Category: Uncategorized

Pacific Northwest Wineries with Distilling Licenses

Cyndi
building in the winter with snow that says Wilridge Distillery

By: Becky Garrison

A growing number of Pacific Northwest wineries have added distilled spirits to their portfolio. Many of these distillers chose to make grappa and other spirits from their must instead of composting this product. However, a growing number of distillers are choosing to go the route of distilling whiskey.

Washington State Wineries & Distilleries

  In Distilling in Washington (The History Press, 2024), I noted the history that led to the ability of Washington State wineries to also hold a distilling license:

  “When Paul Beveridge of Wilridge Vineyard, Winery and Distillery of Seattle and Yakima began advocating in 1988 to change the liquor laws so that he could operate a winery and a distillery, a member of the board told him, ‘They’ll never be a distillery at a winery permitted in my lifetime. It will have to happen over my dead body.’

  Beveridge and members of Family Wineries of Washington State began calling the board ‘The Department of No’ after it not only denied his request to operate a distillery but also refused to allow him to use refillable bottles or offer restaurant-type service, even though the latter two activities were not mentioned as prohibited by law.

  The law pertaining to distilled spirits was amended in 2015 to permit wineries, breweries and cideries to hold a distilling license, with Beveridge’s becoming one of the first wineries in the state to also operate a legal commercial distillery. Initially, he had to set up his distillery in a separate space from his winery, though his businesses can now operate under one roof. Until recently, he could not sell his spirits at any tasting rooms where he was also selling his wines.”

  According to the Washington State Liquor and Cannabis Control Board (LCB) regulations:

  “A winery license (RCW 66.24.170) and a distillery license (RCW 66.24.140) can operate in the same building if physically separated from each other. There is currently no allowance for a winery and distillery to alternate production or share production space. What they can share is a jointly operated tasting room (RCW 66.24.1472). Also, wineries and distilleries can jointly operate an off-site tasting room, as detailed in RCW 66.24.1472 and WAC 314-28-310. They do need to maintain separate storage and financial records. They must also comply with the food offering requirements found in WAC 314-28-067, which include prepackaged items or items prepared off-site.”

  Following Beveridge’s advocacy, a select number of Washington State wineries have followed suit.

Browne Family Spirits (Spokane, Washington)

  Having founded Browne Family Vineyards in Walla Walla 20 years ago, it may surprise a few that founder Andrew Browne’s drink-of-choice is an Old Fashioned. He and the wider Browne Family team recognized the tastes of Browne Family Vineyards consumers reach beyond wine and felt joining the two industries brought the opportunity for discovery. 

  Getting into the spirits business had been on proprietor Andrew Browne’s mind when the opportunity to purchase a distillery came to fruition. He jumped at the chance, given its location in Spokane, Washington, where he was born and raised, and his strong bond with master distiller Aaron Kleinhelter. As Kleinhelter grew up in the shadow of the Jim Beam distiller, he bought insights from one of the world’s most established bourbon communities to Browne Family Spirits.

  Browne was a fan of Kleinhelter’s unreleased small-batch recipes he had made under the previous distillery. This evolved into what would become the initial line of Browne Family Spirits. In both ventures, Browne aspires to create an environment that appeals to and caters to both without diluting the experience.

Mastrogiannis Distillery & Winery (Lakewood, Washington)

  In 2016, Ilias Mastrogiannis launched a distillery and started a winery in 2019. In terms of production, he would describe his venture as a distillery-focused operation focusing on grapes. This project started with his early memories of growing up in Greece.

  “My dad was a mason turned winemaker, so during harvest, the entire family would assist in crushing grapes. That upbringing, along with the fact that nobody at the time was making grape brandies to the quality I know existed, we decided to start our distillery with that singular focus,” Mastrogiannis recalls.

  In terms of their wine portfolio, they have a Vermouth, which is a combination of their rose wine and their brandy, both of which are made under the same physical roof. In Mastrogiannis’ estimation, “Being able to cross two different products into one is something really special.”

  Due to the short harvest period for grapes, he finds he is limited to production for that season. He notes, “For example, we cannot get grapes in March, so by default, you don’t see a lot of distilleries focusing on grape distillate because from an economic standpoint, it is very hard.”

Monson Ranch Distillers (Prosser, Washington)

  Goose Ridge Estate Vineyards and Winery was established in 1998 when the Monson family planted 2,000 acres of estate vineyards. In 2023, the family officially launched Monson Ranch Distillers in Prosser, Washington. With over 80 years of family history in agriculture and farming, Monson Ranch Distillers is led by the third and fourth generations of Monson ranchers, together with Master Distiller Brian Morton to create uniquely crafted spirits. Morton has been working in the Washington spirits business for over 14 years. He opened one of the first distilleries in Washington state, Blue Flame Spirits.

  Starting with cattle feed lots, the foundation of Monson Ranch was built in the 1930s, as the family started climbing its way up in the Washington agriculture community. Following years of hard work and success in ranching, farming and winemaking, Monson Ranch Distillers is the newest venture for the family. The distillery offers a full range of premium spirits. Vodka, gin, brandy, and whiskey are only the beginning. With vineyards, orchards and new rye and corn plantings at the family’s home ranch in Goose Gap, plus a state-of-the-art distillery in eastern Washington, Monson Ranch Distillers controls every step of the process for a complete farm-to-bottle experience.

  The Monson Family wine brands and spirits brands are each distinct from one another. However, VIDO Vodka and Feather & Folly Gin are both made from alcohol distilled from wine grapes grown at the Goose Ridge Estate Vineyard. Both the Goose Ridge Estate Wines and the Monson Ranch Distillery spirits from wine grapes display distinct notes reflective of the unique terroir within the Goose Gap appellation. At the Goose Ridge Tasting Rooms in Richland and Woodinville, guests can taste the spirits in addition to Goose Ridge wines.

Westport Winery Garden Resort and Ocean’s Daughter Distillery (Aberdeen, Washington)

  Kim Roberts decided to make spirits after she went scuba diving with her daughter on Maui and visited the two distilleries. Currently, they have over 30 different wines, plus 30 different spirits. According to Roberts, this gives their guests many choices every day and reasons to visit on multiple trips.

  When asked to describe her operation, Roberts opines, “We’re  a winery with spirits for those who just don’t dig wine.” She views them as outliers in the wine industry since they are so far from any other wineries.

  Roberts finds the same dynamic present in the distillery. “We operate in our own remote bubble, with dedicated fans that share their enthusiasm for our products with their family and friends.”

  Oregon Wineries & Distilleries 

  In Oregon, a winery and distillery can offer wine and spirits tastings in the same area as long as they fulfill two conditions: one, the licensee of record must hold both the winery and the distillery licenses, and two, they must follow the requirements for tasting rooms as outlined in OAR 845-005-0431 and OAR 845-006-0452.

  Also, businesses do not have to serve food with tasting. However, if they want to sell and serve full drinks, they need to get a Special Event Distillery license. In addition, if the business not only has a distillery license but is a Distillery Retail Outlet with approval to sell bottles of distilled spirits, then they would need to have a different point of sale specifically for the distilled spirits.

Willamette Valley Vineyards (Turner, Oregon)

  In December 2021, Founder and CEO, Jim Bernau decided to venture into distilling Willamette Whiskey as a tribute to the people of Carlton, Oregon. For 91 years these residents enjoyed the building first known as W.A. Howe’s General Merchandise Store, which was nicknamed “the Old Cabin Tavern” owing to an interior constructed of hand-hewn timber. This building served as a general store, a hotel, and Carolton’s first bank, with a parlor and speakeasy supper club in the basement. Built in 1904, it was destroyed in a fire on April 18, 1995, with Willamette Valley Vineyards now owning the lot where its building once stood.

  Their limited release of Willamette whiskey heralds the beginning of their efforts to rebuild this property with a brick-clad micro-winery and distillery with food service. In this venture, they partnered with Portland-based Rose City Distillery to produce this handcrafted, small-batch rye whiskey that was aged in new American oak for six years, then blended down to a bottle strength of 100 proof.

  They released 12 bottles in December 2021 and then 350 bottles in February 2022. They want to do this again someday, but nothing is planned.

Patricia Green Cellars (Newberg, Oregon)

  Jim Anderson was promoted to venture into distilling because of all the ruined wine from the 2020 wildfires. In their process of distilling the wine to brandy, Dogwood Distilling in Forest Grove was up for sale. In 2022, Anderson, associate winemaker Matty Russell, their distiller Lynsee Sardell and two friends (primarily investors) purchased this distillery and re-named it Die The Wolf Distilling.

  The winery holds a DSP, as all the whiskey is aged on the property. Anderson notes how this business arrangement is a bit difficult to describe since the winery does not directly own the distillery. Still, a partner in the winery is also a partner in the distillery. “While we have done some custom distilling for other wineries (largely to help folks out with smoke-tainted wine) the only real distillery customer is Patricia Green Cellars,” Anderson states.

  For Anderson, the biggest disconnect in selling wine and distilled spirits is that while wineries can sell directly to consumers, spirit sales at restaurants and shops must go to the OLCC. Also, as a new distiller, they can only have three items listed at any one time.

Trisaetum Winery (Newberg, Oregon) 

  Founded in 2003 in Oregon’s Willamette Valley, Trisaetum Winery fulfilled the Frey family’s dream to farm responsibly, foster a family and create beautiful wines. As James Frey developed an equal passion for spirits, he dreamed of opening a distillery. That dream was realized when his daughter Tatum developed a similar passion.

  So, they founded Brixeur Spirits in 2020, which is located on the same property as their winery. Currently, James Frey makes the wine for Trisaetum while Tatum and her partner Jackson distill their spirits. On their website, they describe how they take a “winemaking approach to distillation and aging of spirits.”

Contract Packaging Agreements

Cyndi

Purpose in Brand Owner and Manufacturer Relationship and a Look at Some Key Provisions

2 people shaking hands

By: Brad Berkman and Louis J. Terminello, Greenspoon Marder

Brewers and brand owners both, do not underestimate the importance of a well drafted “contract bottling agreement.” First, for the uninitiated let’s briefly explore what in fact, a contract package arrangement is and brand development within the context of that arrangement.

  Breaking into the realm of manufacturing alcoholic beverages can be a very expensive endeavor. Startup costs for opening a brewery, distillery or a winery can be immense. Even startup costs at the “craft” level are significant. Land and facilities must be bought or leased, mechanical, electrical, and plumbing systems need designing and buildout, and of course, manufacturing equipment such as tanks, stills, bottling lines, and pumps must be purchased and installed, among many other things. The costs can be very high. Hundreds of thousands of dollars, likely even more, will come out of pocket before the first bag of grain is poured into a mash tank, distilled, and bottled, labeled, and a corked brand comes rolling down the bottling line. Of course, merely producing an alcoholic beverage brand is just the beginning. The idea is to sell bottles, boxes, pallets, and container loads of happiness in the bottle. This of course requires tremendous expenditures on brand marketing, sales, and promotional initiatives. Happiness in the bottle can quickly turn into weeping in one’s glass if poor planning is exercised.

  Enter the contract package arrangement. A business deal that benefits the independent brand owner and marketer and the skilled brewer, distiller, or wine maker. It is the foundation of a symbiotic relationship that cuts costs for both parties and goes a long way in increasing the likelihood for the economic success of each. In the simplest terms, in a contract package relationship, a brand owner will “contract” with an existing manufacturer to produce and bottle and alcoholic beverage for the owner. All production and labor are contributed by the producer, paid for by the brand owners, ultimately leading to a finished product owned and ready for sale in the market by the brand owner.

  For manufacturers, contract packaging, in addition to bottling their own labels, can be a significant and badly needed additional stream of revenue. For the brand owner, the significant cost savings from avoiding building out a plant are immense and allows for valuable financial resources to be directed to advertising and marketing activities. After all, a bottle is not going to come off the retailer’s shelf by itself.

  With the above in mind, this article will examine some of the key provisions that must be addressed in any well drafted contract packaging agreement that are likely concerns of both parties to any agreement of this sort. When crafted properly, the agreement will ensure that the rights, duties and obligations of both parties are clearly defined, ideally leading to an unambiguous business relationship. It is important to note that every deal is different, and the terms of a well drafted agreement will be deal specific. The below provides general but important guidance on some essential terms.

A few Key Provisions:

  Intellectual Property Rights and Licensing

The brand owner almost always has spent significant treasure in developing a brand name and identity. The first step in protecting brand ownership commences in fact prior to entering into a contract packaging agreement. The brand owner should make every effort to trademark the brand name and logo in the appropriate trademark categories prior to bottling and sale in the marketplace.

  Building brand equity or value is a labor intensive and costly exercise. Trademarking the brand name is an absolute requirement to ensure brand value remains with the owner. As for the contract packing agreement, the brand owner will grand a limited, non-exclusive license to the manufacture to produce and bottle the product for the duration of the agreement. At termination of the relationship, the limited license shall cease to exist, and the manufacturer will generally have no future rights to the brand name.

Formulation, Ownership

  Product formulation must be addressed in these agreements as well. Both the manufacturer and brand owner must agree prior to production, the formulation specifications and method of manufacture of the liquid in the bottle. A well-crafted agreement should address deviations from the agreed upon formula. If a dispute arises between the parties in regard to formulation and product quality or integrity, a means for determining fault should be incorporated into the agreement. It is highly recommended that third party laboratories are identified in the agreement where the finished product can be sent for testing and ultimately assignment of responsibility.

  Compensation to the injured party for out-of-spec liquid should be codified as well.  The contract should also address formula ownership and use of the liquid. Common place vodkas, as example, are drastically different from unique formulations with unique ingredients. Assignment of ownership of the formula should be addressed in any contract packaging agreement in a similar fashion as usage of the brand name as described above.

Raw Materials, Packaging

  Every beverage product produced requires raw materials and packaging materials. Grains, malt, yeast, and other ingredients are required as well as bottles, labels, stoppers, and cases. These items can be secured by the manufacturer as part of the contract arrangement, or they can be secured by the brand owner and delivered to the producer’s plant (producer is used interchangeably with manufacturer). The acquisition of these items is very important for many reasons including the quality of the materials used and the costs involved.

  Ultimately, the costs of these materials will determine the price of the finished product on the shelf. The parties to any agreement should establish roles and responsibilities for obtaining these items to ensure adequate supplies of the same at the right cost point. Storage of inventory of both raw materials and packing and how to deal with defective materials should be sorted through by the parties with the costs assigned accordingly.

Production Quantities

  Production amounts are an essential element of negotiations and memorializing them in an agreement is vital. Both the manufacturer and brand owner need to align their expectations on this issue. Either party will quickly cry breach of an agreement if the manufacturer cannot produce the quantities the brand owner requires and conversely, the manufacturer will do the same if the brand owner does not contract and purchase the quantities bargained for. 

  Realistic volume expectations need to be established for both parties to the agreement. As an offering of sage advice, if there is not a meeting of the minds on this issue by the parties, it is best to walk away from any arrangement. Further, it is advisable to incorporate reasonable and realistic annual volume growth expectations, year over year, in a multi-year agreement.

Payment Terms

  It goes without saying that payment terms may be the most important part of a contract packaging agreement. Clearly both parties need to know when they will make and receive payment and the timing of the same. In some instances, manufacturers may be willing to provide favorable credit terms, (most likely offered to a long-standing brand owner partner who has well established credit).

  In many instances manufacturers may require all monies to be paid prior to production. In other instances, they may require one-half of the production amount prior to commencing manufacturer, the remainder due at pick up of the finished product. Once again, this essential term must be negotiated and memorialized in a well drafted contract package agreement.

Quality Control and Product Recall

  This provision was briefly mentioned above but is worth restating here. Ideally, production moves along without a hitch and product quality and integrity remains excellent. Of course, that is not always the case. There are times when product formulation is off or foreign objects make their way into the bottle. The parties to a production agreement must memorialize issues such as the right to inspect finished product prior to leaving manufacturers warehouse, the procedures and allocation of costs if in fact product must be recalled.

  As a final thought, contract packing agreements must be beverage law compliant.  Additional terms in the agreement must comport with and be legal under alcohol beverage law and the parties to the agreement must be licensed accordingly.

  The above is very much a sketch of some important issues that must be addressed in a well-crafted contract package agreement. There are many other areas that must be negotiated between the parties and included. A word to the wise, it is always beneficial to both parties to consult with attorneys who are experts in this area. Ideally, the agreement should provide a business framework that makes for a productive relationship between manufacturer and brand owner and anticipate problems that may arise and incorporates mechanisms and procedures for addressing reasonably foreseeable issues.

Diaphragm Pumps Remain Popular Choice in Distillery Applications

Cyndi 2 Comments
diaphragm pumps in action

By: Gerald Dlubala

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

Yamada America Inc. Stresses Versatility, Experience and Partnership

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

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

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

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

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

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

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

Versamatic diaphragm Pumps Prove to be Gentle Workhorses

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

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

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

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

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

KOVAL Distillery Chooses Diversity in Pump Selection

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

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

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

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

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

Inaugural Craft Beer Marketing Awards Competition Underway

Cyndi
3 statues holding a beer can

By: Jim McCune

  There are dozens of competitions that award any number of beers on their flavor. There are no competitions, however, which recognize the incredible design and marketing work that breweries do for the branding of beer.

  As Jim McCune, a longtime promoter of craft beer states: “I’ve been in the beer-marketing industry for 24 years, and attended nearly a hundred beer-tasting competitions, yet I’ve never seen anything celebrating the amazing work that designers, illustrators, branders, and marketers do for beer. In many cases, this work is being handled by the brewers themselves.”

  The concept for a nationwide marketing competition was “brewed up” in November 2018 on Long Island as the brainchild of McCune and Jackie DiBella who are, respectively, the Executive Director and Account Manager of EGC Group’s Craft Beverage Division in Melville, New York. They brought this concept to EGC CEO and Founder, Ernie Canadeo, who immediately loved the idea and agreed to help both develop and finance it.

  McCune and DiBella got right to work at building out the Craft Beer Marketing Awards (CBMAs) from scratch. They cracked open a beer and started sketching a logo. From there, they carved out the categories and rules. They started inviting judges from within the brewing and creative industries. All of this work needed to be formulated into a strategic plan, with a schedule for receiving entries, judging, awarding, and celebrating.

  Creating this new business got extremely difficult during the development of the interactive awards website. The site needed to accept calls-to-entry registrants, paid entries, but also have a sophisticated, encrypted, yet easy-to-use judges’ platform. The judging process for the CBMAs had to be robust, credible, and have transparent digital scoring.

  Everyone involved simultaneously acquired sponsors and partnerships as they developed and produced a very unique awards trophy – something they know would look cool on a winner’s desk.

  Canadeo, McCune, and DiBella gave it their all, and in less than a year had the CBMAs live and accepting entries on October 6, 2019.

  The Craft Beer Marketing Awards became the first-ever in the USA, having been developed to recognize and award the very best marketing in the brewing industry across the nation. Breweries, their agencies, designers, and marketing partners were invited to enter their top work.

  The CBMAs were excited to get immediate coverage about the marketing competition from publications that included Forbes, New School Beer, Beverage-Master Magazine, Brewpublic, Media Post, Craft Beer Austin, Beer Connoisseur, Brewbound, Pro Brewer – and Forbes again. See all media here. https://craftbeermarketingawards.com/news/

  Design and marketing of each beer has become critical to a brewery’s popularity and success. With nearly 8,000 breweries across the country, and all of them vying for the same eyeballs – it has become increasingly more difficult to stand out from the competition in this incredibly saturated marketplace.

  In the past, small breweries could rely solely on word of mouth about their beers, but the past decade has seen something of a renaissance in craft beer marketing and branding. Beer packaging and design quickly became much more sophisticated, similar to that of the wine industry, and for good reason.

  “More than ever, breweries recognize the need to prioritize their marketing strategies,” said Prabh Hans, VP Business Development & Strategy for Hillebrand, and CBMAs Presenting Sponsor. “We’ve worked closely with brewers since 1984, and know that shelves and cities are flooded with an overwhelming amount of craft beer options. The CBMAs’ team recognized how much time and money these breweries are now investing into branding efforts and created a one-of-a-kind opportunity to celebrate them.”

  While most craft beer consumers might seek out local brews or prefer a certain style, many of today’s beer shoppers between the ages of 22 and 37 (the millennial generation) are making their final purchase decision based on “cool looking labels” – and this is why beer branding, design, and packaging has become the most effective means of influencing a purchase at the decision-making moment.

  Approximately 80 percent of consumers make their final purchase decision at the retail shelf, while 64 percent of this group admitted they would change their mind if “something better” caught their eye at that moment.

  But who do brewers owe credit to when it comes to these eye-catching, decision-driving can designs?

  Beer brand identities give breweries the opportunity to share their stories and personalities outside the brewery walls via their packaging. One of the coolest parts about beer branding is who brewers choose to collaborate with. And the choices are endless.

  These artists, designers, marketers, and branders are the ones who bring the beer to life on the shelf. Each can label, logo, and beer name ignites the brand to the consumer. It’s their job to provide packaging design with stopping power to capture the eye and compel the shopper to grab a particular beer.

  Today, brewers use strong visual identity, storytelling, word of mouth, and digital media to achieve never-before seen growth that has leveled the playing field between big and small beer companies.

  The packaging and overall branding of a beer is the most effective means of influencing purchase at that decision-making moment, and the CBMAs felt the time had come to recognize the talent behind the creatives that makes the craft beer culture so rich and unique.

  “This is a great opportunity for designers like myself to show off some awesome work I’ve done for breweries,” said Ben Owens, founder of Phine Art Designs. “I’ve never witnessed an industry with such fast growth and transformation. Craft beer is constantly evolving. So is the design, marketing, and packaging of it.”

  Each category is judged by an influential and respected panel of beer, marketing, and design experts from all across the country.

Celebrity Judges Include:

•   Zane Lamprey, comedian, actor and writer known for TV show “Three Sheets” and new Adv3nture active gear.

•   Harry Schumacher, publisher and owner of Craft Business Daily.

•   Jeff Bricker, publisher, graphic designer and owner of Beverage Master Magazine and The Grapevine Magazine.

•   Jon Contino, creative director of branding agency, Contino Studio.

•   Ralph Steadman, the infamous artist and illustrator who is most well-known for his collaborations with Hunter S. Thompson and Flying Dog Brewery.

  Check out the full panel of CBMAs’ judges here. https://craftbeermarketingawards.com/judges-panel/

  The awards accept entrants in 30 categories, ranging from “Best Logo Design,” “Best Packaging Design” and “Best Can Design” to “Best Website Design,” “Best Merchandise Design,” and “Best Use of Social Media.” Both “Best Packaging Design” and “Best Can Design” feature “People’s Choice” sub-categories that will be voted on by fans.

Some of the Award Categories are:

•    “Best Can Design”

•    “Best Tap Handle Design”

•    “Best Original Video”

•    “Best Merchandise Design”

•    “Best Use of Social Media”

•    “Best Website Design”

•    “Beer Marketing Wild Cards”

  Entry is open to anyone involved in marketing within the brewing industry. To see the full list of categories, click here. https://craftbeermarketingawards.com/categories/

  “We have numerous entries in all 30 categories,” DiBella added. “This marks the beginning of what will become a long tradition of prestigious recognition and merit for brewery marketing.”

  The CBMA “Crushie” trophies were designed and manufactured by the same NYC designer awards firm that created the prestigious Emmy Award and MTV’s “Man on the Moon” statue. The Crushie Award is sculptured to depict a heavily tattooed arm crushing a beer can to symbolically represent how breweries are “crushing it” with their unique and creative beer marketing and branding.

  The Platinum Crushie is the CBMAs’ most prestigious nomination for entries demonstrating marketing and branding excellence that exceeds the defined category objectives by using strategy, creativity, and overall innovation. Only one entry – with the highest achieved ranking from each category – will receive Platinum.

  The Gold Crushie is for entries that meet or exceed the defined category objectives by using strategy, creativity, and innovative production techniques to achieve a higher level of perceived uniqueness. The CBMAs’ will award up to five Gold Crushie Awards per category.

  The “People’s Choice” Black Crushie is the most elusive of all the awards, because the CBMAs only award up to a total of five of these. Unlike Platinum and Gold, the “People’s Choice” Crushie isn’t totally reliant on the judges’ panel. Once the judging process is complete, top-ranking entries who entered the “People’s Choice” Category have an additional showdown with a public-judging panel that uses social polling to choose the final winners.

  The Crushies’ major sponsor is Hillebrand, the Germany-based freight logistics company that has a large presence in the beer, wine and spirits business. “More than ever, breweries recognize the need to prioritize their marketing strategies,” Hans added, calling the CBMAs: “…a truly unique and important event for the craft-beer industry.”

  Critical to the continued success and growth of the CBMAs’ program is the generosity and support of their sponsors and partners. The CBMAs invites you to consider supporting these great businesses:

•   Hillebrand

•   Beveraage Master Magazine

•   EGC Group

•   Brewery Branding

•   Pro Brewer

•   Don’t Panic Projects

•   KSidrane

•   DKNG

•   Hankscraft AJS Tap Handles

•   DWS Printing

•   Society Awards

•   MMX

•   Lauterbach Craft Brew Labels

•   Red Vault Productions

•   The Beer Connoisseur

  McCune and DiBella enjoyed representing the CBMAs as podcast guests on “Beer Busters,” “Tap That AZ,” “Beer-Fit–Life,” “AG Craft Beer Cast,” “Beer N Goodz,” and “Craft Beer Storm.”

CBMAs Update:

  The last couple months have brought about changes, fear, and uncertainty – especially within our beloved craft beer industry. We understand this is no time to celebrate. The Craft Beer Marketing Awards want to make sure those in our industry most affected by the COVID-19 pandemic have the opportunity to focus on their business and the comeback from this.

  Making our peers the priority, the CBMAs have decided to extend the judging window by one month to Monday, May 11. Crushie Award winners will now officially be announced on Tuesday, June 16 through industry media and our social channels.

  We hope that the decision to delay the announcement allows us all to look forward to brighter days. We are rooting for you all and can’t wait to cheer when this is behind us.

  Individuals involved in the production and/or creation of winning works can purchase their personalized trophies in our CBMAs’ Award Shop, which will launch right after the winners are announced in June. Winners will be notified by email of their win, along with further instructions.

Stay safe, stay healthy, and stay positive.

For more information, visit craftbeermarketingawards.com or email: info@craftbeermarketingawards.com

  Jim McCune is director of the Craft Beverage Division of Melville-based EGC Group. Reach him at jimm@egcgroup.com or 516.935.4944

Craft Malt in the Brewery

Cyndi

By: Erik Myers

Bearded brewer in apron holds bag of malt at brewery factor

Recently, the Craft Maltsters Guild – the non-profit association dedicated to promoting the manufacturers it defines as “craft maltsters” – announced The Craft Malt Certified Seal, a new initiative to promote the use of craft malt by breweries. In order to qualify, a beer or spirit must contain at least 10% of its grist, by weight, of malt sourced from one of the Craft Maltsters Guild’s members.

  A craft maltster is defined as a maltster that is independently owned, that produces between five and 10,000 metric tons of malt per year, and that uses grain grown within a 500-mile radius of the malt house for at least half of their grain supply.

The Difficulties of Using Craft Malt

  Craft malt is an industry that is still very much in its infancy. There are very few craft maltsters that have been around for more than a few years, and even those that have been in business for a decade or more are only recently seeing healthy and sustained growth on the wave of a beer industry that favors local goods as a strong marketing standpoint.

  Craft maltster startups have many of the same issues as small brewery startups: Capital intensive equipment, a production process that requires a varied technical background, and a competitive marketplace that’s dominated by a few, large, international players. Craft maltsters have an added layer of complexity of – in many cases – having to educate their suppliers in how to make the products that they need to operate.

  The end result can be, at the worst of times, an inconsistent product: variations in color, moisture content, diastatic power, protein or sugar content, uneven kernel sizes, or inconsistent flavor characteristics, all of which can cause difficulties for a brewery that is engaged in making a consistent product from batch to batch.

  Like any brewery moving through its startup phase into an experienced, scaled production facility, most craft maltsters have grown past these initial challenges to create an even, predictable, product, but the occasional problem may still arise – particularly with an untested supplier or process.

  Other difficulties working with craft maltsters can come from simple supply chain issues. Smaller suppliers with longer lead times and limited on-hand inventory can be challenging to predict when managing a small brewery that is, itself, running a just-in-time inventory process. One hiccup in that supply chain can affect weeks worth of brewing.

  Finally, it’s difficult to ignore that all of the above also comes at a higher price point. While malt from international maltsters can run as low as $0.40/lb before bulk discounts, it’s rare to see a small maltster with the scale available to get a price point anywhere near that, and most are at least double. Those craft maltsters, themselves, are paying an elevated rate for grain from small suppliers who are dedicating a small portion of their farms to malting barley. They do not have the advantage of a scaled, international supply chain for cost benefit to pass along to a brewery customer.

  Using a local craft maltster can often mean paying a premium for a product with uneven consistency and unpredictable supply.

The Advantages of Using Craft Malt

  For all that, there are definite advantages to having a relationship with your local small malt house. 

  Working with a local maltster gives a brewer a whole new palette of flavors and ingredients to work with. In an industry where 7000+ players all use the same basic inputs, a local maltster is an avenue toward differentiation: Each grain does have its own “terroir” that follows through into the end beer, providing a very distinct taste of place. Maltsters that have roasters might offer a lighter or darker Lovibond roast of chocolate, caramel, or Munich-style malts than might be available at a commodity maltster. It allows a brewer that many more variations on ingredients that they can use to create a more distinct array of beers to help differentiate themselves in a crowded market.

  While there may be times that a local maltster can’t deliver as fast as a larger supplier could, they can also be the source of last minute saves and emergency help. Short a couple of bags of base malt on the last brew of the day? Being able to drive over to your local malt house to pick up 150 lbs of grain is a distinct advantage that can definitely save you in a pinch.

  Local maltsters also have – like small breweries – the ability to make weird stuff without taking an enormous financial risk. The capability to malt ancient, heirloom, or alternate grains like triticale, spelt, buckwheat, or corn, sometimes in incredibly small batches, can lead to truly innovative brews that would be otherwise unavailable from larger maltsters.

  From an environmental and sustainability standpoint, it’s undeniable that using a local craft maltster creates a smaller carbon footprint for your operation. Instead of shipping a container across a country or across an ocean, most of that malt originates at a farm within a day’s drive and never really has to move that much farther away, meaning less fuel, lower emissions, less labor, and fewer aggregate resources than it would at a large scale malt house.

Finally, the vast majority of the money paid to that local maltster stays within the local economy in the form of wages as well as payments to their suppliers – local farms and local agriculture. It’s a way that a brewery’s dollars can make a significant and multi-industry impact on the local economy.

But Is It a Marketing Advantage?

  The most challenging part of using malt from a local maltster, however, isn’t ingredient consistency, how to use the ingredients, or any potential supply chain issues. It simply comes down to this:

How Well Can You Tell the Story?

  There is no barrier to entry for a brewery to use a local maltster aside from price. As long as a brewery is willing to pay the premium for the malt, they are an instant user and it behooves them to become an instant evangelist. The added price of malt comes with few immediate end-product advantages itself: A smaller carbon footprint and better support of the local economy isn’t reflected in the taste of the beer, in a better bottom line, or any sort of cost-driven advantage. It’s a marketing point.

  While working with a local maltster on a specific new roast or grain might lead to new recipes, without something truly distinct showing up in the glass, telling the story of local malt is a difficult one because drinking customers, in large, don’t really know what malting is. It falls on the brewery to educate the end consumer as to what a local maltster really is, and how using one positively impacts the environment and the local economy. It also lies on the brewery to show their customer the value of the added cost that local malt brings to beer.

Craft Malt Certified

  Enter the seal of approval: Craft Malt Certified. The seal, created by the Craft Maltsters Guild, is a tool to help breweries and distilleries tell that story to their customers. By creating a seal to go into packaging and the taproom, it creates a conversation piece for customers to engage with. What is craft malt? Why does it matter?

  The odd stumbling block is that rather than creating a freely-available graphic to help breweries raise craft malt’s profile, the Craft Maltsters Guild has put a price on the use of the seal, charging $150 per year to register as a faithful customer – yet another cost, albeit a small one, on top of the premium cost of using the malt in the first place.

  That is the hurdle that still needs to be cleared by craft maltsters and their end users: how to sell the story of increased cost to their customers in a way that makes them care enough to part with their money. Without the additional value proposition, the story of craft malt becomes muddled into the same gnarled discussion of what local means that the entire craft beer industry wrestles with: What does local really mean? How far away does something have to be to no longer be considered local? Is it your local neighborhood, your city, or your state? Is your beer still “local” if it uses malt from another country? What about hops? Will the customer pay a premium for “local” when it increases the cost of the end product to well above regional market norms?

  With the uncertain answers to these questions comes the unfortunate follow-up:

  Why does any but the most enlightened end-customer care?

  The craft malt industry is an exciting new development within the craft beer industry with reflections of what the craft beer industry itself went through 40 years ago. In a modern marketplace focused almost single-mindedly on hops as a key ingredient, it faces a bevy of challenges that it may only get through with the help of its most ardent customers.

Key Finance & Accounting Performance Indicators for Craft Breweries: What Data You Should Be Tracking and How to Leverage it for Success

Cyndi

By: Kelly Addink

Do you have real-time visibility into your financial information?  If so, are you confident you’re monitoring the right type of data to achieve your business goals?  We plan to explore these questions and more as we dive into the issues breweries often face when it comes to financial reporting. We will also take a look at industry best practices and technologies brewers are leveraging in order to spot opportunities, identify risks, set goals, measure progress and adjust their strategy.

Cash is King

  Every business, large or small, depends on cash. However, for many breweries, the focus tends to be more on sales growth than anything else. While sales growth is fundamental to your business, it is equally as important to monitor your cash flow.

  Cash flow is the movement and timing of money into, through and out of your business. In other words, it provides a clear picture of your company’s financial health. A cash flow projection estimates the timing and amounts of cash inflows and outflows over a specific period, usually one year.

  Let’s take a look at some high-level benefits of a cash flow projection:

•   Allows you to anticipate changes versus reacting to changes.

•   Encourages a collaborative working environment between operations personnel, management and owners.

•   Fosters “bigger picture” thinking.

•   Enables you to run different scenarios such as:

  • a.  Impact of cash collection practices and terms (when and how)
  • b.  Impact of accounts payable terms and discounts (when and how)
  • c.   Cash flow for an event
  • d.  Adding a new revenue source
  • e.  Leasing or building a new brewery or taproom
  • f.   Debt restructuring

•   Can ease the burden of sudden and significant changes.

  The first step to creating a cash flow projection is to define your approach and assumptions. For example, you may want to evaluate the financial impact of adding a new seasonal brew. A few key questions to ask are:

  How much will I expect my revenue and expenses to increase?

  Will I need to tap into my line of credit or find additional financing as I start up?

Next You Will Need To:

•    Obtain historical revenues, expenses and cash flow for last two to three years.

•    Develop a template to forecast one year into the future.

•    Review historical growth and forecast growth based on discussions with management.

•    Prepare a formal report outlining the significant assumptions and the forecast results.

  • a.   Key assumptions
  • b.   Increase operating revenue
  • c.   Increase operating expenses
  • d.   Capital additions: production or brewing equipment, delivery trucks
  • e.   Debt service / borrowings
  • f.    Cash reserves

    To make sure your projection stays accurate throughout the year, consider these variable expenses:

•    Months with three payrolls.

•    Months when insurance premiums are due.

•    Increased estimated taxes due to increased sales.

  A good rule of thumb is to designate an amount equal to 10% of revenues for “other expenses” under uses of cash — so you’ll have some cushion when unforeseen costs arise.

  To keep your projections on track, create a rolling 12-month plan that you update at the end of each month. If you add a new month to the end every time a month is completed, you’ll always have a long-term grasp of your business’s financial health. However, don’t try to project more than 12 months into the future or you’ll end up spending a lot of time trying to predict something with too many variables (prime rate could shoot up, sales could go down dramatically, etc.). 

Cash Flow Projection Example:

  After you define your assumptions and approaches and create your 12-month cash flow, you notice a net cash loss in the first half of the year as highlighted below (shown as 6 months).

projection example 2

  You decide the next step to minimizing your negative cash flow in the first half of the year is to evaluate the impact of producing a new seasonal brew as seen in the projection below:

projection example 2

  Using cash flow projections is a cyclical activity. As months pass, you can compare your monthly cash flow statements to your projections for each month and the numbers should be close. You can get away with a 5% variance but if you start to see large differences from month to month, you should revisit your key assumptions to check for flaws in your logic.

  Even if the actual numbers come in higher than your projections, you should take a close look at your assumptions, because higher returns in the short term could lead to shortfalls later on. For example, if you predict your Oktoberfest brew to have the greatest cash inflow during October and you start distributing it in September, you may run out of product by mid-October. You’ll need to adjust for these unexpected changes as you move forward month to month.

  Once you’ve gotten into the habit of using a cash flow projection, it should give you added control over your cash flow and a better understanding of your brewery’s financial position.

  Beyond cash flow, it is important to understand and consider all of your financials when determining your strategy and planning for the future of your brewery.

  By transforming your finance and accounting data into key performance indicators (KPIs), you become equipped to make intelligent, informed business decisions. Below are examples of relevant KPIs for craft brewers along with items to take into consideration during analysis.

1.  Revenue trends: monthly comparisons year over year and month over month, actual to budget comparisons, revenue by category and/or style, revenue by package type, etc.

  Are sales meeting expectations? Are any seasonal brands selling well enough to go year round? Are there any year round brands that could become seasonal? Are there brands that should be discontinued? Are certain package types selling more than others?

2.  Cost of Goods Sold (COGS)/gross margins: monthly comparisons in total, by brand, by category/style, by package type, actual to budget, etc. – report both in dollars and as a percentage of revenue.

  How are margins trending to expectations? Are there styles that are cost effective to produce with a higher perceived value in the market? Are costs increasing/decreasing due to raw material cost changes? Are there items that may need a price increase? Are there potential efficiencies that can help reduce costs in the brewing process? Should you brew larger batches for better yield? Are your COGS fully loaded with labor, overhead allocations, excise taxes, utilities, insurance, etc.?

3.  Distributor/customer performance: revenue, gross margin, rebate/discount tracking month to month by distributor/customer, actuals vs projections, etc.

  How is each distributor performing compared to projections? Are their margins sufficient to cover rebates, discounts, samples, shared mark-downs, etc.? Are certain geographical regions performing better than others? Where should your inside sales team focus their efforts? Consider additional reporting options that provide visibility of distributor sales to retailer including: on vs off premise sales, sell through turns, etc.

4.   Operating expenses: monthly comparisons year over year and month over month, actual to budget comparisons, etc. – report both in dollars and as a percentage of revenue.

  Investigate areas where expenses are increasing (either in total or as a percentage of sales). Identify areas where there are cost savings opportunities. Variable expenses should fluctuate with sales levels, including staffing costs.

5.   Tasting room and restaurant metrics: Revenues and margins tracked by month year over year, food cost as a percentage of food sales, staffing costs as a percentage of tasting room revenue, daily sales trends, etc.

  Evaluate seasonality trends to determine staffing needs and consider training time needed when hiring new staff for busy season. Monitor food costs to determine if menu price increases are needed. Assess daily sales trends for potential promotions on slower days of the week in order to increase business.

6.   Capacity/efficiency: Production volumes as a percentage of full capacity month over month, direct labor costs as a percentage of revenue, etc.

  Are you at capacity and losing orders? Is it time to increase capacity? Are you consistently under capacity? Possibly consider contract brewing or other ways to fill capacity. Evaluate labor costs to ensure efficient production staffing levels.

  So, now we know what type of data successful brewers are tracking but what technology is needed in order to access that data?

  Introducing new technology to any business is commonly viewed as complicated, timely and costly. However with the rapid expansion of cloud-based technology, there are now a number of applications tailored to meet the needs of small and midsized businesses in any industry.

  Most of us are familiar with the phrase “moving to the cloud” but, what does that really mean? In its most simple form, cloud computing is the use of a shared resource on the internet to store, manage and process data. Unlike the historical way of hosting a technology platform on your own server, cloud-based technology allows unique users to access the same software application from any device, anywhere, at any time. Information is easily updated and shared between team members without the need to manually input reports or be in the same physical location. Cloud applications are also being built with an open-interface approach which allows for more seamless integration amongst individual solutions.

  Business processes that are commonly handled in the cloud include:

•   Accounting and General Ledger Management- Such as: Sage Intacct, QuickBooks Online

•   Accounts Payable- Such as: Bill.com

•   Expense Management -Such as: Expensify, Nexonia

•   Inventory Management- Such as: Ekos, OrchastratedBEER

  How leveraging those tools can provide data-driven insights while saving you time and money:

Real-Time Data and Reporting:

  Because cloud-based technology can be accessed from anytime, anywhere, the data really is “at your fingertips”. This accessibility is becoming increasingly important as the competitive landscape continues to intensify in the craft beverage space. The ability to integrate your existing applications with multiple cloud solutions allows for a comprehensive view of your data (i.e. sales, operations and finance) and thus, enables you to make timely intelligent business decisions. Plus, you can use these tools to create tailored management dashboards with customized reporting capabilities – so you see what you want to see on a regular basis.

  Taking it one step further, the ability for craft brewers to access data in real time also makes that data more useful in identifying trends, comparing results to industry benchmarks, monitoring key performance indicators and, ultimately, being a better business partner to your distributors and retailers.

Automation and Scalability:

  Most growing craft breweries tend to run lean and have limited personnel resources. In these cases, leveraging innovative technology to streamline finance and accounting functions and reduce the need for manual processes can be very beneficial. For example, cloud-based accounting software typically automates processes by importing transaction data on a real-time basis. The cloud computing model empowers team members to collaborate and share information beyond traditional communication methods – allowing multiple facilities and/or taprooms to co-manage production, raw materials, packaging levels and distribution scheduling.

  Successful craft brewers are growing at an unprecedented rate and the ability to scale on an as-needed basis is one of the biggest advantages of cloud technology. Accelerated business growth typically leads to growing pains and missed opportunities resulting from the mismanagement of more data, infrastructure and customers. The right cloud solution will grow alongside your business to meet market demands and accommodate growth as technology shifts, revenues grow and your business needs evolve.

  Brewers face many challenges in an industry that is becoming less predictable with fewer loyal consumers. Staying a step ahead of your peers in this rapidly changing environment is critical to maintain a competitive advantage and realize long term success. Having real-time visibility into your cash flow, sales and operational data is a key part of that success. This will allow you to determine KPIs that align with your business goals and track them so you can plan for the future. Take advantage of the many cloud-based tools that can help you transform your data and streamline processes so you can get back to what really matters, running your brewery.

About the Author

  Kelly Addink is a Controller in Baker Tilly’s outsourced accounting practice. She has nearly 25 years of experience in providing financial accounting advisory services to companies in a variety of industries. Kelly also worked as a Controller at a craft brewery for more than 6 years. Today she combines her technical skills and industry expertise to deliver customized accounting, finance and operational assistance to Baker Tilly’s craft brewery clients.

CIDER: It’s Time is Now

Cyndi

By: Tracey L. Kelley

3 cocktails in glass
Photo credit: Kim Fetrow Photography

North American regional and local cider makers are throwing elbows at major corporate producers, trying to respond to consumers’—particularly those in the 18–24 demographic—demands for alternatives to mainstream products. This is good news for producers eager to tap into the young but evolving cider sector. Current market analyses indicate cider sales will dip slightly through 2022, but some experts report this is only because larger, national brands are losing footing as the craft ciders surge forward.

  Nevertheless, there are growing pains within this emerging product line, especially when there’s so much education necessary to help the public understand that cider:

1)  Isn’t beer or wine.

2)  Is just as complex as those beverages, with particular nuances and unique profiles.

  It’s an interesting challenge for a beverage that relies on a fruit with approximately 2,500 varieties in the United States alone. Apples are grown in all 50 states in America, and five of the 10 provinces in Canada. This means regional and local orchardists offer unlimited possibilities for crafters.

To share the knowledge that’s plentiful for wine, beer and spirits, but less so for cider, we reached out to the following experts:

Peter Glockner, co-owner, director, and brewing/filtration sales, Cellar-Tek. The company started in 2004 as a two-person operation in British Columbia, specializing in winery supplies. Now based in both British Columbia and Ontario, it also provides equipment and supplies for craft brewing, cideries and distilleries.

Bill and Michelle Larkin, co-owners, Arsenal Cider House, established in 2010 and headquartered in Pittsburg, Pennsylvania, with additional tap houses in Wexford and Finleyville, plus taps in rotation throughout Philadelphia. Another location in Cleveland, Ohio, is scheduled to open by the end of 2019. The Larkins produce hard apple cider, cider-style fruit, grape wines and mead. Flagship pours include Fighting Elleck Hard Apple Cider, Archibald’s Ado Hard Apple Cider, Picket Bone Dry Hard Apple Cider and Murray’s Mead, with various seasonal and one-off releases on tap at each location. Annual production is more than 50,000 gallons.

Molly Leadbetter, owner, Meriwether Cider Company, with two locations in Idaho: a taproom in Garden City and a cider house in Boise—the first in the state. Opening in 2016, Meriwether is owned and operated by the Leadbetter family: Molly, sister Kate, and parents Ann and Gig. Notable award-winning ciders include Foothills Semi-Dry, Strong Arm Semi-Sweet, Blackberry Boom, Ginger Root and Hop Shot, crafted with Citra hops. Annual production is approximately 30,000 gallons.

Michelle McGrath, executive director, United States Association of Cider Makers, based in Portland, Oregon. Its mission is to “grow a diverse and successful U.S. cider industry by providing valuable information, resources and services to our members and by advocating on their behalf.” The USACM also stages the popular CiderCon each year, which provides new and existing members opportunities for workshops, cider tours and networking.

Tie Information to Innovation

  The Larkins started Arsenal with $60,000 and zero working capital in the basement of their city row-house. Bill was an accountant, and Michelle, a pre-school teacher. His winemaking hobby expanded into a passion for cider and mead. “When we started in 2010, there wasn’t anyone doing what we wanted to do anywhere around us. We had to essentially make up things as we went and hope for the best,” Larkin said. “This is why I always tell new people in the Pittsburgh industry to feel free to reach out to me if they have a question.”

  The Leadbetter family, after years in other professions, chose to band together and open a cider house. “My sister, my dad and I all took cider-making classes at Washington State University’s extension program, and Mom took a business of cider class. And webinar-based classes on our specific areas inside the business,” Leadbetter told Beverage Master Magazine. “We also attended the USACM’s CiderCon the years before and after we opened, which was incredibly helpful, and I recommend to everyone!” They launched Meriwether with a Kickstarter campaign.

  McGrath said the USACM strives to provide as much insight as possible. “Our Certified Cider Professional program educates distributors and retailers about cider, but cider makers may gain tools for conversations with those audiences as well,” she said. “We also have marketing resources our members can use to educate their accounts about cider. Lastly, our recently-refreshed cider lexicon project aims to curate a language for talking to customers about cider. Having the same talking points is good for any campaign—including spreading the cider gospel.”

  Refining cider lexicon is one way to lessen the gap between what consumers currently understand about cider and how makers want to communicate flavor profiles and other characteristics. For example, the USACM suggests “focusing on the accepted scientific classifications of apples: sweet, sharp, bittersweet and bittersharp.” There are also grouping categories so consumers can more easily select what taste appeals to them and have confidence in that choice. So the USACM considers input from producers to create classifications that might include something like:

•   Does it taste dry or sweet?

•   Is it tart? Spicy? Sour? Floral?

•   Is it fruit-forward or tannic?

•   Is it light-, medium- or full-bodied?

  This type of universal messaging helps all cider producers continue to create beverages people want. “Don’t make products for yourself unless you’re planning to buy them all, or you are a social media star influencer,” Glockner said. “Know your market and cater production to the customer base(s) you’ve researched and proven will trade their hard-earned money for your product.”

  Progressive success depends on customer relationships—it’s not a cliché when it’s true. “We have a gold standard of treatment for all of our customers whether they’re tasting room visitors or on-premises licensees,” Larkin said. “Everyone in our company in retail, sales and distribution know the customer is always right and that we’ll bend over backward to make them happy. I can’t overstate the importance of this.”

  “We have four core values: family, integrity, generosity and fun. We don’t make any company decisions unless they fit into this framework,” Leadbetter said. “We run a business we can be proud of, that strives to make our community better, our guests happy, and makes our and our employees’ professional and personal lives fulfilling. Working with nonprofits, connecting with the community, and educating people on cider are huge parts of doing all those things.”

  Arsenal Cider House partners with a local activity and tour provider that plans community excursions. Meriwether Cider Company’s approach includes integrative actions such as Purposeful Pours, a quarterly event that raises money for different nonprofits in its community, and Cider Crews, a tiered club program to encourage a dedicated clientele.

Mind Your Business

  The foundational practicalities of your start-up are often a mashup of reality and possibility. So start with the right advice.

  “We always advise an in-person consultation with one of our cider equipment sales gurus to ensure that our potential customers are correctly assessing their equipment choices using the correct data and math,” Glockner said. “We also try to get them to think ahead, so they don’t face having to upgrade their equipment two-or-three years after opening because they didn’t plan for growth. He stressed the need for reinforced vision. “Production plans and projections need to be backed up with solid sales plans and projections. Otherwise, you’ll have an expensive hobby, not a business.”

  He also pointed out there’s no “right” way for cideries to choose equipment. “’Right’ could mean the equipment fits their budget, or it could mean it matches the processing rates they need to achieve for the total volume fruit they harvest. Assuming that matching equipment sizes to the customer’s projected harvest numbers and product plans is the ‘right’ equipment, doing so can minimize the required time to process a given volume of fruit—typically expressed in kilograms per hour of fruit processed,” Glockner said.

  “If one producer is doing multiple small-batch productions of different styles or varietals, their equipment and tank size choices will be smaller than another producer looking to make large volumes of one or two,” he said. “The latter would benefit from equipment with higher throughputs and larger tanks to process bigger batches for longer continuous periods of time. So getting the ‘right’ equipment is all about creating operational efficiencies for the type of production the customer wants to do.”

Here are some additional tips from Cellar-Tek’s Co-owner:

1)  Most equipment for the cider industry isn’t produced in North America, so expect a supplier of specialized processing equipment containing electrical components to have the equipment UL- or CSA-inspected and approved when it lands in North America.

2)  Also, expect to have the supplier set up an appointment at your production facility to start the equipment and provide basic operations training along with any applicable maintenance and safety advice. This tutorial might not be necessary for “basic on/off equipment,” such as manually-fed fruit mills, pumps, or manual gravity fillers.

3)  If you can find used equipment in relatively good condition and see it working before purchase, it may save you capital during the start-up phase of development. However, lack of warranties and local factory support from a supplier makes it a difficult decision when your equipment breaks down in the middle of harvest, and there’s no technical support in the area to repair it quickly. The cost of lost production, spare parts and labor to repair a broken machine can easily surpass the price of a similar piece of new equipment.

4)  If you don’t have experience with fermentation, hire a pro to do it for you, or at least a reputable consultant with a list of references who can teach you the many ins and outs of a successful fermentation. “The pitfalls of fermentation are many,” Glockner said.

  Our experts all recommended allowing an ample amount of time and patience to make it through multiple layers of bureaucracy to establish your cidery. “Cider regulations are incredibly complicated,” McGrath said. “Anybody thinking to jump into the market should take some time to understand how they differ from wine, beer and spirits.” The USACM intends to provide more checklists to help answer producers’ questions, but consult your regional association for more specifics.

  Larkin added, “Many people think the biggest hurdle is getting the liquor license, but it goes way beyond that. There are zoning and building codes, county and state health requirements, general business licensing, taxes etc….To be in any business, you have to be determined and not let anything get in your way. You need to be a jack of all trades. There’s a solution to almost any problem—you just have to keep on it. You’ll get through it.”

  Leadbetter also pointed to the need for fluidity in your business approach. “We still have our original lineup of year-round flagships, but we added many seasonals, one-offs, barrel-aged and small batches to the mix every year—much more than I thought we would,” she said. “And we never envisioned having a second Meriwether retail location when we started. Truthfully, at the time, we were barely two years old and not ready to expand. But we felt an urgency because downtown Boise was in the midst of a renaissance with new businesses and bars, and we lucked into the perfect space. We might have balked and given up if not for that.”

  Larkin said, “If an opportunity seems like a good one and we can afford it, we do it.” This approach applies to both Arsenal’s stair-stepped location expansion and shifting model.

  “When we first opened, we planned to sell half our inventory by refillable growler and the other half by bottle conditioning in Champagne bottles. We sold through the initial inventory so fast, we never had the opportunity to do any type of packaging, and we’ve just been trying to keep up all these years,” he said. “We finally started canning one product and bottling a mead product for the first time after eight years in 2019. We now have the capacity to expand our product offerings and plan to do so in 2020.  It only took 10 years to get to it!” 

  McGrath told Beverage Master Magazine that “there are certain pockets of the cider market managing to make apple-forward ciders cool. That’s always been a challenge, especially in today’s craft beer culture. It’s controversial, but I think putting these types of ciders in cans is part of what’s helping drive that. It makes a complex, nuanced beverage more approachable.”

  She added that it’s important to “figure out how to incorporate educating consumers about apples into your marketing and branding. Apples are what this industry is all about. We can celebrate a diverse range of products and styles, but when consumers catch on to the variation an apple variety (and season) can provide, it will be good for cider makers and orchardists alike.”

Expanding the Industry

  All of our experts are excited to contribute to the reawakening of this pioneer beverage. Here are some final thoughts they believe about cider’s potential.

  Cellar-Tek’s Glockner: “By far the most exciting trend is the growing global acceptance of locally-made craft beverages—be it cider, wine, beer or spirits—by the sectors of the general public that used to gravitate to the large, corporate-produced beverages.”

  Larkin of Arsenal Cider House: “High-quality products aren’t optional. It’s not just important for your business, but the business segment as a whole, especially in one as young as mead and cider. This philosophy extends to how we source our ingredients, as well. If care isn’t taken with raw materials, we can tell.”

  Leadbetter of Meriwether Cider Company: “After creating a good product, our main mission is to create what Danny Meyers (restauranteur and CEO of Union Square Hospitality Group in New York City) calls ‘enlightened hospitality’: ‘treat your employees well, and they will take care of your customers.’”

  McGrath of the United States Association of Cider Makers: “Most people who love cider also love food, and the consumer knowledge that cider pairs really well with food is increasing. Regional cuisine cider-pairings, geographical cider cultures, a focus on locally-celebrated apples (like Gravenstein for Sonoma County in California)—these things all make it a really fun time to create cider right now.”

Post-Harvest on the Hop Farm: Jobs Change, But Work Continues

Cyndi

By: Gerald Dlubala

rows of fence in a farm

After all the time and energy spent on vine training, pest-free growth and meticulous care that hop farmers put into raising the best possible crop, the harvest can feel like a whirlwind that’s over in a flash. Depending on the types of hops grown and the climate in which they are farmed, hop harvest can run anywhere from early August to late September. But the actual timeframe to get hops picked during peak ripeness and quality is a short, week to 10-day span.

  Hop ripeness and quality are directly related to the moisture content and alpha acid levels of the hop cones. Hops too high in moisture aren’t considered at peak alpha acid content. Hops harvested too late can degrade quickly in storage, be more susceptible to oxidation, and become more vulnerable to disease and pest contamination. Timing is everything, and sampling is critical to make sure hops are at peak ripeness.

  “It’s not that you can’t harvest and get good hops after that peak ripening period,” said Sean Trowbridge, co-owner of Top Hops Farm, LLC in Goodrich, Michigan. “It’s just that after peak ripening, the hop integrity comes into question and can result in product shatter during the picking process. Then you’re talking about the potential of considerable product loss.”

  Even when the harvest is completed, there’s little time to relax. When not evaluating the year in general, focus switches to working on sales and starting the farm tasks involving post-harvest sanitation, soil care, weed eradication and addressing any pest and disease issues that need attention. Since hops aren’t generally considered a pick and pack crop, there are several drying techniques to bring the moisture down so they can be stored safely without damaging the qualities that they bring to craft beer.

  “Immediately after harvest, it’s drying and baling time for the hops,” said Trowbridge. “Then we move 100% of the harvest to our pelletizers to have a fresh crop of current year hop pellets for the breweries.”

Fall is Spent on Cleaning and Maintenance

  “Cleaning, repairing and readying our equipment for next year is usually done in the fall. Just by their nature, hop cones can be pretty sticky, so after harvest, our equipment and work areas can get gummed up just with all of the contact with the hops,” said Trowbridge. “We take the time right after harvest to thoroughly clean the pickers, conveyors, belts, totes, wagons and anything else that gets used during harvest. Equipment like sprayers, whether boom or air blast type, need to be winterized. You know, it’s initially just a lot of manual work, cleaning and maintaining our equipment and getting our barns ready now for the next growing season.”

  Trowbridge told Beverage Master Magazine that after the equipment and buildings have been taken care of, late fall is generally spent in the hop fields on end-of-season responsibilities and plant management issues. Hopyard sanitation and cleanup is a critical function to get done right after harvest because it decreases the chances of disease and deters pest infestation for the next growing season. This also includes some type of weed suppression, usually by laying down a pre-emergent herbicide. 

  “As far as our hop yards here, we let our vines go into dormancy and apply a pre-emergent in spring. There’s no specific reason for that other than it seems to work better for us, and just like in farming in general, each farmer has his way of doing things that may not be the norm but have shown success in the past,” he said. “You still have to monitor moisture levels, because even after harvest, the hop vines need moisture for optimum winter survival. But once temperatures dictate action, we have to blow out our suspended drip lines and irrigation systems to prevent freezing and damage. Fall is the best time to get soil samples analyzed for pH to see what’s left in the soil and what needs to be replenished. Hops thrive in soil with a pH between 6.2 and 6.5, so fall is the time to make corrections if needed. Liming is common, but takes time to become widely incorporated into the soil.”

  Hop scrap can be a subject of contention. Some farmers take the hop scrap and compost it for use elsewhere. Others return the composted scrap right back onto the fields, while others take the scrap that’s not composted and spread it onto the fields. Every farmer has their opinion on the matter. The decision on what to do with the hop scrap is largely based on its condition. Were the hop vines healthy? Were there any signs of downy mildew or other diseases that can overwinter in clippings and on the ground?

  “Late fall is also when we switch our tractor to a mowing head and weed badger to cut all the remaining parts of the hop vines down. There’s usually about 1½ feet left of the vines after harvest, so we cut them and leave them be,” said Trowbridge. “Then, in spring, we go back over the rows with a brush head to remove all of the debris off of the plants and leave only clean rows for new growth. We won’t typically tear out or replace any vines that are healthy and productive. Good healthy rootstock can last fifteen years easy.

Some of the European heritage farms may have fifty to a sixty-year-old rootstock. Sometimes after about ten years, the Western-based hop farms will replace a portion of their hops with a more vigorous growing stock or different variety, but it’s not common. We’ve only done it once, and that was based purely on economics, replacing a portion of very low-income generating hops with a higher income-generating variety.”

Winter Involves Building Relationships And Business

  Trowbridge told Beverage Master Magazine that winter activities differ depending on where the hop is grown. West Coast farms can just keep growing, putting their harvest into the hands of brokers while they get back to producing more. In Michigan, Trowbridge first focuses on wrapping up sales for any product that remains unsold. Much of the harvest might already be spoken for, but any unsold product will be made readily available for anyone interested.

  In addition to sales duties, Trowbridge said that winter is typically the time to refresh and renew business contacts and associations and try to get more exposure for his farm. He uses the winter months to attend any conferences or expos put on by hop farmers associations or by the Craft Brewer’s Guild. He especially likes those that allow him to set up a vendor tent or booth so he can personally get his hop farm more exposure, make new contacts, refresh older ones and reach potential customers on a personal basis.

Growing Organic: Norton’s Hop Farm

  On the other side of the hop growing spectrum, smaller, organic hop farms have a different view of the post-harvest season.

  Don and Tina Norton maintain and operate Norton’s Hop Farms in Springfield, Oregon. Since 2008, they have grown Cascade and Nugget varietals on their family-run, certified organic hop farm. Because they’re organic growers, their post-harvest routine is a little different than others.

  “Well, we obviously don’t have to spend the time applying the herbicides or pre-emergent weed killers,” said Don Norton. “Most of my days are spent doing a lot of grass cutting and weeding out in the fields. We don’t chemically treat for unwanted growth, so it has to be continually weeded and mowed. We get a lot of blackberry growth in this area in addition to the grass and weeds, so it all has to be kept up with regularity. I do get basic soil testing done to see if we need to add lime and adjust pH levels in our fields. We don’t fertilize until just before we expect the new growth to appear, and that can happen in early January.”

  In between weeding and cutting, Norton spends time in the off-season on equipment maintenance as well as checking and winterizing his water and irrigation lines. He doesn’t have the same sales and marketing push that some larger volume farmers do because one of the benefits of being a smaller volume, organic farm, is that his product is generally sought after and already spoken for by regular customers.

  “We’ve sold to our local craft breweries in the past, but as of late, our harvest is sold to a locally well-known organic herb company—Mountain Rose Herbs in Eugene, Oregon. They need the whole flower of the hop, so we supply that to them. There’s also an emerging market for our hop cuttings and vines for use in-store or in other decorative displays, and also by local florists that like to use them in their creations.”

  “One thing that makes us different than a regular hop farm is that we don’t plant any cover crops or use any mulches in between rows,” said Norton. “Instead, we lay a ground cloth with holes cut out over the growing area for our hop plants to grow through. Doing it this way helps keep our weeds and grasses to a manageable level so we can remain organic.”

Kombucha with a Kick

Cyndi

By: Nan McCreary

Artisanal cheese for sale at artisan market in Ile rousse

Hard Kombucha is one of the latest drinks to make a splash in the “better-for-you” alcoholic beverage market. But what is hard kombucha, you ask? Wait, what is kombucha?

  Kombucha traces its roots to China’s Qin Dynasty (221 BC), where it was known as the “The Tea of Immortality” for its medicinal properties. The drink is made by mixing sweetened black or green tea with a symbiotic culture of bacteria and yeast called SCOBY and allowing it to ferment. The result is a tart and sour, lightly-carbonated drink that’s naturally gluten-free, low in sugar and chocked full of probiotics. With health-conscious millennials driving today’s beverage industry, it’s no wonder that kombucha is experiencing a revival, and is one of the fastest-growing beverages on the market today.

  Kombucha first went mainstream in the U.S. in 1995 when GT Dave, the man behind GT’s Kombucha, established the first and largest kombucha brand in the industry. Promotion for the drink touted the health benefits of both tea and probiotics, and sales immediately exploded in supermarkets throughout the country.

With an ABV of less than 0.5%, kombucha could be sold legally as an alcohol-free beverage. In 2010, however, a Department of Agriculture inspector discovered a kombucha at a Maine Whole Foods that contained alcohol levels well above 0.5%. It was pulled off the shelves nationwide, and producers were left with three options: keep their kombuchas under 0.5% and follow strict labeling laws, sell them in the beer section at their current ABV, or create an intentionally higher ABV beverage. For those who chose the latter — a “hard” kombucha — the crisis presented a golden opportunity. The low-alcohol beverage with a healthy dose of probiotics caught on quickly, and in just a few short years, became the hot new kid on the beverage-industry block. According to Nielsen, sales of hard kombucha spiked 247% in the 52 weeks leading up to April 20, 2019.

  One of the first to create high-alcohol kombucha was Dr. Hops, based in San Francisco. “I was working in Berkley with the fitness and yoga community, and craft beer was exploding and doing amazing things,” said CEO and founder Joshua Rood. “Non-alcoholic kombucha was also growing rapidly. I’ve always been a food and beverage guy. When I saw this happening, I realized you could make a high-alcohol kombucha that would be authentic to both categories, offering the benefits from the health properties of straight kombucha, and the flavor, complexity and pleasure of a really good craft beer.”

  With only one hard kombucha on the market at the time—Unity Vibration in Ypsilanti, Michigan—Rood approached a brewer who was making both beer and kombucha and asked him to make a prototype that offered the best of both beverage worlds. “The prototype was awesome,” he said.  “At the same time, my wife had an adorable rabbit named Dr. Hops, and I thought, ‘what a perfect name for a health-conscious kombucha that’s all hopped up.’ So that’s why we named our product Dr. Hops.”

  While Rood was developing his product in 2016, another hard kombucha hit the market: Boochcraft, California’s first high-alcohol kombucha, and today’s market leader in sales.

  To make hard kombucha, producers start with a mixture of sugar, tea and water. For his base, Rood selects the highest organic quality and fair trade tea he can obtain. Next, he adds SCOBY—a combination of bacteria and yeast that he’s developed in-house—and adds it to the tea mixture. The concoction ferments for a week, allowing the SCOBY to work and make kombucha what it is: a probiotic, sour and flavorful drink. To raise the alcohol level beyond the 0.5% from the initial fermentation, Rood adds a Belgian Ale yeast that creates a slight beer quality and lets that mixture ferment for another week. This step raises the alcohol level to 0.7 to 1%.  Finally, after the second fermentation is complete, Rood adds hops, fruit, herbs or spices and “lets it rest” to let the flavors develop. 

“This is a very mellow waiting period,” Rood told Beverage Master Magazine. “We gently stir the mixture and let the particulate matter sink to the bottom. Then we add a bit of sugar, which gives the kombucha a touch of sweetness, and finally, we package it.”

  Dr. Hops makes four standard products: the IPK, similar to a juicy IPA; the Lop, a tart, refreshing pomegranate chai with prominent grapefruit notes; the Jackalope, with prominent ginger, lime and mint flavors; and the Blinky, with hints of basil and lemongrass. All are dry-hopped with hops sourced from the Pacific Northwest. Sugars vary from 4-6%, and ABV runs from 5-9%. Flavors come from fresh, organic fruits rather than flavoring compounds.

  In terms of legal classification, hard kombucha is typically classified as a beer rather than a wine product. The Dr. Hops production facility is similar to a brewery, with stainless steel tanks and temperature, pressure and oxygen controls. To produce optimum results, brewers have to be very meticulous, Rood explained. “The process goes through many different phases, and each phase has the potential to create benefits as well as off-flavors. It’s really an art. We have to check fermentation constantly, as it’s a living process and not an exact formula, although we’re getting pretty good at it.”

  Ultimately, Rood’s goal is to create a product that is “good for your belly” and “good for your buzz.”  Hard kombuchas have less sugar than anything in the alcohol world, he said, except for pure vodka. “As Americans, sugar is one of the worst things we consume, so we keep ours as low as possible.”

  Rood also uses a kombucha strain that’s rich with alcohol-resistant lactobacillus, a health-enhancing probiotic. Because Dr. Hops’ products are unfiltered and unpasteurized (heating from pasteurization destroys enzymes, organics and flavors), the probiotics stay in the beverage, helping the body process not just food, but also alcohol. Another health benefit: Dr. Hops uses only organic fruits, roots and herbs, which provide additional nutrients.

  “Essentially, we’re trying to eliminate the junk people put in their bodies while drinking alcohol,” Rood said. “When you take all of our ingredients together, you have a beverage that’s remarkably distinct and much healthier.”

  As more and more health-conscious imbibers turn to beer/kombucha blends, Dr. Hops is enjoying great success. Currently, the company produces 1,000 barrels a year, with plans to triple—or even quadruple—production within the next year.  Right now, they package their kombucha in bottles, but Rood intends to switch to cans soon. Dr. Hops is available in liquor stores and independent food stores and markets in Northern California and is on tap in several bars in the Oakland, California area. Rood’s goal is to increase distribution to the western third of the country and Florida. 

  “Sales have been amazing,” he said.  “It’s something people want, but most don’t know it until they discover it, and then they get very excited about it.”

  Within the past couple of years, many up-and-coming hard kombucha brands have emerged within the growing industry, including Flying Embers, KYLA, JuneShine and Lambrucha. Established kombucha producers are also getting in on the action. Wild Tonic, originally a regular kombucha brand, created two hard kombucha products: one with 5.6% ABV and one with 7.6% ABV. Kombrewcha, one of the country’s pioneering hard kombucha brands, received backing from AB InBev’s investment arm, ZX Ventures, to produce a new line of hard kombuchas.

  It’s not only AB InBev getting in on the action, however. Craft breweries have also extended their product portfolio to include hard kombucha. For example, New Holland Brewing, a Holland, Michigan craft beer brand that’s been around for over 20 years, now produces a seasonal offering that combines the flavors of an IPA with Kombucha. Boston Beer, maker of Samuel Adams, recently launched Tura Hard Kombucha. And Deschutes Brewery in Bend, Oregon collaborated with Humm Kombucha to create Humm Zinger, “a beer that blends together Humm’s tangy grapefruit kombucha with Cascade hops and Pilsner malt for big citrus flavor with a profound dry hop character.”

  Clearly, hard kombucha is hitting the mainstream. After all, what’s not to like? It’s all-natural, gluten-free, organic and vegan, low in sugar and calories yet contains enough alcohol to be fun. As part of the low-alcohol trend, which includes hard seltzers, hard ciders and low-alcohol spirits, hard kombucha has a lot of opportunities to grow. If you think you might be one of those who want it but don’t know it yet, hustle off to your favorite vegan restaurant, grocery or liquor store and check it out.

Assessing the Growth of Cider Apples in the Pacific Northwest

Cyndi

By: Becky Garrison

4 cider cans in a table

In 2016, the Northwest Cider Association received a specialty crop grant from the Oregon Department of Agriculture. This grant enabled them to launch a signifi-cant initiative encouraging farmers to plant cider apple trees in the Pacific North-west. The Northwest Cider Association chose to focus these planting efforts in Oregon in two areas: Willamette Valley and Hood River.

  While there has always been a small selection of heirloom cider apples available for small-batch releases, this initiative marks the first time post-prohibition that a sizable number of cider apples will be available to cider makers. Will these ap-ples bear fruit in the burgeoning cider market?

  Currently, there is no available national data on the breakdown of cider made with cider apples versus dessert apples. Michelle McGrath, Executive Director of the United States Association of Cider Makers, attributes this lack of statistics to the fact that the U.S. cider market consists primarily of many very small cideries. As such, their sales are not reflected in any of the scan-based data found in trade reports.

  Even though a majority of ciders available in grocery stores, bars and restaurants are made with dessert apples, a large percentage of the cideries in the U.S. uti-lize cider apples. In McGrath’s estimation, “Fifty percent of our paying members grow their own apples, and 50% of our paying members are using cider apples to make cider.”

  Furthermore, regional brands continue to absorb more of the cider market share, and these brands offer a greater variety of ciders to consumers. McGrath says that in 2012, regional brands represented about 8% of the cider retail market, a number that has risen to 34% today. Also, regional brands of cider sales have grown 16% in the last year, while national brands declined 9%. Because national brands represent more of the total market share, the net result is an overall de-cline of 2% in domestic retail cider sales in 2018. 

  At first glance, this appreciation for small regional craft ciders seems to indicate consumers will be interested in paying a premium for heirloom ciders made with cider apples. Crystie Kisler, co-founder of Finnriver Farm & Cidery, observes how the consumer’s palate has evolved since 2008 when she founded an 80-acre farm situated in Chimacum Valley, Washington.

  “We have appreciated seeing how the sensibilities and palate of folks in the cider-drinking community have evolved over the years,” Kisler says. “We get a lot of interest in our homegrown ‘estate’ ciders—featuring those traditional cider apple varieties with greater complexity—and enjoy seeing people discover the nuances and possibilities in cider fruit.”

  Kisler’s partner at Finnriver, Eric Jorgensen, says that the higher price point of cider made from cider apples does not appear to deter customers who travel to their tasting room. “I’d say that despite their higher price point, when we have them available, they are just as popular as our ciders made from dessert fruit. That preference runs the full range of consumers—we get a very broad spectrum of people coming to visit us.”

  According to Jorgensen, this consumer interest in cider apples can be attributed to several factors: flavor profiles that are nuanced, interesting and complex; gen-eral values around tradition and the rediscovery of these apple varieties; and in-terest in products made with ingredients farmed locally and on a smaller scale.

  From the cidermaker’s perspective, Andrew Byers, Head Cidermaker & Produc-tion Manager at Finnriver, says the advantage of producing cider apples is based in complexity. “Making cider from dessert fruit—be it antique varietals or more modern releases—is making cider from fruit that was conceptualized for a differ-ent purpose, such as eating a fresh apple, or saucing, or baking a pie. Cider fruit has been selected for the qualities they bring to the cider. Body, phenolics, aro-matics—all that cannot be found in a dessert-fruit-based ferment.”

  Byers describes how these apples can transport drinkers to another level. “[Cider apples] waltz you across the room with ease to a place of wonderment where you didn’t know ‘apples could do that.’ [They bring you to] that lovely platform of hav-ing your horizons broadened—a place to realize you just discovered a previously unknown potential. Cider fruit, each year, is an opportunity to waltz with the pub-lic and show them the best we can be.”

  Some logistical challenges are inherent in growing cider apples not necessarily found when producing dessert apples. Tim Larsen, owner and cidermaker at Snowdrift Cider Company in East Wenatchee, Washington, says, “These apples were never cultivated because they grew in an orchard so well, or because they yielded so many tons to an acre. They are grown because of their flavor and aroma. Furthermore, fermentation and aging of cider apples is a fair bit different than working with modern eating apples.” Larsen designed his new operation, Sunred Cider, to manage these challenges for cidermakers and streamline the process between growers and producers.

  Adding to the cost of producing cider fruit is the U.S. law prohibiting farmers from harvesting apples that fall to the ground. Hence, farmers cannot mechanically harvest these apples on a large scale, unlike in the U.K., where apples can be harvested after they’ve fallen off the trees.

  Larsen points to the need for consumer education. In his estimation, “most peo-ple see cider as a sort of holistic Mike’s Hard Lemonade.” He attributes this per-ception to the fact that most large scale cider operations are forced to rely on a very restricted supply of apple juice that, at its best, is pretty uninteresting. They spice up their product, adding flavorings, sweeteners and colors. “This is great if you want something that tastes like alcoholic watermelon juice with hibiscus or some other flavor combination, but it’s not great if you want to experience real cider,” he said.

  Ryal Schallenberger of Northwest Mobile Juicing says that cidermakers try to distance themselves from the apples when they are using bulk juice. “They make comments on their labels that are generic like ‘fresh northwest juice.’ Folks that are using traditional cider apples say so on their labels, for the most part.” This distinction may be apparent to cider connoisseurs; however, this differentiation does not seem to be conveyed to the general public.

  The question, though, is how many consumers crave “real cider” given the popu-larity of ciders made with added pineapple, hops, botanicals or spices? In 2018, apple cider without added fruits, spices or botanicals constituted 63% of national retail sales. Even though over half of all sales in 2018 were ciders made with ap-ples, the trend toward producing non-apple ciders appears to be on the rise. For example, Jeff Parrish, co-owner of Portland Cider Company, notes that consumer demand continues to increase for ciders made with pineapples, pears, and other non-apple fruit.

  In his analysis, Parrish does not view large-scale production of cider apples tak-ing off unless enough cider apples are grown and harvested to bring the cost down to the same price point as craft beer. Simply put, not enough consumers are willing to pay $10 to $12 for a bottle of cider made with premium Pacific Northwest cider apples to justify producing it on a large scale.

  Also, Jorgensen says the general cider distribution market trends towards cans, and thus towards higher production volumes. He’s not aware of anyone with ac-cess to enough “traditional” cider juice to be able to package and sell in large quantities, let alone at a price point comparable to the more contemporary ciders on the market.

  Emily Ritchie, Executive Director at Northwest Cider Association, acknowledges the difficulties faced by craft cideries like the Portland-based Cider Riot. They closed their doors in November 2019 as they found themselves unable to produce their award-winning heirloom ciders while also maintaining a viable cidery and pub. “Right now, it’s harder to keep a business open when you’re just using cider fruit, as your price points are higher,” Ritchie says.

  In assessing the future of cider apples, Parrish points to cider’s long history as a working man’s drink. “It’s never been seen as having a high intrinsic value, and will not be viewed by the mass market as having a high value similar to wine.” In his estimation, history has proven that cider apples will remain a niche market with a loyal following.

  Conversely, Ritchie compares the potential growth of Pacific Northwest cider ap-ples to the growth of the wine industry in Oregon over the last 30 years. Those who planted the first vineyards in Willamette Valley and other AVA’s began from a place where they had no name recognition into producing internationally re-nowned Pinot Noirs and other varietals.

  With the first harvest from these aforementioned cider trees slated for 2020, will cider apples join Pinot Noir grapes as a fruit that defines this region? Time and price point will tell.