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For Your Consideration...

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Category: General Blogs  |  Tags: beer, brewing, alcohol, spirits

We tend to use the term “Emotional roller coaster” so much in our every day lives, both personal and professional, that we’ve become numb and oblivious to just how much of a cliché it’s become. But there really is no better way to describe major global beverage alcohol news from the past month and a half or so. Reading the headlines of the past six weeks has been akin to watching all of the most hackneyed cinematic clichés play out on screen.

There’s the tragic romance in which the overtures of a much more well-to-do suitor (SABMiller) are ultimately rebuffed by the object of affection (Heineken). Of course, that unrequited pursuit may have been in defiance of a forced marriage (AB InBev).

Then there’s the tale of the rebellious, sardonic hipster whose tough, above-it-all exterior really hides a delicate vulnerability (Pabst). That all comes to the surface when the rebel falls for an exotic stranger from a faraway land (Russia).

And, especially this time of year, there has to be plenty of Oscar bait. And who doesn’t like a good, sweeping epic? It’s the story of a nation in conflict (Scotland) and the common hard-working folk (The Scotch whisky industry) just trying to get by as the world around them is nearly torn at the seams. I say ‘nearly,’ as at the 11th hour, that world was forged back together.

Okay, I should get serious for a bit, put on my movie critic’s hat, and tackle each of these in reverse order.

The Scotch Whisky Association sees last month’s “No” vote on Scottish independence as the dodging of quite a bullet. If Scotland had left the United Kingdom, uncertainty and instability in the Scotch market would prevail. Whisky exports already have been falling. If the industry suddenly faced new tariffs as it tried to ship to its biggest markets in the EU—which it would have to go through a potentially lengthy process of rejoining as its own entity—it wouldn’t bode well for the bottom line.

On the Pabst development, I was surprised (well, not really) at how many people expressed shock that the brand that’s enjoyed a renaissance at the hands of American hipsters would be (*GASP*) foreign-owned (and by investors in Mother Russia, no less). To that, I say, “Get over it.” Pabst has been playing ownership musical chairs for years. It’s essentially a trademark holding company, as it doesn’t operate its own breweries. Drinkers shouldn’t get too upset about something as abstract as a trademark. It’ll be business as usual.

As for the AB InBev-SABMiller dance and the SABMiller-Heineken dalliance: That’s a little more serious. If a merger between the two biggest brewers were to take place, it’d essentially create an entity that’s responsible for nearly a third of all beer volume in the world and closer to 40 percent of its revenue. That’s pretty intimidating. But I wouldn’t get too scared because there are far too many regulatory hurdles to jump before such a combination could become a reality. As for Heineken, my hat’s off to the family for, well, wanting to keep it in the family (at least for now). Though, it would’ve given SABMiller a solid and rapidly growing Mexican brand (Dos Equis) with which it can compete directly with the Modelo business that AB InBev now owns.

But I’ve had enough of these manipulative, heart-string-tugging films. I’m in the mood for a feel-good comeback story. And that’s exactly what’s happening in Kentucky. If there’s ever been any doubt that the bourbon renaissance is here to stay, just look at what Diageo’s been up to over the past couple of months. The company broke ground on its $115 million Bulleit Distilling Co. distillery and cut the ribbon on the visitors’ center at the rejuvenated historic Stitzel-Weller facility. When the world’s biggest spirits market gives the Bluegrass State and its distilling heritage that much of a vote of confidence, it makes me eager to get off that chaotic emotional roller coaster in favor of another cliché: raising a glass.

The Mother of Reinvention

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Category: General Blogs

Lately I’ve been doing a fair amount of speaking at industry events across the country on a range of topics, everything from cider to managing SKU proliferation in the warehouse. Each presentation has had its own unique challenges, but I have to admit, none have been more challenging that the one for the panel I moderated last month at The Beverage Forum. And the reason for that is the disparate nature of the four speakers (other than me) on the panel: Becky McAninch of Kraft, speaking specifically about the company’s MiO water enhancers; Paddy Spence, CEO of Zevia zero-calorie CSDs; Andy Thomas, CEO of Craft Brew Alliance (CBA) and Charles van Es of Heineken USA (who graced our April cover), addressing the company’s Strongbow brand.

So what was it exactly that binds this diverse lot together? That was my conundrum. And then it hit me in the form of one word: reinvention. It’s a concept that has driven some facet of each of the brands that will be showcased on the main Forum stage.

When Kraft launched MiO it was essentially reinventing the way consumers drink water. More specifically how they enhance their water. Value-added water has been on a bit of a downward trajectory over the past couple of years, according to Beverage Marketing Corporation (BMC, our partner on The Beverage Forum). Last year, BMC reports, value-added water dipped nearly 7 percent. The emergence of flavor drops, such as MiO was really rooted in the overarching customization trend. In this age of social media, Spotify and Pandora, consumers, especially the mammoth millennial demographic, are looking to have everything their way. And with products like MiO, they can determine just how much flavor and functionality their water has.

Zevia seized on a similar downward market trend—albeit one on a much grander scale than functional water. The CSD market has been declining for most of the past decade, as consumers are looking beyond just simple refreshment in their liquid refreshment products. Two terms that keep popping up are “natural” and “healthy” and those are words that often are associated with Zevia’s signature ingredient, stevia. Zevia, in essence, is a reinvention of the struggling soda category.

The whole craft beer phenomenon, one could argue, is a reinvention of the overall beer category and some of the core brands in the CBA portfolio, Widmer and Red Hook in particular, were among the pioneering players in the segment involved in that reinvention. However, companies like CBA are reinventing the specialty segment even further through their marketing strategy. They’re recognizing that there’s not really such thing as a “craft drinker” but sub-segments within the craft universe that need to be targeted with the utmost precision.

And a similar scenario is playing out in the surging cider market. As the category enjoys its current explosion, brand owners are realizing that there really isn’t a “cider drinker” per se.  It’s segmenting much like the overall beer market has: There are the premium domestics (think A-B’s new launch Johnny Appleseed and MillerCoors’ Smith & Forge), the crafts (such as this month’s Breakout Brand Virtue) and then the imports (Stella Artois Cidre, for instance). But Heineken USA has recognized that there’s segmentation even beyond imports into the upscale, lifestyle, “badge brand” space—a space that it hopes to define by the reinvention of its venerable, classic Strongbow trademark.

The general rule in today’s beverage market is that there are no rules. Those who try to adhere to “the way things have always been done” will be mere spectators as the world is reinvented around them.

Now Open: The 2014 Global Packaging Design Awards

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Category: General Blogs

We are now accepting entries for the 2014 Global Packaging Design Awards. The awards recognize the best in beverage packaging design from around the world. They are open to any packages introduced since Sept. 1, 2013. Deadline for entries is August 15th. Winners will be notified by Oct. 1st and will also be featured in the November 2014 edition of Beverage World. Contact packagingawards@beverageworld.com for details on how to enter.

New Products Tap Into America’s Spirits Market

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Category: General Blogs  |  Tags: spirits, liquor, cocktails, pisco, Wine & Spirits Whole

I found it interesting while walking the aisles of the Wine & Spirits Wholesalers of America (WSWA) show last month in Las Vegas just how many different types of beverages—even after all these years-—the average American consumer still has little or no knowledge of. There were numerous importers and distillers from other countries at this year’s show, here to publicize their national drinks to the American market. I covered this to some extent in my write-up about the show, which you can find beginning on page 10 of the May issue of Beverage World. But the space there didn’t really allow me to do justice to the passion these companies have behind their products. Two cases in point are Portón, which sells half of all Peruvian pisco exports to the U.S., and CNS Enterprises, the oldest and largest importer of China’s baijiu to the United States.
 
During the show I had the pleasure of spending time with one of the world’s foremost experts on pisco, Johnny Schuler. Having Schuler guide you through a personal tasting and exploration of the delights of this unique spirt is a special experience to say the least. It’s rare to meet someone more enamored of a particular beverage. He detailed for me how Portón is made at the 330-year-old distillery in Hacienda La Caravedo in Ica, Peru. That’s right, 330 years old, making it the oldest working distillery in the Americas, according to Schuler. “We consider Pisco to be the fifth white spirit,” he explained to me. “Gin, vodka, rum and tequila are the four big sisters. And we have the new one on the market called pisco. People have to understand that pisco is a category of its own. It’s not like tequila which is made from cactus. It’s not like vodka, made from grain. Pisco’s made from fruit, the grape. So it’s the only white spirit made from a fruit. And Peru has about 380 distilleries that make hundreds or even thousands of different varieties of piscos. So it’s a wonderful, huge, beautiful world, much like the world of cognac in France.”
 
And yet, ask many Americans about pisco today and they might give you a blank stare. This is especially curious because pisco at one point was enormously popular in some parts of the United States. In fact, if you were to jump in your time machine and travel back to mid-1800s San Francisco, you’d find Pisco Punches being served all over the city. Furthermore, it just so happens that the most popular cocktail in Peru today, the Pisco Sour, was actually created by an American in Peru in 1918—a Mormon, in fact—named Victor Morris. 
 
As for baijiu, the folks with CNS  enthusiastically explained to me how much this spirit is an integral part of Chinese culture (and also that of many other Asian countries). The custom is for guests in China to be greeted with a tiny measure—about half an ounce (it is over 100 proof)—of the spirit when they arrive and everyone begins drinking it before they sit down. (I believe I actually witnessed this custom amongst a group of Chinese at a Chinese restaurant in New York City right after WSWA, purely by coincidence. The baijiu kept the diners quite energized, and on their feet very often during the meal!) 
 
Baijiu is actually the top-selling spirit in the world; almost twice as much of it is consumed around the world as vodka. Now it’s heading here, too.

Don't Let Quality Be Blinded By Quantity

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Category: General Blogs

If there’s one theme that sticks in my head from last month’s Craft Brewers Conference (CBC) & BrewExpo America in Denver, it’s quality versus quantity. Or, more specifically, how much does the latter help or hurt the former?
 
The quality issue has been a running theme at the past handful of CBCs and has been a core talking point in Brewers Association director Paul Gatza’s annual State of the Craft Brewing Industry address. And it kind of has to be, especially when you’re bringing quantity into the equation. By quantity, I mean, of course, the exploding number of new breweries getting into the craft business year after year. Just last year the number of new craft operations surged by about 15 percent to 2,768 at the end of 2013.  

It’s exciting but it’s also somewhat frightening and that sentiment’s certainly not lost on the folks at the Brewers Association. It’s a segment whose key players have survived and thrived largely because of an uncompromising commitment to quality. The pioneers got in the business when there was no bandwagon on which to jump or wave to ride.

But now, as everyone from financial community to amateur brewing hobbyists are hip to the accelerating growth of craft, there could be many getting into the business without getting their heads around what’s truly involved. I’ve spoken to more than a few people who’s said, “I’m a pretty good home brewer and my friends said I should start a brewery. So I did.” And more than a few others among the moneyed classes who’ve said, “I hear craft brewing’s hot, so I’m going to invest in it even though I don’t know much about it or really care all that much about beer.”

I can somewhat relate with the first group. It wouldn’t be immodest of me to say that the dozen years I’ve been writing about beer (not to mention every other beverage) that I know slightly more than the average consumer about it.

But I could never claim to know as much or more about beer than actual brewers or authors who’ve had several books published on the topic—many of whom I count among my friends. The friends not involved in beer in anyway, however, think I know “everything” about the beverage because I know a few more things about it than they do. So I’ve had them tell me on more than one occasion, “Hey, you should start a brewery.” Umm, no. There are two types of insight my experience has afforded me. No. 1: Running a brewery is hard work.  No. 2: The more I learn about brewing the more I learn how little I know about brewing.

So it scares me when folks say they’d committed their every penny to a business based on nothing more than the urgings of less-knowledgeable friends.
   
Don’t get me wrong, I’m thrilled that there’s so much interest in craft beer and so many new players. I fell in love with craft beer my first year at Beverage World and the rise of the segment over the past decade-plus has paralleled my own personal beer geek adventure.

This is personal for me. I don’t want this surge in quantity to be at the expense of quality. Because it’s quality that really makes craft...well, craft.