Cannabis was legalized in Canada a year ago;
however the production and sale of edibles, in-fused beverages and tinctures,
remained illegal—until now.
The
first legal cannabis-infused drinks and edibles are expected to hit shelves as
early as De-cember. Many have been designed to produce a high mimicking the
effects of alcohol in terms of onset, intensity and duration.
While the federal government officially legalized edible cannabis
products on Oct. 17, produc-ers still need to obtain Health Canada approval, a
process that industry insiders expect to take a minimum of 60 days.
Some
products will include only CBD, a non-intoxicating compound found in cannabis,
while others will have THC, the psychoactive compound in marijuana that
produces a “high.”
According to a report from Deloitte, the cannabis-infused beverage market will be worth an estimated $529 million per year in Canada, most of which will be on top of existing cannabis spending. Deloitte predicts sales of these beverages will come at the expense of beer, wine and other alcohol as “cannabis-curious” customers experiment with marijuana instead of booze.
The
Deloitte report notes that alcohol and tobacco companies are looking for
opportunities to enter the legal cannabis industry to avoid losing market
share. Pharmaceutical companies are also entering the market, as consumers turn
to CBD oil and cannabis to self-medicate.
Mild High Aimed at New Cannabis Consumers
Deloitte predicts cannabis-infused beverages will appeal to older, often
female, Canadians who are concerned about the adverse effects of alcohol and
are interested in trying cannabis yet are turned off by the idea of smoking it.
Most
producers of THC-infused drinks are aiming for a formulation that triggers a
high within about 15-20 minutes and lasts no more than a few hours. This effect
is in contrast to most cannabis edibles and oils, which are slower to take
effect and produce a high that can last as long as six hours.
Unlike beer or wine, there’s little risk of a hangover from cannabis
beverages. Some varieties can also boast they are low-calorie drinks, which
could appeal to more diet-conscious con-sumers. Prices are expected to be
similar to that of craft beer; however, the beverages can on-ly be sold at
legal cannabis outlets, not grocery stores or alcohol retailers.
In
October, Ontario-based Canopy Growth Corp announced the launch of 13
cannabis-infused drinks, some boasting as few as five calories per serving. The
drinks range from pure distilled cannabis, intended to be mixed with sodas or
other beverages, to pre-mixed blends of canna-bis with tonic, ginger ale, cola,
soda and fruit-infused sparkling water.
Unlike some legal producers in the U.S., Canopy Growth’s lineup focuses
on low-dosage bev-erages with an effect similar to that of a single beer or
mixed drink. According to the Ottawa Citizen, while Health Canada allows a THC
concentration of 10 mg per package, 10 of Canopy Growth’s 13 products will have
2.5 mg or less, producing a mild high aimed at appealing to inexperienced
cannabis users looking for an alternative to alcohol.
Truss Beverage Company has also announced it will be ready to release
cannabis-infused beverages in December, including CBD-infused spring water and
THC-infused drinks. Compet-itor Fluent Beverage Company said it would be
prepared to release CBD-infused beverages but is still working on formulations
with THC.
Beer Brands
Push Into Cannabis Beverages
Ever
since Canada legalized the sale and consumption of cannabis, big beer companies
have been teaming up with cannabis companies to develop cannabis-infused
beverages.
Canopy Growth, for example, has benefited from billions of dollars of
investment from U.S.-based Constellation Brands, maker of Corona. Truss
Beverage is the product of a joint venture between Molson Coors and cannabis
producer Hexo, and Fluent Beverage is backed by An-heuser-Busch, who has
partnered with British Columbia-based pot producer Tilray.
In
June, Bloomberg reported that Molson estimates cannabis beverages will make up
20-30% of Canada’s legal cannabis market. However, a report by Deloitte
estimated drinks make up just 1% of sales by value and volume in U.S. states
where pot is legal.
Marketing, Labeling Restrictions on Cannabis Beverages
If cannabis beverage producers want to steal
market share from beer and wine, they need to overcome the strict limitations
on marketing, packaging, labeling and distribution imposed by Health Canada.
Consumers are thirsty and
they want something new. Increased demand for all things local and unique have
helped pave the way for a surge of craft distilleries across the country. For
those interested in starting a craft distillery today, there is a wealth of
resources available to help navigate the unknown. Many toes have been stubbed
by those who have been through the startup gauntlet and came out successful on
the other side, lighting the path that new distillers can follow. Finally,
let’s look at some of the proven, key attributes of a successful craft
distillery.
Find Your Niche, Strengths
Every craft distillery is
different. That is what makes this industry so exciting. Every distillery
starts with different goals, aspirations, skill sets, strategic strengths, and
weaknesses. What is your story? What makes you different than the other 900
craft distilleries? If your sales representatives are in front of a new
account, how will you get and keep their attention after they leave? Are you
the first in your area? Is there something special about your grains or
recipes? What does your background and strengths give you as a competitive
advantage? Whether you have a business, marketing, technical, accounting,
tasting, bartending, packaging, or engineering background, identify and
capitalize on your team’s unique skillset to make a lasting mark in the industry.
Understand Your State
Not all states are craft
distillery friendly. Some states permit craft distilleries a great deal more
flexibility than others. Colorado, as example, permits self-distribution and
sales direct to retailers or bars, bottle sales direct to consumers, and sales
by the drink out of the distillery tasting room. Washington State has similar
distillery-friendly legislation. For these reasons, there are more craft
distilleries in these states than any other. States, including some control
states, can have very restricting laws making turning a profit very hard.
Successful distilleries have come from restrictive states but their struggle is
uphill. If you have flexibility in deciding where to open a new craft
distillery, research the laws and find a state and a region that is distillery
friendly.
Foot Traffic is King
The most successful craft
distilleries leverage their location. Ole Smoky Distillery in Gatlinburg, TN
handles thousands of thirsty tourists each week, all lining up for free
tastings of their flavored moonshines. Port Chilkoot Distillery in Haines,
Alaska has cruise ships dock 500 feet from their distillery that unload 2,000
thirsty passengers right into their backyard. Hotel Tango Distillery is turning
into the hangout bar for locals in downtown Indianapolis, Indiana. Dancing
Pines Distillery in Loveland, Colorado is in the middle of a Denver suburb and
has gained a significant following. Is there a successful brewery or winery
near you that draws a large crowd? A new craft distillery in the area can offer
exciting opportunities for co-branding like bourbon barrel aged beer or a wine
barrel finished rum. Urban distilleries can require expensive real estate but
the opportunities for distribution and loyal foot traffic can lead to big
returns.
Quality is the Only Option
First and foremost a
successful craft distillery must have a high quality, great tasting product. If
a consumer is going to spend $35-$70 per bottle on a local craft spirit, it
better taste good. If the spirit does not meet expectations, the risk is a bad
mark on the entire craft industry. Take your time on your formulation. Get
feedback from professional tasters, bartenders, distributors, and consumers
before you release the product. For example, finding the right combination of
gin botanicals does not happen on the first batch. For aged spirits, don’t rush
bottling your product if the spirit is not ready. Time, experimentation,
research, blood, sweat and tears go into a successful brand and it does not happen
overnight. The even harder challenge is making a high quality product in a
process that is scalable to meet increasing demand.
Do the Math on Still Size
The most common question I get asked when consulting on a startup is “How big of a still should I buy?” My answer is, “How much money do you NEED to make?”
Here is a simple example:
Distilling a batch of spirits from grain on a 60 gallon pot still will make you about four 12pk cases a day (about 7-9 Proof gallons), depending on the mash bill. If these bottles retail for $40 per bottle, you can probably sell those bottles to a distributor for $20/bottle. That is a total possible revenue of $960/day.
Assuming a healthy 40% profit margin after Cost of Goods Sold for raw materials, you can net $384/day.
Assuming you distill Monday to Friday for 250 days per year, can $96,000 per year after material costs cover overhead, rent, other expenses, and payroll?
Assuming reasonably similar labor inputs and profit margins on materials, a 600 gallon pot still will produce 10x the spirits in the same number of working days.
At that production level, a distillery can both sell unaged products and lay down spirits for aging. Estimate your revenue needs to cover your overhead and back into how many cases you need sell. Reasonability account for year over year growth and calculate how big your still needs to be to keep up with demand.
Source or Not, but be Transparent
Large distilleries know
they can make vodka from scratch for $15-$35 per proof gallon. They also know
they can buy beverage grade Grain Neutral Spirits (GNS) that can be used for
vodka, gin, liqueurs, or “moonshine” for $1.50-$4.50 per proof gallon. Instead
of aging spirits for years, if available and cost effective, sourcing aged
spirits from established distilleries can allow start up craft brands to add
aged whiskey to their portfolio immediately. Without debating the pros and cons
of sourcing spirits, it is important to follow all labeling guidelines and
regulations. If you take pride in making it from scratch, let the world know.
If you don’t distill the spirits at your distillery, do not imply as such on
the label.
Sales and Marketing
Once you’ve distilled or blended an award winning craft spirit, you have to get the consumers’ attention. The most successful craft distilleries with growing market share know that marketing dollars are key. Tasting events, radio promotions, print advertisements, and social media blasts are not only expensive, but take up your time.
Distributors can be great partners to help open new markets but the ultimate responsibility is on you to provide boots on the ground support for your brand. Convincing brand-loyal consumers to try your product is hard and expensive. Sharing the cost of promotions, samples, and incentives with your distributor is common, especially for new brands, but can take a big piece out of your margins. A rough estimate for a marketing spend budget is 10% or more of your annual revenue.
As a new generation of craft distilleries open, standing on the shoulders of those who opened before them, they have an incredible opportunity to be a part of rapidly growing industry. The path has been lit by history’s pitfalls trying not to repeat themselves.
The time is right to start a new craft distillery while learning from the most successful in the industry. No matter what your background, find your strengths and create your story. Find a location that is both craft-friendly and draws visitors. Make smart business decisions about equipment and marketing. But most of all, embrace your responsibility to ensure your product tastes good and be a positive reflection of the craft community.
There has never been a better time to start a craft distillery. As previously explored, new distillers can stand on the shoulders of established craft distillers who have paved the trail over the last five years. There is an abundance of resources available including online forums, distillers’ conferences, craft-focused trade shows, local distiller guilds, experienced consultants, and a Tax and Trade Bureau (TTB) that has never been more approachable.
However, this is by no
means an easy and well-lit path. It can be a very expensive and frustrating
adventure. What can we learn from others who have successfully accomplished the
startup gauntlet? Hopefully the history of toe stubbing and blindly stumbling
through starting a new craft distillery doesn’t need to repeat itself. Here are
some of the most common pitfalls of starting a new distillery:
1. No Business
Model or Minimal Operations Cash Reserve
This is the most common
issue I have seen. Distillers should ask themselves some fundamental questions
like: What are your revenue goals? How many cases do you need to sell to make
those goals? What are your Costs of Good Sold (COGS) for the raw materials
needed to make those cases? What are your fixed expenses like rent, full time
labor, and loan interest? How much capital investment do you need to start up?
How much cash do you need in reserve to run the business until the distillery
starts shipping orders? An easy to understand business model is invaluable to
setting sales and production goals, getting a loan, or enticing investors.
2. No Chilling System
Distillers will spend lots
of time and money to add heat, steam, and energy to cook their mash and to run
their still but completely overlook the equipment needed to remove that same
heat from the system. Crash cooling a hot grain mash with chilled water can
help to minimize bacterial growth. Having an abundant supply of cold water
keeps your chiller running efficiently. Cold water can also be used to cool
your fermenters to help avoid overheating and stalling fermentation.
3. No Thought to Waste Water
I have seen many craft
distilleries rely on cheap, abundant municipal city water to cool their
condenser but run that water straight down the drain. Many distillers waste
thousands of gallons of water daily. Even if waste water is practically free to
dump down the sewer, that water could be re-used and recycled. Try using the
hot, clean water from your condenser as the water for your grain mashing.
Investing in a cheap poly tank to hold some of the water as part of a recycling
system can save thousands of gallons of water every day.
4. Not
Understanding TTB Compliance and Reporting Regulations
This issue appears to be
systemic with new craft distillers. Passing the DSP application process is only
one of many hurdles to running a federally compliant distillery. Meticulous
records must be kept and Operations Reports must be filed monthly. Excise taxes
must be calculated correctly and paid on time. It is not a requirement to
memorize the CFR chapter and verse, but a deep understanding of the regulations
is a must to avoid penalties, interest, or even being shut down. Like other
resources, there are systems available to help craft distillers manage their
TTB reporting, operations tracking, and excise tax liabilities to minimize the
learning curve and headaches.
5. Not Involving Local Regulators
A local craft distillery
is not something that most county or city regulators have ever had to license.
If you are the first craft distillery in your area, the odds are your local
zoning, health, environmental, and fire regulators will have to create new
codes to accommodate your operations. Getting the officials involved early on
in your planning and development is key. After completing all your building
renovations is an unfortunate time to discover the fire marshal requires
installing an unbudgeted $20,000 sprinkler system.
6. Difficult Layout, Too Small of a Space
Distillery equipment is
big. Vodka columns can be 20+ feet tall. A 600 gallon pot still kettle can be 8
feet wide. Fermenters, pallets of glass, racks, grain sacks, bottling
equipment, finished goods, mash cookers, storage totes… they all take up space.
Can you access and move everything with a forklift? Are your doorways big
enough to move equipment and materials? Do you have a dock door for truck
loading? Don’t underestimate the space needed to operate an efficient
distillery.
7. The DJ Dilemma
While sitting in a dark
studio it is very easy for a radio disk jockey to play the music he wants to
hear, even though it may not be the music his audience enjoys. Just because a
distiller wants to make something, doesn’t mean it will sell. I know a
distiller who adamantly wants to make brandy even though the market for brandy
in his area is next to nothing. It is important to be passionate about what you
make but don’t let that blind you from making a solid business decision. Find
the line between running a profitable business and having a hobby.
8. Making Whiskey with No Available Barrels
Whiskey is hot right now.
Brown spirits like bourbon are experiencing double digit growth with record
high shelf prices and consumer demand. But there is a serious problem for new
craft distillers hoping to jump on the whiskey bandwagon. There are no new oak
barrels available. In order to make bourbon, you need a consistent supply of
new, charred, white oak barrels. Although cooperage capacity is slowly opening
back up, the waiting list for barrels is anywhere from six months to over a
year. If you want to open a craft distillery today, white spirits like gin,
vodka, rum, non-grape brandies, corn whiskey, or flavored liqueurs may be your
only options to make for a while.
A common lesson I hear amongst the established craft distillers who survived starting up is, “I didn’t know what I didn’t know.” While there is no way to predict every issue while starting up any new business, these are some of the common obstacles that future distillers can avoid. We are in an exciting period of growth for the craft distilling industry as more and more consumers are seeking something new and different. The first distillers muddled through complete darkness and came out successfully on the other side. We may all stub our toes while wading through the unknowns of beginning a new distillery but learning a few of these cautionary tales will help light your path.
Smooth Ambler Distillery – Maxwelton, WV Photo Credit: Donald Snyder
Ask any established craft distiller what they would have done differently and you will get a common answer, “How much time do you have?” For most new distillers starting from scratch in the last few years, it was a learn-as-you-go venture paved with blood, sweat, and tears. The promise of high margins in an exciting and rapidly growing industry with local laws now changing to be more “craft friendly”, the draw to join the liquor industry today is almost intoxicating. Today, new craft distillers are starting up following in the footsteps and standing on the shoulders of those who came before them to bring something new and unique to the market.
There are over 800 active micro distillers in America and dozens more opening every month. Domestic and international consumers have developed a palette for unique distilled spirits and have not seemed to quench their thirst for all things different and local. If that wasn’t a big enough reason to join the party, there is now a wealth of resources available to get started without repeating the painful road paved by others.
An aspiring distiller today does not need to look very hard to find resources to help them start up a new distillery. There are distillation classes across the country offering everything from a hands-on introduction to the distilling industry, chemistry-based fermentation and mashing lessons, blending and product development classes, to advanced distilling techniques classes for those looking to sharpen their craft. As a lecturer at both the Moonshine University in Louisville, KY and at the Six & Twenty Distilling class in Greenville, SC, I get to give people a taste of the industry before they decide to jump in with their hard earned money. Being able to touch, look, and feel for a few thousand dollars can be well worth it.
Another hands-on and
immersive way to learn about the spir
its business are the annual craft distillery conferences with break out
informative sessions for all levels of experience. The American Distilling
Institute (ADI) and the American Craft Spirits Association (ACSA) both have
annual conferences where all the players in the industry converge to discuss
current market trends and distillation issues of the day. For new players in
the business, the biggest advantage of these conferences are the vendor booths
which are a literal one-stop-shop for all the suppliers you will need to start
a craft distillery. Imagine having every major glass bottle supplier, chiller
and equipment vendor, grain sources, and even the Tax and Trade Bureau (TTB)
all represented and able to answer your questions in one space. I hear the
established craft distillers groan every year having had to research and hunt
them all down one by one.
However, even before an
aspiring distiller books an air plane ticket to a conference or to a class,
there are now vast repositories of information available on-line. There are
several popular and active forums and blogs on-line with communities of
distillers sharing their experiences and responding to questions. One of the
most active is the ADI Forum where new and established distillers talk about
the issues du jour and share techniques. There are active home distilling
forums with resources as well but I’ll remind everyone that distilling spirits
without a federal permit is currently against the law.
Finally, once a person is
ready to start a distillery, there are now a plethora of consultants with years
of experience in the distilled spirits industry. There are consultants for
every specialty, issue and budget. There are consultants like Richard Wolf of
Wolf Consulting who can help prepare a solid business model including cash
flow, cost of good sold (COGS) and profit projections to help articulate capital
needs and find investors. Consultants like Jim McCoy, who retired from the TTB
after 32 years, can help navigate the licensing, federal permitting, or audit
headaches and assist with label or formula approval. Sherman Owen of Artisan
Resources can help with developing a mash bill, fermenting, distilling,
equipment sourcing and may other tactical operational issues. There are retired
master distillers who worked for the large distilleries who can help teach the
up and comers how to make a high quality product while leveraging their
connections in the industry. Nancy Fraley of Fraley Nosing Services can help
with blending and differentiating your product in a crowded market space. There
are even “one-stop-shop” consultants who act like a general contractor that can
walk a distillery from concept to reality while bringing in specialized
consultants and network resources as needed.
With all that said, even
with all the incredible resources available, it can still be a hard and
expensive road to travel. A typical new craft distillery will require hundreds
of thousands of dollars in equipment and investment. Older buildings will need
expensive renovations to be both visually appealing and up to local code to
operate a still. A green field distillery built from scratch sized to expand
could easily cost a half million dollars or more. For distilleries hoping to
make an aged product such as a bourbon, they must prepare to spend a thousand
dollars per barrel in raw materials, labor, and other conversion costs and see
no return on that capital until it is dumped and bottled. Cash flow and
operational reserves for a startup distillery can easily trip up even the best
business model. It is possible to start a distillery on a “shoe string” budget,
but it is a tough road to travel.
If you are considering opening a craft distillery, know that there have never been more resources at your disposal. It is not an easy or cheap road to go down but the return can be big. Reach out to a local craft distiller, make a connection with a consultant for an introduction, or be an active participant on-line and you will be well armed to decide if your next business card will say Master Distiller.
Competition is fierce! With the number of craft breweries
and brewpubs continually on the rise year-over-year, it should come as no
surprise that current bar owners and operators must focus on more than just
word of mouth, radio ads or the occasional 30 seconds of air time on the local
network to create buzz about their business. Developing a marketing plan to
maintain visibility and relevance is key to both the initial and ongoing
success of your business.
But not just any marketing strategy will do.
A robust and diverse digital
marketing plan, one that also leverages
mobile technology, will play a significant role with effectively attracting and
retaining customers. Utilizing loyalty apps and a variety of marketing
automation initiatives will ultimately allow you to spend less time and
money on your overall marketing efforts, while simplifying and maintaining your
path for continued growth and success.
All of this
speaks to the advancement of technology within this space. As such, it should
come as no surprise that the role of technology continues to be on the rise,
both in terms of what is in the hands of you and your loyal customers – on
their phones and through a more personalized interface with your business – as
well as the technology your business may currently be utilizing.
The increased
involvement of technology is very much a generational change and one that craft
brewery and bar owners are recognizing as a means to become better and more
productive at what they do. The old saying, “work smarter, not harder” rings
true across the board.
Align yourself with mobile technology and mobile marketing
By 2020, 77% of the US population will be using
mobile technology daily. It’s the go-to technology for personalized
communications. Adding to this impressive statistic is the notion that thirty-five percent of smartphone users are
already claiming to use their phones more than 50 times a day—this is where craft
brewery and bar owners and operators can make the biggest impact. Personal means connecting with customer routines,
moods and of course, discerning taste buds. Data makes it possible—mobile makes
it deliverable.
Most consumers expect information to be available at their fingertips. The
vast majority of consumers are searching for information about a particular
business on their smartphone, with 84% of them contacting that
business as a result. An app with your menus, reservation, ordering, payment
and delivery capabilities maintain accessibility and convenience. And
convenience is a big part of the overall experience that customers are looking
for. If too much is being asked of your customers they may abandon your
business before ever stepping through the front door.
Attracting new customers, building
loyalty and running a variety of continuous promotions requires a heavy
investment of time and energy. An automated marketing strategy allows you to
focus on what you do best—providing great craft brews and exceptional service.
Capture your guests at every touch point with pre-scheduled communications,
photo push messaging, social media posts and more. Utilizing a robust app for your business allows you to
capture more first-time guests, make your regular guests feel like insiders and
remind customers who haven’t visited with you in a while why they should
consider returning.
Utilizing technology does not necessarily equate to an
entirely new business plan. However, it does mean that you now have an option
to execute your current plan better, while also being able to expand and grow
them quicker. An example of this is identifying those efforts that you may
currently be doing with email, paper punch cards or in-house only promotions
and taking that to a mobile and digital platform as a means to obtain more
control and visibility for everyone involved – customers and owners alike.
An app has the ability to
act as your personal, day-to-day assistant. If you don’t have the time or money
to hire and manage another employee, it might be time to look at technology as
the employee that never gets tired. With it you can send your loyal customers
birthday wishes, offers and alerts, giving them the personalized experience
they prefer and deserve. With an automated marketing strategy, you can create a
series of push notifications triggered by their activity. Notifications can be
sent right away, pre-scheduled or programmed to be delivered in certain
scenarios. Either way, it communicates why your business is the perfect option
for that moment.
Being social
with your media
Customers love to see what is offered
before deciding where to go. Show them, don’t just tell them. Instagram and
Pinterest are fantastic options for enticing people with tasty-looking and
thirst-quenching photos. It’s also beneficial to develop short, unique videos –
such as a quick recipe or a behind-the-scenes look at your brewery. And don’t
forget to use trending hashtags to increase post visibility. For example,
include #happyhour, #newbrew, or #foodielife, along with the name of your craft
brewery or bar. All of this will help keep your establishment top of mind with both
your regulars and first time customers.
Your customers are always
looking online to get ideas when thinking about visiting a new business. To
ease this process, make sure that all of your social profiles are up to date
and easy to read, as well as portray your business with the correct ambiance. It’s
not uncommon for new customers to be hesitant about visiting the unknown. Your
social presence needs to provide a compelling reason for them to engage with
you. However, never sell your business through a clouded social media lens. Customers
expecting one experience based on how your business is represented on social
media, only to walk in to something entirely different, will likely result in
negatively affecting your business as a whole.
Your social media
promotional efforts should also be backed up with an engaging customer-facing
website in order to complete the experience. This will further provide your
customers with an even better idea as to what they can expect when choosing
your business over the competition. Think of a great website as a first
handshake, before they commit to visiting your business for the first time.
Your website must be mobile friendly so that it can easily be viewed from your
phone without distorting the message or making the experience inferior in any
way.
Technology that’s
here to stay
This growing
trend in technology is a strong reflection as to how business owners are
looking to maintain their operations with their distributor – online,
expedited, quick-to-answer and respond and capable of addressing all of your
needs through a variety of technological channels and initiatives. It would be
unfair and, quite frankly, unacceptable, for a distributor to suggest that you
engage with your customers through the advancements of technology if they
themselves are not capable of providing the same level of service to meet your
day-to-day business needs. Technology will continue to impact and affect buyer
behavior. This can be seen both from the customers that frequent your
establishment, as well as the way that you engage (or want to engage) with
them.
Consumer preferences are changing
faster than ever, dictating how your business must respond. The distributor
that you have chosen to partner with should be in the business of delivering value.
When they deliver on value, it demonstrates an understanding of what is truly
important. A distributor capable
of delivering value and unforgettable experiences is infectious, and it will help
you, in turn, deliver unforgettable experiences to your own customers.
A thoughtful and in-the-know distributor should always have the pulse
of what consumers want as a means to help you innovate and continually reinvent
yourself in order to remain relevant in a highly competitive landscape. When
they can adapt and respond with speed and agility, they help you to keep pace, stay
relevant and often outpace your competition. Ultimately,
their business should be dedicated to helping you succeed with yours, utilizing
non-traditional methods to better serve your needs through more interesting and
engaging uses of product management, technology and education. While it’s true
that people do business with people they like, they also look to do business
with the people that are committed and able to execute. Finding a distributor
that can serve you better and become a comprehensive, go-to resource for all of
your business needs is the end game.
Technology is advancing faster than ever before and it’s here to stay. As a business owner, your digital media strategy should be flexible to more easily respond to what does and doesn’t work. Discover how your customers found out about you to gauge where they’re spending time online in order to maximize those platforms. Cross-link all of your online profiles and link your website to your mobile app and social media pages. In doing so, you’ll be able to strategically cover more ground while building a base of followers on their preferred platform. The end result will likely translate to an increase in new traffic, while also building upon an established foundation of regulars.
It’s hard to deny that this past summer was the summer of hard
seltzer. In fact, it was a summer that saw hard seltzer grow to more than $1
billion dollars in sales. In just the week of July 4 this past summer, White
Claw and Truly seltzers combined sold over 100,000 barrels of product. That’s
enough to put them in the Top 50 Craft Breweries for production over the whole
year. It’s no surprise that craft breweries large and small are looking to tap
into the apparent gold mine that is hard seltzer, but how they approach it
doesn’t quite seem to stand up against the segment’s largest competitors, and
that’s worth thinking about. At a recent industry panel in Charlotte, NC,
several craft brewers who make seltzers spoke about their perspectives on this
new slice of the industry.
But… Why?
This might seem fairly
obvious with the sales numbers that hard seltzers are putting up, but a closer
look at the craft beer industry tells a slightly different story. Recently in
an interview, the senior vice president of marketing for Mark Anthony Brands
(the makers of White Claw) noted that though White Claw has incredible
penetration in grocery stores and liquor stores nationwide, only about 20 percent
of bars and restaurants are currently selling hard seltzers. For the average
small craft brewer, the opposite is true – while the limited shelf space of
grocery is locked behind the arcane process of distributor-led Planograms,
inaccessible to most small breweries, they are nearly ubiquitous on draft
systems in bars and restaurants eager to serve local beer. So, why chase a
segment which shows so little relevance in their primary market?
“After the surge of
LaCroix in the non-alcoholic market, we took a hard look, and it’s what our
market research showed our customers wanted,” said Colleen Quinn, of Craft Beer
Alliance (CBA). Their market research showed something else interesting – that
while most hard seltzers are marketed specifically toward young women, their
targeted demographic tended to skew almost 50-50 male-female. It led to CBA’s
decision to package their multiple seltzer brands in regular 12 ounce cans,
rather than slim cans like their competitors.
“I’m looking for one more
reason to keep the customer in their seat,” says Mike Rollinson of Joymongers
Brewery, a brewery that enjoys two taproom locations in Central North Carolina,
but no off-premise distribution. “I don’t see it as craft. I’m not making a
seltzer for beer drinkers. I’m making a seltzer for the one person in a group
of 5 people who will pressure the group into leaving if there’s not something
for them to drink.” Rollinson just started making seltzers this year as he saw
the trend grow, noting that one of his business partners is on a Keto diet and
now drinks his seltzer almost exclusively – as a healthy alternative to beer.
Clear or Colored – the Question of Craft
While the two major market
players, White Claw and Truly, are both crystal clear beverages, two of the producers
on the panel noted that color helped them differentiate. Both Brian Quinn of
Town Brewing Company and Lindsay Sprick of NoDa Brewing Company pointed to
their process as an advantage over the big seltzer makers.
“I can guarantee that
nobody at White Claw was sitting down last week processing a ton of raw
ginger,” Quinn noted with a smile. “We’re small enough that we can use natural
ingredients as a base for these seltzers.” Those natural ingredients come with
their own colors and – he thinks – customers want to see the presence of those
ingredients in the product when they’re ordered. “When you get something that’s
wild cherry flavored and it’s clear, you ask yourself: where’s the cherry in
this?”
Sprick, of NoDa, shared a
similar feeling: “We stand out because we’re using the same ingredients that we
use make our beer.” She felt that it was more true to the brand and brewing
ethos of NoDa Brewing Company than a clear, sparkling beverage. NoDa’s Brizo
Seltzer, unlike other seltzers represented on the panel, is barley-based, which
lends even more color to the finished product than the others.
Rollinson had a different
take at Joymongers. “When I see a color, like red or blue or purple in a glass,
that reads ‘sweet’ to me, and that’s not what this is.” He mentioned that
because his primary customer is not one that’s seeking this for a fruit flavor,
but rather as an alternative beverage or a more healthy choice, that the
neutral color was a better choice. “The only people who have complained about
it being clear were bartenders because they throw it out by mistake because
they think it’s water.”
Regulatory Loopholes
Interestingly, hard
seltzers fall into a slight grey area of regulation from both the Trade and Tax
Bureau (TTB) and the Food and Drug Administration (FDA). Hard seltzers are the
product of fermenting sugar into alcohol and fall under the manufacturing umbrella
of a brewery, but labeling considerations vary based on what sugar base is used
as the basis of fermentation. A brewer who uses a barley base – even a very
light brewer’s malt – still falls under the definition of a beer, requiring a
pre-market Certificate of Label Approval (or COLA) and is restricted by certain
advertising laws. A brewery who uses sugar as the base for their seltzer is not
required to obtain TTB approval as it is not a malt beverage. However, they do
fall under FDA labeling guidelines which require a nutrition panel and a list
of ingredients.
While it might seem
attractive to a brewery to skip TTB approval and jump straight to FDA labeling
because the FDA does not have pre-market approval requirements, it’s important
to know that FDA labeling is required to be in compliance before sales and that
manufacturers can be held liable to both financial and regulator consequences.
Consult your lawyer for best practices.
None of the panelists
chose to share which path they had taken from a regulatory standpoint.
What’s in the Mix
Clearly, there are as many
ways to approach making hard seltzers as there are reasons to make it.
Fermenting white sugar seemed to be the preferential approach to creating a
fermentation base for hard seltzers. Of the panelists, NoDa was the only one
using barley.
Most of the panelists
spoke of these seltzers as good gluten-free alternatives to beer and marketed
their seltzers as either gluten-free or gluten-reduced. NoDa used ClarityFerm
from White Labs to reduce gluten content in their barley-based seltzer but
others simply brewed on their normal equipment directly after “CIP day” in
order to guarantee no gluten would be present in the final product. Quinn of
Town Brewing shared that lab results showed no traces of gluten in his
products.
From there, the small
producers all had a similar strategy of using whole ingredients to flavor as
they would for any flavored beer, whether that’s the addition of aseptic fruit
puree or hand processing ginger for additions during fermentation. They seemed
to feel that the use of “real ingredients” was a way to stand out versus large
scale competitors from a flavor standpoint as well as an ethical one. They
appeared to share the belief that it “felt more like craft.”
Yeast was a large
differentiator between the producers. While Rollinson at Joymongers used ale
yeast to ferment his seltzer, making a note that harvested yeast seemed to
perform much better than a fresh pitch, Quinn of Town used Distiller’s Yeast,
seeking a strong, healthy fermentation that would get as dry as possible. Both
mentioned the need for high amounts of yeast nutrients. “As it turns out,”
Rollinson joked, “yeast doesn’t really like to digest straight glucose.”
Where It’s All Going
All of the panelists
agreed: hard seltzer is a trend that is doing nothing but growing, and they all
agreed that their futures had more and varied seltzers in it. Each of them was
excited to experiment in the market and push the bounds of craft’s involvement
in the segment.
The question remains for
you – will we continue to see on-premise growth in a meaningful way that the
craft market can take advantage of, or will hard seltzer grow only in larger
and larger stacks in grocery stores? We’ll have to wait for the next White Claw
Summer to find out.
Modern beer plant brewery , with brewing kettles, vessels, tubs and pipes made of stainless steel, monteiths beer factory, south island in New Zealand.
Three beverages are the most consumed in the world: water, tea…and
beer. Regional breweries, brewpubs,
microbreweries, and contract brewing companies all experienced growth in 2018.
In the United States, 219 breweries closed, but 1,049 opened last year. In
Canada, there was a slight decline in domestic beer production last
year—3.4%—and only a scant increase in sales—0.3%. Nevertheless, 178 breweries
opened.
Producers and consumers
alike want the diverse selection, high quality and community connection craft
brewing provides. This makes entering the industry an enticing option. So to
answer some brewery start-up questions, we’ve compiled a few experts to share
their acumen. They include:
• Jeffrey Gunn, president and CEO ofIDD Process & Packaging, based in Moorpark, California. IDD is a family-owned corporation that provides the consultation, design and manufacture of complete brewery and beverage plant systems.
• Lindsay Johnson, operations manager, and Shawn Johnson, head brewer, Birds Fly South Ale Project (BFS) and tasting room in Greenville, South Carolina. Named one of 2019’s Top 10 Breweries by the U.S. Open Beer Championship, BFS specializes in Farmhouse and Saisons, along with sours, funky IPAs, barrel-aged brews, and range of wild and traditional styles. BFS is also on the 2019 Thrillist “Most Underrated Brewery in Every State” list.
• Ben Parker, CEO, Scan American Corporation, located in Kansas City, Missouri; and Aubrey Dyer, business development manager, Flavourtech, represented by Scan American in North America. Flavourtech is a global technology manufacturer that specializes in aroma recovery, extraction and evaporation solutions for the food, beverage and pharmaceutical industries.
• Christian Riemerschmid von der Heide, president and CEO of theSiebel Institute of Technology (SIT) in Chicago, along with John Hannafan, vice president and director of education. SIT is a for-profit vocational school for brewing education and brewing services. Founded in 1868, it’s oldest brewing school in the United States and home of the World Brewing Academy program, offering campus and web-based courses jointly developed with Doemens Academy of Munich.
The three primary start-up
takeaways they want you to remember:
1. Take
time to learn. Whether it’s refining your processes or understanding how to scale
up, knowledge is power.
2. Choose
equipment wisely. Everyone makes different choices—research and compare to make the
right decision for your business.
3. Be
patient, young Jedi. Slow, budgeted growth and the right partnerships make more sense
for long-term sustainability and adaption to trends.
These experts provided
much more valued insight than print space allows, so we’ll highlight some of
the top aspects.
Take Time to Learn
The Johnsons were a Coast
Guard family for more than 20 years, all the while gradually expanding their
brewing and business knowledge. “We invested sweat equity first,” Johnson said.
“We started home brewing while in Alaska. As we lived in different locations
with the Coast Guard, Shawn was able to volunteer at several breweries,
learning different aspects of business.”
In 2016, Shawn officially
retired from service, with a year or so of professional brewing experience as a
contract brewer for Thomas Creek Brewery, also in Greenville. “This provided us
an opportunity to test the idea and see how we wanted to proceed with a brewery
buildout,” Johnson told Beverage Master Magazine. “This period of time
made it simpler for us to find funding through investment, as we were an
established brand and gained some national level recognition early on.” BFS has
since received top medals in the Best of Craft Beer Awards, the Great American
Beer Festival and the North American Beer Awards.
Contract or nomadic
brewing often reduces start-up risks. Some craft producers try the industry on
for size, like the Johnsons. Others do it to gain gradual packaging and
distribution knowledge and capital—a wise idea, since a full-scale packaging
operation averages more than $300,000.
Some brewers develop
contract partnerships because their current facilities are out of capacity, but
budget or geographical constraints prevent expansion. In rare circumstances, a
contract partnership with a local brewery happens when someone only has
interest in running a taproom.
“We anticipated being
small and niche and allowing the education and evolution of our products to
happen slowly and organically,” Johnson said. “However, we quickly grew past
all our projections and expectation models, and continually have to be
extremely agile as our product line expands and as trends in the industry
change. Our production model hasn’t found a ceiling yet.”
Hannafan/von der Heide
believe that every good brew begins with one key ingredient.
“’First, you add
knowledge’ is one of our favorite tag lines. A producer should begin their
journey with education, and not after they run into issues,” Hannafan/von der
Heide said. “Hopefully they come to us sooner than later to avoid many of the
common pitfalls experienced by others. The same process applies brewing theory
and understanding the ‘why’ of brewing. It’s not enough to open this valve or
turn that pump on—there’s far more to brewing than the equipment side.”
SIT creates viable paths
for new producers through extensive courses on everything from the art and
science of brewing to the nuts and bolts of business operations.
“We share our knowledge by
having assisted in numerous start-ups and real experience, not just theory. We
offer a consulting arm which assists with recipe formulation all the way
through to test batches and evaluating the product,” Hannafan/von der Heide
said. “We assist with brewery start-ups and build-outs, supplier evaluation,
business case review and staff training. We like to think that the art and
science of brewing beer makes lifelong learners out of all in the brewing
sector.”
Hannafan/von der Heide
said there are relatively short courses that can dramatically enhance your
probability for success. These include the two-week “Siebel Concise” course,
“Start Your Own Brewery” and “Executive Overview.”
SIT also provides another
valuable service: yeast banking. “Selecting the right yeast strain can be a key
differentiator for better flavor profile, product innovation and brewery
capacity utilization. Yeast banking, strain profiling, yeast propagation,
fermentation optimization—you can never know enough about yeast,” Hannafan/von
der Heide said.
Choose Your Equipment Wisely
Evolution in trends,
products and other aspects of the brewing industry greatly influence how to
source equipment. Spend time to evaluate options based on your ultimate goals
and budget—not necessarily what everyone else does.
“For too many years, craft
brewers grew up with the idea that the two-tank combi-brewhouse doing
three–to–four brews in 24 hours was the only way to brew beer,” Gunn said. “As
the industry grew, the systems expanded to four or five vessels, but were still
stuck in the four–to–seven brews in 24 hours process, with low efficiencies in
malt extract, water, energy, labor, effluent and so on.”
IDD specializes in
high-efficiency brewing systems, or HEBS. “HEBS mash filter brewhouses were an
unknown entity to most and misunderstood by many that were aware of them. It
continues to be an educational project, because it’s difficult for many to
believe the efficiencies we publish and the misnomers perpetrated by
conventional lauter tun brewhouse manufacturers,” Gunn said. “With HEBS capable
of 95–to–98% extracts, up to 40% overall more efficiency and up to three times
faster than a combi-brewhouse, there’s such a high ROI for a start-up or
expanding craft brewer. Obviously, size has to be adjusted down from a
conventional system because of the reduced turnaround time per brew. But
12–to–15 brews in 24 hours are the norm for HEBS.”
If you’re planning a
low-alcohol or non-alcoholic line, your equipment choice is even more specific.
For example, Flavortech uses spinning cone column (SCC) technology to enhance
flavor, efficiencies and budget.
“The day-to-day operating expenses of the SCC are low, as it’s
very energy efficient. The first two years of maintenance are also included, so
these don’t need to be budgeted for until year three,” Dyer/Parker said. “The
other main cost is dealing with the alcohol removed from the beer. Disposal can
be expensive—however, it can be a valuable income stream if re-concentrated, or
could potentially be used to fortify other products in the portfolio. It’s
important to work through this part of the equation in advance to maximize the
ROI of the system.”
Scan American/Flavortech
allows producers to test all its equipment. “We can teach the customer how the
system works and showcase the different outcomes. A beer trial can be run with
as little as 60 gallons of product,” Dyer/Parker said. “After each trial, we’ll
complete a product tasting to see how it responds to the process. Typically,
these trials are proof of concept.”
Gunn noted an interesting
trend that influences equipment choices. “Smaller, more efficient breweries and
cans. HEBS, for example, have gone from 20–to–40 Hl brew capacity systems to 5
and 7.5 Hl brew capacity systems. This reflects on the matured craft brew
market reverting back to brewpub/restaurant and taproom style operations: local
market supply through their own establishment,” he said.
BFS took a completely
different approach to equipment. “Budgeting a brewery start-up is difficult.
We’re so capital heavy,” Johnson said. “Don’t rush into purchases. A lot of
times you see a deal, but it’ll come back. Some producers are better off
sourcing used equipment when applicable.”
Hannafan/von der Heide
offered this important reminder. “If you don’t know about equipment or sizing or
space planning, hire a seasoned, independent consultant. Don’t let your
emotional side pick the equipment suppliers. There’s a lot of unsafe,
poorly-designed equipment that will haunt your day-to-day operations and
product consistency.”
Be Patient, Young Jedi
Our experts offered
numerous tips for new producers—here are just a few.
“We always advise the
producer to focus on employing a good industry experienced general contractor,
experienced industry-related architect, an experienced industry equipment
supplier and themselves doing their due diligence,” Gunn of IDD Process &
Packaging told Beverage Master Magazine. “The four parties working together can
achieve the best system, the right location and within budget.”
“Our initial vision was
quite different, or I’d say 60-70% different,” said Johnson of Birds Fly South
Ale Project. “We call ourselves an ale project because we’re constantly
exploring new styles, techniques and flavors. Our process is unique in that we’re
continually blending, and our beer has a chance to evolve through different
fermentation processes.”
“We knew from the
beginning we wouldn’t have a ‘set’ product line,” Johnson continued. “This can
cause some educational issues when first entering into a distribution
partnership. Our brands slowly became a steady product line, but patience was
key in our relationships with distributors and retailers. So be patience in all
aspects, from hiring and budgeting finances to decision making. We like to say,
‘The beer takes two weeks or more to make—let’s give ourselves an extra hour
before we make a decision.’”
“My advice to someone
coming to us with a new product idea would be for them to sit down with us and
work through the processing details to make it a reality. The next step is to
book some time in our pilot plant and produce some product,” Dyer/Parker with
Scan American/Flavourtech said. “We have a great team of engineers with a real
depth of knowledge and can assist with the practical realities of turning ideas
in successful products.”
Dyer/Parker also pointed
out two exciting trends. “One is the move towards much higher-quality beers. I
was in Brazil last month, and the local beer we were served was so good that we
cancelled our wine order and continued to drink beer with our meal!”
Dyer/Parker said. “Parallel to this trend is the development of the
zero-alcohol segment. This fits really well with the SCC, as we enable
zero-alcohol products to meet exact quality requirements.”
The educators from the
Sieble Institute of Technology offered two final thoughts. “Create a realistic
business plan. Then, have others with industry knowledge challenge and build
your plan,” Hannafan/von der Heide said. “The craft and brewing industry is an
amazing place to be creative and excel in entrepreneurial activities. It is,
however, a place for the long run, despite the hype—there are no quick
sustainable wins. Product and process knowledge reigns.”
While both Scotch and American single malt whiskey possess some
similarities in terms of taste, their origins are quite different. Scotch is a
spirit born of tradition and known for its heterogeneity and consistency, with
brands distinguished by their geography (the Highlands, the Lowlands, the Isle
of Islay, Campbeltown, and the Speyside). Furthermore, the majority of Scotch
distillers are distributed by four companies: Diageo, Pernod Ricard, William
Grant and Sons, and Bacardi. A similar vibe besets its cousin Irish whiskey.
Conversely, American
single malt whiskey possesses a more pioneering spirit and is distinguished
more by the style of whiskey than any particular geography. While the TTB has
not formalized strict criteria for what constitutes an American single malt,
the American Single Malt Whiskey Commission, founded in 2016, established a
standard of identity for American single malt. Currently, over 140 distilleries
have signed on as member producers of the ASMWC.
For a distiller to use the
term “American single malt” to describe their whiskey, the ASMWC recommends
that the spirit fit the following criteria:
• Made from 100% malted
barley.
• Distilled entirely at
one distillery.
• Mashed, distilled, and
matured in the U.S.
• Matured in oak casks of
a capacity not exceeding 700 liters.
• Distilled to no more
than 160 (U.S.) proof, or 80% alcohol by volume.
• Bottled at 80 (U.S.)
proof or more, or 40% alcohol by volume.
While the ASMWC has not
issued a specific recommendation on maturation time, producers are aging their
American single malt whiskeys in barrels at a variety of ages, from three
months to 10 years. Some American distillers get creative with the maturation
process by experimenting with used casks from breweries, wineries and other
distilleries.
Terms like “handcrafted”
and “produced” may be found on a bottle by those distilleries engaged in
producing mass-market spirits. Unless the bottle contains the word “distilled,”
the product cannot be considered a product made from grain to bottle by a
single distillery.
Before prohibition, one
could find thousands of distilleries and breweries in the U.S., particularly
along the Eastern seaboard. During this period, rye whiskey emerged as the
dominant dark spirit. After prohibition, the whiskey movement took off in Kentucky
and Tennessee, where bourbon became king.
While bourbon is part of
the whiskey family, this product differs from American single malt in several
ways. In addition to being made with at least 51% corn, the mash is distilled
using a column still. The barley mash distilled for American single malt
whiskey is typically done with a pot still, though a few distillers use a
column still.
Through consolidation and
mergers, the quality and production of all American whiskey resembled that of
mass-produced beer. However, the advent of the global food revolution in the
1950s and 60s, coupled with federal legalization of homebrewing in 1978, led to
the implosion of the craft brewing industry. Concurrently, Americans became
acquainted with beers, wines, and spirits hailing from Europe and the UK thanks
to pioneers such as Charles Finkel, co-founder of Seattle based Pike Brewing
Company, who introduced these products into the United States market.
Many distillers of
American single malt, like Christian Krogstad of Portland, Oregon-based House
Spirits Distillery and Jason Parker of Copperworks Distilling Company in
Seattle, came out of this craft revolution, beginning their careers as brewers.
Both distillers use a hundred percent malted barley and brew their wort using
the same technique employed in brewing beer.
While Krogstad waited for
his whiskey to mature, he became known for distilling Aviation Gin. The first
bottle of Aviation Gin came out in 2000, well before their first bottle of
whiskey was released in 2008. In 2016, House Spirits Distillery sold Aviation
Gin’s distribution rights so they could devote their energies to producing
Westward American Single Malt Whiskey.
Parker, Co-Founder and
President of Copperworks Distilling, followed a similar trajectory of
distilling gin and vodka until their single malt whiskey was ready for release.
For the past three years, they’ve produced whiskey from single farm, single
variety, and single vintage malts. Each batch is given a unique number and has
a slightly different taste from other batches.
Traditional Scottish Style American Single Malt Whiskeys
Other brands like
McCarthy’s Single Malt Whiskey and Westland American Single Malt Whiskey are
distilled using a traditional Scottish style. This style requires that the
whiskey be made from a mash of malted barley, distilled at a single distillery
using pot still distillation, and matured in oak casks.
After a damp trip to the
Isle of Islay where he visited several local distilleries as a way to avoid the
rain, Steve McCarthy returned to Oregon where he had the distinction of being
the first distiller to bring an American single malt to market. His whiskey,
distilled in 1993 using 100% peated barley from Scotland, was released in 1996.
While the mash used in most Scotch is distilled twice, the type of still they
use allows them to reach desired proof in a single pass. That still is often
referred to as a “hybrid pot still” or “eau-de-vie still” as it has a short
multi-chambered column above the traditional pot.
According to Steve Hawley,
Director of Marketing for Westland Distillery, their distillery was founded in
2010 with the ambition to add a new and uniquely American voice to the world of
single malt whiskey. “When we began, we adopted the same basic processes used
for generations in the whiskey-making of the old world, but we don’t simply
seek to replicate the results. Instead, we work to create whiskeys that reflect
the distinct qualities of our time, place, and culture here in the Pacific Northwest.”
Developments in American Single
Malts
According to Adam Foy,
Vice President of Business Development for Skagit Valley Malting, “Barley grown
for yield is about sameness, whereas, we grow barley for distinction by
searching the globe for unique and distinct barleys that provide varietal
nuances.” Connecting the origins of the barley used in the mash to a single
farm or variety adds another dimension to the term “single malt.”
Distilleries like
Copperworks partner with Skagit Valley Malting and other like-minded companies
to craft what Parker refers to as non-commodity malts. “Instead of measuring
our efficiency from farm-to-bottle, we measure the flavor from unique malts to
bottle, and share these flavors as different whiskeys, rather than a standard
release whiskey.”
Currently, Copperworks is
maturing whiskey that was produced using locally-grown malt from the Skagit
Valley and infusing it with smoke from Washington-sourced peat. They brewed the
malt into a beer with no hops, distilled, and matured in new, charred American
Oak barrels with a number one char, the lightest of chars, so as not to
overwhelm the peat flavors.
Currently, Westland is
working with partners on a holistic barley program that focuses on flavor and
includes breeding unique varietals suited to the Pacific Northwest region.
“We’re malting them using innovative new technologies, and building a
sustainable—both agriculturally and economically—model for bringing those
barleys to market for use in distilling,” Hawley said.
A few distilleries have
begun to experiment with imparting smoke instead of peat into their barley
through the use of cherry wood, mesquite, or scrub oak. In particular, mesquite
lends a natural smokey and spicy flavor without adding artificial flavorings
found in commercial cinnamon whiskey.
Then comes Wanderback
Whiskey Company, a distillery with a unique production focus. They partner with
various single malt producers in the United States to make their whiskey using
a bespoke grain bill that’s grown in the Pacific Northwest. Then they age,
blend, and bottle small batch releases on their family farm in Hood River,
Oregon.
Pushing the Boundaries with Innovative Cocktails
While Scottish tradition
maintains that one should drink Scotch neat, adding only a drop or so of water
to help bring out the flavor, some American distillers are blazing new
territories by creating craft cocktails. At events, such as PROOF: Washington
Distillers Festival, participants can sample a range of single malts, as well
as unique cocktails while sitting in on educational sessions. A trek to Tankard
& Tun, Pike Brewing Company’s Seafood Restaurant, features beer cocktails
made with spirits from Copperworks Distilling. Historical tidbit: Parker was
the first brewer for the Pike Brewing Company when it opened in 1989.
In addition to offering
tasting flights, House Spirits Distillery serves up a range of cocktails
including a Boulevardier (a Negroni for whiskey lovers). Also, during their
repeat appearances at Feast Portland, they showcase their traditional side by
featuring Westward at one of Feast’s signature BBQ events, Smoked. But then
they’ll display their more flamboyant side by demonstrating how a quality
spirit can enhance the cocktail experience. For example, at Smoked 2019, they
featured a S’Mores Old Fashioned made with Westaward American Single Malt
Whiskey, graham cracker honey, chocolate bitters, and toasted marshmallow.
As members of the ASMWC continue to win
national and global awards and competitions, this commission continues to push
for the formal establishment of a “single malt whiskey” category. Already, the
American Distilling Institute has established the “American single malt
whiskey” category for those whiskeys made according to ASMWC’s proposed
statement of identity.
When Meghann Quinn’s great-grandparents planted their first acres
of hops in 1932, little did they know that their great-grand-daughter would be
responsible for the business side of what is now Bale Breaker Brewing Company,
a family-owned enterprise ranked last year as the fifth-largest independent
craft brewery in Washington state.
At Bale Breaker Brewing
Company, women play an integral role in nearly all aspects of the business,
from the farm to the tasting room. It is
a tradition that Quinn traces back to her great-grandmother, Leota Mae Loftus,
the namesake of the brewery’s Leota Mae IPA.
“It never occurred to
Leota that there was a job she couldn’t do,” Quinn said. “If an irrigation
ditch needed to be dug, crops needed to be picked, or workers needed to be fed,
she was the lone woman on the crew beside—or in front of—the men, getting the
job done. In fact, throughout the 1940s,
she was the only woman hop drier in the Yakima Valley.” In those days, Quinn
says, hops drying was done by hand.
Fast forward to the 21st
century. Bale Breaker Brewing Company operates out of a 27,000 square foot
facility housing a 30-barrel brewhouse. The brewery’s tasting room is right in
the center of Hop Field #41, part of roughly 2,200 acres of the family farm in
the heart of Washington’s Yakima Valley, where Quinn and her three brothers
grew up.
“My dad always says that
when you grow up among them, hops become part of your DNA,” said Quinn. “I
guess my brothers and I are pretty good examples of that.”
Quinn earned a degree in
Business Finance from the University of Washington. She now handles all things
business at the brewery, including finance, accounting, reporting, marketing,
public relations and the like. However, she proudly points to the team of women
whose expertise gives Bale Breaker Brewing its competitive edge.
“Jackie
Beard is
our Quality & Sensory Manager. She has a degree in microbiology from
Northwestern, has developed a robust in-house sensory program from scratch, and
makes sure all of the beer we send out is up to our high-quality standards,”
said Quinn. “Erin Schlect and Shayna Koch are two young moms who run our
accounting department. Our marketing
department consists of Danika Norman (Marketing Manager), Sara Gottlieb (Social
Media Manager) and Marguerite Washut (Marketing and Events Coordinator). These three women are essential to driving
our brand forward and effectively communicating to and connecting with our
consumer base.”
Quinn also said three of
the company’s four-person outside sales team are women. Sara Verdieck covers
western Washington, Kat Finn handles Oregon, and Justine Malland tackles
eastern Washington and northern Idaho. “These women are the face of Bale
Breaker with our distributors and accounts throughout our distribution footprint.”
Pink Boots Society
Quinn and members of her
team at Bale Breaker Brewing are among the more than 2,000 women worldwide who
network through The Pink Boots Society. This nonprofit organization, founded by brewing pioneer Teri Fahrendorf,
supports women engaged in the brewing profession and, in particular, the craft
brewing industry. The group, which began in 2007 with fewer than 20 members,
helps women brewers connect with mentors and advance their brewing knowledge
through education. Educational opportunities receive support through
scholarship money the group raises to help women advance in the industry. There are Pink Boots Society chapters across
the United States and global chapters in Canada, Europe, Asia, South America,
New Zealand and Australia.
Bron Yr Aur Brewing Company
Be it a global enterprise
or a blossoming start-up in the U.S., women have come into their own in the
craft brewing industry. Bron Yr Aur Brewing Company is among the latter, a
fast-rising brewery and restaurant owned and operated by the Hatton family, who’ve
called Yakima Valley home for seven generations. Annette Hatten, whose husband,
Mike, had been a homebrewer for more than a decade, decided to turn an old
fruit stand into a brewery with a restaurant. Bron Yr Aur Brewing Company
opened for business in 2013 and the Hatten children, Zach, Amanda and Trevor,
gave up their day jobs to pitch in and contribute to the brewery’s success.
They’ve focused on capturing space in the competitive craft beer market by
combining its brewery offerings with innovative restaurant fare, ranging from
its popular pizza varieties to its beer brownies.
Annette Hatton is involved
in day-to-day operations, brewing recommendations, as well as recipe
development for the kitchen and distillery. Daughter Amanda, co-owner and Operations
Manager, was recently awarded the Yakima Valley Tourism Ambassador of the Year
Award. She sees to it that Yakima Valley produce gets featured on the
restaurant menu. She also manages the brewery’s community outreach, creating
innovative partnerships with local organizations and small businesses. Amanda says that the opportunity to work side
by side with her mother is a gift.
“Not only do I get to
spend time with her every day, but we get to collaborate on many great ideas
and have a ton of creative energy flowing, which I love.”
Cowiche Creek Brewing Company
Maria Nordberg worked side
by side with husband Derrick to build the Cowiche Creek Brewing Company, which
opened for business in 2017. What started as a homebrewing project evolved into
a full-fledged business plan to launch a brewery that’s products would showcase
the citrusy, piney, and tropical hops varieties of Yakima Valley. Nordberg has
a background in food safety management from her position at Yakima’s Green Acre
Farms, a fourth-generation family operation with a vineyard, orchard and
hopyard, as well as row crops. Cowiche Creek Brewing gets much of their hops
from Green Acres, although the Nordbergs also grow and use their own varieties
of hops.
To keep a firm hold on
construction costs, The Nordbergs built the brewery’s 20 barrel brewhouse and
taproom by combining their own sweat equity with their skilled tradesmen
friends who knew how to do tile work, plumbing and other construction trades.
Marketing strategies for
Cowiche Creek include electronic gift cards available online, as well as
business partnerships with restaurants, bars, hotels and casinos in the Yakima
Valley area that feature the brewery’s products. Maria says that at the end of
the day, it’s the customers ‘ appreciation for the brewery’s offerings that
count.
“All the hard work is
worth it when you see a smile on someone’s face and knowing you helped put it
there. “
Like a Lady Boss
Women who don’t directly
brew craft beer have still found a way to incorporate it—or its ingredients –
into their businesses. A prime example is HopTown Wood-Fired Pizza, which
features pizzas sprinkled with hops from Yakima Valley. Co-owners Lori Roy and Carrie Wright serve
wood-fired fare, showcasing fresh-from-the-farm ingredients paired with local
craft beers, wines and ciders. “We celebrate the hop heritage of our community
with our award-winning pizzas and our local brews,” said Wright.
There are also the women
who keep the taproom flowing, responsible for everything from managing staff to
operations. Such are the responsibilities of Rachel Verhey-Goicoechea, Taproom
Manager and Cellar Assistant at Varietal Beer Company, located in the Yakima
Valley community of Sunnyside, the second-largest city in Yakima County. Varietal, which opened last year, joins an already crowded field of craft beer
establishments in the Lower Yakima Valley area but is holding its own as a
popular gathering place. It’s headed by Verhey-Goicoechea, who not only runs
the taproom but also assists in the cellar CIP, transfers, dry hopping, kegging
and other related duties.
In addition to the Pink
Boots Society, women are teaming up for special events that champion women in
the craft brewing industry. Last year, Atlanta, Georgia was host to Dregs and
Dames, a festival aimed at empowering women in craft brewing by presenting
beers brewed by women and discussing community, business, brewing and legal
issues affecting women’s success in the craft brewing world. There is also a
push for more diversity as minority women enter into the craft brewing scene.
For all of recorded
history, women have played a role in craft brewing. The earliest civilizations
considered brewing beer a “woman’s job.”
Today, according to an Auburn University study, women comprise 29% of
beer industry workers. Women who have been in the business the longest say that
mentoring is the key to sustaining and expanding the number of women who own,
operate and work in the field of craft beer brewing.
Boilers are rarely glamorized in any distilling discussions. The
end product is the star, whether swirled, stirred or shaken in the able hands
of a local mixologist. However, any boiler manufacturer will tell you that a
reliable boiler affects every facet of the distilling process, including the
cost of production. During fermentation, the mash is heated with steam to
transform the carbs to sugars. The wort gets removed and transferred to a
fermentation vessel to cool and get ready for the introduction of yeast. Steam
provided by a boiler generates a gentle, consistent heat, very conducive for
vessel heating, temperature maintenance and successful fermentation. Once
fermentation is complete, the product is moved to the still, using steam heat
to separate and remove the impurities.
Distillery Environment Matters
“You always have to be aware of any unique requirements due to installation environment,” says Mike Bonjo, Sales Manager and Brewer for Columbia Boiler Company. “Boilers are mandated to be a certain distance away for safety, but in general, it’s best to have them within eyeshot. Low-pressure boilers generally provide enough energy for craft distilling. However, if the boiler is situated a long distance from the other equipment, high pressure reduces heat loss during long runs in between distillery equipment.”
In addition, when it comes
to boilers, the type of building where the distillery is located makes a
difference. “The current trend of
renovating historic buildings into rustic craft distilleries and breweries is
aesthetically very cool, but these old buildings require custom installations
because of building materials, floor strength and utility availability,” says
Bonjo. “Professional consultation is needed to determine floor strength, layout
viability and fire ratings. Also, you never want to situate a steam boiler
directly on those old wooden floors. We have custom stands and risers for these
situations.”
Columbia’s boilers are
popular because of their performance and compact design. Their flagship
units—the MPH boiler series, manufactured to fit through a standard
thirty-six-inch door opening, provide up to eighty horsepower. Columbia also
offers the CT line, a vertically-designed, tubeless boiler created for the
dry-cleaning industry, now repurposed for artisan distillers.
“Our boilers are easy to
install, easy to use and a breeze to service,” says Bonjo. “They are operable
right out of the box and come with everything needed to get up and running.
Anyone with a basic mechanical aptitude can operate and maintain our boilers.
We use standard industry controls rather than custom or proprietary controls.
Parts are standard, so you don’t have to find a certain distributor in the area
and hope that they have your part in stock. We also feature a copper coil
inserted into the boiler to carry and heat city water—to be used as potable
water—for cleaning or any other domestic water situations around the
distillery. We fire up and thoroughly test our units before shipping to the
customer for, what ends up being, a plug and play installation. If there are
issues, we can relay our test settings and compare them with the customer’s
running settings to make sure the boiler is in an optimal run state.”
Maintenance on Columbia
boilers is minimal. In addition to the mandatory annual state inspections, the
boilers should be “blown down” at the end of the day, flushing out the silt and
sediment that naturally forms at the bottom of the boiler. If that sediment
isn’t regularly flushed out, it congregates and sticks to the steel, forming
scale. Over time, scale causes the affected steel to fail due to improper heat
retention and metallurgical issues. Blowing down takes 10 to 15 seconds,
transferring the water to a blowdown separator to cool the liquid before
disposal, nullifying any potential damage to drains and plumbing lines. Monthly
water chemistry level checks should be performed to keep it compatible with the
steel. For steel boilers, the pH should remain a constant 10 to 11.
“If by chance, the proper
maintenance has not been kept up with, the tubes on our boilers can be replaced
independently, saving money on repairs and reducing downtime,” says Bonjo.
Safety Is Always The Priority
“Your boiler is the one piece of equipment in your distillery that is more powerful than dynamite,” says Dave Baughman, President of Allied Boiler & Supply Inc. “It can relocate your whole business in an instant.”
Let that sink in, and
you’ll understand Baughman’s emphasis on boiler safety before selling you a boiler.
“Boilers are truly the
heart of the distillery, but there’s a critical need for training in daily
boiler operation,” says Baughman. “When I ask potential customers if they’ve
had any training on boiler operation, even if it’s just about keeping daily operational
boiler log sheets, their answers reflect a need for training. We don’t expect
boiler experts in these craft industries. They know the biological processes of
distilling and rely on others for boiler recommendations, and frankly, the
competence out there is lacking. The end-user is being thrown to the sales
wolves.”
This incompetence may even
extend to the sales wolves themselves, who are often aware of the national
codes but may not be as educated on those closer to home.
“[Distillers] may need
certain, critical support equipment with their boiler, depending on the
environment and local code requirements. Do they need water treatment? What
type and how much? What about chemical injection systems, blowdown separators,
boiler feedwater systems with steam preheat, or condensate return systems?
These can all be critical components that may or may not be necessary. Sales
representatives may follow national code, but if they’re not aware of the local
regulations, you’ll end up with a boiler that’s not code compliant,” says
Baughman.
Distilling is a
cost-driven industry, but Baughman believes decisions should still be made
based on technical specifications related to distillery needs. Some boilers are
better at heating, some better at boiling. Older cast iron sectionals are great
at heating but inadequate for production environments. Vertical boiler units
were introduced for the dry cleaning industry, and when that industry dried up,
manufacturers started pushing those high-pressure units into the next expanding
market. That happened to be brewing and distilling, even if it wasn’t a perfect
fit.
“My best advice is to be
diligent in research, and never buy based on cost alone,” says Baughman.
“Instead, buy based on the technical needs of your situation. For smaller batch
distillers, low steam boilers are sufficient. Larger production distillers with
continuous columns need more steam, so high-pressure boilers with regulators
that hold a constant temperature for longer periods are beneficial.”
Purchasing the boiler is
only the beginning. Baughman tells Beverage Master Magazine boiler training is an
absolute necessity because manufacturers have a legal and moral responsibility
to sell safe units to trained users. Allied Boiler & Supply offers a three-day,
no-cost, on-site boiler training school and startup with every boiler they
sell. Water chemistry, a significant contributor to boiler failure, takes up
one of those days.
“Everyone worries about
the effects of scale, but most failures are attributed to improper oxygen
levels,” says Baughman. “It becomes a very aggressive situation when heated and
must be treated by the use of a deaerator or with chemical injection systems.
Water softeners won’t treat the oxygen component. Underwater injection systems
or sodium sulfite are used and should be administered by professionals, along
with consistent tests for pH, conductivity and oxygen levels.”
All Allied’s boilers come
equipped with troubleshooting display modules and forced draft systems, which
are more efficient and less prone to backdrafts.
“These things add to the
bottom line cost, but they are legitimate safety features,” Baughman says. “Our
after-sale support is unmatched in the industry. Every sale comes with two
emergency phone numbers, one being a service employee and the other being mine.
We are serious about becoming a partner with your company and will never just
sell you a boiler to make a sale. There is too much at stake personally and
professionally for both of us.”
Baughman runs his business
on a motto that his father taught him.
“Consider service ahead of reward, and the reward will come
because of the service.”
Boiler Choice Based On Technical
Specifications and Business Goals
Correct sizing without
upselling is always the best for the customer, so before getting a
recommendation for a boiler from Jack Coe, President of Rite Engineering &
Manufacturing Corporation and manufacturer of Rite Boilers, there will be some
technical fact-finding.
Affordable Distillery
Equipment is an OEM of stills and packages Coe’s Rite Boilers with their
stills. Affordable Distillery’s CEO Paul Hall says, “We are sticklers for
right-sizing because it can take four-to-five years to recoup the boiler cost,
but if you get too large of a boiler, you can end up paying for that system for
the next ten to fifteen years. Every boiler situation is unique and has
different needs depending on the equipment used and the business goals.”
Rite Engineering offers multiple boiler lines that maintain their efficiency, provide one hundred percent access for inspection and cleaning to help avoid costly repairs, and remain field repairable.
When deciding what boiler
is best, Coe recommends looking to your existing equipment. “To determine if
you need a low-pressure versus a high-pressure boiler, look at the equipment
you already have or are planning to use and see what the highest duty
application will be,” says Coe. “In the craft distillery, it’s usually the wort
boil. Subsequent pieces of affected equipment should be labeled with a steam
pressure recommendation. If they are all rated as 15 psi or less, you’re good
to go with a low-pressure boiler. If pieces of equipment are rated to handle
higher than 15 psi, then you can consider a faster, high-pressure boiler, but
boilers can use large amounts of fuel, so be aware of that when choosing
components.”
Speaking of support
components, Hall says, “You absolutely need a condensate return to bring the
condensate back to the boiler, or else you’re constantly pumping fresh water
into the system. Additionally, a blowdown system used at the end of the day or
when you’re finished with the boiler session will hold the blowdown water until
it cools down to 140 degrees or so. [This is the] temperature that municipal
discharge systems feel is safe to allow down the drain lines into their sewers.
If you’re not using a municipal system and just have your own discharge pool on
the property, you don’t need this component. Each of these components can run
an extra three to four thousand dollars on top of the boiler.”
Hard water will no doubt
shorten your boiler’s life span. If testing shows hard water in your system,
Coe recommends a Zeolite salt exchange type, and steers customers away from a
deionized or reverse osmosis systems, as they can lower water’s conductivity
and pH to unsafe levels.
“After that, boiler
professionals need to be brought in for consistent cleaning, checks and
inspections,” says Coe. “Some of these are mandated by codes and laws and are
in place to prevent small issues from turning into big problems. These
professionals can also [help with] monitoring water pH and treatment options.”
Whatever boiler system you
decide to work with, both Rite Engineering and Affordable Distillery Equipment
recommend installing them in a separate boiler room when possible.
“That way, the boiler fire
is isolated and kept from any equipment, and you’ll have some type of vapor
barrier,” says Hall. “By rule, distillery equipment is classified as a Class 1
Division 2 Hazardous Environment, meaning boiler placement must be at least six
feet away from any still parts that are 18 inches or less off of the floor, and
at minimum 24 inches away from any still parts above that 18-inch mark.”
