Category: Archived Articles

Diaphragm Pumps Remain Popular Choice in Distillery Applications

Cyndi
diaphragm pumps in action

By: Gerald Dlubala

If you’re pouring your passion into distilling a quality crafted product, you need equipment that’s manufactured using that same level of passion. You want quality equipment that will not breakdown, is easily maintained, and most importantly, matches the needs of your distillery. It’s especially true for pumps because they are used throughout every stage of the distilling process, from bringing in water, through the mashing stages, wort recirculation, fermentation transfer, distilling, filtration and filling of barrels, totes and bottles. Quality pumps are critical for a distillery to retain the ability to replicate and deliver a consistent product for their consumers and should be chosen based on needs regarding pressure, proof of liquid to be transferred, head capacity, viscosity and acidity of the product being pumped.

Yamada America Inc. Stresses Versatility, Experience and Partnership

  “Diaphragm pumps have many advantages when compared to other pumping technologies used in distilleries, starting with affordability,” said Jeff Selig, National Sales and Marketing Manager for Yamada America Inc, an innovator in developing complete lines of air-operated double diaphragm pumps (AODD). “Additional out of the box advantages include infinitely variable flow rates needing no special controls and the ability to run dry and deadhead, all with the sensitivity to pump very clear, fragile liquids up through thicker liquids and even solids. Depending on a distilleries size, they are found in every application from simple waste transfer to product transfer to being used to pump cleaning and sanitizing solutions on through the final bottling.”

  “It’s a whole pumping system in a box,” said Selig. “With flow rates ranging from less than a gallon per minute (GPM) to over 200 GPM and made from materials like stainless steel, polypropylene and Kynar with food-grade diaphragms, an AODD is by far the most capable and flexible pump for distillery application use. And due to their unique flexible nature, the ability to be made explosion-proof and the ability to operate on compressed air, an AODD pump is usually mounted on a portable cart to use them for more than one application. The carts can be outfitted complete with filter regulators and the needed hoses for any application.”

  Diaphragm pumps are easy to maintain, with less moving and normal wear parts than other pump types. Diaphragms will eventually fail and need to be replaced, but preventative maintenance based on the number of pump strokes can prevent an emergency repair situation. Experienced manufacturers can estimate the life of their pumps for select applications, and repair can be done by a distributor or trained user. Kits are available that coincide with training videos to show the exact repair procedure for the corresponding pump.

  Selig tells Beverage Master Magazine that choosing a pump manufacturer with experience is important. But so are their partners.

  “You want to work with a company who has been there and done that,” said Selig. “Someone who has the right construction materials and the know-how to apply available technology. Then you want them to have a strong distribution network to help you at the facility level. Most distributors have trained staff with intimate knowledge of the pumps, inventory, and available repair services. If a facility has an experienced mechanic, he can quickly be trained to repair the pumps on-site as needed. A distillery builds a partnership with the manufacturer and their distributor to maximize uptime and be assured of timely repairs.”

  “New technology is always welcome,” said Selig. “For starters, companies are putting more effort into making their pumps smarter, with things like monitoring pump cycles or allowing externally controlled operation. Batching systems along with stroke monitoring and leak detection can quickly turn a simple pump into a true process pump. There are also evaluations on some material changes and modifications that will lead to longer pump lives. Quality manufacturers are in the pump business and strive to get their pumps to last as long as possible. They’re not in the parts business. The longer the pumps last, the more likely customers will keep buying them. We are currently introducing the next generation of pumps with upgrades to the operating air valves, pump communication and material technologies.”

  To add to the versatility of their AODD pumps, Selig said that his customers have been able to use their standard sanitary pumps without making any changes to switch to sanitizer production. Additionally, Yamada pumps have been provided to some of the largest sanitizer companies in the world.

Versamatic diaphragm Pumps Prove to be Gentle Workhorses

  “Several different pump options are available depending on what phase of the distilling process we’re looking at,” said Tim Caldwell, National Sales Manager of Versamatic, a global provider of the air-operated double-diaphragm (AODD) pumping solutions. “But the AODD pumps are always great choices because of their ability in matching distillery applications. Diaphragm pumps require less attention, can run dry, are self-priming and are designed to be portable so they can be used where needed. Our diaphragm pumps don’t need constant monitoring like some types of equipment. They will deadhead pressure and then stop pumping, so once a certain pressure is built up in the lines, the pump shuts off but will hold the pressure for immediate restart. Deadheading capabilities are efficient and very functional for filtration and cleaning, which can produce clogged filters.”

  Caldwell tells Beverage Master Magazine that Versamatic diaphragm pumps are popular in distilling because they can all be grounded for use with high proof vapors or liquids. The air inlet pressure and discharge valves are easy to adjust and control, and all you need is a clean air source sized for your process. Diaphragm pumps are excellent choices for everything from pumping tank overs through the bottle filling and cleaning and sanitization processes.

  “Diaphragm pumps work great to clean sludge and solids buildup when tank cleaning too,” said Caldwell. “They’re able to move what we call cake (semi-dry waste) out of the tanks through the pumps and lines. When you think of everything that gets included in the waste cleaning process, whether it’s naturally occurring sludge or other waste, why pay to have all the unfiltered wastewater removed if you can manage the waste by pumping it through a filter press that will allow your wastewater to be deposited down city sewer systems? Then you’ll just have a small amount of cake to dispose of, saving money.”

  When matching pumps to applications, Versamatic has pumps and lines for distilleries that are approved by the FDA and also adhere to the EU Framework Regulation 1935/2004, meaning that their products contain nothing that will leech into any food or beverage applications that come in contact with or run through them. What comes out is the exact same product that went in.

  “Diaphragm pumps like ours at Versamatic are just really good values for distillery use,” said Caldwell. “They can be used throughout the distillery, are shear sensitive and won’t damage or change the makeup of the product that flows through as can happen with some centrifugal pumps. There is no damage by impellers, and maintenance and repair are minimal. They can safely handle the distillery processes, they’re reliable, easy to maintain with long life capability. Replacing normal wear parts is fairly easy with parts or repair kits found at distributors that include all consumable parts for your pump. It’s one less thing for the distiller to worry about. And under changing conditions like those that we currently work in, we’ve had good success using diaphragm pumps in hand sanitizer conversions.”

KOVAL Distillery Chooses Diversity in Pump Selection

  The type of pumps you use may be a personal choice, but as Mark DeSimone, Vice President of KOVAL Distillery believes, it’s a good idea to match equipment to specific needs. KOVAL matches pump type to process and uses different manufacturers to get that match. By performing normal daily visual checks, their pumps require minimal maintenance with repairs done only when needed. Needed maintenance other than routine cleanings are occasional services to the impellers and screw pump stators.

  “We typically produce about 70,000 gallons a year using a variety of pumps in our distillery,” said DeSimone. “All are grounded and explosion-proof for safety, and chosen based on the material, alcohol content, viscosity and temperature of the product that we’re moving. For water circulation, we use several centrifugal pumps that move water through our heat exchanger and pump warm water captured during the distillation process to our mash tank for heat up. Both of these processes save us a good deal of energy as well. We move cold mash from the fermenters to our still with impeller pumps. Screw pumps are utilized for moving hot, thick, or sticky mash through our heat exchanger and for transfer to our fermenters. And then we use air diaphragm pumps to move alcohol between storage tanks and when filtering or bottling the final product.”

  As to any new technology, there hasn’t been a lot of groundbreaking developments to the traditional pumps that continue to do the job, but DeSimone tells Beverage Master Magazine that new improvements are always welcomed.

  “We’re always excited to see new advancements,” said DeSimone. “Our centrifugal and screw pumps have dry run sensors built into our automation systems that add to the lifespan of our equipment. It’s very important to keep everything running or at least have a backup for redundancy. It’s really tricky when something goes down and you’re unable to produce, so we naturally try to prevent that as much as we can.”

  As an experienced distiller, DeSimone said that there are two critical components to look for when choosing a pump supplier. “I feel it’s important to look towards and choose someone with specific experience in the distilling field. But just as importantly, that experienced supplier has to come with quality support that will be available whenever it’s needed.”

Barrels Old and New: Make Crafting Spirits a Careful Balance of Art & Science

Cyndi
man rearranging the barrels

By: Cheryl Gray

Distilleries are as selective about the barrels they use as they are about the ingredients that go into crafting their spirits. In fact, the right barrel plays an integral role in the entire process.

  Experts say that new barrels impart the highest wood impact into a spirit, giving it color and emphasizing characteristics exclusive to the wood. On the other hand, older barrels play a very different role and are used in a variety of ways by the spirits industry.

  Brown-Forman is the only spirits company in the world to handcraft its own barrels. Michael Nelson is Director of Brown-Forman Cooperage.

  “The barrel plays an important role in the making of whiskey,” said Nelson. “With more than 50% of the flavor and 100% of the whiskey’s color coming from the barrel, it is a key ingredient, not just a storage vessel. Barrels impart this flavor and color by sucking whiskey into the wood and through the char and layers of sugar behind it during the winter. When summer comes, it pushes the whiskey back out. That process repeats itself several times before it’s ready.”

  Brown-Forman has two cooperages, one in Louisville, Kentucky, and the other in Decatur, Alabama, both of which use American white oak to custom craft barrels for time-honored brands including Jack Daniels, Old Forester, Canadian Mist and Woodford Reserve. Few know better how barrels impact the end product than Woodford Reserve Master Distiller Chris Morris.

  “When crafting a straight whiskey, such as Woodford Reserve Bourbon or Rye, the use of a new, charred oak barrel is required by the federal standards of identity,” said Morris. “The pros of using a new barrel are that we achieve the product type and descriptor we desire. The cons would be that if we filled a used barrel, we wouldn’t. There are additional pros and cons as well—those of crafting a desired flavor profile. A new barrel is an intense source of color, aroma and flavor, while a used barrel is not. During our initial use of a new barrel, we extract approximately 85% of the heat-induced oak character. Therefore, to create the product profile that consumers expect, we must use new wood.”

  However, Morris said, that doesn’t exclude using barrels from another beverage class, a technique he calls “finishing.”

  “We have finished Woodford Reserve in wine barrels, port, sherry and cognac barrels for a specific flavor formation purpose. Of course, by finishing a straight whiskey in a barrel that was previously used in any form or fashion causes us to lose the straight whiskey designation. That con is superseded by the pro of getting a unique finished product.”

  Morris told Beverage Master Magazine the concept of using finishing barrels is an innovation that Woodford Reserve Distillery introduced to the whiskey industry in 2006 when it became the first distillery to “finish” a whiskey in Chardonnay barrels. The flavor notes found in such barrels, like citrus, apple, pear and vanilla, are also found, Morris said, on the Woodford Reserve flavor wheel.

  “The ‘finishing’ barrel is selected so that it will highlight and enhance an existing Woodford Reserve flavor,” he said. “This will create an out-of-balance flavor presentation by design, therefore making the ‘finished’ expression ‘flavor focused.’”

  Canton Cooperage is also headquartered in Kentucky. Its master coopers handcraft barrels for wineries and distilleries worldwide, using American white oak, aged in open air. The company creates “Spirit by Canton,” a line of branded barrels for its distillery clients, who place orders based on specific barrel details, including the age of the barrel’s wood.  Bruno Remy, a veteran enologist, is Vice President and Sales Manager for Canton Cooperage.

  “At Canton Cooperage, our production is limited to craft premium spirit barrels,” said Remy. “We make our barrels by order with American oak wood seasoned for 12 months, called ‘Spirit by Canton;’ two years, called ‘Spirit Premium;’ three years, called ‘Spirit Grand;’ four years, called ‘Spirit Limited Edition;’ and even a very limited production of barrels with five-year-old wood called ‘Spirit FIVE.’”

  Remy told Beverage Master Magazine that distilleries pay attention to a barrel’s every detail.  He said that list includes dimensions, the thickness of staves and headings, logo branding on the heads, number of hoops, position and diameters of the bunghole, toasting recipe and charring.

  Another critical factor that distilleries look for in a barrel is the percentage of leakage, with 0%, of course, being ideal. That’s where handcrafted barrels have the edge. Industrial barrel production can show a higher percentage of leakers compared to artisan production.

  As for the life span of a barrel, some barrels can last 30, 40, 50, even 100 years or more, provided they are well-kept. Barrel recycling is fundamental to the spirits industry. Not only is it environmentally responsible but also financially practical.

  “Commonly, the large distilleries have a contract with their cooperage to sell back the used barrels after a certain number of years. Large distilleries can also transfer used barrels to subsidiary distilleries when part of a group,” said Remy. “There is a market of used barrels, and effectively, the barrels can have a second life when shipped to Scotland, Ireland, Spain, Caribbean islands, Japan, Brazil and Chile for whiskey, Scotch, sherry, rums, cachaça, pisco, etc.”

  In producing its rum, Washington D.C.’s Potomac Distilling Company uses a mix of new and old barrels to create Thrasher’s Rum. Owner Todd Thrasher told Beverage Master Magazine that multiple factors go into his barrel choices.

  “One con associated with new barrels is cost. It tends to be very expensive,” said Thrasher. “Also, because we have limited storage space, I only use 30-gallon barrels, which are more expensive than 50-gallon barrels. I find that many American spirit drinkers tend to enjoy the taste of oak, so it definitely makes for an easier transition for whiskey drinkers and can open our rum up to a potential new audience of drinkers.”

  Thrasher said that he sources old barrels from a variety of local distilleries with whom he has relationships. He chooses used barrels that are, on average, three years old, and inspects them for any aesthetic defects, especially for any signs of leakage. That aside, he is sold on the benefits his distillery gains from barrel recycling.

  “Barrels can absolutely be recycled! For example, one of our barrels is a used peach brandy barrel. I find that the recycled barrels can imbue the new spirit with a slightly different profile or flavor.”

  New barrels, Thrasher said, can be harder to source but, when he does place an order, in addition to size, he looks for other specific characteristics. “All new barrels are number three char with medium-toast. That’s the barrel profile that best suits my needs.”

  Cooperages do not typically stock a lot of new barrels in their inventory since most are made-to-order, and empty barrels sitting too long can cause problems. Even with a new barrel, the wood is continually drying out. As it does, the barrel shrinks. Once a shrunken barrel gets filled, it will almost certainly leak.

  Heidi Korb, owner and co-founder of Black Swan Cooperage in Park Rapids, Minnesota, said her cooperage’s typical lead time for a barrel order is approximately two months but will vary depending on the quantity of the order.

  Korb told Beverage Master Magazine there is a wide range of possibilities for clients to consider when choosing barrels. “The variables and options are fairly endless, so it very much depends on what the customer is looking for, what product they are aging and their preferred aging timeframe,” she said. “Using new barrels, especially smaller barrels 30-gallon on down, can be a great way to test new products because the age time will be less than if aged in a standard 53- or 59-gallon barrel.”

  Although used barrels are a staple in the spirits industry, Korb said that careful inspection includes more than watching out for aesthetic imperfections or signs of leakage.

  “In used barrels, you want to avoid any barrels that have off-flavors or barrels that have gone sour. This means they have sat too long empty or were stored in an area where they started to grow mold,” Korb said. “If a barrel is treated well and used rather continuously, it can be used—for lack of a better term—a very long time. Think of your 20-80 plus year aged Scotch whiskey!”

  Virtually all experts agree that the best method to protect a barrel’s integrity is always to keep it full. Industry veterans recommend that if barrels are to be ricked, empty them with the plan in mind to fill them within hours. Cellar or rick house temperatures should stay between 45 to 65 degrees Fahrenheit. Moisture in a cellar is vital for the barrel’s physical stability and aging of the spirit, with 50% to 80% of humidity recommended. Low variances of temperature and moisture present the ideal environment.

  New or old, the common denominator in the industry conversation about barrels is that they are a significant part of the distilling process that uniquely defines a crafted spirit, giving that spirit an identity all its own.

Pike Brewing Company: Celebrating 30 Years as a Craft Beer Pioneer

Cyndi
2 men toasting

By: Becky Garrison

Why is Seattle-based Pike Brewing Company still standing 30 years after its 1989 founding when a growing number of craft breweries in the Pacific Northwest are either shuttering their doors or being bought out by global conglomerates?

  According to Pike’s co-founder and co-chair of its board, Charles Finkel, “There’s an unbelieva-ble amount of competition out there with a challenging business climate, but we’ve done our best to have a sustainable business model. We work really hard and have a good team of people.”

  Following his lifelong passion for imported beers, Finkel founded Merchant du Vin in 1978, so he could introduce consumers to craft beers from England, Scotland, Germany, Belgium, France and Norway, as well as several small American breweries. Jason Parker, co-founder of Copper-works Distilling and Pike’s first brewer, points to the difficulties in convincing Americans to give craft beer a chance. “Back then, nobody knew how to drink a quality beer, so Charles had to edu-cate each person bottle by bottle.”

  Finkel would enter a restaurant and ask to see their beer menu. Inevitably, the waiter would re-spond, “We don’t have a beer menu, but I can tell you what we have.” The waiter would recite names of commercial beers like Budweiser, Coors Light, and Rainer. Then Finkel would reply, “Oh, just bring me some jug wine.” When they noted they don’t serve that type of wine here, he would respond, “Yes, but you serve that type of beer.” Following this exchange, he would set out some imported beers and encourage them to up their beer game.

  In assessing the Seattle beer culture circa 1980, Christian Krogstad, Seattle native and founder of House Spirits Distillery in Portland, Oregon, recalls being smitten by the unusual styles and packaging of Merchant du Vin’s imported beers. In Krogstad’s estimation, “More people than you can imagine were influenced by the beers they imported. I credit them more than any mi-crobrewery or homebrewing writer with creating the spark that led to the explosion in American craft brewing.” In the spirit of other like-minded folks, Krogstad tried his hand at home brewing, and he discovered his vocation in this process.

The Founding of Pike Place Brewery

  In the late 1980s, Finkel took his experience influencing some of the finest breweries on the way that they brewed, packaged and marketed their beer, and founded his own brewery. “I felt if I could sell beer from Bavaria, Yorkshire or Belgium at a price level that was the highest in histo-ry, I could do at least as good, if not better, here in Seattle.”

  On October 17, 1989, the Pike Place Brewery announced its grand opening courtesy of the World’s Shortest Non-Motorized Uphill Parade. John Farias of Liberty Malt Supply led the pa-rade pushing a two-wheeled silver hand truck filled with a keg of Pike Pale Ale. Following Fari-as were the Finkels, Franz and Angela Inselkammer from Bavaria’s Ayinger Brewery, and Jason Parker, along with local media and about a hundred beer aficionados. Also included in the parade were dogs, a cat, a walking geoduck from the Sheraton Hotel, a llama from the Herb Farm and an oyster. After a two-block uphill walk, the menagerie arrived at Cutter’s Bay House, where Franz Inselkammer tapped and poured the inaugural pint of Pike Pale Ale.

  Finkel chose the brewery’s location on Western Avenue due to its uphill location so he could in-stall a gravity-flow steam-powered system. At the time, the brewery’s equipment was state-of-the-art with a four-barrel copper kettle custom made by Seattle’s Alaska Copper and Brass Com-pany.

  When Dick Cantwell, currently the Head of Brewing Operations for Magnolia Beer Company in San Francisco, was hired in 1991 after Parker went back to college, the craft brewing scene was in its infancy. About 200 U.S. breweries were in existence, with Pike being the third in the great-er Seattle area. Cantwell recollects, “By today’s standards, most people made mediocre beer, but the scene was exciting, and we all became lifelong friends.”

  In addition to brewing their perennial best-selling Pike Pale Ale along with a porter and Pike XXXXX Stout, Pike also has the distinction of making one of the first IPAs in the United States. By developing relationships with companies such as Skagit Valley Malting and area grain farm-ers, Finkel sourced local products to create flavorful beers.

  Finkel worked in conjunction with his wife Rose Ann, co-founder and co-chair of the board. Parker sums up their creative, collaborative relationship. “Charles is the artistic force while Rose Ann is the business financier. When he wants to bring a vision to life, Charles needs a team who can come behind him and help him figure out how to do that.” Finkel’s artistic touch can also be found on Pike’s iconic beer logos. The art is distinctly “Charles Finkel” in its design, colors and Victorian-style lettering.

Opening of Pike Pub

  In 1996, they moved to a larger 30-barrel brewery located at the site of a former winery on First Avenue. Rose Ann’s experience of owning a cooking store played a seminal role in their mission to combine craft beer with local, sustainable food. Also, they changed their name to the Pike Brewing Company due to their proximity to Pike Place Market.

  Concurrently, they launched Pike Pub as a destination place that offers a curated experience visi-tors cannot experience elsewhere. For example, the pub houses the Microbrewery Museum, a collection of Finkel’s personal artifacts that document 9,000 years of brewing history. “My goal was to encourage people through our decorations to view beer as cultural items instead of a mass-marketed highly advertised commodity,” Finkel tells Beverage Master Magazine.

  Then after realizing that the brewery and pub could not stand on its own without the support of parent company Merchant Du Vin, the Finkels sold the brewery and pub to Merchant Du Vin the following year. Drew Gillespie, Pike’s current president, began as a line cook in 1998 during this period, which he describes as the Dark Ages. “There wasn’t a lot of investment or passion within the company.”

  After realizing they were missing their brewery and the maturation of the industry, the Finkels purchased Pike back in 2006. Gillespie describes this purchase as “a rebirth that really picked up the heart and soul that the Finkels bring to their work.” Upon their return, the Finkels further built up their community connections, ethical business practices and sustainability focus.

  Among their numerous community projects include a long-standing commitment to Planned Parenthood, where Charles Finkel served on their board before founding Merchant du Vin. They brew a specialty beer titled Morning After Pale as a fundraiser for Planned Parenthood, which they offer during their annual Women in Beer event. Also, their annual event, Chocofest, sup-ports Long Live the Kings, an environmental group dedicated to preserving local salmon.

Moving Towards the Future

  Currently, Pike has five owners, who are all members of the board: the Finkels, Gillespie, VP and Controller Patti Baker and Executive Chef Gary Marx. “We call this selling in versus selling out,” Gillespie says. “You have to have people on site who are really focused on how to make it successful and willing to put their life into it.”

  Pike further expanding its brewing capacity in 2017 by launching Tankard & Tun. This intimate seafood restaurant located on the second floor above the pub enabled them to serve dishes like oysters on the half shell that are hard to serve in a hectic pub environment.

  They also introduced cocktails, which Parker says is a relatively new development in brewpubs. “There was a time, if you were a brewery and you had cocktails, you were seen as not committed to being a brewery. You must think your beer is not good enough to be able to stand on its own. But that’s sort of like saying we’re not going to serve wine either because no wine can be better than our beer. Well, that’s wrong.” 

  Presently, Pike partners with local distilleries, including Woodenville Whiskey, Dry Fly Distil-ling and Copperworks Distilling for their barrel-aged program, which they look to expand in 2020. They also plan on making more sour beers to meet the customer demand for more extreme types of beers.

  Despite these innovations, Pike’s prime focus remains its consistency. “We like being slow-moving. We don’t feel we need to expand and get giant. We just want to have a nice solid base, two restaurants and a beer distribution network in the Pacific Northwest,” says Gillespie.

  To this end, they’ve made in-roads in Hawaii and Alaska and want to establish a presence in Or-egon. In 2018, Pike went global by launching a collaboration in Japan with hopes to expand the Pike concept to China through a Chinese partner.

  “If we could maximize the capacity of the brewery, we will be helping the local community and being a good employer,” says Gillespie. “That’s a recipe for success for our little mini-empire.”

Post-harvest Tips for Hop Growers

Cyndi
truck hauling trees

By: Alyssa L. Ochs

Hop growers spend much of the year planning and preparing for harvest, which is typically a busy time in the late summer through early fall. But once harvest season has wrapped up, there is still plenty of work to be done on a hop farm.

Hops by the Season

  Running a hop farm is a four-season endeavor because there is something unique and important to do every time of the year.

  In the winter, it’s time for trellis construction, planting cover crops and transferring potted plants to greenhouses.

  Springtime is ideal for applying fertilizer, pruning primary shoots to prevent early disease, and tying twine to the trellis. Spring is also the time to establish training dates and install drip irrigation tubing.

  When summer rolls around, hop farmers see the blooms occurring, monitor the crops to prevent loss to disease and pests, and plan for harvest between August and October.

  In fall, it’s time to inspect the quality of the harvested crop, have brewers visit the farm to select hops, and plan for the first frost when plants go into dormancy.

  While sometimes overlooked and not given the attention it deserves, the post-harvest season is crucial for hop growers as part of a year-around maintenance schedule. The tasks relevant to this time prevent pests and disease for the next season and help growers get their orders in well in advance, so they’re not rushing at the last minute. Meanwhile, post-harvest provides an opportunity to set up the next season for success by recalling lessons learned from the past growing season.

Soil Considerations

  Soil maintenance should be at the top of the priority list for any hop grower’s post-harvest season. After harvesting the hops, growers can spend their time wisely by draining irrigation systems, cleaning filters, tilling the hop yard and planting winter crops or perennial cover crops. This time is also when growers can run harvested bines through a chipper to create mulch or add to a compost pile and fertilize the area to replace nutrients in the soil. Typically, applications of nitrogen—80 pounds per acre or less—are most effective. Fertilizer should be applied along rows, not on top, to prevent rot and disease.

  Consider changing the irrigation frequency after harvest, and only irrigate if the area is experiencing a drought to prevent downy mildew and other diseases. To restore nutrients and increase the health of next year’s hops, add lime, potassium or gypsum. It is often best to apply sulfur to the field soil after harvest in small applications to lower the soil pH. It’s also a good idea to dig up a selection of plants to inspect the roots and assess the soil compaction, decay and lesions before simply replanting the crowns.

Pest and Disease Control Considerations

  Hop growers can get ahead of pests and disease problems by paying more attention to these issues right after harvest. To fight downy mildew, a common problem on hops at this time of year, try using systemic fungicides and developing a protectant treatment program for next spring.

  Other common insects to watch for in fall are two-spotted spider mites, damson hop aphids and potato leafhoppers. When high populations of these pests exist, it may be beneficial to apply insecticide in the post-harvest period. It may also be required to obtain a burning permit if burning pest-infested plant debris is allowed in the area.

Post-harvest Hop Drying

  Also important is the post-harvest drying of hops to prevent mold and mildew, while allowing for proper storage to maintain high crop quality. This task is timely and relevant because harvested hops are rarely needed for immediate use. Right after harvesting, hops have high moisture content, often greater than 75% moisture contained within the fruit, leaves and flowers. Moisture content between 10 and 15% is ideal for preservation, but this may vary slightly based on hop varietal. Timely drying of hops will help preserve their flavors and aromas while keeping them fresh.

  Growers can dry hops in ambient air with no heat added or use an oast to dry hops with temperature and air controls in a dedicated building or cabinet. Oasts can be convenient for large-scale hop producers but are often not practical or affordable for smaller hop growers with more modest crop yields. Alternatively, food dehydrators, ovens and microwaves are used by hop growers to aid the heated drying process. A drying rig can be used for the small-scale, low-cost drying of hop cones and other plant material where low-temperature drying is preferred.

Packaging the Hops

  After hops are dried, it is time to store them in airtight packaging in a cool, dark, dry place. The hops should remain there until they are ready to be used.

  Preserve hop cones and pellets in tightly sealed bags, while getting as much air out of the packaging as possible through manual pressing, vacuum removal, or nitrogen gas-assisted removal. Nitrogen purging is most effective but requires specialized equipment. Many medium-sized hop producers rely upon a food-grade vacuum sealing machine to package and store their hops in either multi-layer plastic or mylar vacuum-sealed bags. Hops are generally best used within a year of harvesting; however, properly packaged hops can often enjoy an extended shelf-life of up to five years.

Pruning and Trimming Considerations

  Concerning maintaining the plants, this is the time to prune long stems off at the ground level. Top-dress hops with compost and mulch now too, which is especially important when winter temperatures drop below zero degrees Fahrenheit.

  For infected hops, trim the bines short after leaf drop and then remove the debris. Cut at about two inches above the new crown buds for bines that are still green and not killed off from the frost. Then cover the remaining crown buds lightly with soil or mulch before winter comes. It’s best to get rid of weeds promptly, so they don’t lead to higher disease infections.

Trellis Repair Considerations

  After harvest, but before winter is also an ideal time to inspect trellises and make any necessary repairs to the construction. If any trellis repairs are needed, stock up on supplies including anchor and interior pole materials, cable, anchor pins, clamps, staples, nails and wires. Tools and machinery potentially needed for the job include a tractor, shovels, cable pullers, hammers, sockets, tampers and a flatbed trailer.

Hop Stock Considerations

  To prepare for the growing season ahead, start browsing different hops and the pricing from several competitors. This way, hop growers can learn about new varieties, the care they require and their general characteristics and benefits.

Contract Review Considerations

  On the administrative side, early fall is an ideal time to review current contract options with trusted suppliers to secure high-quality hops for many years to come. Work on establishing good long-term relationships with suppliers and other relevant companies while reevaluating hop needs and plans for the future. Compare the cost options, and look into getting a private pesticide license if needed. Such a permit may be required in some areas for any use of general or organic pesticide on a crop for sale.

Other Post-harvest Tasks

  Around this time of the year, make sure that trickle and drip lines and tape are drained and don’t have water pockets that could freeze in the winter. Cover lines that will remain in the field with plastic or mulch to prevent rodent damage. Growers with animals on their property can allow chickens or sheep back into the area to finish the cleanup process in the fall. Some hop growers even use hop bines as materials for winter wreaths as a side hobby or small business, so think creatively during any downtime after harvest.

Reflect and Reassess Operations

  Post-harvest is also a valuable time to reflect upon the past season. Jot down a few notes about problem areas in the hop field or general operations to address anything related to nutrients, pests or other issues for next season.

  With the craft brewery scene continuing to expand worldwide, now is an exciting time to be a hop grower and be such an integral part of the craft beverage industry.

The Canadian Ready-to-Drink Canned Cocktail Movement

Cyndi
4 beer cans sticking together

By: Alyssa Andres

Over the past five years, the Canadian ready-to-drink cocktail scene has gone from passé to a huge craze, hitting liquor stores across the country. Blossoming from a limited selection of sugary beverages to a sophisticated array of craft canned cocktails, RTD beverages act as an easy and accessible option for cocktail lovers. As more and more breweries and distilleries make the move to include alternative, ready-to-drink choices to their repertoire, it is clear Canadians love a canned cocktail. The movement has sparked an array of new RTD options across the country, each offering a unique, local flair.

  In 2015, the biggest names in RTD cocktails on Canadian liquor store shelves were Smirnoff Ice, Palm Bay and Mike’s Hard Lemonade. They were most popular amongst teenagers and novice drinkers but left something to be desired amongst cocktail connoisseurs. Still, sales of these vodka-based coolers were on the rise each year as the only portable alternative to beer. As consumers continued to reach for these products to bring along to the beach or a picnic at the park, the concept of the cooler started to evolve, and the idea of a sophisticated, more adult RTD cocktail was born.

  In 2016, a new, more refined canned cocktail arrived on the scene in Ontario. That year Georgian Bay Spirit Co., located in Northern Ontario, released the Georgian Bay Gin Smash, made with their award-winning, handcrafted London style dry gin. The Gin Smash, flavoured with lemon, lime, tangerine and a hint of mint, was an instant hit, earning rave reviews from The Toronto Star that called it “easily the best pre-mixed cocktail to have hit the shelves of the LCBO (Liquor Control Board of Ontario).” They could not keep it on the shelves, doubling their sales in 2017.

  The Gin Smash appeals to a more mature audience. The gin is made using wild juniper berries handpicked along the shores of Georgian Bay. It’s light, complex and refreshing while still having some sweetness. Since the remarkable reception of the original Gin Smash, Georgian Bay Distillers has released seven variations of RTD canned cocktails, including a Smashed Tea that combines the original Gin Smash recipe with black and Darjeeling tea. Following the Gin Smash’s enormous success, many breweries and distilleries across the country added ready-to-drink cocktails to their lineup.

  No longer are these RTD beverages marketed explicitly to young adults. Many companies are opting for a dry and often sugar-free alternative to the everyday canned cocktail using natural flavours and sweeteners. On the west coast, Vancouver company Ocean Blu has created a vodka-based beverage sweetened with stevia, a natural alternative to refined sugar. With zero grams of sugar and 100 calories per serving, these drinks are perfect for the health-conscious consumer and a far cry from the limited offerings of the early 2000s. True to its name, Ocean Blu is also dedicated to the environment, using eco-friendly packaging and donating 25 cents from the sale of every six-pack to ocean shoreline clean-up initiatives and marine wildlife conservation, pivotal to the west coast’s ecosystem.

  Further inland in Kelowna, British Columbia, Orchard City Distilling has created their own conscious cocktail, Zen Kombucha, which combines vodka with kombucha and other organic herbs and botanicals in a convenient can. The health tonic/alcoholic beverage is the first of its kind in Canada and hints at a potential future evolution of hybrid RTD cocktails that could cross over into health elixirs and probiotics.

  While British Columbia distillers create health-conscious canned cocktails, in Alberta, Canada, they are crafting a spirit that is unique to the province. Eau Claire Distillery in Turner Valley created Alberta’s first line of craft cocktails. They instill a “field-to-glass” attitude in their small-batch craft cocktails, using local ingredients like spruce and handcrafted techniques, including hand-harvesting and hand-sealing. Master distiller, Caitlin Quinn, has created a unique spirit made with prickly pears that are indigenous to Southern Alberta. She uses the Prickly Pear Equineox, a sweet, barley-based alternative to gin or vodka, in the Eau Claire Equineox Mule. The spirit is naturally sweet, intensely fruity and has hints of watermelon and bubble gum.  The Equineox Mule combines this unusual spirit with a ginger beer made by local brewery, Annex Ale Project, and is a great option for cocktail lovers interested in Alberta’s local flavours.

  The emphasis on local flavours doesn’t stop in the west. The prairies of Canada are also serving up a variety of RTD cocktails. Prairie Cherry and Prairie Pear are the results of a collaboration between Manitoba’s Fort Garry Brewing Company and Capital K Distillery. These RTD cocktails are produced in Winnipeg using small-batch gin made from Manitoba grains and are released seasonally, selling out each summer in liquor stores across the province. Fort Garry Brewing Co. general manager, Scott Shupeniuk, says the duo of gin beverages has been a huge success. They plan to continue releasing these types of beverages despite being predominantly focused on beer most of the year. Many breweries and distilleries are choosing to release variations of their usual offerings to please consumers looking for new drinks to sip on this summer. 

  Canada’s signature summer drink, The Bloody Caesar, has also evolved with the RTD movement. Four variations of the original cocktail are now available at liquor stores across the country, including Pickled Bean, Lime and The Works. Made with Mott’s Clamato juice, vodka, tabasco and Worcestershire, the Caesar is just one example of a classic cocktail that now comes pre-mixed in a can, no bartending skills necessary. This is a huge draw when most bars have been closed since the start of the COVID-19 pandemic. The notion of sitting down and ordering a cocktail at a bar is no longer, so more brands are choosing to offer classic cocktails in a pre-mixed, RTD format.

  So, what’s next in the Canadian ready-to-drink cocktail movement? As single-serving pre-mixed cocktails become more popular amongst consumers, a new line of spirit-forward beverages has started to appear on the Canadian RTD scene. Dillon’s Distillers in Grimsby, Ontario, has created a single-serving Negroni they call The Professor’s Negroni, available at Ontario liquor stores. At 18.4% alcohol by volume, this product is the first of its kind in Canada. It took two years for Dillon’s to get the product on the shelf due to the cocktail’s spirit-forward nature. As of May 2019, Canada set in place restrictions on ABV in canned cocktails. Previously a 568 mL beverage could contain up to 11.9% ABV. Now, a 473 mL canned cocktail may contain 5.4% ABV, while a 568 mL can is limited to just 4.5% ABV. Dillon’s Distillers has gotten around these restrictions by classifying their pre-mixed Negroni as a spirit and serving it in 125 mL glass bottles. It isn’t located in the RTD section of liquor stores; it is placed on the shelves alongside bottles of liqueurs and aperitivos, despite being pre-mixed and ready to pour over ice for quick and easy cocktail convenience.

  The Professor’s Negroni is an example of a truly artisanal RTD cocktail. Dillon’s Distillery crafts all three ingredients for the cocktail, from the Dry Gin to the vermouth to the bitter aperitivo, made using rhubarb, violet and wormwood. The distillery believes this sort of spirit-forward RTD cocktail fits their brand better than a canned drink and allows them to showcase what they do best. The distillery has even tried a kegged version of the classic Negroni, ideal for busy bartenders and extremely cost-efficient for restaurants. As the idea of easy, accessible, pre-mixed beverages continues to evolve, RTD cocktails might be the new alternative to traditional bartending. 

  Presently, new RTD products are hitting the shelves each month in Canada. From seltzers to spiked iced teas to classic cocktails-in-a-can, the options are limitless. Unique cocktail creations are becoming more common with flavours that might be surprising to find. Collective Arts in Hamilton, Ontario, is producing an artisanal dry gin soda with grapefruit, lemon and thyme. Little Buddha Cocktail Company in Toronto makes a premium distilled vodka-based cocktail with grilled pineapple and rosemary that also contains carrot and pumpkin juice. No matter their preference, there’s an option for every cocktail lover.

  With Canadians deprived of bars and restaurants for the majority of 2020 due to the COVID-19 pandemic, and therefore unable to grab a cocktail made by a proper bartender, the pre-mixed cocktail movement may continue to rise. With seemingly many more days of social distancing ahead, RTD beverages are the perfect option for summer outdoor gatherings and backyard barbeques. Opting for an RTD beverage makes perfect sense for most, as opposed to spending money stocking a bar cart with expensive liquor bottles and taking the time to prepare the perfect cocktail to-go. As the food and beverage and hospitality industries continue to change and evolve through this pandemic, so too will the vision of the RTD cocktail.

Beyond the Mask: Rebuilding after COVID-19

Cyndi
earth covered with face mask

By: Tracey L. Kelley

  At press time, details about the future economic impact of the pandemic are in constant fluctuation. However, most forecasters are certain greater challenges loom large. 

  It’s not for a lack of effort. There were many expedient pivots in the craft beverage industry, from the much-lauded manufacturing of hand sanitizer and flipping stale beer into whiskey to crafting subscription boxes and extending off-premise sales.

So, now what? We asked business consultants to provide their perspectives, and they eagerly offered frank but encouraging relaunch and repositioning action steps we hope spark ideas. Our experts include:

  Jacob Halls, partner, and Rick Laxague, partner, Craft Beverage Consultants in Columbia, Missouri. Halls advises in areas of business strategy, compliance and marketing and distribution. Laxague provides plans for distribution, operations and sales and marketing. Laxague said, “Our experts have a combined 150 years in the alcoholic beverage industry, with deep knowledge in everything from sales and distribution, production and regulatory compliance to marketing, package design, event planning, IT, (social) media, hospitality and even values-based executive coaching.”

  Scott Schiller, managing director of Thoroughbred Spirits Group, which specializes in helping new and established spirit companies. Schiller said, “Since 2009, our Chicago-based company has helped launch more than 30 distilleries, designed over 50 spirits brands and facilitated three exits.”

  Beverage Master Magazine (BM): Right now, there’s still considerable uncertainty in the beer, cider and spirits industries. Is this a time to wait and see what happens, or an opportunity to take proactive steps?   

  Jacob Halls (JH): Be proactive—successful companies see their environment and adapt to it. Waiting to see what happens to you takes you out of an element of control of the direction of your company. See the changes in the hospitality climate and take note of how they’re not going to be going back to how they were anytime soon and adapt accordingly.

Consider:

1.  Were your on-premise sales 80% of your business? Find a way to team up with your prime on-premise accounts to set up partnered order pairs if the state allows curbside/delivery alcohol sales. For example, if you have 200 kegs, sell them directly from the taproom.

2.  Slow down production in the areas where your sales drastically diminished, and shift to areas that have picked up. 

3.  Are you currently doing curbside sales at your taproom to supplement that revenue generation? Have you created a gift card program? Have you developed an online sales system and where legal, delivery/distribution program for your products and merchandise? Have you explored every option of new streams of sales? How have you maintained connection with your customer base?

Adapt—or Get Ready to Sell Your Equipment

  Rick Laxague (RL): Be proactive now! If you’re not analyzing your business right now and what the new normal looks like for your brand post-COVID, chances are you won’t recover from this.

Scott Schiller (SS): The spirits business is recession resilient, not recession-proof. I’m not an economist, but at the time of writing this, I don’t foresee the economy recovering quickly. As such, there’s no better time for the well-prepared—whether existing or those in the wings to enter the industry.

  I take no pride in writing this, but there are many distilleries, and companies in general, at risk before COVID. Unfortunately, COVID is forcing their hand. The knowledgeable, well-financed, nimble and diversified—such as those with a healthy combination of on- and off-premise ratios and affordable price points—have the potential to flourish. For the distiller in planning, there’s likely to be less competition and a healthy offering of used equipment.

  BM: In your estimation, how much of a shift do you think the pandemic and its aftermath will make in the industry?

  JH: I don’t want to sound grim, but the taprooms, bars and restaurants will take the largest hit, which passes to the alcohol producers for a decrease in on-premises sales.  Walking around or dancing shoulder-to-shoulder in a club for three hours isn’t going to be viewed as normal for a while. If an establishment’s happy hour was its primary earnings time-of-day, and it could seat 200 people with the average space between seats being two feet, how many people concerned about this will want to sit that close to someone? 

  As businesses adapt, seating space becomes less per square foot. In order to earn the same dollars-per-hour, something has to change in the pricing or the amount of staff—both of which can drastically change customer flow and demographic of the restaurant. Service may go down with fewer staff, causing a less-positive experience and fewer return visits. 

  If the prices have to go up in order to maintain the same level of staffing, then some customers may now be priced out of the establishment, as they’re financially affected by the pandemic as well. 

  The brands of alcohol purchased by the establishment may also change: a package by the smaller craft producer that’s normally $45 per case or $200 per keg may be passed over for a cheaper $23 case and $60 keg in order for the establishment to maintain its customer service level of staffing and pricing. 

  Something will have to give. Bars, restaurants, wineries, breweries, cideries, meaderies and distilleries will suffer and, in many cases, cease doing enough business to survive their existing debt loads.

  RL: It’s obvious that all segments of the industry have seen growth from new entries—that is, companies and brands opening in the past eight or more years. Some of these segments have triple-digit growth. This caused the glass for the consumer to be overflowing with overloads in brand, flavor, style and marketing. There’s no loyalty to a brand in the new 21–28 age range due to the influx of offerings. To stop the glass from overflowing, you have the following options:

1.  Get a bigger glass.

2.  More space in retail stores, as the stores aren’t getting any bigger. B: More stores, but with the cost of real estate and larger corporate retail stores the “A locations” are gone and a “C location” won’t deliver a ROI.

3.  Turn off the faucet. Stop the “overflow abundance.” The thinning of the crowd needed to happen, but it’s unfortunate that a worldwide pandemic life scare is what it took. Think of Mother Nature and our farmers who produce ingredients to make these beverages. They burn off their fields after harvest to create new healthy growth for the coming year.

  SS: The mid-size and larger distillers will benefit from this pandemic. Part of what has hindered their typical growth patterns is the number of new entrants and the plethora of local distillers who often gain favor.

  The second tier puts an incredible focus on companies that provide their quickest pathway to recovery/profitability, which will likely cause some brands to have even less attention. I believe some brands will be delisted before that dance plays out.

  Once we reach the third tier, the on-trade will rely on brands that provide value and support. Off-trade is doing very well, but I don’t foresee these profits being poured into unsupported/unknown craft brands, as consumer confidence isn’t likely to be there to warrant the investment to carry them.

  BM: In what ways is a relaunch plan essential now, and how can a producer formulate one? What might it entail?

  JH: I tend to have three or more plans for almost every situation—you can never be too ready, but you can always be underprepared.  One may ask how to prepare as a producer. In order to plan, know your business history:

•    Where have you struggled before?

•    Where were you suffering most recently?

•    How agile is your marketing team to communicate your company’s changes, and in a tone that maintains a positive message? 

•    How agile is your production team in shifting from kegs to package? 

•    How able is your operations team to facilitate the changes that need done: ordering disposable growlers, cans, contactless delivery material, etc.

•    How able are you as the proprietor to manage the economic responsibilities needed to maintain changes in your company?

•    Are you able to make hard decisions as needed?

•    Laying off or furloughing a long-time employee is incredibly hard to do. Do you have a support system yourself for this?

  Account for everything that has happened and can happen. 

  RL: What is the saying: “You have one chance to make a good impression?” Well, now you have a second chance! Look at your original business plan and model and select all the positives—then write a new one. You can remove things you did wrong and implement those you thought of after the fact. You know more now, but not everything. So source out what you don’t know, a.k.a, “phone an expert.”

  SS: No matter how this pandemic is influencing your business, it’s vital to create a strategic plan with several pathways and outcomes, for there is only one who is all-knowing in this unknown, and that is neither you nor me.

  With plans in place, financial models need to be built to ascertain how much time you have, and along with an awareness of critical decisions and time periods. Assigning weights to the various outcomes also allows you to make a calculated risk assessment on what should even be attempted.

  BM: What top three action items do you recommend to producers right now?

JH:

1.  Don’t produce just to produce unless you need to burn through raw materials already purchased. If you can, barrel-age or delay the release dates to maintain the production/release rate to sales rates.

2.  Take a cold look at your finances. The hardest part of that is being honest with yourself. Don’t let ego make the decisions.

3.  Be as proactive in your community as possible. If you can, develop a T-shirt that’s available online or curbside with 100% of the proceeds going to support your furloughed taproom staff or a local community cause. Work with your distributors in other communities outside your own to be supportive there as well. Be part of the community, even if you’re not local—keep your face seen in a positive way.

RL:

1.   Evaluate finances. What can you afford to do, and what can you afford not to do, have or upgrade?

2.   Branding. What can you improve upon from a brand perspective—as in, how to reach the consumer and engage with them? Get them to stop scrolling, and “like” (buy) your brand. I think virtual happy hours will be a popular thing moving forward for friends and families apart.

3.   Distribution. Improve your relationship with the distributor network. This also means having adequate sales-brand representation to work with your distribution network to secure those placements.

SS:

1.  Center yourself and get extra clear on your definition of success.

2.  Develop a rock-solid strategic plan and financial model.

3.  Get your team informed and aligned, from front-line workers to investors. Prepare them mentally and emotionally for what’s at hand. Ensure that you have the right warriors, and that you have the leadership and wisdom to see them through.

  BM: In what ways can producers work within their communities and develop new marketing strategies to rebuild their businesses?

  JH:  As mentioned above, team up with distributors, businesses that supported your brand well, and charities and causes that are positively helping communities during this pandemic. 

  RL: Thank the community for the support during this crisis. If you have a loyalty program, use an email marketing platform to send a direct thank you letter to the zip codes where members reside. Make it a bounce back: “Thanks for the support, bring this letter in for a ½ off item,” or a similar promotion.

  SS: Every business is in this together, and every business is going to need help. Distilleries and other craft producers have always been important members of communities, from supporting other local businesses such as farms and utility companies; to offering dependable and well-paid jobs from production to sales to executives; and of course, providing extensive tax revenue for their municipalities and states.

  Distillers switched gears during world wars, and are doing so now during the pandemic. This is an amazing time to be a leading light in the community and an essential economic engine in a town’s rebirth. We often say “support local.” This is a two-way street and right now, distillers can lead.

  BM: Finally, “no revenue” is an obvious answer to the question, “Should I close?” But in the current over-expanded market, what other answers might a producer consider?

  JH: SKU reduction. If you have a brand that’s working and some that are lagging, but they’re being produced to fill out the portfolio to make your brand more attractive to distributors, grocery, C-store sets or franchise restaurant chain mandates—cut them! Focus on what’s working and do it well.

  RL: Be humble. It’s more admirable to ask for help than to never build a new door to walk through. Also consider:

1.   What’s your quality of life? Health, stress levels, missing kids’ activities because you must run the business and so on. This pandemic has brought families together. More meals in groups, board game conversation and outdoor life vs. a face in a phone all the time.

2.   Are you staying true to the mantra, integrity and goal of why you opened the business? Some people will say no—they’re just trying to keep up.

  SS: This pandemic will hopefully be the toughest business challenge you’ll ever face in your lifetime. As such, it presents an excellent opportunity to confirm your commitment to your business:

1.   Is it your life’s calling/purpose?

2.   Do you have the energy and resources to start back from where you were in the early years?

3.   What will your personal and financial well-being look like if it takes two years to get to where you were at the end of 2019?

  If you have the fortitude and the wisdom, you can work through this. And the field will likely be even greener if you can make it through the next 730 days.

BEER FINANCE: Covid-19 Cash Tactics & Strategies

Cyndi
dollar bills inside a jar

 By: Kary Shumway, Founder of Craft Brewery Finance

  The Covid-19 pandemic is wreaking havoc with our emotional and financial well-being. Now, more than ever, cash flow planning is a survival skill.  In this article, we’ll review tactics and strategies to keep more cash in your business during this crisis. And I’ll share the cash flow templates that I use to monitor cash flow in our brewery.

  We’ll also cover how to build a new financial plan for the coming weeks and months to make sure you are properly tracking revenue, expenses and cash flow. This crisis will end, but the brewery financial skills you learn today will benefit you and your business forever. Use them to survive now and thrive into the future.

Short-Term Planning: Survival Mode

  First things first, let’s focus on cash.  Financial survival requires cash on hand, access to capital, and a tool to project near-term cash flows. Start with how much cash you have on hand, and list potential sources of additional capital.

  Next, calculate expected cash flows for the upcoming week. List out expected collections from accounts receivable, and payments to employees, vendors and the bank. Use a simple tool like this to summarize the numbers.

Simple Cash Flow Tracker

  This cash flow tool will show you cash on hand, and upcoming flows of money in and out of the business. It’s a tracker you can update quickly and regularly to keep a close eye on short-term cash flow.

  Next, dig in a little deeper on accounts receivable (A/R). These are your uncollected payments from customers and must be monitored closely during this crisis. Use the detailed A/R aging report to monitor any overdue customer invoices. Accounts receivable represents future incoming cash flow and is critical to the financial survival of your brewery.  Communicate with any overdue customers, work out new terms if you must, and keep the cash flowing in.

  Likewise, review the details of your accounts payable (A/P). These are your unpaid invoices to vendors and suppliers. Identify those invoices that must be paid on time, and which can be pushed off. Communicate with key vendors and ask whether they will accept extended terms. For example, if a vendor offers 30-day credit terms, they may be willing to extend to 60 or 90 days. The goal is to slow down the outflow of cash, while maintaining a good relationship with key vendors. Monitor your accounts payable, communicate with vendors, and keep more cash on hand.

Change Your Cash Process

  One important skill to learn during this financial crisis is how to aggressively manage cash flow. Specifically, learn where cash leaves the brewery and how you can adjust quickly to keep more cash in your bank account.  Cash on hand means you’re in business. Running out of cash means big trouble.  To aggressively manage cash flow, I use a three-step process that looks like this:

1.   Find out how and where money leaves your business.

2.   Insert yourself into the money-out process.

3.   Review past spending … and adjust.

Step 1:  Find out how and where money leaves your business

  To start, make a list of the ways that money flows out of your brewery. The usual cash outflows are:

•    Accounts payable

•    Payroll

•    Manual checks

•    Electronic Funds Transfer (EFT)

•    Automated Clearing House (ACH)

  Pay special attention to the last two bullet points. These are deductions directly from your bank account and may go unnoticed in a time when you’re trying to turn off cash outflows.

  Which of these cash outflows apply to your business? Take your list and move on to the next step.

Step 2:  Insert yourself into the money-out process

  Put yourself directly in-between your money and the expense to be paid. In other words, sign every check that goes out through accounts payable, review every manual check before it is mailed, look over the payroll report before it is processed, and get a listing of all the EFT or ACH payments that have been processed through your bank account.

  This is the only way to slow or stop cash from flowing out of your business. You need to be directly involved, and directly in-between your money and the expense to be paid.

Step 3:  Review past spending

  One of my favorite financial reports, in good times and bad, is the general ledger (G/L). It records every transaction that flows through your business. The G/L can serve as a road map to reduce the outflows of cash in an emergency.

  Print a copy of your detailed general ledger for the past 12 months and review all the expenses. As you look over the figures, ask questions: What cash outflows are recurring? What can be shut off immediately? What upcoming payments can be delayed or deferred?

  The general ledger isn’t just for the bookkeeper, it’s a tool for brewery owners and managers to identify and shut off cash outflows.

Use these cash flow tactics

  In addition to the 3-step process, there are several specific steps you can take right now to improve cash flows during this crisis. These include communication with your beer wholesaler, bank, insurance company, key vendors, and landlord. The primary goal of this communication: Build a plan so that you don’t run out of cash.

  Market changes are happening daily, and this requires regular communication with your wholesaler partners. Ask what they are seeing for sales trends. This will help inform expected sales volume as well as production and packaging plans. Ask your wholesaler what they need, and how you can help. Your wholesaler is your biggest customer, and biggest source of cash flow. Stay close, be supportive and responsive to their needs to keep the cash coming in.

  If you have business debt, you have monthly payments of principal and interest due to the bank. In this crisis, your lender may have the ability to reduce your monthly payments to interest-only. This can be a significant cash flow savings.

  Take for example, a brewery with monthly debt payments of $10,000 per month. The loan payment schedule shows the $10,000 payment represents $8,000 of principal and $2,000 of interest. Therefore, reducing the payments to interest-only will save $8,000 per month in cash flow.

  If you have business interruption insurance, reach out to your insurance company to determine coverage. While this type of insurance usually excludes pandemics (go figure) it is still worthwhile to understand how the claim process works. Legislative rules are changing every day, and it’s possible that insurance companies will be required to cover losses. Learn about your coverage, file a claim, and you’ll be ready if the rules change.

  Your key vendors may be open to extending payment terms to 60 days, 90 days or longer. Some larger vendors may reach out to you and negotiate new terms. Other vendors you have to ask. The takeaway is to be pro-active, communicate with your vendor partners and negotiate new terms that you both can live with. Any credit extension you can get will improve short term cash flow.

  This same approach can be used with your landlord. If you have a lease, you have monthly rent that needs to be paid on time. Your landlord may be open to a rent deferral in exchange for extending the back end of the lease. For example, no rent for the next two months, in exchange for the lease end date to be extended two months. As with the other ideas in this section, this might not work. But if it does, it will help short term cash flow. 

Re-forecast Your Financials

  The cash flow tool shared earlier is useful for a quick look at short-term cash flows. The financial re-forecast tool that we will cover next provides a longer-term look at expected results.

  Thanks to the financial crisis, your original forecast for this year is no longer relevant. However, it can still be used as a starting point for the financial re-forecast. Adjust the numbers up or down depending on changes to the business, new information that arrives daily, and trends in the market.

  To start this process, take the annual plan and spread it out over the 12-months of the year. The financial re-forecast model that I use looks like this:

  On the left side of the model, summarize sales, margins and operating expenses. Across the top of sheet, list out each month in the year and whether the information is based on actual or forecasted numbers. For example, if you have January, February and March financials completed, input those actual results in the sheet. For the remainder of the months in the year, mark these as forecasted numbers.

Sample Brewery Table

  The financial re-forecast tool is intended to be a one-page plan that is quick and easy to update on a regular basis with new information as it becomes available.  Use this tool to combine all the information you are gathering from wholesaler partners, key vendors, and changes to legislation (such as the excise tax deferral). 

Wrap Up + Action Items

  Cash flow planning is a financial survival skill and is needed now more than ever. While we don’t know when this crisis will end or what business will look like when it does, we do know how to aggressively manage cash to keep our business going as long as possible.

  Use the cash flow template presented here to keep a close eye on cash balances, access to capital and expected money flows into and out of your brewery. Take an active role in managing this most important asset.

  Use the financial re-forecast model to build a simple, one-page plan. Keep the numbers high-level to start – sales, margins, and operating expenses.  Update the plan on a regular basis as changes happen. And changes are happening every day.

  The brewery financial skills you learn today will benefit your business forever. Build your skills to survive now and thrive into the future.

  Kary Shumway is the founder of Craft Brewery Finance, an online resource for beer industry professionals. He has worked in the beer industry for more than 20 years as a certified public accountant and a chief financial officer for a beer distributor. He currently serves as CFO for Wormtown Brewery in Worcester, Massachusetts.

  Craft Brewery Finance publishes a weekly beer industry finance newsletter, offers online training courses on topics such as cash flow planning, financial forecasting, and brewery metrics. During this crisis, Craft Brewery Finance is offering a Free 60-Day Subscription. Visit www.CraftBreweryFinance.com for details.  

SUPPORTING “TRADE” DURING COVID-19

Cyndi
alcohol and tobacco tax and trademark bureau seal

By: Ryan Malkin

  Does the rulebook go out the window during a pandemic? As the Alcohol and Tobacco Tax and Trade Bureau (“TTB”) and states weigh in via guidance and industry advisories, the resounding answer is no. Still, brands seek to support bartenders with, by and large, pure intentions. That is, brands have money and bartenders may not. Bartenders and brands establish important and long-term relationships over the course of, in some cases, decades. If your friend needed a meal, you’d certainly oblige. However, when the funds are coming from an upper tier (manufacturer, supplier, wholesaler) member’s pockets, we must consider whether and how funds can go towards trade. As a threshold matter, we should consider whether the bartender is employed or unemployed. If a bartender is unemployed, arguably that person is no longer considered a retailer within the meaning of the rules. If that’s the case, the rules with regards to how a brand may engage with that person may also go out the window.

  By way of very brief background, it is unlawful to induce a retailer (an on-premise or off-premise licensee) to purchase your brand to the exclusion in whole or in part of another brand’s products. In particular, the federal and most state rules note that, subject to exceptions, “the act by an industry member of furnishing, giving, renting, lending, or selling any equipment, fixtures, signs, supplies, money, services, or other things of value to a retailer constitutes a means to induce within the meaning of the Act.” In short: unless there is an exception, you may consider the giving of any “thing of value” to be impermissible.

  That means, but for exceptions, it is impermissible to acquire or hold any interest in a retail license, pay or credit a retailer for advertising, guarantee a loan to a retailer, require a retailer to purchase a certain amount of products, or provide any items that are not allowed under an exception. Those of us in the alcohol beverage industry may not realize it, but we largely play in the world of exceptions. The exceptions are where you find it permissible to offer point-of-sale materials, conduct tastings/samplings, provide displays, offer educational seminars to retailers, and stock/rotate your products.

  Federally and in many, though not all, states the providing of the “thing of value” must also lead to exclusion. Exclusion is when the practice “puts the retailer’s independence at risk.” To determine that, the TTB will look at the practice and consider, among other things, whether it required an obligation on the part of the retailer to purchase or promote the brand, and whether it resulted in discrimination among retailers. That means the brand did not offer the same thing to all retailers in the area on the same terms without business reasons for the difference in treatment.

  Now that we’re on the same page with regards to the rules, we want to consider whether the person we want to assist is employed by a retailer or unemployed. If the person is employed by retailer (remember that means on-premise or off-premise), the brand will be more limited in how it may engage with that person. In short, follow the pre COVID-19 rules. TTB’s recent guidance on this topic specifically states that “the furnishing of business meals or entertainment to a trade buyer is an inducement under the Act” if the inducement results in the full or partial exclusion of products sold by that brand in the course of interstate or foreign commerce. In other words, according to TTB, “the furnishing of business meals or entertainment to a trade buyer is not by itself a violation of the Act.” In fact, providing retailer entertainment is quite common and many states have specific regulations that permit the practice.

  Typical states rules will require that the brand’s representative be present, that the entertainment be reasonable, and not conditioned on the purchase or agreement to purchase any of the brand’s products. Retailer entertainment rules are how you often see brand’s take bartenders and liquor store owners to ballgames, concerts and dinner.

  Given the social distancing rules, it is impractical and unsafe to get together with working trade. Instead of going to dinner and discussing business, it may be worth considering whether a brand feels comfortable doing so online via, say, Zoom or FaceTime. The brand can send drinks and a meal to the bartender. When the food and drinks arrive, the brand and the bartender can hop online and eat together. The brand representative would be as present as one can reasonably during this time. Of course, the brand should analyze this against the rules in the applicable state(s) and with its own attorney.

  However, if the bartender is no longer employed, one should now consider him or her as just a regular consumer, albeit with above average mixology skills. Now the brand may feel comfortable entering into an agreement with the person to be a brand consultant to perform any number of services. For instance, to create how-to cocktail videos or conduct virtual tastings. The brand would then pay that person whatever the two agree as reasonable. The brand should consider putting an agreement in place with that out-of-work bartender. The agreement should include basic provisions, perhaps paying particular attention to intellectual property (we own it, you’re using it with our permission and we own what you create) and representations around the unemployed bartender’s status. This compliance section should require the person being hired to acknowledge that he or she does not have any direct, or indirect, ownership in any retailer, and, at minimum, that the fee being paid is not conditioned on or being used to induce any retailer to purchase the brand’s products to the exclusion of any competitive products.

  Now that you have a solution for supporting both employed, though perhaps struggling, bartenders and those out-of-work, go out there and keep your brand alive and relevant during these unprecedented times.  Be careful out there.

  Ryan Malkin is principal attorney at Malkin Law P.A., a law firm serving the alcohol beverage industry. Nothing in this article is intended to be and should not be construed as specific legal advice.

For more information contact Ryan Malkin at…

Malkin Law, P.A.

260 95th Street, Suite 206

Miami Beach, FL 33154

Office: (305) 763-8539

Mobile: (646) 345-8639

Email: ryan@malkin.law

Website: www.malkinlawfirm.com

Brewery Start-Up Tips for a Successful Launch

Cyndi
facade of a brewery

By: Alyssa L. Ochs

  In the United States, there are currently over 7,000 breweries, but that isn’t stopping entrepreneurs from opening even more in cities, small towns and rural areas. Fortunately, craft beer lovers are plentiful across the country, loyal to their favorite brands and curious to try new brews.

  When making plans to open a new brewery, there are a few things to keep in mind. 

Initial Considerations

  Many things go into starting a brewery, even before searching for a physical location. You’ll need to choose a business structure for your brewery to operate within, such as an LLC with an operating agreement, which is often preferable to a brewery corporation because it’s quicker, easier and more affordable. You may choose to hire an attorney to handle these matters for you or give it a try yourself with online legal resources for a DIY approach. Insurance is also an important consideration to protect the business with liability, property and casualty coverage.

  When it comes to the legalities of opening a brewery, things can get complicated quickly. Permits and licenses must be filed at the local, county, state and federal levels. Depending on where you live, regulations, licenses and permits vary, so be careful to do thorough research to eliminate surprises in this regard. Be aware of when to file permits as well. Filing permits in the wrong order can lead to delays or stymy plans altogether. State liquor licensing and a federal brewing permit from the Alcohol and Tobacco Tax and Trade Bureau can take several months to process, so file those as soon as possible.

  You must also consider if you want a simple taproom or if you will include food in the business model. Those choosing to include food will face more permitting and costs for equipment and location modifications. The overall cost of opening a brewery is often between $250,000 and $2.5 million, and much of that money goes towards equipment.

Physical Location

  The location you choose makes a huge difference in the type of customers you will attract and how your brand will grow in the future. At this stage of development, there is also the need to weigh the pros and cons of opening up on a busy street with lots of foot traffic versus opening in a more isolated industrial park with space to grow and more affordable rental prices.

  Remember that you’ll need to secure the proper zoning for your new brewery and meet all the necessary legal requirements in your jurisdiction. Zoning laws matter because you want to create a favorable community gathering space that’s welcome with local neighbors.

  While searching for a storefront, you must have at least enough funds for the first month’s rent and the security deposit for the lease. Also, consider any construction that will be needed to outfit the building for brewery purposes. For example, you will need a sturdy floor in your physical space that can withstand the beer-making process. Also, take into consideration the plumbing and electrical capacity of the building and start getting quotes from local contractors for any work that needs doing before opening.

  Space requirements for your location may be based on equipment needed, but consider whether it’s in your best interest to secure a location with space to accommodate future fermentation tanks and storage needs.

Brewing Equipment

  Equipment is, by far, one of the biggest financial hits for a new start-up brewery. Equipment costs can range from $100,000 or less for a very small-capacity brewery, to over $1 million for a brewery that uses a new 30-barrel system.

  The brewing equipment you need will primarily be based on the number, category and style of beer you plan to make. There are significant differences between a brewery that will only brew a couple of types of beer compared to one that is looking to launch eight to ten styles right away. Unless you have ample support staff and financial resources, most new breweries find it in their best interests to start small and build up their offerings and services over time.

  The list of equipment needed for a brewery can be very overwhelming at first, but do your best to take it one step at a time. Some of the equipment to start thinking about and budgeting for early-on are kettles, kegs, boilers, bottling and canning lines, conveyors, cooling systems, storage tanks, fermentation tanks, filters, labeling machines, piping and tubing, refrigeration equipment, cleaning equipment, waste treatment systems and tap handles.

  Now is also the time to learn about the differences in piping, tubing and brew pump equipment so you can make informed decisions about buying peristaltic, diaphragm or centrifugal pumps. Fermentation tanks and temperature gauges will be needed for beer storage. Meanwhile, immersion wort chillers and counter-flow chillers are essential for cooling systems, and brewing kettles and boilers are necessary for heating processes.

  Andrew Ferguson, sales manager for Codi Manufacturing, told Beverage Master Magazine that packaging is more important than ever in today’s rapidly evolving beverage market.

  “Codi manufactures complete canning systems that scale to meet the demands of our growing customers,” Ferguson said. “Codi’s counter-pressure filler allows for a high temp caustic CIP and over four CO2 vols, giving you the ability to package seltzers or other beverages.”

  Ferguson said that a common mistake among brand-new breweries in the start-up phase is buying on price and speed instead of function and quality. He recommends always finding others who own the equipment you are looking at and asking for their advice.

  “You can have the best hops, malts, yeast, water, recipe and brewer, but a bad packaging machine will ruin all your hard work,” he said.  He also recommends buying spare parts to decrease your equipment’s downtime and avoiding machinery made with aluminum and cheap plastic materials so you can CIP with caustic at 180-degrees Fahrenheit.

“Form solid relationships with suppliers and stay in touch to get the latest updates and functionality out of the equipment you purchase.”

Ergonomics

  Stocking up on all the necessary equipment is often the first goal of a start-up brewery. According to Ron Mack, the regional sales manager for Bishamon Industries Corporation, one of the most common mistakes that new breweries make is being “laser-focused on production equipment and often forgetting to consider ergonomics that increase worker safety and productivity.”

  Based in Ontario, California, Bishamon Industries Corporation specializes in quality, innovative, ergonomic products that enhance worker safety and productivity. The company offers a wide array of ergonomic assist lift equipment, including the EZ Loader Automatic Pallet Positioner, that are useful for craft breweries that hand-palletize cases of beer.

  “This product keeps the top of the pallet load at waist height, eliminating worker bending, which can lead to back injuries,” Mack said. “The EZ Loader also features an integral rotator ring like a lazy Susan that enables near-side loading and eliminates reaching, stretching and having to walk around the pallet to load or unload. For breweries that do not have access to a fork truck for loading or unloading, we offer products that are pallet jack accessible, like our Lift Pilot and EZ Off Lifter.”

  Bishamon products can significantly help reduce the risk of worker injuries related to lifting, bending, reaching and stretching while loading or unloading cases.

  “Another great benefit is that the EZ Loader also significantly increases productivity, as pallet loading and unloading can be accomplished in much less time with much less effort,” Mack said.

  Mack said breweries should “think about how to make the work environment, especially in the packaging area where the heaviest lifting is done, more ergonomic and efficient for the employees.” From ergonomics to scheduling and operations, making your employees’ needs a priority from the very beginning is a positive way to launch any type of new business.

Other Early-Stage Planning

  Once you’ve gotten a handle on these aspects of opening up a new brewery, think about the customer experience and how your staff will work onsite starting on opening day. An efficient, friendly front-of-house staff can make all the difference for a brewery’s reputation, particularly in areas with a lot of competition. Start picking out and ordering glassware and growlers that reflect the brand image you want to create. Keeping the brewery hygienic and sanitary is essential to its long-term success, so make a list of cleaning products you’ll need and narrow down your list of suppliers. Before you get too entrenched in your operations processes, invest in a POS system to track inventory, outline your staff management system and begin thinking of ideas for a loyalty reward system to entice new customers.

  Building a clear brand identity early-on to help you stay focused, and establishing a robust online presence as early as possible can spread the word about your new brewery.

  Also, consider your relationships with vendors. Ferguson from Codi told Beverage Master Magazine new breweries would be wise to support family-owned suppliers who are invested in the industry.

  “Private equity held manufacturers are lowering quality to meet your price point and are not concerned about your long term needs,” he said.

  Starting a new brewery is rarely easy, but it’s often worth it if craft beer is your passion, and you have a great business plan and support team behind you. As you prepare for your initial launch, remember some things can wait. Focus less on merchandising, loyalty programs or decorating for every event and allow the business to grow a little at a time. Once you’re established with a good reputation, those things will come naturally and pay off quickly.

Keys to Creating Effective Incentives for the Craft Beer Distribution Channel

Cyndi

By: By Nichole Gunn, Vice President of Marketing and Creative Services, Incentive Solutions

  When it comes to improving your go-to-market strategy, incentives can be a powerful tool that craft beer producers can use to motivate distributors and wholesalers to sell their product. Incentive programs help craft beer producers build mindshare with distributors and wholesalers, differentiate their product, provide enablement to indirect sales reps and collect important data throughout their channel.

  However, it is important to be mindful of your marketing spend and to focus on designing your program to generate a meaningful ROI. Keep in mind that an incentive program is about more than just rewards. 

Keys to Creating an Effective  Incentive Program

  While the specifics of incentive program design will be as varied and unique as the craft beer producers who use them, below are several overarching principles that can be utilized to create effective incentives for supply chain trading partners:

1.  Choose a specific, measurable goal for your program.

2.  Analyze your audience and your competitive situation.

3.  Offer rewards that are relevant to your target audience.

4.  Structure promotions to target KPIs (key performance indicators) that bring you closer to your goal.

5.  Consistently market your program to stay top of mind of with your indirect sales reps.

6.  Use digital platforms to drive your program and measure results.

  By following these six steps, craft beer producers can establish effective incentive programs that give them a sustainable competitive advantage in their channel and allow them to focus more of their attention on where it belongs – crafting great beer that their customers will love!

Choosing a Specific, Measurable Goal

  In order to achieve a meaningful ROI, it’s important to begin with the end in mind. Why do you want to launch an incentive program? What do you hope this program will accomplish? How will you measure success? The more specific you are when answering these questions, the more informed you will be when making decisions to empower your goals.

  Possible program goals craft beer producers use incentive programs to accomplish include:

•    Generating brand awareness;

•    Increasing sales for a specific product or region;

•    Driving incremental growth among supply chain trading partners;

•    Gathering data to improve partner profiles;

•    Capturing market share and gaining access to new verticals; and

•    Building loyalty with wholesale and distributor sales reps.

  While an effective channel incentive program can accomplish all of these things, it’s best to start small and narrow your focus to just one or two goals. Doing so will help you sell other members of your organization on the idea of launching an incentive program and will allow you to more effectively measure the results. Plus, you can always scale your program to accomplish additional goals once you know it’s working.

Analyzing Your Audience and Your Competitive Situation

  When building an incentive program, you have to put yourself in the shoes of the wholesale and distributor sales reps you’re attempting to motivate. What do you know about their lifestyle? What are the things that excite them? What information can you provide to make selling your products easier for them? The more you understand about your target audience, the better equipped you will be to create incentives that inspire them and align your goals with theirs. 

  In the competitive craft beer channel, each of these reps is responsible for selling multiple products from dozens of brands. The battle for mindshare is fierce. Chances are, some of your competitors are already running an incentive program or using other channel marketing promotions. It’s up to you to take a look at what your competitors are doing and to create an incentive program that is more engaging and compelling than theirs.

Offering Relevant Rewards to Your Target Audience

  According to the COLLOQUY Loyalty Census, the average American household is enrolled in more than 18 loyalty programs. Of those, they actively participate in fewer than half. In order for your incentive program to accomplish its goals, you have to stand out from the competition by offering rewards that enhance your value proposition and feel necessary to your participants.

  The more closely you can match your incentive rewards to the lifestyle and interests of your participants, the more effective your program will be. However, it’s important to choose rewards that align with varying levels of performance, while fitting into your overall budget. Luckily, there are plenty of options!

  For SPIFFs, rebates or programs with a wide range of participants, debit card and gift card rewards provide flexibility, convenience and wide appeal. Online merchandise rewards are more personalized and scalable, ranging from easily-earned “point burner” items like movie tickets for part-time customers, to exclusive, high-end merchandise and custom reward fulfillment for higher-performing supply chain partners. Group incentive travel is memorable and emotionally impactful, perfect for building loyalty with your top wholesale and distributor sales reps. Although incentive travel events are currently on hold for the foreseeable future, demand for travel rewards will be extremely high when the shutdown ends. This will not last forever, and there will be compelling bargains to be had as resorts and hotels at top destinations endeavor to resume business.

  Additionally, you can use a mix of rewards and tier them for different levels of performance or segments of your channel. For instance, it might make sense to offer an online points program for individual sales reps, while running an incentive travel promotion for the brand managers at the distributor level.

Structuring Promotions to Target Strategic KPIs

Incentives work by modifying the behaviors of your wholesale and distributor sales reps. Each step these reps take that bring you closer to your goal is also known as a KPI (key performance indicator). KPIs can be measured to predict or prove program success. For instance, the more participants that enroll in your program, the more likely they are to sell your product. Enrollment bonuses are a common incentive promotion, but you can also reward points bonuses for KPIs such as:

•    Attending tradeshows or taking online certification courses;

•    Participating in product-related trivia and quizzes;

•    Providing referrals;

•    Filling out surveys or updating their contact information; or

•    Making a first-time sale of a specific product.

  However, priorities change! For craft beer distributors, it’s important to have the ability to set multiple promotions and change reward parameters to target strategic initiatives, capitalize on analytics and respond to the tactics of the competition.

Marketing Your Program to Stay Top of Mind

  Once you have outlined your strategy and structure, the next step is to spread the word. Incentive programs create an easily communicated value proposition, but it’s necessary to consistently reach out and engage with your wholesale and distributor sales reps over a variety of channels.

  From program launch to reward redemption, you should be communicating with your supply chain trading partners across email, SMS, web platforms, direct mailers, flyers and phone calls. Get them excited about participating in your program, educate them on your brand, inform them about new promotions and remind them about the rewards they have the opportunity to earn. Your incentive program provides the chance to personalize your communication with your indirect sales reps in a way that may be otherwise difficult to achieve in the craft beer distribution channel. Additionally, you can use analytics to spot opportunities for growth or which accounts you should reengage and create targeted marketing campaigns for those accounts.

Using Digital Platforms to Drive Your Program

  Finally, you have to consider the user experience of engaging with your platform, as well as the administrative functions you need to successfully manage your program. Today’s incentive programs, like most business platforms, are software-driven. Gone are the days of analog catalogs, manual processes and investing in channel marketing strategies that don’t produce measurable results.

  When exploring potential incentive program providers, craft beer producers should ask themselves questions such as:

•    Does this incentive program software integrate with my CRM and other existing platforms?

•    How will this program software help me capture the data and analytics I need to improve my channel marketing?

•    How will this program software improve my ability to communicate with my supply chain trading partners?

•    Will my reward program website present an engaging and accessible user-experience that is a strong reflection of my brand?

•    What other features, such as gamification and sales enablement tools, does this platform include to keep participants engaged and to help them succeed?

  Luckily, these are areas where the incentive industry has made exciting strides over the last decade or so. As data, analytics, automation and providing digitally connected channel partner experiences continue to become increasingly important, incentive companies have shifted their focus from just providing reward fulfillment to offering complete channel sales and marketing solutions.

  This focus on technology has made launching and managing an incentive program less time intensive. In a 2019 survey, Incentive Solutions found that 70 percent of our clients, including several notable craft beer producers, spend less than two hours a week managing their incentive program. Additionally, some incentive companies provide the option to take full responsibility for program management to free up your resources for other priorities.

  After all, chances are you didn’t get into the craft beer industry to manage channel partners and set parameters for sales promotions. You got into it because you are passionate about brewing great beer!  

Nichole Gunn

  Nichole Gunn is the VP of Marketing and Creative Services at Incentive Solutions (www.incentivesolutions.com), an Atlanta-based incentive company that specializes in helping B2B companies improve their channel sales, build customer loyalty, and motivate their employees. Nichole Gunn can be reached at ngunn@incentivesolutions.com.