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Thursday, January 20, 2022

Breaking into the craft alcohol business

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Many people enjoy craft beer and whiskey, or beer and whiskey created in small batches where craftsmanship is emphasized. Yet despite mainstream popularity, the craft drinks industry has few African American business owners.

Even those in the business have difficulty naming Black-owned breweries and distilleries. Patrick Pennington, owner and co-founder of Backstep Brewing Company, could only think of one other Black-owned brewery in Indiana off the top of his head. Barriers to entering the industry include expensive startup costs, a complex legal landscape and the time-consuming nature of brewing. The popularity of craft drinks among African Americans also impacts representation in the industry. 

Startup costs depend on factors such as what drinks are made, the size of the business, plans for distribution and if the operation includes a bar or restaurant. According to The Really Useful Information Company (Truic), an online resource for businesses, a small distillery focused solely on distribution costs around $30,000. 

Pennington estimates a brewery that also serves as a bar will cost between $200,000 to $500,000.

Ponce Tidwell, co-owner of Still Moon Moonshine, said startup prices are a deterrent from entering the business, especially when African Americans may not have as much money on average as their white counterparts. 

To reduce startup costs, Tidwell and the five other co-owners decided to outsource production of Still Moon to a distillery in Kentucky, allowing them to focus more on the business side of the company. 

Even if a craft brewer or distiller does not outsource, Pennington recommends separating business from production by hiring people who can focus on different aspects of the business such as brewing and operation concerns. Pennington said too many in the industry attempt to operate the business side and brewing side, causing burnout as brewing is a full-time job.

As the brewer at Backstep, Josh Miller often works 12- to 14-hour days a week and an average work week is about 50-55 hours. Most of that time is spent checking machinery, fixing equipment and comparing ingredient prices.

“Most people think all I do make beer and drink beer all day,” Miller said. “When in reality brewing is only about 20% of what I do.”

Getting proper licensing can take 10 months, and distribution laws vary from state to state. For example, Still Moon is distributed in Indiana and North Carolina, Tidwell said. Indiana liquor stores are privately owned, which means individual stores determine prices. Liquor stores in North Carolina are state owned, which means the state Alcoholic Beverage Control Commission determines the price. In addition, alcohol companies cannot directly sell to stores, bars and restaurants and must go through distributors.

Pennington and Tidwell suggest aspiring craft drink makers meet with veterans in the industry for advice and learn what pitfalls to avoid. Connecting with distributors is also important because they are the ones who get product on shelves. However, they warn breaking into the alcohol business will still be slow.

 

“Have belief in your product and have patience,” Tidwell said. “The process moves somewhat slowly. It’s a lot of work to put in. We launched in 2015, but it took three, almost four, years to get everything in place to get launched.” 

For African Americans trying to break into the industry, Pennington said there could be an additional challenge: microbrewing is not as popular among African Americans. He remembered once inviting members of his fraternity to Backstep only for most of them to order mixed drinks instead of beer. 

Pennington does not know for sure why craft beer is not as popular in the African American community, but he thinks a lack of exposure may be the answer. Pennington did not hear much about craft beer growing up, associating alcohol more with liquor. When he drank beer, it was usually a well-recognized national brand such as Coors Light, also known as a macrobrew in the brewery industry. Pennington’s passion for craft beer began when his friend and eventual business partner, Jim Burroughs, began taking him to craft breweries.

“Once I was exposed to craft beer, I enjoyed it and I wanted to learn more about it,” Pennington said. “And, I had somebody who introduced me to it. I think the first craft beer I had was an IPA. It was explained to me this is what an IPA is, this is how it came to be, and I enjoyed it and that made me interested in other beers.”

Pennington thinks craft beer will gain more popularity among African Americans as more try it for the first time.

“A festival I go to today will definitely have more Blacks there than five years ago,” Pennington said. “It might have been myself and one other person I might see at a festival five years go. Now if I go out, I might see myself and there might be 10 other Blacks at that festival or maybe even more.”

 

Contact staff writer Ben Lashar at 317-762-7848. Follow him on Twitter @BenjaminLashar.

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