Keeping Up With the List

Oh, so close!  We should wrap the lease any day now.  We're just waiting to ensure our parking needs will be met.  Here is an update from the list I posted several weeks ago:

 

What’s next?  Well, Mark and I have been thinking the same thing.  Here’s our list of must dos over the next few weeks:

 

1. CHECK!  Get the US Patent and Trademark Office off of their rears and review the trademark for our namesake, Second Line Brewing.


2. Wrap up our logo.


3. WORKING ON IT!  Brew some tasty beer – Mark and Jason are going to have a tasting panel for their delicious home brew.


4. STARTED!!  Start the TTB paperwork.


5. CHECK!   Engage with an architect and get our new building up to par to hold our brewhouse and associated equipment.


6. Finish our private placement offering documents and term sheet.


7. Raise capital.


8. Order our brewhouse.


9. Get our name and logo out there.


10. Hire some people.


11. WORKING ON IT!!!   Move to New Orleans.


12. TRIPLE CHECK!!!!   Brew great beer!

 

CHEERS Y'ALL!

It Feels Like We're Getting Close!

Hi Y’all, it’s been a while.  We are rapidly pulling the business plan together to present to our banker when we arrive in New Orleans at the end of December.  We’ve also hired a lawyer to help us finalize our Operating Agreement and develop our term sheet for potential investors.  We’re following the Private Placement Offering (PPO) sometimes referred to as the Private Placement Memorandum (PPM).   Unfortunately, we’ll need to file with the Securities and Exchange Commission and we need to ensure we’re in compliance with state Blue Sky Laws.  The legalese is complicated but certainly manageable.



We have found the perfect property and it’s located in Mid City.  We’re working with the property owner to negotiate a deal that will give us some relief on the terms of the lease agreement should we not be able to get our Alcohol and Tobacco, Trade and Tax Bureau (TTB) permit and our non-conforming use permit from the City of New Orleans.   Manufacturing alcohol is capital intensive on the front end.  Basically, you can’t apply for any of your permits until you have a signed lease agreement or you own the property where your brewery will be located.  There is no way around this.



Our current plan is to present our business plan to our banker and lawyer at the end of January.  Have our lawyer finalize our Operating Agreement and develop our investor Term Sheet and then start raising capital.  In conjunction with this, we are hoping to sign the lease agreement on the great piece of property we’ve found.  Once the lease is signed, we’ll file the TTB papers and start the NOLA permitting process.  If the stars align, Mark will head to New Orleans in June to receive our brewery and we’ll have our brewery and tap room up and operating by January 1, 2015.  Happy New Year’s Y’all.



We’re planning on selling a lot of draft and “bombers”.  We’re also looking at a canning line.



Well, I’d better get back to finalizing the business plan.

Cheers Y’all!



Karen

Bend, Oregon Trip report

Greetings Hopfools,

Well, the last three weeks have been busy and productive.  Our trip to Bend, OR to attend the Oregon State University Craft Brewery Startup Workshop was great.

This was the first time this course was offered and is part of OSU’s Professional & Noncredit Education program.  There were ~40 participants with many others on a waiting list for cancellations.  There were attendees from as far away as Taiwan and Australia.  The participants were in various states of the process of opening either a brewpub or microbrewery.  Some of the attendees already owned brewpubs and were looking to make the transition to becoming a microbrewery.  Overall, the interaction and networking with the participants was almost as helpful and informative as the seminar itself.

The class was 4 ½ days and consisted of three blocks.  Leo Sharkey and Roger Woods conducted the first 2 ½ day block.  Leo Sharkey has a background in chemistry as well as an MBA and currently works for Siemens Water Technology.  Leo also serves as a mentor and coach at the Acara Institute and is an avid homebrewer.

Roger is senior lecturer at Michigan Technical University as well as a consultant specializing in helping startups, well start-up.  Like Leo, Roger is also a longtime home brewer.

Leo and Roger covered the following topics:

• Being an entrepreneur;


• How to write a business plan;


• Market research;


• Market resources;


• Accounting/finance;


• Microbrewery financial analysis;


• Risks and assumptions; and


• Strategy.

Leo and Roger where very accessible and offered some very valuable insights into the many nuts and bolts that go into to a craft beer business plan.  Overall it was very informative with much valuable feedback from Roger and Leo.

Roger and Leo have also agreed to review everyone’s business plan to select the one that they feel has taken the most away from the seminar.  The writer of the winning business plan receives a two-week paid internship at Ninkasi Brewing!  (We just submitted our plan this morning….fingers crossed.)

The second half of day 3 was devoted to the topic of sustainability.  Matt Shinderman did a great job but it was probably a bit more theory and information than was needed for this audience.

The management team of Ninkasi Brewing conducted the last 1.5 days.  I mean seriously, when was the last time you took a seminar and had the entire executive management team of an up-and-coming business devoted 1-½ days to tell you how to be successful.  Kudos to Ninkasi for sharing their time, insights and demonstrating one of the greatest aspects of the craft beer culture, commitment to community.

Ninkasi covered the following topics:

• History of Ninkasi;


• Ingredients and Materials Sourcing;


• Onboarding and Performance Management;


• Building a Company Culture;


• Managing growth;


• Sensory and Supporting Quality from Startup


• Trends and Opportunities; and


• Panel Q &A

Needless to say it was a great opportunity to hear how they have grown and all that they have learned along the way.  Jaime and Nikos, along with everyone on the Ninkasi team, were very approachable and did a wonderful job of making everyone feel at ease.  They also allowed us to have copy of their slide packet for reference, a real bonus. I have to say it was a fantastic opportunity to interact with the entire management team.

The organizers of this course also arranged for us to have dinner and meet/mingle with the founders of 10 Barrel Brewing.  Dinner was catered by 10 Barrel’s brewpub and we had free reign of the brewery.  We gained some very valuable insight along the way and got to ask lots of beer geek questions; it was great.  As with all of the people we met in Bend, the guys from 10 Barrel were consummate hosts and great to hang out with.

As for the location for the class, Bend was fantastic and inspirational.  The craft beer community in Bend is the stuff of legends.  Had some really great offerings from Boneyard Beer, Bend Brewing, Deschutes, Crux Fermentation, Worthy and the list goes on.  Didn’t get a chance to partake of any offerings from The Ale Apothecary, but they were epic from what I heard.  What was apparent is that even a town as small as Bend (~80,000) can support over 14 craft breweries/brewpubs.  In fact in my opinion, it is the “critical mass” of craft brewers in this area that has allowed it to become such a hotbed for great beer, and tourism.  We can only hope that we can be part of creating the same thing in NOLA.

Last but not least, there were a number of “one off” tidbits of knowledge that we picked up along the way.  These aren’t things that you necessarily think of at this point in the startup but are good to know.  So here’s my list in no particular order:

• Anticipate using 3 kegs a week for a local account and 6 kegs a week for an out of town account (when you start adding up all the kegs you need at $150 a keg shell you can see how this hammers your cash flow);


• You make more money on kegs then you do packaged beer. The only exception to this are 22oz bombers.  These give you your greatest profit.


• When you negotiate and agreement with your distributor, make sure there is a keg audit included.  This way your distributor has to compensate you for lost kegs.


• Those variety packs that everyone loves, yeah those get packed by hand.  Yikes that’s a lot of labor.


• Chinese made kegs with MicroMatic spears seem to work pretty well and cost less.


• If you decide to can your beer, just remember that empty cans take up a lot of room.


• You are never too small to follow good safety guidelines.


• Don’t forget to register your brewery with many of the online smart phone apps like “findmytap”.


• Startup with a good, and trusted, lawyer and accountant.


• Ideal ratio of accounts/distributor sales rep is 80:1 or less.


• In markets with limited shelf space you’re probably better off going with 22oz bombers versus 6-packs due to shelf space issues and profit margin.


• If you're going to do dock sales, use plastic kegs and add the price into the cost (note there was a recent fatality associated with filling plastic kegs so be sure you know what you buy since many believe that some plastic kegs are better than others).

Well enough with the business talk.  My session IPA is almost completely dry hopped and ready for carbonation.  I’m not displeased with what it tastes like to date but have already begun to reformulate the recipe for the next batch.  The Keezer is getting low so I’ll be brewing next week.  Due to popular demand, I’ll be brewing my American Pale Ale with a few minor adjustments.

In the meantime we are submitting RFPs for equipment and will meet with a design company to discuss our logo and brand later this week.  The Master Brewers Association of the Americas Annual Conference is in October and the program looks extremely interesting.  Hoping to address some scheduling conflicts and attend but if not there’s always the Craft Brewers Conference in April.

Cheers,

Mark

P.S.  Finally got to try Pliny the Elder...pretty darn tasty!

Sustainability and Responsibility

 

Greetings all!

Well just received our syllabus for the Craft Brewery Start-up Workshop in Bend, Ore. on September 9^th.   It was refreshing to see that along with many of the typical topics one would assume would be discussed (e.g. finance, operations, logistics) was  sustainability.  Given that there are, at last count, 2,483 microbreweries in the United States, sustainability is a clearly a topic that all current and future microbrewery owners need to address.

Many of the larger microbrewers have already taken steps towards sustainability and beyond.  New Belgium, for example, approaches sustainability from the perspective of core company values, environmental metrics, sourcing and community.  Similarly, Sierra Nevada has had a long commitment to supporting the cause of sustainability and has a very extensive webpage detailing the steps that they are taking to continually improve their processes, energy efficiency/generation and minimize waste.

All along we’ve been considering how we can make our brewery, even in the start-up phase, more consistent with the tenets of sustainability; it will be interesting to hear how others are tackling this problem as start-up microbreweries.

 

Switching from sustainability to responsibility, the New York Times today featured the results of a small study out of Johns Hopkins which found that five beer brands were prevalent among emergency room patients who had consumed beer within the 6 hours prior to their presentation to the emergency room (Budweiser, Steel Reserve, Colt 45, Bud Ice, and Bud Light).  Moreover, nearly 46% of beer consumed by emergency room patients in this study was accounted for by four malt liquors (Steel Reserve – 8.1% ABV, Colt 45 – 6% ABV, Bud Ice – 5.5% ABV and King Cobra – 6% ABV), despite the fact that these four accounted for less than 2 percent of the beer consumed among Americans.

While things like study size, study location, demographics, etc make it difficult to interpret the implications of this study, the authors did suggest these results suggest that there should be better labeling on malt liquor beverages and less marketing. They also recommend a higher tax on beverages with higher alcohol content to discourage people from drinking more potent brands.

With many craft beers in the 6.5 – 7.5% ABV range, changes such as those suggested by the researchers conducting the above study, could have a significant impact on craft beer producers.  Consequently, like sustainability, responsibility and education are major considerations in the development of our business plan.

With the old adage, “all work and no play” in mind, it’s time to start brewing again.  Our recent first tap gathering has depleted our stores of tasty homebrew, with our robust porter being the latest victim.

The last of our experimental IPA batches (with single aromatic hops) is about to come out of the fermentor and will be transferred to a keg for dry hopping later this week.  While we wait for it to mature we are beginning work on a “sessionable” IPA recipe.  Our first attempt will draw from the taste profiles of our single aromatic hop IPA’s to date; can’t wait to get back to brewing.

More to come.

First Tap

Was able to try a few of our new beers out on friends last night and it was a resounding success.  We used a standardized beer tasting questionnaire from Beerology in the hopes of gathering helpful feedback for the next batches.  There was some great comments and all positive reviews.  Next time we’ll do a blind comparison with a “gold standard” of that particular style as the comparator. 

Our two latest beers are an American pale ale and a Cascade IPA.  The latter is part of an IPA series we’re doing featuring a single aromatic hop.  Our thoughts are to appreciate the taste of these aromatic hops solo before putting them together for a more complex flavor profile.  

In the meantime, we are working away on our business plan and have begun to talk to banks about financing.  Last week we were able to obtain the particulars for the Pegas Craft Tap and Novotap growler filling system (http://pegasdistusa.com/pegas-novotap/).  We first became acquainted with this system when we were in Russia a few years ago.  It’s a great system that allows a growler (both glass and plastic) to be filled under an atmosphere of carbon dioxide in about a minute with minimal waste (the Pegas distributor website states growler loss is as high as 30-40%).  The benefits for the consumer is that the beer tastes better longer and with the use of polyethylene two liter bottles it can be transported to the beach, fish camp, or camping without worrying about dealing with a large glass growler.  For the craft brewer  the benefit is that the quality of the beer will be preserved and there is a minimal amount of product loss due to foam over, etc.  

There are still some issues obtaining the brown polyethylene bottles (necessary to prevent UV damage to the beer) in the US but we have some ideas for a work around to this issue that will also tie in with our marketing plan.   

[caption id="attachment_83" align="aligncenter" width="130"] Pegas Craftap[/caption]

In the meantime we continue to brew.  Today we brewed another of our IPA series.  This one features Ahtanum.  Ahtanum has a decidedly floral presence with some spice and a bit of pine thrown in for good measure.  It isn’t nearly as popular as Amarillo, Centennial or Cascade for dry hopping and its aromatic properties but from what we could tell from today’s batch, it’s a tasty little hop. 

More to come.