Brewbound Podcast: Out-of-State Taproom Expansion Strategies, with Monday Night, Hi-Wire and Weathered Souls; Plus, the National Black Brewers Association

[00:00:00] Justin Kendall: Next on the Brewbound Podcast, we are live from CBC. Hello and welcome to the Brewbound Podcast. I'm Justin Kendall, the editor of Brewbound.

[00:00:20] Zoe Licata: And I'm Zoe Licata, the reporter for Brewbound.

[00:00:23] Justin Kendall: And we are live in Nashville at the Craft Brewers Conference 2023. Zoe and I have been all through the first day. We did Brew Talks on Sunday and now we are here in the lobby with two mics. So Zoe, what are your takeaways from day one?

[00:00:43] Zoe Licata: Takeaways from day one, we had the general session this morning, heard from a lot of people, real heavy hitters today. Bob Pease, heard from Craig Purser from the NBWA, Brian Crawford from the BI, and from Bart Watson. Number one takeaway was Bart's keynote speech. Bart kind of, he was straight up with everyone today and really said, you know, Craft is, it's not growing and if you keep doing the same stuff you've been doing for the past decade or more, it's not going to change. So you really got to find something else, find other opportunities, find new consumers. It wasn't holding anything back today.

[00:01:21] Justin Kendall: Bart was keeping it real. He laid it down. He said that slow to no growth is Kraft's new normal. And while he didn't offer a lot of guidance for folks out there as how to get there on those new opportunities, he did talk about focus. He talked a little bit about reinvention. And he hit on some other things. You ran through a whole bunch of them in the story that's up at Brevin.com that you can read if you're an insider. But why don't you give one or two of those that folks should probably take a look at?

[00:01:55] Zoe Licata: Yeah, Bart admitted, you know, he doesn't have all the answers. This is new territory. But one of the biggest things that stuck out is Kraft really needs to get some of those new consumers, particularly female consumers and people of color. He has mentioned it before that Kraft has kind of failed to speak to these consumers, but he did a comparison today showing that Kraft is the worst BevElk producing segments with these consumers. And they're also the ones that are the only growing consumer base in all of BevElk. So that's a problem. One of the other opportunities was just looking at new channels or reinvigorating some of the channels that beer is already in, such as the on-premise. Draft is still really struggling right now and Craft makes up 30% of that. You need to really support that on-premise base and put some brands out there, some core brands, some focus brands that can get that Craft Brewers business back.

[00:03:01] Justin Kendall: Well, reaching some of those new consumers is one of the topics that we should sort of hit on because this episode We are going to have two of our conversations from BrewTalks, one of them with the National Black Brewers Association. We'll talk with their new executive director, Kevin Asato, as well as Celeste Beatty from Harlem Brewing and Chris Harris from Black Frog Brewery. And they're going to talk about that new trade organization's mission, which is to basically bring a lot more representation to craft brewing. And I think it's a conversation that folks need to hear. And then we're gonna have our second conversation, which is about expansion through out-of-state tap rooms. And we're gonna talk with Hi-Wire Brewing27;s Adam Charnack, Monday Night Brewing's Jeff Charnack and Weathered Souls Brewing's Marcus Baskerville. So...

[00:03:55] Zoe Licata: They both touch on both of those opportunities. So basically we can predict the future in Bart's speech.

[00:04:01] Justin Kendall: You're humble as always. So why don't we get into those conversations? So here is a special BrewTalks replay. We are all very aware that the crap brewing industry could be a lot more representative than it is. Less than 1% of Craft Brewers in the U.S. are owned by African-Americans. However, there is an organization giving voice to Black and Brown brewers. The National Black Brewers Association is a membership-based nonprofit organization on a mission to increase representation in the craft brewing industry. And we have some of the leaders here today to discuss. So joining me on stage is Celeste Beatty, founder of Harlem Brewing Company in New York City. How you doing, Celeste? She's great. So we also have Chris Harris, founder of Black Frog Brewery in Holland, Ohio. Thanks for being here, Chris. Thank you for having us. And we're going to break the little news here because our third panelist is Kevin Asato, the new executive director of the National Black Brewers Association. So welcome, Kevin. Hello, everyone. Extremely happy to be here and appreciate the introduction there. Yeah, we got some great energy in this room. So Kevin, let's start with the NB2A's mission and vision. Please give us an overview of that. What are your goals? They're definitely not my goals. They're definitely the goals of the organization, right? This organization is compounded of the brewers that are in this community today. And from that, we absolutely want to be the most trusted and respected and impactful organization for black brewers of America. We're going to highlight the history and the understanding of black brewers. And from that history, our mission is going to be driven towards, you know, addressing the fact that only 1% of ownership is in the black and African-American communities there. So we're going to look to right that and increase that and be a bit more representative of the demographics of the U.S. I mean, that's our initial goal, but we're not setting a timeline against that just yet there. So what are some of the main issues that are facing black brewers today? And I'll throw this to the whole panel. Feel free to chime in, Celeste and Chris. I don't think there is a main, but there's definitely a few that come to mind as hitting a little harder. Look, getting into ownership, there's a lot of heavy moving parts, right? And there's a lot of tools required. It's, you know, heavy capital resources required, good, phenomenal understanding of the brewery process, and quite frankly, the sales and distribution components all become major components, but they're heavy, right? There's a lot that gets involved in ownership. Not everyone wants to be an owner. Not everyone wants to take on all those responsibilities. And so when you look at the Black Brewers Association, we can perhaps connect some of the people that may only have a passion in select disciplines and bring a group of those people together to help take on some of the bigger initiatives there. But on top of that, we talked about some of the resources being available. There are some challenges in getting some of those resources. And so that's going to be one of our bigger opportunities to really tackle and knock down. Feel free to chime in, Celeste, if you have something. Well, next question's coming to you anyway. African Americans make up 13% of the U.S. population. We know that there's less than 1% that's brewery ownership. How do we get there as far as making this a more representative community, and what are the hurdles to making that progress?

[00:07:34] Brewbound Podcast: Well, Kevin definitely touched on it. We know the big one is capital. We certainly know that. I think the other one that I've experienced personally and when I've talked to other Black and Brown brewers is making sure that the bankers and the funders actually understand that we are able to have a passion for beer. Helping them understand that we can be brewers. Some of the questions I've gotten recently about a project I'm working on at Rocky Mountain is like, why do you want to brew beer? I mean, it's like odd questions. about them seeing us Craft Brewers. I mean, obviously, that has its own challenge because there's just not many people that look like us. But some of the responses, I think they've really got to come into the community and see that we can brew, we can create places and spaces for people to gather and experience beer. And I think that's been a really big hurdle because of the imagery that they've seen, which is good, but we've got to get them to see us Craft Brewers. We've also got to get more people in our community through a lot of the initiatives that we're talking about to see themselves Craft Brewers, to see that they can do this, they can brew. But I think those two things have to come together. The lending institutions, the funders have to come in and see who we are. where we are, meet us where we are, and take a chance. Give us an opportunity to really be a part of this industry.

[00:09:02] Justin Kendall: Chris, I'd love to hear from you, too. What are some of the issues that you're seeing out there that would really help black brewers?

[00:09:09] Brew Talks: Going along with what Celeste said, in some of my personal experiences, you get people that will come into the tap room, and they're surprised to see a black owner behind the bar serving them beer. And then when they taste the beer, and they're like, wow, that's really great. And you kind of get the feeling that, OK, what did they really expect from a black brewer? Or what do they think? going to be a malt liquor. But as Celeste said, I mean, we have a wide array of different beers that we brew that could appeal to many different types of audience. And they just need to give us a chance.

[00:09:45] Justin Kendall: Chris, I'm going to stick with you for a second here. How can we build some more awareness for the black brewers who are out there, as well as the history?

[00:09:54] Brew Talks: There needs to be more outreach to minority communities for a better understanding of the Craft Brewers community. If you look at some of the major players in the beer industry, they really don't target minority communities with Craft Brewers. So that could be a step to where you could start targeting your product in minority communities And because minorities make up a big demographic of consumership that's going to purchase beer. So that may be another revenue stream that people may not even be considering that if I target this minority community, then I might increase my revenue ship, whatever beer company they have.

[00:10:43] Justin Kendall: Let's bring you back in, Kevin. What are some of the initiatives that the NB2A is doing to sort of drive that awareness, or will be doing, I should say? One of the first things, there's already existing trade organizations, right? We're a part of a larger community. So some of the challenges that you yourselves are experiencing, we experience precisely the same. So we're keen to meet with the leadership of all the other trade organizations there and make sure that we essentially pick up where they leave off, right? We know they're doing a lot of good work. We're not looking to do duplicative work. We don't wanna, but we can absolutely add on and build and augment to what they're doing there. So that'll be one of the first things. meeting with that leadership group there, you know, and we'll constantly be evolving what the priorities are and what our initiatives will be, right? I mean, as time passes, we recognize that our board is living, breathing some of the challenges firsthand. So we're constantly going to be updating what we're going to be working on and what resources and individuals we pull together to help knock down those obstacles. Celeste, you started Harlem Brewing in 2000. You have a wealth of experience in this industry. You can provide a lot of mentorship to the up-and-coming Black and Brown brewers out there. How do you see the NB2A playing a role there in mentorship for the up-and-coming brewers?

[00:12:03] Brewbound Podcast: I think the wonderful thing about the formation of the National Black Brewers Association is that you've had Quite a number of people very, very excited about bringing our cause and the opportunities that exist in our communities to the forefront. But now we have a central place, an organization where all of that energy can be channeled together. We can bring all of that into one space. And I think, you know, there's been several organizations that have come together to really look at some of the issues that we're facing. And this organization represents a broad spectrum of Black and Brown brewers across the country. You get to talk to some of the people here today. I mean, New York, West Coast, East Coast, all over. A lot of the brewers that you know are part of this organization. So I think it's really an opportunity now for us to bring all of that energy together and look at some of the issues together and to let other people see that there is an organization that represents all of our interests. And any of you in this room that wants to be a part of this, you can come to that organization. And that will help us really move things forward in a way where we can begin to see some change and begin to engage people that are supportive of Black and Brown brewers. So having that organization is really important. You know where to go, you go to the website, you can talk to any of us to find out what some of those needs are. So I think this is pretty revolutionary at this time to form this organization, to be able to really focus in on our collective concerns as Black and Brown brewers.

[00:13:34] Justin Kendall: You started Black Frog in 2014. What would it have meant to have mentors out there to lean on at that time, or an organization that could sort of pull everything together in one place, be a clearinghouse, really? It would have been amazing.

[00:13:51] Brew Talks: When I started organizing and trying to figure what I wanted to do with the brewery beforehand and did a lot of researches, of course, you ran across legends like Celeste and Gary. But there really wasn't any type of a resource on, OK, you need to do this step. You need to do this step. You need to do this step. But what this organization will do is we're gonna get all that information together. So when somebody is thinking about or in the process of opening a brewery, they can come to, it's a one stop shop to where, okay, there's gonna be some type of mentorship to get them from point A to point B without any of the problems that any of us occurred in our earlier days. And it's just gonna make it easier path for that newer generation Craft Brewers that's coming up.

[00:14:43] Justin Kendall: Kevin, we talked a little bit earlier and you said, you know, you're just starting your membership drive, really. And you're starting from square one. There are a lot of folks, I'm sure, who are in this room who would be supportive. How can they be supportive? What can they do to back the NB2A? You know, Justin, that's a phenomenal question. And the short answer is become a member. That's the first step that we're going to be asking everybody to do. And when we have our membership drive, That's going to take place in a couple of months there. But that will give you some good insight of not only what we're able to do, but where you can actually lend a helping hand as well. Whether it's your experience, your financial, physical resources, your time, all of those resources are absolutely necessary. When you hear the stories of Chris saying, hey, If you're giving us your experience, your ability to be a mentor, we can actually help a fledgling brewer not make the same mistakes and actually accelerate to success much faster. That's a win. That's a massive opportunity for us to be successful. And that comes from this community out here and the community out there that's viewing and whatnot. We benefit from all resources that come through. Becoming a member and providing any sort of resources you have to offer to support our process would be greatly appreciated. Where can they find out more information? Where should they go? How can they contact you? What should they do? mb2a.org. That is our website. That is going to be where we're going to house all of our information. We will have social media presence in Instagram and Facebook, so we will have touch points there. As Justin mentioned, we are very much in the start, and as we have our board meeting, we're going to continue to produce content and additional information. So we're still developing all the tools that will be visible and accessible, but As of today, mb2a.org is the website that you can keep up with the latest and greatest that we have going on. Well, give it up for Kevin, Celeste, and Chris. Thank you for doing this. Thank you for sharing your vision. We're excited. Thank you very much. Many breweries are looking outside of their home state's borders for taproom expansion opportunities. More than 90% of Craft Brewers rely on at-the-brewery sales, according Craft Brewers Association Chief Economist Bart Watson. In addition to providing an avenue for higher margin sales, taprooms allow breweries to interact directly with drinkers. curate a branded experience and tap into real-time consumer feedback. For breweries who open tap rooms in new markets, those ventures can establish deeper roots in new communities. Our panelists today will share their strategies. and tips for opening out-of-state taprooms. So let's welcome our panelists, starting here with Jeff Heck, the co-founder of Monday Night Brewing in Atlanta, which outside of Georgia operates taprooms in Nashville, Charlotte, and Birmingham. Thanks for being here, Jeff. My pleasure. On the end, we have Adam Charnack, co-owner of Hi-Wire Brewing in Nashville, which outside of North Carolina operates taprooms in Tennessee, Kentucky, and Alabama, and soon to be Ohio. Finally, last but not least, we have Marcus Baskerville here in the middle, co-owner of Weathered Souls Brewing in San Antonio, which also operates a brewery in Charlotte. Thanks for being here, Marcus. Thank you for having me. Let's start with the obvious question, and that is why. Why is expanding to an out-of-state market with a brick-and-mortar space the right opportunity? And I'll start with you, Jeff. Well, I think the answer is it's not necessarily the right thing for anybody. And you were talking about some of the reasons to do it. And I think we start with the reasons of what are the wrong reasons to do it? Because a brick and mortar location is not a silver bullet, nor is it easy. It's actually a very different business than than a distribution business. So we distribute in Georgia, Alabama and Tennessee. That's 70 to 80% of our volume. But for us what those brick and mortar locations do. are really two things. One, they help to further our purpose, which is not just about putting beer on the shelf, but to really deepening relationships in the markets that we serve. And two, they help to build brand awareness and connectivity to the brand in markets that we haven't had a physical presence in before. So we've seen that wholesale sales typically get a pretty significant double-digit boost when we open a taproom in a market that we already sell and distribute into. Marcus, you went from one to two breweries. Why was that the right decision for your business? Yeah, I won't say it's necessarily the right decision, but being that we're in San Antonio, San Antonio is a market that is very overly saturated with Hispanic drinkers and is very much the Modelo Dos Equis capital of the world. So being said that, we had an opportunity to expand our outreach outside of the San Antonio, Texas market. So dealing with that, it was kind of the situation that made it right for us within the Charlotte market, as they're a very welcoming, emerging Craft Brewers scene. And so for us, it was more so about the outreach of getting out of San Antonio and be able to hit multiple markets. So Adam, you like courting complexity. So why is 11 Taprooms the right business model at this moment? And I'm sure you'll add more down the road for Highwire.

[00:20:22] Craft Brewers: Uh, no. I have a big announcement that we are not opening any more tap rooms, uh, after Nashville opens in a couple months. Yet. Yet. Yet. We just saw what Jeff was doing on Monday Night and just figured we'd just copy whatever he was doing, basically. So, just, you know, core cities in the south. No, for us, We looked at how do we differentiate ourselves. We started our brewery in 2012 2013 and it's wild to think that at 2500 breweries at the time it was an extremely crowded marketplace. Now it's quadruple that. But we saw success in our tap rooms. We saw challenges in the distribution model. We saw them not getting easier but getting more challenging for a brewery that wasn't quite a legacy brewery and didn't quite have sort of that slam dunk number one winning beer our portfolio sells across several different products. That was the impetus for opening up tap rooms outside of Asheville, but the other part of it is we are in a pretty small metropolitan area. Asheville's a quarter million people in the metro area. So it's nice to be a bigger fish in a smaller pond, but I think ultimately if we wanted to expand our scope, the way to do that is to kind of branch out some tentacles. So we started off expanding into Durham and then into Wilmington and kind of saw success. It was sort of a proof of concept and so expanded out of state. So I think that was a big part of it, is that ultimately being in such a small market, If we wanted to reach our ambitions and reach the scope that we were looking for, we needed to kind of find another way to achieve some scale. So we found some markets where we had some brand loyalty and just kind of put our money where our mouth was, basically.

[00:22:06] Justin Kendall: Marcus, let's go through some of the complexity of going from one operation to two. What was that like? Basically, you're doubling your complexity right off the bat there. I'm still figuring it out. So we've been open since the second location has been open since November. And so it's definitely been a work in progress as because they're two very different markets. And so with our San Antonio location is very much taproom driven outside sales. But then you look at the Charlotte location and they have so many different options. when it comes to Craft Brewers versus San Antonio. So you have to have things that are going to highlight your brand outside of just having beer, right? Because there's multiple amazing breweries there. So for us, it's been about trying to highlight some of the fantastic beers that we bring from the San Antonio location. We've also expanded into cocktails. So bringing in a top mixologist in the country, really, to curate our menu and create some fun cocktails. But then also on the restaurant side, trying to build a synergy And so we've brought on a four times James Beard nominee to run our chef, or run the kitchen as far as does chef stuff. So trying to create the upper echelons of synergy between food, beverage, and beer, and working that angle in trying to create something different from what we've had in our normal San Antonio market. Jeff, when you go from tap room two to tap room three to tap room four and so on, what have you learned? Have you gotten it down yet, you know, or, you know, what, what's the challenge there? There's just one, no, there's a lot of challenges. I mean, one of the things we've learned is there are dozens of ways to go wrong. Um, and so I think we've learned so many things. Uh, I, I should write a book like Sam and Garrett here about that, um, about all the mistakes we've made. But I mean, I think the reality is that, uh, The real key for us has been to try to make sure that the locations we open are, one, commensurate with the quality and the hospitality experience that we want. We want to have our brand. Well represented. One of the things we talk about a lot is that each taproom needs to have a reason to exist. And they need to have a reason to exist just like any of our beers needs a reason to exist. It needs to be a place that like, what's the reason this needs to exist? Not just for us, but for the community that it's a part of. Is it consistent with the quality that we come to expect from our beers? So that's been a huge learning. And then the other thing I'd say is that the biggest learning has been people are everything. You know, people are everything. Our general managers, especially in the outlying markets that we aren't in every day, are the standard bearers of our brand and our experience and our culture. So we started brewing beer in my backyard on Monday Night, you know, 15 years ago. And people would literally, for four years, 2,000 people came through my house when we were homebrewing. And what happened when they came through my house is that they're my guests. So I care so much that every person that walks into our tap room has the experience like they're walking into my house, that they're coming in, that they're welcome, that they feel comfortable and safe. So that means that I can't be in Charlotte or Birmingham or wherever, so we need to make sure that those GMs, we give them a ton of training, they live and breathe our culture, and that they're absolutely the right cultural fit. So that's probably the biggest learning I've had from all of it. What do you think that folks underestimate when they're opening an out-of-state taproom, Adam?

[00:25:39] Craft Brewers: I mean, there's more than meets the eye. Even if your brand sells well in the market, I think that's a good reason to consider opening a taproom in a market. There's so much more to it. I mean, Marco was talking, you were talking about in Charlotte. Charlotte is like, I mean, I just went there for a few days. I mean, I go there often, but I went there to do like an audit or like a drop-in and kind of just evaluate how are taprooms competing in the market. I mean, I was just drunk walking in the streets thinking to myself, like, this is the New York City of beer market, of taprooms. Like, Charlotte is insane. Like, it honestly is the most competitive Craft Brewers market for taprooms, I think, in the country that I'm aware of, at least. I mean, so you've got to step up your game. People, I mean, level up I guess is a term. You really got to like, you know, know what you're doing and I think adapt. The best late plans are a guidepost and I think that's true not just in tap rooms but in the Craft Brewers business and generally. I mean, if you're not pivoting often, I think you're probably a step behind. If you're not a step ahead is the way I like to think about it. And so I think in tap rooms, it's plan and see how you're, for us, it's been how can our tap room be competitive and different and find a niche, but then also evaluate what we're doing and if certain things are working great and if others aren't, well, then we need to kind of adapt and figure out how to maintain, you know, what makes us special and why people want to come to us.

[00:27:00] Justin Kendall: Marcus, I think you said that you opened in November. You know, you've had some time now to sort of get settled, but what do you wish you had known now, or then, what you know now about opening that new location? I think the biggest thing is being aware of your local laws. because I just mentioned in a manager's meeting not too long ago that Texas is definitely the wild west. So there's a lot of things that we get away with or just generally don't have to worry about in the Texas market, especially when it comes to the restaurant side of things. But then going into the Charlotte location, it's like, wait, you can't do that. You can't do that. You can't do that. You can't do that. You can't do that. And it's like, well, we did not know that. So I would say the biggest fault to us is the education portion of local laws, local processes, the different things that you're allowed to do on the restaurant end, the different things that you're allowed to do on the beverage end, because all of those are things that are going to help you progress in the long run. But they could definitely set you back if you're not familiar with what's going on in the area that you're opening in. That's a great point. We have tap rooms that seem to be in four states. We almost shop the states depending on what the laws are. I would love to open more brew pubs or tap rooms in Georgia, but in Georgia there are very strict production laws that mean we have to spend at least an incremental half million dollars to comply with those laws, which sucks, but then North Carolina's totally different. And so that's actually, I would really, I mean, before you do anything, understand how those state laws work, hire a good attorney who understands the state laws. It's worth every penny that you'll spend.

[00:28:47] Craft Brewers: Every dime. Every dime.

[00:28:49] Justin Kendall: I'm guessing that factors.

[00:28:50] Craft Brewers: No, I'll second all that. I mean, I could just say ditto and it'll pretty much, you know, encompass what these guys said. Yeah, find local attorneys has been super helpful for us. The laws are so idiosyncratic in every state and yeah, I mean we don't have a tap room in Georgia and you know Jeff kind of highlighted one of the main reasons why.

[00:29:08] Justin Kendall: I talked it out of him because I didn't want him to come and infringe on my backyard.

[00:29:15] Craft Brewers: We can't copy your business model entirely, right?

[00:29:18] Justin Kendall: Let's talk a little bit about market selection. When you're looking to expand to another location, what are the top factors in choosing not only a city but a space?

[00:29:29] Craft Brewers: Sure, I mean, we look at where our brewery has relevancy and if and when we can stand out. You know, there are a lot of craft, there are a lot of cities in America that have extremely competitive Craft Brewers environments and it's very difficult, even if we're popular there and sell a lot of beer there, it can be extremely difficult to stand out. And we've chosen to enter some of those markets, but you know, it's also better sometimes to be, I mean, some of our smaller markets that we're in that are have a less developed Craft Brewers scene, we actually see better performance than in larger markets that have more competitive Craft Brewers scene. If you caught what I just said there, I kind of confused myself. But yeah, so I think understanding the market dynamics is number one. And then two, I think part and parcel of our brand is we like being in locations that are It's kind of a core belief of our of our company and our ownership is wanting to be in town So it's very essential for us and it may not be for for other people's breweries and that's okay I mean you have to understand what your niche is So our niche is we like being in in up-and-coming areas liking being in kind of closer to the heart of town We like helping to improve neighborhoods and and repurpose buildings where we can we're being in kind of vibrant districts And so that's dictated the second part of your question is kind of how we did how we decide to what location to go into is a big part of it. It's just kind of who we are and what we want to be part of.

[00:30:53] Justin Kendall: Jeff, I'd throw the same question to you. What why don't you hit that real quick, you know city in space, you know, how do you how do you determine it? I mean we want to be in markets that are adjacent to we think about so my background I spent a lot of years investing in like multi-unit consumer retail businesses. So it's the whole idea is you got to expand to concentric circles. No offense Marcus. You got good reasons to be in Charlotte. But for us, that's been a part of our strategy, is just, where do people know our brand? What are the cities and geographies that we know and understand, which actually was part of what drove you guys to do Charlotte? And then, how do we find spaces that are, to be similar to Adam, we wanna be in sort of in-town, densely populated areas. We've made some mistakes on some of those choices as well, but that's really our goal. The other thing I'd say is like, we want spaces that are super unique, that aren't cookie cutters. Every single one of our spaces, we have spaces from 3,000 square foot to 15,000 square feet with different programs and structures and programming. And so again, everything needs to have a reason to exist. I'll maybe come back to that. Charlotte kind of sells itself Marcus, but you know, what was it that was attractive about the space there? I'll let you say the city but you know, we kind of know that it's a mecca. So for us we actually toyed with opening Charlotte for our original location seven years ago. But I wasn't moving to Charlotte at the time, so that didn't happen. But now we've been able to kind of expand our outreach and I don't have to move. I spend a few weeks there every month, but I don't have to move. So being said that, for us, it was, again, something that was completely different from the market that we're currently in. Obviously, we have a fantastic stronghold in the San Antonio Craft Brewers market. But one of the things for us is, especially because my business partner spent about 25 years in Charlotte, was expanding past that. Plus we have a relevancy as far as our beer for the Charlotte market. And there's certain issues within there that we've seen a gap in at the time. So it worked out for us to be able to open. But then also dealing with the specific location that we open, Charlotte is a very expanding market currently. So it's interesting because both of us are actually opening about a mile and a half away from each other. And Adam's like two blocks away from us. We'll all open Charlotte locations within 12 months of each other. Again, yeah, 12 months of each other and we're all within like a two mile radius of each other. So it's looking within those markets that are growing, expanding, the demographic scenes are growing there and different things like that. And so it just made sense at the time. Adam, how do you weigh the price paid for being in a more densely populated area versus one that's cheaper, but a little less populated?

[00:33:47] Craft Brewers: Our first location outside of Asheville was in Durham, which for us was a approachable size market. And then we moved to Knoxville, which is kind of also a more approachable size. And eventually we worked our way up to bigger markets like Charlotte, Nashville, Cincinnati. Louisville so I think for us it was proof of concept in what we felt is more attainable markets and then finding the confidence to kind of spread ourselves out and not overextend ourselves so and it's it's interesting you know it's not always the bigger the market the bigger the returns for us and it's this isn't all about like the performance of each taproom. It's about building a brand and putting our money where our mouths are and being local where we kind of already feel local and putting a brick and mortar in. But also it is part of the puzzle is that as the cities get bigger generally there's more opportunity there. So I guess long answer short is it was proof of concept in smaller to medium sized metros and then kind of find that confidence and build from there.

[00:34:50] Justin Kendall: Jeff, you've sort of leaned on it, or you mentioned it a little earlier, but you sort of focus on more densely populated areas, right? Yeah, that's been the more recent focus, and a big part of that has, there's a trade-off, right? You're gonna pay higher rent and have higher build-out costs for more densely populated areas. Just prepare for it, which means you have to have more sales, and this is like, 101 stuff, but it's shocking how easy it is to forget you got to have higher sales You got a manager cost to be able to pay for it And so we always start when we're thinking about a location with with like what's our pro forma look like? We're doing as much research as we can to figure out what we think is a reasonable low-side revenue. We manage to the downside on most of these things to make sure that we don't get upside down. I mean, that's where we start. So the other thing is that managing additional tap rooms, especially out of state, takes a ton of work and focus and institutional energy and cultural energy. And so our approach has also been, we want to have locations that are actually going to be pretty meaningful contributors from a financial perspective. in order to necessitate the kind of investment that we need to make as a leadership team, resourcing our folks. We wanna be able to, so it just doesn't make sense, even if it's gonna be a profitable, even if the ROI makes sense on paper, we wanna be able to take bigger swings at fewer spots. So that's been a part of what's contributed to that strategy. Marcus, you've just opened Charlotte, but is that the end for Weathered Souls, or do you sort of think, well, you know, maybe three, maybe four, you know, maybe another market? Yeah, um, no, that's not it. Um, we're actually about to open another location or another tap room in Charlotte, uh, inside the spectrum center, uh, with the Hornets. Um, thank you. Um, and we're working on a couple other little potential locations. I can't say what yet. Um, but hopefully the goal is to get like these two gentlemen next to me and open a few different locations over the next few years. Awesome. Well, let's talk a little bit about real estate and landlords because everybody loves talking about real estate and landlords. What considerations do you need to make when considering a lease? And I'll start with you, Jeff. This is the boring stuff that's super important and will come back to bite you in the ass. I mean, I really do think that your landlord, your lease, how you structure it, how like If you don't, unless you're a real estate attorney, hire a good real estate attorney to help you walk through this stuff. It's super, super important. And there's a lot, one thing I would just say too is that for a lot of, in our experience, one unique thing about being a Craft Brewers is that you bring something really special and unique to a landlord. A couple of our taprooms are part of larger developments, and so that's given us some leverage when negotiating with our landlords about flexibility or the investments that they make. And so a lot of times we've found that actually landlords will be pretty flexible and open to some creative ideas. Don't just bend over backwards. Don't just say no. Landlords oftentimes have a very rigid idea of how they think about, like, it's X dollars a foot, and we give you X dollars in build-out money, and you have a 10-year term. But the reality is we have several deals where we've structured thing as percentage rents or partial percentage rents or we can renew in five years at a Market rent or we can pay you back for the money that you've given us to help build out is in a different so there's so many different creative ways to structure a those leases that align, but it really starts actually with not just at knowing what do you want, but also knowing like what is the value you bring to this landlord. They are betting, they're betting on your credits as a tenant. They, all they want to get is do is get paid, which makes sense because they're giving you a space that they could leave to someone else. So I really think understanding what your landlord's motivation is also helps as well.

[00:38:44] Craft Brewers: Yeah, I'll echo what Jeff said, you know having I can't underestimate the value of having Qualified professionals help you out or if you have that capacity yourself as Jeff mentioned your background You said worse than consumer product goods or something like that. I mean and that probably informs a lot of our your capacity, natural capacity, to do a lot of what you do. And similarly, I have a background in commercial real estate, and so I think that kind of informs my world view that something that I think of, I think I can think of something a little bit differently than somebody who doesn't have that background and experience. Not better or worse, just differently. So I think, though, if you don't, if your background doesn't happen to be in these areas, then work with good people. You mentioned real estate attorneys. I'll throw in a good real estate broker is probably the most important thing. If what Jeff said overwhelms you of all the different opportunities and ways to negotiate a real estate transaction is overwhelming, it doesn't need to be your ideas. It needs to be your real estate broker's ideas. We work with top-notch real estate brokers that we can't speak highly enough. They help not only find space, but then also be creative in negotiating solutions for you as well.

[00:39:59] Justin Kendall: Marcus, what have you learned in negotiating that second lease? And now it sounds like third and fourth and so on. Yeah, I mean, I'm going to echo what these gentlemen said. You definitely want to have a good lawyer in hand and definitely a good broker. So luckily, I haven't had to deal with too much of that. But being able to work with your landlord in a cohesive type of situation where they're going to be able to help you out when you need assistance and stuff like that is going to be very important. So building up those type of relationships is definitely going to kind of guard you in the longer run.

[00:40:30] Craft Brewers: Let me say one, build on one other thing Jeff said too is breweries add a lot. We always talk about how we're building community. I think most of us, most brewers in the room can say that that about their business is you're building community. You are, and you're bringing people to a community. And so you provide a pretty big asset for a landlord and landlords, smart landlords will notice that and see that and value that appropriately. So just again, while, you know, they're the, Big Bad Boss who has the space that you want, you're also providing a great resource for them and you have a lot that you're offering for them and their goals as well. And that's important to remember.

[00:41:10] Justin Kendall: Let's talk a little bit about brand. Let's bring it home to that, because craft fans have been enamored with local. And these are markets that you're new to in a lot of ways. So when you're entering a new market, how do you build a brand reputation in those markets to consumers who have been largely local seeking? I'll start with you, Adam.

[00:41:32] Craft Brewers: Yeah, sure. I'll just dive in. We spend a lot of time and energy, I mean, These are markets we already felt local enough in, so we just put our money where our mouth is and our word where our mouth is. We host a lot of non-profit nights at our taprooms to build the communities that we want to be building in. We also have a lot of programming. So, I mean, we have a calendar of events at all of our taprooms, and it's probably full more than half the time. whether it's a drag bingo or a silent disco or even like a puzzle night or you know a pop-up thing going on or you know there's kind of always something going on that kind of is additive to what we're doing and then the last part is is just kind of having our taprooms being true to who we are we're a fun brand meant to be a good time or like good beer good times is on our cans, that's what we're trying to spout. So when you come to our places, there's games, there's amazing hand-drawn murals. It's just, we're trying to kind of embody who we are and I think that's what makes them unique.

[00:42:33] Justin Kendall: Marcus, how do you bring that Weathered Souls experience to your new markets? Well, obviously it's about branding, but then also getting to kind of know your local marketing community. For us, with our brewery, we have a lot of community outreach and a lot of community support. So even then, you know, looking at the quality of styles that we're releasing with a particular branding, I mean, we're more known for stouts and Charlotte hasn't been a big, heavy stout market. And so that's been a niche for us that we've been able to go into. But dealing with us, it's more so kind of about also attaching yourself to the community, attaching yourself to the people around you. And we've been able to do a pretty good job of that. Jeff, when you're bringing the Monday Night experience to a market like Charlotte, where you've got competitors on down the line, how do you bring that unique experience? Yeah, these guys right here. No, actually, I think one thing that has changed, so we've been open for 12 years now, One thing that has really changed in the industry is that I think local means something different now. I think our consumers care a lot more about our engagement with, employment of, connection to our local communities than that it was founded by somebody that lives within a five mile radius. I just think that is a different ballgame. So I think that I'd echo what these guys said, like knowing your local market, One just additive thing I'd say is training. Training is huge. So we really will really, really want to hire local GMs, local assistant managers, local staff, people that know the neighborhood, that when their neighbors come in, they know them and can connect with them. But then we also want to really immerse them in the Monday Night culture. So our GM for Nashville, or for Charlotte, which is opening in about six weeks hopefully, has spent three or four weeks in Atlanta, then in Nashville with our GM in Nashville, in Birmingham, and then back in Atlanta, and then back to Charlotte, and then every week we've got somebody going up. So that is so, so, so critical to make sure that they are connected deeply to their community, but also that we're giving them the train to understand what does it mean to be Monday Night Brewing in this local community. How soon do you make that hire? So we hire a GM. We're usually hiring them like three months out, um, which is a lot of time. So they have about a month of training. That's really, we're not expecting anything from them. Sometimes it's even more than three months. Um, but we're, we don't expect anything other than them just to be a sponge. which is expensive for a good GM, and travel and all that stuff. And then they're really developing a plan, hiring and onboarding. I think it's super important that a GM be allowed to hire their own team, but only after they've really become immersed in our culture. You want people to have the autonomy to pick their team, but know and understand how you pick that team. You've opened multiple locations. I'm sure you all get the question, like, why not just franchise? Why not do that? Is my short answer so I worked I worked in a for a private equity firm that did invested in franchise business and franchising is a beautiful business model because you basically take a box and you replicate it ten a hundred a thousand times in strip malls across America and then the world and the beauty of franchising is the operations are Simple they're codified and actually there's no room for deviation. So And that is the furthest thing from what our industry is and from what we are as makers. So I really am a deep believer that things like handing over the reins of your brand to anyone other than you is a horrible mistake and will end up backfiring because I think consumers are smart enough to see through kind of the bullshit of that.

[00:46:23] Craft Brewers: I mean, I don't think I could have said it more eloquently, but I think I'll add a couple more sprinkles on the cupcake of You know, people aren't just buying your products, they're buying your experience. So if you're selling your experience, you ought to be in control of that experience as much as humanly possible. So I think long and short, that's it.

[00:46:45] Justin Kendall: Marcus, in Charlotte, you're starting the Harriet Baskerville Incubation Program, which is aimed at creating opportunities in the beer industry for minorities and women Tell us a little more about that program and how you expect it to help introduce your brand to new drinkers in the city. So a few years ago, I found out that my grandma used to actually brew and distill. So one of the things that Black Brewers Association really didn't talk about is the historical relevance of blackened beer, right? Beer came from Africa. We'll just keep it real. So being said that, it's very much been in our history as a people. But then over the course of time, you figure you deal with the progress of the way beer has gone. And we won't go too far into details, but that's where it's gotten diminished from the black community. And then the lack of marketing, the lack of being able to receive financing, to be able to lack of housing and etc, etc, etc. All of these things have led up. But one of the amazing things is that I found out that my grandma and great grandfather used to brew during prohibition. So being said that, also my grandma owns a church in Compton. And so very much community driven, very much has been about her city for years upon years. She's 93 years old and as of last year was still doing Sunday school. But being said that, after Black is Beautiful, I kind of grew complacent, right? We did this amazing thing, raised $4.5 million, had all of these breweries support. and supported social justice reform. And I grew complacent because we did such an amazing thing and it was like, what's next? For me, being the type of individual that I am, I'm not a very complacent person. And so I was on a Peloton ride and was listening to Day and she was talking about passion and purpose. What isn't always your passion isn't always your purpose. What's always isn't your purpose isn't always your passion. But I realized within that conversation that Social work being the forefront of wanting to give back isn't necessarily my passion, but it's definitely became my purpose. And I've put myself in a situation dealing with Black is Beautiful, dealing with our brand to where I can go and ask for money, or I can go and ask for resources, or ask for all of these things that the normal individual like me hasn't been able to get access to. And so I realized within that, that, hey, if I can go ahead and give back, then I guess that's going to be my job to go ahead and do so. So Harriet Baskerville Incubation Program is named after my grandma. One of the biggest disparities of what they talked about is we're at less than 1% ownership, right? There's over 9,000 breweries in the United States, and there's less than 70 black-owned breweries. But then also going into women ownership, it's not that great either, right? So being said that, you look at how mentorships work and different things like that, and it's always cool to put more foot soldiers into the masses, right? But we know where real change is given is the people that have creativity, the people that have ownership, the people that have the decision making, and that's where the disparity is when it comes to black ownership. So with the incubation program, instead of gearing towards building more brewers or building more taproom employees, we're going to focus on the ownership end. So we brought in some of the top businesses dealing with RAR, White Labs, Yakima Chief, Jagermeister, even though they're not beer, but they do fantastic at marketing and sustainability. We'll be working with SBA on law officers and all of these things to start building individuals into ownership. So they'll start working with some of these brands as far as how to operate their business end of it, how to work with them on the supply chain end. They'll go and work with different marketing to learn about sustainability, how to grow their brand. We'll pair them with SBA loan officers on the financial side, working with some banks. So we're building a partnership with Bank of America right now where they'll be able to work with some of the people in business banking to learn how to go ahead and ask for money or go ahead and secure money on different ends. But the main goal of what this incubation program is is to change that narrative of ownership. And you look at the first year, right? Hoping out of the 12 people that we bring in, four people go open a brewery, that's already a 60% increase in the amount of ownership that there is. And so you look at that, those are those real changes that we're looking for, right? You can always have the small things that are gonna happen, but the real ones are gonna be within the ownership in. So working very hard to build that program up. We just brought in a fantastic education director. To start working with that realize that I can't manage this program on my own So just brought in a full-time employee for the nonprofit But hopefully we'll have our first cohort at the end of June to start out and hopefully start building from there You know like the goal of the Michael J Jackson Foundation is to build more brewers more individuals that are going to grow within the Craft Brewers This is going to be more towards the ownership side and trying to build more ownership within beer Let's wrap this up with an audience question. When you open a taproom in a new state, are you also looking to have representation in the off-premise in the same market? Is that an expectation that factors into selecting taproom location? So I'll start with Jeff here. We've done it several different ways. In Alabama, we had been operating in wholesale for years before we launched. In Tennessee, it was within a couple of years of each other. In Charlotte, we will actually open a taproom before we have wholesale distribution. We're hoping to do it right around the same time. We don't really think about the specific real estate in light of what the off-premise or on-premise looks like. They're separate pieces. But we do think about, on the margins, we'll think about what the impact is to our wholesale business in terms of the lift that it could provide. it's a farther reaching concentric circle on the wholesale side. Marcus, how important are distributed sales to building up the taproom? It's definitely important because it's what's going to give that community recognition to your brand. So for us, we actually distributed in North Carolina or Charlotte prior to opening the taproom. Now, the majority has obviously been the taproom and we've stopped distribution. Currently, but it's definitely important as far as building the brand building that brand recognition and at least getting the community Familiar with your brand prior to opening. I mean you take a random burger and they're like, oh who's Weathered Souls?

[00:53:26] Craft Brewers: So obviously you need to have some type of market sustainability there before you actually physically open Yeah, and we were we distributed had distributed sales in all of our markets before we opened the taproom as I mentioned earlier We're in a small market. So a big part of our business strategy from day one when we were more focused on, well, when we were almost exclusively focused on the distribution side was to kind of expand out and branch out and be relevant and sort of be kind of a first mover in a lot of different markets. And so we sell our beer in nine states. It's been that way for about three years that we've kind of been stopped at nine states. But then we've kind of come back and back filled with the tap room. So for us, you know, as our business model, as the market evolved, our business model evolved. And whereas at first it was get out in front on the distribution side to kind of catch up to a lot of the brewers. who'd kind of been paved the way and been doing this for a long time. And then once we had our distribution out there, now we've kind of backfilled it with our tap rooms.

[00:54:19] Justin Kendall: You know, one other thought, Justin, is that I'll tell you like in a year, whether we're idiots or geniuses in terms of North Carolina of opening a tap room around the same time as distribution, I will say it's really changed in terms of new markets. Our ability to, even a brand as big as Monday Night, we have a, we have a, you know, we're only in three states, but we do really, we're really deep roots in those three states. The conversations with distributors were way easier once they knew that we were opening a taproom in Charlotte. That was not the case years ago. It was, oh, well, you're going to piss off our on-premise accounts, and you're going to compete with them. And that whole narrative is completely flipped for us. So we actually have got conversations with distributors that we probably wouldn't have gotten otherwise because of our taproom, which is a totally different thing than what it was, yeah, 5, 10 years ago. Well, I think that's a good place to leave it. Adam, Marcus, Jeff, thank you for doing this.