Brewbound Podcast: Kelly Meyer Explains How Not to Start A Damn Brewery

[00:00:00] Brewbound Managing: How should you not start a Damn Brewery? Kelly Meyer is here to tell us. Next of the Brewbound Podcast. Hello and welcome of the Brewbound Podcast. My name is Justin Kendall and I am the editor of Brewbound and I am joined by Brewbound Managing Editor, Jessica Infante. Hello, Jess.

[00:00:29] Jessica Infante: Hello, how are you?

[00:00:30] Brewbound Managing: I'm well. Also joining us, as always, Generation Z correspondent, Brewbound reporter, Zoe Licata. How you doing, Zoe?

[00:00:40] Zoe Licata: I'm doing great. Glad to be here.

[00:00:44] Brewbound Managing: Yes, and a survivor of hard Mountain Dew. Oh, yes. We'll talk about that in a little bit. Also, we've got a guest coming on from How Not to Start Damn Brewery, Kelly Meyer. He started New Braunfels Brewery in Texas and it didn't go so hot. And then he sold it last year and now he has a podcast talking to a lot of folks about their experiences of shutting down their breweries. So, a theme that we're hearing a lot of this year and also joining us this week at the top of the show. We don't usually do this, but this is very exciting. Kate Bernot from Good Beer Hunting and all kinds of the publications. Thanks for being here, Kate.

[00:01:33] Kate Bernot: Thanks so much for having me. This is fun.

[00:01:36] Brewbound Managing: Well, we're excited to have you back because you had a big story last week that we followed up on, but like you really got the CEO of Modern Times to spill the tea on their plans for what they're gonna do now that they've shut down four of the tap rooms for, I believe it's what, four of eight, Jess?

[00:01:55] Jessica Infante: Four of eight, about half.

[00:01:57] Brewbound Managing: Yeah.

[00:01:57] Jessica Infante: Actually half. There's no about there.

[00:02:01] Brewbound Managing: Yes, no qualifiers and laid off about what? Well, not about 73 workers. Yes. So coming out of your conversation, we learned that they're open to, I think she said, entertaining a buyer or an investor. So tell us a little bit about how that all went.

[00:02:22] Kate Bernot: Yeah, I think I was struck in my conversation with the relatively new Modern Times CEO, Jennifer Briggs, by just how drastically the company seems to need to change is what I heard from her. Not only in the sense of closing half its tap rooms and laying off a significant amount of the workforce, which Jennifer seemed extremely genuinely pained by. I mean, I don't think anyone wants to start of the tenure as CEO with huge layoffs like that. Not just in terms of closing the taproom, but in terms of reorienting the company to be much smaller and much more SoCal focused than it had been. And also potentially bringing on an investor or buyer, which would include, she seemed to allude to consolidation happening with other breweries and could they be part of something like that? So some of the collectives that we've seen become even more popular. So it seems that Modern Times is quite publicly shopping itself around.

[00:03:22] Brewbound Managing: Yeah, I've never quite seen anything like that before where the CEO of Damn Brewery just kind of a major what top 50 brewery, right? Just throws it out there that you know they're open to a sale. It's out there.

[00:03:37] Kate Bernot: Yeah, I think those conversations usually seem to happen sort of back channel, like, oh, we know if you're in the know that so-and-so is kind of maybe looking shopping around, but this was a very public, yes, hello, we are open to that possibility, which again, yeah, did feel like nothing I've ever heard before quite in that form.

[00:03:59] Brewbound Managing: A lot of times it's just an anonymous book where it's like top 50 brewery that produces X amount of barrels in the Western half of the United States. And then you start the guessing game and going through the new brewer, looking to see who's 60 to a hundred thousand barrels and trying to suss out, you know, how many tap rooms they have to figure that out.

[00:04:23] Kate Bernot: Yeah. I wondered if that was a sign of, you know, Jennifer's preference for just sort of directness and transparency, which she also talked a lot about in terms of the context of the company and how she wants to really embrace open book management and be much more transparent about forecasting and budgeting, or whether that was a sign of the, I don't know, ticking clock on, on this. Obviously she was pretty candid that the company was in rough financial straits and needed to immediately make changes to shore up finances. So hard to say exactly why this sort of unprecedented transparency is happening, but it's kind of, I don't know, for a journalist, it's kind of refreshing to just get the, get the word straight from the CEO without beating around the bush.

[00:05:11] Jessica Infante: And their financial situation is a little interesting. And I know Jen talked about this with you and pointed out the fact that their majority shareholder is the former CEO and founder, Jacob McKeon, who owns about 50.5% of the company. Now, Jacob stepped down almost a year ago in late May of last year amid the reckoning that charged through the craft beer industry. They were named a few times as being a toxic workplace with some favoritism and some other harassment. And so Jacob stepped down, but he does still own half the company. And Kate, I know Jen told you, like, he's going to want to move on. So they're going to need to figure out a way to let him out. Right.

[00:05:54] Kate Bernot: Yeah, I mean, she said, you know, he's the majority owner of the company. He still cares a lot about the company, but he might be ready to move on. So how do we recapitalize if he moves on? I did reach out to Jacob via email for comment and he didn't get back to me. So we kind of have to take it second hand that that's how he's feeling, but in the absence of a word from him, I'll take that. So yeah, it sounds like he could potentially be ready to let someone else do this.

[00:06:22] Brewbound Managing: And there are a lot of notes that are coming due that were related to that ESOP that Modern Times did that are going to be starting payment to Jacob, to his brother and to his father starting this year.

[00:06:35] Kate Bernot: Yeah, that's an interesting aspect of the financial structure of the ESOP having what a 30 something percent stake in the company. Yeah, so that creates some financial transparency, but you know, ESOPs are not the same quite as other employee ownership structures. It's kind of a retirement plan essentially. So yes, just a really unique setup for this company that I think you know, there are broader lessons to take from perhaps what's happening with Modern Times, but it also feels very specific in other ways. So I'm sort of cautious about painting too broad, like taproom models are dead, you know, from this news because the company is structured so uniquely.

[00:07:19] Brewbound Managing: Well, in a lot of the tap rooms, they ran long on construction. Some of the open right before the pandemic, and then you're operating in very expensive California, and also during the pandemic, very shut down California.

[00:07:35] Kate Bernot: Right, totally. There are some definite unique situations there, but it just, I couldn't help but think personally about my experiences with Modern Times as I was writing this story. I remember going to visit Modern Times in San Diego on a San Diego trip in something like, I want to say 2016 and just cannot overstate that it was the coolest, thing going like the tap rooms were packed. People just could not get enough of it. And six years is not that long ago. And just I couldn't help but kind of having that image of the San Diego tap rooms in my mind as I was reporting this and thinking how quickly things can change. Not to get philosophical.

[00:08:21] Jessica Infante: No, but I mean, when you look at the taprooms they're closing, and they've been very clear about this, they want to focus on Southern California. of the taprooms that have shut down is Oakland, Portland, Oregon, LA, and Santa Barbara. They kept Anaheim, which in my admittedly limited detailed knowledge of California geography is near LA-ish, but really focusing on San Diego. And they've also retrenched out of the Pacific Northwest will no longer be distributing beer there. But the rest of the footprint they're keeping intact, which I thought was interesting.

[00:08:57] Kate Bernot: It feels like such a dramatic. change from how they want to be perceived as a company. A few years ago, it seemed like they had this regional expansionist mindset that they were going to be almost like an entirely Western US brand with locations and sales. And now it's very much like we want to be known as a SoCal brewery, even if our beer is sold elsewhere, like we very much want to be associated with this place. And something Jennifer had said to me that didn't quite fit into the story that I wrote for Good Beer Hunting, but she said a question that has been on her mind even as far back as her tenure at New Belgium is breweries today, is there a place where you get to be quote, too small to be big and too big to be small? And do you fall into this weird valley where you're just not quite one of the other. You don't have the purchasing power to compete with the big boys. You don't, people don't perceive you as small enough to be truly local craft and you're just high and dry, which again, feels like a very 2022 conversation.

[00:10:05] Brewbound Managing: Did you get the sense that there is any help of the way?

[00:10:12] Kate Bernot: I couldn't say really. I, you know, they're looking for it. It seems like the company is being much more realistic in its forecasting, realistic in its budgeting, making some really tough decisions, which I think can only, you know, dealing in reality can only be a good thing. But as far as outside help, I think they're looking for it. I don't know. I didn't get the sense that there was anything immediately in the works, but maybe there's behind the scenes moves that I'm not privy to at this point.

[00:10:45] Brewbound Managing: I'm just struck by going back through some of the SEC filings that they put out there during a WeFunder raise for around a million dollars. And, you know, at the time, I remember thinking, I don't know why they're doing this. Why do they need one million dollars? Why are they showing us their books? Well, I mean, they had to show us our books like that. To get the million dollars, you have to show your books. They suffered losses in 2018, $2.9 million, 2019, $4.7 million. I can't speak to 2020, that wasn't in any of the documents, but you gotta think, we're bumping up against the pandemic there, and of course, there wouldn't be 2021 numbers in there either. So, you know, I can't speak of the last two years, but the two years before that, we know that they were operating with net losses. And that was very striking for a business that, like you said, you know, like has the outward appearance of being rather successful, you know, packed taproom being one indicator, you know, but large growth plans that didn't pan out.

[00:11:57] Kate Bernot: It is striking that if you are valuing your company at nearly $300 million that you're willing to open up all your books or a lot of your books to raise $1 million perhaps. Yeah, that should have been more striking at the time, but those were heady times for a lot of folks, not just Modern Times, but, you know, certainly the Southern California beer scene seemed like the good times were never gonna stop rolling. And it's, again, it's just hard to even contrast that mindset with some of the really difficult realities today.

[00:12:33] Brewbound Managing: Jennifer's candor to of the valuation was was just it was like one statement after another. My jaw kept hitting the floor because it's like when she said, you know, that was, you know, of a bygone era, which we all know that bygone era where Ballast Point sold for a billion dollars and Lagunitas sold for a billion dollars. And their buyers end up incurring multiple impairment charges that write down the value of the brands in the hundreds of millions of dollars that we've seen with Lagunitas and Ballast Point over the last recent years. And then for her to say, it's of that bygone era and expectations when they reevaluate in May or June of this year is that it's going to be pretty low. I was just like, wow, like I'm just shocked.

[00:13:23] Kate Bernot: I also shocked. And as we were having this conversation, I was sort of, I will give Jennifer credit for, I think, making her point very clear about these valuations all being inflated at the time, never outwardly coming out and saying Modern Times was overvalued. There are probably legal ramifications for doing that if you have investors, but saying that all of the were of, a time of unanchored optimism, as Modern Times put it in their blog post about this. Yeah, quite striking, but I really do appreciate, yeah, her candor. And I think she's approaching the really difficult task ahead of the as we can't do business the same way. We can't We have to be honest, transparent, kind of radically upfront about what's going on. And this feels just like a very new wave here.

[00:14:19] Zoe Licata: I think it connects really well of the conversation we're going to hear later that we had with Kelly as well, which he was talking about. There seems to be a lot of optimism in craft and this message of like, we can recover. We're always focusing of the good things. And this was a nice little change of pace of like, oh no, we got to be realistic about what's going on if we want to actually do what's best for craft. So it was nice to see that from an actual CEO. Agreed. Yeah.

[00:14:47] Jessica Infante: Well, Kate, thank you so much for joining us. It's always a delight to see you, whether that's on Zoom or on Twitter spaces or via text, and maybe in person in May, definitely in person in May.

[00:15:00] Kate Bernot: Definitely in person in May, where we can hold each other's hands and see that we are flesh and blood humans. That'll be a nice change of pace. But yeah, in the meantime, always happy to join on Zoom and to be part of such smart discussions. So thank you so much for having me. Oh, you're too kind.

[00:15:18] Brewbound Managing: Our pleasure. Well, let's get of the rest of the news this week, although that was a big news segment, but we got more big news. Oh, we've got big news. I'm excited. We got the biggest news, which is not New Belgium and Bells consolidating their distribution with Reyes outside of Michigan. It's Zoe drinking hard Mountain Dew. Although we should probably talk about Reyes and New Belgium and Bells.

[00:15:49] Jessica Infante: Let's do that first and we'll leave the people on a high note with the present, a gift of Heart Mountain Dew.

[00:15:57] Brewbound Managing: Yes.

[00:15:58] Jessica Infante: So Justin, you got a phone call today from our friends at the crew at New Belgium. What did they tell you?

[00:16:05] Brewbound Managing: They said, do you have 10 minutes? And I said, I have 10 minutes. And what I learned in that 10 minutes is that New Belgium began notifying Bell's wholesalers on Monday of plans to consolidate the portfolio with the Reyes beer division, presumably with the Reyes beer division. I don't wanna get too far ahead of ourselves, although the statement pretty much says with the Reyes beer division in several markets outside of the state of Michigan. And so they didn't offer granular details of the states, these wholesalers, anything like that. There's still a lot of work to do to get there. But Steve's statement pretty much said it all, which is, you know, they reviewed their distributor network and they started notifying impacted distributors of the plans on Monday. In the state of Michigan, though, they call that a critical state for Bells and New Belgium combined and we don't anticipate any change in our distribution networks there in the near future. And then you know the big news Reyes has been a great partner for New Belgium and they have played a huge role in our industry leading growth, we realized. that Bells opted out of Reyes houses and pursued a different strategy, which was logical for its business at the time. We know Tom Day and the entire Reyes team is very excited to sell the Bells portfolio, and that's the kicker there. Tom Day and Reyes excited to sell the Bells portfolio. Words that would not be coming out of my mouth if Larry Bell was still the owner of Bells, but That roadblock is out of the way now and it's off of the races.

[00:17:49] Jessica Infante: Nope, Larry's retired. I hope he's hanging out on a beach somewhere. And the interesting thing here is that, you know, yes, they're holding Michigan out, but Ray's hasn't been in Michigan that long. Ray's only acquired powers distributing in October. And that to me totally makes sense. I know after the Boston Dogfish had went down, I think what was really important for Dogfish was to retain their wholesaler networks in the state of Delaware. So this is an unprecedented.

[00:18:14] Brewbound Managing: No, not at all, but there's a level of vitriol that was there before. Yes, I don't know that Sam- It was very public for a supplier to pull out of an entire state like Larry Bell did with Virginia when they ceased shipments to Virginia in 2019 due of the attempted sale of Bell's distribution rights to a Reyes subsidiary. That's a big statement. And then, as you pointed out, Larry wrote a letter that very specifically listed the Reyes Beer Division, wholly owned Anheuser-Busch, InBev, and Molson Coors wholesalers as ones that he would absolutely refuse to accept a sale of his portfolio to as a successor wholesaler.

[00:19:04] Jessica Infante: Yeah, and that was just a letter, but they actually started writing that clause into contracts with new wholesalers moving forward.

[00:19:10] Brewbound Managing: Yeah, so this is a sea change.

[00:19:13] Jessica Infante: Totally, big about face.

[00:19:15] Brewbound Managing: New ownership, new world, and we don't have all the details yet, but those details are likely to come out. And a lot of people, unfortunately, probably didn't have great Mondays.

[00:19:28] Jessica Infante: Sure, it was not probably a fun thing to hear in the least, but you know what will be a super fun thing to hear? Zoe, tell us all about your field research with the hard Mountain Dew samples you received. Tell me everything. Cause I didn't get a box. I'm not cool. Like walk me through this. What was this experience like when do a vision ended?

[00:19:49] Zoe Licata: I received a very large package on my doorstep. Um, and inside was a very beautifully crafted wooden box labeled like hard mountain dew on top smelled like freshly cut wood.

[00:20:04] Brewbound Managing: I would call this a chest or a crate.

[00:20:07] Zoe Licata: Yes.

[00:20:08] Brewbound Managing: More like a chest.

[00:20:08] Zoe Licata: That would more accurately describe it. Yes. Beautiful chest. Hard Mountain Dew on top. Open this lovely chest and there is a pamphlet for the end of the Dewhibition. We now have Hard Mountain Dew and one of each of the new Hard Mountain Dew flavors. of the Watermelon Baja Blast, Original Mountain Dew, and Black Cherry. And so my lovely boyfriend Lawrence posted a photo of the products in the box on his social media and his phone was blowing up for the next 24 hours with everyone under the sun asking where he got it. How can they get some? Can they try it? And so I knew I had to to see what people's reaction was going to be of the actual product and conducted a very scientific experiment to gauge reactions. It was a whole occasion. This right there. Beautiful cans, I will say. I mean, I don't know if you call them beautiful. Very cool cans. Interesting designs.

[00:21:07] Jessica Infante: There's a wolf one that gives me Game of Thrones vibes.

[00:21:11] Brewbound Managing: I feel like Ed Hardy designed these cans.

[00:21:14] Jessica Infante: Wow. I wonder what the overlap is between Mountain Dew drinkers and Ed Hardy shirt wearers. So what was the most popular flavor?

[00:21:23] Zoe Licata: So overall, most popular flavor was the watermelon. There was a lot of debate at first about what was better, watermelon or black cherry. Those were the first two that everyone tried in this furnished basement in Boston, Massachusetts. But watermelon ended up taking it. It reminds me a lot of like a watermelon Jolly Rancher was what people were saying. Next, ended up being Baja Blasts at third Black Cherry, and then a unanimous worst number four was Mountain Dew. A lot of disappointment for the Mountain Dew flavor.

[00:22:05] Brewbound Managing: I will agree with that. That's the only one that I've tried thus far, and it tastes nothing like Mountain Dew.

[00:22:13] Zoe Licata: No, we brought a bottle of original Mountain Dew with us to as like our control to compare it and it was not the same. Smells the same. It tricks you a little bit and you're like, oh yeah, this is going to be the same. Not at all.

[00:22:28] Brewbound Managing: Now you almost need to mix it with an actual do.

[00:22:31] Zoe Licata: Yeah, it's a very light flavor. We decided it was similar to like a Sierra Mist or like a watered down Sprite is the vibes we were getting.

[00:22:41] Brewbound Managing: Yeah, get angry letters there.

[00:22:45] Zoe Licata: Sorry Sprite and Sierra Miss. The color, it's, they're colorful as the cans, if I remember correctly. So yeah, it is a little, has a little bit of a green tint to it for the original.

[00:23:00] Brewbound Managing: On black cherry, did it taste medicinal?

[00:23:04] Zoe Licata: No. So normally I do not like any black cherry flavored anything. And usually because it has that medicine like flavor to it. This is more like a sweeter black cherry. I actually didn't mind it. So that was a nice surprise. Someone compared it to like when you drink Kool-Aid and you don't quite mix the powder in enough. Not sure what that means, but that was their take on it. All of the flavors do have a, because there's no sugar, it has zero sugar, it does have artificial sweetener in it. And they all do have that artificial sweetener aftertaste, which isn't so pleasant, but the stronger flavors like the black cherry and the watermelon counteract that more than Mountain Dew or Baja Blasted.

[00:23:52] Brewbound Managing: Well, these are not available nationwide yet. They're available in Florida, Tennessee and Iowa, the home of the Iowa State Cyclones, the Cyclone State. So I guess they've got that going for them as well. Yes.

[00:24:09] Jessica Infante: I mean, these aren't even available brew bout wide, so whatever. Sorry, Jess.

[00:24:14] Zoe Licata: They did say it's an email away, so I could ask them to send you some.

[00:24:18] Brewbound Managing: It's okay. I will live. You have connections.

[00:24:21] Zoe Licata: I have connections. I have those Hard Mountain Dew connections. They're vital.

[00:24:26] Brewbound Managing: The Dew hookup.

[00:24:27] Zoe Licata: Yeah.

[00:24:30] Brewbound Managing: You probably shouldn't put that out there or else like people are going to be hitting you up.

[00:24:34] Zoe Licata: I know my inbox is going to be flooded now from like all of Lawrence's Snapchat friends. They're already asking. They are going to expand into 11 states by May. So there are more states coming in very shortly.

[00:24:48] Jessica Infante: You're really out here doing the Lord's work, my friend.

[00:24:51] Zoe Licata: Thank you. You can check out my Twitter for all the official rankings. Thank you for this intrepid reporting. Very important information.

[00:24:59] Brewbound Managing: How many people consumed these?

[00:25:02] Zoe Licata: This was seven, seven people.

[00:25:05] Brewbound Managing: Okay.

[00:25:06] Zoe Licata: A lot of people mad that they didn't get to participate, but these are still COVID times and you can't get everybody. We had one of each flavor.

[00:25:15] Brewbound Managing: Keep your circle tight.

[00:25:17] Zoe Licata: Yeah.

[00:25:19] Brewbound Managing: Well, I don't know that we should even follow that, but we'll try. And so let's get to our featured interview. So let's bring on our featured guest. We've seen a lot of breweries close over the last couple of months. So we figured let's have a chat with somebody who solely focuses on breweries and businesses that are closing. We have Kelly Meyer here. Kelly, thanks for joining us. Absolutely. Thanks for having me. So Kelly, you started How Not to Start a Damn Brewery. You were the founder of New Braunfels Brewing in Texas. You founded that brewery about a decade ago, and you sold it last year. And now you're of the third season of a podcast about businesses, primarily breweries, that have closed. And so I guess, having been through your personal experience and also sort of getting all these other personal experiences of people who have gone through very similar circumstances. What have you learned as sort of like a common through line in all of the closures?

[00:26:26] of the: Well, so I will preface that by saying that I have made it a point not to try to have a goal or a, I guess, a hypothesis on what we're going to prove. But I think early on, it's very easy to say that one of the most common themes is distribution is a killer, and you better watch your back. Other than that, there's a lot of recurring themes for sure. Undercapitalization obviously is a humongous problem, and just getting the attention of the consumer, it seems to be a very consistent story regardless of which brewery I talk to.

[00:26:56] Brewbound Managing: Does the word overleveraged come up a lot

[00:27:00] of the: So I'm actually interviewing primarily the guys that are smaller. And so we're using a lot of grandma money, maybe an SBA loan and definitely investor money. But I think that in some cases, it's under leveraged that they couldn't get enough money to get of the point to get to where they needed to be production wise. And we've dealt with that, too. But then very quickly, this very tight margin pushed right past that. And then you become over leveraged. And if you're around long enough, of course, you've refinanced your debt tremendously over and over of the point that you're adding to it. And then you're, you're over leveraged to a point that you just can never catch up. But I think you see both, I guess, with my point.

[00:27:38] Jessica Infante: Wait, Kelly, can you clarify something? Did you, did you start this by saying grandma money? Are grandmas out there, you know, like funding brewery openings?

[00:27:46] of the: Well, so that's, that's what I call an investment, or I'm sorry, inheritance money. Grandma's money she gave you or, you know, maybe, maybe it's pre-funeral that she's, that my grandma did that. She gave me some cash, you know, to kind of watch what I did with it and be able to experience that. And that was, that was grandma money for me. So that's a lot of pressure. Don't screw this up, kid.

[00:28:07] Jessica Infante: Jeez, mine gave me her wedding ring and her diamond earrings. And then, I'm sorry, I'm going to make this a sad story. And then our house got broken into and they got taken. But I would feel a lot worse if I had to close down a business. And on a happier note, I would just like to tell you that I really appreciate your decision not to split the infinitive in the title of the book and the podcast. I don't know that anyone else has ever called that out, but. Yeah, like you were just, you know, we, I did a little background reading and you were just getting ready to wind things down at New Braunfels in January of 2020. And then COVID happened and you got a little bit of a bump, but what was going through your mind when that started to happen? You'd already made up your mind that you were going to wind things down. Then the pandemic happened and then like curbside pickup turned out to be kind of popular. What was that like?

[00:28:57] of the: It was hard. And even I will remember back during the pandemic, which I'm sure Damn Brewery owners around the country had the same experience that it was almost day-to-day where it was like, oh, crap, we're going out of business on Friday. It's Monday, we're still here, so let's keep running. For months, it was like that. I remember actually there was a point in time where our production picked up so dramatically of the packaging side that I had to order more packed decks, more cardboard flats. I was like, I'm ordering three times as much as I did last time and those are already pre-sold. This can't last. This is going to fall apart. And granted it did eventually, but it ran for quite a while.

[00:29:36] Jessica Infante: So this sounds emotionally exhausting.

[00:29:40] of the: It was. And if you read the book, you'll you'll hear a lot of that in there from men, too. Or it's just it was just staring over the precipice, trying to convince myself that there was a pathway forward while accepting the fact that I knew that there wasn't, because talking to other people, the goal that I was trying to reach, they had all tried to reach and no one's reaching it. It's exhausting and it does feel a little bit like that hamster wheel thing, but more importantly, it was just, this is my family's life, the future. My kids are going to college in a few years and how am I going to pay for that? It was a traumatic experience for sure.

[00:30:13] Brewbound Managing: Did you dip into the tranche of PPP money or even the EIDL money that was out there and available to breweries, restaurants, businesses?

[00:30:24] of the: I did. And so I think that's one of the most interesting pieces of what's happened to our industry in the last two years is that in 2019, during that time when I was winding the brewery down, you know, kind of planning for the end, I didn't pay myself. And so PPP required 2019 payroll numbers, and I didn't have any. And so I basically couldn't really help from that, even though I was still working in 2020. But the EIDL is the thing I think that saved, in broad stroke, I'd say 60% of the British United States, where it was 75% of 2019 revenue, meaning that if you had lost money for the last decade, all of a sudden, if you happen to do a million and a half in 2019, all of a sudden, you got more money you'd never seen in your business. And that's where you saw a lot of reinvestment. Obviously, the owners took some home. We did the EIDL as well, and I swore I wasn't going to touch it. Obviously, that, you know, bandana crystal ball that I did touch it, I used it, I bought a bottling line, like many people did, like inline labeler, and ran that thing. And I mean, it definitely helped that we would have been that we would have been unable to perform at the level we needed to, to reach any sort of good months during the time of the pandemic without that equipment without that loan.

[00:31:40] Brewbound Managing: Have you heard stories from others that that money sort of helped stave off closures?

[00:31:46] of the: Absolutely. That's why many of the are not, the doors aren't closed. So yes, it was essentially free money and they said they were going to have you start paying it back. But I don't think a lot of guys haven't even started making payments on it yet.

[00:32:00] Brewbound Managing: I feel like that's why we're starting to see a few more now. The money's run out. There's no more of the table and whatever forgiveness is probably there already.

[00:32:11] of the: Yeah, well, I had predicted March of 2020 was going to be sort of the end of the world for the breweries to do it the first time. The first big correction is we hadn't really seen one in a decade. And obviously, with the pandemic, the free money, that ended up not happening. And so I, quote unquote, re-predicted that it would happen again this year. And it's definitely starting. I think it's going to drag out throughout the whole year. You won't get the big drop off in April like we would if we hadn't had that free money. But it's going to be a bloodbath this year for sure.

[00:32:41] Zoe Licata: I mean, we're a couple years into this now. How do you think the struggles that breweries are facing have changed since that beginning?

[00:32:50] of the: Well, in some ways, I think it's gotten worse. And if you look at, you know, we can argue all day long about the legitimacy of the Brewers Association's numbers. But if we look at their July 2020 to July 2021 numbers, during that period, we had a net gain in breweries. We put that on paper that cannot make sense like we added breweries United States during the time that everybody thought they were gonna go out of business every day. So that's a struggle with what you've seen happen if you look at the 20 2016 to now numbers of the Brewer Association as far as. the actual revenue that we've produced, the barrels we've produced, and the number of breweries that produced it, it's just cut, cut, cut every single year. Now what you're seeing is every Damn Brewery that opens is taking money from some existing brewery. There's no other place that it can come from. It's just getting harder and harder. Numbers are getting tighter and tighter. Then with increase in supply costs, the margins are getting smaller. I just think you've got a perfect storm of disaster. I don't see who's making money, I guess, is the point.

[00:33:54] Jessica Infante: So let's go back to your personal experience deciding to shut down New Braunfels. Sounds like it was a roller coaster, but how did you feel at the end of it? Were you relieved? Were you regretful? Like how did you end up feeling when you walked away?

[00:34:06] of the: So they actually started the brewery, my wife and I started the brewery in 2011 after selling another company. And we, that one was successful. We sold it, you know, great, great return on investment, um, funded our retirement, paid of the house. And when I sold the brewery, we literally made 8% as much money as we made selling that company. And I was somewhere around three times happier. Like I literally drove around that Saturday morning and was just like listening to Mighty Mighty Boston's and I had nothing to do. And I just, I never felt so light. It was the craziest experience.

[00:34:39] Jessica Infante: Oh God, that's wild.

[00:34:41] Zoe Licata: Is that something that you are seeing from other breweries that you've talked to that are, might be closing the doors that it's just, it's kind of not really worth that grind as much anymore. And there's just a relief there.

[00:34:53] of the: Yeah. And I've actually interviewed a guy Friday from Florida and he was talking about how he had fought through the pandemic and just, you know, day in, day out, uh, actually given him a little bit of an alcoholism problem. And he was kind of open about that. And he just said, I asked him like, do you feel comfortable telling me like, what was the last five months for you? Like you, when, when you finally closed and how have you felt? And he's just like, dude, I just wake up and I look at the ceiling and I'm just I just feel amazing. So yeah, I mean, there's a lot of that out there. There's a lot of people that I know that are still open, but they, the owner has another job and he's using the proceeds from that to fund his existing business. And you know, they're just, it's just miserable and you don't want to let go of the business of the baby, the investment, all those things. But at the same time, just imagine, you know, what you thought was your retirement plan is now destroying your retirement. And that's, that's a tough place to be.

[00:35:44] Zoe Licata: With that happening, I mean, what does that mean for craft? What needs to change for people to still think that it's worth it to stay in that and kind of keep battling?

[00:35:55] of the: Well, I know it's kind of a macro question, but I'll give you a macro answer that, unfortunately, I think that the correction is good for the industry and that as much as I would never wish that somebody would lose their life savings and their dream business, that the reality is we're just overblown with breweries and there needs to be some sort of correction. So that's a big part of it. And then, you know, if you can get consumers to stop drinking diabetes milkshake stouts, that might help too. And we can go back to real beer, but I think we all know the odds of that happening.

[00:36:24] Brewbound Managing: I want to back up a little bit because you had that, you know, freeing feeling when you sold your brewery and you're driving around and you're listening of the Mighty Mighty Ballast Stones and, you know, there's this lift off your shoulders. But at the same time, you had to go through a sale process. And, you know, it's probably not easy to find a buyer, but you were able to find a buyer. Internally, what's going on with you? You know, when you're thinking about selling your brewery and you've gone through this experience, is there a part of you that just somewhere deep down almost wants to warn the buyer and be like, Are you sure? Are you sure?

[00:37:00] of the: So I gave them a copy of my book. And my wife was definitely more vocal about her concerns on that front than I was, just in the sense because she had gotten another job two years before, so she no longer worked at the brewery. I think she had a little bit of distance from it. And so for me, I was basically, I come to terms with the fact that one way or another, I was out of this thing in three months. And so when somebody, and I actually had four bidders, basically, that were kind of looking at it, the people that did choose to finally do it, They had money, they wanted to do it for reasons other than profit. And there was one period where they asked me a question and I just looked at him and I said, guys, that's chapter eight. Like, I thought you read the book. You need to go read the book. Like, I'm not kidding. Like, I want to make sure that I share this information with you. Listen of the podcast. I know they've listened of the podcast. And so where I felt guilty, I also felt like I made it a point to educate them of the things that they needed to do differently. And I made myself available for consulting kind of indefinitely for, you know, for a daily rate, obviously, but they got free consulting in the beginning, because I wanted to do everything I could to set them up for as much success as they could get. But I also knew that it was going to be a struggle, and there's a really good chance that profitability wasn't part of the future, which, again, luckily, they didn't mind.

[00:38:19] Brewbound Managing: There's always stories of breweries opening. I mean, every local paper, it's always, you know, Damn Brewery opening, Damn Brewery comes, you know, finally a craft brewery here. And I'm sure you read some of the stories and you probably shake your head. So I'm curious to get, what are the red flags that you see with people opening breweries? What are the things that stick out in your mind that are like, oh, you're headed for trouble?

[00:38:46] of the: Well, if I hear one other brewery tell me that we're not in a saturation point because look how many San Diego has, I'm going to stab somebody in the face. That's one. It's like, well, look, there's only three breweries in town and blah, blah, blah has so many breweries. That's always a big issue if someone just sort of doesn't get it. It's we don't have the penetration nationwide. Overbuilt is another one. Between over and under, I think those are the two big things you see. Anything 20 to 30 barrels in 2022 is just suicide. And anything two barrels and under, there's no profit there. And the guy's just going to work his tail off over and over. The old idea of we're going to start with phase one and build into the bigger brewery, it just doesn't work. And the examples that does work are the exceptions that prove the rule, not vice versa. So those are big ones. And then a lot of times too, you'll go in and you can just tell by the beer lineup that, oh crap, like these guys are going to struggle. You got to have something special, but you've also got to be great. The days of when I opened, you could make mediocre beer and figure it out. Those are long gone. You better be badass from the beginning.

[00:39:49] Brewbound Managing: I know I always cringe when I see that there's a story about an older couple taking their retirement money and they always wanted to open Damn Brewery and so they invest in Damn Brewery. And that just scares the crap out of me when I see those stories. One thing that I sort of take away from a recent interview you did with Hanging Hills, one of the founders there, was that there's an industry messaging going on of positivity that maybe fuels some of this. Do you really think that that's the case?

[00:40:21] of the: Oh, absolutely. So think of it this way. I think that the constituents currently in the brewing industry that are reading, listening in many cases. And I will clarify, I do think yours is slightly different because you're more news driven than some of the guys. Some of the guys are trying to tell a story of positivity because the more eyes they've got of the page, the more money they're going to make. In all fairness, the Brewer Association is probably making more money than they ever have at the same time that the individual brewer is probably making less money than they ever have in the last 15 years. So it's tough for an organization like that to feel like times are bad. I get that. But the reality is that you have a responsibility of the people who are listening and coming to you for advice, to be honest. You know, one of the examples I think you probably heard in there, there was a magazine here in the United States, and I reached out to them specifically about that story of me selling the brewery and why, and a variety of the things that I had said and done. And one of the owners just straight up told me, he's like, you know what, it's hard to own Damn Brewery. Every brewery owner knows it. And so why would we want to talk about it? We want to talk about positive things and how to fix the problem. And I think that was the defining moment at that point when he wrote that sentence that We essentially have, we carry content for people who have figured it out and want to solve the problem. And I will fundamentally tell you on this show right now, I do not think that problem is solvable with 9,000 breweries in the United States. It doesn't matter which packaging line you use.

[00:41:51] Zoe Licata: Do you think COVID with, I mean, we had VA layoffs, there was event cancellations. Like, do you think that changed that narrative a little bit?

[00:42:00] of the: No, because ultimately what you heard when you start reading those magazines is that we figured it out. Now it's direct-to-consumer. And that's this new business channel that all of a sudden is going to make it all okay. And everybody knows that that business channel is going to be less than 10%, probably across the board. So there's not Damn Brewery during COVID that was struggling so much that 10% would fix it. That was better than nothing, for sure. And we would all take it. But We need something bigger than that. The distribution, the three-tier chain, there's a lot of different things you could touch that are a bigger issue that make it challenging to get to market. I think that each of the things individually would result in something more with just direct-to-consumer and isn't enough. even during COVID, like everybody was super big on what was local and support the family brewery down the street. We saw it, we benefited from it. It lasted maybe five months. And then, you know, everyone just sort of, and the restaurants had the same problem. Everyone just sort of went back to their normal life, you know.

[00:42:58] Jessica Infante: I'm hearing you say, and what I kind of have lived through my own personal experience being in and around beer for over 10 years, Craft beer kind of has like a toxic positivity problem. How much do we want to say everything is great and everything is fine and beer is really fun and we all love what we do, but... What we do is really hard. And I think I say we now, obviously different, but you know, like this is a hard industry and running Damn Brewery is super hard. It's really hard labor intensive work. And not to mention how much money it all takes, you know, like, I feel like you're right. Somebody does need to kind of be like how Dr. Fauci used to call himself the skunk at the picnic. We need to have more of this, like upfront, this shit's hard. And if you want to do it, you got to know that coming in.

[00:43:46] of the: I was just going to say I'm happy to be that guy. But at the same time, I do struggle with that a little bit where I don't just want to tell a negative message. And so one of the people I've reached out to to interview is a lender. And I've asked him, hey, let's talk about what business plans you've seen that do have some legs and some of the bad, too. But I'm trying to balance that message somewhat with not just necessarily positivity, but at least something good.

[00:44:11] Jessica Infante: Yeah. Well, like the media angle that you mentioned that magazine, like they don't always want to tell the truth. Cause yeah, we all know it, but you know what? Like I think a lot of people often have to walk the line of, and this is not like at all how we operate, but I can see other outlets being worried about always taking a negative angle and worrying they're going to lose their access to sources and information and stuff.

[00:44:29] of the: Yeah. I think that's an issue. And I've always wondered that at some point, like how do you get so-and-so to call you back if you just wrote a really bad story about him, but that's the art of journalism, I guess. That's not what I do.

[00:44:41] Jessica Infante: So what business models are most attractive today?

[00:44:45] of the: Well, so it's interesting, and obviously you hear over and over people telling you that it's the taproom model, right? Like the taproom model is the one that's going to work. And I think that's a broad stroke, but it's also a little bit not researched. And so if you think about it logically, what you're saying is that Damn Brewery should be able to make the most successful that it can be by operating as a bar, but without the spirits margin, and without the shock roll, and without the specials on Tuesday nights, I don't think that those margins are there to support that business for a decade. You can have a few good years following up on some great beers that you've made, or some cool bartenders that are just killing it, and when your manager moves to Michigan and you've got to re-figure that out. I just think that's a challenging model So without having multiple streams, for me, the one that on paper makes the most sense is to really focus on a very strong Tapper model. And then strategic distribution. So you're not going to be able to do like a Shelton Brothers thing anymore, which was a fantastic way for the Artistic Brewery to get nationwide distribution. And it just, you know, just kind of died. You can't do that anymore. You've got to go through the AB guys for the most part. And that's just a different model. So strategic distribution, hardcore on-site stuff, and then a channel that is a direct-to-consumer type of thing. Or you can just get really lucky and catch fire and become a hype brewery. But I don't know how you put that in a business model. You've got to get lucky on that. In fact, I can't tell you how many people I've talked to that said, you know, if I could just get a piece of that Jester King money, like, and that's consistently I hear that a lot. And that's true. But at the same time, you just you're not gonna.

[00:46:21] Jessica Infante: No, and you know, where we live, it's definitely Treehouse. So there's a few of the and there's a reason there why it works, but I don't know that anyone's ever been able to quantify it. Like I have a good friend who works in PR and she says all her clients are always like, just make me go viral. Yeah, that's like, that's just what we want to do here. Like that's the goal of this campaign. Like, okay, sure. Simple, easy ask. Yeah, you know, MBD.

[00:46:44] of the: But it's funny too, because you see that a lot where somebody has success doing something, so everybody copies it, but the people copying it don't make as much money. And somehow that business still tends to stay at the forefront of it. It's almost like they push him forward and then they just sit up in the middle and fight for the scraps.

[00:47:00] Jessica Infante: Yeah, that's a great call. Kelly, if you were going to open a Tavern Brewery today, what would your draft lineup look like for your grand opening? Because your conversation with Joe from Hanging Hills about this was really interesting to me. What's the lineup?

[00:47:14] of the: So what would mine be? I personally feel like guest beer is a strong part of what a successful taproom has to do. So I don't think you should make everything. I think that you should make what you're good at. So for example, even in Damn Brewery, we focus solely on mixed culture and sour stuff. So we had a lot of guest products from every other thing that you could find. But I feel like For me, if you're going to open your brewery now, you had better be able to kill it with a lager and you have to have a solid IPA. I think the rest of it, you don't have, I mean, you can do whatever, get an ESB in there because they're your moneymakers. And if you're buying those, you're going to run into a margin issue where there's a lot more money being left of the table that, and technically, depending how you make your IPA, it might be a loss for some of the guys. But if you do it right, then I think those are the beers you can lead with. No one's getting in line for ESBs anymore. The stout thing, sure, you can do your brownie batter stout, and you can do all these different things. But the margins on those tend to be okay. The bomber sales outside your tasting room don't do fantastically. So if you really go down to what's doing the driving of the profit, it's the lager, the coleslaw, those kinds of things. So I would have a diverse lineup, but I'd only make things I was great at. And I would make them, a lot of the, and I would price them aggressively just to do volume.

[00:48:39] Jessica Infante: Now follow up, would those beers change if you were opening Damn Brewery that was going to focus on distributed package sales?

[00:48:46] of the: I wouldn't do that, first of all. But yes, so at that point, and somewhat, but I think at that point, what you've got to do is, it's almost more about the marketing at that with a distribution model. And you're playing some games early on to get the lines in there and to get the nationwide, you know, the traders looking at it. But for the everyday thing, I cannot even imagine a situation where I tried to consult with somebody about how to put a Pilsner in a can and get it at the grocery store today. I mean, I know how to do it and I just don't know if I could get it done.

[00:49:21] Zoe Licata: You said you wouldn't open one that's going to have that distribution focus. What are the biggest challenges that you see with that and why is that just not? I mean, we've seen distribution has kind of been what people have relied on for survival with COVID and everything. So why is that not necessarily the best thing right now?

[00:49:39] of the: You have a mix of problems. One, the average price per six pack hasn't gone up dramatically. And $10 is still this massive issue where you can sell a $14 six pack, but not as quickly. And of the guys that are doing volume, guys and girls, I should clarify, they're doing volume at the store, they're going to have a aggressively priced, or they're going to do $11.99 and always have a yellow tag cheaper with a TPR or whatever. And you can do those, you can play those games, but at some point, You've got to have a product that solidly moves at the price point that it's at. And I mean, it changes every time you go in the grocery store. It is a different brewery in the forefront for the most part. I mean, there's some guys that are consistently there. But again, how do you knock that person of the pedestal with just a new IPA? There's not some great reason to walk in of the set captain and say, hey, look, I need that space and they need to get out. And here's why. That's the conversation you've got to be able to have at some point.

[00:50:36] Brewbound Managing: How difficult is it to get wholesaler focus? What have you sort of learned in those conversations you've had over the last two to three seasons of your podcast on that?

[00:50:47] of the: Well, I hate to say that, you know, the old tired adage that it's just, you can't, right? That it's not, well, you still hear people tell you that, well, you've got to do is you go ride with the salesperson, you do promotional things and sure you follow up, you set goals, you, you have, follow up meetings every quarter, every month to make sure they're being met. You have to do those things, but those things don't drive the attention from the wholesaler. It's your SPFs, your paybacks. You've got to do all the things that are illegal and under the table. Because if you think that the big guys aren't still doing it, you're insane. That's still how they're getting the placements they're getting. And so if you want to compete in that playing field, you're going to have to compete with the same tools they do. You can't play baseball with a stick. You've got to get in there. And so That's an issue. But the other problem is that I would say that, again, as I'm interviewing more and more people, you're seeing a shrinking pool of distributors at the same time as you're seeing an expanding pool of breweries. And that, any analyst would tell you, is an insane proposition going forward. So there's consolidation. There's guys dropping out of the game. It's exceedingly hard. If you were to go into Austin right now, you basically have two and a half distributors to talk to in that huge MSA. How are you going to get attention? The short answer is, I don't know that you can get that done in any meaningful way. And I had that conversation with a friend of mine a week and a half ago, where he asked me that question via text, and it took me two days to call him because I didn't want to tell him that. And he agreed with me when I called him. He was like, yeah, I know what you're saying. I just want to make this work. I'm sure you do, man. I feel bad.

[00:52:22] Zoe Licata: So knowing what you know now about that process and everything that goes into Damn Brewery, if you could go back and talk to yourself when you were starting your own, like, would you still do it?

[00:52:33] of the: Ooh, the problem is I was an exceedingly arrogant little guy back then. So I'm not sure I would have listened. And I actually called this my active retirement plan. So in a way, I didn't expect to make a bunch of money. I just didn't expect to lose as much as I did. So in other words, I think if I was going to go back, I might have the conversation like, hey, why don't you get three partners and put the rest of that in a shopping center? And at least that way, when the brewery loses money, you'll make it of the shopping center and Texas real estate. But I needed that artistic outlet. So I definitely I'm not going to sit up here and tell you that I regret the last decade and that there weren't good things that had come about. I do think that One of the most important valuable things that I gained is I am a better person than I was back then. And if you hate me now, you would hate me much more back then. But I think that it's, you know, that art, the people, it's a great industry. As you guys know, I'm not telling you, I mean, you don't know the cool people here. I was in fitness before that. They're not cool people in fitness for the most part. So I just, it was a great experience. I loved it. I just wish that I had gotten out three years before. I think that would have been a better timing for me. Do you feel humbled? Oh, absolutely. I'll talk to my wife about it. There were three big moments that we almost closed and that we were just going to walk away basically and kind of lick our wounds and cut our losses. And had I done it at that point, I would have had massive depression issues. I could sense that at the time. There was this failure. I was trying everything I could possibly think of. Nothing worked. We pulled out all the stops of reinvesting personal capital, different things like that. And so it was a big financial loss. But what happened during the three years after that, four years after that, is that I learned a lot and I faced those demons down. And so I was in a much better place last September to sell the brewery than I ever would have been previously. So I did get out at the right time personally, but maybe not financially, I guess.

[00:54:30] Jessica Infante: So, I mean, you did this with your wife, like that could put a lot of strain on a relationship. How did you guys navigate that?

[00:54:38] of the: It was tough because we also so we were partners in the fitness business before as well and we had eight different gyms. And we were able to split that in half. And so she ran essentially the accounting and all the personal training and training new staff. I did primarily sales and new acquisitions. But with this project, we tried that and we weren't able to do it. What ended up happening is that basically she did accounting again, because she's much better at that than I am. And I basically ran the sales and production. But what ended up happening there is that production had to ask accounting for money when accounting didn't have it because sales was getting paid late. And so it became a point of contention between the two constituents in the business. But then that, because we were married, we did bring that home more often than I would like. But we talked about that many times. We luckily had, or not luckily, but we had a strong enough marriage that it lasted past that. But there are definitely people that, and the guy I interviewed Friday, he and his wife got a divorce through this process. And there are other examples of people who didn't, and I feel sorry for those people, for sure.

[00:55:43] Jessica Infante: Yeah, I mean, that you guys are still together is like super impressive. So congrats on that.

[00:55:49] Brewbound Managing: Thank you. What are some of the myths to brewery success that you'd like to bust?

[00:55:57] of the: Barrelage is a key metric. Obviously, bearish doesn't tell the story of anything. There's so many different variables as far as sales price, the product mix of what you have in there, where you've sold it, that kind of thing. So I think that's a metric I'd like to just see go away. I think it's irrelevant outside of taxes, obviously. But there's that one. And then one of the big ones that I pointed to in my book was that popularity is somehow related to profitability. And that's one that you see a lot in the magazine that I talked about. He said specifically that there are plenty of folks who are successful in this industry. And what does that mean? Success is not how many products did I sell and how many times I get written up in a magazine. It's what did you do last quarter in profit? And if you didn't do anything last quarter in profit, you're not successful. You're having fun. That's great. And you continue to do that. But I think that profitability and popularity are too closely tied together in this industry and that definitely needs to be pulled apart.

[00:57:00] Brewbound Managing: One of the things that shocked me that you said on a recent podcast was that you don't know any breweries that were profitable. Is that right?

[00:57:09] of the: Yeah, but so I'm specifically saying on like a year long basis. And so I've heard so many breweries that will tell me, hey, you know, yeah, we're we made a profit last year. And then when you ask them the details, they don't have any facility costs. You can't say you're profitable if you've got a million and a half in debt, essentially, of the books just because you're not paying that debt. And so there's a lot of that sort of smoke and mirrors been going on in the industry, where there's not a fair assessment of, again, grandma money. We paid cash for the bottling line, and it just sits there 35 days out of the year. So at some point, you've got to do your accounting correctly to be able to have that conversation around profitability. And when you have it correctly, I don't know anyone profitable. Maybe you do, but I don't.

[00:57:58] Brewbound Managing: Well, we know a lot of folks, right? Hopefully somebody and there's profitable love numbers here.

[00:58:05] Zoe Licata: You're talking about how popularity doesn't necessarily mean success. And one of the ways you can like gauge is how popular someone is now is social media and what people are saying online, various platforms like untapped or something where people are talking about beers. Is there ever a case for listening to what that online commentary is?

[00:58:27] of the: Oh, you don't get me started on tap. Well, the short answer is that obviously, if you as your business owner, you have to listen to what some of the commentary is specifically, because that's driving some of the customer base in anywhere your customer is, you would be stupid not to at least pay attention to where they're going and what they're saying. That being said, many of the places, the customer, the average customer that's on those sites is not educated enough to make any of the claims that they're making. And so at some point, you have to also ignore a lot of it. So it's for me, it's one of the things, pretty much every brewery owner I know, ignores all the one and two star reviews. But they're perfectly happy to pay all the attention in the world of the four and five. And at some point, if you ignore the one and the two, you've got to also scratch the four and the five and assume they're anomalies as well and just pay attention of the guys in the middle. Nobody's really doing that. And for obvious reasons, you're an artist. You want to hear the good stuff, right? So yeah, as far as which ones are popular there, you also see a lot of breweries with higher untapped ratings that we all know clearly doesn't make the best beer. And some of the guys that make the best beer, 3.6, 3.7 on untapped, and they just make the best pilsner in the world, but it's not a highly rated beer, so it doesn't extrapolate.

[00:59:45] Jessica Infante: Yeah, well, it's easy to get. You don't have to trade with some guy five states away and throw in however many cartoon animated beer glasses you have. It hasn't exploded in your pantry, you know.

[00:59:58] of the: And there's so much to be said about that. Like last night, I actually had the Jack Daniels Frank Sinatra edition. It's a $160 bottle of Jack Daniels, which the dude was super excited about. I enjoy whiskey as well. It was a $70 bottle, maybe, at best, but because it had Frank Sinatra on it, everybody thought it was great. It was a great whiskey, but it was not worth that. And that's all marketing. And you get a lot of that, where if I've had to struggle to trade, it took me six months to get it. If I open it up, I'm going to like that beer. And that adds of the value of it to an extent.

[01:00:35] Jessica Infante: I don't know the last time I rated a beer. I don't know the last time I checked into a beer, but I was never really big on rating them. I would just check them to make sure I remembered that I had them.

[01:00:43] Zoe Licata: Keep track of your yearly beer consumption. Make sure it doesn't get out of hand.

[01:00:48] of the: Why would you want to do that?

[01:00:53] Brewbound Managing: One of the things that I sort of wanted to circle it back on before we let you go is gauging health of a business and really just the industry at large. Having had three seasons worth of conversations and continuing those conversations and seeing what's happened over the last couple of years, what do you think that the state of the health of the industry is at this moment?

[01:01:19] of the: Well, like I said, I think the biggest metric to pay attention to is the market share of craft beer per brewery. And that has gone down every single year dramatically. And now we're at a point to where some of the guys at the top are they're expanding while everybody else is shrinking. So unfortunately, until that number makes a significant jump, which, you know, if you know 10 people who you don't know from the beer industry, it's really challenging to imagine that two of the are going to switch to craft beer, at least the people that I run into. So I think that's an issue. It's just there's not been a market penetration anywhere near what we thought it was going to be a decade ago when everybody got into it. And that is a big issue. So until that changes, we're all going to struggle and continue to struggle. And I don't I don't know who comes out on top in that situation as the pie keeps getting smaller or split more ways. I know that's not a positive message. I apologize, but that is unfortunately how I feel. And I backed it up with research. I didn't just come to that conclusion on my own. I wish that wasn't the case because the other side of the... I've even interviewed... There was a guy here in Texas, Southern Star Brewery, one of the six or seven oldest breweries in Texas. And I just basically straight up asked him, like, hey, obviously you've been around forever. You know what works. What are we doing wrong? And he looks me straight in the face and goes, I have no fucking idea, Kelly.

[01:02:50] Brewbound Managing: Well, at one point there, there was a goal of 20% by 2020. And we all know that it didn't reach that. I think it's in the 12 to 13%. Yeah.

[01:03:01] of the: And at the same time, we've expanded brewers by the thousands, you know, from, from 2016 to now, I think it's more than doubled. And so, How do you combat that, right? Where does that money come from? It's just the same people funneling back and forth, handing it to one another. The pie is just not getting bigger. And at some point, it's going to have to because I don't see opening slowing down, at least from what I can see in the industry so far.

[01:03:25] Brewbound Managing: Now the hermit crab, just like you said.

[01:03:31] Jessica Infante: Just his favorite. I mean, Bart Watson said it first, but yes. I've just really held on to that phrase like a dog with a bone.

[01:03:38] of the: You're making it your own. Well, he's not of the show. So clearly, as far as I'm concerned, you said it.

[01:03:45] Jessica Infante: Yeah, you get the credit. That is true. Hermit crabs.

[01:03:49] Zoe Licata: Is there anything that does give you optimism for like the future of craft beer?

[01:03:54] of the: Well, I think there's some really nice people in the industry and I like some of the creative things that they've done. So in that, from the artistic perspective, I think there's that, that, you know, we, barring a few different kinds of goofy styles, I think that from the consumer's perspective, the beer landscape has improved over the last decade. there's better access to beer. As far as from the brewery's perspective of where's profit going to come from and how do you feed your kids, I unfortunately don't have a great positive spin for that. But I think it's exciting to see that all the different beers and breweries and creativeness come out, creativity.

[01:04:31] Brewbound Managing: What is the question that we should have asked you that we didn't ask you?

[01:04:36] of the: Maybe one you could maybe this as a like a fun silly question, but how many breweries are too many? I don't have the answer to that, but I would say somewhere around. 6000 was too many.

[01:04:50] Brewbound Managing: That was the breaking point.

[01:04:52] of the: Yeah. Well, as far as the timing goes, that's when it really started to hit the point where we stopped making new creative things. We had done everything at that point. And what ended up happening is, again, we ended up with more breweries, less market share. And so we didn't need the other 3,000 that we got. And I don't think the industry was better off for it. And I hate to point fingers, but which of the 3,000 breweries fundamentally and radically changed the industry in ways that it will never be the same? I can't point to one.

[01:05:23] Brewbound Managing: So where do you think the consumer is with craft beer at this point?

[01:05:27] of the: Oh, they're exhausted. Even craft beer fans are just like, I can't even, you know, the, the releases are not as good as it used to be. The lines aren't really there. I mean, you still see it, but people's hearts aren't in it. It's not as fun to drive two States over to pick up 18 cases of beer and bring them back. And some of that's just that there's already access to better stuff close by. You don't need to, or at least as good as stuff close by. But yeah, I mean, I think by and large, the biggest, biggest word I would use to describe the craft beer aficionado now is just exhausted.

[01:05:57] Brewbound Managing: Yeah. I guess final, final question for you. How difficult is it to get guests on your show? Is it usually a struggle to get somebody to want to tell their story or are they seemingly pretty willing and ready to dive in and go deep? Because you go pretty deep with these folks.

[01:06:18] of the: The short answer is it's hard and easy in the sense that when I find the people who really want to tell the story, they're super excited about it. You know, Alex from Intergalactic in San Diego, he and I have missed each other's phone calls repeatedly. And he just texted me, he's like, I really, really want to do your show. Make sure you call me tomorrow. And then I get people who have a fantastic story. I know that it would add a ton of depth and value of the overall cache of the information we have. And I just can't get him of the phone. Or there was a guy here locally in Texas that had a great story. He early on ran up with some award-winning beer, won like 30 awards, and within three years, completely out of business. And I talked to him. He's like, man, I just can't tell the story. I can't. I'm not there emotionally. I get it. I mean, it was a struggle for me, which is why I hid behind a lot of F words in my book, you know, anger helps hide the pain. But yeah, unfortunately, it's a mix of both.

[01:07:18] Brewbound Managing: Has it been pretty therapeutic for you?

[01:07:21] of the: Oh, the book was tremendously therapeutic. And now I think the main crux of the podcast is to I took that story and I got it out. I want to give other brewery owners the forum to of the same thing and to experience some of that same catharsis. But also, I feel like there's a message, like we talked about, that just needs to be told. And in lieu of some of the other guys telling it, since they're not, I almost feel like it's my responsibility, in a sense, to allow the forum for this kind of thing to be out there.

[01:07:50] Brewbound Managing: Well, this has been great, Kelly. One last thing, where can people find the podcast, the book, and you?

[01:07:58] of the: of the socials are Damn Brewery, it's pretty much at Damn Brewery, Instagram, Facebook, and Twitter. And then the podcast is just anchor.fm forward slash Damn Brewery. That'd be the easiest way to find me.

[01:08:13] Brewbound Managing: Awesome. Well, thanks for doing this. We really appreciate it.

[01:08:16] of the: I appreciate you giving me a chance to talk about it. So again, it's all catharsis. It feels great. So thank you.

[01:08:23] Brewbound Managing: Awesome. Well, go check him out. And as for us, that's our show for this week. Thanks to our one man audio team, Joe. Thanks to all of you for listening. And we will be back next week.