Brewbound Podcast: A California Craft Beer Check In

[00:00:00] California Craft: Heading to CBC? Kick things off the day before The Brewbound's meetup at Love City Brewing Co Philly, Sunday, April 19th from 5 to 7 p.m. Connect with beer industry leaders, grab a drink, and catch up with The Brewbound team. It's free to attend and walking distance from the convention center. Head The Brewbound.com slash lovecity.rsvp. And don't forget to catch The Brewbound team at booth 956 during CBC.

[00:00:28] Managing Editor: What's going on with California Craft beer? Find out next on The Brewbound Podcast. Welcome back to another episode of The Brewbound Podcast. I am Managing Editor Jessica Infante. And I'm reporter Zoe Licata. Zoe, it's just us. It's girls' time. How are you?

[00:00:57] Zoe Licata: Good. Good. I had a One Direction versus Jonas Brothers spin class last night. Stop it. And it was really great. I bet. I'm in a good mood.

[00:01:08] Managing Editor: That's like your generation's Backstreet NSYNC. Exactly.

[00:01:13] SPEAKER_??: Wow.

[00:01:14] Managing Editor: You're really inspiring me to start working out again.

[00:01:17] Zoe Licata: I've dabbled in the yoga, but... Well, I also don't have a literal baby that I have to lift and take care of and all those fun things, so... Yeah, yeah, I think... You're probably getting as much exercise as I am.

[00:01:32] Managing Editor: Maybe. I think we've got to go to the doctor this week. I think she's up to 20 pounds now, so we'll find out. So big, so big, I know. So fast, she crawls. She's so speedy. It's wild. But anyway, it is just the two of us this week because our teammate Justin Kendall is at the Gold Network Summit in Las Vegas. That is, if you haven't put that together yet, that is Constellation Brands' annual gathering of their wholesalers. I went last year. I got to say, it's a nice one to go to because all of the stage content is like good, happy news because Constellation has had years upon years of just straight growth. So the messages delivered are generally pretty triumphant. I will say I was pregnant during this last year and I got to the auditorium a little bit late and there were no seats. And you know what, I don't want to fault everybody because it was dark, maybe they couldn't see, but I was just kind of like shifting from foot to foot and like holding my tummy and just hoping somebody would give me a seat and nobody ever did. but that is nobody else's fault but mine for being late. I don't really know why we felt the need to conclude that story here, but there we go.

[00:02:47] Zoe Licata: Yeah, we appreciate feminism, but also let the pregnant lady sit in a chair.

[00:02:53] Managing Editor: Yeah, exactly. So a lot of news last week, we snuck in an extra pod episode on Friday just to kind of cover up everything because we knew we wouldn't be able to squeeze everything we wanted to get to and with this episode and by then a lot of that would be old. So if you want to hear what's up with Boston Beer, check out last week's episode. We also discuss the Teamsters and Anheuser-Busch InBev reaching a tentative agreement. Voting should be going on right now with that contract that they had, you know, reached a deal on. We will keep an eye out on that situation for you. But for right now, Zoe, where do you want to go first in the news?

[00:03:32] Zoe Licata: We had a story go out that you've been working on for a minute here, finally reaching the newswire. I think we should dive into that first. It's an update on Pontoon, what's happening with their brewery, and also their sticky situation with Bavana. What do you have for us?

[00:03:49] Managing Editor: Oh my gosh, so much. Yeah, you're right. This one we've been working on for a while. Pontoon is a brewery in Sandy Springs, Georgia, which is a suburb of Atlanta. They had opened a second location and, you know, by all accounts, probably were subject to the same currents that were affecting the rest of the industry. But they announced in October that they were closing, which unfortunately, sadly, is not a rarity these days. We hear from breweries shutting their doors kind of a lot lately. But in their closing announcement, they said that one of their main distribution partners, and they didn't name any names, owed them a lot of money, and because of that, they could not continue, which of course sparked the rumor mill. And in time, it came out that the partner they were referring to is Bivana. And we'll get into that, but the way the story kind of unfolded was that that was October. They closed their doors in November. They filed for Chapter 11 bankruptcy protection, which I know sometimes people hear bankruptcy and assume, oh, the business is closing, but that's not always the case. So in the case of Pontoon, they are using Chapter 11 to reorganize their debts and set the business up for future success. And they were able to reopen in January. They reopened their Sandy Springs taproom. They are closing their production facility in Tucker, Georgia. And the new news here was that they are now going to re-enter distribution in May. So the way that they're able to do that, it's kind of a thorny legal situation, but in their bankruptcy proceedings, a judge ruled that their contract with Bavana was canceled, which means that Pontoon is now able to sell their beer into distribution through their regular wholesale network. So to back up here, You probably have heard the name Bavana. I know they sign up a lot of breweries, they generate a lot of PR, but they have kind of a complicated model. They are I wouldn't call them like a fourth tier. They're almost a fourth tier in the system where, you know, like they're able to license breweries brands. Basically, they've got two different methods of partnering. They do offer e-commerce services. So they do have a lot of breweries in that system, but then they also offer this like full service licensing situation where breweries are allowed to license their brands to Bavana. Bavana then goes out and sells these brands in the marketplace. and the brewery's contract brew it for them. So that was what Pontoon was doing. Sean O'Keefe, the CEO of Pontoon and I have spent a lot of time on the phone to get this story to where it is. And the way he explained it to me was that when they opened their new facility in Tucker, it was a brand new bespoke building. Everything they ever wanted in a production brewery was supposed to be like the place where all of their beer got brewed because Sandy Springs, their original location, You know, they've been there a long time and it's fine, but it's not really optimized for beer production at volume. So Tucker opened in November of 2022, and they realized they were going to need to, you know, up their game in chain sales and maybe enter some new markets to be able to pull in the revenue that they needed to support this facility. So they signed on with Bavana in May of 23. thinking that, you know, this organization would help them do all of these things. And the way that Sean explained it to me was that, you know, as they sign on board in May, you know, they pontoon themselves, they're really organized in terms of wholesaler relations, in terms of like coming up with go to market plans, they've got 120-day plans, 60-day, 90-day, like they really have kind of got it dialed in. So they sign up with Bavana in May, and that's right around the time when they need to start taking orders to brew their fall seasonal, which is called the Great Pumpkin Spice. You can figure out what that is. And under the new method where they're partnered with Bavana, Bavana is supposed to be taking orders from wholesalers, but wholesalers are reaching out to Sean and his team saying, hey, we want this many cases, this many kegs. interested in this, interested in that. And they are sending these over to Bavana thinking that these orders are going to be collected and they'll eventually get a purchase order to make the beer. Finally, towards the end of the summer, you know, Bavana comes back and their partner there says like, hey, it's too late. You know, wholesalers were telling us they didn't really want any limited offerings because they have too many. So that is what Pontoon was told. Meanwhile, it got back to Pontoon that what their wholesalers was told was that Pontoon had production issues. which was not true. So basically, you know, Patoon has made all of this beer and they need to be reimbursed by Vivana and that never happens. And there's basically a lot of money that's kind of outstanding. For their part, Bavana has told us that they say Pontoon owes them money. And we've asked for proof of this. They've said they're trying to join Pontoon's Chapter 11 filing as a creditor. The deadline to do that has passed. They were informed of it, as we've been told by both of Pontoon's lawyers. And you can also see it in the court documents when all of these notifications were going out. And they are not listed as a creditor. There's nothing in the court filing that suggests that they have done this. They do tell us that they are trying to be, but have also declined to show us evidence of this. So it's a bit of a sticky situation, but they do say that they, you know, Bavana says that they're interested in appealing the court's rejection of the contracts between the two of them. We'll see if that happens. But basically, the plan for Pontoon is to start distributing to their own distributors in May. They're, you know, very anticipated. Limited release Rainbow Smiggles. which is a Berliner Weiss aged on fruit candy and breakfast cereal. Interesting. Interesting. Yeah, definitely a hype beer for sure. So I mean, we'll see what happens. You know, this isn't the first time that we've heard some breweries that have been involved with Bavana be a little less than satisfied with the experience.

[00:09:52] Zoe Licata: Yeah. We've talked a couple of times about what exactly their model is and how that works. And even Pontoon said they think a model like this could work possibly. They said it was more of an ownership problem, but it's that question of, can you really be this kind of, like you said, fourth tier provider in the beer space? Does that work? How does that work? they're trying to kind of give a modern take on the industry that is so ingrained in the way that it does things. And so it's kind of difficult to change that up at all.

[00:10:30] Managing Editor: For sure. I mean, anybody that says that they're like trying to revolutionize the three tier system immediately, like it gets an eyebrow raise for me because it's so entrenched. It's 90 years old and there's a lot of powerful interests involved in keeping it. So. Also, there's a lot of things about it are just convenient. Like this is the way it is. And craft beer wouldn't exist the way it does, the way it did like 10 years ago without distributors. Yeah. Today Tap Rooms is a whole other ballgame. We'll see what happens. But yeah, I mean, it's the pontoon story. It's interesting to see them really kind of claw their way back under bankruptcy. And Sean is feeling really optimistic.

[00:11:13] Zoe Licata: Yeah, it's good to hear when we've seen so many bankruptcy filings so far already this year. It's been a like unfortunate trend already in 2024 of these bankruptcy filings. So to see that there's a brewery who's actually sticking to their word so far to say that, yeah, we're going to still be operational after this. We can figure out how to function after this. This slightly positive at a very kind of uncertain time. And we saw another bankruptcy filing come out this week. from Carbon 4 Brewing Co of Wisconsin. Insiders might remember them from last year. They bought the IP for Ale Asylum's beers and started producing those after Ale Asylum closed. Then they were involved in a lawsuit, some arguments between the co-founders. This company was started over 10 years ago now by two brothers, Zach and Ryan Koga, and their friend, Alex Evans. And Alex Evans is the one who filed that lawsuit against Ryan and Zach, claiming that they misappropriated corporate opportunities from Carbon 4 with deals like the Ale Asylum deal. So there was already some Interesting situations, I guess you could say, going on there and we got a lot of details from this recent bankruptcy filing about what really was going on internally and some of those conflicts. We're still digging into all the filings now and all of those details. but just not, Alex is not really happy with what was going on in that business and was actually trying to get out of the business before the pandemic and that those negotiations got stalled because of everything happening with the pandemic. So they filed for Chapter 11 and they're saying they are also going to continue to operate essentially the same as they have before. They already got approved for part of their claims where now all worker salaries are covered, are secure right now. but there's still a lot to dig into and we'll have all the details The Brewbound.com for insiders, but it's another very sticky situation over there.

[00:13:31] Managing Editor: Seriously, God bless bankruptcy court filings. You can find out so much.

[00:13:36] Zoe Licata: Yeah.

[00:13:37] Managing Editor: Another deal that broke this week, Zoe, you and Justin chatted with the team on this one, but the two biggest names in hard kombucha are now combined into one brand fam.

[00:13:46] Zoe Licata: yeah Flying Embers and june shine so getting the hard kombucha pretty small market still but now over 60% of it is going to be owned by this same group. So Juneshine has acquired or is currently trying to close this week acquiring Flying Embers in an all-stock deal. They are keeping both brands as of right now, so they're going to continue to sell Flying Embers and Juneshine products separately. And Jess and I talked to Forrest, who's one of the Juneshine co-founders, And he said, there's some overlap in the brands and some of their messaging, and they have some similar ABVs, similar quality in their products, but they have enough differences that they think they can still maintain both brands as is. Bill Moses, who's the co-founder and CEO of Flying Embers, is going to join Junshan's board of directors. That board right now consists of Forrest, along with the other Joonshine co-founder and CEO, Greg Serrero, and two large investors for Joonshine. So they still are hammering out some very small details as of recording this. So we don't have an absolute finalized closing date yet, but Forrest also told us they're trying to work out how they can get as many members of Flying Embers's sales team over onto Joonshine as well. So they have to figure all that out. A little shout out to Dave Infante who first broke that this news was happening. He got his hands on some internal memos. So he had that in his fingers newsletter last week where you might've heard some rumblings. And yeah, it's interesting deal. The hard computer market is not the largest thing out there. So to see the kind of two biggest brands come together and be like, all right, we're going to dominate this is interesting.

[00:15:47] Managing Editor: And Junshin has diversified their portfolio quite a bit, right? They do RTDs, they've got a light logger. Did Flying Embers do the same?

[00:15:55] Zoe Licata: Flying Embers had done some other kind of like what they characterize as like flavored malt beverage products, but June Shine definitely had been more specific about creating themselves as a more like total beverage brand. And this acquisition they said is an extension of that, of trying to be more of this bigger creative portfolio company. But yeah, that light lager brand from June Shine just launched this past month as well. So that's brand new. That one they're trying to get more of, that has a pretty predominant male consumer demographic, while June Shine's consumers are majority female. So trying to get more consumers into the fold there. And then their canned cocktails have been on fire and are really starting to grow in there, both in distribution and how much volume they account for in June Shine's portfolio.

[00:16:46] Managing Editor: Well, I mean, that's a lot of smart diversification, so good on all of them. And it'll be interesting to see what happens with this deal. Yeah. So another thing that's up The Brewbound.com for insiders to check out is a story about a report from Bump Williams Consulting. They parsed out just the lay of the land in terms of non-ALK brands that have crossed over into Bev-ALK and what that could potentially mean for distributors and retailers. As always, the crew over there has some really smart insights. The Brewbound insiders can check that report out right now.

[00:17:17] Brewers Association: This episode is brought to you by the Craft Brewers Conference, where big ideas, bold beers, and brutally honest shop talk collide. Join thousands of industry pros leveling up their game. Don't miss it. Register now at craftbrewersconference.com.

[00:17:38] Managing Editor: This week's featured interview is a conversation with two leaders from the California Craft Brewers Association. I was not a part of it, Zoe. You and Justin chatted with them. What can you tell us about our guests?

[00:17:48] Zoe Licata: On that interview, we have Alicia Barr, who is the co-founder of 5050 Brewing Co Truckee, and Peter Hoey, who is the co-founder and brewmaster of Urban Roots Brewing Co Sacramento. They are talking to us about the California Craft Brewers Association and what they have planned for that event next week, as well as just an update on what the California Craft scene is like right now. how breweries are performing, what consumers are into. We know California is a super heavy craft scene and we kind of look to some of the trends in California Craft see what could be happening in other places in the country or could be coming up. So they provide a lot of good insights, a lot of talk about what does the own premise look like right now? How are tap rooms doing? So a really good conversation and a nice little preview for what you can see if you're attending the summit this next week, which Jess and Justin will also be at. So go say hello. We are going to have a booth there just like last year and recording The Brewbound Podcast on location is what we're calling it for the first time. But yeah, Jess and Justin, you both have some pretty good interviews lined up. It's going to be a fun time. So excited to see what comes out of that.

[00:19:05] Managing Editor: Yeah, we've got some great chats lined up, but we do still have a couple slots in the schedule. So if you want to come hang with us for a couple minutes and put on the headphones and talk into a microphone, it's kind of a good time. So drop us a note at podcast The Brewbound.com. Justin and I will be on the trade show floor. All of that is going down in Sacramento on Wednesday, March 13th and Thursday, March 14Month and Zoe, you will be holding down the fort back here on the East Coast because you are getting ready for some PTO in Montreal, which I'm so excited for you.

[00:19:38] Zoe Licata: Thank you. Yes, I unfortunately am not going to CCBA, but I will be going to the Montreal Canadiens vs Bruins game on Thursday. So I will report back on all the fun things I get up to in Montreal, any delicious beers I get to. I don't really know too much about the Canadian beverage scene.

[00:19:58] Managing Editor: Honestly, we went to Montreal last Thanksgiving and I was pregnant, so I don't know too much about the beer scene either, but I can tell you the bagels phenomenal.

[00:20:08] Zoe Licata: On my list. Ready for some good bagels.

[00:20:11] Managing Editor: Yeah, I've got a whole list for you. So perfect. Sorry, I can't help you with the drinking. Okay, so that's the news. Again, you can check out all of those stories and more The Brewbound.com. Join us as an insider, but let's get to our next edition of Another Round or Tabbing Month and Zoe, it is our first podcast happening in Women's History Month. And since it is a Girl Power podcast episode, I want to get your thoughts on the fact that we're about to be overrun with generic, like, what is it like to be a woman in beer conversations that will happen for the rest of the Month and Zoe will not talk about that again for another 11 months. And then this cycle will repeat itself next March, I assume. Are you getting another round? Are you tabbing out on the overall? You're a woman in beer. Wow.

[00:21:04] Zoe Licata: I think it's pretty easy to assume. I'm going to say I'm tapping out on that. We have had those conversations many times. It's the same thing that happens, I think, with other times. Like Black History Month, when people are promoting Black businesses, Black people in the brewing industry. But it's not just a one-month thing. You're supposed to be supporting people within the industry all year round. and having, I think, more elevated conversations about, okay, what can you actually do to create a more supportive community, more supportive industry? What are the things that we're dealing with on a daily basis that you might not think about? And not just doing it because you know you're kind of taking off a box because it's Women's History Month. I'm going to assume you feel pretty similar about that as well.

[00:21:54] Managing Editor: I feel extremely similar. I am with you. My tab is closed. I am in a Lyft on my way home. Like you said, it's important to support people from typically underrepresented communities that are trying to make their mark on the industry. But I mean, just having the you are a lady brewer. That is weird. Like, what are we doing? Yeah, you know, it like really gets my goat this time of year and honestly all year. But like the word badass. It will be used to refer to a woman who's just like living her normal life. You and I, I feel like people assume that, you know, if you don't know us, you'd think beer business writers, you probably are picturing not me and you. But whenever people are like, oh, and you're like such a badass reporter, it's like. Why? I'm just living my life, doing my job. I'm an old mom. There's nothing badass about this at all. I'm just doing what anybody else would do. So just before you're about to refer to somebody who, I don't know, a woman in beer sales, a woman who works in distribution, a woman who makes beer, like maybe some people do want to be called badasses and good on them, but nah, I said the fly. Yeah. Would you use that term to describe a man doing the same job?

[00:23:08] Zoe Licata: The exact same job. Probably not. That is a very good point.

[00:23:14] Managing Editor: Thank you.

[00:23:14] Zoe Licata: I would also like to make a special call out to all PR companies and stuff. We get a lot of pitches about women in the industry during History Month about like, oh, hey, do you want to highlight this person? Send us those like all year round. We want to know about these people and the cool things they're doing all the time. But I'm less, I know, at least for me personally, I'm less likely going to pay attention to it and want to write about it because you're specifically calling out, hey, it's Women's History Month. Do you want to talk to a woman? These are people that I assume by what you're writing are doing really cool things. I want to know about it all the time. And I don't want to feel like their accomplishments are almost like invalidated a little bit because you're prefacing it being like, pay attention to it because she's a woman and it's Women's History Month.

[00:24:06] Managing Editor: Yes, 5,000%. Support women all 12 months out of the year, not just this one. I mean, this one's important too, but it's not like all of these women just take up this job for a Month and Zoe go back to whatever else it is that they were doing. No, like these people are in these positions all year and deserving of attention all year long. I think we solved all the world's problems. Great job. Well done. Well done, everybody. And with that, let's get to our featured interview with some leaders from the California Craft Brewers Association.

[00:24:46] California Craft: The largest gathering of California Craft brewers will take place next week with the California Craft Beer Summit. We'll be there on the trade show floor recording future episodes of this podcast. But joining us first to discuss the summit is Alicia Barr, co-founder of 5050 Brewing Co Truckee and a board member with the CCBA. Thanks for being here, Alicia.

[00:25:08] Alicia Barr: Thank you. My pleasure. Thanks for having me.

[00:25:10] California Craft: Also joining us is Peter Hoey, co-founder and brewmaster of Urban Roots Brewing and Smokehouse in Sacramento. Thanks for being here, Peter. Happy to be here. For our audience who may not have attended the summit before, how would you describe it, Peter?

[00:25:27] Brewing Co: Some people have referred to it as a mini CBC. It's a great mix of technical information for professional brewers, hospitality. There's a lot of other interactive elements like cooking demonstrations that are paired with beer right on the showroom floor. And then there's an opportunity to walk around and visit vendors from all different disciplines that service the brewing industry, from chemical suppliers to ingredient suppliers to equipment suppliers. So it's a really great one-stop shop for really expanding your knowledge and networking within the industry.

[00:26:04] California Craft: And Alicia, anything you'd like to add there?

[00:26:06] Alicia Barr: I mean, I think the mini CBC is a really great way to describe it. It's also a much more affordable way to get more of your team there. So obviously CBC can be anywhere in the U.S. It can be really expensive to travel there. And having something local in California, I'm able to send more brewers there. I can send my taproom manager there. It's not just like kind of the upper level management. And like Peter was saying, there's something for everybody. There's, you know, how to make your brewery more profitable for those who want to start getting in more to the business side of the brewery. And then there's social media tools and there's marketing tools as well as all the technical Brewing Co it's a really nice way to get kind of a team building element out of it. I think we're sending a team of five this year and it's just great network and it gets everybody kind of out of the brewery and invigorated in the industry. Just so much going on there.

[00:26:58] Zoe Licata: California is such a huge craft beer market and so many great breweries in that state. So I feel like we look to California Craft one of the key places for what's happening in craft. How would you guys describe the overall health of craft beer in California Craft now? Or what are some of the big things that breweries are dealing with right now?

[00:27:20] Brewing Co: I mean, I think some of t the world is being made h the cool thing about Cali of breweries here is good good beer. So if your nei good beer, it forces you in trading employees and employees graduating from assistant brewer and going on being a head brewer somewhere else, that culture of excellence really spreads throughout the state. And, you know, we're facing the same challenges that everyone in the country is with ingredient costs up and packaging costs up and all of that. But there's been a really good local response Especially for us, we run pubs and restaurants. There's still people coming to gather and people coming to drink beer and really take advantage of really what all of these breweries have to offer. And as long as the quality is there, the breweries in our community are meeting customers where they're at. They're meeting their demands, whether that's you know, fruited beers or hazy IPAs or a resurgence of lager or whatever it might be. And the people making them are really, really talented and really attacking each style really well.

[00:28:29] Alicia Barr: I would also say that the craft beverage industry has changed a lot in the last five years. You see a lot more craft spirits, boutique wineries, craft ciders, craft kombuchas. There's a more competitive space that craft beer used to really kind of have to itself. So it's a tougher industry as far as there's a lot more competition, but the craft brewers still feel like a rising tide together. To Peter's point, there's a lot of collaboration still within the industry. There's a lot of shifting around of employees as they grow and take knowledge to a new place. That is what to me is so inspiring about this industry is, yeah, it's a harder marketplace. There's more competition, but that collaborative spirit and that sense of rising tide is still very strong. And that sense of innovation, always looking for new, new styles, new way to do things and that gathering place.

[00:29:20] California Craft: Peter, you mentioned increased costs for goods and those sort of things. Is that really the biggest issue that's facing California Craft brewers at the moment?

[00:29:31] Brewing Co: It's that it's labor for sure. Just the cost of everything has gone up. We have always just we price our beer according to what it costs us to make it. So we use really premium ingredients and a lot of our very high end beers. And we've always had the attitude that like this is what it costs to make this type of beer, whether it's a barrel aged stout or a long aged lager or whatever style of beer it is. And if our guests no longer want to pay that price for that beer, then we fit it and we'll make a different style of beer. So it's pretty black and white for us. We're just applying a margin to what it costs us to make it. But yeah, I mean, that's challenging. We've been really fortunate. We have a very solid team here. We haven't had a lot of turnover on the brewing side, but I know that's challenging for other breweries trying to get, especially kind of entry level positions right now. It's the same story, just a different chapter. I mean, there's always, these challenges have always existed. There's just more of a spotlight on them. And there was a more exaggerated increase in the last couple of years is probably why everybody's feeling it, talking about it so much more.

[00:30:34] California Craft: Alicia Barr you seeing a lot of challenges, too, as far as the price of a pint, like how elastic is price at this moment with consumers?

[00:30:43] Alicia Barr: It's less elastic than it used to be. To Peter's point, we operate on a similar philosophy and we have pivoted beer styles to be a little more accommodating to the general consumer price point at this point. There's not as many people willing to spend a lot of money on a hazy IPA when there's a lot of good hazy IPAs out there for less. And so just kind of pivoting and finding that sweet spot of quality ingredients, but also something that your average consumer is willing to spend money on. California-specific, and Peter mentioned this, labor in particular is, I think, one of our biggest challenges. Every year, literally every year, the cost goes up, not just with the minimum wage, but with all of the additional add-ons after that. It's not just their salary, it's the workers' comp, it's the employee liability insurance, it's all these things that make it, especially if you're running a taproom, which is a little more labor-intensive, finding models that aren't so employee-dependent. I think the other California specific, and this is a little bit national also, is the consolidation of distributors. The smaller brewers are having a lot harder time finding room for a distributor to give them any attention because it's a lot of big brands. The local taproom is really key for our market these days, that gathering place, not having to rely on a broader footprint for distribution because with the current landscape of distributors, that's a tough one.

[00:32:05] Brewing Co: Yeah, absolutely. I mean, you know, beer is our passion, and we started as a brewery, but we've evolved into Urban Roots Hospitality Group. We operate four other restaurants in addition to the original Brewpub now, and all of the emphasis is on hospitality and experience, on guest interaction, on becoming a third place for people to gather where they're comfortable, where it's fun, where it's, you know, something they can come out and do. And that's just become increasingly important for a variety of reasons. Distribution has become more competitive. That's where a lot of consumers are looking for a bargain on packaged beer. They expect it to be cheaper than in the tasting room. So you've got price competition. You've got consolidation of distributors, which make it harder for smaller breweries to go to market, so much so that a lot of them have just said, that's not our path. We're going to stick to doing our taproom, direct-to-consumer sales. And a lot of them have been very successful with that. You create an atmosphere that people want to hang out. you get your highest margin possible selling it right across your bar, even your cans across your bar are better than going through a distributor than a retailer and then to an end user. That's been our formula. You know, we continue to invest in hospitality and experience. And we're seeing a lot of other breweries that started off as warehouse taprooms that are now investing more in whether it's decor or events or what have you to to bring people into their breweries and give them that brewery experience rather than kind of a transactional here's 20 bucks and here's a four pack of double IPA kind of experience that you know maybe we saw five years ago be pretty successful in the industry.

[00:33:37] Zoe Licata: Alicia, when the CCBA was going through what kind of the greater themes of this year's event was or the events that you wanted to put on, what were some of the key aspects that you wanted to make sure were a part of the event this year? Any like specific programming that you know brewers are really looking forward to this year?

[00:33:55] Alicia Barr: For sure. So last year was kind of the reintroduction and reinvention of the summit after the whole pandemic break and everything. And we introduced tap talks on the trade room floor as kind of a new concept. And those were a huge hit especially the closing one which last year featured Ken Grossman and Natalie and Vinny Choruzo. And it was it's an interactive like really get to know an icon in the industry experience. And I think that was a really fun way to engage everybody. It wasn't as formal as a big conference room. It was like on the floor and everybody had a beer in hand. It was just like get to know these legends of the industry. And this year, actually, Peter's business partner is featured, I believe, in the closing tap talk, which is going to be great. And so that was one thing we enhanced this year. We added even more throughout the general session, little tap talks, whether it's with a supplier who might have some really interesting info on a new piece of technology or just a brewer who's been experimenting with new methods, things like that. So we're trying to get kind of that smaller group informal sessions on the floor were a huge hit. So we're excited about that this year.

[00:35:03] Brewing Co: Yeah. A lot of the talks are about, you know, whatever track it's in or about how to get better. And I'm finding a lot of my colleagues energy is in that place. A lot of our neighboring breweries and friends that I talk with nationwide, you know, when there was the super period of growth, all of the energy was on, how can we keep up with this growth? How can we expand the seller? Was it a faster packaging line? How can we go to market more efficiently? And now that people aren't seeing 10, 20, 30% growth every year, a lot of the focus is now back on how can we be more efficient with our ingredients? How can we be more efficient operators? How can we work with labor better? How can we market more efficiently? It's almost a pause and reflection period to get better at the business of beer, to become better operators, in part because you have time to do it now, but in part because you have to, because you're not growing at 10, 20% anymore.

[00:35:58] California Craft: So what are some things that are working at the moment as far as being more efficient for each of your businesses?

[00:36:05] Alicia Barr: For us, we're getting better at economies of scale. We're getting a lot better at employee efficiency, honestly, like really taking an honest look at how many employees does it really take to work the floor, you know, getting the most out of our employees and being a little more strategic about which suppliers are used. You know, before it was easier to maybe do a one stop shop for a bunch of different packaging needs and things like that. But now it's like, well, you know, if we really want to spend the time to dig down, we can save a lot of money if we get X from supplier A and Y from supplier B instead of even if it means having multiple invoices and vendors to manage, you can actually save a lot of money by just taking the time to really dig down. That's what we're finding.

[00:36:48] Brewing Co: Yeah, we found something really similar. Like I said, when you're in that stage of really rapid growth, you tend to just throw money at the problem. You're like, okay, we need to make more beer, we're hiring more people, we need to just have, you know, one ingredient supplier, so we can just order once and everything shows up and you go. And now you can kind of find out what works and really fine tune and find those pennies and nickels that you might be have just been leaving on the floor in exchange for expediency. You can turn that into efficiency in your brewery. I'm giving a lecture this year, not one of the cool tap talks, like fireside chat style, but in like a lecture hall, that's really about evaluating raw materials for small breweries. I was a brewer at Sierra Nevada, so I've worked at a really large brewery. And even when you work at a really large brewery, they have a division that deals with raw materials and the lab, and it's kind of sequestered from the brewing operators. And I've run small breweries that you often don't have time or the resources to kind of educate your staff on what you're really watching as an operator. And this is an opportunity to look and say like, hey, we're just going to go really quickly through malt, through hops, and how to translate that into quality and efficiency in your brewery.

[00:38:00] California Craft: You mentioned the consolidation in distribution as being one of the challenges out there. How much of that is born out of just the pandemic versus the slowdown in craft that we've seen the last couple of years?

[00:38:17] Brewing Co: I think it was happening before the pandemic. I mean, there were already very bullish distributors coming into the market and purchasing distribution or expanding their areas. I mean, that's always been, as long as I've been in the industry 25 years now, as long as I've been in the industry, the path to market has always been a challenging one for small operators. California Craft the ability to self-distribute, so that does give you an immediate path directly to retailers. but there's limits to that. If your aspirations as a brewery is to grow beyond a 5, 6, 7,000 barrel a year brewery, at some point, you're going to have to expand your region large enough that you're going to have to engage a distributor. And if you're going into a neighboring city or the other, you know, for us, like the other end of the state, we can't effectively self-distribute to Southern California. For example, you have to engage a distributor down there. And now you went from maybe a variety of choices to four. And it ultimately results in less choice for consumers, because a lot of times the larger distributors, if they'll take you, will say, okay, we want two flagships and that's all we're going to sell from you. And we know as small producers, part of the excitement of craft beer is, hey, here's our rotating seasonal, here's a new IPA, here's a new lager, here's a new this. And distributors, depending on your agreement with them, can just fold their arms and say, nah, not interested, we're not buying. So it limits choice, it limits your availability, especially if you are still kind of marketing your beers as kind of a what's new situation, like, hey, here's a new beer every month, which a lot of breweries still do. It can stifle that creativity and choice for consumers.

[00:39:57] Zoe Licata: We've heard the CCBA talk about things like this Distributed Beer Consolidation for a couple of years now. What other kind of big topics is the CCBA focused on? What are your kind of priorities for this year?

[00:40:10] Alicia Barr: So some of the priorities are really focusing. So one of the big accomplishments we had in the last couple of years was additional taproom licenses. So again, so that way, smaller breweries, you can have multiple resources to sell and be innovative with small batches of beer and not have to rely on distribution to get it out there. The other issue is right now we are allowed to ship direct to consumer within the state of California. However, it's kind of a gray area and we're seeking to solidify that so that then we could have reciprocity with other states to be able to direct to consumer ship again to some other states around the country, which again alleviates that distribution issue. The other thing that we're pushing this year is some better event licensing capabilities for craft brewers to be able to support community events with a catering permit. that makes it more streamlined and easier than it is right now. It's pretty convoluted right now. So basically allowing smaller brewers to get more interesting products to the market that wants them and not having to rely on big cumbersome systems. Peter, anything to add to that? I know you've been directly involved with Government Affairs Committee for the last couple of years.

[00:41:25] Brewing Co: Yeah, I mean, no, that's it. You hit it on the head. And you can see the common theme with what Alicia is talking about is, you know, events, hospitality, and then the availability to get your beer right to a customer, rather than having to go through an intermediary.

[00:41:39] California Craft: California is obviously one of the most mature craft markets out there. What consumer trends are you noticing at the moment, Alicia?

[00:41:48] Alicia Barr: We're noticing that a lot of styles will come and go with like a brief spike, at least in our region. IPAs are still the go-to. People want to taste those different hot profiles. They like seeing a variety of IPAs. You don't necessarily want a big triple or a big crazy sour IPA or anything. They just, I think they're going back to some of the retro concepts of just like really interesting malt and hot profiles. That's kind of what we're seeing. from our taproom consumer. As far as more of the outreach distribution consumer, people are looking for, and Peter alluded to this, price point on the shelf. If they want something fancy and expensive, they'll probably go get it in your taproom. But if they're looking for something on the shelf, they want something that's really more price competitive.

[00:42:33] Zoe Licata: Peter, when you're making those business decisions around that, what are you looking to most to see what consumers are looking for? Is it your taproom sales? Are you looking at scans? What is the most vital piece of information?

[00:42:46] Brewing Co: So our taproom behaves very differently, like Alicia alluded to, behaves very differently than our distribution. We found over the last year, like high priced, high alcohol, say double IPA in four packs, really sells better in our taproom than it does out in distribution. So we've pivoted and started making smaller batches of those kind of more, you know, we call it more premium products and selling them in our taprooms and not been pushing very little into distribution. especially if you're like a double IPA, you know, we only give those beers 60 days on the shelf. So we really need to see pull through in sales. So if I flood the market with a beer that's too expensive, that makes it sell slower, we're pulling beer back that's out of code. And that's, that's no good for anybody. So just seeing those beers go down despite the, we'll call it the Voodoo Ranger impact on the IRI scan data, we're seeing the opposite where all of our growth is, is in lager and in West Coast IPA. Now, I don't know that we're the right litmus test for that because we've brewed very few hazy IPAs since we've been open. We've been open six years now and it's really not been a thing. Right now we have 22 beers on tap and one hazy IPA. It's just not a thing that we do, so it's not something that the people who know us and know our brand are not coming to us for that. We do see a lot more lager sales happening, both in and out of our tap rooms. We see that every year and every year somebody says it's going to be the year of the lager. I'm still waiting for it to be the year of the lager. I would love that. About 60% of our production is lager. That's down a little bit. As we pushed more into distribution, our IPAs are skewing it a little bit higher. But certainly in our taproom, when we run our product mix, we sell a lot of lager here. 10 Degree, our Czech lager, is one of our top-selling beers. And we put very, very little into distribution, and we brew 60-barrel batches, and our four pubs soak it all up. So we sell a lot of lager in-house, we sell a good amount, I think more than some locally into distro, whether that's going to translate to the year of lager, I'm hesitantly optimistic, maybe, but that's what we're saying. And when we meet with like larger distributors and they were like, Hey, can you come to market with the double IPK? And we're like, well, unless we're selling it for two for five bucks, we're not going to get traction with it. Not at our price point. And I'm not Brewing Co for that price point.

[00:45:12] Zoe Licata: We're continuing to root for the year of lager over here.

[00:45:14] Alicia Barr: I'm with you on that too. Actually, our Pilsner is our biggest seller at our pub. It's then followed by all the pails and IPAs that we make, but the Pilsner is the big seller. We're eagerly optimistic for a year of the lager too.

[00:45:31] California Craft: Well, before we let you go, what's one thing that should be on everyone's radar for the summit?

[00:45:37] Alicia Barr: I'm really excited about the keynote speech, the welcome from Rob Todd at Allagash. I think it's, again, an industry icon who's been through a lot of ebbs and flows in the industry. Brews such a, from a market standpoint, unique style of beer that is still crushing it. That's probably what I'm most excited to just hear his experience, his strategy, his thoughts on that.

[00:46:00] Brewing Co: For you, Peter? For me, I'm a technical brewer, so it's always the technical talks for me. A lot of the speakers are the same speakers that present at CBC, at MBAA. They're highly qualified, really knowledgeable speakers. And it's my opportunity to go and learn something new and get inspired and bring that back. And very much like Alicia, we're sending our whole brewing team. So someone's going to come back with a nugget of something that they want to try in the brewery. that they experienced or my taproom manager is going to come back with a new event idea or operations idea. So I love getting better every day. I mean, I love learning and growing and getting better at brewing and better at restaurant operations. And to be able to interact with some of these professionals who've been doing it for a very long time is something that's really, really valuable to me and my team.

[00:46:49] California Craft: Well, we appreciate the time, Peter and Alicia. Thanks for joining us. Appreciate you having us.

[00:46:54] Alicia Barr: Thanks so much for having us.

[00:46:55] California Craft: And that's our show for this week. Thanks to Jess and Zoe for all they do. Thanks to our audio team. And thanks to all of you for listening. We'll be back next week.