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microshiner

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Everything posted by microshiner

  1. I was sad to see the recent news about the closing of Cooper River Distillers. Here is a link for those who haven't seen it: https://www.courierpostonline.com/story/news/2018/04/04/cooper-river-distillers-announce-closing/485693002/ While the experience at Cooper River is wholly their own, and I don't pretend to speak for it, I do believe that it is emblematic of two tendencies in the space that put a lot of craft distillers at risk of a similar fate. No matter what the business, there is a sweet spot between what the fixed and marginal costs are to operate and the amount of the market you can reasonably expect to capture. I haven't done the math to know exactly what that is for craft distilling, but I know it exists. I also know that if that percentage of market isn't big enough to cover your amortized startup costs, well ... you either started too big or you aren't putting the appropriate focus on marketing. My opinion is, when it comes to craft distilling, oftentimes it's both. My motivation for pointing this out is driven entirely by self-interest: I operate a content marketing platform for craft spirits. But I also sincerely want to see every one of these small producers succeed, because I believe their continued viability is tantamount to the future of civilization. I don't presume to tell them their business, but rather share some insights from a great deal of time spent looking at it from another perspective. "I would've liked to see things grow bigger, but at the scale we're at, it's not easy," said James Yoakum (distiller at Cooper River). "Growing (production) to the next level would have meant millions of dollars that we just couldn't find." In craft, the decision of what scale you are going to attain has to be determined at the onset. It is a function of the market you can reasonably expect to capture - in other words, the local one. Every decision about the business follows from this initial determination. The capital required to start a distillery is significant, much greater than that for beer, on par with planting a vineyard. To premise that initial investment on an assumption that the enterprise will capture anything more than the local market, more often than not, is to expose a fundamental flaw in the business plan. Why? Because the core customer of a micro-distillery doesn't care about craft, they care about local. If they wanted "craft", as in other than local, they would buy commodity. Which is why you see so many former Bud and Jim Beam drinkers flocking to such "craft" brands as Samual Adams and Bulleit. But you don't see craft drinkers asking for them. No, those drinkers are asking for local. Or at least micro. Which leads us to the next tendency, which is to under-invest in marketing; specifically, in content marketing that encourages consumers to ask for local, wherever they might be. Anyone who would drink a craft product wants to only drink craft products. But when they find themselves staring at the backbar in a crowded tavern, searching frantically for the labels they would love to try but can't find while the bartender glares at them impatiently, they default to Tito's. The entire difference? Content marketing that encourages them to ask "what do you have that's local?" So how much money has gone into a collaborative content marketing campaign to that end, knowing that, if only 1% more commodity drinkers did "ask for local" then every micro distiller would see a 1% increase in sales? Exactly zero. Now obviously I can't say whether having this knowledge would have saved Cooper River. Most likely not. But I do know that it is key to ensuring the future success of the micro-distilling industry as a whole.
  2. Hello friends in craft We have a very limited number of advertising slots available in our soon-to-be-released mobile application. If you are interested, give us a shout at growth@microshiner.com cheers - cobey
  3. Content marketing is the new way of doing things, and it is important for craft to plant its flag in this new landscape. Already established brands like Grey Goose are partnering with media outlets such as Tastemade to create branded series that connect with audiences on their own terms. It is a trend that cannot be ignored. But how are small craft labels going to compete with massive marketing budgets from the likes of Bacardi? How will you be able to cut through the noise? That is where a platform like MicroShiner comes in. MicroShiner is a content marketplace dedicated solely to craft brands. We are working to build a platform that puts craft on an equal footing. A channel that is accessible to craft labels, where they do not have to compete with huge advertising spends, but still provides a readily available platform for sharing their message. We know many craft producers are already making their own branded content. That’s great, but if everyone does it, what happens to the attention of the craft consumer? Is it aggregated, or diluted? Now imagine if instead we had a single channel filled with that same content, where a consumer can go to find a vast amount of content about craft that leaves them inspired to become a part of this growing movement. The network effect of such an approach, leveraging your collective content in a synergistic manner to everyone’s benefit, bringing craft consumers together in one place, magnifies the return on your marketing dollar immensely. Because you're not competing with each other. You are all competing against the conglomerates. At MicroShiner, we understand the demands on your resources. Hey, we’re a craft brand too! But we also understand the power of community. And we’ve done the math. For a brand that is only distributed in 2 states, putting money into promoting itself on a global platform doesn’t make sense. Except that it does. Because right now, the quickest way to increase your sales is to increase awareness about craft itself. This is what MicroShiner is working to do. Our first and overriding goal is to get people to ask for craft and local spirits every time they make a purchase. Right now, craft’s share of the spirits market is only a few percent. But if we can get just twice as many people asking for local or craft spirits when they are at the bar or bottle shop, your sales will nearly double. Which is why investing money in content marketing that is aimed at improving awareness of craft spirits is absolutely the highest and best use of your marketing budget outside of your immediate area. We want to see you succeed, and we're here to help make that happen. So let’s make a craft content marketing platform together. A place people can tune into to celebrate the values that are craft, a place free from the noise, a place where being small is an advantage, not a liability.
  4. microshiner

    Craft is Not a Commodity

    The thing about craft isn’t the craft. Everyone practices craft, whether you’re a grandmother making quilts for the church bazaar or you’re a sewing blankets in a factory in Vietnam. No, the thing about this phenomena we call ‘craft’ is that it’s an entirely new way of doing business. It’s a melding of the best practices of the Old World with the technological advancements of the New. There is a reason I chose the name MicroShiner. It was because, like the moonshiners, whose moniker is believed to have been derived from the early English term "moonrakers" and resulted from the clandestine nature of illegal Appalachian spirit makers, this new breed of distillers were fucking rebels. This was the new Whiskey Insurrection, except that, instead of simply resisting a tax, these cats were wresting an entire industry back from those who had stolen it. They weren’t going to be satisfied hiding up some holler, or in their basement, sneaking out to sell a jug here and there or giving it away to their friends as Christmas gifts. No. They were about changing the paradigm. Regardless of the prefix - whether “moon” or “micro” - they were definitely shiners, and I thought they were badass. But now it seems, sort of like its contemporary, the blockchain, that has, remarkably, grown up alongside it, this rebellion has been appropriated. Like the original Whiskey Rebellion, the real basis for this one has been re-authored, twisted to some other intent, and threatens to be given over entirely by the very same people who initiated it. What I’m talking about is acquisition and the reconsolidation - worse yet, recentralization - of the production capacity that was distributed across the landscape by the craft movement. It’s a travesty, and I don’t care whether you’re a consumer, producer, distributor, or investor, you should have no part in it. Here’s the thing folks. If it can be centralized, it can be automated, and should. Don’t get me wrong, I have nothing against passable drink at near zero marginal cost. But it has nothing to do with craft. Craft production provides intangibles that almost cannot be quantified and certainly cannot be understated. Read Small is Beautiful by E.F. Schumacher and you’ll understand what I mean. And go ahead, send me your Hayek and Ayn Rand. But I’ve already read them too. They both agree. I understand that you don’t care about economics. You just want to make, or enjoy, a good drink. Maybe you want to escape from the 9 to 5 and do something with your hands. Leave me out of this, you might say. No problem, you and I are on the same page already. Perhaps you’re an investor, who got into this to get some ROI on your money. Really? That’s pretty last century, but okay. I hope you also bought some Bitcoin and shares of MGP. You might want to exit those now, too. See the thing is, an independently owned distillery, appropriately scaled to meet the needs of a specific population, is not the same thing as a brand. And the demand for the thing I just described will always be there. The other thing, its a fancy label on some commodity whiskey. But you knew that. It’s why you got into craft in the first place. The genie is out of the bottle people. Leave the past where it belongs. We are never going back.
  5. microshiner

    Craft is Not a Commodity

    I empathize with your situation. I am not armchair quarterbacking your industry. I am simply trying to offer some alternatives solutions to the problems you describe that I feel are more sustainable than the one you proposed. I have invested many thousands of dollars and countless hours of time into building a marketing platform for craft producers because I believe in the value of craft and am adamant that this new paradigm requires an entirely new approach to marketing. It is important to note that distillers are not the only people in this industry, and just as you have disrupted the production end of the equation, there is going to be disruption of all the other facets: compliance, distribution, logistics, sales, and marketing. Whether you choose to believe it or not, I am on your side, and I have skin in the game. I sincerely want to see you succeed, and I believe it is important that you do so. There are alternatives to lowering costs. Lowering costs is a race to the bottom that ends in centralization and automation. It is the anti-thesis to craft. Craft is about increasing value. These alternatives are going to require eschewing the accepted practices of the past and creating new ones that are designed for the craft market. They are going to require investment and collaboration, and they are going to come with their share of growing pains. However, they are absolutely requisite to future success in the craft spirits industry. As you say, the market is only going to get more crowded. The front page of Amazon is only so big.
  6. microshiner

    Craft is Not a Commodity

    Mr @Dehner Distillery, I would agree that "things are just as clear as mud as far as what happens behind the scenes in this industry". Deliberately so. Fortunately we live in an age where information is free and travels at the speed of light, so there is no reason for it to remain thus. To be clear, MicroShiner exists to protect the interests of that portion of consumers, admittedly small, who are looking to invest their dollar in a new paradigm, and to promote those micro-distillers who are committed to providing that value proposition. The issue at hand, as I see it, is that every distiller has "different target customers, different areas to sell into"; however, in a significant number of cases, this is neither the practice nor the narrative. It has been said here that 99.9% of consumers do not care, so I would challenge everyone to share the narrative that has been put forth in this thread with their next customer and see where that leads. Anyone whose narrative matches the value proposition they are offering would have nothing to lose in doing so. By your own admission and math, there are not ~2000 micro-distilleries operating in the USA. There are many fewer than that. A rectifier is not a distillery, whether it be craft or not. At some point, words matter. I try to be careful and specific with mine. At the risk of being unpopular, I will say this, which was the point of my original post. There is a group of us who realize that our current production, distribution, and consumption behaviors are not economically or ecologically sustainable. Within that group there is a cohort who believe that craft (i.e. micro-scale production using intermediate technologies) will be instrumental in developing a sustainable and resilient economic system. This is what drew me to what you all were doing: distributing the production capacity of a critical fixed and use value asset across the landscape. In fact, market forces to create that distributed model are what, along with oil prices, are driving the growth of craft, not consumer preference. Because distillation, more so than wine and beer, is a capital intensive activity that adds significant value to the feedstock (i.e. real value of output in food/fuel/medicine is orders of magnitude greater than the cost of production), to have that capacity both centralized and monopolized is of negative benefit to both the individual and society at large. So I was excited by what you all were doing, that is, until I learned about this business of NGS. I am a pragmatist, so I say this: there is nothing wrong with NGS or bulk spirits, within context. Properly applied, their production is highly efficient and their marginal cost nearly zero (although there is a point of diminishing returns when you are talking about hauling water). So in that light, I am all for them; they should be used wherever it makes real economic sense. However, what has been made perfectly clear in this thread is that the real use value of craft is being subsumed by those who are marketing sourced spirits under its guise. The result of this is that capital that should be flowing into actual craft production is instead being siphoned off as profit. This is where I have a problem, because I feel very strongly, as does a not insignificant portion of your base (i.e. those critical early adopters, or 1000 true fans), that buying craft rather than commodity is a critical step in building a truly resilient economy. I understand markets, and I am aware that the average person doesn't know enough to care where their spirits come from, or the implications therein. But I also understand the law of diffusion, and that it only takes adoption by 2.5% of the population to create a shift. It is interesting to note that Apple only makes up ~12% of market, but ask anyone to name a computer brand and half of them will say Apple. Likewise, ask someone to name a craft vodka, and they will likely say Tito's. Lastly, @MGL - I did not say do it all yourself. What I said was, source from other producers who share your scale, ethic, and values. That will drive capital into more distributed capacity and allow you to align the entirety of your brand with your craft value proposition. For those who have read through to this point and given my thoughts genuine consideration, I thank you for your time and effort. We are currently working on a peer reviewed and hosted blockchain solution for micro accreditation and mobile tools for validation. I'd love to hear your opinion and feedback.
  7. microshiner

    Craft is Not a Commodity

    Our position is that the "one" who must decide is the consumer. However, in order for this to occur, there must be complete transparency throughout the entire process and supply chain. That the majority of drinkers care only about price and taste is exactly our point in saying that craft is not commodity. The difference is, we disagree on the inference, as well as the number. Our research into the market places that number at 25% of all the alcohol that gets drank, not 99.9% of drinkers. We take it a step further, by saying that the consumers who make up the difference between those two numbers (which is, by the way, is a lot more than 0.1% of drinkers, seeing as 10% of Americans account for 75% of all alcohol consumption by volume) do not want to drink commodity spirits i.e. GNS or sourced whiskey. They are specifically targeting craft brands because they are looking to avoid commodity spirits and accomplish something altogether different with their dollar and purchasing decision. To the question of whether a micro label needs to grow their own grain or make their own barrels to be craft, the answer is no. But they do need to source those products from other micro/local producers. The long term interest of the majority of craft consumers is to see an entire craft ecosystem, not commodity products rebranded and marketed as belonging to that ecosystem. Again, this is not the majority of the market, nor the one with the highest margins, short term ROI, or greatest potential for a quick scale and exit. But it is the core craft market, which is why we encourage micro producers interested in operating in that space to loudly and transparently promote their commitment to its fundamental principles. It will be key to their success in the long term. Because craft is not commodity.
  8. microshiner

    Craft is Not a Commodity

    @Roger - no need to wait for Amazon (although that is definitely coming) https://www.huffingtonpost.com/entry/a-trio-of-new-whiskeys-from-the-legendary-mgp-distillery_us_5a5e2bf8e4b01ccdd48b5fc8 BEST line in the whole piece: "Probably better than if it really had been bearded, tattooed dudes in a garage." All credit to Ryan Montgomery at Montgomery Distillery for calling this one on our webcast last month. I'd encourage you to listen to the whole thing but his prediction about MGP is right around the 30:00 mark. https://www.stitcher.com/podcast/microshiner/life-distilled
  9. microshiner

    Craft is Not a Commodity

    This statement, to us, highlights the crux of the matter. @Glenlyon is correct - it is not for producers to say that one approach is better than another. That right, or responsibility, falls to the consumer.
  10. microshiner

    Craft is Not a Commodity

    Great article @Glenlyon. Thanks for sharing! So much good stuff in there but the key is: "I don't think the [growth] is sustainable" Of course not. It's a closed system, and liters/yr is static (X liters/yr = Y producers x Z liters/yr). Therefore, if Y goes up and X stays the same, then Z must go down. However, there is another factor at play, which is price. This creates a point of inflection, based on marginal cost. On the one side you have commodity, on the other side craft. A significant cohort (I say 75% by volume sold) will not pay more than the minimum marginal cost. The buying decisions about the other 25% are based on the strength of their value proposition, because that is what accounts for the added marginal cost in the mind of the consumer. I agree with you - the mid/mass market is a no-man's land.
  11. microshiner

    Craft is Not a Commodity

    Thanks for the kind words @Southernhighlander! Feel free to suggest it to him on my behalf. I've already pitched him on this as a topic for the next ADI Conference.
  12. microshiner

    Craft is Not a Commodity

    If you've read my other post on value propositions then you'll know that I don't believe micro-distilleries can compete with commodity products, nor should. My opinion is that over time automation will reduce the marginal cost of producing beverage alcohol at scale to such a point that it will be impossible for micro-distillers to be competitive on price, which is the only concern for the cohort of drinkers who account for the vast majority of sales by volume. Craft and commodity are diverging at a rapid rate, and there will be very little middle ground. But what I am more getting at is, whether they intend it or not, craft distillers are a part of a global movement toward decentralization. It is a massive redistribution of capital and production capacity, and it has only just begun. That is what is driving this thing, and those who have gotten into this thinking they are going to build a brand, scale, and exit are in for a surprise. It will work for a little while, but not for long. As commodity brands continue to lose customers even as they acquire the biggest, most successful 'craft emeritus' (as ADI calls them) brands, they will quickly wise up. The future of the beverage conglomerates in the craft market lies in what Jeremy Rifkin calls 'performance contracts' not in the acquisition and ownership of actual operating distilleries. So plan accordingly. Remain a rebel. Set a ceiling. Stay the course. Your business and your community will be better for it.
  13. We are super excited to announce the launch of our latest channel for content marketing, the audio podcast version of our 360 video YouTube webcast - Life, Distilled. Podcasts are huge right now, and there are few better places for connecting with millennial audiences. With the Life, Distilled podcast we have created a platform for introducing this important population to craft spirits and the small batch lifestyle, tapping into their desire to find and connect with brands that share their values. Please give it a listen, share it on social media, and let us know what you think. On iTunes: https://itunes.apple.com/us/podcast/life-distilled/id1312985660 On Stitcher: https://www.stitcher.com/podcast/microshiner/life-distilled/e/52215718?autoplay=true If you're interested in seeing (and hearing) your business and products discussed and promoted on the show, drop us a line at growth@microshiner.com Cheers, and thanks for listening!
  14. There seems to be a lot of opinion around this, so we thought we would open ourselves to your abuse. Perhaps this way our other posts can be consider on their own merit. Fire away.
  15. The alcohol beverage market is a closed system. In the US what this means is that that ~136.8 million people account for the ~211.6 billion dollars in alcoholic beverage sales each year. It is important to note that this number of drinkers has remained essentially unchanged for over 40 years, despite an onslaught of alcohol advertising. What that means if you are an alcohol beverage producer is this - you are stealing your customers from somewhere. The question is where. Now here, there are a number of options. If you are producer in a certain category, perhaps you are winning over some drinkers from another category - say beer to wine, or vodka to gin. But the switch we are most interested in is this one - commodity to craft. Surprising as this may seem to some, the person who determines what somebody is going to buy isn’t the guy who made it, or some marketing exec, or social media influencer, brand ambassador, bartender or distributor. The person who determines what alcoholic beverage they are going to ask for is, guess what, the consumer. So, in a closed system where success is measured by winning a consumer from someone else’s product over to your own, it comes down to one thing. The value proposition. One such value proposition is simple and straightforward - price. The top 10% of drinkers, or 14 million people, account for almost 75% of all alcohol consumption. They only care about one thing, and that is cost. If you are a craft producer, forget these people. They are not your customers. That leaves you 25% of the drinkers to fight over. Right now, craft spirits account for 3.8% of market. That means there are 21.2% more commodity drinkers available for you to win over to craft. In that conversation, what is your value proposition? If it’s that you make great spirits, then you are missing the point. All your competitors make great spirits, even the commodity ones. Especially the commodity ones. They make better spirits and a larger variety of expressions too. You can’t win anyone over with that value proposition, because they can make them cheaper too. Your value proposition is that you are craft. And micro. And local. These are all qualifiers that set you apart. They are conditional terms a consumer can use when asking for a product, and they simply cannot be met by a commodity brand. If we can get 1% more people asking for craft at the bar, restaurant, and liquor store, that is 1% more sales for every craft producer in the market. How do we do that? Through content marketing that communicates the value proposition of craft.
  16. Just so you know, I started a new thread for this discussion.
  17. @Southernhighlander - absolutely. In select markets - or as you said, at the micro level - this is very feasible, and I wholly support and encourage this model. My statement was, again as you graciously point out, directed at the macro. However, any craft distillery regardless of business model, unless it is to scale and exit, will benefit from communicating to the craft consumer that they are craft.
  18. @Glenlyon - this comment speaks to the conversation at hand We feel it is important to approach this from the consumer's perspective. If I am a 'craft' consumer, if I subscribe to a 'craft' lifestyle, define and consider myself in that light, and I am at the liquor store, what am I looking for? The purpose of our post here is to try to point out that your customer base already exists. They just don't know that you do, and they most certainly don't know that you are the 'craft' option they are in search of. We are very confident that a craft cohort exists. Beyond our own research, we don't have to look beyond the specialty coffee and craft beer examples to substantiate this. It seems, however, that there is a misconception that these are separate cohorts, delineated by category. They are not. They are the same. The people who drink specialty coffee are the same people who drink craft beer. And they are the same people, predominately, that are, or want to be, the craft spirit customer base. The trouble is, you are not as accessible as beer or coffee, and therefore you must market. Craft beer and coffee's market inroads were built off grassroots, cash flow models - they became sustainable, even profitable, selling out the front door, then moved into distribution. Spirits are not consumed, let alone financed, in the same way, so we must utilize different methods in their marketing. But the facts remain: the craft consumer exists, is ~25% of the total market, and has not been educated adequately enough (i.e. marketed to) to know what his or her spirit option is.
  19. Just so the point of this thread isn't lost - craft doesn't serve 20% of the US population, it serves 3.8%. How best to capture the other 16.2% (we believe it is 21.2%) that are potential craft customers is what we are discussing. Our position is that content marketing that communicates the value proposition of craft over that of conglomerate is the most effective and efficient method to do that. We provide a platform for content marketing. If you don't ascribe to the values of our platform, we recommend that you align yourself with one that aligns with your values and the value proposition of your brand. CRAFT by Under My Host and The Alchemist (if you are in BC) are two great options.
  20. Yeah @Silk City Distillers, @Glenlyon and I sort of hijacked the thread. Apologies for that. To your point, we are talking about the same thing. Beyond the price point of inflection, it all depends on your value proposition, those values you evoke in the mind of the consumer, which is subjective. As you state, whether your locality has any bearing on your price point is strictly a matter of economics. We could do the math, but essentially it correlates to the cost of oil and how far you are from source and market, and there is a hard point in that equation at which sourcing from and serving the local market yields diminishing returns. This is again where that subjective value proposition enters in. I love what you are saying about experience, and about offering a physical experience and sense of community. Your conversation around this speaks to my other favorite talking point in craft, which is the matter of appropriate scale. What I am really working to say is, micro producers can compete with commodity products on the shelf and particular on premise, at least in that 25% cohort who cares about something other than price, if the consumer knows the keyword and your product contains it. But you have to actively promote the lifestyle and culture that is associated with this keyword, own it and make it known. I hear what you're saying about Mila Kunis, but I disagree on two points. One, I don't believe the people influenced by the Wild Turkey/Matthew McConaughey ad are in the 25% that is in your customer base. Two, the craft producers have a lot more money, collectively, to spend on effectively marketing an authentic craft meme then they think they do. And my argument is that doing this - marketing the craft lifestyle and your association with it - will make any and all of you realize a lot more growth then marketing your individual brands in a sea of cheaper and more readily recognizable options ever will.
  21. @Glenlyon - thank you very much for your kind words! We really enjoyed making it, and we aim to again. To be honest, it wasn't really the printing so much as it was the lack of advertisers. Our model was designed such that subscriptions covered print costs and provided for profit, but production had to be supported by ads and sponsored content. We found selling subscriptions to be relatively easy - it was getting micro-producers to support the platform that proved exceedingly difficult. At MicroShiner, we have made a commitment to only promote small, independent businesses. To us, it undermines what we are trying to do in creating a content marketing platform for the craft movement to promote anything but craft products. Which means we depend upon other businesses in the craft ecosystem to help us grow. It goes to our point about the craft value proposition that we posted above. From a marketing perspective, craft spirits are better served to consider themselves in the craft horizontal than the spirits vertical. Making craft approachable - nicely styled, with a gentle insight - is what MicroShiner is here to do.
  22. @Glenlyon - we had to take a step back from making the magazine and put it on the back burner to simmer but - yes, that MicroShiner.
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