The Growth of Craft Beverages

October 5, 2016

Support the Craft

 

If you google “craft beverage” you will get a list of websites focused on the craft beer trend, but the truth is, craft beverages encompass spirits, wine and ciders too. Throughout the Hudson Valley, the industry of craft beverages is taking off and growing exponentially. New York State is home to an increasing amount of craft beverage producers, with the Hudson Valley owning claim to 38 breweries, 18 cideries, 22 distilleries and 35 wineries. The buy-local trend, which we saw first with restaurants as the farm-to-table movement, has now rapidly moved to the beer, wine and spirits sector.

 

“Support the Craft – Drink NY” is a first-time campaign launched this fall by The Valley Table and Empire State Development to help craft brewers with the goal of increasing public awareness of the local industry and ultimately increasing sales. With the number of craft beverage manufacturers more than doubling in the past four years, the economic impact on both revenue and job creation throughout the region has been extremely positive.

 

The launch of the campaign was held on September 27th at the Culinary Institute of America to coincide with the launch of The Valley Table’s 10th year kickoff party for Hudson Valley Restaurant Week.To initiate the start of the campaign, an industry panel hosted a round-table discussion on “The Business of Selling Craft Beverage.” The talk centered around the craft beverage revolution from the the various perspectives of the producers, the retailers, which include restaurant, bars and retail stores, and the distributors. It gave those in attendance the opportunity to hear about the future of the booming industry and the challenges it faces.

 

Panelist included: Greg Best, a Poughkeepsie native and renowned restaurateur and barman who’s newest opening is the Ticonderoga Club in Georgia and who is notably known for igniting the craft cocktail movement across the nation; Hutch Kugemen, the head brewer at the Culinary Institute; Douglas Miller, Certified Hospitality Educator and Specialist of Spirits at Cornell University; and Robert Mitchel, VP of Craft Beer, Wine and Spirits at Manhattan Beer Distributors. 

 

According to the panel, this is the best time ever for food and beverage, beer, spirits and wines everywhere in the country. “The collection that we have, the quality that we have, is second to none,” says Miller, who goes on to say, “I will make the argument that we have more going on in the beer world in the United States than in any other country in the world. And will also say we have more going on in distilled spirits than anywhere else, too.” 

 

According to Miller, this is both great and very challenging. With all the information and products coming at you, it can be overwhelming for retailers, producers and customers to make decisions of what to carry and what to drink. For example, if you are a restaurant owner or retailer, how do you decide what beers to offer when there are over two hundred and forty breweries in New York alone? As a beverage educator, Miller says that you have to take an honest look at how much knowledge you and your staff can maintain. There is a real story, as well as best quality serving practices, for each product. For example, knowing the shelf life of a product to make sure that it is served at the quality it was produced and intended. Miller explains that what many people don’t realize is, just like milk and eggs, beer is a perishable product and has a “best used by” date.   

 

Similarly, if a restaurant offers too many wines by the glass, there is a good chance the less popular bottles might sit open on the shelves for an extended period of time, compromising quality when finally served. This also speaks to the knowledge of the retailers, the training that they have received and the training they are providing their staff. It can become a big challenge for producers because if the product is not sold at its prime, it reflects badly on them. It actually becomes a disservice to both the producer and the customer and ends up hurting the craft beverage industry as a whole. So it becomes a fine balance to offer a broad selection, and be able to move the product in a manner that protects the quality of the beverage.

              

From a producer’s point of view, it’s about how a small producer can connect with the retailers, and ultimately with the consumer. Small producers all have something really unique to offer the marketplace. “It’s authenticity,” says Kugemen, “It’s about where their products come from and the story behind it. Producers can be local, but also hyperlocal. So retailers and consumers can really connect with those people. They live local, they hire local and they support the local community. For the retailers, that is a story they can sell to their customers. As producers, if people do not know you as the face of your product, they need to. That is what is going to differentiate you from all the others out there who also make really good products.”

 

According to Kugemen, there needs to be a connection between the producer, the retailer and the customer in order to grow and to continue to drive new business. The retailer plays an important role in the ability to be the so-called middleman, listening to what the customers are saying and wanting. Are they looking for different varieties, different package, different bottle size?  When they hear feedback from the consumers, retailers can take that information back to the producers so that they can make adjustments and develop new offerings based on what the customers want. “The supply chain goes both ways,” says Kugemen.

 

For producers, the competition is fierce and presents not only a challenge for shelf space, but for the raw ingredients as well. “In the beer business it is inevitable that purchasing hops is going to be an issue at some point. Producers need to build good relationships with their suppliers,” says Kugemen.

 

The other important step that producers can take to grow their business is to offer the retailer access to education. Although the industry of craft beverages has been growing for years, there are still many consumers just getting started that need to be educated about not only what makes each product unique, but also the basics. For example, in the world of beer, those who are just learning about the variety available may not know what the difference is between an IPA, a Stout and a Porter. When someone takes the time to educate them, the customers find greater enjoyment and satisfaction, which in turn promotes demand.

 

To Best, knowing where the story behind everything he sells or creates behind the bar makes the business of selling craft beverages so rewarding. “I love the story that a bar can create and how the craft spirit, wine and beer movement has helped form my story as a restaurateur,” says Best.  It can get difficult as the demand gets larger and as more products are created, which can lead to the market becoming saturated. But, according to Best, “The job of a restaurateur, waiter or bartender is not just to make or serve cocktails, but to tell a story about that cocktail.”  He also says that in selling craft beverages, it’s important that you have to pick a product that speaks to you not just in taste but in their story as well. Taking the time to learn the stories behind the product, such as where the ingredients were grown, the kind of still that was used, and how the business came into being, will help sell the passion of the brewer. Smart operators recognize that the story is first and relates to building a relationship and a rapport with customers, understanding and delivering what they like, and creating repeat business. 

 

A key component in growing the industry is getting the product to market. That is where distributors such as Manhattan Beer Distributors comes in. “The small distributor is trying to juggle it all,” says Mitchel, “Most small producers wear many hats. For someone who owns a small brewery, there is a pretty good chance they are brewing, doing the sales, running the tasting room, picking up money and making deliveries. A distributor allows the producer to do what they do, produce great product, while the distributor can do what they do, bring product to market.”

 

But handing the distributing over to someone else is not always easy for the producer. They need to build a relationship with the distributor and build trust that the distributor, who becomes the salesperson for the product, understands the product and has their best interests in mind.  The role of the distributor includes knowing their clients and making the decisions on what to bring to each retailer, it’s not one size fits all. A pub will have a much different need than an upscale restaurant or cocktail bar. 

 

“The business was different 15 years ago, you could offer the greatest selection and have all the beer from everyone, you can’t do that now. There are too many choices out there,” says Mitchel. This makes the role of the distributor much more complex.

 

Due to changes in the New York State liquor laws over the past decade, there has been a real boon in the craft beverage industry throughout the state. Janet Crawshaw, publisher of The Valley Table, has put together the ”Support the Craft – Drink NY” campaign with the goal of helping to boost craft beverage sales and enhance consumer appreciation for local products. From top-area chefs and beverage directors, to retailers and grocers, the event congregates local businesses that sell craft beverages with those that produce them. It provides an ideal opportunity to sample and purchase unique, high-quality products from New York’s food and beverage producers and purveyors.

 

The campaign will run through October 31st.  During the campaign, consumers can pick up a free guide on craft beverages made in New York State at participating business and vendors.

 

For more information visit www.Supportthecraft.com

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