Jul 162019
 

This post begins the eighth year of Beer Business Unplugged.  As I have done for the past seven years, I will comment on the previous year’s posts and industry issues.
The February 19th post, Success and Failure are Both Part of Life, was the most read post for the year, and it also set an all-time record for the most read post ever! Success and Failure told the story of the reincarnation of Austin’s Celis and the struggles of the brand.  The post brought a multitude of responses from all tiers in the industry, many advocating that Celis was, in fact, a viable brewery. In recent weeks, the industry learned that Celis has gone out of business and two weeks ago, filed for bankruptcy under chapter XI.
The Celis story was one of the many lamenting breweries that had closed or sold over the last year. It seemed that every week there was another blog about another brewery closing. This trend appears to be continuing over the next year.
Another shift which seems to be gathering some steam is the growth of sessionable or light crafts. More and more brewers are adding a low ABV and lighter flavor to their portfolio. Call it the Ultra effect, but it will continue.
Breweries by Population

There are two other key developments which have continued to capture the industries sights during the past year.  The first is the cannabis situation which seems to be losing traction at this time, and the second is the continued and amazing growth of seltzers and spiked waters, led by White Claw.
Once again, I want to thank the readers who have sent comments and thoughts, they are always appreciated and helpful. I look forward to the continuation of this blog throughout the coming year.
This year’s classic Schlitz commercial.

And now, on to year number eight….

 Posted by at 6:00 am
Jul 092019
 

In a conversation several years ago with a distributor who had recently sold his large, successful operation, the distributor commented on the challenges he encountered trying to train and maintain company employees. As an illustration, he referred to the tradition of sports teams and the amount of training and preparation, often a full five days, for a mere three-hour game.  The distributor noted the length of practice in regards to a relatively short game and acknowledged a similar training system used by the United States military, noting the importance of superior training techniques in the event soldiers were called to duty.

When one looks at the beer industry, it is quickly evident the amount of time invested into craft beer training. A recent article in the Dallas Morning News, “Jobs Data Helps Track the U.S. Brewery Boom,” highlights the job growth of the brewing industry.  The article stated, “The number of jobs at breweries jumped from 26,380 in 2008 to 77,902 in 2018, according to the Bureau of Labor Statistics.” This parallels the growth in the number of operating breweries.

The article further states that there is also a regional variation to be found. Some regions, or cities, have more breweries than others. To sort this out, an “employment location quotient” provided by the BLS for states, metropolitan areas, and countries was in each industry. The BLS measures an industry’s share of total jobs in an area divided by its share nationwide. In Bend-Redmond, Oregon, population 191,000 in 2018, one is 18 times more likely to run into a brewery worker than in the U.S. as a whole.

This article goes on to state that the BLS will suppress data so as not to reveal employment and wage information that can be traced to a single employer.  For example, in Chico, California, home to Sierra Nevada, and in Pottsville, Pennsylvania, the home of Yuenglng, the data is suppressed. The data translates into salary ranges, thereby illustrating that an AB brewery or a MillerCoors operation would have the highest pay. The metropolitan areas with annual brewery wages of $80,000 are indeed home to major AB breweries. In the craft world, San Diego, which has 128 breweries, has low wages, as would be expected.  Employment, however, has more than doubled since 2014. The annual wages on the low end of the scale are $23,049 in Niles-Benton Harbor, Michigan and the highest in Syracuse, New York, at $89,675. The brewing industry only accounts for 0.05% of total jobs in the U.S. 

Many craft brewers struggle to find quality employees as referenced by the low salaries. These brewers can find bodies, but without the proper, on-going training, how well are they going to perform? Many of the young beer people have some type of Cicerone training, which does aid with the understanding of beer, but may not necessarily translate into sales.

The old adage, “you get what you pay for,” could not be more evident than in today’s beer industry.  It is easy to equate a breweries’ payroll to their success by using the above mentioned statistics. If a brewery wants to be successful, they should pay for talent instead of simply acquiring more employees.  Not only will the brewery benefit, but so will the wholesalers, retailers, and consumers

Money and salary are not particularly good motivators in the long term.

 Posted by at 6:00 am
Jul 022019
 
Also last Friday, the state of Texas filed a tax lien against Celis Brewery’s parent company, FFBC Operations LLC (which also operates as Flemish Fox Brewery & Craftworks LP).
Christine Celis, who 
resurrected her late father Pierre Celis’ long-shuttered brewery in 2017, did not return requests for comment.
Messages left for representatives from Amplify Credit Union and Streusand, Landan, Ozburn & Lemmon LLP were also unreturned.
Additionally, Celis is facing a trio of liens filed earlier this year against the company for thousands of dollars in unpaid construction and electrical work.
In an “affidavit claiming lien” dated February 1, Hill Morrison of Hill Morrison Construction Services claims that Celis owes “at least $271,872.81” for the construction of a beer garden and remodeling work.
According to a second “affidavit claiming a lien,” dated March 15, R&M Electric owner Rick Hendrick said his company is owed $8,211.85 for electrical work done at Celis in November 2018. Also on March 15, Elliott Electric Supply Inc. filed a “mechanic’s and materialman’s lien affidavit” seeking $5,058.80 from FFBC for materials provided to R&M for work done from October to December 2018.
As 
Brewbound reported in May, rumors of financial struggles, layoffs, and a potential bankruptcy filing dogged Celis throughout the beginning of 2019. At the time, a new investor group was considering acquiring the distressed brewery. Sources told Brewbound then that the Celis operation was in trouble soon after opening in 2017, after overspending on a 50,000-barrel brewery in northwest Austin and relying on financial models that required high double-digit, year-over-year growth in order to service debt.
Last year, Celis’ production increased 320 percent, to 11,339 barrels of beer.
According to a “modification and extension agreement” filed with the Travis County Clerk’s Office this past April, Flemish Fox Brewery & Craftworks reached an agreement with Amplify Credit Union to suspend payments on the principal $5.3 million note it first took out in March 2016, from February 1 through July 1, 2019. The company was to resume payment on August 1, with the total balance to be completely repaid by September 1, 2037.”


The above is from Brewbound, at the time of this posting, Celis has not filed for bankruptcy, however, it is expected to do so soon.


 Posted by at 6:00 am