28 Sep 2010 @ 3:20 PM 

I am here to make a confession: I have a problem. I sometimes read the anonymous comments posted after news articles.

I know.. I know… I shouldn’t do it. I don’t know why I do. It’s like watching a train wreck.

Today, I was lucky enough to be quoted by Eric Burkett in an article over at Delish about the Budweiser National Happy Hour that’s going on this week. Despite the tone of the article, and the fact that I apparently take beer drinking “veddy, veddy seriously” (I honestly have no idea how to take that), I was pleased to see that he’s actually lending my opinion some credibility. So.. thanks, Eric! That was really cool.

And then, like an idiot, I read the comments.

Many are on the same side as me, which is nice to see. Of those that are not, there appears to be a prevalent feeling. Let me see if I can sum it up in my best anonymous internet commenter voice:

OMG I CAN”T BELEEVE UR ARGUING ABOUT FREE BEER!!11 A HUGE COPMANY IS GIVING U SOMETING FOR FREE AND UR COMPLANING! YOU MUST BE STUPID!! LOL11

Or, as one commenter put it, “But here are a couple of facts SMART %&*$#, MAN UP, its a free beer.”

And thus, I have a response, and because I just got back from the dentist, and I’m not a big fan of dentists and they always put me out of sorts, you get it with profanity.

(Mom, you can stop reading right here.)

Here is a fact, smart ass: You didn’t cite any facts.

Read the fucking article. Nobody’s complaining about free beer; we’re pointing out that this is a marketing gimmick from a company that spends more time and money on marketing than on flavor. A suffering brand can afford to give away millions of units for free. You know why? Because they’re making money hand over fist, and they’re making money from you. You don’t see it because you’re looking at quantity over quality. Sure! You can buy a 30-pack of Bud for the same price as a six-pack of some craft beers. So.. what.. you think you’re getting away with something? I’m here to tell you, it’s because they use ingredients in craft beer.

Have you ever sat back and thought about how much money Bud is spending on marketing campaigns? Tens of millions of dollars on Superbowl commercials alone. That’s more money spent in 3 hours of advertising than 99% of craft beer manufacturers will see over years and years of sales. So with all that money outflow on marketing, packaging, shipping, and giant cardboard cutouts of whatever NASCAR driver they’re sponsoring this year, how much can they possibly be spending on quality ingredients? Not a whole hell of a lot. To me? That equals Not Very Good Beer. You make a sandwich with shitty ingredients, you get a shitty sandwich. Beer is no different.

So, when I’m getting something for free that they didn’t spend very much money making (but a lot of money advertising) I’m supposed to MAN UP and like it? MAN UP, IT’S SHITTY AND CHEAP! YEAH!

You, sir, are a fucking rock star.

MAN UP, THEY’RE FREEBIES!

MAN UP, IT’S APPLEBEES!

MAN UP AND SHOP FOR DEALS ON QVC!

When did we get to a point where liking nice things was indicative of being a pussy? Wow, yeah, I have discriminating taste and like to enjoy the foods and beverages that I consume, that must mean I’m an idiot.

Here’s mine:  Man up and pay for quality.

</rant>

Comment all you want, I’m not reading any more.  Just the articles from now on.  Really.

(Though I’ll probably look at the pictures, too.)

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Posted By: erik
Last Edit: 28 Sep 2010 @ 03 48 PM

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Hey, everyone! Have you heard the news? FREE BEER! Yaaaaaaaaay!

That’s right! Anheuser-Busch-InBev is launching a new marketing campaign and it’s time to PAR-TAY! The new “Grab some Buds” campaign is targeted at the 21-30 demographic and culminates in a free national Budweiser Happy Hour on September 29th. [reference]

It warms the cockles of my jaded little heart.

This new campaign is targeted at the 21 – 30 demographic, which AB-InBev has determined is the primary reason that they’ve seen a 20% dip in unit sales for their flagship over the past 2 years. In order to invigorate the market and to bring people back into the fold of their bland overlords a new ad campaign and enormous marketing gimmick must be had because that’s what Budweiser does. They market things. They also, apparently, make beer.

Here’s the thing: I’m sure it will work.

For a day.

I ask you this: Who over the age of 21, among people who are likely to drink beer, hasn’t tried Budweiser? What are they really trying to achieve by doing this?

Let’s talk for a second about why Budweiser (the beer, not the company) is losing market share.

1) Many drinkers have discovered that they actually have taste buds and like things that taste good and have moved up to craft beer.

2) Many (other) drinkers have decided that Bud doesn’t really taste that different from Bud Light, Coors Light, Miller Lite, Milwaukee’s Best Light Ice, PBR, Schaeffer’s, Stroh’s, Genny Light, or any one of hundreds of other sub-premium adjunct pilsners and have moved DOWN in price point to get the same crap taste for less money because, hey – have you noticed that the economy isn’t that great? Why pay more for what is essentially the same product? Or maybe they’re just hipsters.

This happy hour WILL work. People who are predisposed to drink Budweiser and who like getting trashed on a Wednesday night will show up for their free sample of Bud. They’ll stick around and have a few more – though I’d be curious to find out if they keep drinking Bud once it’s on their dime. Bars and restaurants will be pressured by Budweiser distributors to buy extra kegs to stock up for the obvious DELUGE of business that they’re sure to get on the 29th, but don’t worry, they’ll kick in an extra keg if you buy enough, or maybe snag you some tickets to the ballgame. You know, a little quid pro quo to get you through your day.

Sales will look up, investors and stock market lackeys will be mollified because 3rd quarter sales look like they might have some life, but in the end, will they really pick up a big slew of new Budweiser drinkers to revive and sustain their flagging brand?

I don’t see it happening.

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Posted By: erik
Last Edit: 23 Sep 2010 @ 11 13 PM

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If I’m going to correctly cover all my startup bases, there’s one more startup option that I need to get into: contract brewing.

I’ve been a little dicey on contract brewing for a long time. There’s a stigma against it that I’ll discuss in a little while, but first, let’s start here:

There are two versions of contract brewing.

Version 1: Contract brewing. You come up with a recipe, a brand, and a wholesaler’s license, then you contract with somebody else to make the beer for you. They package it and sell it to you. You sell it.

Version 2: Alternating proprietorship. You rent a brewing facility and do your own brewing and packaging.

I’m going to talk about them separately, because they’re really completely different animals.

Some of the most recognizable names in craft beer have started (and continued for years and years) as contract breweries: Sam Adams, Brooklyn Brewery, and Terrapin come to mind. If you play your cards right, it can be a very profitable venture where you essentially act as a middleman as experts that you hire do their work on either side of you. You pay for the beer to be made, you manage the freight for the beer to be delivered to your distributor, then the distributor does all the sales and delivery for you. Aaaand scene.

Of course, that’s where the stigma comes into contract brewing. If you’re using that model – where does the brand really exist? You, as the middleman, carry the name of the brand on your organization, but your involvements exists on a purely organizational and managerial level. You didn’t make the product, you didn’t sell it, you’re just a money-collector in the middle with a good idea. It’s why people started getting bent out of shape when Sam Adams started winning medals at the GABF way back in the day. Sure – it’s great beer – but who deserves the credit for it? The guy who made it or the guy who marketed it? Tough call.

On the other hand, for a startup brewery, this is a really smart way to go. You get to pay someone who already has equipment and licensing in place to get your product off the ground. It’s a shortcut to revenue generation and you don’t have to be the mindless drone middleman. There’s no reason you can’t be actively involved in the brewing process – go hang out while your beer is being made, make sure that recipe is being followed to a T. What’s more – you need to be set up as a wholesaler to be a contract brewer, so get out there and sell your beer and make the deliveries. You don’t have to be out of touch with the product, but you can be if that’s your cup of tea.

Alternating proprietorship is a horse of a different color. Here’s the idea behind alternating proprietorship: You are set up as a brewer in another brewery’s space. Every once in a while, on an agreement with the brewery, you take legal possession of their brewery for a certain amount of time. It’s essentially a really short term lease – like 24 – 48 hours. In that time, the brewery is legally yours. You (and your employees, if any) are the people who are in there managing the product, the equipment, and everything in between. Sounds awesome, right?

Sure, but you have to get someone to let you into their brewery.

Alternating proprietorship comes from the wine world. Wine, as I’m sure you know, has a much longer production period than beer. In a winery, you’re only ever spending a few weeks per year using the equipment to actually make wine. The rest of the time, the vintner’s job exists in the cellar managing the inventory and aging. That means that the equipment itself is free, and if someone else comes in and uses it for a few weeks it won’t interrupt the flow of business in the winery.

That doesn’t really work out the same way in the beer world. Since our long turnaround times are measured in weeks instead of years and our short turnaround times are measured in days instead of months it means that the amount of time when equipment is not actually in use in a brewery is much smaller, thus, the amount of time available for somebody to come in and rent that equipment is low.

However, if it can be done, it’s another great way to get going as a startup, and that’s exactly what it’s designed for. In addition, since you’re in ownership of the entire process (just not the equipment), you avoid the traditional stigma of the contract brewer.

For my own operations at Mystery Brewing, I had been hoping to participate in an Alternating Proprietorship but have had to change my plans and am now looking at a short-term contract and getting quotes for brewhouses. Why? It’s simple: finding a contractor is hard. The craft beer industry is doing well, and very few people have the space available to allow a contract. That means that even fewer people have space available AND feel comfortable renting their facility out on a regular basis. From my assessment, and others I’ve talked to in the industry, the feeling is that if a brewery has the ability to offer alternating proprietorship, then their business is probably failing and they’re using this to generate extra revenue. Not a bad way to go about staying afloat, but a little sad, and risky from the standpoint of the startup business. Of course, the alternative is that they’re just a really low volume brewery and doing fine, but it seems hard to believe that a brewery would exist right now with that much empty space around on a regular basis.

Still, I’d like to offer you this Pro/Con chart between the two methods of contracting. (I’ll probably update this over time as more items are either brought up to me or occur to me.)

Contracting
Pros Cons
  • Low startup cost
  • No need for brewing equipment.
  • You don’t actually need to know how to make beer.
  • No need to buy supplies, etc.
  • No brewer’s bond needed, just basic wholesaler’s permit.
  • Contract brewery handles the bulk of the paperwork, COLAs, etc.
  • Traditional stigma against contracting – hard to market to beer geeks (everyone else doesn’t care).
  • Space is a premium; it’s difficult to find a contractor, especially on a small scale.
  • It’s even more difficult to find a good contractor; you’re often required to use their base supplies instead of being able to specify your own.
  • Extra freight cost after manufacturing.
Alternating Proprietorship
Pros Cons
  • All the benefits of owning your own brewery, without the initial startup cost.
  • No need for brewing equipment.
  • You actually get to make the beer yourself, manage supplies, and manage your own brand.
  • No contracting stigma, if you can explain just what it is you’re doing.
  • Space is a premium; it’s extremely difficult to find someone who will let you use their space.
  • All paperwork falls into your hands, plus extra paperwork for the host brewery.
  • You lose control of your product while you’re not in possession of the brewery.
  • If something goes wrong while you’re brewing, the potential for incurring additional cost is high (it’s not just your equipment/beer/space, but somebody else’s.)

Read more from the TTB Industry Circular describing contract and alternating proprietorship breweries.

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Posted By: erik
Last Edit: 17 Sep 2010 @ 01 18 PM

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 02 Sep 2010 @ 10:15 PM 

This month’s Session is being hosted by The Beer Babe and is a topic of particular interest to me. It is, New Kids on the Block. Her summary:

With the astounding growth of the number of craft breweries this year, chances are there’s a new one in development, or has just started out in your area. My challenge to you is to seek out a new brewery and think about ways in which they could be welcomed into the existing beer community. How does their beer compare to the craft beer scene in your area? Are they doing anything in a new/exciting way? What advice, as a beer consumer, would you give to these new breweries?

I’m going to take a little bit of a different tack on this because I am, myself, a New Kid on the Block. In fact, I’ll be cross-posting this post on my brewery’s website and so, in a most amazingly selfish manner, I’m going to write about me.

I want to tell you about my crazy plans to make only seasonal beers. I want to tell you about how I’m never going to make the same beer twice and that consistency only needs to be in quality not in flavor. I want to detail how I’m going to offer a food pairing with every single brew I make. About how I want to steal marketing ideas from the wine industry and how I never want to sell a 6-pack. I want to tell you about how I plan to market to nerds with literature references and appeal to history buffs because I’m tired of beer pong and tit jokes. I want to go on about how I want to use the web and social media to engage customers in ways that I don’t see anybody doing right now. I think that I’ve got some groundbreaking new stuff in mind that could change a lot of people’s minds about how beer exists in the marketplace and how it gets in to restaurants and bars.

But I’m not going to.

Instead, I want to talk about how awesome everybody else has been using two aphorisms that you tend to hear in and around the industry.

Beer People Are Good People

You hear this a lot. Hell. I say it a lot. Beer people are good people. Let me show you what I mean. Click on this link. What you see there are the results of 243 people who appreciate good beer enough to help some lucky bastard (ermm.. me) chase his dream. That is nothing short of absolutely phenomenal. (I should also note that 1 of those 243 people is the host of this month’s Session. Thank you, Carla!) I have received support from local beer people that is beyond anything I could have hoped for. I received offers for help with everything from construction to design to manual labor. Sure, maybe there’s the hope that some free beer might change hands here or there, but I haven’t heard much about it. Instead, I’ve heard, “I’d just like to help.” As a new brewery coming onto the scene it’s heartwarming. It’s great to run into people in bars and hear their excitement. It’s humbling and ridiculously exciting.

A Rising Tide Lifts All Boats

Let me tell you a starry-eyed plan that I have for my brewery. No! Let me tell you first about North Carolina beer. Here in North Carolina, we have a great beer scene. There are breweries up and down this state that are making world class beer. There are ground-breaking new breweries, veteran award-winning breweries, brewpubs, nano-breweries, Reinheitsgebot-following breweries, and everything in-between. The past year has seen 5 new breweries open in the state, 3 within an hour drive of me. On top of that? I have received nothing but kind words, support, and help from the local industry. Instead of competition, I am being treated like.. well.. a new kid on the block, a new friend. So that starry-eyed plan?

I have a clause written into my business plan that says that, whenever possible, I would like to avoid taking another North Carolina beer off tap in a location where I go on. Is it always going to be possible? Probably not. It’s not my decision, after all. But I would rather go in next to a great local beer – and have the establishment that I’m in sell the local option than replace a local beer and go in next to … whatever. Sam Adams Seasonal. Hell – keep the Boston Lager tap, but let the locals roll together because a rising tide does lift all boats. What helps one of us, helps all of us. We’re all riding this wave together, and we’ll get there a lot better if we act in unison against the forces of bland sameness instead of individually. United we drink, divided we sink.

Maybe I’m going into this with rampant naivety. Maybe all this support is merely a facade of good will, warm-fuzzies, and glowing elf hugs and it will all be whisked away by the cold light of The Need For Sales and Revenue, but I think that, as the topic of this Session suggests, there is a groundswell of support for new breweries, even in the wake of so many new openings in the past few years.

The question has been posed in the past: Are there too many breweries? I still contend that the answer is a resounding, firm no. Rather, there are still too many people in this country settling for less. There’s room in the marketplace for all of us new breweries and many more. Beer people – good people – are making that clear with their vociferous support.

Thanks to all of you good beer people. I look forward to reading the advice posted for new breweries in response to this Session.

À votre santé,
Erik

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Tags Categories: brewery, Sessions Posted By: erik
Last Edit: 02 Sep 2010 @ 10 15 PM

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