Category: Archived Articles

Innovation in Craft Beer is Dead: Long Live Innovation

Cyndi
4 men watching intently

By: Erik Lars Myers

It’s the rallying cry of the craft beer fan: What’s freshest?  What just went on tap? What haven’t I had before?

  Today’s craft beer industry is a vast whirlwind of new. “Rotation nation” we call it, as we tuck our tried and true flagship recipes into the back of the filing cabinet and turn to search for the next new thing to wow the customer with. This industry, with over 10,000 breweries making hundreds of thousands of individual beers each year, is becoming more competitive than ever before. As each brewery fights for their individual slice of market share, it all comes back to that same question “Whaddya got that’s new?”

  Weirdly, it’s an answer that our industry seems to struggle with. The hippest, most sought after breweries in the country are all really coloring from the same box of crayons – lactose laden juicy IPAs, pastry stouts, and fruited kettle sours. It’s the strategy at the forefront of the industry because it makes real money, particularly in a taproom setting selling the vast majority over the bar to customers who are willing to drop exorbitant amounts of money on a case of 16 oz cans. But at the end of the day, the answer to “Whaddya got that’s new?” right now in the industry really seems like, “Some more of the same.”

  Certainly, the small side of the industry is making great strides in technical brewing. We’re reducing TPO and gaining shelf life on small, open air, 4-head canning lines in ways we’ve never been able to do before. But shelf stability isn’t innovation. Our largest macrobrewery competitors have had shelf stability down for decades and longer. We’ve got enzymes available that will cut down fermentation time, reduce diacetyl, promote and stabilize hop aroma, cut gluten chains, and create clear – or hazy! – beer. But buying new products from your chemical supplier can hardly be considered innovative. The suppliers are innovating. Our hop growers are creating new varieties to supply all of our customer’s wildest fruit flavored dreams. We’re the middlemen who put it into beer.

  Most of the innovation in the industry in recent years really comes down to variations on the theme of IPA. American IPA, Black IPA, Brown IPA, Red IPA, White IPA, Imperial/Double IPA, New England-Style IPA, and the most recent brief experimentation, the Brut IPA.

  For years, IPA has been the dominant style in the American market. Leaning on hops, and particularly fruit-forward and citrusy hops, was the defining differentiator for the American craft beer industry in its nascent years all the way through to current day. It is a story that doesn’t exist with any other ingredient available right now. Every other brewing culture in the world uses malt, water, and yeast and (basically) always has. But hops – the American craft beer industry has hops. And not just, “put it in to make your beer bitter” hops, but wide ranges of usage to create wide ranges of flavor hops.

No Wonder it’s Been Our Source of Innovation

  The story of Brut IPA is a good snapshot of what innovation in the craft beer market looks like right now. A brewer – Kim Sturdavant of Social Kitchen and Brewery – had an idea. Use amyloglucosidase – an enzyme used in brewing to help increase saccharification in the mash, or to increase attenuation during fermentation – in a traditional IPA, dry it out as much as possible, build a hop bill that complimented the dry body and malt flavor profile instead of a sticky sweet one and, bam, a new style is born.

It’s a cool – yes, innovative – idea, and one that resulted in some delicious beer.

  But also one that resulted in a mind-boggling range of other results. Shortly after Sturdavant made his Brut IPA, other breweries started jumping on the bandwagon – and why not? In an environment in which “new” is prized, being the first brewery around to make a new style, much less a new IPA, is going to draw some quick dollars, and so Brut IPAs began to pop up around the country with staggering speed. The only problem is that very few of the people making them had ever had one. Sure, it was easy enough to pop “Brut IPA” into Google, read a few articles, and probably find a thread or two in brewing forums describing how people were taking shots at it, but few worked from the source of the innovation, or even tried one before making one. Consumers were presented with a wide, inconsistent range of interpretations of what a “Brut IPA” meant from dry-bodied dank hazy beers, to crystal clear effervescent champagne-like beers, and as a collective style they largely faded from draft lineups as quickly as they appeared as consumers turned back toward what they knew they could count on.

   “New England Style IPA” was arguably the last real true innovation in craft beer. It created something wholly new that the industry hadn’t seen before. Certainly, as it’s evolved, the only reason that we call it an IPA at all is that we don’t have another term for a beer that uses a lot of hops – but that’s the only resemblance it bears to IPA as a style. It lacks any sort of bitterness or clarity, and leans toward overripe tropical fruit flavors instead of the floral, citrus, woody, or dank characteristics that IPAs have exhibited for the known span of IPA history.

  Think on this. The Alchemist’s “Heady Topper” was released 16 years ago. The prototypical example of a “New England IPA” that graces the draft lineup of almost every one of those 10,000 breweries in the country is older than 75% of those breweries and the brewers in them wearing “Make Beer Clear Again” hats. It was years before you could find this style outside of Vermont.

  Since then, there have been years of experimentation and articles written about the virtues of the biotransformation of hop oils during fermentation. There have been whole books put together about the style that include topics like haze stability and how to increase fruit characteristics in dry hopping. Recently, the largest craft brewery in the country introduced one of its fastest growing SKUs, “Hazy Little Thing” as it finally jumped on the trend. Maybe Brut IPA will get there, but I suspect that, like its cousin the Black IPA, it will only see rare comebacks – a fad, not a trend.

  It’s worth arguing that wild Belgian-style, spontaneous fermentation in America fits the same categorical differentiation in many ways, but focused on bacteria and yeast, rather than hops. And it’s true – coolships, foeders, and barrel rooms are being installed at breweries dotting American geography as brewers on this side of the Atlantic experiment with their own versions of spontaneously fermented ale and mixed culture fermentations. However, it’s worth noting that while these beers are being experimented upon and popularized by American brewers, they’re ultimately historic styles. As small brewers we’re mimicking the actions of those who have been there before us. Yes, we’re learning and improving, yes, that can definitely lead to innovation, but it is not (yet) innovation in itself.

The New Forefront of Innovation: Not Beer

  It’s difficult to ignore hard seltzer’s impact upon the brewing industry. In 2019 seltzer exploded into a $1+ billion business and it immediately turned heads. Not only is it a substantial threat to shelf space and customer mind share, it delivers something that most breweries have a difficult time consistently delivering: a completely clean, completely clear beverage. That hasn’t stopped brewers from trying to emulate it, though – and that might ultimately be the basis of the industry’s problem with it.

  For a moment, think through what hard seltzer is as a beverage: a fermented neutral base (either Clear Malt Base, Dextrose, or sometimes even Sucrose), blended with a flavor. While a brewery could use a fruit puree or real fruit additions to gain that flavor, fruit extracts are cheaper, easier, and don’t add pesky colors or haze. From a pure process standpoint, it’s about as far away from crafting a beer as you can imagine, and when your innovative take on a product means, “Make it taste like Dragonfruit instead of Lemon/Lime”, you know that you’re not making great new creative strides forward. Making hard seltzer is the latest in the trend of making a thing that tastes like a different thing. It’s a bubbly water with flavorless alcohol that tastes like a fruit – maybe two fruits!

  That is ultimately the problem that craft beer faces – its fans have fallen down the rabbit hole of mimicry. We are actively helping our customers turn from beer. Those people who are standing in line at hype breweries for milkshake IPAs, pastry stouts, and fruited sours? They’re not really fans of beer. They’re fans of alcohol, and of things that taste like other things. It is the Imperial Stout that they’re a fan of? Or is it Butterfingers and Count Chocula? Are they really fans of the IPA or the fruited sour? Or do they like getting drunk while consuming something that tastes like juice?

  Chasing these customers is a sound financial decision in the short term – but when those same fans turn from the rest of your products because they taste like beer instead of something else, then you’re ultimately undercutting the concept of a brewery – a beer factory – itself and opening the door to eventual obsolescence. When customer tastes shift from juice and candy bars to something else, hope against hope that the thing they shift to is “back to beer” or your future is limited.

  Innovation in beer may be the only thing that brings these customers back – and it’s difficult to know what that looks like. Before the iPod was invented, only a small handful of people could imagine what that looked like. The next new innovation in the brewing industry – that whole new thing that brings people back to beer – could be in your head. It could be in your brewery right now, but we’ll never know if our industry continues to build and thrive upon mimicry.

  Erik Lars Myers is an author, brewer, and lover of beer. He currently works as the Director of Brewing Operations at Fullsteam Brewery in Durham, NC where he strives toward innovation every day while supporting the Southern Beer Economy by using brewing ingredients sourced and grown across the American South.

Soul of the Beer

Cyndi

Origin Malt’s barley roots in Ohio fosters promising growth for the Midwestern malt market

hand grabbing grains

By: Tracey L. Kelley

It’s taken nearly a century, but barley production for craft beverages in Ohio is making a comeback. Victor Thorne and Ryan Lang, the founders of Origin Malt in Marysville, just north of Columbus, are ready to fulfill brewers’ and distillers’ demand for local products. “From seed to sip” is not only the company’s motto but also a source of intention.

  “In 1900, there were over 4,000 breweries in North America. Four of the largest malt houses in the continent were in Ohio, and over 300,000 acres of malting barley were grown in the state,” Thorne told Beverage Master Magazine. “In 1978, there were fewer than 50 breweries, and no malting barley produced in our region. Now, with over 8,000 breweries in the country, and roughly half of the 27 million barrels produced within a day’s drive, we still have no industrial malting plant within 300 miles.”

  Barley was a viable crop in Ohio and throughout the Midwest before Prohibition. After repeal, beer and spirit makers disappeared, and regional farmers switched to more valuable commodities such as corn, wheat and soybeans, growing barley mostly as animal feed. While producers in the Great Northern Plains and the Pacific Northwest provide some access to quality malting barley, crafters in other regions have to look elsewhere.

  “Our craft brewers import the majority of their malt from Canada and Europe,” Thorne said. “Also, craft brewers require more than three times the amount of malt per barrel that they produce when compared to large industrial brewers, so as the craft segment grows, demand for malt exceeds domestic supply.”

  Thorne, a tech serial entrepreneur but no stranger to the foodservice industry, believes in building relationships from the ground up. One of his first ventures provided a solution for process automation software by partnering with titans such as Cargill, Sysco and Tyson. Origin Malt’s co-creator, Lang, is a fourth-generation distiller and co-founder of Middle West Spirits in Columbus. He understood a crafter’s desire for local products. The two opened the malt house in 2015.

  “I enjoy matching complex challenges with experts who can solve them. In the beer, spirits and specialty foods sectors that procure sprouted and malted grains, we require a range of expertise to tackle each of the delicate steps to provide the highest quality products at competitive prices,” Thorne said. “Before taking steps to build a malt house, Ryan and I spent several years forming trusted relationships with the agricultural community, from seed breeding, seed production, agronomists, university researchers, established global maltsters and the end customer—brewers and distillers. Our equity partners represent all of these key relationships.” 

More Than Malt

  “Malt is the foundation of beer—some people may say the ‘soul’ of craft beer. After working in the industry and learning so much about the brewing process—sensory, fermentation and quality—what struck me was that malt sets us up. It’s the canvas with which wort is created,” said Sara Hagerty, sales and marketing director for Origin Malt.

  “The question we want to answer is, ‘Why isn’t barley grown [in the area], and how can we bring it back to the region in a functional, sustainable and economically-impactful way?’” she said. “Victor and Ryan found a way to truly shorten the barley supply chain. For me personally, I could get behind that and feel confident that the groundwork was laid for a revolution in sourcing, procuring and bringing high-quality malt products for brewers and distillers to market.”

  From her passion as a dedicated homebrewer to her work for a leading liquid yeast provider, and later with a global malt provider, Hagerty’s experience helps her envision an integrated purpose for Origin Malt. “Suppliers should be more than salespeople with a price list and a catalog. Suppliers should be educators, listeners and visionaries. From our work with consumers, our customers, and our directly-contracted growers—every step of our supply chain is highly regarded and valued.”

  Supply starts with seed—in this case, that of LCS Puffin, a two-row winter malting barley. It’s derived from the heirloom variety Maris Otter—a popular grain grown in the United Kingdom and appreciated by brewers worldwide. Puffin was initially identified from 50,000 stock seeds by Eric Stockinger, a molecular biologist at Ohio State University, and now bred by the Miln Marsters Group.

  “In the Midwest/Great Lakes region, Puffin is planted in early fall and harvested in late spring/early summer. As a winter grain, the variety comes with some standard characteristics—a well-adhered husk, low protein and winter hardiness. These attributes and more play a part in how we malt it and the flavors it creates,” Hagerty said.

  Base and specialty malts include Pilsen, Brewers, Light Munich, C40, C60 and C90. “Some of the flavors and appeal that Puffin has can be identified in its classic nutty characteristic, and as more pronounced roasted almond flavor in some of our specialty malts,” she said.

  “How we decide on the base and specialty malts we bring to market is based on the general needs of our customers, and also the ability to provide a solid lineup of products that are versatile. Meaning, you could utilize all of them across a set of recipes or pull in one or two for a specific recipe,” Hagerty said. “While our established products exist with industry specifications in mind, we’re always keeping our eye on the opportunity to produce limited-edition specialty and custom products for customers.”

  The company currently uses a partner malting facility, but plans to establish one of its own in central Ohio so, as Thorne puts it, the supply chain shortens to “300 miles from seed-to-sip.”

  At press time, Origin Malt’s products are used in more than 50 beers and spirits, as well as health foods, baked goods and other items. To help producers explore the possibilities, the team frequently hosts beer dinners and “Seed-to-Sip Malt Schools” with brewing and distilling partners using a Hot Steep method to evaluate aroma and flavor.

A Boom for Midwest Agriconomy

  Puffin is sourced from directly-contracted family farms in Ohio, Pennsylvania, Michigan, Indiana and Illinois. Growers in New York are interested, too. Producers in search of a reliable winter cover cash crop have an advantage with Puffin not only because of its cold heartiness and disease resistance, but also its ability to help reduce soil erosion and runoff, improve terroir and water quality, and provide wildlife habitat.

  “By growing winter malting barley in combination with double-cropping soybeans, farms can reduce soil erosion and phosphorous runoff by as much as 80%. This is significant since we’re growing in the Great Lakes region, and phosphorous is the primary feed for algae blooms,” Thorne said. “I didn’t anticipate this being a major discovery that reinforces our commitment to conservation and sustainability.”

Origin Malt expects a 2019–2020 harvest of 10,000 acres, but the five-year projection is 75,000.

  “Puffin has a rich European heritage, and has had amazing results since we began producing and testing the variety—initially a cup of seed—nearly a decade ago,” Thorne said. “Our process and demonstrated commitment to bringing malting barley varieties to large has inspired more interest in our region from seed breeders who have been more focused on developing varieties suited to grow in other regions around the world.” 

  Reintroducing an integral ingredient in a multi-level supply line isn’t without risk, but Hagerty thinks Origin Malt’s best practices are factors growers and crafters can trust.

  “Every crop year can yield slightly different results, and it’s up to us—the maltster—to manage how we adapt and uphold our specifications and adjust our malting protocols. I’m a big believer in that it comes down to how you’re educating and keeping your customer informed—as that relationship needs to be lock-step to make sure that everyone can do their best,” she said.

  “We’re very focused on risk management, which is why we’re strategic in where we grow and how we develop and diversify our growing region,” Hagerty told Beverage Master Magazine. “That being said, if barley volumes or quality were low, there’s an established global market for high-quality malting barley that Origin Malt could procure. Maintaining those secondary-sourcing relationships is something we already have in place in case of a North American shortage or crop failure.”

  Thorne said weather is the challenge he worries about most, but cannot control. “To mitigate the risk of weather damaging our crops, we’re committed to spreading our seed across a several-hundred-mile range from Illinois to the Atlantic coast.”

  The company’s agriconomy roots will filter even deeper in the coming years. “When our plant is at capacity, we’ll be ‘reshoring’ tens of millions of dollars every year from the local researchers, seed sales, malting barley production, agronomists, local storage and transportation, and our malting facility,” said Thorne. “Total economic impact will exceed $2 billion from seed-to-sip.”

  He said he loves all the people Origin Malt works with, “aligning every day to make this a success. I’m driven by the potential to make a sustaining impact on an important supply chain.”

  Hagerty is always excited by the “amazing products made with our malt and watching consumers learn about our supply chain and the processes and products that come as a collaborative effort between Origin Malt, barley growers and our brewing and distilling customers.”

  “The value that our malt house has is in the ability for our future facility and the agricultural economy to tie in more deeply with the craft beverage movement, and most critically with craft beverage consumers,” she said. “Sustainability isn’t just an outlook for the short term, but a long-term goal that will continue to be challenged and achieved with the efforts of our team, our growers, our brewing and distilling customers, and, most importantly, consumers who seek to support American agriculture.”

Making First Impressions Count: Smart Math & Creativity Produce Innovative Design and Manufacturing of Labels

Cyndi
stacks of beer cans

By: Cheryl Gray

Whether beer or bourbon, a distinguishing label serves a dual role in either identifying an old standard or giving consumers a reason to try something new.  

  Craft breweries and distilleries count on the design and production of their labels as a key marketing strategy. Labeling is part of brand identity, a creative process frequently handled by specialists in the field. Among them is Argent Tape & Label, a global, woman-owned business headquartered in Plymouth, Michigan, which makes labels, tapes and adhesives for the automotive, pharmaceutical, industrial, healthcare and food and beverage industries. While it considers itself to be a small company, ATL is big on customer service. Bekah Keehn, who spearheads quality assurance for the company, says its customer service goes well beyond the sale.

  “We are a small, dynamic company whose hallmark service begins with the personal interactions between customers and sales account managers,” she says. “Our sales account managers and customer service representatives are in continual contact with our potential existing customers, and we pride ourselves on listening to our customers. From the moment an inquiry comes through our website or an introduction is made at a trade show or other industry event, and even through successful delivery of the finished label, our sales account managers are engaged with the customer base.”

  Experts say that attractive, cost-effective and environmentally friendly are among the characteristics that craft brewers and distilleries want in their labels. Keehn says that finding the right combination of standard elements and unique creativity is what ATL strives to produce for its clients.

  “Every customer requires different characteristics for their labels,” she says. “Once we speak to our customers and have a thorough understanding of their requirements, we work with our material suppliers to provide the material substrate (underlying layer) for label production.”  

  Durability, Keehn says, is also important. “Some need a very durable label to withstand the outdoor elements, very moist or high heat conditions, while others may need something delicate and attractive or flashy and eye-catching for prime shelf appeal. We consider all conditions the label must ultimately withstand, we review the effect or finish the label should have, we address the color and graphic requirements and we employ several different pricing methodologies to achieve our customers’ requirements. Most recently, we have experienced a demand for sustainable material from our customers, and we now offer metallic, clear and white sustainable materials that we can print on. You would never know the label is specifically designed and considered environmentally friendly!”                                

  With design demands constantly changing, technology plays an integral role in the design and production of product labels. Keehn says that digital processing gives customers a heads-up on possibilities.

  “We employ digital processing and are able to show our customers online samples of what their finished product will look like,” she says. In this way, customers can ask questions, and we can discuss changes without always running numerous, costly physical samples. We can refine the outcome well before running a physical sample so that when and if we do require a physical sample, it is as close to production-ready as possible. Employing technology in this process is invaluable in allowing flexibility and efficiency through the product and design development phases.”

  Some craft beverage makers find inspiration through other kinds of collaboration. Todd Thrasher, owner of Potomac Distilling Company in Washington, D.C., teamed up with a graphic designer to get just the right look for his product labels.

“I hired a graphic designer that I knew and trusted,” Thrasher tells Beverage Master Magazine.

  “I showed her vintage labels for inspiration. We primarily concentrated on bottles from the 1960s and 1970s. I completed a marketing course at Moonshine University (in Louisville, Kentucky) that was focused largely on labels, so I was excited for the opportunity to apply what I had learned in this process. After we met a few times and sketches were developed, I sent three versions of the logo for review via email to a group of 30 people—close friends, family, business owners, etc.  A large majority favored the label that had been my favorite. It was really validating to have the opinion and feedback of others.“

  Thrasher, well-known in the Capital Beltway as both a sommelier and bartender, wanted creative labeling to showcase Thrasher’s logos for his five signature rums—Spiced, Green Spiced, White, Gold and Coconut, all produced in an urban, waterfront D.C. setting on the Potomac River known at District Wharf. For Thrasher, making products instantly recognizable was vital.

  “The most important element is that the label is easy to read and identifiable from across a bar!  I also wanted the aesthetic of a more vintage bottle. I decided not to use shrink wrap and instead went with waxing the bottles for a more handmade approach.”

  Owner input also goes into label designing at family-owned and operated Bron Yr Aur Brewing (pronounced “bron-yar”), located in Washington State’s Yakima Valley. Amanda Hatten, co-owner and Operations Manager, says that in the beginning, the brewery utilized an outside design company, but it wasn’t long before she took over the task. Becoming the brewery’s solo in-house label designer was less about saving money and more about adding a personal touch to the brewery’s brand.

  “This is a passion of mine, and it’s a great way to express who we really are as a company when it comes to working so closely together on designs,” Hatten says. “We have them printed elsewhere. For our crowlers, the main thing is to create fun graphics that are filled with adventure.” 

  There is adventure, too, in developing new innovations for labeling, led by companies like ATL, which tracks market trends. ATL’s sales force has identified a rise in the use of sustainable materials in labeling and packaging. Keehn says the information was priceless. 

  “They brought this trend information in-house, and we put together a cross-functional team that identified, tested and priced out a line of sustainable label substrates,” she says. “We partnered with new and existing material suppliers who pioneered the introduction of sustainable materials into the label market, and now ATL has its own line of sustainable material offerings that are proven compatible with our traditional, Flexo and Domino N610i, digital presses.  In this time of environmental consciousness, we are excited to meet the demand for recyclable labels that utilize less material and may be biodegradable with a low carbon footprint.”

  Above all else, a quality label is long-remembered by the client—and consumers.

  “Producing a quality label is paramount at ATL,” says Keehn. “We take quality seriously, employ standard procedures and processes to assure consistent outcomes, and we spend time prior to production reviewing our customers’ needs and whether and how we can produce their quality label.”

  Some craft breweries and distilleries are opting for full-body shrink sleeve labels. A shrink sleeve label provides top to bottom coverage because it conforms to an entire container’s shape, allowing a complete label identity for any product. It is one of the specialties of PDC International Corporation, a 50-year old company based in Norwalk, Connecticut.

  According to PDC International, converting to a full-body shrink sleeve not only boosts a product’s shelf appeal and visibility but does so at significant savings. A regular, stock container (bottle or can) is generally used, and, with a full-body shrink label, there is no worry about aligning front and back labels. One sleeve, the company says, does the job of three labels, improving consistency, lowering costs and requiring only a single application. In the spirits industry, one full-body shrink sleeve can brand a product on the front, back and at the neck. 

  For breweries, a full-body shrink sleeve conforms to the entire can, covering it 360 degrees. Rather than having to store large quantities of pre-printed cans, full-body shrink sleeves allow a brewery to decorate blank cans when needed. PDC experts say that the process saves warehouse space, pares down logistics and saves money.

  Increasing the bottom line for companies in the labeling industry sometimes means anticipating client needs before even the client can pinpoint it. ATL’s Keehn underscores how communication and innovation go hand-in-hand, citing an appreciation from clients to a commitment to stay on top of industry trends.

  “We attend trade shows and review trade publications to keep abreast of new offerings in materials, inks and methodologies, and we continually expand our product line to offer new and innovative materials and printing effects. As high shelf appeal and unique design are common characteristics of our customers’ labels, we strive to meet the next level of creativity, quality and excellence.”

  That said, creativity, quality and excellence of any label are perhaps best measured by how consumers respond as they peruse store shelves for the multiple craft beer and spirits options competing for their attention—and their money.

Testing, Metering and Monitoring Tools Enable Consistent Brewing

Cyndi
staff checking quality control

By: Gerald Dlubala

Consistency in the craft brewing process is achieved through quality control. Quality control includes regular testing and monitoring of ingredients and processes to achieve consistent results over multiple batches, while also ensuring that all regulatory issues are followed and the risk of contamination is minimized. With new flavor profiles and textures being introduced seemingly daily, a craft brewer needs to practice exceptional quality control to make their beer the best they can, even if it’s a new and unique offering. Craft brewing starts with water, and as a major component, that is where the testing must begin. Quality testers and monitors are a necessity, but so is the willingness and discipline to use them diligently at the proper times.

Simplifying the Chore of Testing and Monitoring

  Milwaukee Instruments Inc., of Rocky Mount, North Carolina, operates on the belief that digital testing technology should be easy to use and available for every level of brewer. They focus on offering affordable, easy to use instruments manufactured from quality hardware. Milwaukee Instruments offers all the most widely and regularly used testing and monitoring products for the craft brewing and winemaking industries, and they do so without the use of test strips. Being known for outstanding capability while packaged in a smaller, more convenient size, their handheld meters can be kept conveniently in a pocket, and feature exceptional accuracy and lab grade performance.

  “Temperature probes, pH meters and a unit like a refractometer that measures Brix are must-haves when brewing craft beer,” said Jason Brown, Operations Manager, North American Operations. “Monitors and meters are used throughout every stage of the brewing cycle. Depending on the type of beer the brewer is making at the time, there are major factors to be controlled and monitored. The initial pH of your water plays a big role in the taste and profile of the beer, whether you’re brewing a lager or a stout, a smooth or a bitter, or anything in between. The Brix, or sugar content, is measured before and after fermentation by measuring density. We have the right testing and monitoring products available for every stage of brewing, as well as every level of brewer.”

  Included in that selection of testers and meters is their turbidity, or haze meter, used to measure clarity by the concentration of undissolved, suspended particles that are present in the beer.

  “All of our instruments are very precise and accurate when taking measurements within the specific applications of pH, temperature or Brix. Our testers and meters are manufactured to be small and wireless, yet durable and waterproof to give a brewer the most convenient and easy-to-use method for testing and monitoring applications. These instruments have withstood the test of time and generally fit all of the required needs of the craft brewer at all levels,” said Brown. “That being said, of course, there are always ways to improve on the current tools and instruments. Brewers haven’t asked for anything that we can’t provide, but faster processing and longer-lasting probes would always be welcomed. The average lifespan of a normal pH probe is 12 to 18 months, so maybe we can improve upon that. More manufacturers are heading towards data logging equipment so brewers can have a historical view of their pH, temperature and Brix levels during different applications.”

  Milwaukee Instruments’ automatic smart controllers continually monitor the required parameters set for the brewing process, including pH and ORP. These monitors dose and adjust the system as needed, 24 hours a day, seven days a week. Automatic monitoring and control systems are nice additions because let’s face it, things happen, and measurements can and will get delayed or forgotten, allowing water makeup parameters to possibly get off track. Automatic smart controllers have your back when needed.

Quality Water Before Quality Beer

  Industrial Test Systems in Rock Hill, South Carolina, knows that water matters in craft brewing, and, no matter what type of beer, it’s best to know the makeup of the water source. Without quality water, there cannot be quality beer. The water chosen for brewing, depending on things like chlorine or other contaminants, affects the sulfide to chloride ratio, how the beer is expressed to the drinker’s palate, and, ultimately, the final taste of the beer. 

  Water hardness plays a significant role in the beer’s mouthfeel. Light beers tend to be noticeably smoother on the palate, and a lot of that has to do with using softer water for brewing. Dark beers can use harder water, producing that familiar stronger or crisper flavor profile.

  All-in-one kits, like the Smart Brew Starter Kit by Industrial Test Systems, can keep water testing on target. The self-contained kit tests for water hardness, calcium hardness, alkalinity, pH, chloride and sulfates. Once brewers get the hang of the basics and are looking to expand their testing, the Smart Brew Professional Kit provides the same testing plus the eXact pH+ Smart Meter System, a Bluetooth enabled, handheld multi-parameter pocket meter that works within their eXact iDip app for both iOS and Android smart devices. This unit can test pH, conductivity, salinity, Total Dissolved Oxygen, Temperature, and Oxygen Reduction Potential using two different probes. The data captured is useful for specific brewer formulas and brewing-specific calculations.

Temperature and pH Determine Results

  “A good pH meter and thermometer are used in all stages of brewing and are, by far, the best friend of the craft brewer looking to produce a quality, consistent brew,” said Casey Thomson, Application Sales Engineer for Hanna Instruments, a world leader in pH and titration science.

  Hanna Instruments is known for developing innovative products, and many are the norm throughout the instrumentation industry. Included in their product offerings are pH electrodes with built-in temperature sensors and waterproof, portable pH meters.

  “As a brewer, one of the most important things to test regularly is the water supply you’re using as source water. If you’re using your area’s general water supply on a year-round basis, chances are your source water is changing with the seasons, and that’s ultimately going to alter and change the taste of your beer. Inconsistency in the taste of your product is something you never want because that’s a good way to lose customer loyalty. Pilsners, for example, are all about the water that they’re brewed from. Guinness will never be exactly duplicated here in the states because of the water that is used as the base.”

  “Craft brewers also need to keep tabs on temperature over the entire process,” said Thomson. “Extra-long probes, like the one we affectionately call ‘The Sword,’ come in very handy to monitor the temperatures down deep into the mash to ensure consistent temperatures throughout. When you do that, you’ll know that you’re keeping the yeast happy enough to form alcohol from the sugars.”

  Thomson told Beverage Master Magazine that refractometers are useful for brewing reports and for measuring the sugars before fermentation. After fermentation, a refractometer measures alcohol content. Many brewers still like to use older style hydrometers, and that’s fine, but they have to use a larger amount of product for a sample. If the brewer offers hazy IPAs, a haze meter is a great addition to their testing instruments and can indicate the amount of concentrated, suspended particles in the beer by measuring the amount of transmitted light through the product.

  “Due to the growth in the popularity of sour beers, we are also seeing increased interest and requests from brewers for a tool to measure lactic acid,” said Thomson. “While we don’t currently have beer-specific units to do this, we do supply these types of testing units to the dairy industry, so the breweries can use those and expect quality, true results. Additionally, being able to measure the alpha and beta enzymes in hops is an area with some interest, so we’re learning more about the science behind as this is an area of business growth.”

  “All of our instruments are generally easy to learn and use,” said Thomson. “It’s more of a situation of having the time to get the measurements done as needed. I always like to show the users what the process is to take the measurements and make sure they know what they’re getting into as far as using our equipment consistently. We get users up to speed in about two hours tops, but we also provide web training through YouTube videos, our online training manuals, etc.”

  Hanna Instruments also provides testers and monitors for the wine industry. Consistent pH measurements are important throughout the process. Their Halo wireless pH meter provides direct readings on a phone or tablet. Their edge wine meter kit is their most popular unit, measuring pH, conductivity/cold stability and dissolved oxygen. It’s Bluetooth capable, able to be carried around and equipped with an eight-hour battery. A benchtop cradle transforms the unit into a tabletop wine lab.

  “Winemakers are more traditional with their processes, so the testing tends to stay more standard,” said Thomson. “Occasionally, you’ll get a winemaker with a science background that wants to play around, experiment and see what happens under different circumstances so that other tests can come into play. But pH is, of course, very important throughout the entire production process, as is the ability to stay aware of free acids and sulfur dioxide that affect both bouquet and shelf life.”

VIRGIL GAMACHE, ORGANIC HOP FARM IN THE YAKIMA VALLEY

Cyndi
aerial view of a facility

Virgil Gamache Farms, Inc. is a leading organic hop farm in the heart of the Yakima Valley. The Gamache family began farming in here in the Yakima Valley in 1913. They called their first farm “the Sunshine Ranch.” Here the company’s founder, Virgil W. Gamache spent his formative years. The family raised alfalfa, wheat, corn, potatoes, apples and grapes.

  With the end of Prohibition in 1932, the Gamaches lost no time in planting hops. In the mid 1940’s Virgil and his brother Francis took over the farm. Virgil eventually became sole proprietor. Not long after, Mr. Gamache incorporated the family business as Virgil Gamache Farms, Inc.  The family worked hard over the years to bring this thriving organic hop farm to its ninth decade of production. The growth at the farm and the industry as a whole today, would no doubt astound even Mr. Gamache.

A STARTLING DISCOVERY

  Mr. Gamache himself witnessed the beginning of a new chapter for the farm. In 1997 the Gamaches discovered a brand new hop variety. The family designated this intriguing hop variety as “VGXP01,” in honor of Mr. Gamache.

  So with this new discovery, the family began to market the carefully cultivated, organically grown VGXP01 hops as “Amarillo® brand.”  Amarillo® hops are hugely popular with craft brewers. Brewers apreciate Amarillo® hops for their complex and delightful aromatic characteristics, including citrus, floral, tropical fruit and spice tones.

   Thus, Virgil Gamache Farms and its Amarillo® brand launched a period of tremendous growth, paralleling that of the booming craft brewing industry. With that, the operation has grown from a small 15 acre ranch in 1932 to an organic hop farm of over 1,000 acres today. In addition, VGF, Inc.’s auxiliary production program produces under license an additionally significant volume of Amarillo® brand hops. VGF partner farmers grow Amarillo® hops all across the Pacific Northwest–in Washington, Oregon and Idaho–as well as multiple regions in Germany.

ADVANCED ORGANIC HOP FARM

  VGF’s operations have not only grown in scale and geographic area, but also in creativity and in use of new technology. Originally hops were all cultivated and gathered by hand, with help from industrious native Americans and other neighbors. Today, the operation is highly mechanized and automated. In addition, VGF’s lab monitors hop quality to assure ideal harvest time. Thus, today’s VGF continues its relentless pursuit of producing great hops for great brewers, in a growing craft brewing community.

  In summary, while embracing the future we also honor our past. Our founder Virgil W. Gamache’s life-long love of farming empowered him to celebrate his 100th birthday. Though Virgil is no longer with us, his spirit of hard work and innovation lives on. You see it in his sons and grandchildren who continue the tradition. It is a tradition of excellence that defines Virgil Gamache Farms to this day.

ORGANIC HOP FARM

BEST PRACTICES

  The Gamache family have a love for the Pacific Northwest. It began when great grandfather Albert Gamache first settled in the Yakima Valley in 1880’s. That love of the land is demonstrated in the sense of stewardship that guides the everyday work at Virgil Gamache Farms.

  An important way to respect the land is through organic farming. As a certified, organic hop farm, our best practices include composting and returning all vines and organic farm matter to the earth. We plant triticale, a natural grain ground cover, between the hop rows to protect the soil from erosion. The triticale crop returns organic matter to the soil as workers till it back at the end of the growing season.  It also support organic hop farming by reducing the soil temperature and reducing the spread of wind and dust-borne pests.

WATER AND RESOURCE CONSERVATION

  Finally, the Gamache family knows that water is a precious resource. VGF makes the most efficient use of water with drip irrigation. Wireless controlled water valves direct the limited water resources specifically where needed and in just the right amounts. VGF takes care to recycle everything, including motor oils and discarded metals.  All these practices work to ensure the legacy of founder Virgil Gamache and protects our beautiful Yakima Valley. 

For more information visit… https://www.vgfinc.com

https://www.vgfinc.com

Ogden’s Own Distillery: Bringing History to Life in Utah

Cyndi
5 women posing for a beverage

By Nan McCreary

Ogden, Utah, is a small city with a big, colorful past. From the late 1800s to the mid-1900s, Ogden transformed from a lawless frontier town to a rough and tumble railroad hub, to a center for bootleggers and speakeasies during Prohibition. The infamous 25th street, called “Two-Bit 25th” because any form of debauchery could be had for two bits, was a hotbed of gambling, prostitution, opium dens and bootleg booze.

  Today, Ogden is rich with heritage, live music, arts and outdoor activities, and, contrary to its notorious past, is home to a heavy population of Mormons. In 2009, despite a sizable culture that bans alcohol, two entrepreneurs decided to open a distillery — only the second in the state — and capitalize on Ogden’s unique history.

  “Our first product, Underground Herbal Spirit, was named for the tunnels off main street that were used to move contraband during the late 1800s and early 1900s,” co-owner and CEO Steve Conlin told Beverage Master Magazine. “Ogden was a notorious, wild place back then. With the railroads, it was the crossroads of the west. We pay homage to that with our logo, a circle with a cross, and a small dot ‘on the map’ that represents this era.”

  According to Conlin, Underground Herbal Spirit was highly inspired by the success of Jägermeister. Yet, with a mixture of 33 herbs, spices and flavors, it also reflects the odd assortment of characters that traveled through Ogden in the early days. “I love the idea that you could have all the herbs from around the world coming through Ogden and making a concoction,” Conlin said.

  Underground Herbal Spirit includes a mellow blend of cassia, angostura, anise, cardamom, gentian, yarrow, wormwood, mate, guarana, ginseng, molasses, orange oil, lemon oil, spearmint, pure cane sugar, agave and plum. While the drink is technically a liqueur, it has less than the required 2.5% sugar content by weight, which allows the herbs and spices to come through for a sweet, complex flavor experience.

  Ogden’s Own enjoyed immediate success with its Underground Herbal Spirit. Not only did it win a Double-Gold Medal in a San Francisco World Spirits Competition in 2010, it was also selected as the Best Liqueur in the Americas at the Spirits of the Americas Competition in 2012. The beverage was extremely popular with consumers, too. 

  “People ask me why I would start a liquor business in Utah,” Conlin said, “and the answer is because I had distribution. Utah is a control state, where liquor is sold only in state stores, so I had access to the market right off the bat. At the time, as long as you had a good solid product, the state stores were happy to sell it for you. We deliver our products to the warehouse, and they place it in all [44] of their stores.”

  Ogden’s Own followed Underground Herbal’s success with a 2012 release of Five Wives Vodka. The beverage, made from Utah mountain spring water, is a 100% distilled corn-spirit and gluten-free. The spring, hidden in beautiful Ogden Canyon, is inaccessible by vehicle, so the water is hiked out five gallons at a time.

  Five Wives Vodka got off to a rather inauspicious beginning: the bars in neighboring Idaho wanted it, but the state refused, saying the name was offensive to women. Ogden’s Own, seeing a public relations opportunity to gain “notoriety for being bad in Idaho,” took the story to outlets such as NPR and NBC’s Today Show. As a result, Ogden’s Own captured the attention of a high-powered Washington D.C. attorney who wanted to use their case to clear up some constitutional issues involving interstate sales. “The attorney wrote an eight-page letter to the state of Idaho,” Conlin said, “and within 30 minutes, they called me and invited me to send the product.”

  Conlin claimed their intention was never to poke fun at women or Mormons. “We liked the alliteration, like ‘Five Guys Burgers,’ and the idea that anyone could interpret the name with their own baggage, whatever that was,” he said. “Five Wives could be a group of girlfriends or a knitting circle for all we know. Plus, we found a fun image to use for the label.”

  Today, Five Wives is a Utah favorite and was voted by Salt Lake City Weekly as the “Best New Spirit” in Utah for 2012. It has won silver medals in the San Francisco and Denver International Spirit competitions as well as the Spirits of the Americas competition.

  After Five Wives, Ogden’s Own launched its Porter series of hand-crafted flavored whiskeys: Porter’s Fire, Porter’s Peach, Porter’s Apple, Porter’s Huckleberry and Porter’s Small Batch Rye. 

  “We wanted to expand,” Conlin said. “Fireball had just come out, so we decided to create a local cinnamon-flavored whiskey. Our Fire is not as hot as Fireball; it’s more natural cinnamon with a cinnamon roll finish with vanilla. We like to take a lot of things that are popular and give them our own little twist in a way that we think makes them more palatable. A lot of people who don’t like whiskey like ours.”

  The Porter series is named for Orrin Porter Rockwell, a notorious gunslinger and wanted man. It is said that Rockwell killed more outlaws than Wyatt Earp, Doc Holliday, Tom Horn, and Bat Masterson combined, earning him the menacing title, the “Destroying Angel.” Paradoxically, he was also a devout church member and bodyguard of Joseph Smith, founder of the Latter Day Saint movement, and Brigham Young, a Mormon prophet.

  “There’s this weird mentality in Utah where the Mormons all partook of alcohol before Prohibition, but then they laid down the law and banned it,” Conlin told Beverage Master Magazine. “We like to poke fun at this paradox without being vicious.”

  The Porter labels carry the menacing face of Porter Rockwell, similar to that on a wanted poster from the mid-1800s. According to Ogden’s Own website, Porter’s Fire “combines the smoothness of Canadian whiskey with the most divine ingredients to deliver you one hell of a well-balanced flavor. Sweet, but not sugary, berry and spicy, but not too hot, Porter’s Fire captures the passion of its namesake and the carefree spirit of the old west.”

In 2017, Ogden’s Own began producing Madam Pattrini Gin, made from juniper, bergamot, coriander, cardamom, Nigerian ginger and Sicilian lemon. It’s a small run of fewer than 1000 bottles at a time, with all bottles numbered by batch. In 2019, the gin was selected as the Best Compound Gin in the United States at the World Gin Awards in London.

  What makes this gin especially unique is the namesake: Madam Pattrini was actually B. Morris Young, the son of Brigham Young, who performed in drag as an opera singer in northern and central Utah venues from 1895 to the 1900s.

  “Our goal is to bring historical figures back to life, back into the consciousness of Utah,” Conlin said. “It’s funny, but a photo of Madam Pattrini was recently found hidden in the church archives.”

While Ogden’s Own staff has fun bringing the ghosts of the past to life, they take their distilling seriously. All products are corn-based and gluten-free.

  “Our philosophy is to produce quality spirits at a reasonable price,” Conlin said. “Lots of people overprice their products just because they’re ‘craft.’ It serves us best to keep our price low.”

This philosophy has certainly paid off. Ogden’s own has grown from producing 600 cases in 2009 to 20,000 in 2019. According to Conlin, “The market is the 21 to 35-year-old drinker who is spending money on a craft product — a unique product — and has a sense of humor and wants something they can talk about when they go to events.”

Currently, Ogden’s Own has eight employees: four in sales and four in production. Overseeing production is co-founder Tim Smith, who started the Ogden’s Own ball rolling when he took his home-made hooch to Conlin’s mortgage company for advice on marketing. After “bootstrapping” their way from what was basically a small garage to a 6,400 square-foot facility, the partners now have distribution in states including Utah, Idaho, Wyoming, Oregon, Nevada, Michigan and parts of Southern California. 

  “It’s been a step-by-step process,” Conlin said.  “You have to have a distributor if the state doesn’t do it for you. You have to knock on a lot of doors. I call it shaking hands and kissing babies. We’re out politicking, meeting people, telling them about our product, doing the ‘Costco taste test,’ one by one.”

While the people at Ogden’s Own have worked their way up to become a significant presence in Utah, they now have their sights on nationwide recognition. The distillery recently raised $2 million from fans, partially via an online crowdfunding campaign, which is enabling them to move into a new 32,000 square-foot facility in April. Their new home will house a full bar, a massive production area, new offices, and an amphitheater for live music events.

  “We are ramping up considerably,” Conlin told Beverage Master Magazine.  “A year from now, we will be a much different company. Our fans have enabled us to take a whole new approach to growing. As we do, we plan to be very transparent and honest and ensure that our expenditures make sense. It’s up to us to parlay this into nationwide success.”

  As Ogden’s Own Distillery moves into the future, we will no doubt be hearing more from them, along with the ghosts who once roamed 25th street.

For more information on Ogden’s Own Distillery, visit https://www.ogdensown.com/

Cider Saviours: How the Next Generation of Craft Cider-Makers is Saving Family-Run Farms

Cyndi
women holding 2 apples in front of their eyes

By: Briana Tomkinson

The agriculture industry is in a period of intense change. Globalized markets are driving com-modity prices down, making it hard for smaller farms to compete. Many mid-sized operations are being snapped up by large conglomerates.

  Additionally, many of the men and women running small and mid-sized North American farms are starting to look forward to retirement. According to Statistics Canada, the average age of the Canadian farmer is 55. Yet, often their children aren’t interested in taking over the family business.

The apple business is no exception. Yet, as many independent growers are discovering, changing consumer tastes are opening up new opportunities for niche producers. For apple orchardists, pivoting from selling apples to launching a craft cider brand can be a lifeline for struggling family-run orchards.

  According to Anelyse Weiler, a college professor of sociology at Okanagan College in Kelowna, British Columbia, and a Ph.D. candidate in sociology at the University of Toronto, moving into craft cider production opens up new revenue streams and buffers producers from economic volatility in the fresh fruit commodity market—and can be an effective way to entice grown children to consider returning to the family business.

  “Apple farmers face a slew of challenges in their industry, like the toll of the physical labour on their bodies, the increasing consolidation of apple production companies into huge conglom-erates, and the effects of climate change on their crops,” she said. “Moving into cider produc-tion can help farmers maintain their rural lifestyle instead of getting out of it altogether.”

  As part of her dissertation work, Weiler spoke to 100 people working in the Pacific Northwest craft cider industry about the challenges they face. She found most young cider producers she spoke with grew up in the agriculture industry and saw the struggles their parents faced.

  “For a lot of young people who had grown up on farms, they could observe not only the eco-nomic volatility but the emotional stress put on their parents’ generation and, frankly, the phys-ical cost of being a full-time farmer,” Weiler said. “For some of them, there was no romanticism that went into this idea of farming. They went into it with eyes wide open, and in many cases, wanted to maintain some sort of connection to agriculture, but on their own terms.”

  Weiler said mid-sized farms are finding it more difficult than ever to eke out a profit. Yet smaller farms have more opportunities to sell their products directly to consumers through farmer’s markets, farm tourism, local distribution to restaurants and via online marketing. Sales volume may be lower, but customers are increasingly willing to pay a premium for high-quality “arti-sanal” products.

  “A lot of producers face this ultimatum: get big, get out or get niche,” Weiler said. “And craft cider industries are one way for people to get niche.”

  Many young orchardists in the cider business truly value the interactive service components that go into direct marketing and sales, Weiler said. They also enjoy the chance to connect with customers in a direct way that isn’t always possible when just selling fruits to the commodity market.

  “I think it draws on this emerging craft livelihood movement where young people are interested in the creativity, in the sense of being able to put their unique signature on something in ways that farming for the fresh fruit market doesn’t always allow,” she said. 

  Weiler noted that the high cost of farmland in Canada makes it hard for young people without family ties to enter the orchard business. Young people who want to get into orcharding on their own have to get creative, she said. Some have created micro-cideries using windfall fruit or harvesting from abandoned orchards, for example—even using their own labour to pick the fruit.

Cider by the Numbers

  In Canada, cider sales are booming. In 2018, Statistics Canada reported that Canadians quaffed 181 million litres of ciders, coolers or similar beverages per person—the equivalent of 21.5 bottles for every person over the legal drinking age.

  According to research by Euromonitor, the craft beer craze has sparked interest in other small-batch, artisanal food and beverage products, including cider. The amount of cider sold in Canada more than doubled between 2013 and 2018, from 29 million litres to 63 million. Euromoni-tor projects sales could jump to almost 93 million litres by 2022.

  Sales growth in this category over the past 10 years has outpaced wine, spirits and beer in Canada. Cider and cooler beverage sales had an annual average increase of 6.4% over this period, compared to 4.2% growth in wine sales, and 2.8% for spirits and 1% for beer. Sales of imported cider grew faster than Canadian-produced brands, increasing at an annual average rate of 10.2% versus 5.5%.

  Ontario is the largest apple-growing region in Canada, with over 16,000 acres of trees. Accord-ing to the Ontario Craft Cider Association, cider is now the fastest-growing category of alcohol-ic beverages in Canada. Reporting from the government-run Liquor Control Board of Ontario shows that between 2012 and 2019, sales of Ontario craft ciders soared from $1 million to $16.3 million.

  According to Statistics Canada, ciders and coolers represented 4.2% of total alcohol sales in Canada in 2018, with the largest market share in New Brunswick (6.8%) and the lowest in Nu-navut (0.9%).

Key Dates for Canadian Cider Festivals (as of the date of publishing):

•    B.C. Cider Festival (http://bcciderfest.ca/): May 24, 2020: This year’s event will feature over 30 cideries from the Pacific Northwest and beyond. The festival is connected with B.C. Cider Week, May 23-31, which includes tasting events and tap takeovers throughout the province.

• Toronto Cider Festival (https://www.torontociderfestival.com/): August 28-29, 2020: Fea-tures live music, artisan market, food, an outdoor fire pit, and of course, a cider showcase and tasting events.

Collaboration is Key in Canadian Craft Beer

Cyndi
blood brotherhood beer

By: Alyssa Andres

With the number of breweries in Canada growing to over 900 this year, craft brewers need to find new ways to set themselves apart from the competition. A series of rotating taps isn’t enough to draw the crowds to the tasting rooms anymore. There are over 300 craft breweries doing that in the province of Ontario alone. Many Canadian breweries are choosing to team up with other brewers, local businesses and people in the community as a way of creating something newsworthy, both in their beers and in their tasting rooms. It’s no longer an “every man for themselves” mentality in the brewing industry. Collaboration is a key component for some of Canada’s most exciting and successful breweries. It allows them to experiment with new techniques and approaches. It also sparks interest in new products while building a sense of community and assisting other local businesses.

  In downtown Toronto, Canada, craft brewers have to battle to be the latest and greatest in the food and beverage scene. The foodie culture is strong in the city, but Torontonians tend to lose interest quickly, so the battle to stay hip is hard.

  Blood Brothers Brewing has managed to stay at the top of the wave since opening its doors in 2015. Owners and actual brothers, Dustin and Brayden Jones, combine innovative brewing ideas and methodical techniques with beautiful design and packaging, making Blood Brothers Brewing stand out amongst the hordes of other Toronto craft breweries. However, that’s not all they’re doing to keep people’s attention. For the brewery’s newest releases, they’ve teamed up with four other Ontario craft breweries to create “The Blood Brotherhood.” The brewery released four beers on February 22nd, each a different collaboration with a smaller microbrewery in the area; Barncat Artisan Ales, Badlands Brewing Company, Short Finger Brewing Company and Rouge River Brewing Company. The limited-edition series sparked massive interest from the brewery’s online following after only a week of promotion. The Blood Brotherhood Imperial Stout with chocolate, coconut and banana, a collaboration with Barncat Artisan Ales in Cambridge, Ontario, sold out all 200 bottles within an hour of release.

  For microbreweries like Barncat, pairing with a reputable brewery like Blood Brothers gives them exposure and instant credibility in an otherwise volatile market. It’s easy for many new craft beer releases to fall under the radar, but a limited release collaboration creates something one of a kind, and people tend to take notice. At the same time, collaborating allows brewmasters to work with other brewers, sharing new ideas, learning new techniques and utilizing different facilities to make unique products they might not otherwise create.

  Powell Brewery in Vancouver, British Columbia, used this mentality when brewing its Ode to Wallflower Pale Ale. Powell has teamed with East Vancouver distillery, Odd Society Spirits, to create a Citra pale ale aged in Odd Society gin barrels. This limited edition 6.2% ABV beer has incredible personality. It is crisp and botanical, with a slight oak quality and smooth finish. A collaboration like this helps both businesses gather attention and create a hyper-local product that speaks to its location.

  Many craft brewers in the Niagara Peninsula are collaborating with local winemakers to create innovative beers that reflect the region. Exchange Brewery in the heart of Historic Downtown Niagara-on-the-Lake, uses grapes from popular local winery, Pearl Morisette, to create their Grand Cru Ale. The ale is brewed with a hint of spice and aged for one year on pressed grape skins. The result is a dry, fruity ale with a deep colour and smooth body. Nearby, in the Twenty Mile Bench VQA appellation, Bench Brewing Company is also using local wine barrels and grapes to brew their beers. Not only that, but they’re also using a plethora of fruits grown in the surrounding farming region. The result is a roster of beers that showcases the land from where it comes. These collaborations help to support the community and local farmers.

  Collaboration is not only happening in the breweries but the tasting rooms as well. Many Canadian craft breweries are choosing to partner with local businesses to enhance the front of house experience and create something authentically local. At A-Frame Brewing Company in Squamish, British Columbia, owner Jeff Oldenborger works alongside local businesses to create a one of a kind haven for people in the community. Local food trucks serve guests regularly outside the brewery, and snacks are for sale from local vendors such as Spray Creek Ranch Pepperoni and Kaylin & Hobbs Pickles. Oldenborger has even partnered with Trae Designs, a local toymaker that creates sustainable and innovative wooden toys, to create “Okanagan Lake,” a play area for children to enjoy while visiting the space. Combined with regular events and live music, the space is a hub for ongoing collaborations within the community, and a popular retreat for locals.

  On Cape Breton Island, Nova Scotia, on the eastern coast of Canada, a similar collaboration is happening between local craft brewery, Big Spruce, and Cabot Public House, a popular local pub. The restaurant has orchestrated a regular “Tap Takeover” with Big Spruce, where the pub pours only their beers for a night, offering locals the chance to try a larger selection of their products. The event draws quite a crowd.

  That’s not the only exciting collaboration for Big Spruce. Each year since 2017, the small east coast brewery partners with the Ocean Tracking Network to create a “colla-BEER-ation” that raises awareness surrounding issues that face the ocean’s ecosystem. The beer, Big Spruce’s “Tag! You’re It!” American-style IPA, doesn’t change, but each year the brewery chooses a new oceanic creature to be featured on the label. The 2019 label featured an Atlantic salmon and raised $5000 for marine conservation. This brought the total amount to $56,000 in donations since the project launched. This year’s featured species will be announced in May, and the donations will continue to help support ongoing initiatives to support the ocean ecosystems.

  On the opposite coast, another brewery choosing to collaborate to do good is Surrey, British Columbia’s Central City Brewing Company. Every April, their Red Racer line releases a special edition beer to raise money for autism research. This year the brewery released a Superfruit IPA. Two dollars from every six-pack and $0.25 from every pint sold at participating restaurants go to the cause. Since 2013, the company has raised $600,000 to help battle autism. Red Racer also collaborates with a slew of craft breweries all over Canada to create their “Across the Nation” collaboration pack, originally released to celebrate Canada’s 150th birthday in 2017. Now in its fourth year, the 12-pack features beers from 12 different Canadian craft breweries, one from each province and territory in the country. Beers range from traditional to entirely experimental, but they each pay tribute to a local monument from their hometown. This collaboration helps put smaller Canadian breweries on the map and builds camaraderie within the industry from coast-to-coast. 

  The ultimate example of craft beer collaboration in Canada is Collective Arts Brewing in Hamilton, Ontario. This grassroots brewery has made collaboration the core spirit of their company. They collaborate every step of the way, not only with other brewers, local businesses and charities, but also with artists and musicians from all over the world. The result is truly remarkable. Each of Collective Arts’ beers displays artwork from a different artist chosen from thousands of applications on a bi-annual basis. To date, over 600 artists have been featured on Collective Arts’ cans. Visitors of the brewery can see the entire collection in the tasting room. A recent three-way collaboration with Chicago brewery Marz Community Brewing Co. and Hamilton Donut shop Donut Monster resulted in the hugely successful “Beady Eyes Pale Ale.” The beer, brewed with blood orange, hibiscus and lactose sugar, to emanate one of Donut Monster’s signature treats, featured art from Hamilton artist Joel MacKenzie.

  Collective Arts’ cans showcase not only artists but also feature different bands and musicians. To take it one step further, the brewery has expanded this alliance and is hosting an event in Hamilton, Ontario, in June 2020. Liquid Art Fest will see over 50 brewers from all over the world pouring their most unique and rare beers. The event will feature live music as well as live mural artists, screen printing and food trucks. Collective Arts has transformed what it means to be a craft brewery and created a company that embodies creativity, community and collaboration.

Canadian craft brewers all over the country are coming up with new ways to join forces and make headlines. Collaboration in the craft beer industry creates the same buzz as a celebrity romance. It’s like a superstar duet featuring two of your favourite bands. Not only does it create a buzz on social media and allow a brewery to network outside of its direct audience, but it inspires innovative ideas and results. It brings communities together and helps local businesses. It encourages camaraderie within the industry and can even support charitable causes. There is no downside to collaboration, especially when the other result is just really good beer.

How Craft Beer Producers Can Incentivize Distributors and Wholesalers to Help Them Go to Market

Cyndi
lone beer glass in front of a beer stall

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

As a craft beer producer, competition is fierce. According to the Brewers Association, there were 7,346 craft beer producers in the U.S. last year competing for $27.6 billion in sales. That’s a lot of beer! And, that doesn’t even take into account competition from “The Big Five” or import beer for shares of the overall U.S. beer market.

  For craft beer producers who are looking to scale and increase sales, it might be tempting to start pouring your marketing funds into consumer marketing. But will that really make a splash? Think of the hundreds of millions in media spend by beer companies every year that you’ll be going up against.

  Could there possibly be a more efficient way to use that marketing spend? For craft beers producers who are trying to go to market, it’s important to sit down and ask yourself, “Who has the biggest impact on whether or not end consumers find my beer? And how can I motivate them to prioritize my business?”

Understanding the Craft Beer Sales Channel 

  When it comes to connecting with end consumers, craft beer producers have four options:

•    On-Site: Selling directly to consumers at your brewery.

•    E-Commerce: Selling directly to consumers online.

•    Retail: Selling to consumers through other retailers.

•    On-Premise: Selling to consumers through bars and restaurants.

  However, on-site sales are limited by geography and e-commerce sales require brand familiarity or extremely creative (or very expensive) marketing. For a scalable sales and marketing strategy, craft beer producers have to turn their attention to retail and on-premise sales and the indirect sales force that helps them achieve penetration with these vendors.

Incentivizing Distributor and Wholesaler Sales Reps

  Outside of smaller, highly localized breweries, most craft beer producers rely on distributors, wholesalers and other supply chain trading partners to market to retailers and restaurants. Distributor and wholesaler sales reps are responsible for selling vendors on the value of your beer, negotiating pricing and terms of sale agreements and ultimately getting your craft beer to market.

  There’s one small problem: no matter how awesome your craft beer is, it only a small fraction of your distributor or wholesaler’s supply mix. In this battle for mindshare, it’s up to you to educate reps about your brand, enable them to sell your product and supply them with a value proposition that inspires them to take action on your account.

  This is where an incentive program comes into play. When many people think of incentive programs, they think about rewards. But while rewards play a big role in building relationships with your channel partners and adding to your overall value proposition, modern incentive programs take a more holistic, software-driven approach.

  Today’s incentive programs act as comprehensive sales and marketing platforms that enable craft beer producers to:

•   Build mindshare with distributor and wholesaler sales reps.

•   Target promotions by qualifying participant type, regions or product line.

•   Fill data gaps within their channel.

•   Enable sales reps to sell their product to vendors.

•   Deepen relationships with partners throughout their channel.

Building Mindshare with Distributors and Wholesaler Sales Reps

  Sales reps, for the most part, sell what they know. However, in a crowded supply mix, building this awareness and product knowledge with sales reps can be challenging. While every supplier wants something from these outside sales reps, far fewer supplier focus on offering value and creating memorable brand interactions.

  Inviting these sale reps to enroll in an incentive program where they have the opportunity to earn millions of rewards or exclusive incentive travel opportunities (and perhaps giving them a generous point bonus upfront) is more than a nice gesture. It’s a strategic differentiator and an opportunity to stand out from your competitors.  

  Your rewards program also creates new opportunities for communication and engagement that aren’t strictly business. These brand interactions are an opportunity to improve personalization and build relationship capital, which can be difficult to achieve in supply chain partnerships.

Targeting Promotions to Minimize Cost and Maximize Return

  It’s worth noting that a channel partner program is an investment. When planning an incentive marketing strategy, craft beer producers need to focus on maximizing the return on their marketing spend. This means that they should target first and scale second.

  For instance, would it make more sense financially to target your program to the sales and brand managers at the distributor level or the individual reps who work beneath them? It depends on your go-to-market strategy and the size and number of distributors you work with. If you sell through smaller wholesalers with a handful of reps, who each are responsible for a significant portion of your overall sales volume, then it might make sense to structure your program to reward individual sales reps. On the other hand, if you’re selling through a number of wholesalers and distributors, or an extremely large distributor with thousands of reps, it might make more sense to target your incentive programs to sales and brand managers.

  Additionally, from those managers and sales reps, craft beer producers can set qualification thresholds, based on sales volume or engagement, to ensure that their incentive program spend is allocated toward the participants who are most impactful to their sales growth.

  Another aspect of your targeting strategy is choosing to set incentive promotions by specific regions or product lines, based on strategic initiatives and opportunities for growth.   

Collecting More Complete Data Throughout Your Channel

  Craft beer producers, like many other companies who sell into a channel, often struggle with having inaccurate and incomplete data about their channel. Your incentive program is an opportunity to motivate distributors and wholesalers to provide more complete data. There are several ways craft beer producers can use their incentive program to fill in gaps in channel data:

•   Structuring enrollment forms that capture contact information and firmographic data during program registration.

•   Including automated tools for sales reps to attach invoices or other documents as part of the program’s sales verification process.

•   Offering rewards to participating sales reps for referring other reps within their organization.

•   Rewarding sales reps for completing voluntary surveys that can be used to clean up your existing database or collect more information about your participants’ interests, demographic and lifestyle.

•   Analyzing engagement datapoints the program generates to spot highly engaged accounts that are ripe for upsells and cross-sells.

  All of this information can be used to inform your sales and marketing strategy and increase the level of personalization you offer your supply chain partners.

  However, all the data in the world is useless unless you’re able to act on it. Modern incentive software includes CRM integration, data filters, reporting dashboards and custom reports to streamline this data for optimal use.

Enabling Your Distributor and Wholesaler Sales Reps

  Do you know one of the quickest ways to build brand preference with an indirect sales rep? Provide quality sales enablement. Using proven strategies to educate sales reps on your brand and your products makes it easy for them to sell your products to vendors.

  Integrating interactive quizzes and training videos with your incentive program is a powerful tool for supplying your external sales reps with the knowledge they need to sell your beer. This education can be supplemented by your incentive program’s digital communication platforms. (If you use this kind of strategy, make sure to break things up into bite-sized pieces and focus on the highlights your partners will need to help you go-to-market). Additionally, these quizzes are another opportunity for sales reps to earn rewards, increasing the overall value proposition of your program.

Deepening Relationships Throughout Your Channel

  Finally, in addition to short-term sales growth and marketing penetration, your incentive program has another benefit that will have a lasting impact on the success of your go-to-market strategy: relationship-building. Non-cash rewards are a social currency that achieve emotional impact and memorability with sales reps at distributors and wholesalers. In addition to motivating sales growth and reinforcing desired behavior, the rewards your program offers create a sense of personalization.

  For craft beer producers, your distributors and wholesalers are more than just conduits to the end consumer. They are your partners – an indispensable part of your go-to-market strategy. Offering your sales reps the opportunity to choose from exciting rewards or treating top performers to unforgettable incentive travel experiences represents the type of brand interactions that will set you apart from the competition. But more than that, these rewards inspire your distributor and wholesaler sales reps to emotionally invest in your brand and take an active interest in your success.

Unsure About Where to Start? Be Smart, Explore Your Options and Focus on Scalability

  An incentive program can be an integral part of a craft beer producer’s go-to-market strategy. However, what about companies who have never used this type of strategy before? If you are interested in creating a channel marketing program for your distributors and wholesalers, do your homework. Identify a goal for your program and the software functionalities you’ll need to achieve that goal.

  Compile a list of incentive program providers who fit your requirements and who have a proven track record, with case studies and testimonials to prove it. From there, begin reaching out to these providers and enlist their help in planning your incentive strategy. Use these conversations to refine your strategy and learn more about what has worked for companies with similar goals and similar distribution channels to yours in the past.

  Once you’ve decided on a provider, you don’t have to go all in. It’s prudent to start small, maybe with a pilot program or highly targeted incentive promotion. You can always scale, once you’ve proven that you can do this successfully.

  However, it’s also important to have a sense of urgency. As craft beer sales continues to grow, so will competition for craft beer dollars. Beating your competitors to building an incentive program for your distributor and wholesale sales reps can be a major competitive advantage. Plus, you owe it to your future customers to help them find their new favorite beer!

  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

Increasing Brewery Cash Flow: Craft Breweries and the R&D Credit

Cyndi
A money bag with the word Cash Flow and a chart with an up arrow

By: Wendy Landrum, CPA, Partner and R&D Advisory Leader; Mark Heroux, JD, Principal, Tax Advocacy and Controversy Services Leader; and Brian Haneline,  CPA, Senior Manager, R&D Advisory

Craft brew popularity is at an all-time high in the United States, with explosive industry growth in the past five years. According to the Brewers Association, craft brewers now make up 98 percent of all U.S. breweries. As new craft brewers continue to enter the industry and existing brewers look to keep up with recent trends, significant financial investments must be made before the first brew can reach the consumer. Whether these costs are related to the formulation of the brew, or how to produce or package the brew, costs can be substantial.

  Fortunately, federal and state governments offer an often overlooked but valuable benefit to help offset these costs in the form of R&D tax credits for craft brewers engaging in “qualifying activities.” 

R&D credits result in a dollar-for-dollar reduction in income taxes and, if applicable, payroll taxes, providing cash flow for future investments. The R&D credit applies not only to new product development, but also to improvements to existing products and manufacturing processes. Importantly, the activities need only be evolutionary to the organization, not to the industry as a whole, to qualify for the credit.

  Because the R&D credit is nonrefundable, startup companies and other small businesses like craft breweries are often limited in their ability to claim the R&D credit in the current tax year because they do not have current income tax liability to utilize the credit. Despite the credit having a 20 year carry forward if not used currently, the company receives no immediate tax advantage from the R&D credit, especially for years in which R&D activities and investments may be high.

Payroll Tax Offset

  However, the Protecting Americans from Tax Hikes (PATH) Act of 2015 allows certain small businesses to offset the R&D credit against payroll taxes instead of income taxes. PATH allows for up to $250,000 of annual federal R&D credits that can be allocated against payroll tax liability. This applies to tax years that begin after Dec. 31, 2015.

  To qualify for the payroll tax offset in 2019, a business must have gross receipts of less than $5 million in 2019 and may not have had gross receipts for any tax year before the five-tax-year period ending with 2019. For example, if the credit-claiming year is 2019, a company must have had less than $5 million of gross receipts in 2019 and no gross receipts prior to 2015.

  The R&D credit may be applied against the FICA portion of payroll taxes beginning in the first calendar quarter following the date on which the business files the income tax return. If the payroll tax credit portion of the R&D credit exceeds the tax liability for any calendar quarter, the excess is carried to the next calendar quarter and allowed as credit for that quarter. The payroll tax election is limited to five taxable years.

Four-Part Test

  Naturally, the question then becomes, what are “qualifying activities” to be able to claim the credit and what costs can be captured? Generally, activities must meet the following four criteria (referred to as the “four-part test”) to include the related wages, supplies, or contract research costs in the R&D calculation:

1.   The activity must be technological in nature. The activity must be based on the principles of a hard science such as chemistry or engineering.

2.   The activity must be for a permitted purpose. The activity must involve the creation of a new or improved level of: function, performance, reliability, quality, durability or cost reduction for a product or manufacturing process

3.   The activity must involve the elimination of uncertainty. The activity must explore what was not known at the start of the project.

      •   Capability: Can we develop the new or                                improved product or process?

      •   Methodology: How will we develop the new                       or improved product or process?

      •   Design: What is the appropriate design of                            the new or improved product or process?

4.   The activity must involve a process of experimentation. Substantially all activities must include elements of experimentation such as:

      •    Evaluating one or more alternatives

      •    Performing testing or modeling

      •    Examining and analyzing hypotheses

      •    Refining or abandoning hypotheses

  A wide range of technical activities related to product or process development or improvement in the craft brew industry may qualify for the R&D credit. Consider the examples below:

•    Developing new or improved recipes and styles.

•    Brewing experimental or pilot batches of new or improved recipes and styles.

•    Performing lab testing, or other functional testing, on new or improved products or processes.

•    Developing new or improved ingredient mixing methods.

•    Developing new or improved yeast strains or fermentation processes.

•    Developing new or improved manufacturing processes.

•    Researching new or improved production techniques.

•    Automating existing manufacturing processes.

•    Developing new or improved processes or methods to prevent spoilage.

•    Developing new or improved bottling or packaging processes.

•    Developing new or improved methods to minimize or treat wastewater.

  For reference, examples of activities that may not

qualify include:

•    General administrative and managerial functions.

•    Sales, marketing and business development activities.

•    Routing data collection (e.g., management studies, efficiency surveys).

•    Day-to-day production activities.

•    Routine quality control and inspection.

•    Maintenance and installation services.

•    Training (even if related to new equipment or technology).

•    Research conducted outside the U.S.

Qualifying Costs

  As mentioned above, the following costs are included in the R&D calculation:

1.  Wages paid or incurred to employees who are directly engaged in qualified research activities, or who directly supervise or support qualified research activities. Qualified wages are computed by multiplying the percentage of an individual’s annual time attributable to qualified research activities against W-2, box 1 wages.

2.  Supplies include any tangible property, other than land and depreciable property, which is used or consumed during the development process.

3.  Payments to third parties to perform research and development activities on your behalf. The services must be performed within the U.S. and you must have financial risk (with T&M or hourly contract terms paying for the services versus final product).

  There are two calculation methodologies to consider, alternative simplified credit and regular credit, both with alternatives for start-up companies.

Documentation Requirements

  Federal and state regulators focus on whether a taxpayer can document: 1) the process of experimentation, and 2) the development of a new or improved product or process (also referred to in a research credit discussion as “the business component”).

To maximize the credit taxpayers are well-advised to conduct a disciplined, documented research process. It is important to document every step of the research process, particularly the process of experimentation used to eliminate uncertainty and the identification of the business components, i.e., the new or improved product or process. Sales increases and customer surveys will help to identify improved products, but will not be conclusive. It’s the contemporaneous recording of the research activity that will carry the day in an IRS exam.

  It’s also important that breweries identify the amount of time that professionals spend performing qualified research activities. Time tracking software that identifies the various activities that take place when creating a new or improved product or process is the best option to document time spent by professionals in the conduct of qualified research activities. Taxpayers that do not use time tracking software generally use estimates provided by the research professionals, through the use of time surveys, as to the percentage of time that they spend conducting creditable research activities.

Case Study

  To see how the credit can benefit a craft brewer, the following case study is instructional. In this example, XYZ Brewery in Texas wants to design a new brew from scratch. Once research is conducted to determine the ideal end product (and this research should qualify for the R&D credit), here is the process employed by the brewer (pre-bottling) and who is involved:

  General R&D process including potentially qualifying activities:

1) Mashing – malts are mixed with adjunct flavorings and liquor (pure water) and heated to allow enzymes to break down starch into sugars.

2) Lautering – consists of three steps: mash out, recirculation, and sparging.

3) Hops boiling – once the mash is sparged, the resultant wort is sent to a hops boiler where hops are added for flavor and boiled according to a recipe hops schedule.

4) Fermenting – the wort is sent to a fermentor where the sugars undergo fermentation, via the glycolysis which causes a chemical reaction.

  Who might be involved in the process:

1) Head R&D Brewer

2) R&D Brewery Manager

3) Production Manager

4) Assistant R&D Brewer

5) Brewery Quality Control/Lab

The brewer in this case provides their tax advisor with a W-2 box 1 wage listing and supply expenses for the current and previous three years, and had no contractors that assisted with the development process. Your tax advisor conducts technical interviews with the employees below to help identify the qualifying activities and to allocate a percentage of time to each qualifying activity:

  Assumptions:

•   Head R&D Brewer’s time qualifies at 100%

•   R&D Brewery Manager time qualifies at 100%

•   Production Manager’s time qualifies at 50%

•   Assistant R&D Brewer’s time qualifies at 100%

•   Brewery Quality Control/Lab’s time qualifies at 100%

  Qualified supply expenses by year:

•    2018: $60,000

•    2017: $50,000

•    2016: $50,000

•    2015: $40,000

  Once the data is gathered, analyzed and quantified, your tax advisor calculates a federal and state R&D credit. In this case, the brewer will generate a federal credit of $10k and a Texas state credit of $6k.

  As can be seen from the case study above, the R&D credit can be a valuable tool for craft brewers to help offset startup or other operational costs, either in the way of credits to offset tax liability or refundable payroll tax credits in certain cases.

  While it may not be readily apparent that the R&D credits are in-play for the craft brew industry, many craft brewers have taken advantage of this opportunity. Craft brewers should take notice of the activities that they engage in and consider whether R&D credits might be an option.

For more information, contact the authors at Baker Tilly or 608-240-2334.