Monthly Mash February 2019 Part I

Minneapolis Mixer: ACSA’s 6th Annual Convention and

Vendor Trade Show

Typically, the last thing anyone wants to hear while at a professional gathering is “failure,” but it was, counterintuitively, one of the big buzz words this month at ACSA’s 6th Annual Distillers’ Convention & Vendor Trade Show in Minneapolis—in the best possible way.

The convention drew nearly 1,000 craft spirits industry professionals from 42 states and nine countries and showcased 124 world-class vendors offering equipment, packaging, ingredients, financial services and consulting solutions for the craft spirits market (Big shoutout to BSG for sponsoring the soft opening of the exhibit floor on Sunday).

Keynote

“Fail quickly, fail cheaply and then get creative,” was the first of three key themes of keynoter Nick Gilson’s presentation, which resonated a great deal with the room full of craft spirits entrepreneurs—which is no mean feat for the head of a company in an unrelated industry. Gilson may have founded his namesake Snowboard & Ski Company, but his insights on innovation were universal and rang true with most in the general session audience.

In addition to the “Fail quickly…” mantra, Gilson’s principal takeaways included “Build a culture that allows for innovation at all levels” and “create and then constantly iterate YOUR OWN playbook.”

“These three ideas are applicable to any company that’s going up against simply massive and deeply, deeply entrenched competitors, Gilson said.

Craft spirits producers and Gilson’s company operate within a similar market dynamic: large mega-competitors that can easily outspend them. But the advantage that small companies have is that they can outthink the big ones.

“The willingness to fail quickly, fail cheaply, these small failures across all departments have allowed us to pivot,” Gilson said. “You need to know when to stick to your guns and when to pivot. The first step is to get good at this quick and iterative failure.” And that goes for all employees, he noted, who must be encouraged to get past their own fear of failure. “Find and hire really smart people who can get down with this—encourage them to fail quickly and fail cheaply,” Gilson said. “If you can do both of these things, learning from failure and empowering employees to do the same, you will be able to write your own playbook.”

Remembering Dave Pickerell

Sadly, there was an empty seat in the audience, one belonging to Dave Pickerell, an original member of the ACSA Board of Directors (ex officio) and a true visionary in the distilling world who died suddenly in November. ACSA honored Dave with a moment of silence during the convention’s general session and a toast celebrating his life during the craft spirits awards ceremony.

“Dave Pickerell was someone who lived a life that was full, someone who lived a life that was too short,” said ACSA CEO Margie A.S. Lehrman.

Craft Spirits Producer Definition

ACSA Board member and chair of the Membership Committee Jeff Kanof (Copperworks Distilling Co.) detailed a recent minor change to ACSA’s definition of craft spirits producer. The updated definition is as follows:

Membership in ACSA is open to anyone, although Voting Members must be independent licensed distillers with a valid DSP, subscribe to ACSA’s Code of Ethics, have more than a 75% equity stake and operational control of the DSP, and annually produce fewer than 750,000 proof gallons removed from bond (the amount on which excise taxes are paid). In case terms, 750,000 proof gallons is 315,451 9-liter cases (12 750 ml bottles) of 100 proof spirit. A DSP may not be a Voting Member if another producer of distilled spirits whose combined annual production of distilled spirits from all sources exceeds 750,000 proof gallons removed from bond, has more than 25% equity stake and has operating control over the DSP. “Operating control” for purposes of this Section means access to and management of the distillery operations.

The key change is a clarification of “operating control.”

ACSA also introduced an Alumni class of membership for producers that were once part of the craft distilling community but no longer meet the definition. Alumni members pay $2,500 per year, but do not have voting privileges.

Update from the Hill

On the legislative side of things, ACSA’s Public Policy Adviser Jim Hyland addressed how the recent changes on Capitol Hill are impacting efforts to ensure that the temporary federal excise tax (FET) reduction achieved by passage of the Craft Beverage Modernization and Tax Reform Act (CBMTRA) is made permanent. CBMTRA lowered the FET from $13.50 to $2.70 per proof gallon on a producer’s first 100,000 proof gallons. The reduction is set to expire at the end of this year. “Unfortunately the outlook for a major tax bill is unclear,” Hyland said. “That is why it is crucially important to have a large number of co-sponsors on our FET bills.”

Hyland noted that Senate Minority Leader Chuck Schumer (D-NY) is a critical player going forward, as “all roads lead through Chuck Schumer” to get the Democratic caucus on board. Senators Roy Blunt (R-MO), Rob Portman (R-OH) and Ron Wyden (D-OR) continue to be instrumental. Blunt and Portman reintroduced the CBMTRA earlier this month and Portman was key to bringing the original bill to the floor for a vote. “Ron Wyden is really the godfather of our bill,” Hyland said. The CBMTRA lost a major advocate in the House when Rep. Erik Paulsen (R-MN) lost his re-election bid in November, but Hyland noted that Reps. Ron Kind (D-WI) and Mike Kelly (D-PA), have stepped forward to take up the mantle.

If the CBMTRA tax cuts are allowed to expire, distillers will be the hardest hit among craft beverage producers.

“If this goes away, beer and wine still pay the reduced FET they had prior to this,” Hyland said. “We go back up to $13.50. Beer doesn’t go that high, wine doesn’t go that high.”

Hyland recommended several major talking points for craft spirits producers engaging with their federal legislators: “Talk about how we’re helping Main Street, small business, job growth, tourism and local sourced products, much like craft beer and small wineries.”

Proposed TTB Rulemaking Changes

ACSA Board member and past president Mark Shilling of Treaty Oak Brewing and Distilling Co. and Nicole Austin of Cascade Hollow Distillery updated attendees on the Association’s efforts related to TTB’s proposed rulemaking to modernize labels and advertising. ACSA has been gathering feedback from members and is submitting recommendations on the industry’s behalf next month.

“We’re going to submit one document in March,” Shilling explained. “This is not like legislation, it’s not a popularity contest. It’s not about the most comments. It’s more thoughtful.”

Austin noted that the craft spirits industry’s focus is about balancing product innovation with the need for quality protections. “We want to ensure future innovations…How do you leave the door open for innovation while you protect the national and international reputation of craft spirits.”

Simplification in labeling has been a major goal of the process and TTB has been actively reaching out to the industry to achieve that end.

“This is probably a once-in-a-lifetime opportunity for us,” Shilling said.

Commitment to Diversity

Expanding demographic diversity has been a challenge across all industries and ACSA President Chris Montana (Du Nord Craft Spirits) touted the Association’s efforts to address such issues within the craft spirits community.

“I think it’s good that we’re talking about it today,” Montana said. “I’ve had a couple of different reports of things that made it all the way up to the Board, experiences that our family here have had that have not made them feel welcome.”

Emphasizing inclusion, he said, is about more than just putting a statement together as an organization. “We’re hoping to put some programs together behind it,” Montana said. “That takes time and it takes partners and hopefully we’ll be able to roll out some programs soon. We want to make sure everyone feels welcome in this room.”

Here’s the official ACSA Values Statement on Diversity:

The ACSA acknowledges diversity in distillery leadership, and various positions throughout the industry continue to be a problem. Thus, we are committed to creating and fostering an environment that is welcoming and accepting of all individuals, and ensuring that all members of our community are treated with dignity and respect. We believe that a person’s background, identity, or beliefs, should not be a hindrance to their being in a position to contribute.

ACSA Media Launch

One of the biggest news items coming out of the ACSA Convention was the announcement that the Association this year is launching a bi-monthly digital magazine and industry news website to serve the entire craft spirits community. Leading the effort is Jeff Cioletti , whom ACSA this month hired as full-time Editor-in-Chief. Jeff brings more than 25 years of professional writing, editing and journalism experience to the role, having previously spent 14 years on the editorial staff of Beverage World Magazine, including 8 years as editor-in-chief of the monthly B2B publication and its corresponding website and e-newsletters. Jeff is also the author of five beverage alcohol books: “The Drinkable Globe,” “SakePedia,” “The Year of Drinking Adventurously,” “Beer FAQ” and the upcoming “Drink Like a Geek.” Before being hired as Editor-in-Chief, Jeff worked for more than two years on a consulting basis with ACSA, producing The Monthly Mash, Craft Spirits Weekly, the Quarterly E-news and the Annual Report. Look for the first issue of the as-yet-unnamed ACSA publication this summer!

Education

This year, ACSA offered more than 30 hours of education during regular Convention hours, plus more than 20 additional hours during two pre-Convention Master Classes: Essentials to Successfully Implementing an Occupational Safety Program in Your Distillery, presented by Industrial Safety and Training Services, and Sensory Master Class, presented by Lallemand Biofuels and Distilled Spirits.

The regular convention education program included two new tracks: Advanced Technical Track and Legal/Compliance Track. One of the highlights of the Technical Track was Sensory Analysis on Rye Varieties, in which Mike Swanson of Far North Spirits instructed participants to sample nine different rye varieties in unaged distillate form to assess the vast range of flavors and aromas different breeds of the grain exhibit.

Among the Legal/Compliance offerings was Labor Law for Your Labor of Love: An Overview of Labor and Employment Law, during which attorney Corey Day detailed key day-to-day personnel concerns—everything from issues related to workplace harassment and discrimination to fair compensation practices. On that last point, Day warned, “Just because you’re complying with federal law, doesn’t mean you’re complying with state law. Federal is usually the floor, not the ceiling.”

Other education highlights:

• In her session, “Stealing From the Big Boys (and Girls): Build a Killer Strategic Marketing Campaign Using Tips and Tricks Nicked from Million-Dollar Brands,” noted whiskey writer Heather Greene (“Whiskey Distilled: A Populist Guide to the Water of Life”) discussed what she called the “holy trinity” of marketing criteria: Know yourself, know your customer and know how to start a conversation. Greene’s biggest tip on marketing to women: Don’t. “Just do what you’re doing,” she said. “They’re going to find you. They want a seat at the table.”

• In “How to Compete in a Global Craft Beverage Market,” Emily Pennington, formerly of Wine & Spirits Daily and now of Park Street, led a panel that included Andrew Beebe of Arlington Capital Advisors; Dan Gasper, formerly of Distill Ventures and consultant J.B. Shireman addressing the major market realities facing those in the spirits spirits. The group identified five key trends that are impacting consumers’ buying decisions today: a product’s provenance and authenticity, the company’s commitment to sustainability and localism, a desire to explore new flavors, an economy based on experience rather than acquisition (people are more interesting in doing something than buying something) and health and wellness (people are consuming less, but consuming better).

Board Elections

Attendees had the opportunity to get to know candidates running for five Board of Directors seats that are opening up when the current Board members’ terms expire. A big shout out to Renee Bemis, Driftless Glen (WI) for chairing the Elections committee and organizing the nominees for the elections ballot that will drop within the week.

Candidates include:

Kris Bohm

Grand Canyon Distillery (Arizona)

Central & Mountain

Dan Farber

Osocalis Distillery (California)

Pacific

Doug Hall

Brain Brew Custom Whiskey (Ohio)

East

Becky Harris

Catoctin Creek Distilling (Virginia)

East

Joe Henry

J. Henry & Sons (Wisconsin)

Central & Mountain

Gina Holman

J. Carver Distillery (Minnesota)

Central & Mountain

Thomas Mote

Balcones Distilling (Texas)

Central & Mountain

Sas Stewart

Stonecutter Spirits (Vermont)

East

Mark Vierthaler

Tenth Ward Distilling Co. (Maryland)

East

Rick Wasmund

Copperfox Distillery (Virginia)

East

Colton Weinstein

Corsair Distillery (Tennessee)

Central & Mountain

PT Wood

Wood’s High Mountain Distillery (Colorado)

Central & Mountain

Dave Woods

Wiggly Bridge (Maine)

East

Hockey On Ice

But it wasn’t all work and no play at ACSA’s 6th Annual Convention and Vendor Trade Show. On the first night of the convention Team Tails, led by ACSA President Chris Montana (Du Nord Craft Spirits), faced off against Paul Hletko’s (FEW Spirits) Team Heads at Hockey on Ice, our first ever competition pitting distillers against distillers at Minnesota Made Ice Center. Heads maintained the lead for most of the game—leading 7-0 at one point—but Tails made a stunning comeback, ultimately besting Heads, 8-7. Huge thanks again to BSG for sponsoring the truly NHL-worthy jerseys both teams wore.

Fitness Focus

The ACSA Convention wasn’t just about enhancing the health of the distilling business, but the health of the people behind the business. That’s why he hosted two early-morning fitness opportunities at this year’s event. On Monday, February 11, attendees gathered at the Hyatt fitness center for a yoga class taught by certified yoga instructor Michelle Darsow and sponsored by Gina Holman, J. Carver Distillery. The following morning, a group of fitness-minded spirits producers power-walked across 2.5 miles of the indoor Minneapolis Skywalk

Awards Dinner

ACSA awarded the best brands in the business at the 6th Annual Judging of Craft Spirits awards dinner, sponsored by Total Wine & More. Total Wine’s VP of merchandising Eli Aguilera kicked off the event with some opening remarks and ultimately presented the Best in Show award to Gulch Distillers (Helena, Montana) for its Burrone Fernet. Gulch’s Tyrrell Hibbard received a custom set of skis from keynoter Nick Gilson.

This year, entries were submitted from 38 states and the District of Columbia, as well as one international location (Panama), in six main categories: Whiskey, Gin, Rum, Vodka & Grain Spirits, Brandy and Specialty Spirits. In addition to a Best in Show and the Best of Class Distinctions, the judging panel awarded 8 Gold, 68 Silver and 172 Bronze medals.

The 2019 Best in Class distinctions, the highest honor in each of the six judging categories, were awarded to a mix of both established, award-winning distilleries and younger newcomers. These winning distilleries were each presented with hand-carved barrelheads courtesy of Thousand Oaks Barrel Co, and all medal recipients received custom medals generously provided by Apholos.

This year, ACSA also introduced a new award category: the Innovation Award. The new “Innovation” category aims to recognize remarkable spirits whose flavor profiles may stray from their category’s signature notes.

All participants in the ACSA spirits competition will be receiving their tasting notes and medals (if applicable). Weather has delayed shipment from Minnesota so we ask all entrants for their patience.

Best In Class Winners in each category included:

Whiskey: Sugarlands Distilling Co., Roaming Man Tennessee Straight Rye Whiskey (Gatlinburg, TN)

Gin: FEW Spirits, Coffee Flavored Gin (Evanston, IL)

Rum: Tattersall Distilling, Barreled Rum (Minneapolis, MN)

Vodka & Grain Spirits: Charleston Distilling Co., King Charles Vodka (Charleston, SC)

Brandy: J. Carver Distillery, J. Carver Apple Brandy (Waconia, MN)

Distilled Specialty Spirits: Gulch Distillers, Burrone Fernet (Helena, MT)

Innovation Awards included:

Whiskey: Middle West Spirits, Sherry-Finished Bourbon Whiskey (Columbus, OH)

Gin: MISCellaneous Distillery, Gregarious Gin (Mount Airy, MD)

Vodka: Distillery Partners, Northern Oasis Spirits Lakeview Vodka (Plover, WI)

Brandy: Bluebird Distilling, Blueberry Brandy – Maple Cask Finished (Phoenixville, PA)

Distilled Spirits Specialty: Pittsburgh Distilling Company, Wigle Eau De Pickle (Pittsburgh, PA)

The complete list of winners is available on the ACSA website  here .

Following the awards dinner, attendees had the chance to taste all of the winning products at a special after party, Sips & Sweets, at The Blaisdell, a local mansion whose history dates back more than 100 years.

The Minnesota Toast

The spirits tasting didn’t end there. On the final evening of the convention, attendees got to taste the very best that the host state had to offer at the Minnesota Toast, a showcase of local spirits hosted in partnership with the Minnesota Distillers Guild. More than 15 producers from the Land of 10,000 lakes poured products from across all of the major spirits categories. Attendees also bid on a variety of items donated by participating distilleries in a silent auction, with proceeds benefiting a local charity. We’d like to thank our sponsor, Glencairn , for generously providing the glassware for the Minnesota Toast and the post-Awards tasting at the Blaisdell. Also, special thanks to GoDaddy Social and NearestYou for sponsoring the Toast.