By Bruce Pokarney, Oregon Department of Agriculture
For the Oregon Beer Growler
Oregon exports into South Korea have greatly expanded following the U.S.-Korea Free Trade Agreement (KORUS FTA) of five years ago. The potential of Oregon wines and craft beers is starting to be realized in a country that has developed a thirst for imported alcoholic beverages. South Korea imports nearly $140 million of wine from around the world, and even though the U.S. is responsible for only about $20 million of that total, it’s still significant.
Five years ago, I visited Shinsegae, a large upscale department store in Seoul that also sells food and beverages. Pre-KORUS FTA, there were no Oregon wines to be found in Shinsegae’s well-stocked wine section. Now, several Oregon wines can be located without much effort. Granted, the price is still steep (A 2012 pinot noir from Lange Estate Winery & Vineyards in Dundee goes for more than $100 a bottle) and the Korean consumer is more apt to look for more affordable products. But as the tariffs continue to tumble, Oregon wines are more often on the shopper’s radar.
“The free trade agreement is driving down the tariffs, and that has helped,” said Shawn Kim, who works for the State of Oregon’s Korea Representative Office in Seoul. “People who know and love wine know all about Oregon pinot, which is still more expensive than many other wines in the Korean market but is priced more competitively than it was five years ago.”
Oregon is on everyone’s map when it comes to craft beers. South Korea is no exception.
“Rogue was one of the first American craft brewers to enter the Korean market,” notes Sang Yong Oh, senior marketing specialist at the U.S. Agricultural Trade Office in Seoul. “They have a very solid foundation for their export business to Korea because they were ahead of others. I think Rogue is a very good example of how American suppliers can benefit from the export opportunity in Korea by being active in Korea.”
The key for a craft brewer seems to be supplying enough volume to satisfy the demand. There is plenty of competition from beers exported by other countries, but Oregon can be a big player in a market where it’s trendy to ask for an imported craft brew.
It will be interesting and exciting to see how many more Oregon products might find a home in South Korea over the next couple of years.
By Christopher Morehead
For the Oregon Beer Growler
November is here, which means two things. First, you’ve probably recently tried a new pumpkin beer. Second, it’s the middle of fantasy football season, and you can bet that employees are spending work time managing their fantasy team.
According to a 2016 study conducted by Challenger, Gray & Christmas, employers across the country suffered an estimated $17 billion in lost wages due to employees working on their fantasy football teams while on the clock. That number is based on an estimated record 57.4 million fantasy football enthusiasts — 38.5 million of whom are employed full-time — taking an hour out of each work week for the course of the 17-week fantasy season. Those numbers have been growing annually across demographics, particularly with the enhancement of smartphone technology. Simply put, employees at all levels are generally spending more work time trying to find that next waiver wire player that will push their team — probably named something corny, like “Belichick Yo Self” — over the top. After all, bragging rights over Bob from receivables is on the line!
Realistically, some employers probably don’t know (or even care) that much about the impact of fantasy football on their employees’ productivity. But if you are legitimately concerned that employees are spending company time deciding whether to sit or bench Marcus Mariota on their fantasy team, there are few options that some employers have used over the years to address the issue.
One option is to ban fantasy football in the workplace altogether. Employers may lawfully demand that employees focus exclusively on their job duties during the workday and discipline those who play fantasy sports while working, provided such actions are done on a consistent basis and in accordance with clear, written company policies.
Of course, you should also understand that employees can just as easily use their iPhones to manage their fantasy teams. Many employers have realized that using this approach doesn’t really get them anywhere, and so it is not usually recommended go this route.
If that level of enforcement sounds too authoritarian and isn’t in line with your company’s culture, perhaps you are willing to accept the reality that many employees will, inevitably, check Facebook, Twitter and Instagram regularly. So if employees tweak their fantasy football lineup just prior to kickoff, you’ll realize that isn’t that much different than popping into a social media site.
Provided that expectations are still being met, why discipline an employee simply because he or she is managing a fantasy team? You might even check your own social media accounts while on the job. A workplace with managers who set the same expectations for themselves as they have of their subordinates is generally appreciated and fosters loyalty.
Some employers even go the extra distance and organize office fantasy leagues. Studies have suggested that short periods of unproductiveness can actually have positive impacts, like increasing morale and long-term productivity. In fact, if you’ve ever participated in an office league or an NCAA basketball tournament pool, you may have already experienced beneficial results. Of course, if you do organize an office league, it’s important to make sure people don’t go overboard with smack talk. A little banter is fine, but you don’t want anyone to turn into a real life Terry Tate, Office Linebacker.
The bottom line is that fantasy football in the workplace does impact overall productivity. Just make sure that when you choose how to address it, everyone is on the same page.
Chris Morehead is an attorney in the Portland office of Ogletree Deakins, a national labor and employment law firm. He focuses on hospitality employers, with an emphasis on the craft beer industry. He can be reached at firstname.lastname@example.org or 503-552-2140.
By Kris McDowell
For the Oregon Beer Growler
Brewing craft beer is an art. Running a successful craft brewery is a balance of inputs and outputs. It’s the result of careful thought and planning, addressing each component of the business in the most efficient way possible. It’s undoubtedly a lot of work but one Oregon company has developed software that streamlines these processes, making it easier for craft breweries to focus on the part that we all love the most — the beer.
Beaverton-based Orchestra Software was started by Brad Windecker in 2008 to provide enterprise resource planning (ERP) software specifically for the craft beer industry. At the time, there were plenty of resources relating to brewing technology but nothing that addressed the business side of the equation — at least to the degree he intended. That intention was to provide true ERP, a comprehensive solution to run a business that would replace the various disparate tools and bootstrap solutions (i.e. QuickBooks, Peachtree, spreadsheets). Other companies were providing piecemeal offerings at a lower cost, but Brad aimed to offer a comprehensive package that was even more affordable as well as less complex — making it more approachable to craft breweries.
Identifying a need in the market is one thing and having the ability and know-how to implement a solution to address that need is another. So what put Brad in a position to go from idea to implementation? Growing up around a family business, Brad had always intended to be an entrepreneur and supported that plan by earning a business degree at San Francisco State University. Deciding not to take over the reins of the family business, it was somewhat of lucky chance that brought him into the craft beer fold. During his last year of college his girlfriend (and now wife) took him on a trip to Portland to attend the Oregon Brewers Festival. He was already enamored with craft beer, which could have landed him in a number of places, but during their visit he also fell in love with the city. From there, a path that combined his business background with a passion was forged.
The software Orchestra has created is similar to the kind that large enterprises utilize, but it has been brought down to an affordable level for small breweries or what Brad calls “democratizing technology.” It integrates purchasing and receiving, sales and shipments, production and packaging, quality control and inventory tracking while offering automated accounting and full reporting along with interfaces to third party systems.
Sound like a lot? It is, but it’s all part of what running the business side of a brewery entails. By addressing and successfully managing those things, businesses that utilize this software will not only run more efficiently, but will also have an advantage over those that are wasting time and resources on those same processes. By reducing the pressure of administrative tasks and allowing the focus to be placed on producing and selling product, Brad feels the industry as a whole is improving.
Starting with their early customers — Lazy Magnolia Brewery in Mississippi was the first, followed by Missouri’s Schlafly Beer and Firestone Walker Brewing Company in California — Brad says that, “word of mouth has been the biggest engine of growth since the beginning.” Brad sees an extension of that craft beer camaraderie in their Community Forum, an online resource where customers can ask for or offer help. It has not been uncommon for breweries that first connected in the Forum to go a step further and actually meet in person.
In addition to the always-available Community Forum, Orchestra offers an annual Orchestrate User Conference, yet another way to help their customers to get the most out of their software. At Orchestrate 2017: Level Up (Nov. 15-17), they are expecting 500 attendees who are there for the education and the networking.
Orchestra has come a long way since their inception and counts many Oregon breweries, including Buoy Beer Company, Cascade Brewing and Full Sail Brewery as customers. Their 40 percent year-over-year growth and 96 percent employee retention rate would make them highly attractive to many buyers, however, Brad isn’t interested in selling. He’s far more interested in continuing to grow and improve, changing craft beer on a global scale by expanding through the beer value chain. It may seem like a tall order, but based on how far they’ve already come it’s simply a matter of time before Orchestra is able to provide more avenues to help craft breweries run as efficiently as possible.
By Ezra Johnson-Greenough
For the Oregon Beer Growler
In March, Portland’s Metalcraft Fabrication shut down after facing a federal lien, causing the company’s bank funds to be emptied, according to industry insiders. Owner Charlie Frye acknowledged the bank had closed accounts, but did not address this specifically when asked for comment.
The closure came as somewhat of a shock since Metalcraft was one of the greater success stories in Oregon’s craft beer industry. Co-owner Charlie Frye came from well-established manufacturer JV Northwest to found an innovative brewery-centric fabricator. Metalcraft reportedly made more than 1,000 tanks for businesses in 30 states and three countries in the last 10 years, including equipment for some of our state’s best breweries like Breakside Brewery and pFriem Family Brewers.
Many are left wondering how a company that was once praised by beer makers and business journals alike can suddenly close and see some of its relationships with clients go sour.
Charlie Frye and his then-wife Jen Baque opened Metalcraft in 2007, starting off welding furniture and building facade components before picking up work fixing tanks and equipment for breweries. By 2015, the business expanded by moving into a huge new warehouse to become one of the few U.S. fabricators that could make larger equipment — tanks more than a couple hundred barrels and brewhouses beyond 30 barrels. And just last year, Metalcraft teamed with Pelican Brewing Company to develop a new dry-hopping method. The resulting “Hopinator” received a rave review from brewmaster Darron Welch, who said Metalcraft “perfected a design that was exactly what we wanted. Not every fabricator would have been that patient.”
However, it wasn’t long after that when Metalcraft began scrambling to keep the doors open long enough to finish millions of dollars’ worth of projects.
“A number of factors contributed to Metalcraft’s demise,” said Frye in my original article breaking the closure for newschoolbeer.com, “the greatest one being several unforeseen challenges associated with our expansion.”
Metalcraft entered the brewery fabrication business at just the right time — before the big boom that would become the industry’s largest period of growth, post-2010. Growth was quick and used equipment became scarce, which led to longer lead times and down payments. Industry sources familiar with the matter indicated these upfront down payments ranged from 15-40 percent.
“The company got themselves into a cash crunch,” said Thad Fisco of Portland Kettle Works, another local fabricator that has offered to help finish Metalcraft’s work for clients. “[Metalcraft] ignored some basic fundamentals to maintain cash to finish deals. You begin to burn those deposits to finish projects that were contracted previously.” There are no rules against operating this way.
According to Fisco, this is “unfortunately not an uncommon occurrence in the manufacturing industry.”
The practice of taking on new jobs and even discounting them in a mad dash to use that money to finish past work that may not have even gotten underway “unintentionally turns into a Ponzi scheme.” Fisco says this is a critical issue for the industry overall and one that he expects could cause a few more fabricators to go bankrupt.
You might be wondering if this has anything to do with the unsustainable growth of the craft beer industry. Yes, a little. As brewers get bigger, and some more desperate to compete, they may plop down huge sums of money upfront without checking a fabricator’s creditworthiness.
Meanwhile there is mounting competition from China where fabricators routinely offer a cheaper but lower-quality product. Some American companies have even stooped to selling Chinese equipment and marketing it as U.S. made, according to Fisco. However, the larger the tanks, the higher the shipping costs, and that can decrease margins and any competitive advantage.
According to comments Frye made to me in March, he laid off 35 employees, which would’ve been a significant cut to the 50-60 people he reported would be hired by 2015. He also hinted at some financial mismanagement, saying “a business owner should always be aware that their finances are in order and those trusted to manage them are qualified to do so.”
Frye declined to answer additional questions, stating “I'm not prepared to give any more interviews at this time.” For now, then, it’s impossible to know the full story of what happened to Metalcraft. But its failure is bad for both the brewery fabrication business as well as brewers and should serve as a wakeup call to each.
When fabricators go bust, some brewers who have sunk large sums of money into equipment will have invested too much to recover. That may include some of Metalcraft’s clients. Bill Baburek of Infusion Brewing Company in Benson, Neb. is one of those affected by the closure. “They took $45,000 dollars in deposit money from us in late December,” Baburek said, “for a $60,000 tank order, and now we get nothing for it!”
“If another company the size of Metalcraft or bigger goes down, it’s going to be a big deal,” warned Fisco. “It starts to tear the fabric of the system that is in place ... people that are looking to buy right now should take a moment to check the credit of the people they are looking at doing business with. Find out what’s going on with the business before jumping in with both feet.”
By Anthony St. Clair
For the Oregon Beer Growler
It used to be that you just had to make good beer, but in today’s competitive industry good beer isn’t even a starting point. That’s why, in 2013, Oregon State University’s Professional and Continuing Education program (PACE) began offering their Craft Brewery Startup Workshop as a way to give fledgling brewers a boot camp-style overview of all the essentials of launching a brewery.
“There is so much more to the craft brewery business,” says Emily Henry, PACE program manager. “Our workshop covers all of those topics and ties together the business and production sides of the industry in a compact format.”
This year’s workshop was held in Eugene Feb. 25 through March 1, with the first three days at Lane Community College’s Center for Meeting and Learning, and the last two days at Ninkasi Brewing. Twenty people from Oregon and at least nine other states — including one student based in Central Asia’s Kazakhstan — came to learn from experts who had experience in everything brewing. Topics ranged from licensing and following regulations to ingredient and equipment sourcing as well as building a company culture.
“I attended the workshop to gain a three-dimensional insight into what it takes to operate, run and keep a brewery running successfully,” says Laura Dunn, who along with her fiance co-owns startup G Town Brewery in Greenville, Texas. “I am at the beginning stages of my brewery setup and wanted to gain as much knowledge as possible to know what I'm getting myself into!”
The first portion of the workshop highlighted the business and entrepreneurial aspects of planning and starting a craft brewing enterprise, including brewery case studies, with the goal of preparing students to draft or enhance their business plan. During the second portion, Ninkasi founders and key personnel offered their insights, along with stories of the good, the bad and the ugly of Ninkasi’s 10 years in the business. The course finished up with interactive sessions and a panel discussion. Course instructors were also available to review student business plans.
“You learn about ingredients, talk to real brewers. This is a good crash course for exposure to all those key areas,” says Ninkasi CFO Nigel Francisco, one of this year’s instructors. “It’s hands-on. They see the equipment, talk to the people who brew the beer and source the ingredients. They hear about our pitfalls and successes, and then can apply them to their own business.”
PACE and Ninkasi have collaborated on the workshop for four years. Henry credits the partnership’s success, in part, with Ninkasi’s willingness to pull back the curtain and give an in-depth look at the logistics of running a brewery, with sessions led by their CFO, COO, co-founder and Technical R&D and Quality team.
“Ninkasi has had tremendous growth over the last 10 years while also maintaining their core values and ethics as a business,” says Henry. “They stay true to themselves, both in their business and in their beer, and it is amazing for our upcoming craft brewery owners to see this success and the thoughtful management that is behind it.”
The workshop allows prospective brewers to “hear the challenges and opportunities in the industry as we see it in our position,” says Francisco. He credits co-founder Jamie Floyd’s background in brewing as helping Ninkasi weather startup challenges and growing pains, which may have been harder had there not been someone who was familiar with the ups and downs of the industry. “You have to think about strategy, legality, regulation, work force, how to run a brewery or pub,” says Francisco. “You might make a great beer, but when you take that next step you have to be able to make it all fit together.”
For Francisco, he knew that giving brewers insight into the financials would be a needed perspective. “You can’t grow 100 percent year-over-year for 10 years, so how do you plan for that?” he asks. “What’s a sustainable growth percentage, and what does that mean to you? Do you want to be small, big, boutique, have more locations? Pick what you want and match your strategy to the brewery you want to be.”
After all, sometimes people get into brewing simply because they want to make beer — but there is a world of difference between brewing beer and running a brewery. Many of this year’s students found the workshop eye-opening in regards to the business side of running a production brewery or brewpub.
“I gained the confidence to push forward with my business with more knowledge and expert advice,” says Texas startup co-owner Dunn. “Everything from legal information to how to design my brewhouse. I learned things I didn't even think of, such as having a ‘concept’ and the strategic planning to help organize and prepare my brewery.”
Perhaps even more important is understanding that while there are others in the industry who are willing to help, your operation ultimately is your operation — from compliance and sanitation to payroll and personnel. “Nobody is going to do these things for you,” says Francisco. “The buck stops with you.”
That’s one of the many things Laura Dunn is taking back to Texas. “It was brilliant and I would recommend anyone who is thinking of starting their own brewery business to take this course,” she says. “I came out feeling much more prepared.”
Other OSU PACE Beer and Cider Workshops:
Beer Quality and Analysis Series May 15 through June 19, online, June 19-23, Corvallis
Craft Cidery Startup Workshop June 11-15, Portland
Cider and Perry Production July 17-21, Corvallis
Origins of Beer Flavors and Styles — Check website for next year’s dates.
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