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microshiner

Craft is Not a Commodity

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21 hours ago, Roger said:

The wine industry is very strict about viticulture, fortification origin, etc and the beer industry is all local, but unfortunately Big Alcohol has embraced laws that obfuscate the actual origin of spirits to the detriment of the true craft / local centric culture.  

The wine industry has stressed local and terroir, or at least called out product origin, for a long time; with limited ways to obfuscate. Beer has been getting a pass on using local. The beer industry is a way behind in sourcing local ingredients and most "craft" brewers use nothing local; it simply has not been an issue. The resurgence in local hops seems more driven by market opportunity for farmers than any real call by beer consumers. Owning both a winery and a distillery I see a vast range of consumers. People who know anything about the business or understand the information on a label are few and far between so it is a constant educational process. Most days it comes down to taste and price; local is a nice to have for some people, most don't care. A frustrating reality to those that do care. The local food movement is very strong in my area and a few other areas of the US so some of that is spilling interest over.  I actively encourage people to read and understand labels; though servers in tasting rooms can get away with all kinds of lies without repercussions. Of course one can also walk into any place that sells alcohol and find labels that the TTB should never have approved.

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Dear Roger - I am sorry your upset. That is just the way the world world works.

Dear Microshiner- I live in Iowa, a place where I drive every day through seas of corn fields. I would find it impossible to buy corn from a small boutique farmer. Around here your not a real farmer unless you farm 10,000 acres or more.

I have made hundred of connections and friends on this forum. I am not here to upset them at all. The fact of the matter is every distiller has different plans in life, different target customers, different areas to sell into. We are NOT the same, nor would I want to be.

Food for thought, there are 2000ish micro distilleries in the USA. If half of them are on this forum, and half of them are holding back because they know me, well then there should be 500 + people arguing with me right now calling me the devil, but it really only seems to be 2 people. So maybe things are just as clear as mud as far as what happens behind the scenes in this industry.

Take care.

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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.

  • Thanks 1

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20 hours ago, microshiner said:

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.

 

Here is the problem. I am a small distillery in an already crowded, and becoming much more crowded by the day industry.  I am crowded because the megabillion dollar distilleries are releasing more and more products and brands. I am crowded because the regional megamillion dollar distilleries are releasing more and more products and brands.  I am crowded because the local million dollar distilleries are releasing more products and brands.  I am crowded because the local equally scaled, ethic and values distilleries are releasing more products and brands.  I am crowded because those who don't want the headache of a distillery are releasing more private labeled products and brands.  I am crowded because the liquor store owners have no more space for us to grow.

As the dollar becomes harder to earn and my costs go up I have no choice but to source from cheaper manufacturers. Shure, 5 years ago I was proud to pay my farmer $0.05 more per pound of corn, but now I simply can't afford it.  Heck,. most of my competition uses neutral, so what am I supposed to do?  If you think I can make a better product, in less time, with less overhead and have time to actually go sell it, I invite you to come out and try it yourself. Here's the catch, if you can't do it you owe me all your money, your cars, your house and your credit (because that's what the bank will do to me).

It's easy for you to armchair quarterback our industry.

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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.

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