Should I Stay or Should I Go?

Dear Client:

Listening to the Clash as I write this, a propos of nothing.  This is a hot topic as many craft brewers trying to decide whether to circle the wagons and hold pat, or attempt to grow through territory expansion.  Kimberly Clements and Dan Lust of PINTS, LLC (who consult with craft brewers and distributors) and Rob Tod of Allagash (one of the few decades-old Top 50 craft brewers to actually grow last year) provided some insights in a preso at CBC earlier this month.

First off, let’s get the obvious out of the way:  It’s way smarter to try to grow in your local established market than to open up new markets. It’s been proven hundreds of times over the years.  As Kimberly says, “Don’t get over your skis,” because rolling out in new markets takes a lot of planning, due diligence, and most of all, money. If you’re counting on the wholesaler to do all the work for you, think again.  After all, craft beer growth overall has stalled, so everybody is fighting for the same cases.

So here is a quick and dirty run down of what Kimberly & Co. recommend:

-First, get a damn business plan, seriously. Yes, you’re a beer artiste.  But you’re a businessperson too. A business plan should include mission statement and statement of values, and:

1 year projected sales volume, revenue, expenses

3 year: equipment, capital improvements

5 year: organization, succession plan

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Plus an annual budget (revenue – expense = profit)

-Make sure you have the brewing and packaging capacity, but not too much.  A good rule of thumb is to run at 80% of total capacity.

-Invest in a QA program. If you don’t have a quality lab, you have no business shipping beer far from your home market. Quality and consistency is key to long-term growth.

-Invest in trained salespeople for each market, including a chain rep.

-Make sure you understand the laws of the state you are entering, including distribution, franchise laws, reporting and taxation, and have a termination and exit strategy if it doesn’t work out.  

-Know when to cut bait, and this is where Rob Tod has experience.  Allagash has exited markets, and now only enters markets after careful consideration. Do your analytics and know the warning signs of when to course correct goals or exit the market altogether and reallocate resources.  You’ll know something’s wrong when your wholesaler quits returning your calls, pull-through slows up, and trade inventory increases to where you start getting code date problems.

-Most of all, don’t get caught up with short-term growth, build a plan to sustain long-term methodical and PROFITABLE growth, says Kim. “If you have a PULL problem, expanding your territory only makes the problem worse. Entering a new market is tough and requires a lot of work.”

BEER BRIEFS:

SAM ADAMS REFORMULATES SUMMER ALE. For the first time in more than 20 years, Sam Adams Summer Ale is getting a recipe tweak. Boston Beer announced today a “new” Summer Ale, with “all the flavor drinkers know and love” as well as “a boosted citrus profile and scaled back earthy, spice note for a lighter and brighter taste.” The updated brew is available this month. Summer Ale and the brewer’s flagship, Boston Lager, are also the first Sam Adams styles out on shelves with the franchise’s redesigned packaging, which sports “the iconic Samuel Adams blue,” as well as “images of the Sam Pint showcasing the color and corresponding haze of each beer, a youthful illustration of Samuel Adams, the rebel rouser himself, and scripted text drawn in his original handwriting.”

Until tomorrow,

Jenn, Jordan, and Harry

“The harder I work, the luckier I get.” – Samuel Goldwyn  

———- Sell Day Calendar ———-

Today’s Sell Day: 15

Sell days this month: 22

Sell days this month last year: 21

This month ends on a: Tues.

This month last year ended on a: Mon.

YTD sell days Over/Under:  0