[00:00:03] John Craven: Hey everyone, I'm John Craven with BevNET and we're here for another episode of the BevNET Podcast. Today I'm joined by Jon Landis, our Brand Specialist. And we also have Chris Furnari, who is subbing in for Ray Latif. He's on a special assignment, we'll say. Hello, hello. Chris heads up brewbound.com, which is our Craft Brewers site, if you haven't seen that. And, you know, figured it was a good time to bring Chris in since last week was the Craft Brewers Conference down in Philadelphia. So we wanted to kind of do something a little different here and just kind of talk about Craft Brewers a little bit. Plenty of parallels over to the non-alcoholic world and why not? So anyway, let's give Chris a chance here. Maybe you can just kind of bring us up to speed on what's going on in Craft Brewers real quick. Sure.
[00:00:45] Jon Landis: Well, I finally digested all the cheesesteaks, so now's a perfect time for the podcast. There you go. The Craft Brewers industry right now, obviously, as many people know, is growing leaps and bounds. I think on the Brewers Association, which is the trade group that represents small and independent Craft Brewers across the U.S., there's upwards of 4,500 now. They would define Craft Brewers as those being small, independent, and traditional, less than 25% owned by an alcoholic beverage manufacturer that is not themselves a Craft Brewers, small, less than 6 million barrels, and traditional, a majority, so over 50% of their products need to be a beer product. That group in the U.S. is about just over 12% of the volume of beer now. And that's grown considerably just in the last five years, but especially over the last two years. And so that's sort of, I guess, the 30,000 foot view of what's happening in Craft Brewers.
[00:01:44] Brand Specialist: And the beer category as a whole, like, you know, craft seems to be driving the innovation, but, you know, volume and growth overall.
[00:01:51] Jon Landis: Well, yeah, the beer, the beer category overall is relatively flat and actually beer has been, you know, losing volume, but craft, you know, the, the subsegment of craft has been growing.
[00:02:02] John Craven: So a lot worse for, for craft is kind of the bottom line, right?
[00:02:05] Jon Landis: Exactly. And it's not a one to one ratio, right? So it's not like you lose one barrel of domestic light lager and you gain back one barrel of Craft Brewers, you know, the higher ABVs and, uh, the, the sort of more heavy beers are, you know, it's, it's not as easy. Exactly, it's not as easy to make up those losses, but the dollars, you know, Kraft is almost 20% of the dollars now.
[00:02:28] John Craven: So this year's CBC Craft Brewers Conference, you know, it really, I hadn't been in, jeez, I guess two or three years. You know, talking about growth, I think, you know, the first one I went to was when it was in Boston, which I think was like 2009. And it was, you know, like a fraction of the size that this one was. You know, it really seemed like just, I don't know, like a crazy, crazy tornado of an event, which sort of speaks to the buzz of what's going on. What was, uh, you know, Chris, you've been going for a couple of years now and, and John, you've been there, uh, for a few as well. What was sort of like your feeling on this year and sort of how it's, you know, evolved the past couple of years, the show that is.
[00:03:08] Jon Landis: Yeah. So I think the first one that I attended was, uh, 2011 in San Francisco. You know, the differences between that event and the 2016 event, I mean, are just pretty tremendous. Uh, size alone, I think is the most obvious one. This year's event, there was like 835 different supplier companies or exhibitors in the Expo Hall. And the Expo Hall itself was over 500,000 square feet. And I mean, that's not something that happened five years ago.
[00:03:40] Brand Specialist: Right. And we were even talking to Bart Watson, the BA, and they're going to be in D.C. next year. And the last time they were in D.C., they only had half of the convention center. And this time they're just doing the whole thing. So it's even, I mean, that was only two years ago that they were in D.C., right?
[00:03:55] Jon Landis: Yeah, so it went San Francisco, San Diego, then DC, I think, was 2013, and then Portland.
[00:04:02] John Craven: Well, in San Francisco, I was at that one. That was in a hotel, and, you know, now we're beyond hotels and in, you know, pretty sizable convention centers. I mean, that definitely anecdotally speaks to kind of the change of it. I guess, what about, you know, the crowd this year? I mean, one of the things, Chris, you had mentioned was just kind of how young the crowd seemed. You know, again, my own sort of anecdotal experience of being there is that it seemed like it had just a ton of like new faces, new people who, you know, I felt like, you know, the first couple of times I went to them, it was like, you know, this collection of old, you know, like the old guard of Craft Brewers who had been around for a while. Yeah. You know, what's what's your feeling on that?
[00:04:39] Jon Landis: I had this weird moment like registering, you know, walking up to get my media badge. And I grabbed it and walked by this group of guys that were like 23 years old. And I was just like, oh, either I'm getting old or this crowd is getting younger. And that just sort of speaks to all of the entrepreneurs that are coming in the space. And they're starting from a much younger age. We just wrote a story the other day about one of the proprietors of The Jackson family wines and he graduated in 2011. I got his undergrad from Santa Clara where I went 2011 was three years after me. Right. And here he is starting a brewery. So I think youth is. Yeah. I mean it's it's one of the things driving the industry forward. But that presents you know a lot of risks a lot of challenges for the industry as a whole because a lot of these guys you know they're they're not as business savvy. This is their first business that they're starting. So I think there's some concerns.
[00:05:31] Brand Specialist: can't even have a whole lot of experience brewing beer when you're 23, right?
[00:05:37] John Craven: Well, I guess, you know, that makes sort of an obvious follow-up question, which is like, what is bringing all of these people into it? I mean, in our non-alcoholic world in BevNET, you know, most people are just in it to get rich, sell the Coke and Pepsi, be the next vitamin water. You know, what is it that these companies or entrepreneurs are trying to do? I mean, there is no like the next vitamin water, right? I mean, there is no like, mega multi-billion dollar payday that some, you know, small little brewers had, right?
[00:06:06] Jon Landis: So what are they in it for? I mean, I think there's an element of passion for sure, but I think it's really hard to, at this point, ignore the fact that the industry is growing and people are seeing opportunity. Like, I think maybe five years ago, you probably could have gotten away with, oh, I'm just really interested in beer or I've been home brewing for a while and this is why I started my brewery. But I don't know that that's necessarily the case. I mean, there are some of these new companies that are entering the space. that are, you know, that are savvy, that have been planning for a while, and they're in it to be business owners just as much as they are to be beer passionate. So, you know, I think passion is driving some of it. I think opportunity is driving some of it. You know, I think probably a somewhat low barrier to entry is, you know, always one of the factors that drives this kind of growth. If I wanted to go start a beer company tomorrow, it wouldn't be that difficult. I could probably scratch together a few hundred thousand dollars from Friends and Family and start a contract brand and go rent space at a brewery and produce a label. The barrier to entry if you're doing brick and mortar and building out your own facility is a little bit higher, but it's still not that difficult. I mean, you can get a couple million bucks from Friends and Family to start your brewery at the end of the day. It's long term, you know, when they get to 50, 60 thousand barrels and they need to take a 20 or 30 million dollar, you know, loan out from the bank to take that next step. You know, that's where I think they're going to finally realize what they've got themselves into.
[00:07:42] John Craven: Well, I guess your point of, you know, the ease of raising the money to start a brewery right now is also one of those things that I think sort of speaks to just where the industry is at. I mean, it's You know, certainly capital is is pretty accessible for people starting, you know, natural and healthy food and beverage brands. But, you know, outside of that, I mean, it's not like easy to go out and raise, you know, a couple hundred thousand or a million dollars for a lot of business types. But these are ones that right now there's so much interest in it. Kind of, you know, money is coming from crazy places sometimes.
[00:08:15] Jon Landis: Yeah, I wouldn't necessarily say that it's easy. I mean, raising you know, well, let's, let's use my old roommate for an example. Right. He raised over a million castle Island. Yeah. So, uh, you know, a million and a half bucks or whatever. And that process took him a really long time. So it wasn't like it was easy for him to, no, it took him like three years.
[00:08:33] Brand Specialist: Right.
[00:08:34] Jon Landis: Well, a lot of that was him just, you know, wanting to be sure that he was doing the right thing.
[00:08:38] John Craven: Finding the right money and just finding money are obviously two, you know, different things.
[00:08:42] Jon Landis: Right. So I think it is probably easier because anybody who's willing to invest in a Craft Brewers is probably looking at the space as well and seeing all this, you know, all this growth.
[00:08:54] Brand Specialist: This could be a little speculative, but to your point earlier, John, that there is no vitamin water being purchased by Coke or Pepsi. There's no $4 billion payout or whatever there is. But we are seeing breweries like Golden Road and St. Archer that started relatively recently getting purchased by AB. and Miller Coors. And there is, with the acquisition atmosphere here in the industry now, there kind of is that hope that you can start a brewery on a shoestring budget. It's a cool industry. It's beer. It's this and that. And now there's exit opportunities starting to pop up left and right.
[00:09:32] John Craven: Well, I think the piece that kind of missed or was missing in, take the vitamin water example specifically, Chris talked a lot about passion. And there's passion of producing the liquid. that you're selling in beer, whereas in the non-alcoholic world, like in a brand like Vitamin Water, there's no passion about like mixing, you know, vitamins and, you know, sugar and water, whatever. So it's just, you know, it's a different thing, that's all.
[00:09:56] Jon Landis: But one more point to kind of bring the conversation one step further, I think it's going to be increasingly more imperative for these new companies that start up to really understand who they want to be, right? It's really easy for us to sit here and say, OK, there's 4,500 breweries, right? That number's a bit misleading. 1,000 of those are brew pubs, and you can slice and dice the numbers as much as you want. At the end of the day, like, you know, we hear this all the time, like this comparison to wine, right? Oh, there's 10,000 wineries, so why can't there be 10,000 breweries? Well, I could give you a whole list of reasons why there shouldn't be 10,000 breweries, but I could also sit here on the other hand and say, well, yeah, there could be 10,000 breweries if they all know that they only want to produce 1,500 or 2,000 barrels and sell it, you know, within a 20-mile radius of their brewery and not really worry about getting into distribution channels and things like that.
[00:10:48] Brand Specialist: And their product can sit on the shelf for years like wine and it doesn't go bad.
[00:10:53] Jon Landis: Exactly. There's no freshness issues. So I think having, you know, for a lot of these breweries, it's going to be like, OK, what am I bringing to the marketplace that's new and unique? And what are my goals? What are my aspirations? And if these entrepreneurs understand that, and they're clear right from the get-go what their objectives are, I think there's a lot of open highway in craft. The problem that we're likely going to run into is that either these businesses aren't sure who they want to grow up to be, or they are a bit naive, and they don't understand that not everyone can be the next regional producer, or not everyone can scale in the way that a St. Archer or a Golden Road did and have an exit. as quickly as they did. So yeah, from where I'm sitting, that's going to be interesting to watch over the next couple of years.
[00:11:38] Brand Specialist: Again, that was a pretty speculative statement. You know, I mean, I was just, it only came to me because you, you know, we're not, people start beverage brands to get acquired. I'm just curious to see if in craft, people are going to be starting breweries to get acquired.
[00:11:54] Jon Landis: I don't think that the vast majority, let's just say the vast majority Craft Brewers are not starting a brewery to get acquired. Right.
[00:12:00] John Craven: Well, I mean, there's nothing wrong with that at the end of the day, as long as your strategy of getting there also involves producing a good product, right? I mean, I think that's sort of a problem that we see in the non-alcoholic world is like, geez, well, I want to be the next vitamin water, so I'm just going to make something that kind of looks exactly the same as vitamin water. It's not as good, et cetera. And I think, you know, in beer, there was always that sort of like, you know, if your goal is to like sell and have a good business, well, therefore, like you can't really care about your product, right? And I think we're beyond that. I don't know if you'd agree, but I mean, there are business savvy people who produce good liquid. So, you know, I don't think there's anything wrong with that, but I guess shifting gears back to the conference a little bit, you know, certainly one of the big trends and topics in this industry, just, I guess, I don't know, geez, the past 18 months or so has been deals, right? Deals, deals, deals. And it seems like, I don't know, geez, every other week you're talking about, you know, some deal that happened on a Friday night and ruined your weekend or whatever. Shout out to Greg Cook.
[00:13:02] Brand Specialist: There you go.
[00:13:02] John Craven: Yeah, we don't, we don't have that problem in the non-alcoholic world, but, um, you know, I guess I'm, I'm just curious kind of what your, your sense of all that was, uh, Paul Gotze from the Brewers Association. I know like part of his talk in the, uh, sort of opening was all about that. Um, maybe you can kind of fill us in and give your two cents on that.
[00:13:20] Jon Landis: Yeah, I mean he spent a considerable amount of time during that. So basically the way that it works at the Craft Brewers Conference, for those that haven't been, is typically in years past they've done like a general session that's been, you know, three or four hours long in the morning. And they have a keynote speaker, and then they do this state of the industry stuff, and they present all these statistics. They broke it up this year into two days. So they had Billy Bean, actually, from the Oakland A's. He was on the first day. He did his keynote. And then the second day, they had the real meat, the stuff that we care about, the latest data that Bart Watson, the chief economist, shared. they had this sort of tag team presentation of about 30 or 40 minutes. And I'd say at least half the time, Paul Gatza spent, you know, and he's the director of the BA, he spent talking about the differences in some of the deals that we've seen. And a lot of it felt like, you know, a pretty overt, I guess, attack on Anheuser-Busch. I mean, it was no secret that that was like the large company that he was alluding to.
[00:14:25] Brand Specialist: I mean, how many deals have they done in the last year, year and a half?
[00:14:42] Jon Landis: kind of existed. The more recent acquisitions, there's eight Craft Brewers, and that's including Goose Island in 2011. You got Breckenridge out in Colorado, Four Peaks, Golden Road, Devil's Backbone, Ten Barrel, Elysian, and Blue Point. I don't know if I'm missing any. At this point, it's getting hard to keep track. But yeah, I mean, that's been the sort of topic of discussion. not only at the Craft Brewers conference, but, you know, kind of for the last year, year and a half is like, who's next, you know?
[00:15:14] John Craven: And I guess some of that seems to come back to just the Brewers Association, their own classification of what a Craft Brewers is. I mean, that was part of like the talk is that if basically AB InBev buys you, then you're not a Craft Brewers. But if someone else with a lot of money, namely private equity, then it's OK.
[00:15:32] Jon Landis: Yeah, essentially, the theme was, you know, not all acquisitions are created equal. So if a private equity company comes in and purchases a stake, even again, even if it's over that 25%, right, because we started this conversation by laying out what a BA defined Craft Brewers is 25% ownership. Now, It doesn't matter if you're TSG Consumer Partners and you own a piece of Pabst, which the Brewers Association doesn't define as a Craft Brewers. Well, TSG also owns a piece of Sweetwater, right? So are they themselves not or an industry member that is not themselves a Craft Brewers, right? I don't really know, and I don't know that the BA has ever really answered that until, I guess, this session, right? Where Paul basically stood up there and said, private equity deals are okay. They're still in our set, our Craft Brewers set. So, you know, Miller Coors and Heineken and Anheuser-Busch and Mao San Miguel, you know, sorry guys, but if you're making acquisitions, in the BA's eyes, you're not craft, you know?
[00:16:34] Brand Specialist: What if AB just started a private equity firm that was just, you know, their money?
[00:16:38] John Craven: Then it's owned by AB and Bev and it's not. I mean, I guess the real question is just, you know, and kind of where I was going, like, how much do you think this, this label really matters?
[00:16:48] Brand Specialist: It doesn't.
[00:16:49] John Craven: And, you know, I guess if the label goes away, then where'd all these brands that are currently Kraft end up and, you know, does that sort of, you know, there's all the, well, sorry, go ahead. I shouldn't say that it doesn't matter.
[00:17:02] Brand Specialist: Right, they get access to the BA and all the resources that they have if they're a member, right?
[00:17:07] Jon Landis: Right. Well, yes, for the BA membership, there are advantages. If you're talking about it just on like a raw sort of consumer level, I would be willing to bet that most consumers, you know, if you stuck a ballast point owned by Constellation in front of them, and a St. Archer owned by Miller Coors and then some independent brand. Are they going to try all three and be able to say, well, these two aren't craft, but the third one is? I don't know. The average consumer is probably not worried about that. They're probably just worried if the liquid tastes good.
[00:17:37] Brand Specialist: It's interesting, too, because we work in this industry and we're in a little bit of a bubble, looking at this stuff all day, talking about it all day. You have to remember that your typical consumer just doesn't read these news stories.
[00:17:50] John Craven: They don't read the package to see who's- Well, even just what those of us in the industry are discovering is so far ahead of- what consumers are discovering. I mean, I still have people that are like, Oh wow, I just discovered, you know, I don't know, ballast point sculpin.
[00:18:05] Brand Specialist: Yeah.
[00:18:05] John Craven: And it's like, okay, you know, that's great.
[00:18:08] Brand Specialist: In beer it's weird because you have these really hardcore consumers, like these really like the junkies of Craft Brewers, right? The geeks, the 1%. Total geeks. Absolutely. 1%. But, but they're so, they're so vocal and they're out there and you know, it's really easy to think that most of their Craft Brewers consumers are like that, but in reality they're not.
[00:18:27] Jon Landis: But keep in mind, so the Brewer's Association definition, and this is where I really struggle with it, because at its core, the Brewer's Association definition is not for consumers. This is not supposed to be an outward-facing thing. It's just, like, they have to draw a line in the sand, they have to figure out who they're serving as, you know, who their members are, and this is how they've chosen to define them, which is fine, like, at least they've drawn a line in the sand, and there are advantages to being a member of the Brewers Association and to being a Craft Brewers in their eyes. Case in point, out in California, this Prop 65 BPA thing that's going on, they sent out mailings alongside the Beer Institute and some other trade groups to like 80,000 retailers. And if you're Craft Brewers Association member and you have that BA insignia that you can put on your website, you should, in theory, be covered for any of these class action hungry lawyers out there that might be looking to capitalize on the fact that Brewery A didn't tell one of its retailers in some random town in California that they need to post these placards now, right? Well, if you're a member, the Brewer's Association did all the work for you. And that's an advantage of being a member.
[00:19:50] Brand Specialist: So... Because that's a costly and time-consuming thing.
[00:19:53] Jon Landis: It is. There's not a Craft Brewers in this country, well... I take that back. Maybe Boston Beer could figure it out. But you can't, you can't go mailing 88,000 people these signs if you're a small Craft Brewers, no way. So, you know, there are, there are advantages like that. I think it is good to have a definition. But, you know, getting back to the real issue here, which is like consumers, no, I don't think it, I don't think it matters to them.
[00:20:19] Brand Specialist: But it's funny cause we have all these blogs and we have all these really vocal consumers and it's just, it throws people's perception as to like what the real consumers are looking for because the real consumer isn't blogging about beer. They're not on untapped.
[00:20:32] John Craven: They're not doing, you know, like, well, yeah, I mean a lot of these things that again, like the beer geek cares about, like you just ultimately kind of care if it tastes good, right? And et cetera.
[00:20:42] Jon Landis: The good part about it all is that this is like the circular debate that will rage on for eternity. So, you know, we can go to the bar and we can have a bunch of beers and we can just argue about this like every other week, you know? And it'll give me material for the website for as long as I live.
[00:20:57] John Craven: There you go, that's what we're here for. I guess, you know, we should probably wrap this.
[00:21:01] Brand Specialist: Well, let's keep it back on topic here about CBC, because there were a couple of other things that we, I mean, we walked around the Expo too. Yeah. There was a lot going on at the Expo.
[00:21:10] John Craven: All right, let's talk Expo then, sure. I can ask a, here. Well, don't sound too excited, John. Well, no, I saw your Instagram photo of the Pico Brew, man. Oh, the Pico Brew is great. We're getting one of those for the office. Are we? Yeah, we're getting one for the office. Oh my gosh.
[00:21:25] Jon Landis: So wait one quick tangent. Can we talk John? Why did you come to the Craft Brewers conference? Why did I come to the craft first just to Instagram things?
[00:21:34] John Craven: Jeez, you got me Well, hey, you know, we are in the the business of Craft Brewers We had this nice little brew talks thing that we put on down there. You know, I kind of forgot about that that event with dogfish head and
[00:21:48] Brand Specialist: You know, I have to very quickly, we were in Philadelphia, the BevNET team was there. We have this event. We've had it planned for months with Dogfish Head and it's great. And right as we're, uh, people are leaving the convention center, cause it started at four, there was a massive protest right outside. And they were, they were protesting the proposed soda tax. So I just thought it was so ironic. DevNet comes to town to do an event and SodaTax thwarts our attendees from getting there.
[00:22:17] Jon Landis: And this is the second time that a protest has impacted our ability to run a successful BrewTalks event.
[00:22:24] John Craven: What's the other one?
[00:22:25] Jon Landis: This happened in Portland a few years ago when we were at Widmer. It was like one of the very first BrewTalks event and there was like some union like trade dispute or something. I think it was like something to do with the trains or something like that. But they basically shut off like one half of the city and nobody could get over to Widmer.
[00:22:43] Brand Specialist: So we lost half our audience. Despite the soda tax protest, we still had over 300 people join us for that event. It was really cool. You know, Amazing feedback from people and it's on it's on our YouTube channel So if you know you want to see Sam and you want to see we had Hayes and Hayes from Devil's Backbone We had Simon from doable a couple, you know, great David Walker David Walker Rob Mitchell had the crowd roaring and and rolling all over the place with his It's engaging and it's fun. If you want to know a little bit more about the beer, I thought the pricing conversation, we had all three tiers. We had Bump and then we had a distributor, we had a retailer, we had two breweries on stage and talking about pricing strategies. So just to have all three tiers on stage talking about it, I thought it was really engaging.
[00:23:29] Jon Landis: And probably some parallels there for the non-alcoholic listeners out there on pricing, I would imagine.
[00:23:35] Brand Specialist: Definitely at least with strategy of like raising and lowering prices. I mean there's Absolutely with non-alcoholic beverage brands going on sale, you know, and we do it at Bev net I think I think the biggest difference I noticed with the pricing is that there seems to be like almost a
[00:23:51] John Craven: subtle, you know, not directly stated, almost like pricing discussion and beer that's kind of like, let's all price about the same. Whereas, you know, because they're not like competing for shelf space. But it's not collusion, John. It's not collusion, right? You know, in the non-alcoholic space, it's, you know, it's like who can do the craziest deal, right? And not bleed to death.
[00:24:13] Brand Specialist: Well that, I thought the alignment with non-alcohol was more relevant now because a lot of the entrepreneurial brands are premium and craft is premium and everyone was talking about being able to command that premium price point.
[00:24:26] Jon Landis: And non-alcoholic is shifting towards craft as well. I mean craft sodas, higher end coffees and juice and everything else.
[00:24:34] John Craven: No, I mean, there's a ton that's being borrowed. I mean, in the last, not the last, but one of the past podcasts, we were talking about just how like companies are trying to borrow things that have been successful. And, you know, one that I pointed to was, you know, a kombucha brewery that has a tasting room. It looks like it could just be, you know, another beer brewery. And, you know, I think that's another thing that like everyone that's in the food and beverage space would love to have that kind of like, you know, sexy, part of their production that beer has. I mean, it's kind of insane if you think about it. I mean, I remember the first time I saw like a brewery tour happening, I'm like, this is nuts. Like people are paying to walk in a factory. It's like, I could go to a factory that makes, I don't know, energy drinks for free, like all day long. Who cares, you know? So, you know, I think it's, it's funny how much crossover there is where, you know, you have this whole movement that's about, you know, craft and premium products and, you know, look, everyone's trying to sort of achieve the same thing, which is, you know, create higher quality stuff, certainly command a higher price for it.
[00:25:31] Jon Landis: Why aren't there more businesses focused on brick and mortar manufacturing in the non-alcoholic space like there are in craft?
[00:25:39] John Craven: Scalability. Scalability, yeah. And I think, you know, there's never an issue of like, oh my God, this is a contract brewed tea, you know? Like no one ever says that.
[00:25:48] Brand Specialist: And it's frankly- No, and in fact, a lot of the contract brewed teas are handmade or, you know, freshly brewed.
[00:25:54] John Craven: Well, it's more- They use a lot of marketing to- It's more akin to like, you know, gypsy brewing in that sense. You know, you go into the Copacker, you do all the, you know, the work of batching yourself, and then someone else is filling the bottles, the cases, et cetera. But I think it's just something that, you know, it's the hair net on and you shoot one of those awesome videos. I love those plenty of Instagrams in there. That's why I know for sure. No, I think it's also that it's a strength in the rest of the food and beverage world that you're having your product like manufactured in a professional.
[00:26:24] Brand Specialist: facility.
[00:26:24] John Craven: So like when you see footage, even like, you know, those things like unwrapped on the food network, it is trying to show the size and like almost the scientific nature of where things are being produced, which is kind of not how like Craft Brewers works, right?
[00:26:40] Jon Landis: Yeah, I mean, it's the exact opposite in the Craft Brewers world. If you don't have a facility, you know, that you're brewing all of your own liquid out of, it's almost a detriment, right?
[00:26:51] John Craven: I know, or even like in the case of, you know, Sam Adams, they have their pilot brewery that's like on their commercials, right?
[00:26:57] Jon Landis: And you know what, probably I would imagine that a lot of that is just like a market development issue, you know? The way that the non-alcoholic space has developed over time is such that It's been skewed towards this co-packing model. Whereas if all the beer brands that existed 30 years ago were made by a couple of companies, like, well, then obviously they're just going to make them in their in their plants. And if you wanted to get in or break into the space, you know, that really wasn't available to you. There wasn't an option to do it. So you had to build it yourself.
[00:27:26] Brand Specialist: And we did see a lot of suppliers at the expo that were, you know, there's a lot, a big range of sized equipment that was available there. And Chris, you heard some rumblings about, you know, some of the equipment. I mean, we, we're not by any means experts on how to use this equipment and this is kind of stuff that we've been hearing that some of the equipment wasn't, you know, made up to the standard of how it should be made.
[00:27:49] Jon Landis: If you think about the way that the space is developing and some of the other things that we've kind of touched on today, right, the low barriers to entry, the youth and the sort of the people getting into the space that are maybe not as experienced or less familiar with what to be looking for. I don't know, like let's use, for example, some kind of stainless steel equipment that you put in your facility, like a hopping device or a fermentation tank that you got to rack beers off of or something like that, right? There are probably 15 or 20 companies that make one of those devices. And they range from, you know, your Kia to your Lamborghini in terms of price and in terms of, how high quality it is and how well it's made. Well, if you're the guy who started with only a few hundred thousand bucks and you want to dry hop your beers or get some new kind of fermentation tank, like, and you only got a little bit of scratch to spend, what are you going to go with? Like, you're not going to go with the highest quality item that's there. And you might think that the one that's cheaper is just the same. You know, if you're not trained well enough to look for the things that are wrong with some of these pieces of equipment, like that's a problem that'll impact the quality of the beer and potentially could even be a safety issue if these things are being welded together in a poor fashion. So, you know, we heard a little bit of that, I guess, you know, just from guys who have been around the space for a long time that are walking around the trade show floor going like, basically, what the fuck are you selling here? You know, like, how are you even here? And then, you know, then you got to kind of ask the question back to the Brewers Association, I feel, which is like, Why would you allow these people to exhibit if you know that the quality of the product is subpar?
[00:29:36] Brand Specialist: I don't know. Is there a responsibility on their end to kind of vet that?
[00:29:40] Jon Landis: I mean, I don't think they can shut them out, right?
[00:29:42] Brand Specialist: I mean, probably not. They spent all of, CBC last year was all about quality, right?
[00:29:47] Jon Landis: And now here we have- Well, that was quality of the beer, not the- Right, but this is what we're talking about with the equipment. If the equipment impacts the end product,
[00:29:57] John Craven: Well, sure. But I mean, you know, you could go kick that all the way down the line to the point where, like, you know, we're worried about people's I don't know, their truck and how good it is, a refrigerator or whatever, you know. So I think it's probably just a slippery slope that for somebody like that, it's easier to just, you know, let the industry kind of work itself out and that if somebody is making bad equipment, well, we'll figure it out. People stop buying it, you know, whatever.
[00:30:20] Jon Landis: Yeah. Well, I mean, I think the larger issue then is, you know, one, educating these new entrepreneurs that come into the space to, I mean, what we do at our conferences and stuff is more on the business side, but, you know, on the technical side, you know, having a committee and the BA to help people understand the differences between good equipment and bad equipment and, you know, what that, what kind of effect that has on their business.
[00:30:44] Brand Specialist: I mean, they do have some technical brewing sessions at CBC.
[00:30:48] Jon Landis: And they have committees to help with this stuff. But, you know, I think that's going to be, you know, that was something certainly that was expressed to me by some individuals was just the, you know, paying attention to the quality of the equipment.
[00:30:59] Brand Specialist: Can I tell a quick story from the trade show floor that John hasn't heard yet? Go for it. This is good. He's got this brewery, Barrio Brewing, right? I don't remember his name. He owns Barrio Brewing. I think it's in Arizona. And he is really freaked out about the hop situation, hop shortages. Everybody's scrambling to get hops. And his contracts are not being filled to 100%. He's getting 80% of the hop contract filled because it's not a large enough contract, and they have to fill their larger contracts. So he said that he's building this facility. The walls are like a foot thick of concrete. It keeps the inside of the facility at a constant 24 degrees Fahrenheit to keep the hops in stasis. And he is just dumping hundreds of thousands of dollars into like these massive hop contracts of stuff that he'll be using these hops for years, or he could sell them. It's like he's making his own hop bank.
[00:31:53] Jon Landis: Yeah, it's a fallout shelter for hops.
[00:31:55] Brand Specialist: Dennis, Dennis is his name. Dennis, that's right. Yes. Dennis, it was awesome meeting you and I love that story and I hope it all works out for you.
[00:32:03] John Craven: If there's nuclear fallout, he'll have hops still, I guess.
[00:32:06] Jon Landis: Dennis was the guy like, you know, starting a brewery in Mexico like 30 years ago, like a Craft Brewers, right? So, I mean, he's the classic like zag when everyone zigs. There you go.
[00:32:16] John Craven: Nothing wrong with that, I guess.
[00:32:17] Jon Landis: So if you need hops, look up Dennis Arnold from Barrio Brewing. Because he's got the fallout shelter.
[00:32:23] Brand Specialist: Next year, he'll probably have some Citra, some pallets of Citra for sale.
[00:32:29] John Craven: There you go. Well, hey, thanks a lot, Chris, for joining us here for, jeez, I don't know how long this thing's been going on here. While it's always, I think, sort of great, we do a lot of this sort of shop talk internal just about our different verticals and trying to compare notes. So, you know, glad to be able to share this with our listeners. So thanks again for joining us. And yeah, this is another episode of the old podcast. As always, if you have any feedback on stuff you want to hear, you know, don't want to hear, definitely reach out to us at news at BevNET.com. So thanks for listening.
[00:32:59] Jon Landis: And, and hopefully, uh, people still want to hear beer stuff.
[00:33:03] Brand Specialist: Yeah.
[00:33:03] Jon Landis: Don't send any feedback that says we don't want to hear beer stuff.
[00:33:06] Brand Specialist: Yeah, no, we'd love to have you on again.
[00:33:07] Jon Landis: Next time, we've got to be drinking beer.
[00:33:08] Brand Specialist: You said we'd be drinking beer, but we're not drinking beer. Friday fail.
[00:33:12] John Craven: On that note, we're going to go get some beers. So, again, thanks for listening. Cheers.
