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Archive for the ‘beer business’ Category

If you follow GA beer you have heard by now the Georgia Craft Brewers Guild reluctantly agreed to a deal with the Georgia Beer Wholesalers Association. The agreement was put together and heavily pushed by certain GA legislators. There are lots of opinions and statements out there so I figured I might as well chime in. What’s the deal with the deal?

In exchange for not bringing legislation this year to allow GA breweries to SELL a limited amount of beer direct to the consumer (something that is legal in 48 states!), production breweries in GA were given the right to do the following:

  • Once again sell brewery tours at variable prices based on the kind of beer offered. (Passed in 2015, GBWA later influenced DOR to take it away. Read this to understand how.)
  • Allow special events at breweries and distilleries.
  • Let brewers, distilleries and wholesalers use social media to alert the public about where to buy their products or advertise special events.
  • Allow third parties to sell tour tickets.
  • Let breweries and distilleries sell food on site

So overall for production breweries it’s a little bit of a win. Kind of. We get to do what we were supposed to already do and a couple of other things were added in like food and actually being able to tell our customers where to find our beer. You read that right. The old system would not allow us to mention a promotional event or a location that sold our beer because it was considered to be providing free advertising for a retailer in violation of the three-tier system.

For brewpubs in GA, it gains nothing. Brewpubs have been asking for years for the rights to sell a growler to go. (Heck, under GA’s wacky system a restaurant located beside a brewpub can sell that brewpub’s beer in a growler to go while the brewpub that made it can not. What kind of sense does that make?) So brewpubs gain nothing from this agreement and I argue that it can be considered a loss because the legislators knowing a “beer compromise” was reached may be unwilling to help brewpubs during this session.

So why did the Brewers Guild take the deal? The options were to introduce a bill that had NO chance of passing and lose the opportunity to get back some rights we had last year or not introduce the bill (did it being an election year have anything to do with this?) and get the ability to do the items listed above. To be clear, many in the Guild were opposed to any type of a deal. But there was really no choice.

Here is one behind the scenes look at what went on.

What are your thoughts?

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After reading about Ballast Point being acquired for $1 BILLION, I wondered, “Does Craft beer as we know it still exist?” My second thought was, “Should anyone even care?”

My answer to whether craft beer still exists? Hell yes, craft beer still exists. But not in the way everyone thinks. Craft Beer is not defined properly. Which is why several well known brewery owners around the country have recently said the term “craft beer” is becoming meaningless. Look at the comments Saint Arnold’s Brock Wagner made last month. Similar statements are happening daily and they are spot on.

Why the confusion? Because the American beer geek considers craft to be anything that is not AB or MillerCoors. Having good beer does not seem to matter. Being truly small and local doesn’t really matter. Just don’t be associated with the largest American brewers and you are craft. Easy-peasy. But recently, as more and more craft breweries are enjoying huge successes, some are choosing to join with the larger, non-craft brewers. So breweries like Goose Island, Blue Point, Elysian, 10 Barrel, Golden Road, and St Archer were craft one day and then POOF, the next day they are not. Even though these breweries are still the same people making the same beer with the same equipment in the same location.

But wait. It gets even more complicated. There are also many international brewers that are not AB or MillerCoors. So when companies like Boulevard and Firestone-Walker sell to Duvel Moortgat, when Founders sells a portion of equity to Mahou San Miguel, when Lagunitas sells a stake to Heineken, and when Ballast Point sells to Constellation Brands, are all these brewers still craft? Even though they are not associated with Bud/Miller/Coors? Again, it is still the same people making the same beer with the same equipment in the same location.

No wonder the term “craft beer” is losing its meaning. It’s a very loose definition to begin with. So how would the gospel according to John (Cochran) define craft beer? To me it’s about volume.

The Brewers Association defines a craft brewer as being small if they produce under six million barrels per year. For perspective, six million barrels is 1.9 billion bottles of beer!  A brewery can make 7.6 million bottles of beer per day and still be called craft? Seriously?

Here is my request of the Brewers Association. Let’s quit talking about craft beer and go back to encouraging everyone to support their local microbrewery. And let’s redefine microbrewery to mean up to 50,000 barrels per year. I say if craft is defined by being small then it should refer to those who are really small. The guys and gals who are still struggling to get from 500 barrels to 5,000 barrels. Or 10,000 barrels to 25,000 barrels. The ones who are not yet getting a paycheck and have their life savings and their homes at risk if anything goes wrong. The brewers who don’t know whether they can meet payroll, pay the power bill, or even if they will be open next month. These are the true craft brewers of today. The microbrewers.

And once you grow past 50,000 barrels like Terrapin is doing this year, then what? What about DogFish Head, Bells, Sweetwater, Harpoon, Sierra Nevada etc, etc. I could list 100+ more that are no longer microbrewers. And good for us. We have the battle scars and the memories of what it’s like to be on the front line of growing a new business. We used to be those guys. And we found a way to survive. Am I saying it is easy now? No, we are still busting our asses every day. More so than we used to in lots of ways. But guess what. We are no longer in the same business as the much smaller brewers. Sure we all make beer. But we don’t have to fight to get distributor’s attention any more. Now the distributors are calling us wanting to carry our beers. The retailers are finding space to fit our beers on the shelves. We know we will be in business next year. We are succeeding.  So does it really matter whether one or the other of us is still a craft brewer?

Should we care if the term “craft beer” still exists? Maybe/maybe not. Maybe it will all become beer. But no matter what it is called, here is what matters. Everyone should like the beer they are drinking and drink the beer they like. AND everyone should support the local brewery that is contributing to worthwhile causes in their community.

Personally I don’t really care whether Constellation Brands owns Ballast Point. There is a Sculpin in my fridge now and I will still drink it because I like Sculpin. But at the same time you can be damn sure I am going to buy beer from the local guys that are producing it here in town and are helping to raise funds for the local shelter. We do good by supporting good.

Is craft beer as a term still relevant to you? Let me know what you think.

Cheers, John

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Thought I would share a bit of beer insider press. It carries some industry jargon and viewpoint but I hope you will find it interesting. This article appeared in today’s Craft Business Daily. To Jenn Litz, thanks for the coverage; it’s much appreciated. Hope you do not mind my sharing. 😉

 

August 11, 2014

Deeper Home Roots Changing Terrapin’s Chain Business, Route to Market

Dear Client:

Growth of course has spurred changes for Georgia’s Terrapin, one of the premier hop-centric craft producers of the Southeast. They’re up 46% YTD, sales and marketing chief Dustin Watts recently shared. Much of that growth is coming from the seeming unending wellspring of their backyard: Atlanta, where they’re with United Distributors, is up 57%.

“In order for us to be great long-term, we gotta win the backyard,” said Dustin. “That starts in Athens,” their home-home market, where they are up 42% with Northeast Sales Distributing. That’s not on a small base: that market is at about 18% of their planned 47,000 barrel output for 2014.

It’s also making them reconsider their to-market plans in unopened territories. After some great openings with Premium in DC last November and New Orleans/Baton Rouge with Crescent Crown in January, they had plans to open Kentucky and Ohio, which they’re “still heavily pursuing.”

“By no means are we pumping the breaks” for the new markets, said Dustin. But they may readjust how they plant the seeds there. That could involve more phased, 4-6 month launches, instead of hitting entire states at once. “We don’t want to come into a market and just kinda blow it up real quick, with beer everywhere; we want a slow approach, draft approach first … in 2,3,5,10 years, there will be the opportunity to grow the root deeper.”

KROGER FIRSTS. Indeed, as breweries hit those high growth numbers in their backyards, they must not only prioritize markets but also channels. As Terrapin has grown the depth of their backyard roots, they’ve hit a first with their local chain business: With Recreation Ale, they’ve had the No. 1 craft can package in the Kroger Atlanta RNA for the last 26-, 13- and 4-week periods.

“Our company has never had a win like that. That’s a big deal, said Dustin. “And it’s a growing segment.”

But it’s a win they’ve been preparing for, having moved one of their regional sales managers into a chain director role at the year’s outset. They’ve since seen great growth in chain grocery and upper-end c-stores. That “definitely takes time, and building relationships,” said Dustin. But it also takes “understanding that arena, ’cause it’s definitely different. But we’ve seen a lot of great success. The Kroger company has definitely embraced a lot of what we’ve been doing, especially in the state of Georgia.”

Good news for Terrapin — but also a sign of the times, where chain stores will become increasingly competitive for the craft segment. We can’t tell you how many brewers — some even smaller than regional size — have told us they’re doubling down on chain this year.

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I had the recent privilege of speaking on a panel titled “Inspiring Local Careers: Sustainable Athens”. This was hosted by the University of Georgia Office of Sustainability.

Getting Ready to Speak about Sustainable Careers

Getting Ready to Speak about Sustainable Careers

It was great to see so many students interested in finding a career in the Sustainability field. Lots of great people on the panel as evidenced by the sign above.

During our section we talked about many of the ways the craft beer industry as a whole is paying more attention to sustainability issues. We discussed some things Terrapin is doing currently and projects that we hope to do as Terrapin grows larger. The presentation I gave was split into 4 parts. Terrapin as a toddler, teenager, young adult and responsible grownup.

 

 

 TERRAPIN AS A TODDLER

toddler

Terrapin as a toddler.

Terrapin begins! Classic City Brewfest in Athens, GA April 2002.

Terrapin begins! Classic City Brewfest in Athens, GA April 2002.

Terrapin as a toddler. Our focus was on staying in business from week to week. We contract brewed so we were able to do little on the Sustainability front.

 

 

 

 

 TERRAPIN AS AN EARLY TEENAGER

early teen

Terrapin as an early teenager. (Look, our body is changing!)

teen2

2008 Employee Picture. Most of the people here are interns. And no, we did not use child labor.

toddler3

First tanks coming to Athens in 2007.

Terrapin as an early teenager. We were still focused on surviving long term but at least we knew we would be around for the next year or two. We finally started brewing in our facility in Athens, GA. Concrete slabs from brewery construction were retrofitted into a stage rather than hauling it off to the landfill. Old shipping office in warehouse was turned into a bar in our new tour area. Spent grains went to local farmers, cardboard/glass/plastic were recycled. Money was continually raised for local charities and causes.

 

 

 

 TERRAPIN AS A YOUNG ADULT

young adult

Terrapin as a young adult.

young adult2

2013 Terrapin Team Picture.

youngadult3

Bigger tanks in place. The building is filling up.

Terrapin as a young adult. This is us now. Wide-eyed with wonder at the possibilities. Defined mission statement and values. Focus on Contributing to the Community, Being Friendly to the Environment, and Providing a Great Work Environment. Instituted 401k matching and profit sharing for employees. Many more events and fundraisers for charitable causes; $28k in Athens in 2013, even more when considering other communities. Reduced water usage on bottling line by 65%. Cut energy usage and raw ingredient consumption by 15+% through set up of new brewhouse. Goal of becoming 100k bbl brewery AND Great Place to Work by 2018.

 

 

 

 

 

 TERRAPIN AS A RESPONSIBLE GROWNUP

responsible grownup

Terrapin as a responsible grownup. We are starting to think about our long term future. And Sustainability is a big part of that.

Terrapin as a Responsible GrownUp. Not completely there yet but we see it coming. Looking into improving wastewater and solid waste treatment. Conversations about solar and CO2 recapture are starting to happen. Getting ready to have chats with local government about preserving water resources.

 

 

 

 

 

sierra nevada

Sierra Nevada in Chico, CA.

So who is our role model for when we grow up? Recognize this place? (Hint: Chico.)

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While I was out of the office all of last week with Spike, Dustin and Steve launching Terrapin in New Orleans and Baton Rouge (yeah that was a tough trip), Erin Appel wrote up a press release recapping 2013 and previewing 2014. Since I had actually already listed that as my next topic, this just became  a really easy blog post to complete.

So with no further adieu, here is what Terrapin did recently and where we are going next.

Cheers,

John

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Those of you in the corporate world or who run your own business are very familiar with this time of year. It’s about budgets and projections and performance to plan.  It’s about numbers and financials and meeting bank covenants. Those items might be interesting to financial gurus and CFOs, but what about our customers? What about the beer geeks? They don’t care if we hit plan or make our budget; they care that our beer is above reproach and that our brand remains authentic.

The Golden Circle - Simon Sinek

The Golden Circle – Simon Sinek

It is extremely easy this time of year to get caught up in the number crunching and analysis. But we need to remember this is not “why” we are in business.  It is merely “how” we continue in business. Our “why” is much stronger than that.  To understand what I am referring to you need to see Simon Sinek’s TED talk on “Start With Why”, I highly recommend it. “People don’t buy what you do, they buy why you do it.” (Lisa Jordan passed this tidbit on to me a couple of years ago. Big shout out to her for that.)

Simon’s video is a great reminder to keep centered on what’s important. Which is “WHY”.  I can easily tell you why Terrapin Beer Company is here. It’s our Mission Statement. (more…)

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