn, toasted for rye, for example. Spirits aged in a variety of barrels and for different lengths of time give noticeably different whiskies and blenders are able to use just the right amount of each in the final blend so they get exactly the flavor profile and texture they are looking for.”

  He simplifies the concept this way: “American whisky-makers blend the grains together in mash bills, while Canadian whisky makers blend them as mature spirits. Each has its advantages, and each gives the resulting whisky its own personality, so one approach is not better than the other, just different.”

  While at the Rye Ranch (and before a truly superb dinner prepared by Chef Corinna Murray from Personal Thyme), I managed to corner George Teichroeb, ADL’s general manager, into one of those unprepared for, unscripted and (likely for him), totally annoying one-on-ones to pepper him with similar questions. Dressed in my awesome boots and Stetson from Lammle’s Western Wear (if you wanna look like cow-poke, this is the place), I brashly asked questions like, “Did I hear you say earlier in the day that making bourbon is easy, but making Canadian rye whisky is more challenging?” (Teichroeb has spent time in Kentucky – at distilleries, not in prisons, as far as I know –  so, he’s up on the ins and outs of both whisky styles.)

Beverage Master Magazine: Did I hear you say earlier in the day that making bourbon is easy, but making Canadian rye whisky is more challenging?

George Teichroeb: Well, to be clear, I didn’t say making bourbon was necessarily easy.

BM: Okay, fine. It was a bit loud on the distillery floor. But you said something along those lines, right?

GT: What I said was that with bourbon, there are guidelines set out for its production that remove some of the complexities of the process that we, as Canadian whisky producers, face.

  We can use continuous distillation, batch column distillation or kettle, and we can determine how much of each style make up the final blend with a fair amount of flexibility. If we were making bourbon, we would be much more regulated. With Canadian whisky, the distiller can decide which spirit and at what strength can go into a specific type of barrel. At ADL, we use ex-bourbon, new Canadian and multi-use barrels – and we have the advantage of deciding which option to choose.

BM: It would seem that Canadian whisky is “a thing” again. Why, from your point of view, is this happening?

GT: I read an article about three years ago that said from 2009 to 2019, there was a 230 percent increase in global distillers’ use of rye grain in their whiskies. Consumers and distillers have started to understand that the use of rye creates a flavor profile that is very unique, and this has led to a refocusing on the country that’s been a pioneer in rye distillation—namely, Canada.

BM: So, it really is a ryevolution!

GT: [Deadpan glance].

BM: Um, sorry. What, then, from your perspective, sets Canadian whisky apart from all others?

GT: I think there are certain historical standards that play a large part. Canadian whisky has to be matured for at least three years. It has to be aged in wood and on Canadian soil, but these are requirements that are similar to those of other countries. It’s in the blending process where Canadian whisky makers’ expertise comes to the forefront, and consumers are really starting to understand the value of skillful blending.

BM: Anything about the Canadian whisky industry you’d like to see changed?

GT: You shouldn’t be able to call a whisky “rye” if there isn’t, in fact, any rye in the blend! [In my previous Beverage Master piece, I mentioned the somewhat strange situation that distinguishes “rye whisky” as a category rather than a reflection of what is distilled.]

BM: Where do you see ADL, and the Canadian whisky industry in general, heading into the future?

GT: It’s been great that ADL has always been seen as a pioneer rye distiller, but this doesn’t mean we won’t continue to try new things in the future. We will continue to consistently use prairie rye as a main whisky ingredient, and I think this association with specific, regionally-grown grains will take hold in other Canadian distilleries. You might see different strains of corn being used in the eastern Canadian provinces. The prairies will likely remain heavy on wheat, which is a great base for vodkas.

  While touring ADL’s barrel warehouses a few days back, I noticed another unique feature of many Canadian distilleries: the use of pallets rather than racks for barrel maturation. While this is common in the majority of Canadian whisky distilleries and significantly improves efficiency, the verdict is out on whether it has any negative effects on the aging of whisky. To play it safe, ADL incorporates both rack and pallet warehouses. Racking barrels increases airflow around them and gives the liquid greater exposure to the barrel heads, both of which have a beneficial impact on development.

  Other features that are unique to ADL’s whiskies are the use of predominantly unmalted rye and (because of this) the reliance on in-house reactors that yield one of the two types of enzymes that make up the “enzyme cocktail” used to convert rye starch to glucose.

  One aspect that’s unique to all Canadian whiskies, and the one that stirs up the most consternation, is the “controversial” 9.09 regulation, which, in reality, is much ado about nothing. I won’t go into a long dissertation on how this regulation came about (there has been plenty written about it), but the upshot is that a Canadian whisky distiller is permitted to add up to ten percent of another liquid to every 100 liters of mature whisky. So, for example, ten liters added to 100 liters brings the total volume to 110 liters, and ten percent of that volume works out to one-eleventh or 9.09 percent). This “other liquid” is typically un-aged whisky or wine.

  While purists like to rant about this, think of how much “non-scotch” winds up in Scottish whiskey finished in casks that once held sherry, port or Madeira. Teichroeb sees this regulation as beneficial in that it adds a degree of flexibility to the generally ridged requirements whisky makers are governed by. And it allows blenders to introduce subtle flavoring elements to a final blend, the result of which I was about to taste.

  As the sun dipped low behind the majestic Rockies in the distance, and as the embers of the campfire contributed to the glow of our already-somewhat glowing group, Teichroeb poured us drams of ADL’s latest whisky: Reifel Rye. Named in honor of the distilling family that helped establish ADL, it is a 100 percent Canadian rye whisky showing distinctive, dusty/spicy rye on the nose, with subtle hints of vanilla custard and dried fruit. Smooth, warm, mildly fruity/spicy and beautifully balanced, it was the perfect nightcap to wrap up with what had been a pretty much perfect stay in Canadian whisky country.

Slowly Sipping Premium Sake

By: Hanifa Sekandi

You have most likely sipped on this subtle, smooth spirit at your favorite sushi restaurant. Sake is a drink that warms up your soul and shockingly excites your senses. Some would say it brings the same joy as tequila. But you do not see it coming. Sake is a humble beverage that does not announce its presence immediately on the palette. Its balanced flavor profile satisfies the desire to sip and dine without overpowering the experience. Alas, a few sakes in, there it is, a feeling unlike any other alcoholic beverage you have sipped on before. It does not hit you in the chest or burn the throat. That tipsy feeling comes later, even for those who don’t consider themselves lightweights.

  Sake has enchanted North American imbibing culture. So much so that it has transitioned from the beautiful Japanese restaurants where most people first experienced it to liquor stores across the US. As of late, luxury sake brands are making headway, creating an alcoholic beverage niche just like wine and other high-end spirits and liquors. Like premium tequila, it is becoming a staple on bar carts for those who value a selective drinking experience where just anything will not do. It is about quality and the story that makes the alcohol they drink meaningful.

What is Sake?

  Sake is a Japanese alcoholic beverage. The word sake in Japanese describes all alcoholic beverages. Nihonshu is what sake is called in Japan, most likely something sake enthusiasts in the West are unaware of since this designation is rarely used in western Japanese restaurants. For most people, their first experience with sake is at a Japanese restaurant. While dining on seafood dishes, sake is served and an excellent pairing for this type of cuisine. So, what is sake? Sake is a translucent rice wine. It is often served in a small cup called an Ochoko. It is made with rice and water and brewed by converting starch to sugar. From the sugar, alcohol is produced. The brewing process of sake involves several steps.

  The sake brewing process starts with polishing the rice to remove the outer layer. Once this stage is complete, the rice is soaked to ensure that any leftover bran is removed. Next, the rice is steamed to cultivate koji cultures, an imperative component of making sake. While one batch of rice steams, Koji mold is added to the steamed rice. The steamed rice and rice with added koji mold are mixed in a tank containing yeast to create a starter. Next, the mashed ingredients are transferred to a tank with steamed rice, water and koji, frequently added during the alcohol fermentation period of approximately one month. The fermented mash is then pressed and stored.

  As you begin the at-home sake experience, you need to buy the appropriate cups since the size of the cup, the shape and the material it is made with influence the fragrance of sake. There are several vessels that one can use to serve sake. For example, a masu container is a small wooden box with a shot glass placed in the center. Another vessel is a Sakazuki, a flat wide-mouthed cup used for Shinto ceremonies and rituals. Small shot glasses are another option for serving sake since thin glass supports a rich tasting experience. It is also suitable for high-quality sake. Shuki is a commonly used vessel. Shuki is a term generally used to describe all sake vessels. Wooden shukis are favorable since they enhance the aroma of sake and provide a milder aftertaste.

Sake Beginnings

  To truly appreciate an alcoholic beverage, it is essential to understand its beginnings. These stories over a warm meal with friends bring us together. Further, history demonstrates that bridges and communities have been built simply by sharing spices and drinks with people from different cultures. Sake has its own story. Although the birthdate of sake is hard to determine, its roots are intriguing. The Book of Wei in the Records of the Three Kingdoms contains Japan’s earliest record of alcoholic beverages. It is believed that sake dates back to the Nara period (710–794). Initially, sake was used during religious ceremonies. During the Heian period, sake was consumed as part of games and festivals.

  In the earlier stages of sake, before it became a viable commodity. The Imperial Court during the 8th and 10th centuries governed and controlled its production. The types of sake that people could drink were also determined by the rank they held in court. For example, clear, robust-flavored sake was reserved for those in high-status positions. People viewed as a lower class could only consume unrefined, cloudy brews. During this time, people drank sake for festivals and offerings to the gods.

  In the 12th and 14th centuries, shrines and temples became sake brewers and the central producers for over five hundred years. It was at the temples where the brewing process was perfected into three stages. Sake’s longevity, stronghold into the future and availability to the general public are due to these efforts that ushered in the production of sake at a scale. It is important to note that the upper-class nobility only had access to sake during this time. A move into commerce created a demand for this once-exclusive drink.

  Once specialized brewers entered the market in the 14th and 16th centuries, temples and shrines no longer held a monopoly on production. Innovations for serving sake made headway during this sake rebirth. New sake vessels offered an easy way to purchase sake to-go, a departure from the wooden pails. Fast-forward to present-day sake production, where technological advancements that commenced years prior and continue to improve brewing methods have allowed sake producers to distribute it globally. New avenues opened the door for the sale of refined luxury sake. It is no surprise that premium sake brands are finding a space among elite alcoholic beverages.

What Is Premium Sake?

  So, what is premium sake? Is it worth the price? Does it stand out among other luxury beverages? Luxury sake brands are just getting started. It will not be long before such brands are found next to top-shelf wines and spirits on bar menus in North America. Premium tequila has reigned supreme in recent years. It is now sake’s turn.

  Sake has an average ABV of 15% to 16%, quite compelling for those looking for an alternative to high alcohol content spirits. Not bad for a rice wine! Sake Hundred, a high-end sake developed by Ryuji Ikoma, a sake connoisseur who also founded Japan’s Saketimes, is gunning to shake up the fine wine and high-end Japanese whiskey terrain. Ikoma aims to “expose drinkers to the most outstanding examples of Japan’s national drink, showcasing its many styles and sophisticated complexities that allow it to pair with a myriad of cuisines well beyond that of simply sushi.” While developing his brand, he visited hundreds of Japanese breweries to learn about the techniques and art of making sake from those who have gained expertise through their lineage. In 2018, he launched Sake Hundred, a new portfolio of sake for a new generation of sake drinkers. He partnered with select breweries to help him produce his new line of high-end sake.

  “Our collection of sakes will take drinkers through a journey of both culture and taste, two elements that are closely intertwined in sake making. You can taste the personality of the sake brewer in our sake, just as you can taste the terroir of a fine wine,” noted Ikoma. He added, “Each part of Japan has its own culture and there is no better way to get to know that culture than through sake.”

  Sake Hundred released the limited edition Gengai with an eye-opening price tag of $3,100. Their flagship sake, Byakko Bespoke, made from the “king of sake rice,” Yamadanishiki retails at $380. Of course, other premium sake brands are eager to enter the U.S. Kikuhime ‘Kukurihime’ Ginjo Sake, produced by Kikuhime Brewery, is a top-shelf sake named as a tribute to the Goddess of Hakusan Mountain. The water near this mountain is used in this renowned, slowly aged sake for approximately ten years. Some retailers sell it for $650. Another notable high-end sake is Shukondeinoshiro Kamutachi. Producers of this sake only make 60 bottles a year. Luckily, the price tag on this sake is not as shocking. Getting a taste of this premium slow-matured rice wine is a possibility for those who do not mind splurging just a little. It retails at $229.

  Those in the know do not mind lower-priced sake while dining at their favorite sushi restaurant. Even if it sits at a lower price point, it is a great accompaniment to your meal. For many, this led them to explore the world of sake. Its rich cultural roots and the unique brewing process bring each bottle to life. Do not be surprised if it also becomes a member of the new-age beverage trend for individuals seeking wheat-free and gluten-free alcoholic drinks. For now, sipping on warmed sake feels just right.

Use This Idea to Save on Taxes

No one likes paying too much in taxes. In this post we’ll review an idea to use an outside service to reduce one of your tax obligations: the dreaded, and ever-increasing property tax.

Property tax is calculated by multiplying the tax rate by the assessed value of the property – land and buildings. For breweries, this can be a sizable expense.

Both the property tax rate and the assessed value change on a regular basis. Some years the rate goes up and the assessment goes down. In other years it’s just the opposite – the rate goes down and the assessment goes up.

The one thing that doesn’t change is that the total tax bill always goes up.

The process to assess the value of a property is subjective at best. Assessors will use comparable property sales and other metrics to gauge value, but rarely are two properties alike. Therefore, the value assigned to our properties is an approximation, an estimate, a best guess.

So, why not hire your own consultant to make a better estimate?

That’s what we did and the result was a savings of $20,000 per year on our tax bill.

The firm of DuCharme, McMillen and Associates guided us through the process, took up very little of our time, and saved us a lot of money in taxes.

DMA performs Assessment Reviews to identify opportunities for reducing real and personal property tax assessments. DMA’s comprehensive review is customized to your specific needs, and we focus on reducing both current and past assessments.

Our property tax professionals will review your entire portfolio of properties or individual properties of concern to you. Both real and personal property tax assessments are scrutinized to determine the accuracy of the data used by the taxing authority, valuation issues, state-specific treatment of property, and overlooked exemptions.

We communicate the results of each property’s review and, with your approval, take all necessary steps to implement the assessment reduction strategies available, including refund recovery. DMA’s property tax professionals have generated billions of dollars in real and personal property tax savings for our clients, many of which pertain to the beverage and bottling industry. We are leaders in identifying industry-specific issues having an impact on value.

Our property tax professionals have reviewed thousands of assessments in nearly every jurisdiction. DMA’s national scope and jurisdictional expertise means our clients realize the maximum benefit available.

If you’re interested in following in our footsteps, reach out to the folks at DMA. There are other firms that do similar work, but we had a good experience with these guys.

No one likes paying too much in taxes. Check out this idea and reduce property taxes in your beer business today.

New Brewery, Winery or Distillery Start Up

By: Kris Bohm: Distillery Now Consulting, LLC  

Starting up a new beverage alcohol business is hard. Whether making beer, wine, or spirits, the challenges are daunting and upfront costs are huge. No one takes the leap to start a new business knowing it will fail, but many of them will. Based on industry data, up to 40% of new beverage alcohol businesses fail. To create a successful business, there is a common question that arises during the planning phase of launching a new beverage alcohol business.

What is the difference between a successful business and one that fails?

  This massively important question should be answered early on for a new business. In doing so, key strategies will be defined for the business from the beginning as it ventures forward. In the following paragraphs, you will find not only the answer to this question, but also a further analysis of successful business practices.

Defining Success: Let’s take a moment to define and measure success in a beverage alcohol business. This definition applies whether in a brewery, winery, or a distillery. These measurements of success will allow us to look closer at the internal workings of the business. As you look closer you will find common traits among nearly every business that is successful. For the sake of this article we will narrowly define success using the specific individual metrics of profitability, sustainability and velocity.

Profitability: The first key metric and measurement of success is profitability. A business must either be profitable, or at a minimum near self-sustaining, with revenue covering the cost of operating the business. Achieving profitability is one of the biggest metrics that defines success. Reaching profitability is essential, as every successful business must be self-sustaining after a certain amount of time. If a business is not profitable for too long of time, it is almost certain to fail.

Sustainability: A successful business must be sustainable in the capacity to produce the products it intends to sell. To clarify, we do not mean sustainability from an environmental impact or energy usage standpoint. Sustainability in this model means the ability to sustain and meet demand for products through growth. For a business model to be sustainable the equipment must have the capacity to grow and meet new demand as the company grows. The reason this metric is so essential is that most businesses must grow to reach profitability. If your business cannot sustain growth it most likely can not grow to become profitable.

Velocity: A business needs to have regular sales to provide consistent revenue for the business. Velocity is a measurement of how quickly your business is turning raw materials into finished goods and selling those goods. High velocity of product means there will be more consistent cash flow for the business. As product velocity increases it is followed by increases in revenue and often economies of scale. Both of which help a business become successful.

Tripod Business Model: Most businesses achieve some of these measures of success, but not too many will achieve them all. Among those who do succeed in meeting all three, there is a common thread that these successful businesses share. They will usually have three separate divisions that perform distinct business activities. These three divisions are production, sales, and marketing. This concept we will refer to as the tripod business model. If the top of a tripod is a successful beverage alcohol business as measured by our success metrics, then there almost always exists these three divisions in the business that make up equally important legs that hold up the business. If you remove any of the three legs, it only leaves the business on two unstable legs, and in time the business will fall and is likely to fail. It is easy to take this observation and call it as incorrect, but if one was to look closely at established successful beverage alcohol businesses they would find truth in this observation.

  When a sizable amount of time and resources are heavily invested into sales and marketing, the business has a strong probability that it will flourish. Often the business will flourish so strongly that production will often feel constrained in the resources it needs to meet the demand of the business. This is the correct way to invest time, financial resources and manpower to grow. If too many resources are dedicated to production in most instances production will have far too much capacity and there will not be enough demand for product to keep production running near its capacity.

  Now that we have defined some measures of success and the business practices that support them, let’s look closer at the three practices that hold up a successful beverage alcohol business, through the lens of a distillery.

SALES: Sales is essential and paramount to the success of nearly any business that has a product they sell. It can be the easier path for a new distillery to focus on their production with a plan to only sell spirits through a tasting room or cocktail lounge that is part of the distillery. A business plan like this can work, but it has a low ceiling that will often restrict a distillery from growing to a successful level. Real sales of considerable volume come from a distillery selling products in the same market as its competitors. This means working to sell spirits in liquor stores, bars, restaurants and other venues. In this market there is immense competition. The only way to compete in the larger spirits market is by investing into sales. This means having people working for your business who are full time employees whose job is to pull your spirits through the market and drive sales.

MARKETING: Marketing is the driving force that directly links to the success of sales. Marketing can come in a multitude of forms, some obvious and some not so obvious. Public facing platforms, such as social media, websites, billboards, magazines, newspapers, and influencers are all forms of marketing in action. The more a consumer or target consumer encounters a brand, the higher the chance that the consumer will buy your brand. Without an active marketing plan in place, consumers will quickly lose sight of your brand. A strong marketing plan and the person or people to continually implement, monitor, and drive a marketing plan is paramount to achieving success. Marketing is the key difference that will take a brand to the next level and keep pulling it up from there. Although it can be easy to not put an emphasis on channeling resources to marketing, it would be a mistake to do so. Many businesses have launched with little to no resources committed to marketing. Often these launches feel successful, but by our measurements are in fact not truly successful. Oftentimes the business will get going and be selling some amounts of product but in most instances a lack of marketing will cause a business to plateau quickly.

PRODUCTION: This practice of manufacturing is easy to give too much focus in the business of distilling. Whether you are distilling whiskey from scratch or bottling sourced spirits, the production part of this business is extremely important. While production is absolutely paramount to the business, this does not mean that the bulk of resources the business has should be invested into the production of spirits, nor the labor or equipment to produce the spirits. If the bulk of resources go towards production thus starving sales and marketing, there will invariably be a lack of sales to cover the costs of production. Now the manufacturing of distilled spirits is in no way inexpensive. Considerable resources have to go to production for it to function. We are trying to urge you to consider all resources the business has and properly allocate them to all three practices.

The battle between the practices: If you ask most folks who work in this industry, whether they work in sales, marketing, or production, they will all likely tell you that their business function is the most important to the success of the business. To be fair, all these folks can probably make a reasonably sound argument to support that statement. It is normal that there is some friction between all three practices because they all have unique functions and priorities that often do not align with one another. For a business to be successful, production, sales, and marketing must work together to achieve the goals of the business. When common goals are shared it is much easier for each part of the business to work in harmony.

Beware the Franchise Law Lurking Behind Your Distribution Agreement  

By: Louis J. Terminello, Esq. and Bradley Berkman, Esq

No party enters a contract with the expectation that its terms will be unfavorable to them. Having drafted innumerable agreements of all sorts, including beverage alcohol distribution agreements, we have learned that the underlying principle for successful contract negotiations and drafting is fairness. Put another way, the rights and duties of the contracting parties must be clear on the face of the agreement and the detriment or consequences to the non-performing party are clearly stated and actionable. Brewers and their distributors are no exception. Each has their own expectations and definitions of success.

Generally, for the brewer it’s to gain points of distribution at on and off premise venues with the goal of obtaining volume expectations. For the distributor it is to see the long terms benefits of their distribution efforts within its assigned territory.  Distributors generally want a long-term relationship where they know their upfront efforts and costs will come back to them when any given brand attains a level of organic or self-sustained sales success. Brewers beware, however. Within the context of an ideal equitable agreement lies the malt-beverage franchise statute. These laws tend to favor the beer wholesaler and are superior in affect to any agreement executed between the parties. Many established brewers are aware of these statutes but many new brewers and brand owners are not. The purpose of this article is to introduce the new brewer and/or brand owner to franchise law basics and offer a few contract drafting suggestions that they can pass on to their contract lawyers that ultimately will create a brand success story that will benefit all parties to the agreement.

The Beer Franchise Law – the Basics

  First, virtually every state has codified the concept of “franchise” into law. An informal and unscientific survey reveals that only three (3) states in the U.S. do not have beer franchise laws on their books. As a brewer, it’s best to assume, without research, that the new wholesaler you’re considering appointing has the benefit of the law and to negotiate any distribution agreement with that in mind. By now, you’re likely wondering what these laws are.

  The National Beer Wholesalers Association (NBWA) rightfully states that that these laws are creatures of the 21st Amendment which grants the states the rights to regulate the distribution and sale of beverage alcohol within their borders. NBWA on its website states that these laws provide a number of positive regulatory contributions including providing consumers with beer choices by promoting the availability of diverse products,  they allow brewers access to the marketplace while preserving the distributors’ independence and act as a public safeguard by requiring responsible sales through the three-tier system. These benefits indeed may be true.

  But a closer look at the beer franchise laws also reveal that many statutory mandated provisions arguably benefit and favor the wholesaler operation and makes cancellation or termination of any brewer/distributor agreement an overwhelmingly difficult task for the brewer/brand owner. Broadly speaking, many beer franchise laws contain the following common elements:

•    Franchise agreements can be made either orally or written.

•    Franchise agreements appoint the distributor as the exclusive seller within an assigned territory and take effect at the time of first shipment by the brewer to distributor.

•    A franchise agreement can only be terminated or cancelled on a showing of good cause and by the showing of a material breach by a party. Almost always, the brewer bears the burden of the showing of material breach by the distributor.

•    Notice procedures and the timing of the same are explicitly stated in the statute(s) and must be complied with. Put another way, the brewer must notify the distributor that they are not performing according to the terms of the agreement.

•    Opportunities to cure must be provided by brewer to distributors in accordance with the statutory timeframes.

•    Buyout provisions and formulas to calculate brand buy-back are often included should the brewer desire to regain control over the brand.

  The above provides the reader with a basic framework of a franchise law. Given that these authors concentrate their legal efforts in Florida, a closer look at the Florida franchise law follows and provides a good example of some of the language that a brewer will likely see in the laws of other states. Florida codifies its franchise law in Florida statute 563.022. That statute is entitled “Relations between beer distributors and manufacturers.” Florida Statute 563.022 is lengthy indeed with over twenty-one (21) parts. To address each part and its subparts exceed this publication’s length requirements for this article. As a caveat, though, to the brewer/brand owner reader, the statute is detailed, carefully drafted and will be relied upon by the courts of Florida in any breach of contract case likely brought by a distributor as Plaintiff and brewer as Defendant.  A summary of the key points of the statute are offered below with an emphasis placed on unfair practices by the brewer/brand owner (supplier) and the grounds and procedures for terminating the distribution agreement.

Florida Statute 563.022

•    “Franchise” means a contract or agreement, either expressed or implied, whether oral or written, for a definite or indefinite period of time in which a manufacturer grants to a beer distributor the right to purchase, resell, and distribute any brand or brands offered by the manufacturer.

•    Any person who enters into agreement with beer distributors in Florida is subject to this section.

•    It shall be deemed a violation by supplier to:

o   Coerce or compel distributor to accept product they have not voluntarily ordered.

o   For supplier not to deliver reasonable quantities within a reasonable time after receiving a distributors order.

o   Coerce or compel or attempt to coerce or compel, a beer distributor to enter into any agreement (written or oral) supplementary to a franchise agreement by the threat of cancelling the franchise agreement.

o   To fix or maintain the price at which a distributor must resell the beer.

•    DISTRIBUTOR’S RESIGNATION, CANCELLATION, TERMINATION, FAILURE TO RENEW, OR REFUSAL TO CONTINUE. Notwithstanding any agreement a manufacturer shall not cause a distributor to resign from an agreement, or cancel, terminate, fail to renew, or refuse to continue under an agreement unless the manufacturer has complied with all of the following:

o    Has satisfied the applicable notice requirements.

o    Has acted in good faith.

o    Has good cause for the cancellation, termination, nonrenewal, discontinuance, or forced resignation. Good cause is defined as all the below occurring:

•    There is a failure by the distributor to comply with a provision of the agreement which is both reasonable and of material significance to the business relationship between the distributor and the manufacturer.

•    The manufacturer first acquired knowledge of the failure described in paragraph (a) not more than 18 months before the date notification was given.

•    The distributor was given written notice by the manufacturer of failure to comply with the agreement.

•    The distributor was afforded a reasonable opportunity to assert good faith efforts to comply with the agreement within the time limits provided for.

•    The distributor has been afforded 30 days in which to submit a plan of corrective action to comply with the agreement and an additional 90 days to cure such noncompliance in accordance with the plan or to sell his or her distributorship consistent with the provisions of this section.

•    BURDEN OF PROOF.—For each termination, cancellation, nonrenewal, or discontinuance, the manufacturer shall have the burden of showing that it has acted in good faith, that the notice requirements under this section have been complied with, and that there was good cause for the termination, cancellation, nonrenewal, or discontinuance.

•    The manufacturer shall furnish written notice of the termination, cancellation, nonrenewal, or discontinuance of an agreement to the distributor not less than 90 days before the effective date of the termination, cancellation, nonrenewal, or discontinuance; in no event shall the contractual term of any such franchise or selling agreement expire without the written consent of the beer distributor involved prior to the expiration of at least 90 days following such written notice. The notice shall be by certified mail and shall contain all of the following:

o    A statement of intention to terminate, cancel, not renew, or discontinue the agreement.

o    A statement of the reason for the termination, cancellation, nonrenewal, or discontinuance.

o    The date on which the termination, cancellation, nonrenewal, or discontinuance takes effect.

General Applicability, Takeaways and Contract Drafting Suggestions

  Although the above is specific to Florida, hopefully it provides the reader with a bit more knowledge concerning these franchise statutes. Once again, many of the concepts codified in Florida law can also be found in similar laws of other states. An essential term in the Florida law that will likely be found in the franchise laws of other states is “Good Cause.” A showing of good cause must be made by the brewer to terminate or cancel a distribution agreement with a wholesaler. In Florida all the elements noted above (see the italicized language) must be present to show good cause. Another essential element which will guide the next part of our discussion is this:

  “There is a failure by the distributor to comply with a provision of the agreement which is both reasonable and of material significance to the business relationship between the distributor and the manufacturer.”

  For the brewer, brand owner or manufacturer, it is elemental that the agreement contains provisions which are both reasonable and of material significance, which if breached and all other requirements are adhered to, may provide them with legally defensible grounds for termination or cancellation of the agreement. Many times distributors try to avoid the inclusion of material terms for obvious reasons by handing over boilerplate agreements for consideration by the brewer. These boilerplate agreements may look reasonable on their face but almost always lack “teeth” and rely solely on the statutory language that overwhelmingly favors the distributor.  But the smart brewer’s attorney will include reasonable material terms such as volume or points of distribution goals over a stated time period. Such material terms may be as simple as stating that the distributor must sell 100,000 cases for the first twelve months from the effective date of an agreement or establishing points of distribution by stating, as a rudimentary example, the distributor will achieve 75 placements (defining “placements” in a reasonable manner) in the first three months of the agreement and another 75 placements in the second three month period. As a contract drafting suggestion it is important to state that if the distributor fails to meet these goals these will be treated by the Parties as a material breach.

  The above recommendations are provided as suggestions only and are not intended as legal advice. The point of this article is to arm the new brewer with useful information so they may level the playing field to a limited degree with their wholesaler partners at the start of the sales and distribution relationship.  After all, the goal is to draft a fair agreement for all parties with the reasonable expectations of all are clearly stated. As a final caveat, beer wholesalers are powerful actors on the state stage. It is of paramount importance that the new brewer hire an experienced alcohol beverage attorney to assist in negotiations and contract drafting.

Is it Time to Order More Brick-and-Mortar Locations for Your Bar or Restaurant?

By: Raj Tulshan, Founder of Loan Mantra

Is commercial real estate making a comeback in the hospitality industry? After several extremely disruptive years of a global pandemic – and the resulting lockdowns, inflation, supply chain disruptions, and staffing shortages – is the future finally brighter for hospitality and real estate? Is it time to invest in more bars and restaurants – and if so, where exactly should you invest and when do you know if it is the right time?

Investing in real estate is a major, long-term commitment requiring careful consideration. Business owners must do their homework before signing a real estate contract, thinking about a host of factors, including the building’s location, the economy, zoning laws, the projected value of the property, and its expected appreciation over the coming years.

  Location is a huge factor. Is the property you’re considering in a good spot that will attract customers? Is the property attractive, in a safe, high-traffic location? Is the community vibrant and growing, with a history of economic stability? Is there easy access with ample parking, or is there a subway or bus stop nearby? What’s the neighborhood like? Is there considerable competition in your space, with tons of other bars and restaurants nearby? Is the neighborhood hungry (pardon the pun) for your type of establishment? Are the demographics right for your type of business? For instance, a heavy metal-themed bar might not flourish in a neighborhood with an older demographic.

  Despite major difficulties in 2020 and 2021, the hospitality and commercial real estate industries are finally in growth phases again, and this growth is likely to continue in 2022. Some things to consider include:

  People are going out again. Demand for in-person goods and services is rising again, as people want to eat at restaurants and go out for some beers. This pent-up demand is good for commercial real estate – and the bars, restaurants, and other businesses that occupy these buildings.

  Hospitality is rebounding. Now that the worst of the pandemic is (hopefully) behind us, business and leisure travel will start increasing again, and people will be dining out more frequently. The growing travel demand means hotels, restaurants, and bars may take on renovation and expansion projects that stalled during COVID. And, increasingly, hospitality business owners will invest in real estate to house their bars and restaurants.

  Secondary markets are growing. The evolution of remote and hybrid work means many employers and employees are moving out of high-rent cities into smaller markets that are more cost-effective. Recently, people have been leaving big, expensive cities like New York in droves, in favor of smaller, more affordable markets like Nashville and Tampa. If you’re thinking of opening a bar – or expanding your brand to new markets – consider these geographies.

  Operators are opting for building ownership. Some restaurant and bar brands are opting to own real estate rather than leasing. When leasing, the building owner is making money, regardless of whether your business is profitable. However, when you own the property, you’ll be building equity regardless of how your business is performing. Many restaurateurs and bar owners are choosing to buy instead of lease because it makes more financial sense over the long term. If you’re the property owner, you won’t have to worry about surprise rent increases. You also won’t need to abide by your landlord’s rules, giving you more freedom with your business and your property.

  Add new revenue streams to boost profitability. With labor shortages impacting the operating hours (and bottom lines) of hospitality businesses, restaurants and bars have realized the importance of having multiple revenue streams to increase profitability, especially if they’re working to cover the cost of their mortgage. Some brands are selling their own beers online or selling branded merchandise at their brick-and-mortar location and online. While people are finally coming back to dine and drink in-person, it’s wise to have additional revenue streams to keep a steady stream of revenue flowing – and so you can cover your mortgage and property taxes if you’re the building owner.

  If you’re financially able to swing it, buying property for your bar or restaurant can be a wise move. As experts predict that the worst of the pandemic is behind us, it looks like the hospitality and commercial real estate industries are poised for a rebound. If you’re thinking about a real estate investment for your hospitality business, be thoughtful and consider the decision carefully before signing the contract.

About the Author:

  Neeraj (Raj) Tulshan is the Founder and Managing Member of Loan Mantra, a financial advisory firm with best-in-class and proprietary fintech, BLUE (“Borrower Lender Underwriting Environment”). Loan Mantra, Powered by BLUE, is next-level finance: a one-stop-shop for business borrowers to secure traditional, SBA or MCA financing from trusted lenders in a secure, collaborative, and transparent platform. Clients turn to Raj because they know he will always pick up the phone and offer unparalleled financial counsel in a remarkably human—even friendly—way.

About Loan Mantra

  Loan Mantra is a financial services company designed to serve small and medium businesses with offices in New Jersey, Charleston, SC and New York. At Loan Mantra your success is our success. This means that our attention, purpose, and intention are all focused on you, our client. We are your ally to overcome obstacles, bringing peace through uncertain times to achieve your highest goals and aspirations. Your friendly, responsive agent will listen respectfully, and service your account actively through one of three locations in the US. We speak your language whether it’s English, Spanish, Hindi, Bengal, Hospitality, Laundry or Manicure, let us help you today. Connect with us at… or 855.700.BLUE (2583)

Optimizing Same Day At Home Beverage Delivery  

By: Anar Mammadov

It’s not easy to make a beverage brand succeed. The marketing must be just right, including packaging, positioning, and placement of ads. Securing distribution is another step; hitting your sales numbers starts with getting your product in stores. Even when those two are achieved, brands still need to find a customer base that will adopt them, sharing their enthusiasm and spreading the word about their products.

  In 2022, beverage brands that want to be successful can add another task to their to-do list: providing same-day delivery. Consumers, responding in large part to the stay-in-place culture that was inspired by the COVID-19 pandemic, have come to expect that most any item can be delivered to their door in a matter of hours, if not minutes. This is true of everything from bandages to burgers to big screen TVs. And it definitely includes beverages. When a customer realizes that they don’t have the beer they want for the cookout or decides a nice bottle of wine would go well with tonight’s dinner, they are looking more and more to same-day delivery options.

The Current State of Same-day Delivery

  For beverage brands that want to meet the same-day delivery expectation, there are a handful of delivery services that can help them. Looking at the reviews for those companies, however, reveals they leave quite a bit to be desired for the brand that is concerned about providing service that consistently inspires glowing reviews.

  Forbes recently ran an article rating alcohol delivery services. At the top of its list was Drizly, which is an online platform that allows users to get alcohol delivered from local retailers. Drizly promises delivery in less than 60 minutes and the “biggest selection for on-demand alcohol in the history of ever.”

  Forbes rated Drizly as the “Best Alcohol Delivery Service Overall,” but reviews show it to be hit or miss. According to the consumer review website Trustpilot, Drizly needs to do some work to become a five-star service. While 39 percent of the reviews described Drizly as “excellent,” 46 percent labeled it “bad.” The most frequent complaints from users focused on delivery times and fees that could be improved.

  Minibar is an online alcohol delivery platform that Forbes rated as “Best Quick Alcohol Delivery Service.” According to user reviews submitted to the online review site Influenster, Minibar provides better than four-star service, but still struggles in some areas, such as providing reliable ETA info.

If you are ordering alcohol with a takeout food order, Forbes says DoorDash is your best option. But users are not kind to DoorDash in their ratings on Trustpilot or

The Issues That Make Same-day Delivery Challenging

  What is keeping these companies from achieving consistently reliable delivery service?  Anar Mammadov, CEO of Senpex, has some ideas. Senpex is a logistics company that provides safe and reliable on-demand pickup and delivery services for a wide range of companies, including beverage companies. Central to the service that Senpex provides is an AI-powered engine that ensures all of the delivery factors are considered and routes are optimized.

  “There are a lot of factors that need to be considered if you are going to provide delivery in a timely, professional way,” explains Anar. “These include the volume of product, which dictates the size of the delivery vehicle needed, as well as traffic and other road conditions. When you have multiple drivers making multiple deliveries, it gets exponentially more difficult to plan. At Senpex, we rely on our route optimization algorithm to make sure that deliveries are possible and profitable.”

  Sen has some experience in making deliveries. Having worked with more than 3,000 corporate clients, Senpex has more than 500,000 successful deliveries and a 98 percent customer satisfaction rate. And thanks to the help of AI, it is able to achieve that for as little as $7 per delivery stop.

  Anar also highlights the need for reliable in-house logistics that simplify the delivery process by bringing inventory, ordering, and fulfillment together. In addition to partnering with companies to provide a delivery team, Senpex also offers its logistics platform as a SaaS solution for companies that want to increase the efficiency of their own delivery teams.

  “Having your own delivery fleet is not enough to meet same-day delivery expectations,” Anar explains. “You need sophisticated logistics that convert delivery details into optimized delivery routes. The platform needs to keep drivers updated in real-time to make sure that deliveries are not delayed. Being able to stay on top of ETAs allows you streamline deliveries and keep customers informed.”

  In its own operations, Senpex has found it essential to have an AI-empowered dispatch management tool that also provides drivers with an app to track and verify the delivery process.

  “Customers have a lot of expectations when it comes to same-day delivery, regardless of what the product is,” Anar explains. “They want safe and transparent delivery, competitive pricing, and instant real-time status updates. And they want it all to be managed by a professional delivery team. Businesses that can’t meet these expectations are risking their reputations.”

Navigating the Risks Associated with Same-day Delivery

  So what does all of this mean for beverage companies who are contemplating providing same-day delivery. The bottom line is that it is risky. There is a huge potential for craft beverage makers to grow their following through alcohol delivery, as the financial services platform Square recently reported. However, a bad delivery process can come across as a bad brand.

  Is there a solution? The answer may be found in a delivery system that provides a brand with more control than what is typically available through a generalized delivery service like DoorDash. Professional delivery services like Senpex exist to take your delivery to the next level.

  In addition to providing you with the tools that you need to do delivery well, a professional delivery service can also help you to scale that aspect of your business. They give you access to a large fleet while only requiring you to pay for the deliveries that you need. As the demand for delivery grows, you have additional drivers at the ready.

  As you explore the possibilities that are available, here are a few things you will want to consider.

Work with Drivers Who Know Your Business

  Delivering alcohol is not like delivering anything else. Several states have laws that regulate it. Before committing to working with a delivery service, make sure that they can provide drivers that comply with all applicable laws. In other words, choose a professional service that vets its drivers. Let them do the HR work for you.

  Also, make sure that the delivery service has the type of vehicles that are needed to facilitate your deliveries. Not only should they have refrigerated vehicles when that is necessary, but they should also have the right size vehicle. Vehicles that are too small will not be able to handle the load. But vehicles that are too big will often cost you more than you need to be paying. Ensuring that the right vehicle is available is one of the functions of route optimization.

Work with Companies Who Understand Delivery Logistics

  Whether you are partnering with a delivery company to utilize their drivers or simply taking advantage of their delivery logistics platform to optimize the efforts of your own delivery team, there are some things you should look for. For example, look for a platform that integrates with your existing ERP system. If you truly want to take advantage of delivery automation, it is better to avoid working with multiple systems.

  Dispatch management functionality should include tools that allow for real-time fleet tracking. This includes automatic status updates, electronic proof of delivery, and secure driver chat through simple and intuitive apps that are native to both iOS and Android.

  One often overlooked element of logistics optimization is deliveries that are managed by regular drivers on regular routes. Regular drivers know what to expect from both the route and the delivery destination, making them more capable of delivering the type of experience that will lead to repeat business. A company with a lot of driver turnover will not be the best option for businesses that want to provide a consistent customer experience.

  Finally, tools that empower route optimization are critical to success. Last mile delivery is one of the biggest challenges facing businesses today. It takes the most time, it costs the most money, and it serves as the key point of contact between the customer and the brand. It should be a top priority for any delivery service with which you choose to work.

  Overall, same-day delivery provides another revenue stream that beverage businesses should seriously consider tapping. The market clearly exists, even if the price that consumers are willing to pay has yet to be firmly established. Now is the time to explore the options that are available to create a system that can be profitable and provide a positive customer experience.

The Impact of COVID on Beer Tourism

By: Becky Garrison

As expected, brewery tours were among those hospitality offerings impacted by the ongoing global pandemic. While some experimented with online offerings, others simply closed shop or halted operations intermittently.

  For example, prior to COVID, Abil Bradshaw regularly gave tours of the Seattle-based Pike Brewing Company. Also, the brewery engaged Savor Seattle, a local tour provider, who gave tours daily. However, during COVID, Bradshaw moved to Spokane. Also, Savor Seattle ceased operations. While Pike remains understaffed and not in a position to offer tours, founder Charles Finkel can meet for a special tour at the brewery if given adequate notice. 

  Following are examples from a range of brewery tour operators regarding how they pivoted their operations during the past few years, as well as any plans they have for the future.

City Brew Tours, Portland, OR 

  At the end of 2019, City Brew Tours, a tour operator with operations in over 16 cities, had just taken over the operation of Brewvana Portland Brewery Tours. In this capacity, they operated the Original Portland Brew Tour and the Pacific Northwest is Best Tour, as well as private tours. Their Original Tour ran five hours long, visited four of their brewery affiliates and included a meal and beer pairing. The Pacific Northwest is Best tour is a shorter tour at  3 1/2 hours, with three stops and a craft beer pretzel snack.

  Like many other businesses in the hospitality industry, they stopped running their tours in March 2020 with no idea how long they would have to suspend operations. Also, they were unable to provide adequate employment for their beer guides and full-time staff. Chad Brodsky, the founder & CEO of CBT Group, LLC, reflects on this period of time. “There was no workaround and no safe solution to resume in-person tours during the worst of COVID-19. It took 15 months before we could slowly reopen brew tours in Portland, and even then, we had to take every precaution possible, including the limited number of guests, mask mandates, proof of vaccination and strict sanitation protocols.

  During the shuttering of their brew tours, they pivoted to virtual experiences under the brand Unboxed Experiences. Also, they repurposed Brewvana to be a beer lifestyle brand that offered a beer of the month club that explored a new beer city every month along with beer-making kits. This enabled them to bring their full-time staff back. Also, they were able to utilize some of their beer guides in leading online events, such as beer-making at home, beer and cheese pairings and ice cream float experiences.

  Since resuming operations in the summer of 2021, they’ve been able to reintroduce the two tours they were running before COVID-19. However, at times they had to temporarily suspend one or both of their Portland public tours due to the lingering issues brought about by the rise of COVID variants.

  According to Brodsky, staffing and finding reliable tour vans remain the biggest lingering challenges of COVID-19. He noted, “Our hiring process includes multiple steps and trial runs to ensure that new guides can safely lead a tour and are comfortable with the responsibility. The process takes time, and when potential hires decided it wasn’t for them, it would set us back and affect our ability to operate regular tour schedules. Plus, with a country-wide vehicle shortage, it took a long time to secure another passenger van to run more tours.”

Seattle Brewery Walking Tours, Seattle, WA

  Pre-COVID, Tim Lorang offered walking tours of breweries mostly in Seattle’s Ballard or Georgetown neighborhoods. These tours consisted of visiting three breweries for a guided beer tasting of four beers at each brewery. During this tour, he would talk about the beers and beer styles, along with the history of beers and focus on why Seattle was at the forefront of the craft brewing renaissance.

  Once COVID hit, he experienced a 69 percent reduction in his tours in 2020. Lorang experimented with designing webinars and making guides for beer tastings. However, he found this venture became problematic because he could not deliver beer samples to consumers, as he lacked the needed licenses required to send beer through the mail. Also, most breweries had a much more limited supply of beer on stock, and it proved tricky for him to come to a given brewery so he could film his segments. 

  In 2021, his numbers went up 340 percent from the previous year once breweries opened to the public. While Seattle was still not open to tourism, Lorang found that locals within the greater Seattle area booked his tours as they were desperate to go outside and socialize.

  As a number of breweries closed or changed hands, Lorang found he needed to reestablish a number of connections with breweries, hotel concierges, and other businesses that catered to the tourist trade, as many individuals were no longer working in the hospitality industry. Initially, he was limited to hosting tours outside with breweries, only allowing five people per table. Along those lines, the influx of customers wishing to explore the breweries, especially during the weekends, made it difficult at times to find space to host his tour group. During this time, proof of vaccination was a requirement to go on a tour.

  In reflecting on why he remains in business when so many other tour operators have closed shop, Lorang notes that one of the key reasons he survived is that he is a solo entrepreneur. “I don’t have a lot of overhead. I don’t have a van. I don’t have a lot of employees. I’m semi-retired. This is just a passion for me.”

Pedal Bike Tours, Portland, OR

  Since 2008, Pedal Bike Tours has combined two of Portland’s favorite activities by offering pub crawls on a bike. A typical three-hour bike tour would travel five miles and feature a tour of three breweries with a taster tray of six beers offered at each brewery. During the tour, the guide would talk about the history of the microbrewery movement in Portland.

  During COVID, they had no business in 2020, though they could resume business as usual in 2020 with only one of the breweries they frequented remaining closed. They gathered outside where there were no COVID requirements other than the occasional need to mask to go inside the brewery. Also, during this time period, they ceased doing scenic van tours in the Columbia Gorge area after losing their van. 

  At present, they are back to full operations. They do not plan on resuming van tours, choosing instead to focus on their cycling tours. Moving forward, they just added electric bikes, though the tours will not expand the distance they cover. At present, their biggest challenge remains the price of tours, as they had to raise their prices due to the cost of beer.

BeerQuest Walking Tours, Portland, OR

  Pre COVID, they offered a brewery tour and haunted pub tour and would average five to seven public tours a week. In addition, they offered private corporate tours. Once COVID hit, their sales were down by 80 percent. They had to shut down their brewery tour altogether after two of their partners went out of business. Also, those partners who remained open reduced their hours and days of operations. 

  Since COVID hit, their private tour business with corporate clients remains non-existent. Also, they struggle to find employees and remain low-staffed. At present, they offer three or four public tours per week. In particular, they could offer a lower-priced shorter version of their haunted pub tour, which appears to work better for their customers. 

Santa Rosa Beer Passport, Santa Rosa, CA

  In 2016, Visit Santa Rosa created the Santa Rosa Beer Passport as a way to explore and celebrate the world-class craft beer scene in Santa Rosa. While Sonoma County is best known for producing world-class wine, a band of brewery brothers and sisters began pioneering the production of artfully crafted local beers. As a result, this city evolved into a mecca for microbrew maniacs.

  Based on the massive popularity of Russian River Brewing Company’s annual two-week February release of Pliny the Younger, Visit Santa Rosa launched FeBREWary. This venture was a way to promote Santa Rosa’s brewing heritage, showcase artisan producers in the craft beer industry, educate the greater public and unite those who make local beer with those who love it during an otherwise slow time for tourism in Santa Rosa.

  Participation in the self-directed Beer Passport program is simple. At their leisure, craft brew lovers can take their passports to each of the participating 14 breweries and receive a stamp. After collecting at least 11 brewery stamps during the entire month of FeBREWary, participants receive a custom-designed, commemorative oversized Santa Rosa Beer Passport bottle opener medal and lanyard.

  This model proved to be a low-cost way to introduce visitors to the local brewery scene and a tool to inform potential consumers of the changing developments.

Increased Options in the Use of Yeast Strains Leads to Distilling Boom

By Gerald Dlubala

It’s an exciting time for craft distillers, for sure,” said Kris Wangelin, manager and distiller at Square One Brewery and Distillery in St Louis, Missouri. “When you see what’s currently happening in craft distilling, it’s easy to believe that distilling is on the cusp of some amazing breakthroughs, comparable to craft brewing a few years ago. A big part of the anticipated breakthroughs includes the ability and willingness to experiment by combining and mixing available yeast strains, then playing around with the fermentation times. As a result, the distilled spirits consumer will benefit with new choices and innovations in taste profiles that will ultimately lead the way to unique cocktail creations.”

  Wangelin tells Beverage Master Magazine that, unlike before, today’s craft distillers have a mindset that doesn’t limit the available yeast strain choices they can choose to use in their distilling process. Rather than sticking to the traditional distiller’s yeast options, more progressive-minded distillers have a mindset that revolves around the simple question of, why not? With this type of inclusive thought process comes more significant occurrences and acceptance of crossover in the yeast strains used in both brewing and distilling. For example, there’s now more intermingling of strains previously considered only distiller’s or brewer’s yeast. In addition, craft spirits producers are open to experimenting with producing new flavor profiles and combinations that feature different depths and twists from the more traditional spirit profiles that consumers recognize.

  “Yeast strains are not strictly divided into distilling and brewing anymore,” said Wangelin. “Now, it’s more about experimentation and differentiation rather than passing on a particular strain or idea because it hasn’t been done. Now we’re excited to try it to see what happens. Sometimes we succeed, sometimes it’s a fail and sometimes we find that a particular flavor profile can be a good fit for something other than initially intended. But every time we try, we hone the specifics for future distilling success. We know spirits consumers generally have a favorite, go-to spirit profile, which becomes their home point when comparing other spirits. Still, we know they are willing to venture out to see what new flavor profiles may be trending and what possibilities are out there, and ultimately, it’s the consumer that will determine if our efforts are successful.”

  “And today’s spirits consumers also want to know the distiller and the product origins more intimately and personally,” said Wangelin. “A great way to differentiate our products from competitors is to remain as locally-based as possible with ingredients, yeast-driven flavor profiles and all related suppliers. Promoting our product this way makes everything more personal for our consumers. They see us vested in the community and then feel the same level of support by drinking our products.

  Additionally, the availability of any distinctive yeast strains offers us a way to create our own niche and become known as the place to go for that unique flavor profile or mash bill. When that specificity includes being from a local market or our own grain supply, as some are doing here in the Midwest, the consumer gets to see where our spirits start, making for a great story.”

  In the future, Wangelin sees the yeast providers experimenting more with different yeast strains and combinations to offer even more unique and varied flavor profile choices. It’s becoming common for yeast suppliers to ask a distiller what flavor profile they would like to produce rather than telling the distiller what’s available. Then the yeast supplier gets to work on developing and propagating new strains to meet the distiller’s desires. Why not?

Seek Experience and Results When Choosing a Yeast Supplier

  “In the alcohol business, taste rules,” said Dr. Pat Heist, co-founder, co-owner and CSO of Ferm Solutions and Wilderness Trail Distillery. “And when talking about yeast use in distilling, we know that some yeasts remain traditionally great performers, but that doesn’t mean there’s no room for experimentation.”

  Ferm Solutions is a leading research, product development, engineering and technical service provider to the ethanol and distilled spirits industries. They offer a two-day, 16-hour functional fermentation class that focuses on different fermentation levels using the same yeast strain.

  “Using 10 flasks with the same mash, we can achieve 10 different and very distinguishable results with only minor or minimal changes in the process,” said Dr. Heist. “Evaluations on those flasks reveal the easily recognizable and different attributes and developing trends due to those minor process changes.

  The difference in aromas is very distinguishable at the fermentation level. Ferm Solutions has done an excellent job identifying and selecting those yeast strains that perform best at the beer level. Once the beer is distilled, picking out those differences becomes more challenging because they’re now more subtle and enshrouded in higher alcohol content. After aging in a barrel, it becomes even more difficult and sometimes near impossible to differentiate the individual strains, especially with using and reusing barrels that may have held different spirits or alcohols.”

  “For new or inexperienced distillers, the main thing to remember is that a quality distilling yeast will always make a good distillate, whether you’re talking whiskey, bourbon, rum or other spirits,” said Dr. Heist. “That’s the starting point. First and foremost, craft distillers must focus on making the best product they can make. As much as they may want to venture into experimentation and try out new ideas, it’s always best to stick to a traditional plan and mash bill at the onset. Then, once they get experience in producing a great product, they can look at things like fermentation times and what the yield differences are when choosing to experiment and make changes to their proven production parameters.”

  Dr. Heist tells Beverage Master Magazine that the innovation and difference a distiller is looking for in their product isn’t always just a product of a new or unique flavor profile. It can also result from being in a unique locale or having a natural geographic advantage.

  “Maybe you’re producing your spirits in a region known for a specific strain of corn or other grain,” said Dr. Heist. “Use that to your advantage in spirits production and marketing plan. You’re a local spirits producer supporting your local makers and community. It’s a win-win situation.”

  Additionally, Dr. Heist believes that a distiller should choose a yeast supplier and producer with quality experience backed by round-the-clock technical support featuring someone that will pick up the phone when you call.

“We at Ferm Solutions know that a problem needs to be addressed now, not only during standard office hours. We started a craft distillery just eight short years ago and are now the 14th largest bourbon producer in the world, so I like to think that we know what it takes to succeed in this business.”

Whether Staying Traditional Or Experimenting, Focused Yeast Management is Critical

  “Yeast is a wily customer,” said Brent Elliott, Master Distiller at Four Roses Distillery. “It will find a way to flourish under many conditions, so here at Four Roses, we are mindful of possible contaminations or mutations by remaining extremely careful in our strain storage, use and management. Any little change in that yeast strain could change your flavor profile. Even if you think the change is minimal, it’s still there.”

  Four Roses uses five main yeast strains, the same ones they’ve used from their beginnings. These strains provide flavor profiles that include delicate fruit, rich fruit, herbal notes, slight spice and floral essence. Elliott tells Beverage Master Magazine that they haven’t wavered from those strains and are never more than one step away from the original mother strain, which is kept frozen until needed for propagation and the next batch.”

  “We frequently and consistently refresh and genetically test our yeast to maintain quality and authenticity,” said Elliott. “We propagate in-house, refreshing weekly if needed. It is one of the most tedious tasks we perform, but it’s also one of the most important and demands the most focus to maintain our quality and flavor profile.”

  Elliott said that the production of yeast compounds is a vital and tedious part of distilling, whether using single or multiple strains to produce and develop different flavors for your spirits. Of course, yields are essential, but when it comes down to it, yeast strains and their use are all about the desired flavor profile.

  “As a producer, you look at all the variables, including how high of an ABV beer is produced before distilling and the different flavors produced at different temperatures,” said Elliott. “The effects become very obvious when you approach it in analytical ways. For example, taste-testing distillate after different yeast strains like ours allows you to detect each unique flavor added through that yeast strain. It’s pretty cool that you think you can taste notes of a certain flavor profile with a distilled spirit, and then through testing, analytical processes and experimentation, you actually narrow down that implied flavor to a specific strain and get definitive reasons for experiencing that flavor. For example, our floral strain produces more phenol alcohol than other yeast strains, resulting in rose oil compounds that undoubtedly give you that floral note you get when enjoying our product. There’s a direct correlation.”

  Four Roses uses White Labs out of San Diego for most of its yeast products. White Labs has an inclusive catalog from which to choose yeast strains depending on your distilling goals. For example, a distiller can choose the traditional and more predictable yeast strains that have historically been successful or decide to experiment with the non-traditional strains. Another option is for spirits producers to provide their mash bill for customized yeast strains to be developed that fit into their distilling visions.

  “There really is a whole world of possibilities when it comes to choosing and using different yeast strains,” said Elliott. “When Seagrams owned us, we had a massive research department with over 350 yeast strains, each with unique details and characteristics. Now, especially with micro-distilling, those producers have a better path and more availability to experiment, innovate and produce new flavor combinations and spirits profiles.”

How to Get a Grant to Support Your Craft Beverage Business

By: Alyssa L. Ochs

Starting a brewery or distillery can typically cost anywhere from $250,000 to $2 million, which is a lot of money to raise if you’re starting your new endeavor from scratch. Craft beverage businesses often need money from outside sources to launch and continue operations, and one potential source to look into is grant money.

  Grants can be hard to come by in this industry, but they do exist and can be worth the time and effort of applying for a sizable sum of no-strings-attached cash. If your brewery or distillery is looking for funding to get off the ground, keep going or make an expansion, a grant may be precisely what you need to achieve your goals.

Common Needs and Financing Options

  There are many reasons a craft beverage business might seek grant money, such as upgrading a brewing or distilling system, building or expanding a taproom or increasing production capabilities. Grants can also be helpful if you are looking to hire more staff, invest in more eco-friendly approaches or save a struggling business from having to close its doors. During the COVID-19 pandemic, the food and beverage industry saw an increase in grant opportunities to help brewers and distillers stay in business despite public gathering restrictions and government-mandated closures. However, those opportunities were somewhat short-lived and not intended to sustain these types of businesses long-term.

  However, grants are just one of the many ways a brewery or distillery might support itself during challenging times. It is possible to solicit donations or loans from family and friends, tap into savings accounts, apply for a Small Business Association loan or connect with professional investors for funding. Mainvest is an example of a specialized investment platform for professional craft brewers. At the same time, crowdfunding campaigns are still popular options for businesses with good outreach skills and a solid social media following. Yet grants are a preferred source of funding in many instances because they do not require repayment but likely just a follow-up report in the future to prove that grantees are putting the funds to good use.

Examples of Craft Beverage Grant Opportunities

  Grantmakers typically make their awards in cycles that occur once or twice yearly. The opportunities are ever-changing, so it is up to brewery and distillery owners to keep up with what is available and the relevant deadlines. Some funders offer grants annually, while others are more responsive to urgent needs and step up to help during times of emergency.

  For example, the Washington Department of Agriculture Relief and Recovery Grant for Wineries, Meaderies, Breweries, Cideries and Distilleries was a response to COVID-19 and intended to support businesses disrupted by the pandemic because they primarily rely on in-person sales. The money for these $15,000 grants came from a Disaster Response Account managed by the State of Washington Office of Financial Management. Aside from government organizations, some corporations award grants in this industry as part of a commitment to the local community. Yelp recently awarded $25 million in total relief to support independent and local restaurant and nightlife businesses impacted by COVID-19, Amazon started a $5 million Neighborhood Small Business Relief Fund to help small businesses in Seattle with fewer than 50 employees or less than $7 million in annual revenue and Facebook launched its Small Business Grants Program that awarded $100 million in grants and ad credits for up to 30,000 small businesses in over 30 countries. The Restaurants Act was part of the American Rescue Plan Act of 2021 and allowed alcoholic beverage trade groups to specifically include tasting and tap rooms in the definition of establishments that were eligible for grants.

  However, one of the best grantmakers to know is the Brewers Association, which regularly awards Craft Beer Research and Service Grants with priorities that include hop and barley research, draught beer quality studies, sustainability-related projects, supply chain programs and applied research opportunities. In a recent year, the Brewers Association awarded 13 of these grants, totaling nearly $400,000. The Brewers Association also awards Diversity, Equity and Inclusion Mini-Grants to support a more well-rounded and welcoming craft beverage industry through media productions, educational trainings and special events.

  Meanwhile, breweries and distilleries may benefit from the USDA grant program that the USDA’s Agricultural Marketing Service administers and that supports research projects to improve marketing, transportation and distributed-related services. The USDA’s Value-Added Producer Grant Program is an opportunity for farmers that grow products for distilleries in rural parts of the U.S.

  Also, on the distillery side of things, there is the Spirit Hub Independent Distillery Preservation Fund that supports independent distillers and the American Distilling Institute Distilling Research Grant. The Kentucky Distillers’ Association Lifting Spirits Foundation and the Nearest & Jack Advancement Initiative offer additional spirit-related funding and resources.

  Early in 2022, the Michigan Craft Beverage Council recommended $335,000 in grant funding for 13 projects related to research and education to advance the efforts for craft beer, spirits, hard cider and wine. The council’s priorities included climate change impacts, pest and disease management, sustainable water use, wastewater discharge projects, new hop varieties and soil health. Meanwhile, Bottleshare Grant Programs has provided emergency assistance to the craft beverage industry for at least 29 breweries, six state guilds and 175 individuals. Bottle Share Inc. is a charitable organization founded by Christopher Glenn and based in Kennesaw, Georgia that supports industry workers and businesses facing adversity and hardship. Other resources to bookmark for potential funding needs in the future are the Michael Jackson Foundation for Brewing & Distilling and the Pink Boots Society New Mexico State University Course for Brewing & Distilling in Belgium and the Netherlands.

Pros and Cons of Grant Funding

  Many breweries and distilleries are unaware of grant opportunities that exist due to limited promotion and public awareness but could very well be eligible to submit an application. Yet there are benefits to seeking a grant rather than pursuing other funding avenues. First, grants do not have to be repaid, which is a significant advantage over applying for a loan. However, grant applications can be time-consuming, and eventually getting the money in hand can take a substantial amount of time. Grants don’t typically cover overhead, indirect and administrative costs, yet each opportunity is unique and may focus on a specific project or equipment upgrade. There are not nearly as many grant opportunities in the craft beverage industry compared to the nonprofit sector. But applying for grants can get your business onto the radar of major corporations and foundations, thereby boosting your networking power with local community leaders and influencers.

  Some of the biggest names to know for brewery and distillery grants are the Brewers Association, distilling associations like the American Craft Spirits Association and American Distilling Institute and the USDA. State departments of agriculture and restaurant organizations also provide grant funding for the industry, as well as private donors who have personal interests in craft beverages and major corporations with a commitment to niche philanthropy.

Applying for a Brewing or Distilling Grant

  A basic internet search can lead you to current and open grant opportunities for breweries and distilleries, although the funding pool is limited, and the competition can be tough. Craft beverage producers should consider getting involved with industry associations and subscribing to publications and mailing lists to be among the first to know about grant opportunities and deadlines.

  Aside from funding in response to disasters and emergencies, one of the biggest trends in craft beverage grantmaking is encouraging diversity. These grants often help educate and employ women, people of color and members of the LGBTQ community in this industry. Promoting sustainability and eco-friendly practices is another current funding trend among grantmakers that care about craft beer and spirits.

  Although some grants have rolling deadlines and chances to apply at any time of the year, most opportunities have a series of established dates that require applicants to pay close attention. Look into the times when grant deadlines occur before your business even needs funding, just for informational purposes, and mark deadlines on a calendar in case an unexpected need should arise.

  If your business is eligible for a grant, read the guidelines closely, including the best ways to contact the funder for follow-up after you submit your materials. As you review grant proposal guidelines, important details to pay attention to include the budget year dates, duration of funding, funding policies and submission process. Use online applications whenever possible to expedite your application, and be specific in your application concerning the project budget and how you will meet measurable goals. In many instances, it is best to introduce your business and an initial description of what you need to a funder before submitting any official paperwork, either by telephone call, general inquiry email or by scheduling an in-person meeting. And if your business is fortunate enough to secure a grant, keep up with reporting requirements in good faith to set yourself up for potential support in the future if and when you might need it.

  Grants are just one piece of the puzzle to keep a brewery or distillery operational and successful, but they are oftentimes an underutilized asset that might be just what you need to get by or take a new direction with your beverage business.