So, Wot’s… Uh, the Deal?

Obviously, I haven’t been writing.  Haven’t been brewing, really, either.  Three or four batches in the last year, which is pretty much an all-time low since I started all-grain brewing.

What happened?  As Raoul Duke said, “What’s the score here?  What’s next?”

 

*sigh*

I spent much of the summer of 2013 researching what was needed to start a brewery.  I’ll spare you the gory details, or I would if I hadn’t already written them, but the basic answer was obvious:  Money.  More specifically, money I didn’t have.

There are varying levels of investment for various levels of expectation.  I could start a brewery out of the garage for a relatively small investment of time and a few modifications.  My intent, though, was to create a new job for myself, and virtually no one is supporting themselves out of a garage brewery.  Income minus expenses would equal bankruptcy and loss of the brewery.

A real, income-producing brewery involves a much larger scale that I could not afford.  I had no industry experience to bargain with, or borrow against, as it were.  No one was lined up to invest, and even if they were, it would be difficult for me to relinquish any sort of control over the business.

The same was true for the taproom idea.  Leases, build-outs, employees, little cash, and no real experience to work with were not a winning combination.

The real deal breaker, though, was that over the months I had ceased to be income-positive.

So I went back to work.  Having a generalized IT background and years of experience means I can still get a job around here, in most cases, pretty quickly.  As it worked out, I found one within a couple of weeks and am still working there, this time as a supervisor.  Managing a team of six is a great opportunity, and the experience gained should help me when I revisit the brewery and taproom idea a few years down the road.

I’m eager to get back to brewing more regularly.  I brewed a stout and brown ale on back-to-back weekends and it was fun to get back to basics.  I only brewed five gallons, didn’t use the Tower of Power for anything but the hot liquor, and relied entirely on gravity to move the fluids around.  Hit all of my marks on the stout, but flubbed the brown a little.  Nothing fatal, but too hoppy.

Proximity to my LHBS has had an impact on me.  My previous job was less than five minutes from Larry’s.  Now I work a good bit further away, and Larry’s isn’t really on my way to anywhere, so I’m less likely to go.  I need to get over my aversion to ordering ingredients online.

At any rate, this site will probably be changing over the coming months.  I’m spending  time on other projects, like Madera Verde Garden, and I’d like to showcase some of that work (most of which is my wife’s).  I still enjoy writing, and I’m looking forward to presenting some topics for which I have a passion equal to brewing.

In the meantime, support another local brewery, and cheers!

Perfection in Five

I’ve been slowly progressing through what I call my “Perfection in Five” series. I haven’t been brewing the same recipes often enough to really dial them in.  By that I mean I haven’t defined a repeatable recipe and process.  Perfection in Five challenges me to produce one perfected recipe within five brewing sessions.

For years I’ve been brewing 10 gallon batches per session.  As I’m sure I’ve said before, it takes the same amount of time to brew five gallons as it does 10, so why not brew 10?  If I make a good beer, I want to drink it and I want other people to try it, so it works out well.  But if I don’t think the beer is good… well… it sticks around too long and becomes a burden.  Since Perfection in Five is an experiment that was meant to be completed quickly, I didn’t want a bunch of beer hanging around, so I decided that five gallon batches made the most sense.

Except I disposed of all of my “small batch” equipment when making room for my new equipment.

I’ve invested in a system where even a 10 gallon batch is small, so trying to produce five gallons really is asking too much.  I understand now that I want the option to scale back, so I decided to buy an industrial 10 gallon Igloo cooler for a mash tun.  This cooler is designed to keep water cold for a few days at a time, which tickles my fancy for mashing in a near-freezing garage.  My assumption is that it will do just as good of a job insulating a hot mash as it would a cold drink.  Yes, temperature control is a fetish.

I wanted another control for this experiment to be the ingredients, so I put together the recipe and calculated how much of everything I would need to produce five 5-gallon batches.  I gathered up enough grain and hops so that every run of my experiment would use the same batches of those ingredients.  Unfortunately, there wasn’t enough yeast available at my LHBS, so the control is slightly less controlled in that I will be using two different batches of the same yeast.

This is going to be fun for me, and it’s a great time of year to brew the German pils style I’m trying to duplicate with this recipe.

Research: Demographics and Location, Part 2

In my last post, I wrote about how I used a free online tool from Nielsen to research basic demographic information for potential taphouse locations.  Today I want to show how I used another free online tool to gather more detailed information about the same locations.

Because I am a resident of King County here in beautiful Washington State, I have access to the King County Library System.  If you are a resident of King County and are considering starting a business, run out and get yourself a library card if you don’t already have one.  Online, you can verify that you are in the KCLS service area and apply for a card, though you’ll obtain your card faster if you go into a KCLS location and fill out an application in-person.  Many of the research tools provided by the library system are not really affordable for individuals and small businesses, so kudos to KCLS for buying subscriptions and making them available to their patrons online!

If you are not within the KCLS service area, check with the library systems in your area to see if they offer SimplyMap or other similar products.

On the KCLS home page, I scrolled down and clicked on the “Databases” link found under the “Browse for…” header.  On the next page, I selected the link for “Business, Economics & Investing”.  There are a number of databases available here.  KCLS provides YouTube videos to help you use of some of these tools.  I selected the link for SimplyMap.

There was a learning curve with SimplyMap, but the YouTube video helped a lot.  I started by selecting a location.  Here is the list of locations I researched in my last post:

• 98001 (Auburn)
• 98002 (Auburn)
• 98092 (Auburn)
• 98010 (Black Diamond)
• 98038 (Maple Valley)
• 98042 (Maple Valley)
• 98027 (Issaquah)
• 98029 (Issaquah)

I clicked on the “Locations” tab, then selected “Find location by: Zip Codes” and entered the first zip from the list, 98001, then clicked the “Use this location” button.  A little box popped up at the bottom of the screen to let me know that the location was selected, but otherwise I couldn’t tell that I had accomplished anything.

Next I clicked on the “Variables” tab.  This is where I got to pick from some awesome data sets.  One of the categories listed is Consumer Expenditure — how much money people spend on things.  That sounded like something I’d like to know, so I selected it.  Then it prompted me for a “Folder”, so I selected 2010 to get the most recent map data.  The list for 2010 expanded to offer about a dozen industry types.  I chose “Food”, because it seemed to most closely match my business.  Food expanded into three subcategories, one of which was “Alcoholic Beverages”.  That expanded into two more categories, from which I selected “Away from Home”.  Finally, an actual list of variables appeared, one of which was “Beer and ale away (Household Average)”.  That sounds like some good data to me, so I selected it.  Another little box popped up at the bottom of the screen, but otherwise nothing changed.

There must be a better way to display this information.

It took me a while to realize that, in the background, the map had populated with the information I requested.  To actually see the map I had to close the window I’d been using to select the location and variable.  The resulting map was fugly to look at. I could have tweaked the colors in the tool if I wanted to pretty it up.  From here it was just a matter of associating the color of the zip code with the numbers in the legend, which in this case reads “52.76 – 55.22”.  Unfortunately, I have no idea what those numbers mean!

I poked around in the help and did some searching online, but I was unable to find anything to help me clarify exactly what this data means.  If you know, please leave a comment.  Because the numbers in the legend range from 0 – 100, I assumed they represent percentages. So, approximately 54% of households in the zip code 98001 went out and had a beer in the past year?  That’s what we’ll say until someone tells me otherwise.

New column on the sheet: Beer and Ale Away %

I recorded the data for the rest of my target zip codes and stepped back for a look.  It didn’t actually go into the level of detail that I had hoped, but one thing did stand out:  Auburn looks like an even worse option than it did before.  Not only do the Auburn zip codes have lower incomes and lower spending, but when they do spend their money it doesn’t seem to be on beer.  Conversely, Maple Valley and Issaquah have beer spending habits at the top of the range.

The other variable I wanted to look at was how much money these potential customers typically spent on beer.  These numbers were even less telling.

New column on the sheet: Beer and Ale Away $

Fortunately the map can be broken down into smaller chunks called block groups, and by looking at that data I can identify areas within the zip code that spend more on beer.  Theoretically, these areas are where I should be looking to locate the taphouse.

After some fiddling around, I was able to create custom locations in SimplyMap that grouped together my common zip codes.  This pic shows the block groups within the highlighted 98010, 98038 and 98042 zip codes, and the amount of money they spent on beer away from home.

This view shows better detail about who is spending the most money on beer.

There is a lot more data available here. In my next post I’ll be looking closer at the buying habits of my target markets.

Research: Demographics and Location

In my last post, I wrote about my experience researching competition for my proposed taphouse.  I did the research at the behest of my advisers at the Small Business Assistance Center and they didn’t steer me wrong.  In the process, I learned a great deal about my customers and what my competition is doing to attract them.

Next, I wanted to learn more about where I should locate the taphouse.  Until recently, my plan was to find something in downtown Auburn, but I decided that as long as I’m starting over from scratch I should also open myself to the idea of doing business elsewhere.  What do they say about what makes a business successful?  Location, location, location?  Well, that may not truly be what they say, but the sentiment is spot-on.  An otherwise great business in a poor location may never reach its potential.

To start, I looked at a few basic statistics for a number of zip codes immediately around my own.  I used a free tool provided by Nielsen, the same company responsible for TV viewership ratings.  Enter the zip code for the area of interest and you get a quick snapshot of demographic data.

More data!

I chose to examine a few specific details:

• Population, which gives me an idea of how many potential customers live in the target area.
• Median income, which gives me an idea of how much discretionary income these potential customers might have to work with.
• Per-household spending, which gives me a good idea of how much money these potential customers tend to spend.

I selected the following markets:

• 98001 (Auburn)
• 98002 (Auburn)
• 98092 (Auburn)
• 98010 (Black Diamond)
• 98038 (Maple Valley)
• 98042 (Maple Valley)
• 98027 (Issaquah)
• 98029 (Issaquah)

I chose these markets for the following reasons: 1) They are close to my home, 2) They are areas I expect to have income and spending levels that will support a luxury business, and 3) They are areas I think have market space for a taphouse.  Arguably, I’ve left off a few good potential zip codes and a couple of good data points.  The good news is I can easily do this analysis again with any other zip code or data point.

Numbers and colors. This must be important.

As I did with my competition research, I created a spreadsheet to help me track and compare the data.  Using colors, I grouped the results into “neighborhoods” that make up a common market.  There’s one color each for Auburn, Maple Valley/Black Diamond, and Issaquah.

Looking at these numbers, the Issaquah and Maple Valley markets stand out as having the best overall demographics: Issaquah has the highest per-household spending and median income, and Maple Valley has the highest population but only slightly lower per-household spending.  Auburn, unfortunately for me as a hometown supporter, doesn’t pan out as well for a luxury market–there are more people, but significantly lower income and spending.

In my next post, I’ll discuss another online tool, SimplyMap, that helps me understand my demographics in different detail.

Research: The Competition

In my last post, I wrote about restarting the start-up process for the business I want to open.  First I wanted to open a brewery, but now I want to open a taphouse.  Dreaming up these businesses was the easy part, but understanding what to do next was less clear.  My instant gratification personality told me to go find a location, but my advisers steered me in a different direction.

One of the first things to do, they said, was to get to know my competition. As an avid beer drinker, I already have a good idea of which businesses I’ll be competing against, so I put a few of their names down on paper:

• The Parkway Tavern
• Red Hot Tacoma
• Doyle’s Public House
• Airways Brewing Beer & Bistro
• Oddfellas Pub & Eatery

There are hundreds of pubs, taverns, bars and restaurants around me, so why did I choose these particular ones?  1) They offer products and services similar to what I want to offer. 2) They are geographically situated near locations I’m considering.  3) They have proven to be popular with customers.  4) I have been a repeat customer at each of these businesses.

I entered the business name and city into Yelp’s search engine and examined the results.  In addition to reviews, Yelp provides basic information that a customer would want to know, like business hours and amenities, so I built out a template in Excel to keep track of some of the common information I wanted to compare.

I love data!

Whoa.

Then I plugged through every review for every competitor on the list and I recorded each time a quality was mentioned positively or negatively.  I built the list as I went along and the template filled out substantially.

Tallying reviewer comments took some time, because you often have to interpret what someone is trying to say and tie it to a specific label.  Certainly, it’s not a scientific process, but I’m sure some marketing company somewhere has turned it into one.

Many of these qualities were common to all of the competition, but some were specific to one business.  Finding unique qualities and quantifying the number of people who talked about those qualities really helped me understand the identity (or story, as a marketer might call it) of that business. It also became clear very quickly which common qualities, like friendly and attentive service, customers look for in their pubs.

Lots of pretty numbers.

Using this template, I can move on to profile businesses within a more specific geographic location, or ones that have not met their customers’ expectations, or ones that share the same “unique quality”, all of which can help me better understand how I might be more successful with my own business.

What I Learned

A few clear facts emerged during this first run at competition comparison: 1) People expect pub food at a pub, and having good pub food means they are more likely to come back.  2) If you’re going to serve food, people really notice if you also offer vegan, vegetarian and gluten-free options.  3) People will come back if they feel they are getting a good value.  4) People want to have entertainment options.

I suppose none of this should come as a surprise, but it changed my thinking about a number of things:

I didn’t want to open with an in-house kitchen, but now I’ve heard it loud and clear: People expect to have food with their beer.  I knew this, really, but my answer was to locate in an area where there were plenty of take-out options from restaurants nearby.  These kind of off-site food arrangements seem to be awkward for the customer, though, and I would sacrifice a lot of potential revenue if I wasn’t providing the food, myself.  If John Taffer is right, customers are likely to spend 52 minutes more in my taphouse if I have food available.  So, in addition to profit on the food, that would typically include another beer.

I was blown away by the number of comments related to diet-specific concerns.  I should understand this because, hey, I’m lactose intolerant.  I tend to avoid certain menu items when I eat out, so why wouldn’t someone else do the same?  My real takeaway from this, however, is that having good and plentiful diet-specific options really makes you stand out.

One business in particular received props again and again for the value they provided.  Their food is cheap and easy to prepare, which allows the business to keep prices low. The tantalizing preparation options really engage the customer and encourage them to come back for more, which they will because it’s such a great value!  This will be a challenge for me:  How can I create a similar value?

Entertain me.

Finally, people want to have entertainment options at the pub.  Originally, I envisioned a quiet place with nooks and crannies for people to tuck themselves away with a book or a tablet or for a quiet conversation.  Well… that’s what I would want, but I think I saw maybe one comment about how great it was to be left alone in a bar.  Instead, dozens of reviewers talked about shuffleboard, pinball, pool, darts, TV and movies.  “I loved that we could play a game of Boggle!” said no one, ever, apparently.

And that’s a perfect example of why research is important — it encourages you to compare your expectations against real data.  What you like isn’t necessarily what will sell.  Your niche may not be much of a niche.  Your target market might not be what you think it is.

Next up: Where should I set up shop?

Where to Begin?

Over the past couple of weeks I’ve been particularly focused on my business.  Recently, I made the decision to change course, and because that means starting the “start-up” process over again, I thought I’d make a better effort at blogging about what I’m doing.

This is what starting a business can look like from a high level.

When I first met with them, the Small Business Assistance Center provided me with a basic map for the start-up process.  From a very high level they break it down into nine stages:  1) Concept, 2) Research, 3) Planning, 4) Protection, 5) Funding, 6) Start Up, 7) First Mile, 8) Growth, 9) Profit!

The first step, your concept, should be the easy part because all you have to do is conceptualize what you want.  Presumably, you’ve already been doing that.  Until recently, I wanted to open a brewery (I still do), but today I’m envisioning a taphouse with many, many more beers than just my own.  I see two dozen taps, top-notch service staff, and a physical space that encourages customers to settle in for a couple of drinks.

It’s fun to play around in the concept stage and dream many dreams, but at some point you have to act or the dreams will go nowhere.  Once you have an idea of what you want to do, it’s time to do some research.  Kirk Davis from the SBAC says that this is a step that many new business owners overlook or don’t appreciate enough.  I was one of those.  I wanted to go from the concept stage to the planning stage to the start up stage, but it’s simply not effective to try to do that.  In my next article, I’ll talk about what kind of research I’m doing and what I’ve discovered so far.

Sea Change

They say that the only constant in life is change. According to my wife, that’s doubly true for an Aquarius, which, unfortunately for her, I am.

That doesn’t look like a beer, Dude.

I’ve been thinking hard over the past few months about what I need to do with my business.  Starting a brewery is capital-intensive, which means it’s expensive.  Yes, I could brew a barrel at a time, but I wouldn’t have time to do much else.  If I want to be efficient (and profitable) then I have to buy a larger system, and that takes money, which means investors or loans, which means increased risk.  I knew this going in, but I chose to look past it.

I’ve always been concerned about how I will make money during the down time between applying for my brewer’s notice and the point when I can sell beer.  I bounced a few ideas around in my head but never came up with something that really made sense.

So my wife asked me the question, “What are you really trying to accomplish?”  Truth is, I had been asking myself that same question over and over.  The answer was much clearer in my mind than I expected:  I want to run an establishment where people want to go to drink really good beer.  Not just my beer–any good beer.  That’s different than what I’d envisioned.

I love to try new beers.  I make it a focus to try every new beer I find in a tavern or restaurant.  I know other people are like this, too, and I can’t think of a better quality in a customer.  Are you like this?  If so, I’ll make you a deal:  You keep coming in, and I’ll always have something new for you to try.

Where everybody knows your name… and only occasionally get up in your business.

I love a place where I can be comfortable by myself or when I’m with a group.  Sometimes I want to tuck myself away in a corner to read or write, sometimes I want to sit at the bar and chat with the beertender and other patrons, and sometimes I want to sit at a big table with nine of my friends and celebrate the end of the fantasy sports season.  That’s a tall order for one establishment, but that’s what I want to offer.

And I love to teach.  Sometimes to a fault.  I want to help my customers understand and appreciate beer, and that has to be a fun thing to do when you have a wall of taps behind you, through which flow some of the best beers in the world.  Or… I can take your order and piss off so you can enjoy it in peace.  Whatever works for you.

A successful tavern could pave the way to starting the brewery, especially if I can find the right location to make that easy.

Logosity

Last year, Penny-Arcade.com created a Kickstarter campaign to try to make their website ad-free.  I love Penny Arcade and everything they do for the gaming community, and I visit the site religiously for the new web comic every Monday, Wednesday and Friday.  I figured that for all the hours of entertainment they’ve provided me over the years, it would be a good thing to toss a few bucks their way.

As I scrolled through the list of rewards, two options caught my attention:  One was to have the PA design staff create a logo for your company, and the other was to have Robert Khoo, the business mastermind behind PA, do a review of your company’s business plan.

If you’ve read through this blog, you know why these two options appealed to me.  The business plan option was almost twice as pricey as the logo, though, and I felt the logo could provide an immediate return on that investment in the form of branded merchandise, so that’s what I chose.  PA’s Kickstarter campaign was tremendously successful, resulting in a removal of the ads on the PA home page and a lot of free PA content.

The campaign closed in August and I didn’t hear anything from PA until just after the start of the new year, when they sent me a survey asking more about my company and what I was looking for in a logo.  I took my time answering the questions and I was as detailed as I could be.  Perhaps excruciatingly so.

During the Kickstarter campaign, they estimated the completion date for the logo would be March 2013, so I waited a couple of months.

Then I was laid off.

Suddenly, merchandising seemed like a really important thing for me to look into, and anyone who knows me knows I have zero patience when I want something.  I fight hard every day to keep in check my need for instant gratification, so I waited.  And waited.  And waited some more.  Finally, a couple of weeks ago I sent an email inquiring about the status.  I REALLY didn’t want to be “that guy” who’s asking them every day, “When’s it gonna be done?”

Yesterday my unusual bout of patience paid off in the form of an email from Robert Khoo, complete with images attached in a ZIP file.  I read what Robert had to say, double-clicked the ZIP file, took a deep breath, and these are what unfolded from within:

A few things struck me right away.  First, the M-V part of the logo is eerily similar to a sketch I did about a year ago.  Second, the cross-section of the tree was unexpected, but perfect, for reasons I’ll explain later.  Third, I love seeing the Washington silhouette.  “Made in Washington” is very important to me.

With the logos came a “brand guide” that explained the choice of designs.  The brewery mascot is an owl, so they included this little dude as a supplemental element.  Becky opened MS Paint and started messing with his color and texture almost immediately.

Finally, another supplemental element with more focus on local.

I like them all, and I appreciate that Penny Arcade listened so closely to my survey response.  I felt like I was really taking a chance by having my logo done this way, what with doing everything very impersonally over the Internet and all.  I’m stoked that it worked out.

There’s a lot going on in the main logo.  The M-V, in addition to representing the brewery’s name, also represent the mountains and valleys of the state, which is right up my alley.  We can take just that piece of the logo and use it on its own or use it in combination with new elements.

The cutaway of the tree trunk was an awesome surprise.  I wanted something within the logo that would reflect the meaning behind Madera Verde, but my mind fixated on trees and branches and roots — that sort of thing.  The choice of the cutaway trunk is more meaningful than what I had envisioned because of the generations of my family who worked as loggers here in Washington.

I’m also very happy with the owl.  It’s not literal.  I dig that it has a shield feeling to it, almost like a family crest.  Within, I also see mountains and valleys and water.

“Rooted in Auburn, WA” is a great motto, especially when combined with the cutaway of the tree trunk.  In the brand guide they suggested using it for coasters, and I agree!

Now I can start work on a few things I’ve been thinking about, like business cards, growlers and apparel.  I can’t sell any beer, but some early merchandising might bring in a little capital.

Kefir: It’s What’s for Breakfast

A few people have expressed surprise that this blog is not dedicated strictly to the brewery.  The brewery will have its own space, but for now there’s just not enough business going on to keep me writing and this blog interesting, so I throw in other topics that are meaningful to me.

Kefir, which is fermented milk, is an interesting cross-over topic for this blog.  Kefir is brewed with live cultures, similar to yogurt, but kefir culture also contains yeasts that convert milk sugars into alcohol.  The product is only slightly alcoholic, about 1% or so, so it’s not like it’s a beer substitute.

My first experience with kefir was completely unexpected:  This past holiday season, I purchased a quart of egg nog from the grocery store.  I decided to treat ourselves by getting one from a Western Washington dairy that doesn’t homogenize, and sells their products in returnable glass bottles.  I checked the expiration date, which was still a week or so off.

A couple of days later I decided to have some, so I pulled it out of the fridge, and as I did I noticed that there was some schmutz around the cap.  The tamper seal was still intact, so I pulled off the plastic ring and the lid popped open on its own!  Something was clearly amiss.  I sniffed it, and indeed something was amiss, but it didn’t smell rotten, it seemed to be only slightly off and had an odor closer to sour cream or yogurt.

I had heard of kefir and understood the concept of fermented milk, but don’t remember ever trying it and didn’t really have a point of reference.  This egg nog seemed far enough from rotten that I decided I’d give it a go — it’s not like I’d never tasted bad milk before.  It was thick, even for egg nog, and it had little chunks in it that I passed off as clotted cream.  It was also pleasantly effervescent!  It gave just a little tingle on the tongue.  The sweet richness of the egg nog combined with the tingle made it wonderful!  I drank the whole glass.

But then I started getting paranoid.  I still didn’t know it was kefir, or if it was safe for me to keep drinking, so I dumped out the remainder of the bottle and washed it down the sink, chunks and all.

A few hours later when I didn’t find myself running to the bathroom, I started to regret dumping the bottle.  When I say it was tasty, I mean it was addictively tasty.  I liken it to those little bottles of Starbucks Frappuccino, which I can hardly keep from downing in four gulps.  Willpower is barely enough to overcome my desire to just Hoover that stuff down, because my inner caveman just tastes an amazing combination of fat and sugar and wants more, more, MORE!

Where was I?

Oh, the egg nog kefir was damn tasty, and I wish I had taken the time to think about it little more before I dumped it.  Kefir cultures start with “grains” which are colonies of bacteria and yeast that clump together for their mutual benefit while they feed on the milk sugars.  The little clumps that were in the egg nog might have been kefir grains, and if they were I’m particularly sorry that I wasted them, because once you have some you can farm them for perpetual kefir production.  It’s very similar to mother of vinegar and sourdough — feed them, and they will continue to do what they do:  Produce some tasty eats!

So today I am heading out to Meadowwood Farms to pick up our weekly supply of eggs, but also to get some kefir starter.  Starter is a little different than the grains, in that it’s missing some of the critters the grains do have, but it should give me something to work with until I can procure some.

I’m excited about kefir for reasons besides my egg nog experience.  For as much as I enjoy dairy foods, I’m actually lactose intolerant.  Recently I’ve been trying to find foods that could help me work around some of those issues, and it’s been suggested that the probiotic properties of kefir might just do that.

Kefir is just another example of how fermentation can be fun, tasty and nutritious!

The Taxman Cometh

And I’m not even talking about the looming U.S federal income tax deadline, rather, I’m talking about the 500% increase in taxes on beer production that’s been proposed by the Governor of the State of Washington, Jay Inslee

As I’ve gotten older, I gotten more cynical about government — who hasn’t, right?  But cynicism doesn’t change the reality of any situation, and I realized that I’m not doing anything to change that reality.  Today I sent a message to three representatives in our state House, Mark Hargrove, Pat Sullivan and Joe Fitzgibbon, and the text of my message is included below, if you’re interested in reading it.  Hargrove and Sullivan are the representatives for my residence and the desired location for the brewery.  Fitzgibbon appears to be a potential champion of the cause, and he’s on the House Finance Committee.

I also realize that a sternly-worded letter isn’t likely to change reality any more than cynicism is, but I am voicing my opinion to my representatives, right?  Isn’t that how it’s supposed to work?

This tax increase is an extremely hot topic in the WA brewing industry right now, as you might imagine.  The potential economic impact to small brewers is, from my perspective, staggering.  Let’s take a look.

…

You know what?  Let’s not.  You should, though.  Washington Beer Blog did it better than I would, and I have other work to do.  Educate yourself, beer drinker, for the sake of all that is local beer — seriously — then talk about it with someone else and let the legislature know if you think it’s the right thing to do.

Text of my email to my representatives:

I am writing to ask that you reject any bill or proposal that will increase taxes on beer production, and that you provide vocal support to the WA Brewers Guild’s request to exempt microbreweries from the permanent $23.58 per barrel tax proposed by Gov. Inslee.

I am in the process of starting a brewery in the city of Auburn.  My residence and my desired location both lie within your jurisdiction.  Having just been laid off my from job at <some local company>, I have an incredible opportunity to focus on starting a business that will source its raw ingredients from Washington agricultural producers, and will provide jobs to local residents, tax income to the city and state, and fantastically good beer to the residents of the city I’ve lived in for over 26 years.  This proposed tax increase puts my dream at risk at a time when I can little afford to see more money go out the door.

The mass producers of beer have already been paying this tax, but the small producers have not.  This exemption has not given the small brewers any real competitive edge against the big boys, who have tremendous economy of scale, but it has allowed the small brewers to retain more of their earnings, and virtually all of them have invested those earnings back into their businesses in the form of equipment, real estate and labor (jobs!).  An $18.80 increase on each barrel of beer is a HUGE increase in costs to these small businesses — well over 5% on every keg they ship out the door.

I applaud the directive to properly fund the education system in Washington, but I’m asking that you don’t do it at the expense of one of America’s fastest growing industries.  Because all of the new breweries in Washington are “microbreweries”, this change in policy will affect EVERY SINGLE NEW BREWERY in the state.  Washington’s beer products are widely-known, but we have a long way to go to compete with states like Oregon and Colorado.  I feel strongly that Washington, the largest producer of hops in the world and among the country’s leaders in barley production, has perhaps the greatest potential of any state to provide world-renowned beers that could be household names like Microsoft, Amazon and Boeing have become.  If you allow Gov. Inslee’s proposal to to move forward in its current form, you will dilute that potential.

Today I happen to be working on outlining my production costs.  These numbers will determine my fate with investors and creditors, and ultimately will decide if I can afford to start this business.  Right now the spreadsheet says that state taxes will cost me $4.78 per barrel, and the totals look okay.  When I type $23.58 into that field, the numbers change — and so do my chances of success.