Hard Seltzer: Making a BIG Splash!

By: Nan McCreary, Sr. Staff Writer

grabbed can splashed

Listen up, fans of wine, beer and spirits: there’s a rising star in the beverage universe, and it’s taking the market by storm. It’s hard seltzer, a ready-to-drink cocktail made from three essential ingredients—carbonated water, fermented malt or sugar, and fruit. Described as light, crisp and refreshing, the drink has become so popular that beverage pundits named this past June, July and August “the summer of hard seltzer.”

  While seltzer has been around for years, hard seltzer first bubbled up in 2013 when a brand called Spiked Seltzer—now known as Bon & Viv Spiked Seltzer—hit the market. The drink was such a success that other popular brands followed, and the industry exploded. According to Nielsen, from March 2018 to March 2019, sales of hard seltzer totaled $585 million. This represents a 200% growth, with 164.3% happening in July alone. Some analysts predict sales could expand to $2.5 billion by 2021.

  So, what’s with all the buzz? It’s really pretty simple: hard seltzer is low in sugar and alcohol, usually gluten-free, relatively inexpensive, sold in convenient cans, makes a great mixer and, oh yes, tastes good. With today’s health-conscious millennials as a key consumer demographic, that’s a definite formula for success.

  Let’s start with the better-for-you benefits. Hard seltzer is almost always made from fermented sugars, while beer is made from fermented barley and other grains. During the fermentation process, most of hard seltzer’s sugar converts into neutral alcohol, as opposed to grain-fermented spirits which don’t wholly ferment, leaving behind more sugar and, of course, more calories. Typically, hard seltzers contain 100 calories or less per 12-ounce can, with only 4-5% ABV, about the same as a light beer. With no barley or wheat, hard seltzers are also gluten-free.

Besides being lower in calories, spiked seltzers come in many fruit flavors, offering a refreshing alternative to beer, wine or cocktails. White Claw, currently the dominant player in the market, owned by Mark Anthony Brands, has six flavors: black cherry, ruby grapefruit, natural lime, raspberry, mango, and Pure, the latter made to mimic a vodka soda.

  White Claw’s primary competitor, Boston Beer’s Truly Hard Hard Seltzer, produces four styles of 13 hard seltzers:  four berry, four citrus, four tropical styles, and a Rosé, described as “delicately sweet with a hint of California Chardonnay grapes.” 

  The flavors in hard seltzers come from extracts, natural flavors, real fruit juices or concentrates. For the brewer, experimenting with flavors of sparkling water is a blank canvas; while with beer, pushing the limits with fruit or botanicals can upset the flavor of the malt base.

  While hard seltzers can be delicious in themselves, the beverage is very versatile and mixes with just about anything to make an outstanding drink. Some mix it with classics like vodka soda and tequila soda, which adds depth and complexity to the drinks. Others replace the nonalcoholic seltzer in any cocktail with an alcoholic one. Another option is to create a spritzer by adding white wine to your favorite hard seltzer. For all of these drinks, ingredients can be adjusted to each person’s tastes. While the mixes will be a little more “boozy,” they’re still a low-calorie alternative to a cocktail.

  Hard seltzers are especially appealing to those with an active lifestyle because they are portable. The 12-ounce cans are ready-to-drink and ideal for camping, beach outings, boating, stadium events, or any destination where glass is not allowed or discouraged. Like canned wine and canned cocktails, they also offer the advantage of no mixing and, in the case of wine, no corkscrews. Plus, aluminum cans are shatterproof and easier to maintain and transport than glass.

  Hard seltzers offer one more advantage: they are often cheaper than craft beer and certainly less expensive than a mid-range bottle of wine or spirits. A 12-pack of White Claw 12-ounce cans sells for about $15, which is the same price as a domestic light beer and an average cost for a bottle of wine. Canned cocktails retail for $12 to $15 for a four-pack of 12-ounce cans, while a four-pack of 250 ml canned wines averages at $16.

  With all of these benefits, it’s no wonder that hard seltzers are having a moment. Plus, with craft beer sales going flat, brewers are turning to alternatives to expand their sales. Today, there are dozens of brands of spiked seltzers on the market, with the numbers growing by the day. Even big beer is jumping on the bandwagon. Anheuser-Busch acquired Bon & Viv Spiked Seltzer in 2016, Constellation Brands owns Svedka Spiked Premium Seltzer, Diageo touts Smirnoff Spiked Sparkling Seltzer, Oskar Blues has Wild Basin, and MillerCoors has Henry’s Hard Sparkling. In August, Pabst Blue Ribbon announced the release of its first spiked seltzer drink, Stronger Seltzer, at 8% ABV. Four Loko, known for its colorful cans of high-alcohol malt beverages, is releasing a spiked seltzer with a 14% ABV. They’re describing the product as the “hardest seltzer in the universe.” 

  Of small breweries entering the market, one of the more noteworthy is Braxton Brewing Company, whose nationally acclaimed seltzer, VIVE, was just named “Official Hard Seltzer of the Cincinnati Bengals.” Based in Covington, Kentucky, Braxton is the region’s first brewery to release a hard seltzer. The spiked seltzer has only 100 calories and two grams of carbohydrates per 12-ounce can. It’s available in four naturally flavored varieties; mango, lime, dragonfruit and grapefruit. In honor of its partnership with the Bengals, the brewery recently released a Tailgate Variety Pack that includes four flavors: blood orange, cherry, peach and black raspberry.

  For Braxton Brewing, described as “a place where ideas are born and fermented,” entry into the hard seltzer market in 2018 was a natural extension of the entrepreneurial spirit of brothers Evan and Jake Rouse, who founded the craft brewery in 2015.

“We pride ourselves in innovation, and we like to create products that our customers really want to drink,” Jake Rouse told Beverage Master Magazine. “Hard seltzer plays toward the health and wellness trend that is sweeping the country, so we wanted to offer a low-calorie alternative to beer and a ‘better-for-you’ beverage.”


  Braxton Brewing has enjoyed success with its hard seltzers similar to the explosive growth it experienced when the brewery first opened three short years ago. “VIVE has been very successful because of the quality of the product,” Rouse said. “It’s all-natural, and we’re using real fruit. It tastes like water with fruit in it, and that flavor profile works really well in competition with the big producers.”

  Hard seltzer, with three simple ingredients, may seem like a simple beverage to produce, but in fact, “getting it right” is a challenge, according to Rouse. “It’s really difficult to make a great hard seltzer because you’re creating a product that tastes like water,” he said. “While you need to have that 5% alcohol flavor, you don’t want it to taste like there’s a bunch of alcohol in it.”

  Rouse explained that their process for making hard seltzer is a proprietary process developed during beer-making. “The result,” he said, “is a product that’s clear and easy to drink and flavorful without that alcohol sting to it. All brands have their own processes, so they’ll all be different.”

  Hard seltzer’s popularity is rising in the beverage industry and showing no signs of abating. Experts note that consumers of all ages and genders are counting calories and watching their alcohol consumption, giving hard seltzer a leg up in the search for a good tasting, low-calorie, low-alcohol drink. Beverage professionals predict that big beer will seek more opportunities for hard seltzers, and even small breweries will try to lure local customers with a better-for-you alternative to beer. Braxton Brewing Company, which already distributes to three different states, told Beverage Master Magazine that they are seeking opportunities for greater distribution of VIVE, and are considering adding new flavors to their portfolio.

  With these trends in mind, it seems that there only one place for hard seltzer to go—and that’s upwards!

The Best Canning Systems & Machines for Modern Breweries

By: Alyssa L. Ochs

Bottling Canning Machine at Brewery
Eugene, OR, USA – July 17, 2014: Can and bottle filling machine on an assembly line at Oakshire Brewing.

Canning has become an increasingly popular way to package craft beer, and more breweries than ever before are either exclusively moving to cans or incorporating cans alongside their traditional bottle offerings. Many brewers prefer canning over bottling because of the increased protection from light and oxygen, cost, portability, recyclability and freshness. However, a brewery needs the right type of canning system in its space to make this form of production profitable and efficient.

  With the input of top industry experts at SKA Fabricating, XpressFill Systems and OneVision Corporation, here’s what breweries should know before investing in a new canning system for the first time or upgrading a current machine.

Canning Products Available to Breweries

  Smaller and newer craft breweries may start off with manual canning systems that have a two-head filler and that can fill about 10 cans per minute because of these systems’ affordability. An upgrade from this is a micro-automated canning system with a three-head filler and capacity for 25 cans per minute with multiple can size options. Meanwhile, automated canning systems may have up to 10 head fillers and be able to fill more than 70 cans per minute. To operate a canning line, a brewery may also need to purchase blank or printed cans, can ends and lids, PakTech can carriers, shrink sleeves and corrugated case trays.

  One canning machine company based in San Luis Obispo, California, XpressFill, manufacturers affordable table-top machines that are used by craft breweries to fill both cans and bottles. Rod Silver, the marketing coordinator at XpressFill, told Beverage Master Magazine that his company has experienced a significant increase in can fillers from its brewery customers this year.

  “Our counter pressure fillers fill the cans in a pressurized environment to maximize the CO2 in solution,” Silver said. “Our open fill units have become increasingly more popular due to the lower cost and faster fill rate. Controlling filling conditions are critical in achieving optimum fills using either system. Both units purge the can with CO2 prior to the fill cycle.”

  Another relevant company that breweries will want to learn about is Ska Fabricating, which is based in Durango, Colorado and has over 700 customers worldwide. Matt Vincent, a partner in Durango’s largest and most award-winning craft beer brewery, told Beverage Master about Ska’s primary and most popular product called the Can-i-Bus Can Depalletizer. It is paired with either a water twist rinser or ionized air rinse and is an industry-leading depalletizer and rinser combo that covers the speed range of 30 CPM up to 400+ CPM. 

  “It allows for the opportunity to grow as your production grows, due to the wide range of speeds that it can handle,” Vincent said. “It also is a necessary part of a canning line because it eliminates the need for hand-loading cans onto a filling line, allowing operators to focus on quality by eliminating menial tasks.”

  Vincent also said that Ska Fabricating offers an extensive line of conveyance solutions, date coders, handle applicators, can and bottle drying equipment and machinery integration to assist in the post-fill needs of the brewery.

  Meanwhile, Neil Morris of OneVision Corporation in Westerville, Ohio told Beverage Master Magazine how OneVision “manufactures and markets inspection systems that empower beverage canners and food canners produce quality double seams.” This company’s expertise includes double seam evaluations, inspection systems and training and support at system installation, as well as electronic and phone support after installation to prevent seam leaks and keep products fresh.

  Ben Anacker, who manages sales and services for OneVision in the western U.S. and Canada and who is an expert in can manufacturing, said that OneVision arguably provides the most cost-effective craft brew system and support to empower brewers to have confidence in their canned products.

  “Evaluating double seam overlap and tightness is imperative to comprehensive analysis of seam integrity,” Anacker said. “The OneVision SeamMate® Inspection System, in combination with the Mini Drive Seam Stripper System, is unparalleled in performing the destructive seam dissection to allow close examination of these attributes.”

Important Features of Canning Machines

  Overall, canning systems feature a complex set of machines that share some similarities but are also very different in many ways. These differences lie in their speed, efficiency, size and other capabilities, such as low DO pickup, 15-20 ppb, dual cam driven seamers, nitro with a widget or no widget and monitors. Considerations to keep in mind are oxygen and light penetration, seamers, reliability, the ability to upgrade later and integration with your current system.

  Silver of XpressFill said that the most important features to consider are “cost, fill consistency, oxygen uptake, user-friendly, reliability, ease of cleaning and sanitizing and support by the manufacturer (both pre-sale and after).”

  Vincent of Ska Fabricating said that first and foremost, the most important factors for making a canning machine decision are identifying the proper speed line that works well with your budget, batch size, labor pool and desired level of automation. He said that the second priority is to make sure you understand the differences in the fillers and what level of quality you can expect from them. 

  “In the end, you get what you pay for,” Vincent said. “Rotary fillers tend to provide a higher level of fill quality than inline fillers, but they are typically four to five times the cost. 

  “All businesses evaluate the cost-competitive options when procuring capital assets to support their business,” said Anacker of OneVision Corporation. “For the craft brewery industry, there are many options for these canning investments. Sustainability versus initial investment cost is widely overlooked and should be evaluated more closely.”

Questions to Ask Before Buying a New Canning System

  There are many questions to ask before buying a new canning machine, either for the first time as a new brewery or to upgrade existing equipment. Here are some initial questions to start with:

•    Is the machine the right size for your needs?

•    Will you use printed cans or labels?

•    Are pneumatic seamers your best option?

•    How easy is it to clean the machine?

•    What other accessories are needed to operate the machine?

•    What are the financing options?

  Silver of XpressFill said that while many craft breweries are shifting to cans instead of bottles because of customer demand, switching production from bottles to cans is a significant undertaking that should not be taken lightly.

  “Canning lines and mobile canning could be prohibitively expensive depending on the initial scope of your production,” Silver said. “Table top units, like the XpressFill fillers, can be a cost-effective initial effort to meet the initial demand. Questions should be asked regarding the production capacity of the equipment, ability to upgrade, sell-back policies and warranty information to ensure a prudent investment.”

  Vincent of Ska Fabricating said that the most important questions to ask are about the machine’s cost, level of support offered, how many people it takes to operate the line efficiently and what level of dissolved oxygen the filler can maintain while filling.

  Anacker of OneVision Corporation recommends looking into the track record of the supplier company as well as the actual system being considered. He said to ask about if the system can be upgraded to match future growth and to check references of actual users with at least three years of experience using the system. How a “micro-canning” system compares to larger commercial canning systems and whether the system has the same fundamental function and repeatability to have confidence in long-term production capability and integrity are other considerations that Anacker recommends.

Expert Advice About Canning Machines & Lines

  With all of this information in mind, you may decide that now is the right time to start looking at new canning machine options, or it may be best to hold off for a while until you have fully assessed your needs. However, it seems that canned craft beer is here to stay and will only continue to increase in popularity in the future.

  Vincent of Ska Fabricating recommends that breweries do their homework in researching canning line equipment and identify reputable vendors that will provide the levels of customer service and project management that your brewery needs.

  “Budget for the suppliers to do the installations and training for their machinery,” Vincent said. “Many mistakes are made and inefficiencies are created without proper installation and training on the machinery. We have seen many customers that try to do the installations on their own and it ends up creating more problems in the long run, resulting in down time and/or machinery that doesn’t operate as well as intended.” 

  In terms of advice for craft breweries, Anacker of OneVision Corporation said,” Contract or employ resources with canning experience to help make procurement choices, develop production layout, oversee the production to get this business phase started well and develop other resources for sustainability.”

  Silver of XpressFill recommends finding other breweries that have worked with the particular machine and manufacturer that you are considering and asking them about the machine’s reliability and overall satisfaction with the canning equipment.

  “Also, search online for reviews of the equipment,” Silver said. “Real world experience is the best insight into what can be expected with purchasing and operating a new canning system.” 

Connected Closures: Meet the New Technology

By: Robin Dorhn-Simpson

NFC Button on the touch screen with a blur background of the businessman with the phone.

Do you remember when microwaves came on the market? Or when computers replaced typewriters? How about the huge mobile cellphones the size of a shoebox? Technology is constantly changing. Just when we think we have it figured out, it changes. It can add much stress to our lives, or it can make it more enjoyable. Once you embrace it and see how relatively easy it is, the fun begins.

  Millennials have been raised around technology, making it very comfortable to them. They don’t have the fear that baby boomers sometimes experience when learning new technology. Since many businesses are focusing their marketing dollars on the millennial audience, technology in marketing is a natural progression. Many marketing studies on millennials state that, amongst other things, they want experiences. As a producer, are you satisfying their desire for something fresh, new and authentic? Are you connecting with them on their terms via mobile devices? Near Field Communication Technology can help producers do just that.

Near Field Communication

  Quizelet.com defines NFC as a short-range wireless connectivity standard that uses magnetic field induction to enable communication between devices when they are touched together or brought within a few centimeters of each other. Many consumers may already be familiar with this technology through their use of Google and Apple pay.

  Similar to Bluetooth technology, NFC communication is faster and sends information over radio waves. It takes less than one-tenth of a second to establish a connection between two devices.

  Smartphones are the most common form of NFC devices. Most Android smartphones and newer iPhones have the technology included. For older mobile phones, apps can be downloaded to allow these devices to read a variety of NFCs.

  NFC requires at least one transmitting device, and another to receive the signal. A range of devices can use the NFC standard and will be considered either passive or active. Active devices can send and receive data as well as communicate with one another. Passive devices often take the form of a tag or chip, sending information to active devices without needing a power source of their own.

What does all this mean for you?

  In August, Guala Closures, a company that has traditionally employed advanced technologies and connected closures, used NFC technology to add communication content into the cap of a Malibu rum bottle. The chip inside the enabled “smart cap” is so small it’s practically invisible. Each cap then has a 4-letter code, which acts as the proof of purchase inside the lid. 

  Tapping on this cap allows both the consumer and the brand to know more about one another. The producer will know where and when it was purchased. In return, the consumer has access to recipes, contests, and different communications offered by the brand. This will allow the relationship between producer and consumer to reach a new level.

  Many people today are concerned about companies accessing their personal information. Simon Yudelevich, General Manager for Guala Closures North America told Beverage Master Magazine about the concepts of connected closures.

  “When you tap your phone and connect, you give consent to the brand to gather information on when and where. When the consumer goes online to look at what this is all about, there is an explicit consent which requires the consumer to opt-in, in compliance with all applicable regulations,” said Yudelevich

  By committing to developing connected solutions in cooperation with its clients, Guala Closures help them learn more about their consumer habits and loyalty to their brands. In this framework, the company also deposited a patent of the solution that combines the NFC technology with aluminum closures.

Marketer’s Delight

  Since brand owners control the marketing of their product, they have an abundance of creative options with this new platform. The possibilities are endless.

  “By tapping the cap, you get access to great marketing content, which not only further strengthens the relationship between consumers and the brands they like, but also allows them to build a brand community of consumers via access to social media such as Facebook, etc.,” Yudelevich said. “Since the brand owner’s goal is also to engage the consumer, they can create recipes-of-the-month, which can be changed every day if wanted. They can create contests or ask the consumer to join their club. They can even ask the consumer to send a message to their friends about what they just purchased. Marketers can change the messages as often as they want. They can add, delete or amend the content. Since everything happens on the cloud, the changes are simple. They can tap, create video content whereby when the cap is tapped, a video uploads and the consumer can see how to use the product.”

  “Marketers want data from the consumer, including how much they paid to pay for the product. Businesses want the ability to track and trace where the product was purchased, as well as monitor anti-counterfeiting. This is already changing the face of marketing,” Yudelevich said.

  Malibu Rum has recently signed on with Guala Closures with limited-edition connected bottles currently circulating in Ohio and Texas. Marketers plan on including drink recipes and sweepstakes. Soon, consumers will be able to win prizes through a mobile game called Sunshine Slide.

  “Everyone’s excited with this new rollout for Malibu to develop these smart connected closures that enable the brand to get close to its consumers, Yudelevich said. “Once other companies see this new technology and its benefits, these closures for spirits and wine are going to be the leaders in direct-to-consumer marketing.”

Kilchoman Distillery Company Case Study

  In early 2018, Thinfilm Electronics of San Jose, California joined forces with Kilchoman Distillery Company, a producer of single malt Scotch on the island of Islay. Kilchoman distributes its whisky to 13 countries and wanted an effective way to interact with the end consumer. While they didn’t put their technology in the caps of bottles, they used NFC powered, interactive neck-tags for their Machir Bay and Sanaig Whiskey. Fully integrated with Thinfilm’s CNECT Cloud Platform, the tags were the digital touchpoint that consumers could tap to have an individual marketing channel.

  In a case study published at www.thinfilm.com, Thinfilm Electronics created a mobile-optimized product system where the CNECT Cloud Platform stored and managed all of the unique tag IDS. The tags allowed Kilchoman to track the time from “ship-to-shelf” across 13 countries as well as analyze item-level intelligence and consumer interaction data in real-time. Thinfilm produced a branded NFC scanner app called “Discover Kilchoman” available in Apple’s App Store.

  The results concluded that the end-to-end NFC mobile marketing solution was highly encouraging, with a 6.5% engagement rate. This rate is several times more effective than traditional digital marketing activities and created a way for Kilchoman to connect directly with consumers and build customer loyalty. It also mitigated the need for additional promotional support or omnichannel activities. 

  Compared to traditional digital marketing, the NFC display was 70 times more effective than email, search engines and social media. They concluded that there was a 35% virality rate (each bottle tapped by 1.35 consumers on average) and a 22% iOS engagement via the custom Kilchoman branded app. Finally, they were able to identify that it was an average of seven weeks “ship-to-shelf” time.

  Thanks to intelligent technology and the desire to connect with the end consumer, companies are now able to have a one-on-one relationship with those who love and use their products. Each brand has a unique story. Now they can make sure their customers know it.

  So, set yourself apart from the competition. While millennials are brand loyal, someone has to be the one they support. To gain loyalty and foster the next generation of consumers, have originality, offer a great experience, be authentic, have value, and keep the digital conversation going.

A Cider House Divided: Meet the Only Canadian Cider House to Operate in Two Provinces

By: Briana Tomkinson

stack of sarah cole beers

The craft cider industry in Canada is small but growing. Consumers in Ontario, Canada’s most populous province, are increasingly turning to cider when selecting alcoholic beverages, and the drink is trending upward in other provinces as well.

  Yet as one Quebec cider producer found, it’s harder than it seems for Canadian cider houses to expand sales into other provinces, even when their production facilities are virtually next door. 

  Sarah Cole Cider was founded almost five years ago by Pierre Bissonnette and wife Nathalie Laurin in small-town Lachute, just over an hour’s drive from Montreal. Bissonnette’s back-ground was in the textile industry, but he was ready to make a career change and set his sights on entering the craft beverage industry. 

  Bissonnette considered opening up a microbrewery but decided there was too much competi-tion in the beer industry. He flirted with the idea of making wine but decided in the end to ex-plore the emerging cider market. It didn’t hurt that he already owned an established orchard.

  For 23 years, Bissonnette had lived with his family on a sprawling equestrian ranch in St.-André-d’Argenteuil, just outside of Lachute, and he had always dreamed that it could be more than just a beautiful place to ride horses. The property features a sugarbush and a small vine-yard, but in the end, it was the orchard that inspired Bissonnette to reinvent himself as a craft cider producer. The cidery’s name comes from two of Bissonnette’s horses: Sarah and Cole.

  Contrary to some other Canadian cider producers, who have followed the craft beer trend of developing a large variety of creatively flavored products, Bissonnetted decided to zero in on perfecting a limited selection of distinctive dry ciders. He narrowed the recipes down to three: Whip, a European-style dry cider, Snaffle, which he likened to a Prosecco, and a non-alcoholic option cheekily dubbed Mountie, the nickname of Canada’s Royal Mounted Police.

  “Dry cider was missing in the market. Customers found most ciders too sweet,” he said. “The ciders on the market that were dry were tasteless.”

  Initially, Bissonnette focused on selling bottled cider in grocery stores and dépanneurs (what Quebecers call the convenience stores that sell alcohol), but quickly realized the difficulty of standing out on crowded shelves as a still-unknown brand. He decided to switch gears and concentrate on getting his cider into Montreal bars and pubs, and getting customers to try Sa-rah Cole’s distinctive taste.

“Our strength is taste,” Bissonnette said.

  Montreal’s bar and pub owners are a chummy bunch, and Bissonnette said he found once he was able to place his cider in a few top-flight locations like the Burgundy Lion pub and Bier-Market, and hotels like the Fairmont and Sheraton, it became easy to get Sarah Cole on tap in other local hot spots. “It’s a small world. Once one pub discovers us, a whole bunch follow,” he said.

  When Bissonnette submitted Sarah Cole’s flagship Whip cider to judges at the World Cider Awards in 2017, he didn’t expect much to come of it. When he won the Canada Sparkling Dry Award, it turned out to be a game-changer. Doors began to open for Sarah Cole, and Bis-sonnette began to set his sights on growth beyond Quebec. In particular, he hoped to break into Ontario, where sales of locally made craft cider grew 54% between 2015 and 2016. How-ever, cross-border distribution of his cider would be more challenging than expected.

  “If you have a vision to sell outside your own province, it is tough,” he said. “It’s the provinces that make the barriers.”

  One of those barriers was taxes. When he did the math, Bissonnette found that factoring the cost of paying taxes in both provinces would require him to increase the price of Sarah Cole cider beyond what the Ontario market would bear.

  In Ontario, Sarah Cole cider would be primarily distributed through the provincial Liquor Con-trol Board of Ontario, which regularly spotlights homegrown products. Although Lachute is less than a half-hour from the Ontario border, being on the wrong side of that line would exclude Sarah Cole from being featured alongside the locals.

  Strategically, Bissonnette decided there was an advantage in entering the Ontario market as an Ontario cider house, as opposed to a Quebec import.

  That’s how Sarah Cole came to be in the unique position of having not one but two cider hous-es, making it a “local” producer in both Ontario and Quebec. It’s been one year since Bis-sonnette took the leap and opened an Ontario production facility in Vankleek Hill, right across the street from craft beer heavyweight Beau’s Brewing, and he said the risk has paid off.

  “Cider sales are just not comparable between Quebec and Ontario. Here in Ontario, the people already love cider; you don’t need to convince them,” Bissonnette said. “In Quebec bars, there is often only one cider on tap. In Ontario, there can be up to four or five.”

  Bissonnette said there is also a noticeable difference in culture among Quebec cider-makers compared to Ontario. In Quebec, he said, the cider industry is very competitive and tends to be marketed like wine. In Ontario, more cider producers are taking their cue from craft beer.

  According to information on the cider industry released by the provincial government, there are now 70 businesses producing cider in Ontario. The craft cider industry is now estimated to contribute $12.7 million to the provincial GDP. Cider sales at the LCBO in 2017-2018 were over $11.5 million, an increase of 42% from the previous year.

  According to the latest data from Statistics Canada (from 2016-2017), while beer remains the booze of choice for Canadians, representing 40% of total alcohol sales—$9.1 billion annually—the market share of other beverages is growing. Wine sales are growing, and now represent 32% of total alcohol sales.

  On a per-capita basis, Canadians of legal drinking age drink an average of just over 200 cans of beer per year, compared to only 20 cans of cider. While the market share of ciders, coolers and similar beverages remains tiny in Canada, this segment of the alcoholic beverage market is dynamic and growing.

  Tastes have been gradually trending toward cider and coolers over the past decade, with an average annual sales growth rate of 6.4% in this category since 2007. Growth of imported beverages in this category was stronger than Canadian products, increasing 13.9% annually compared to 4.6% for domestic brands.

  Sales of ciders, coolers and other refreshment beverages in Canada totaled $0.9 billion in 2017, an increase of 8% year-over-year. Ciders and coolers are most popular in the Yukon, with 7.2% market share, and least popular in Quebec, representing just 1.2% of alcohol sales.

  In May, the governments of Canada and Ontario announced a joint investment in Ontario craft cider production through the Canadian Agricultural Partnership to support cideries to expand into new markets and increase productivity.

  Canadian consumers’ growing interest in cider is now drawing attention from larger beer manufacturers, Bissonnette said, which is increasing competition in the industry. Canadian beer giant Labatt bought Quebec’s Lacroix cider last fall and is using its marketing muscle to edge out smaller players like Sarah Cole.

  Although Bissonnette has lost some market share to Lacroix since the acquisition, he said there is a silver lining: in promoting Lacroix, Labatt must convince Canadians to consider cider as a beer alternative, which could ultimately increase the number of consumers willing to give other ciders a try as well.

  “The cider industry has been sleeping,” he said. “No cider house has the money to put cider on the map like Labatt does.”

Fernie Distillers: Thinking Outside the Box

By: Adrienne Roman

cozy bar facility

The first licensed craft distillery in Fernie, East Kootenays, British Columbia, opened its doors July 1, 2018, and there’s a good reason why their vodka, gin and liqueurs are flying off the shelves. Husband and wife team Jillian Rutherford and Andrew Hayden dedicate themselves to expanding sustainable practices, preserving Fernie’s industrious history, and providing small-batch, high-quality spirits individually created with local, seasonal ingredients.

The Present Is The Key To The Past

  Fernie’s name originated with prospector William Fernie, founder of the Crows Nest Pass Coal Company, who, along with Colonel James Baker, was influential in the development of the first mine in Coal Creek, just east of Fernie, in 1897.

  By 1898, the Canadian Pacific Railway also came to Fernie, transporting coal and supplying goods. With the rapid growth in mining, logging quickly became the second-largest industry. Unfortunately, with its mainly wooden foundations, two tragic fires in 1904 and 1908 completely devastated the town, but it was rebuilt using brick and stone in 1910.

  Rutherford told Beverage Master Magazine how this relates to the distillery. “In Geology, looking at modern environments like beaches and reef systems helps to find and identify similar features in the rock record. The present is the key to the past. If we flip that around, we feel that Fernie’s past informs our present. We are here because of what Fernie used to be—a mining- and rail-influenced community—and it’s important to remember how we arrived here, not just what we are now. We decided to incorporate Fernie’s history in our branding because as great as the outdoor recreation is here, the town is more than a one-trick pony. We have history.”

A Focus on Fruit

  Collaborating with local talent who also support their community, Rutherford and Hayden understand the importance of initiatives in place that keep both the people and the wildlife of Fernie safe. With a large number of fruit trees in East Kootenays, local Initiatives like “Apple Capture” and “WildsafeBC” help to ensure appropriately controlled harvests. Fruit is picked and managed to avoid falling and rotting, which can attract large deer and bears to the area. The mash supply from the production of their vodka and gin also helps to feed local farm animals. 

Mixology Manifestos

  The bar and tasting lounge at Fernie Distillers has a welcoming atmosphere and unique cocktails, where traditional takes a sharp turn in favor of modern creations with a twist. “The big window into the production room gives our guests the opportunity to see the stills and other tanks,” Rutherford said.

  Plastic does not feature in any of their cocktail presentations. Instead, decorative garnishes are made from an array of fruit, including apples, kiwis, strawberries, lemons, oranges, and pineapples. “A really great garnish should be clever, it should elevate a drink, and it should enhance the carefully mixed flavors. It should surprise and entice, and most of all, it should look and taste fantastic. In short, it should be an integral part of the drink, not a limp afterthought,” Rutherford said.

  There are several interesting DIY garnish ideas listed on the Farewell Umbrellas blog post on their website. Their cocktail menu changes with the seasons and is known for its creative approaches.

  Andy Ward, Fernie Distillery’s bar manager, named the FD G&T as the most popular cocktail. Rutherford added, “It doesn’t sound exciting, but it’s so delicious, and a familiar and approachable choice. We get people from all walks of life visiting us, and not all are adventurous for the first drink. When they come back after a great first experience, they often branch out, maybe with a stinger or a martini.” The FD G&T is made with gin, lemon sherbet, lime juice, and house-made lavender bitters topped with tonic.

Tools of Transformation

  Recycled materials are seamlessly incorporated into a number of the distillery’s features.

  A section of the old Calgary Molson Brewery bottling conveyor belt acts as the front face of the bar. It was given to the distillery by a friend who reconditions brewery equipment. Repurposed doors are part of the decor. The bar shelves are refinished slabs of British Columbia Douglas fir, previously part of horseshoe pits where the patio now sits. Similarly, their bar top is salvaged British Columbia Douglas fir timbers from 1903, once used as power pole cross beams by AltaLink in Southern Alberta.

Sustainable Spirit

  True sustainability is much more than just a word. Visibly expanding its many branches through smaller steps, together with the implementation of new and innovative ideas, remains an absolute priority for the team at Fernie Distillers.

  They’re actively working to reduce their environmental impact in many ways, and hope that their efforts will influence others to follow suit. By locally sourcing ingredients and reducing their carbon transportation footprint, they’re building connections with their community, and in turn, supporting the economic structure of the area. The distillery has also gone green with their Yarai acrylic barware, and only use recycled paper bags for all the sales in their shop. Neighboring businesses have also abandoned plastic. Rutherford and Hayden believe that spreading the word about these initiatives will help create an environment where sustainable practices are increasingly accessible, better understood, and more easily implemented.

  A project in sustainability was Rutherford’s latest brainchild. She wondered what could be done with the distillery’s hundreds of continuously used barley bags. After speaking with the sewing room teacher at The Fernie Academy School, a progressive student project took flight. Starting in September 2019, students will work to reconfigure them into attractive reusable shopping bags, and 100% of the proceeds from the sales will go directly to the school.

Fernie Fog and No.9 Mine

  A Fernie Distillery best seller, Fernie Fog liqueur was born from the idea of creating a black tea and bergamot infused blend with just the right amount of demerara sugar and vanilla. “It’s versatile and unique, and has really struck a chord with our customers,” Rutherford said.

  Their No. 9 Mine Vodka is wheat-based and rich in flavor, acknowledging the history of the Fernie miners who toiled below ground during the mine’s prosperous operation. Although dismantled in 1958, the mine’s remnants still sit along the Coal Creek Heritage Trail. Visitors to the area can still view the conveyor building, decaying ventilation fans and blocked tunnel entrances. 

  Infused with juniper, citrus fruit, and botanicals, the distillery’s blog deems Fernie’s Prospector Gin, “a clean, pure spirit, which can be perfectly flavored by the distiller or mixologist, or enjoyed in its most honest and raw form.”

  The distillery produces new spirits and liqueurs seasonally. They recently released 5th and Park Damson Gin, made with locally grown damsons that are picked just 500 meters off the property in Fernie Gardens.

The Usual Suspects and The Oddballs

  There’s a little something for everyone at Fernie Distillers, from that refreshing daiquiri made with pineapple and green cardamom-infused vodka, to an old fashioned stinger on hand-cut ice. Looking for different and unusual? They’ve got that covered too. Try the vodka espresso, a smooth mix of their No. 9 Mine Vodka, Fernie Fog, cold brew coffee, demerara sugar, Miraculous Foamer bitters, house coffee, cacao bitters and nutmeg.

  Whether skiing the slopes in winter or biking the beauty of the Elk River Valley trails in the summer months, Fernie Distillers offers guests excellent service and products. Their success is fueled by the dedication of those who live and work in a vibrant and historic town dripping with myth and legend.

With less than 200 bottles per batch and one of the industry’s few female distillers at the helm, Fernie Distillers proudly recognizes and celebrates all that Fernie has to offer, one exceptional spirit at a time.

  Fernie Distillers is open every day of the week except Tuesday. Fall cocktail hours are 4-10 p.m. on weekdays and 2-10 p.m. on weekends throughout ski season.

For more information, visit their website at…https://www.ferniedistillers.com

https://www.ferniedistillers.com

ROI on Distillery Conferences

By: Donald Snyder, Donald@TimeAndTasks.com

craft on ice

Another distillery conference season has come and gone. Distillers, weary from their travel across the country, are unpacking their conference tote bags filled with business cards and supplier goodies. The follow up vendor emails are slowing trickling in while the distillery owners dread their upcoming credit card bills. But for now, conference attendees reflect on everything they learned and have taken away from their adventures. The first quarter of the year contains some of the biggest craft distillery relevant conferences and expos including the American Craft Spirits Association (ACSA) Annual Distillers’ Convention & Vendor Trade Show, the American Distilling Institute’s (ADI) Annual Craft Spirits Conference and Vendor Expo, and the Wine and Spirits Wholesalers of America (WSWA) Convention and Exposition.

  The ACSA Convention and Vendor Trade show is usually the first major distiller conference of the year in either February or March. This year’s conference was in the wintery city of Minneapolis, Minnesota and appropriately themed “Distillers on Ice”. Next year’s conference will be in Portland, Oregon March 29-31, 2020. The conference is three-day opportunity for distilleries to connect with suppliers, attend educational breakout sessions, collect their awards from the spirits judging competition, and discuss the issues “du jour” such as lobbying efforts to continue the Federal Excise Tax reduction. The conference leadership is made up of elected volunteer board members and committee chairs from across the country.

  Mike Blaum, Co-owner and Chief Distiller at Blaum Bros. Distilling Co. in Galena, IL brought his entire distillery team to the ACSA conference this year and was very pleased with the show. Mike had several takeaways from the conference. “Besides the educational content and being exposed to new ideas, the networking with industry colleagues and opportunities to discover new vendors is always a highlight.” The travel and entrance fees for the conferences can add up but Mike believes there is significant return on investment for him and his team. “If we can all come home and apply the concepts we were exposed to, cut our costs or improve the value from suppliers, change our way of thinking or doing business, and improve safety, it’s easy to feel good about the ROI.”

  The ACSA conference entry fees for 2020 have not been announced but they are anticipated to be close to the 2019 fees. For the Minneapolis conference, the prices for ACSA Members were $625 per person (with additional attendees at $425 each) and non-members $825 per person (with additional attendees $625 each).

  The ADI Craft Spirits Conference and Vendor Expo is usually in March or April following the ACSA show. This year’s conference was in Denver, Colorado and had over 1,800 industry members in attendance. Next year’s show will be in New Orleans, Louisiana in April of 2020. The American Distilling Institute (ADI) is privately owned with conference leadership positions filled by full time employees. The ADI show is a week long event with several hands-on workshops, such as whiskey and rum distilling classes, before and after the three-day conference. Like the ACSA show, distillers can meet with suppliers on the vendor expo floor, attend educational sessions and paid workshops, and attend the Gala dinner to receive their awards from the spirits judging and tasting panel.

  Matt Beamer, Distiller at Sagaponack Farm Distillery in Sagaponack, NY attended the ADI Conference this year. Matt enjoyed the one-on-one interactions with industry members. “I would say the biggest takeaway from attending would be listening to the panel discussions on several topics. Being in these discussions with distillers discussing their personal experiences makes a huge difference. The face to face interactions go beyond a phone call or email. It takes theoretical knowledge and adds a personal experience to it and makes understanding the issue much more effective.”

  Matt spent time on the vendor expo floor as well. “Being at ADI and having face to face discussions with vendors is very helpful.  Phone and email conversations pale in comparison to direct conversation.” When asked about making the long trip to Denver, he reflected on being part of a bigger community. “There is nothing like being in the community of distillers. When we’re at ADI, we get a sense that we’re not on an Island, but instead in the very thick of the journey of being a craft distiller.”

  Matt and his team’s time away from the distillery, travel expenses and conference fees were high but he felt it was a sound investment. “As for return on investment, we come back excited, invigorated, and ready to incorporate what we learned to take us to the next level. Totally worth it.”

  The ADI Full Conference Pass fees for 2019 were $550 per person for ADI members (with $350 per additional attendee) and $750 per person for non-members (with $550 per additional attendee). The ADI Awards Gala dinner is an additional $50 per person. Additional paid workshops are also available. It is anticipated that the 2020 conference will have similar fees.

  The ACSA conference and ADI conferences provide many similar benefits such as a vendor and supplier expo and diverse educational workshops but there are many reasons to attend both. Some distillers choose to attend one versus the other while many distillers try to attend both conferences each year. Jared Himstedt, Master Distiller of Balcones Distilling in Waco, TX is one of the many distilleries who send teams to both conferences. “For me, the value falls into a couple of categories. The most enjoyable by far is the time with industry friends and colleagues. Every year there is always a new connection made or chance to deepen old ones, whether it’s serious discussion on the trade or just good laughs over drinks. Opportunities to discuss and brainstorm around legislative issues are super valuable to me.”

  Jared and the Balcones team are experienced distillers who have had some disappointments with the technical educational sessions at the conferences. “I always look forward to technical and research sessions with high hopes, but I feel like only a few deliver. There are only a rare few that live up to the expectations of delivering actual research. A lot have anecdotal and uncontrolled ‘experiments’ that leave me a bit disappointed. I look forward to those getting more dialed in over the years.”

  The Balcones team believes that the price to send the team to these conferences is an investment more then an expense. “We have no problem investing in the professional growth of our crew as long as they see the value in the experience. The   team does a good job of attending sessions relevant to their role at our distillery and bring a lot of good info back to the table.”

  The last major show that craft distillers attend in the first quarter of the year is the Wine and Spirits Wholesalers of America (WSWA) Show. The WSWA show is an opportunity for wineries and distilleries, big and small, to reserve a booth to showcase their products to distributors from across the country. Distributors walk around the show tasting products and meeting up-and-coming brand owners. If distributors like a product, they can decide to add it to their portfolio for distribution. The WSWA show is one of the biggest wine and spirits show in the country. Impressing a large distributor could mean a huge increase to sales for a growing craft distillery. This year the show was in Orlando, Florida and next year the show will be in Las Vegas, Nevada. The show alternates between these two cities every year.

  Nick Ladig, VP of Sales of Hotel Tango Whiskey, Inc. in Indianapolis, IN. attended the WSWA show in Orlando, but did not attend the ADI or ACSA conferences this year. Nick’s biggest take away from the WSWA show as both the opportunity for new   sales and keeping up with industry trends. “It was interesting to see the proliferation of new products chasing the trends (ex. canned cocktails, low abv) and the emergence of the new web-based tier in alcohol distribution and wholesalers becoming more disciplined when adding to their portfolios.”

  When asked why Hotel Tango Distillery did not attend the ADI or ACSA conferences, he felt increasing sales was priority for them right now. “We opted not to attend ADI/ACSA because they are more educational and internally focused versus WSWA which is more likely to lead to new business partners.”

  The WSWA pricing for distilleries, wineries, and brand owners to get a booth varies. For WSWA Members booths start at $2,800 for a 10’x10’ booth but go up to $11,900 for a 20’x20’ island booth. Larger suppliers may opt for a private suite or reserve entire conference rooms to showcase their brands. Distillers can pay for additional attendee tickets such as $275 per model and $675 for each additional non-member or spouse to attend.

  Tyrone President and Co-Founder of Islamorada Distillery in the Florida Keys attended both the WSWA and the ADI conferences this year. At the ADI conference Tyrone and his distillery team was able to take away education on good distilling practices. At the WSWA show, Tyrone was able to expose his brands to distributors of all sizes. “The WSWA show opened us up to industry contacts and smaller distributors that we wouldn’t have been able to connect with before. We got to talk to people in the industry that gave us excellent advice like not to be in a rush to get out of your home state and don’t grow too fast. We are a small startup distillery and competing against the large brands can be incredibly difficult.”

  Whether distillers are looking for hands-on workshops, educational breakout sessions, panel discussions with industry experts, connections to vendors, or exposure to distributors, the first quarter of the calendar year has multiple resources. Distillers who can raise the funds to travel to the ACSA, ADI, or WSWA shows, will usually find a considerable return on their investment.

The Sweet & The Sour – Challenges & Rewards in Making Flavored Spirits

By: Donald Snyder, Donald@TimeAndTasks.com

August/September 2016 Issue – Beverage Master Magazine

man in front of distillery

What do apple pie moonshine, birthday cake vodka, blueberry liqueur, absinthe, spiced rum, and cinnamon whiskey have in common? All are distilled spirit flavors, and they make up one the fastest growing segments in the industry. 

  The growth of these flavored varieties isn’t necessarily indicative of market expansion.  Vodka, with entries that include pumpkin pie, marshmallow and cookie dough, has seen stagnant sales in the U.S. since 2003.  Sales of vodka’s flavored varieties experienced steady growth for the same period, according to market research firm Euromonitor International, but not enough to grow volume overall, and new flavor releases started to decline in 2013.  Around the same time, flavored moonshine hit it big and a surge of new brands began vying for a piece of the Mason jar craze.  Now moonshine growth has slowed and flavored whiskey is on the rise, led by cinnamon whiskey and the new fruit and honey-flavored bourbons.

  The bottom line is the flavored spirit market offers opportunity, as consumers are always looking for something new.  But, this also makes it volatile and risky, rewarding the producer who can innovate and move to market quickly to benefit from the success of a new trend or flavor.  The good news is that small craft distilleries have a significant advantage over the larger producers in their ability to just that.

But, before considering an entry into the flavored market, let’s review some basic concepts that will improve your chances of success: flavor development, avoiding shelf-life problems, complying with the TTB, and leveraging a lower effective tax rate.

Flavor Development

  Many distilleries begin by mixing their spirits with flavors, juices, fruits, or any other unique and natural mixers they have on hand, and then market test with their friends, neighbors, and local bartenders. It’s not an easy or quick process, but many distilleries find success using this method. Several regional craft coffee-flavored liqueurs and vodkas were developed in-house by mixing two beverages their distillers were passionate about: coffee and alcohol.

  Another option is to utilize the services an experienced flavor house like Flavorman, Wild Flavors, or Mother Murphy. These flavor blenders and producers have decades of experience in testing and developing new flavored spirits, and they have it down to a science. Ask for a specific flavor and their teams of scientists and researchers will give you exactly what you are looking for.

  For example, the creators of cookie dough-flavored vodka didn’t soak vodka in freshly mixed cookie batter. The flavor essences were developed by an experienced flavoring company, and then shipped to the distillery to be blended and bottled.  They can assist you in creating a blending procedure, or provide you with distillery finished flavorings ready to blend. And, they can conduct shelf stability testing as a way to help ensure your product looks good on the shelf, or after being exposed to extreme temperatures.

  A third flavor development option involves partnering with an established craft distillery with experience launching a few of their own flavored offerings.  They can bring expertise in blending sugar, flavorings and colors with distilled spirits, and can help you develop your recipe.  They may also be able to source the blending ingredients, manage the government compliance and application process, and even bottle for you to help get your product out to market as fast as possible. Once you have the capacity and expertise to do it yourself, you can bring the process in-house.

Avoiding Shelf-Life Problems

  Introducing foreign objects like whole cherries, strawberries, cinnamon sticks, or other non-liquids has the potential for serious shelf-life issues. Before shipping anything with a foreign object, make sure the bottle sits in sunlight and in extreme temperatures for at least a month before you manufacture a large batch. You need to see what the product looks like over time, as fruit may oxidize and other ingredients can change in color.

  The same foreign objects that give your flavored spirit its unique qualities may also be visible in the bottle.  Many consumers are not used to sediment or objects floating in their bottles, as many large distilleries use chill-filtration to remove every last bit of sediment, barrel char, and haze from their spirits. Educating consumers on the role of residual sediment in full-flavored spirits may be challenging, but your continued success could depend on it.  Consider addressing the subject on your packaging or display, as well as in your other consumer communications.

  And, finally, do your blended fruits or juices have an expiration date, requiring bottling within a short period of time?  This is a shelf-life issue as well, albeit an internal one, and it is an important issue to address with purchasing, storage and quality control procedures before going into full production.

Tax and Trade Bureau

(TTB) Compliance

  Next on the agenda is ensuring compliance with the TTB. Your formula must be submitted for approval, along with the detailed list of ingredients, blending steps, and batch details. TTB approval may take 20-40 days and the agent may ask for a sample to evaluate, although this is not common. After the formula is approved, you can then apply for approval of the bottle label which may take another 30-50 days. The bottom line is that earning TTB approval is not a quick process, so be sure to allow for it in any product launch timeline.

  Compliance requirements continue beyond the approval of your formula and label, as each batch must be made within tolerance of the approved formula.  Meticulous batching records must be kept and should include the DSP/Plant Number, the TTB Formula Approval Number, the ingredients used, blending tank name, proofing notes, and other batch details.

  Each batch must also be proofed to ensure it is within tolerance before being bottled. The TTB requires that, if a flavored spirit contains solids in excess of 600 mg per 100 ml, the true bottle proof can be no higher than the stated label proof, and no lower than 0.5 Proof (or 0.25% ABV) below the label proof.  For flavored spirits, this may not be as easy as just measuring with a traditional hydrometer, as the spirits can be “obscured”.

  Spirits are considered obscured due to the change in density from the sugar and other solids, requiring an obscuration test utilizing a small desktop still to distill off the liquid from the sample, leaving only the syrups and solids behind. After the recovered distilled spirits are collected, water is added to make up for the original solids left behind, and it can then be proofed accurately with a hydrometer or density meter. The entire process can take anywhere from 2-4 hours per batch.

  An alternative is to send a finished sample to a TTB-approved lab to do the proofing, but it can take a few days to get the results. And there are some desktop density meters that can do obscuration testing, but these can be very expensive.

  It is crucial that a craft distillery proofs their flavored spirits correctly and in full compliance with regulations. TTB agents randomly pull spirits off liquor shelves across the country, and then test for proof and fill tolerance, and to ensure the approved formula was followed. If a bottle is found to be out of tolerance, the TTB will ask for the distiller’s batching and proofing records, and may issue fines, penalties, or additional taxes.

  Leveraging a Lower Effective Tax Rate

The final and most important consideration for flavored spirits is the opportunity to pay a lower effective tax rate. Distilled spirits are taxed at a standard federal excise tax rate of $13.50/proof gallon. However, with flavored or blended spirits, there are methods a distillery can use to lower that tax rate.

  The most common example is OTS (Other Than Standard) wine. This high proof wine can be transferred into a distillery and blended with spirits. The portion of the alcohol contributed from the OTS wine is taxed at the much lower rate of $1.57 per gallon. Another option is to use tax-paid flavorings that contain some alcohol, where up to 2.5% of the total proof gallons in the batch contributed by the tax-paid alcohol are taxed at 0%.

  An important warning: these calculations are not simple and managing a lower effective tax rate can be challenging. A craft distillery interested in developing a flavored spirit with a lower effective tax rate would be wise to consult with an experienced flavor house or supplier for guidance.

  In summary, the flavored spirits market continues to expand and innovate, but the same demand for innovation also introduces volatility and risk.  A distiller looking to compete in the category should spend time in research and preparation, so that its sour pitfalls can be avoided, and the sweet rewards can be enjoyed.

Finding A Distiller

By: Donald Snyder, Donald@TimeAndTasks.com

April/May 2016 Issue – Beverage Master Magazine

man in front of distillery

What do a former chef, police officer, wine taster, lawyer, home brewer, fireman, general contractor, and farmer all have in common? They all have become award winning distillers. With new craft distilleries opening every month, how does a startup find the right individual to run their stills? Given the shortage of experienced distillers, looking for the right candidate outside the industry may be the only option. What core skill sets would make a good distiller? What skills are crucial to running the day-to-day operations of a craft distillery? After the right candidate is found, how does this person begin a lifetime of learning?

  A quick scan of the American Distilling Institute (ADI) Online Forums shows “Help Wanted” posts looking for distillers outpace the “Job Wanted” posts by almost 3 to 1 (http://adiforums.com/). Individuals with distillation experience, or even fermentation and brewery experience, are in high demand right now. Given the shortage of available experienced distiller candidates, some craft distilleries are connecting with professional recruitment services normally only used by larger distilleries. Even then, finding someone with real-world (and legal) distillation experience can be a challenge. 

  In the end, most startup craft distilleries will not be able to recruit an experienced head distiller. However, there are some key skill sets to look for when selecting this crucial member of the team. The most important and fundamental skill an aspiring distiller must have is a good palette. The ability to taste distilled spirits and identify subtle differences is critical. All the most advanced automated control systems in the world cannot replace the importance of being able to taste and smell spirits to make the correct cuts. The head distiller must also be able to evaluate the quality and flavors of spirits during barrel aging, determine what batches to blend, and even ensure the correct profile before the spirits are bottled. These skills sharpen with experience and training but must build on a core ability to taste and smell. Sherman Owen, Distillery Consultant and Owner of Artisan Resources LLC, says, “If you can taste the difference between Hunt’s and Heinz ketchup, you can learn to be a distiller.”

  Besides having a strong palette, an aspiring distiller must be driven and have a strong work ethic. Eight-hour work days are a rarity in most craft distilleries. If there is an equipment breakdown, it may take twelve or more hours to distill a batch of spirits. Distilling vodka or gin may take a full day or beyond to completely finish. A distiller must be willing to stay with a project no matter what.

  Another key skill set is to have a reasonable mechanical aptitude. If something is not running correctly, can they start to investigate what went wrong? Does the aspiring distiller have any experience fixing basic mechanical issues? Most craft distilleries do not have a full time maintenance staff. Instead of making the expensive call to bring in a mechanic or equipment vendor, can the distiller safely grab the right tools to troubleshoot the issue? A distiller doesn’t have to be able to completely rebuild a pump motor, but they should be able to identify if the pump stopped working because of a clog in the hose. 

  A distiller must not be afraid to get dirty. Distilling can be strenuous work, even with automated handling equipment and forklifts. Over half a distiller’s time will be devoted to cleaning and sanitizing. Commercial brewers can make good distillers not only because of their understanding of fermentation and alcohol regulations, but because of a brewery’s rigorous cleaning requirements. Grain left in an unrinsed fermenter is a magnet for bacterial infection. Once a distillery gets a bacterial infection, it can be very difficult to eliminate. If a bad bacterial infection gets in your fermenter due to a lack of cleaning discipline, it can stall your fermentation and kill your yeast. A distiller must be diligent to balance their time between running the distillery operations and cleaning up after each day. 

  Distillers must be open to learning new things. A distiller is going to learn something new every day. If a distilling candidate does not have distillation experience, they will be inundated with new experiences for the first several months. However, the learning never really stops. New distillers need to be like a sponge, learning as much as possible about all aspects of the industry. They should be open-minded about experimenting with new materials and tools. If there are issues with fermentation, they should learn what variables can be tweaked. Even the most experienced distillers will make mistakes, but the most successful distillers will learn from them and prevent them from happening again. 

  One of the many things that makes the distilling industry unique from most other small businesses is that it is highly regulated and taxed by the federal government, specifically the Tax and Trade Bureau (TTB). Distillers must be organized and be able to keep copious notes. They must be able to learn and understand federal and state regulations to ensure compliance. If a distillery is audited and the distiller did not keep sufficient notes, the business could be heavily fined or shut down. The distiller’s role is crucial to ensure everything is organized and audit-ready. There are online systems to help track distillery production and federal excise tax liabilities, but the distiller needs to be disciplined and organized enough to enter the day’s transactions. It is also critical that an aspiring distiller who is thinking about getting into the industry knows that stealing or “bootlegging” cases from a distillery is a felony. This is a very important conversation to have with anyone thinking about getting into the business.  

  An aspiring distiller must be a leader. Owners and managers will lean on the head distiller to keep the pace of the team and distillery operations. Upstream, the distiller must ensure they have enough raw materials to cook, mash, ferment and distill. Downstream, the distiller must ensure they have enough empty tanks to hold the spirits. The distiller will drive the supply of spirits for filling barrels, batching recipes, proofing and blending, and even preparing for bottling. Each operation requires coordination, planning, materials, and labor. For many craft distilleries, it is the head distiller that provides the leadership that keeps all the working parts in sync. 

  A distiller must have charisma. Tourists, fans, locals, and other customers will patron a distillery for a chance to meet the distiller. When there are tastings at bars, liquor stores, distributors, or other events, the distiller should be there. To have a drink and chat with a head distiller is a highly coveted event along the bourbon trail in Kentucky. Consumers seek this unique experience from their local craft distilleries as well. Having a head distiller who is approachable and accessible will go a long way to create raving fans. They also must be passionate about what they are making. That passion and excitement will carry through when consumers come in for a tour. 

  Finally, a new distiller must completely understand the competitive landscape. Visit as many distilleries as possible, large and small. Build a good relationship with the surrounding craft distilleries. Go to a large liquor store and buy as many distilled spirits as possible and taste them all. Identify what is good and what can be improved. Find where your products fit into the mix regionally and potentially nationally. How do you want your product to taste? Can you tell the differences between similar product types? Subscribe to magazines with tasting notes of spirits. Research the award winning distilleries. Make the rounds and learn about the industry. 

  After finding the right candidate, where to begin a new distiller’s training? The best place to start is at a class focused on craft distillery operations. There are several classes available throughout the year including Six & Twenty’s Distillery Management Course in Piedmont, SC (http://www.letsdistill.com/), Camp Distillery at MB Roland in Pembroke, KY (http://mbroland.com/camp-distillery/), various American Distilling Institute’s (ADI) Workshops across the country (http://distilling.com/events/distilling-workshops/), and many others. New distillers should attend the two major annual distillery conferences; American Craft Spirits Association (ACSA) and ADI. The ACSA conference is a great opportunity to network with established distillers and learn about issues impacting the industry. The ADI conference is a great source of education about the distilling industry for all levels of experience. Talk with vendors to see what the latest technology can offer the distilling world. Can the new distiller mentor or shadow at another distillery for a week? This could be some of the best education available. 

  With hundreds of new craft distilleries opening every year, it will be a long time before there are enough experienced distilling professionals to fill every need. However, if a passionate, hardworking, organized, and eager individual with a strong palette has the drive, they can make a fantastic distiller. The head distiller is the true face of the distillery so they must be a team leader. Once the right individual is found, the lifetime of education begins. Taking classes, networking at conferences, and meeting fellow distillers can give a new distiller the foundations to grow on. After a lifetime of education, fine tuning your skills and experimentation with new techniques, you too can become a master of your craft.

When the State Gives Lemons

By: Donald Snyder, President, Donald@TimeAndTasks.com

June/July 2017 Issue – Beverage Master Magazine

man in front of distillery

With the passing of the 21st amendment, the prohibition of alcohol in the United States was officially repealed. Each state was given the power to regulate and control the distribution of alcohol within their borders. Today, every state handles the sales of alcohol a little differently, including setting limitations on what craft distilleries can do in their gift shops and tasting rooms. Some states are more “craft friendly” than others by allowing sampling, cocktail and bottle sales, direct distribution, paid tours, and other profitable options. However, every state imposes some restrictions. When the state imposes restrictions, how can distillers work within the laws to increase their bottom line?

Florida

  Recently the state of Florida passed a bill to increase the number of bottles craft distilleries can sell out of their tasting rooms; from two bottles per person, per brand, per year to six. Other restrictions in Florida include no drinks or cocktail sales by the glass, no direct sales to bars or retailers, and all products must be distilled on site. How does a new craft distillery in Florida get consumers to experience their brand? St. Augustine Distillery has developed a unique business model to work within the state laws.

  Philip McDaniel, CEO of St. Augustine Distillery has focused on foot traffic.

  “We’ve located in a high-traffic destination which allows us to get a high volume of visitors,” he said.

  Because the law limits sales per brand, Florida craft distilleries are also focusing on new product innovation. If a Florida distillery has 10 different brands, they can now sell up to 60 bottles per person per year. 

New York

  In contrast, New York offers far fewer restrictions on craft distilleries with their Farm Distillery license. As long as 75% of the spirits come from New York produce and grains, craft distilleries can do on-site tastings, serve cocktails, and sell bottles of their spirits in their tasting room.

  Jason Barrett, President and Head Distiller of Black Button Distillery in Rochester, New York enjoys the flexibility the state offers.

  “We can only make cocktails with New York labeled spirits but overall, we are very lucky,” Barrett said.

  Black Button Distillery has built a bar in their tasting room to take full advantage of cocktail sales and is one of the most popular happy-hour spots in Rochester.

Texas

  Texas has some very interesting restrictions that limit bottle sales from the distillery gift shop to two bottles per person every 30 days. The time limit doesn’t reset every calendar month so every consumer has a different 30-day rolling window. Craft distilleries are responsible for maintaining a database of every consumers’ purchase to stay in full compliance with the law.

  Texas recently passed a law allowing cocktail sales in the distillery, which has been a big benefit for distillers like Robert Likarish, founder of Ironroot Republic Distillery in Denison, Texas.

  “The cocktail lounge was integral to our survival the first couple of years. We relied on it heavily while we built our distribution network and waited for our whiskey to age. It is still an important way for us to connect with our community and visitors to the distillery,” said Likarish.

  Ironroot Republic Distillery was recently awarded “Best Corn Whiskey in the World” at the San Francisco International Spirits Competition, which has helped draw new customers into the tasting room.

South Carolina

  South Carolina allows for sampling and bottle sales from a craft distillery with very specific restrictions. Distilleries can provide undiluted, unmixed samples in the amount of 1.5 ounces per person, per day in their tasting rooms. Samples can be free or the distillery may charge for them, which can be a decent revenue generator in an area with heavy foot traffic. Customers can purchase up to three 750 ml bottles per day at distilleries but the products must have a higher price point than the surrounding market. Distilleries cannot serve food or make cocktails, and their business hours must mirror those of retail liquor stores by closing at 7 pm.

  David Raad, owner and distiller at Six & Twenty Distillery in Piedmont, South Carolina is generally positive about the state laws.

  “South Carolina is a fairly forward-leaning state when it comes to distillery tastings, sales, and customer engagement,” said Raad.

  As an additional source of revenue, Six & Twenty offers classes for aspiring distillers to learn the art, science, and challenges of running a distillery before they start their own.

California

  Until recently, California was one of the most restrictive states in the country – forbidding all bottle sales out of craft distillery gift shops. Recent legislation has softened the restrictions considerably making it much easier for distillers to get their product into consumers’ hands. Distilleries can now sell up to 2.25 liters (three 750ml bottles) per person, per day and charge for tours. Self-distribution is prohibited, but craft distillers can open an offsite tasting room as long as it is also a restaurant. There is a cap of 100,000 gallons a year (brandy excluded) and 65% of their spirits must come off of their own still.

  Jim Harrelson, Owner of Do Good Distillery in Modesto, California, and President of the California Distiller’s Guild, has helped shape recent legislation regarding bottle sales and off-site tasting locations.

  “The old method would require the distiller to sell their product to a wholesaler and buy it back.  I know several people who were required to do this and their product travels hundreds of miles on a truck to make a five foot journey,” said Harrelson.

West Virginia

  West Virginia allows bottle sales to customers from a craft distillery’s gift shop with an interesting catch. Distillers must pay a percentage of their gift shop sales directly to a local liquor store called a Market Zone Tax.

  John Little, CEO of Smooth Ambler in Maxwelton, West Virginia explained how recent changes to the Market Zone Tax have improved his bottom line.

  “We used to pay a 28% markup to the state and 10% of all retail sales went to the local retailers via a tax called a market zone tax. Now, we only pay 5% markup to the state for items sold in the gift shop and only 2% for the market zone tax. It’s changed our retail business.”

  Distilleries in West Virginia cannot charge for samples or sell cocktails. But, distilleries can rent the facility and serve samples as long as they abide by the three ounces per person rule. This allows distilleries to have private parties which can be a nice source of revenue. Micro-distilleries have a discounted state license fee but have lots of regulations related to the percentage of grain from West Virginia and have a limit on production.

  Little is happy with his choice to pay for the full distillery permit.

  “While we’d meet the percentage of grain out of West Virginia, currently about 90% of our grain is from West Virginia, we didn’t want to have a cap on production. So, we have a full distillery permit. The West Virginia ABC treats us very well and is eager to help however they can, legally,” Little said.

Tennessee

  One of the states with the loosest restrictions on liquor sales in distillery tasting rooms is Tennessee. The current limit per person per visit is 25 – 750ml bottles. This limit is hardly ever reached by most individuals, but, if a consumer does their daily limit and want more, they can always come back the next day. The catch for the distiller, however, is that the bottles must first be sold by the distillery to a distributor and then bought back. This takes a small bite out of the distiller’s margin, but it is a relatively small price to pay for almost unlimited bottle sales at full retail price.

  Sampling is also permitted in Tennessee, and many distilleries take advantage. Consumers who visit the Ole Smoky Moonshine Distillery in Gatlinburg, Tennessee can sample 0.25 oz of up to thirteen different spirits.

  Tennessee recently passed legislation to permit cocktail sales, a law which took effect in July 2016. Andy Nelson, owner of Nelson’s Greenbrier Distillery in Nashville, Tennessee is happy with the change.

  “The State of Tennessee just passed a law allowing distilleries to sell cocktails out of their tasting rooms and that is very exciting for us. Any alcohol contained in the cocktails must be produced on the distillery premises so it can be a bit limiting but great progress nonetheless. We are right in the middle of trying to figure out a cocktail program for the distillery. We know that we may only get one chance at a first impression so we want to be sure we do it right from the beginning,” said Nelson.

Ohio

  One of the most notoriously restrictive states for distilleries is Ohio. Bottles can be sold from a distiller’s gift shop but there is a significant catch.

  James Bagford, Distiller at Flat Rock Spirits Distillery in Dayton, Ohio, described the process.

  “When a state agency store sells a bottle, they receive six percent of the retail price. When distilleries sell a bottle, the state gets to keep that six percent. So, we actually lose money when selling a bottle from the tasting room after we pay for credit card processing fees, bags, etc. The main advantage of having the tasting room is being able to connect with customers, tell them about making our product, and provide a sample before they commit to purchasing a whole bottle.”

  In November of 2016, Ohio passed legislation to allow distilleries to obtain an A1A permit, previously only available to breweries and wineries. The permit allows distilleries that produce under 100,000 gallons per year to sell their spirits, spirits produced by others, beer, and wine for on-premise consumption, as long as they have a kitchen and the ability to serve food during normal business hours.

Montana

  Montana is a growing craft spirits market spurred by craft-friendly laws. Distilleries can sell and serve two ounces of distilled spirit samples per person per day, which can be in the form of cocktails. They can sell up to 1.75 liters per person per day for offsite consumption, and self-distribute to state liquor stores. In addition, Montana distilleries can provide free or paid tours. 

  Distilleries are not responsible for paying the state mandated 20% markup on products moved through the tasting room. The only real restrictions placed on distillers are that of the spirits sold in the tasting room, 90% must have been produced in-state and can only be served between the hours of 10:00 am and 8:00 pm.

  Courtney McKee, Founder and Owner of Headframe Spirits in Butte, Montana is very happy she’s located her distillery in the state.

  “All in, being a distillery in Montana is fantastic. We’ve had a lot of influence over expanding the privilege of having a tasting room and we don’t think there’s a better state to do business in than Montana.”

Colorado

  Hands down, the state with the fewest restrictions on craft distillery tasting rooms is Colorado. Distilleries in dsColorado have every benefit they could ask for including unlimited bottle sales, no limits on sample or cocktail sales, permission to sell directly to retailers and liquor stores (direct distribution), can offer paid or unpaid tours, can have two separate offsite tasting rooms, and now get a “distillery pub” license.

  In exchange for these benefits, the state imposes a $2.85 per proof gallon excise tax (roughly $0.48/bottle) which is relatively insignificant when selling bottles and cocktails at full retail price.

  Kristian Naslund, owner of Dancing Pines Distillery in Loveland, Colorado enjoys all the benefits of being in Colorado.

  “We can sell anything that contains alcohol that we make, in any form – samples, cocktails, etc. We can sell to anyone and self-distribute. Overall, Colorado is a great state to run a distillery.”

  When it comes to operating a craft distillery tasting room, every state has their unique advantages and restrictions. No state is perfect, although some states are more craft-friendly then others. Whatever the restrictions are in a state, there are always opportunities to tweak the business model to drive a profit. Whether it is building a visitor-friendly distillery to maximize bottle sales from foot traffic, developing and innovating new brands to work within sales restrictions, building a bar to maximize profit from cocktail sales, designing an inviting tasting room to serve samples, or just focusing on efficiency and cost reductions for a pure distribution model, there is an opportunity to make money in every state. If the state gives lemons, make lemonade flavored vodka and sell as much of it as possible.

Turning Data Straw into Wisdom Gold By: Donald Snyder, President Whiskey Systems Online

By: Donald Snyder, Donald@TimeAndTasks.com

June/July 2018 Issue – Beverage Master Magazine

stack of golds glitching

In the story “Rumpelstiltskin,” the miller’s daughter has a seemingly impossible task; turn a room full of straw into gold. With the help of a little magic, the abundant straw, which has little or no value on its own, is turned into gold, a much more valuable commodity. For most craft distillers, they are surrounded by the copious amount of data that they would like to spin into business intelligence gold.

  From raw material reordering strategies, to cost per case, to sales trends, there is ample data available. Without an easy to use data dashboard, many decisions are made on the fly. By tracking the right data and filtering it into appropriate metrics, a distiller can make smart, data-based decisions to bring their distillery to the next level.

  The idea behind business intelligence and data dashboarding is simple: measure and track appropriate data points. Distillers can then use technology to filter and sort that data into metrics, charts, and summary dashboards; visual controls to identify when trends are out of acceptable ranges, and summary data to make smart decisions that drive the business in the right direction. For example, a list of all a distiller’s current raw materials on-hand isn’t the best way to re-order raw materials.

  However, combine current raw material inventories with vendor lead times, volume price discounts, average daily usage, and safety stock levels, and a distiller can be armed with a visual go/no-go strategy to order materials and ensure minimal out of stocks. Better yet, after setting up the dashboard, raw material reordering can be safely delegated to employees, meaning one less thing on the head distiller’s or manager’s to-do list. 

  Collecting data is not always easy or free. Every time an employee writes down data or enters data into a spreadsheet or system that is time away from doing other tasks. Identifying the right data to track, as well as monitoring and recording TTB required production and batch data is critically important. However, for employees who are writing or logging non-compliance related data points, a challenge if the data collected is value-added and is part of a mission-critical metric. As an alternative to manually recording data, invest in technology to simplify data collection and archiving.

Common Metrics to Track

  Not every business or distillery will be tracking the same metrics or key performance indicators (KPI). For example, a distillery who sources finished spirits is not as concerned with fermentation conversion efficiency as they are about tracking their bottling and filtering loss. The best metrics and KPI’s to help drive business to the next level involve data that is easy to collect and accessible; can be visually tracked daily or weekly; and where owners can make data-based changes to the process that will have a meaningful impact. A fantastic KPI is fermentation grain conversion efficiency (proof gallons yielded per bushel of grain used). The data is easy to track, it’s easy to plot the data points and see trends, and owners can make meaningful impacts to the process for positive change. In the end, an improvement to mashing efficiency means more output from the same investment of grain, which will benefit the bottom line.

  The most popular metric that distilleries track is the cost per case, as it gives owners a clear visual indicator of the profitability of their brand. The challenge with this metric is collecting the input data, including tracking all the costs from grain, packaging materials, labor, and even taxes. Using a distillery management system or cost accounting system can simplify the data collection. Once the cost data is summarized, the metric is easy to plot, trend, and compare against a standard. If a brand’s cost per case exceeds the standard, an owner can make process improvements to make positive changes. Every dollar of cost removed from a case means another dollar in profit for the company.

  Sales trends is another metric that distillers use to track company performance. Raw sales by customer data are usually available, but can often be overwhelming to digest. How is a specific brand performing month over month? Are any brands decreasing in sales? If sales are seasonal, compare brand shipments year-to-year to get a better picture of growth this season versus the same season last year. Are any customers trending down on orders? Looking at every combination of brand and consumer sales trends month-to-month or year-to-year could be hundreds of charts. To save time and resources, leverage a data dashboard or technology that can send an alert when specific parameters have been breached. If a brand or customer is trending unexpectedly downward, stakeholders can take action to help steer the ship back on track.

  The most overlooked metrics are ones that impact a distiller’s supply chain and logistics. With so many suppliers providing goods and services to the craft beverage industry, distillers have the benefit of holding their vendors accountable for poor performance. How often are deliveries made late or received after the agreed upon due date? How often does a late material shipment impact the production schedule? What is the supplier’s defect ratio? On a pallet of glass, how many bottles are broken or cracked? Supplier reliability can be crucial to an efficient distillery. If anything, tracking this metric can open conversations with suppliers on mutual expectations.

  Tracking and monitoring adjustments to inventory is an excellent metric to determine losses to your bottom line. How often is a physical inventory taken that doesn’t match the expected inventory? Track adjustments made to raw materials, tanks, barrels, and even finished cased goods. Is inventory missing often? Are employees using more of raw material than expected? Did the supplier ship an order short? Are products being broken but not reported? Are operations being done but not logged? Is there an employee theft issue? Tracking how often adjustments are made to inventory doesn’t always answer the cause of the problem, but it opens the opportunity to investigate and make meaningful decisions to minimize losses. 

One Bite at a Time

  Once a distillery has decided that it would like to start collecting and tracking data, the task can seem overwhelming. But just like eating an elephant, take one bite at a time. Identify one pain point or in-efficiency in the distillery and identify data that can help solve the problem. For those distillers with a math background, consider taking a green belt Six Sigma class to learn how to collect data from a process, identify outliers, and make meaningful changes to improve performance. Also, consider the investment in technology, such as business intelligence platforms, that will help collect and aggregate data into useful dashboards.

  A distiller will have thousands of potential points of data to collect, but tracking everything is not possible. Surrounded by data straw, distillers should look for a way to turn it into gold. Once a distiller or business owner has identified metrics and KPI’s relevant to the business and set up automated dashboards, they can use the data to make smart, data-based decisions. No one has a magic straw-spinning wheel, but every dollar saved by making intelligent choices means potential gold for the bottom line.