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MicroBrewr 086: The future of apple cider in America with Wandering Aengus Ciderworks

MicroBrewr 086: The future of apple cider in America

Nick Gunn and his wife were working for her family’s winery. They had the idea to start growing apples for cider. One of the cideries to whom they were selling apples decided to close down and they offered to sell the business to Nick and his wife who moved Wandering Aengus Ciderworks to Salem, Oregon.

“Cider is a really exciting proposition for a lot of investors.” [Tweet This]

 

Now they have two brands of cider.

Wandering Aengus is the traditional brand of cider. The Wandering Aengus brand has ciders that are more astringent, more bitter, and higher in alcohol content. “For the wine drinkers, it’s something that’s interesting,” says Nick.

Anthem Cider is a lighter style for people who aren’t used to ciders. These are less acidic and have lower alcohol content. This brand is marketed toward to craft beer consumers. “Beer drinkers,” says Nick, “are much more adventurous and willing to try just about anything that’s out there.”

They package Anthem ciders mostly in kegs for sale on draft. The goal is to get the word out for distribution in smaller packaging. “It’s a pretty basic model a lot of people have used,” says Nick.

“Anthem is a little more on the adventurous side,” Nick describes. “And that’s also a part of marketing to people who like craft beer.”

In addition to straight apple cider, Anthem also has pear, cherry and hopped ciders. They’re do some progressive forays like gin and whiskey barrel-aged ciders, as well as ciders fermented with bee pollen.

In contrast, “Wandering Aengus is super traditional,” Nick says, “It’s just those apples fermented without anything else added to them. And those apples are so rare we don’t really want to mess with them in the first place, they kind of speak for themselves.”

Finding good, traditional cider apples is difficult, but Nick is pushing the market.

“Most of the old heirloom apples have been ripped out in favor for Granny Smith and other dessert apples,” he says. “We’re trying to get people to plant some newer [apple trees]. We’re trying to bring back some of the older, better flavored varieties.”

Nick’s favorite apple ciders are blends of sharp apples, bittersweet apples, and aromatic apples.

“You kind of want to blend in a little bit of sharp, a little bit of bitter, a little bit of aromatics,” Nick advises. “That’s a part of the art of cider making, is it’s a blending process. Because there’s not a lot of apples that just make a great cider straight up.”

Some of the high brix, high acidity apple varieties that they use are:

  • Golden Russet
  • Wickson Crab
  • Cox’s Orange Pippin
  • Newtown Pippin
  • Calville Blanc d’Hiver

“These heirloom sharps… is a really [high] sweetness level and acidity is off the charts,” comments Nick.

But these sharp apples don’t have a lot of tannins. Bittersweet apples contribute tannins to the cider.

Some of the bittersweet apples they use for tannins are:

  • Muscat de Bernay
  • Muscadet de Dieppe
  • Yarlington Mill
  • Dabinett
  • Herefordshire Redstreak

“Those apples taste like crap!” exclaims Nick. “They really are horrible, because they have so much bitterness.”

“I’m being evangelical about planting cider apples. That’s really the future of really high quality cider in America.”

While Nick is evangelizing about high-quality, hand-crafted, traditional ciders, a different style of cider is gaining momentum across the country. Large industrial companies are making cider with additives and diluted with water.

While the product sells well on a large scale, it is expanding the overall market and demand for cider. As the larger brands reach into previously untapped markets, they create new spaces for all cider products.

“Their cider is a lot cheaper,” says Nick. “We could never compete on price because we’re using 100% juice. But what we can do is offer a different product. And maybe that’s a graduating step for the consumer.”

RELATED: MicroBrewr 048: Package your beer cheap and easy with mobile canning

“The growth in some of these larger brands has just been astronomical because a lot of the place they’re putting cider there never even existed a cider in the first place.”

“Every single chain store, every 711, every place now has cider. Cider is on the lips of every one. It’s on TV now—it was never on TV before, like, 2 years ago.”

“Even if [cider] gets to 5 percent of the market, we will be gigantic,” Nick predicts. “Over in England, cider is around 20 percent of alcohol consumption. France is about 17 percent. So we have a long ways to go in America. We were just at 0.3 percent about 3 years ago and we’ve gotten to one percent now. So the climb now is just inevitable.”

There hasn’t been a lot of quality at quantity. And now that that is exists, distributors are staring to notice, buyers are noticing, the whole market place takes note.”

As overall demand for cider increases, and a wider variety of cider products becomes more popular, the cider companies are able make larger quantities at lower prices.

Nick’s strategy is to have meaningful impact in the markets where craft beer is already growing rapidly.

They are reaching to key cities such as:

  • Denver
  • Philadelphia
  • New York
  • Los Angeles
  • San Francisco
  • Seattle
  • Portland

“You’re starting from ground zero, you can explode easily,” says Nick.

Yet, cider producers are finding that the industry needs to mature. Particularly, there is a need for more education in cider sales.

“Finding a distributor that understands cider is really difficult,” says Nick.

At the next CiderCON, the conference for the commercial cider industry to be held in February in Portland, Oregon, the United States Association of Cider Makers will unveil the first ever cider accreditation program. The multi-level program is designed to educate “distributors, servers and others who are interested in becoming trained experts on all things cider.”

As the cider market in America evolves, the industry adapts.

“It originally started out as sweet and fruity,” recalls Nick. “I like to call it ‘cheap and cheerful.’”

Now “cider varietals are being recognized, and the quality of cider they make.”

Nick foresees an increasing appreciation of drier ciders, and even higher quality cider apples. More cider will be made from heirloom sharps, cider will be fermented drier with higher alcohol content. There will be more barrel aged ciders, and ciders with more tannins. Ultimately terroir of cider will be recognized and appreciated.

Listener question:

From Daniel Frey: What accounting system do you use or do you recommend?

Can’t-go-without tool:

Cross-Flow filter, Pall Corporation.

Book recommendation:

Check out the entire list of recommended books, click here.

Your Free Audio Book

An upcoming beer style:

North American Heirloom Cider

Other resources:

You can reach Nick Gunn and Wandering Aengus Ciderworks at:

You can reach Anthem Cider at:

Sponsors:

Audible

Download a free audiobook.

Audible. Download a free audiobook. http://microbrewr.com/audible

Support MicroBrewr

Help keep MicroBrewr on the air. CLICK HERE for ways you can help.

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MicroBrewr 084: A healthy alcoholic beverage: hard cider with 101 Cider House.

MicroBrewr 084: A healthy alcoholic beverage: hard cider

As soon as Mark McTavish could acknowledge alcohol, he gravitated toward hard cider. Later, he attended beverage management school and opened a craft beer bar in Toronto, Canada. Now in the U.S., Mark owns a cider distribution company and 101 Cider House in Los Angeles, California.

“As a cider maker, you’re not really making anything. You’re more of a custodian to the beverage.” [Tweet This]

 

Mark had a long career in the fitness business, selling exercise equipment and helping gyms get started. He is very health conscious and this comes through in his hard cider.

101 Cider House focuses on a “healthy” alcoholic beverage. All of 101 Cider products are: raw, living, and probiotic.

Some attributes of what Mark calls a healthy hard cider:

  • Wild fermented
  • A living beverage, don’t kill the juice in the process
  • Not filtered
  • No added sulfites

The hard cider market is absolutely exploding, with 500% growth in the last 3 years. Besides the general growth, Mark is tapping the health foods sector.

“From step one,” reflects Mark, “I always wanted to make a healthy alcohol.”

“Here in Los Angeles,” he says, “people are very interested in their health foods. When it comes to alcohol, a lot of people tend to check their standards at the door.”

“We have to show our ingredients in our cider,” Mark says of the labels on the bottles. “Our biggest marketing tool is to show people that we are using 100% raw fruit and doing the natural process like we do.”

They don’t add any unnecessary or unexpected ingredients to the cider, not even yeast.

“Cider is like wine,” he says. “You can press the fruit naturally, let juices sit their and do its own thing with its indigenous yeasts, and it will tell you what it’s going to do with itself.

“And if you wait long enough, it will make something great.”

Brewery specs:

Kettle size: n/a.

Size and quantity of fermentation tanks: 8, 2000-gal (64-BBL) poly tanks; 6, 275-gal (9-BBL) poly tanks; 50, 55-gal (1.75-BBL) oak barrels.

Size and quantity of bright tanks: 0. Not required as we bottle-condition and keg-condition all product.

Annual brewing capacity/last year’s production: 50,000-gal capacity.

Square footage: 7000 sq. ft.

Years in operation: 10 months years (opened December 2014).

Listener question:

From Rob Lightner: Has your brewery turned out the way you thought it would? And if not, how is it different?

Can’t-go-without tool:

Pump.

Book recommendation:

Check out the entire list of recommended books, click here.

Your Free Audio Book

An upcoming beer style:

Hopped cider

Other resources:

You can reach Mark McTavish and 101 Cider House at:

Sponsors:

InMotion Hosting

“Fast, reliable, affordable, web hosting.”

advert-inmotion-hosting_250x250

Support MicroBrewr

Help keep MicroBrewr on the air. CLICK HERE for ways you can help.

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MicroBrewr 083: Market branding for a cider company with Common Cider Company.

MicroBrewr 083: Market branding for a cider company

Fran Toves’ son challenged her to enter cider into the homebrew competition. After her 3 entries made it to the top 10, she figured it time to take the product to market and started Common Cider Company in Drytown, California.

“There is no need to start a cider company with a million dollars.” [Tweet This]

 

Cider is not brewed the way beer is made, but similar fermentation tanks and bright tanks are used for making cider as making beer. After the initial attention at the homebrew competition, Common Cider Company started with a 400-gallon (13-BBL) test batch that got picked up by a distributor. They grew to 30,000-gallon (1,000-BBL) batches within a couple years.

Whereas a cidery or a cider house presses the fruit themselves to make juice, a cider company buys the juice pre-squeezed. A cider usually has a base of apple juice, but it can start with other fruits. A perry is made from pear juice.

“Cider as a base,” says Fran, “is a great platform to be able to introduce new flavors.”

Fran’s background in product development for the organic food industry is helping her with Common Cider Company. She emphasizes the importance of branding.

Fran says a small company can easily spend $50,000 to $100,000 on high-quality branding design for all promotional materials. With such a significant investment, it is very important to consider your message and what your company is about. If you want to take more time to learn about your customers and find your voice in the market place, just get simple logo at first. Then budget up to $100,000 for a re-branding.

That’s the route Fran planned for Common Cider Company. “I wanted to spend some time with our customers an just spend some time in the marketplace,” she says. “before investing in the brand.”

Sample Cider Packaging

Common Cider Company packaging cans Common Cider Company packaging cans 4-pack Common Cider Company packaging bottle Common Cider Company packaging bottle

They’re keeping a logo element from the original design scheme and hiring a branding firm to re-design their message. The results have been spectacular and you can expect to see more on store shelves soon!

Fran also has tips for the today’s listener question about budgeting and profit projections:

  • Decide where you are and where you want to be.
  • Put a budget for every core area including, branding, legal fees, sales staff, materials, and all other details.
  • Decide what you can spend on each category of your budget.
  • Use checklists so you don’t miss details.

“Your suppliers will give you pretty good information as far as what your cost of juice is and your yeast and any other adjuncts that you want to add to your product,” Fran suggests. “And that goes from your raw material to your packaging.”

As for projecting profits, Fran always advises starting with small batches. She suggests 500-gallon batches or 1,000-gallon batches at the most. Any larger, and you’ll have too much money tied up in product and it will take too long to sell.

After you sell a few batches to earn some money and build demand, then you start doing larger batches.

“It’s important to start small,” Fran advises. “Just like any business, you’ve gotta kind of walk before you can run.”

Listener question:

From Texas Rüegg: Where  do you find real accurate numbers to estimate cost of operation? I keep building spreadsheets with hundreds of calculations, but at best they are just guesses. I want to be conservative with my numbers and be sure that even the worst case will actually make money. So where do you find real data?

Can’t-go-without tool:

Pump.

Book recommendation:

Check out the entire list of recommended books, click here.

Your Free Audio Book

An upcoming beer style:

Dry ciders

Other resources:

You can reach Fran Toves and Common Cider Company at:

Sponsors:

Audible

Download a free audiobook.

Audible. Download a free audiobook. http://microbrewr.com/audible

Support MicroBrewr

Help keep MicroBrewr on the air. CLICK HERE for ways you can help.

Subscribe on iTunes             Listen to Stitcher

MicroBrewr 067: How to find investors for a brewery with Jenny Kassan.

MicroBrewr 067: How to find investors for a brewery

UPDATE: Mistakes and clarifications have been corrected, per Jenny Kassan.

You planned the brewery of your dreams. You researched the market and you know it will be profitable. But you don’t have a million dollars under your pillow to start it. Now how to find investors for a brewery?

Jenny Kassan, an attorney and consultant in Oakland, California, graduated from Yale law and worked for 11 years helping to build really small businesses. For the last 9 years she worked in securities law, “the very highly regulated world of raising money for a business.” Now she does consulting and teaches classes on how to raise funds for businesses.

As soon as you ask someone to invest in your brewery, you’re conducting a “security offering,” which is regulated by the U.S. Securities and Exchange Commission (SEC), as well as the securities regulators in each state where you offer the investment.

“Even if the regulators don’t catch you and fine you, you have created this liability for your company,” cautions Jenny. “If, for example, one of your investors was unhappy later and wanted their money back because you couldn’t afford to pay them or something, they could complain. And then it would be uncovered that you never did comply with those laws. And they would have a pretty good case against you.”

First, some background info.

There are generally 2 kinds of investments:

  1. Equity – ownership in the company
  2. Debt (loan) – must be paid back

There are 2 kinds of investors:

  1. Accredited investor – A person with a net worth of $1 million (excluding his or her primary residence) or annual income of $200,000, or an entity with $5 million in assets.
  2. Unaccredited investor

If you offer a security only to accredited investors, the legal compliance hurdles are generally fewer. However, there are legal ways to include both kinds of investors in your offering.

 

Until you have ensured that your offering is legally compliant, don’t solicit investors directly. Also don’t advertise your offering publicly unless you have done the legal compliance that allows advertising. At this point, don’t solicit investors directly, just ask general questions.

Anything other than one-on-one communication is considered advertising, which is regulated by the SEC.

“Have some informal conversations with potential investors,” Jenny instructs, “and say, ‘I’m thinking about raising some money—I’m not doing it now, but I’m thinking about.’”

Then ask general “if scenarios.” For example, “If I were to offer an investment opportunity in my brewery:”

  • Would you be more interested in equity or debt?
  • How would you expect to get paid back?
  • How long would you be willing to have your money tied up?
  • What kind of perks would you want?

The laws are flexible enough that you can design your investment agreement in lots of different ways.

“There’s a lot of kinds of equity that can look a lot like debt,” says Jenny. “There’s also debt that can look more like equity, where the payment that you make to your investor can vary based on the success of the company.”

After both parties come to agreement, they each need to talk with an attorney to make sure their desired agreement is legally compliant.

Most investments require some kinds of securities filing at the state or federal level or both.

After you figure what you’re willing to offer, you might be ready to conduct an offering. Talk to an attorney to help you do the necessary filings.

Direct Public Offerings

If you want to do a Direct Public Offering which allows you to do public advertising and include unlimited number of both accredited and unaccredited investors, you may need to file a Form D with the SEC and register with your state regulators. The filing requires attachments such as:

  • “Prospectus”
    • Risks
    • Business Plan
    • Description of management team and qualifications
    • Anything investors would need to help them make a decision
  • Sample security to be offered
  • Organizational documents for the company
  • etc.

The filing fee can range from a few hundred to a couple thousand dollars. Legal fees usually range from $15,000 – $30,000. It sounds like a lot, but if you’re opening a million dollar brewery, it’s a worthy 3% of the overall budget.

“I think it’s possible to do without an attorney,” speculates Jenny. “It’s certainly not the best strategy. It may take you twice as long and it may be a nightmare, but you should be able to get through the process.”

If you go at it without an attorney, remember that the regulators are there to help. So work with them, respond to all of their questions, and make their requested changes.

Once you get approval from the regulators for your Direct Public Offering, now find money!

Advertise your offering:

  • Talk to media
  • Get in the newspaper
  • Put it on your website
  • Send mass emails
  • Host parties and events
  • “Set up a million meetings”

Have your investor packet ready for when people want to know more.

“The best thing to think about,” says Jenny, “is to put yourself in their shoes and ask yourself, ‘What is everything I would want to know if I were them, before making a decision?’”

Include anything to help them make a decision, even the risks.

“If they find out later that you didn’t disclose something that was material to their decision,” cautions Jenny, “they could sue you and say you misrepresented what the opportunity was.”

Vet your investors

Another important thing is to make sure each investor is a good fit.

“You don’t want to accept the first investor that says ‘yes,’” cautions Jenny.

Find investors with whom you get along, and with whom your values and vision for the business align.

“When you are bringing in a fairly large investor,” says Jenny, “they may have a pretty big role that they are playing in your life for the next 10 years.”

And maybe we should saying something like… Of course this is lot legal advice. The laws are highly complex and vary from state to state. You need to speak to an attorney about your specific situation.

“You really have to vet your investors in the same way that they’re vetting you.” [Tweet This]

 

Listener question:

If you could ask one question to every brewer or brewery owner, what would you ask? Let me know.

Book recommendation:

Check out the entire list of recommended books, click here.

Your Free Audio Book

An upcoming beer style:

Cider

Other resources:

You can reach Jenny Kassan and her legal work at:

Sponsors:

Audible

Download a free audiobook.

Audible. Download a free audiobook. http://microbrewr.com/audible

Support MicroBrewr

Help keep MicroBrewr on the air. CLICK HERE for ways you can help.

Subscribe on iTunes             Listen to Stitcher

MicroBrewr 041: A flagship nanobrewery in a tourist town, with Backshore Brewing Co.

MicroBrewr 041: A flagship nanobrewery in a tourist town

Danny Robinson had the choice of building a giant brewery in the middle of nowhere, or a tiny brewery right on the beach and boardwalk. He chose the later and made Backshore Brewing Co. in Ocean City, Maryland.

“The plan from the beginning was to have this nanobrewery up on the boardwalk, be the flagship of the brand.”

It seems to be working. In a town whose population fluctuates from 3,000 in the winter to 300,000 in the summer, Backshore has a 1-BBL brewhouse and has beer made under contract to meet demand.

I first heard about Backshore Brewing from Alexis Irvin, who spoke with us on MicroBrewr Podcast 040. Check out episode 40 to hear about Blood, Sweat, and Beer documentary and to get a coupon code for 20% off the price when your order a digital download of the movie.

Some of Danny’s advice to others:

  • Get really deep with the math.
  • Get a mentor and find more mentors.
  • Play to your strengths.
  • Be honest with yourself, but keep trusting yourself.
  • Don’t underestimate the power of packaging and marketing.

Brewery specs:

Kettle size: 1 BBL.

Size and quantity of fermentation tanks: 4, 2-BBL fermenters.

Size and quantity of bright tanks: 2, 2-BBL bright tanks, sometimes used as fermenters.

Annual brewing capacity/last year’s production: Brewed 200 BBL last year, contracted 400 BBL for distribution.

Square footage: 600 sq. ft., with 500 sq. ft deck.

Years in operation: 2.5 years (opened May 2012).

“A business is very different from a hobby.” [Tweet This]

 

Listener question:

From Federico Nussbaum: How can we find out how many beers to have on tap in the start? How can we find out which styles to serve in our local area?

Book recommendation:

Check out the entire list of recommended books, click here.

Your Free Audio Book

An upcoming beer style:

Ciders

Other resources:

You can reach Danny Robinson and Backshore Brewing Co. at:

Support MicroBrewr

Help keep MicroBrewr on the air. CLICK HERE for ways you can help.

Subscribe on iTunes             Listen to Stitcher