Considerations for Producing Non-Traditional Beverages at a Traditional Brewery

Speaker 1 [00:22] To everyone who's here, thank you so much for coming out this morning. Um, I'm really excited for this panel and have been for some time. Um, you all know that the title of this panel is called Considerations for producing Non-traditional Beverages at a Traditional Brewery. However, I think maybe a better title or an alternative title might be, What You Need to Know about the Next Great Opportunities in Beverage Alcohol, and these folks are going to tell us just that. This panel is all about the major differences between brewing beer and making non-traditional beverages, which for this discussion we'll refer to as alternative adult beverages or AABs. That includes hard seltzer, RTD cocktails, and hard kombucha. We're going to be talking about stabilization and shelf life considerations as well as differences in regulatory fermentation kinetics, equipment capabilities, material handling, QA and QC procedures, and formulation and scale of challenges. Again, the panelists that we have here are experts in these topics, and I'm really excited to introduce them now. Starting off the way from my left is Dan Gordon, who's the president and CEO of Gordon Biersch Brewing Company. Then we have Jessica Just, who's the GM of fermentation and enology at Scott Labs, and then we have Nate Armbrust, who is the techno sales representative for AAB for the AAB market at Scott Labs. My apologies for the tongue twister at the end there. Not a problem, yeah. Um, so as I mentioned, we're going to be talking about AABs again those are adult, I'm sorry, alternative adult beverages. That's what we're going to be using the term AABs for. And Jessica, why don't we start there? What are you hearing from producers and their consumers anecdotally or otherwise about interest and demand for AAVs?

Speaker 2 [02:05] Yeah, I think Ray, and it's probably appropriate for me to give a little background on what Scott Laboratories is because that's certainly the perspective that, um, I'm coming from. So Scott Laboratories, we're going into our 90th year of doing business. Um, we started the day after prohibition ended in 1933 selling yeast. So we have been a yeast company for a long time and, and now we primarily supply goods and services to the beer, wine and spirits industries, right? But really within that, we are mostly wine-centric. We do beer too. That's why we've got Dan here, but, um, and so what I've been hearing from our customers is, I would say, and it's a pretty rapid growth over the last 4 years, our, uh, you know, I won't go into revenue dollars, but probably about 25% of our business now is in this other space, this AAB space, and, um. And what we're, what I'm hearing from customers is usually we get involved in looking at Nate now when there's a problem and there's some issue in scale up, and it used to be very much hard seltzer focused 4 years ago and hard kombucha focused, and now it is questions about everything in between fruits, meats, specialty ingredients, and so. I'm not so close to the consumer, but what I would say is that our customers are needing to respond quickly to the consumers, and that's, that's really changed for us in the last 4 years. Yeah,

Speaker 1 [03:31] you know, and it's interesting because the finalists that are going to be presenting in our pitch slam today, we do have a mead brand. We have a sparkling coconut water brand. Um, you know, yesterday we saw a sake brand, and these are all, you know, coming into the category, coming into that space where people are going to be choosing those over beer at some point, or at least that's the expectation. So Dan, I want to get your perspective as well. You know, it's the same question. I'm curious though, which categories specifically are getting the most traction and momentum, and how has demand impacted Gordon Biersch's production and sales strategies?

Speaker 3 [04:02] Yeah, we have kind of switched over the last 10 years to becoming Primarily a contract production facility as opposed to doing uh just Gordon Berch branded items, um, and what we've been seeing is that The percentage of beer inquiries for us for contract production has has pretty much. Leveled off, but the inquiries on contemporary adult beverages has really broadened, and we're seeing. You know, requests for going into blended wine beverages with fruit juices, a lot in that direction, then. You know the spiked seltzer base, but going into RTDs as opposed to just doing another spiked seltzer, so converting converting it that theme because of the tax advantages of a fermented sugar base versus, say blending with vodka or tequila, you can use flavorings and such to be able to get the same effects from a flavor perspective. You just can't put the word tequila on it, but you're able to make some unique RTD type beverages that are going to take advantage of that. That, uh, that tax advantage which is is tremendous. We're talking in California with the state taxes, uh, just that alone is around a $7 per case difference. So, so there's there's that kind of creative, um, unique concoctions I would say that are, that are coming forward. We've also done in the past, um, uh, on a contract, a sake-based sparkling beverage. Um, we're doing a lot of seeing more inquiries from non-alcoholic. Um, really, uh, gourmet, we're, we're doing two items, uh, two companies that are in the mixer categories, uh, which are the non-alcoholic, which is really relevant relevant to what we've done for partnering with, uh, Scott Labs. So, so we're really seeing a broad diversification, um, from into these, you know, contemporary adult beverages and non-alcoholic and going into mocktails even.

Speaker 1 [06:06] I mean, clearly it seems like the opportunity is there, you know, based on what you're seeing on the ground, you and your team, Dan, you know, Nate, clearly it would seem like beer producers would benefit from diversifying their product offerings and introducing AABs into their portfolios. Clearly that's easier said than done. Let's discuss some of the most important considerations for doing so from the standpoint of production and scaling, going from test batch to industrial level.

Speaker 4 [06:35] Yeah, thanks. Um, the, I, I think in the, in the, in the past at a traditional brewery, the path to innovation has been, um, you know, uh, formulating new, you know, gra grain bills coming up with new beers, and those kind of start out in the production facility. Um, and, and you're able to kind of see what you come up with sort of in a production environment. A lot of these AABs start in a lab on a benchtop and are more formulation based. So some considerations there are, you know, what ingredients are you using, how are you incorporating those into your process, into your, into your products out in, you know, you may not have agitated tanks to incorporate sugar or other, you know, fruit purees, fruit juice concentrates, things like that. Um, so it's considering how to implement some of these new ingredients that you've never had in your facility, into your facility. And I know being in, you know, product and process development for a good while, um, in, in my past, um, in a lot of cases where there's a will, there's a way you can kind of figure out how to do that with equipment, um, you know, you have available, or, you know, figure out how to get, say, sugar into solution. Um, where the trick I think comes is At the packaging step where now you have some of these new ingredients because beer, you know, on its own is fairly stable in product. You don't have, you know, any, you know, necessarily any residual sugar or fermentable sugar left so you've got a fairly stable product once you introduce sugar in, you know, in granulated sugar form or a fruit. concentrated purees, you now have a product that is quite susceptible to microbial spoilage. And so how are you treating that? And there are a number of ways to address that. Not a lot. The list is actually fairly short, but they all kind of come with some considerations capital investment, you know, whether it's tunnel pasteurization, using persistent preservatives, using Velcryn, which is a product that we offer to protect the product at the point of packaging. Um, those are all, all considerations to try to make your product taste as good at the end of shelf life as it did on the bench when you formulated it

Speaker 1 [08:34] and keep it safe for the consumer. Correct, yeah, yeah, um, let's stay on that track, um, you know, Dan, how do material handling and QA and QC procedures come into play when you are introducing AABs into your brewery?

Speaker 3 [08:47] Yeah, we're, we're extremely cautious, so we, we go into more of the traditional. Uh, SQF type type mentality, um, hairnets, you know, everybody's wearing gloves, the handling is, is super cautious. Um, we're very, you know, when you're processing and receiving, uh, fresh or frozen, you know, juices, fresh or frozen, you got to be really Um, ultra cautious on, on, on CIPing every, every vessel that it's going to be received and you know, we try to maintain a level of sterility throughout the entire process, so, um. Well, not try to, we have to. And, um, and our biggest fear is, um, you know, we're we're constantly working, you know, about pathogen control, so we're using internal and outside labs for verification. One is just to be absolutely certain that um that the finished goods are, are, you know, pathogen free. As well as spoilage free and uh from a liability standpoint, you mean you can't just rely on internal laboratory controls because uh if you don't have that paper trail, um, obviously a lot processing, a lot of batching, which, you know, is, is pretty, pretty common amongst, you know, the, the larger breweries in the country. Middle sized ones are going to do. Um, the plus minus 1, as the FDA requires on everything in regards to non-alcoholic in particular, you're going to have to really be heads up to make sure that you're tracking every, every input, um, that's going into the production process. And I think the, um, the biggest concern is, you know, when, when you're dealing with alcoholic beverages, you, you do have that, that semi-safety belt of knowing the alcohol is there. Um, and with non-alcoholic, you know, we're, we're, we're. Testing every single seaming head on the canner with an ATP swab, um, and, and really strictly if if it doesn't, doesn't meet the minimums, you know, if we're not getting an ATP swab count of 0 to 2, um, we're re-sterilizing. We're just not taking any risks, whereas with beer we wouldn't, we wouldn't worry as much with hard cider we wouldn't worry as much as Spike Seltzer, but you get into these NA items, you got to really up your game from, from a QCQA standpoint.

Speaker 1 [11:10] Could be a PR nightmare if uh some of the QA QA procedures, QA QC procedures are not,

Speaker 3 [11:16] yeah, and costly. You could lose your insurance pretty quickly. Yeah, you know, those are, those are things you want to consider. Uh, we, we, we kind of baby stepped our way into non-alcoholic with, um, and we were first thing just glass, um, and that was with, um. Um, a ginger beer that we did for the ginger people that, uh, was delicious, by the way, and, uh, they just didn't have, you know, the, the legs to, to market it, um, adequately, but the, um, we, we were really able to get comfortable with it in a small step, you know, for, for about 5 years before we went into a large scale production. And that was in glass, and glass, as you know, comes in, you know, glasses produced hot temperatures, palletized while it's still basically sterile, and then sealed up with stretch wrap along with the shrink sheets, the layer sheets on it. With cans, you don't have that luxury. If you notice, almost all the cans that are delivered are basically open air, and I don't understand why the can industry does that, but that's certainly you're starting. Really with, you know, trying to swim with a 100 pound weight on your, on your feet when you know that just about every can or uh or lid is coming in with some kind of Topical contamination, so to speak, and that's where we got together and uh and started applying Velcerin to uh, to our, our non-alcoholic canned items.

Speaker 1 [12:49] Yeah, um, just for context, what is Velcerin, Jess?

Speaker 2 [12:52] Uh, Velcer and, so Nate alluded to it earlier, and uh this kind of goes back to the stability conversation because there's a lot of differences between beer and AAB, but I think the one that is maybe the most critical is this issue of stability, right, because in traditional beer and wine, even you have a fairly stable product, um, even if it spoils, it's not gonna hurt anybody, but if something's not stable, not just from a pathogen standpoint, but even from re-fermentation. You have the possibility of a can exploding or a bottle exploding, and that's, that gets more into not just PR but human health, right? So I am coming back to your question. What is Velcryn? Um, um, and so, um, so Velcryn is a way to stabilize, um, products that contain residual sugar at the time of bottling, and it's, there's a surprisingly few numbers of ways to really stabilize things, anything, anything in a package. There's basically 4 options. And I would love it if this audience came up with 5 or 5 or 6 more, but there's 4 options. There's pasteurization, which we all know. Thank you, Louis Pasteur. Thank you, beer. Um, so there's pasteurization, there is persistent preservatives, so it'd be something like sorbate, benzoate, those kinds of things. Um, um, if you're really on your game, you might be able to get away with sterile filtration, really tough, and then there's Velcryn. And um it's a, it's a chemical that's added right at the time of bottling that can, it's really effective against yeast and so it can prevent recontamination and and I'm assuming, Dan, that you went that way because you didn't have pasteurization capacity or you wanted to somehow add another layer to your

Speaker 3 [14:31] stabilization. We actually, we actually do both. We have a flash pasteurizer, um, so we're, we're being extra cautious, so we're making sure the liquid comes in, but the Velcro is primarily to Um, protect us against contaminants in the can itself, so the, the canned material and the lid material, that's what we're, what we're asking for for the Velcrom production. So we're, we're using a magnification of, of, of two processes. One of the reasons. We, you know, tunnel pasteurization to me is kind of a four letter word is, is, you know, there is going to be the greatest amount of flavor change that occurs to any beverage when you're heating it up for such a long period of time and then cooling down so that the flavor changes may not be as prevalent initially, but certainly it's accelerated the aging process and oxidation process downstream to an exponential level and the The other thing is that when you're doing highly carbonated beverages and you're doing tunnel pasteurization, that internal pressure obviously gets heated up to a much higher level, and then the pressure inside the can may burst the stem if you're dealing with, you know, something like a sparkling water that's 3.5. Volumes of CO2, you're going to have that danger and the same with glass you'll see a lot of these high-end mixers and such are coming in these really beefy bottles. I mean they're super heavyweight bottles to prevent explosions during tunnel pasteurization, and the cans, the can companies won't, won't really guarantee anything, you know, over, over like 4 volumes or so of CO2. Uh, in a tunnel pasteurizer, so, and not 4 volumes, excuse me, 4 bar. So that's a, that's a problem, you know, when you're, when you're doing highly carbonated beverages.

Speaker 1 [16:27] Uh, I just want to note, we will have Q&A with the audience at the end of the conversation. I'm sure there are questions that are going to come up. So if you have questions, please hold on to them and then we'll have a microphone kind of roving, uh, to get your questions, uh, amplified. Um, certainly, product safety is one big concern, um, one big, uh, thing that you have to think about when you are introducing AEBs into your portfolio. As we alluded to earlier, regulatory is another big concern as well. Um, this is sort of a question for all three of you, but Nate, we'll start with you. Um. You know, there are significant differences in terms of how AB beverages and beer are regulated. What factors should producers be knowledgeable about and what are some of the biggest, the biggest stumbling blocks in that area?

Speaker 4 [17:12] Yeah, I think, um, especially kind of as Dan alluded to, uh, if you've got, you know, production capacity, you've got a bottling line that can, you know, you can put any liquid you want into it, um, thinking about what what products you're going to produce, um, and then what regulatory, you know, compliance you have to adhere to, especially if you start to drift into the non-alk space, um, then you're kind of in a whole new conversation with the FDA and, and food safety plans that get Get pretty intense pretty quickly that um is is quite common in the food in the food space. Um, so I would, I would certainly consider, um, you know, on the non-al side, uh really kind of, you know, consulting with food, food safety consultants, things like that to make sure you're in line with, um, you know, on the food safety side of the micro issue.

Speaker 2 [17:58] Yeah, and, and then, um, with the same within the alcoholic space, I would say there's a difference in regulations even with that because, um. I mean, we're talking about AAB very broadly. We, we define it at Scott Labs as non-wine, non-beer, or non-spirit, anything like that, but really the TTB does not define it that way because if mead is a wine, right, hard seltzer is a beer, um, a hard seltzer being made from fermented sugarcane is a beer, hard seltzer made with from a cider base would be a wine, right? So I think Um, if you're a traditional brewery and you're starting to make things that are considered wine, that's also very important to understand because wine is regulated very differently than beer is regulated. The labeling concerns are completely different, so I would say even on the within the alcoholic space there can be quite a big difference in, in, in those, especially in the labeling ingredients and what can be used and how, how to deal with the TTB.

Speaker 3 [18:58] Yeah, it's, it's a maze uh when you start with the TDB and the ABC, the you know, state, state compliances, um, it, um. It's really hard to navigate, so we have a type 1 brewing license, a type 2 winery license, a, a rectification license for blending that's all with the state, and then you have different licenses in California where um you're going through the same process and the taxation rates are different. The definitions of, of specific beverages get very convoluted if you're gonna. Imports certain alcoholic items like tequila for instance you have to deal with the CTA, which is the Tequila Authority in Mexico, which could take 6 months before you could even Get the approval to uh to be able to import tequila to blend into something a margarita type beverage or some, uh, you know, or another related one. Even Mezcal has their own regulation there, so you're dealing with with the feds, states, and then, then there's some convoluted technicalities, for instance, hard ciders that are. that are considered You know, in California you're allowed to do hard cider so long as you have a brewery that's over 60,000 barrels. You don't need a winery license. The feds say you need a winery license for doing hard cider. The minute you add any other flavoring to hard cider, for instance, you're having to reduce your carbon dioxide level to become a still wine. So there's this massive compliance element that is is just Really, um, a full-time job for one person just to navigate and make sure that you're not going to screw up when you get, get that favorite TTB audit going in, which is invariably going to happen for, for medium sized operations at least once every 55 to 7 years, and it's, it's like passing a kidney stone. And we don't want to do that. Then from the food safety side, obviously, yeah, we did hire a a food safety consultant. We basically went through all the stages of putting together documentation and tracking mechanisms and policies. That were at the SQF Safe Quality Food Level, Level 8, which is about as high as you can get. We didn't maintain it as far as the license goes because you really need a full-time person to do that. But what we do is use the best in common practices involved with that. And, uh, and so long as you can document that, um, to the retailers that you are applying those processes and, and, um, and doing best efforts in that regard, you can usually, um, you know, pass the sniff test for, uh, for manufacturing the non-alcoholic beverages.

Speaker 2 [21:54] And Dan, you bring up a really interesting point with that because I was just, we're speaking about regulatory compliance and the TTB coming in, but in a previous life, I before I worked at Scott Labs, I was in production and A lot of times it's not just the regulators that are looking at what you're doing, but it's Costco, it's Trader Joe's, it's Whole Foods, and so to get many of these products even into any sort of more professional distribution, you have to be adhering to some of these standards, even if the, you know, California Department of Ag isn't coming in your facility and inspecting.

Speaker 3 [22:24] Costco comes in every 2 years to, uh, to inspect our facility with outside auditors. Yeah,

Speaker 1 [22:30] it's funny you say that because I actually visited a A kombucha brewery 3 years ago and I was like, everything looks like it's held together with spit and glue and uh but he had said, well, Trader Joe's had come and seen us and made sure that we were compliant in every aspect of our production and OK, I mean, I guess it works. So um. You know, this is going to be kind of a tricky question given that Dan is right here, Nate, but, uh, you know, when you're vetting co-manufacturers and looking for them to develop and scale your AAB products, uh, what do you, what advice do you have?

Speaker 4 [23:06] Um, yeah, yeah, finding the right co-packer for your, for your brand and for your product, um, you know, can certainly be challenging. I, I live up in Oregon and, and, in, in the past, I've, um, I've utilized co-packers on, on products and, and, um, uh, things that I've worked on, and it can be, it can be a challenge finding kind of the right fit for the size brand that you are at the moment. Um, so it's, it's certainly finding somebody who can who can handle actually producing your product in, you know, combining it, blending it, formulating it, putting it together, but what you really want to do is like kind of look at what your product product is, what your product specs are, and how you're going to make that product stable in a package, whether it's a can or a bottle or a keg. And really look at what capabilities they've got there. Do they have a tunnel pasteurizer for, you know, in package pasteurization, which can be, you know, quite effective, but as Dan said, it's there, and as I've experienced as well, there's, um, you know, certainly it can be a flavor impact, even at low level attempts for, for tunnel pasteurization. I think there's always going to be some sort of compromise. Some products handle it better than others, but it's something to certainly keep an eye on. Um, but in the case of like Gordon Biersch, they've got kind of a perfect setup where they've got HTST, high temperature short time flash pasteurization available just prior to the ability to dose Velcorin. Right before it goes into the package, so they've got this kind of two-step where they're able to actually address food safety issues with the HTST, you know, flash and then protect the product from contamination, refermentation with the with the addition of Velcorin. So really looking for what capabilities that co-packer has to put your product in a in a package and then have it have it stay. Um, the way you want it to through shelf life until it gets to the consumer, I'd say that are the main considerations. All of the, as I kind of mentioned earlier, how do you get sugar into a tank? Are you dumping it into the, you know, the man way of a bright tank and recirculating it? That's not the ideal way to do it, but it can work in, you know, a way to start. Ideally you've got kind of a mix and blend system to incorporate some of these new ingredients and Um, but, but ultimately you want to make sure that they're the product that they're putting in the package is not going to, you know, begin exploding in the warehouse five days from now.

Speaker 1 [25:27] No, that's not good. This is a complex conversation. I think many producers are kind of getting up to speed or will be getting up to speed on some of the issues and challenges facing, you know, AAB production. That being said, you know, is it advantageous to have someone who is highly knowledgeable about the subject with you when you are vetting these code packers and commands.

Speaker 4 [25:49] Yeah, certainly, and you know, as Dan alluded to, whether it's a food safety consultant or a formulator, if you're working with a formulator, they can, they certainly have access to, you know, certain co-packers that might have certain capabilities for the for the products, but But you definitely, you know, want to ask the right questions, and, and really kind of, um, I don't want to simplify it, but really understand like, what, what are the risks with your particular product? And are those risks addressed at, at the co-packer, like with, with, with uh Dan with Gordon Biersch, there isn't a tunnel pasteurizer, but there's this two-step, um, you know, flash pasteurization Velcroin, which from a product quality standpoint is preferred um over tunnel pasteurization. Um, just from, you know, general flavor preservation. Um, yeah.

Speaker 1 [26:37] On the flip side of the coin, you know, Dan, as you mentioned, Gordon Biersch has increasingly worked with producers for co-manufacturing operations. Um, what are best practices for positive outcomes and reliable relationships with these producers?

Speaker 3 [26:52] Um, having clearly defined specifications is, is critical and, uh, you know, making sure that, that it's, it's well documented that the, uh, um, you know, we, everybody in here, you know, is familiar with brew sheets, you have to have a similar, similar, uh, process flow diagram for, for, uh, the production of whatever beverage so that everybody's on the same page. Um, what's interesting is we, um. We work with some companies that do bicoastal production, so they're going to have two production facilities doing the same thing, and they may not have identical formulations going on, um, and then they have flavor differences because there's some, uh, they started off with one company that doesn't have the same capabilities of another, and you find out, for instance, the fermented sugar base from 11 location. Is is screaming with off flavors because they're not using the same same technology and process and that that generally occurs when there isn't someone of a technical background involved with the the contracting company um so it really really is advantageous to make sure that whoever you're is is. Negotiating from the side of of the uh the ownership side of the the um contracting company that they have some technical expertise or that you encourage them to to make sure they engage somebody so that there's not just this one sided OK that the contract producers saying yes, make me hard cider well, you know. That's a big range. How much residual sugar? What's the type of apple composition, all these things that go into it. So if you're involved in the product development side, obviously you're going to be able to help write those specs yourself, but in a lot of instances the companies are In their infant stages, they're well funded. That's the first thing they get their way in the in the door, but they don't have the true specs written out on what they want to have made and, and making sure those those specifications and processes are clearly defined is really critical.

Speaker 1 [29:06] We've talked about some of the problems. Let's talk about some of the outcomes and let's scare some people. Jess, you know, as we've discussed, expertise is really important. Experience matters. You've worked with a range of fermented beverage companies. What are the biggest problems financially and otherwise that you've seen when producers undervalue that expertise?

Speaker 2 [29:28] Oh, Ray, where to start? Um, and obviously we're a bunch of technical people, so we're like, you need some technical people to help you out, otherwise you're gonna get in trouble. Um, um, I, I think, um, Uh, two examples, recalls, um, and there's a couple of ways, actually the most common cause of recalls are, um, undeclared ingredients or allergens, that's really common, so that kind of gets to that compliance piece, but recalls are a tremendous pain in the ass. They're costly, they're complicated usually because people aren't doing recalls every day, hopefully, so they, they don't know how they're, they work. So that's, that's a, that's a, that's a big problem, um, and then I would say it goes back to, um. If you do have product failures or you have really inconsistent product or you can't provide product consistently enough, you will lose distribution, you will lose Trader Joe's, you will lose shelf space. So and I'm not sure if that kind of falls in line with the question and, and kind of needing to know some of these, these technical things, not just exploding bottles, but also just interruptions in production, right, can really affect your relationship with the distributor. So, um, I think, I think that's, that's critical.

Speaker 1 [30:38] Um, you know what, we've talked about a few of the, uh, beverages that fall into this AAB category. Um, I want to break a couple down individually because I'm sure some people have individual questions about different types of products. Um, you know, when it comes to things like You know, top of mind for, for our organization is obviously uh RTD cocktails. Um, Nate, what are you seeing in that space right now as um some of the most critical aspects of producing RTD cocktails and things that really people really need to pay attention to? I know Dan mentioned uh earlier about tequila and, you know, the challenges in being able to source and produce a tequila beverage, but what are you seeing in that space?

Speaker 4 [31:18] Yeah, I think, I think, again, the, the biggest thing to consider is, is stability and um product quality across shelf life, because a lot of these products, again, um, you know, have, have added sugar, um, not necessarily residual sugar in um in the spirit based cocktail space, but, but certainly sweetened. Um, and those, those, um, you know, don't, don't do well in, in can, even, even at some of the higher alcohol levels, a lot of the RTDs are coming in at, you know, 667, 8% alcohol. Some of them are a little higher in the 10 to 12% range. So you're starting to get some protection from the alcohol itself, but they're still susceptible to, um, particularly refermentation. So Um, I think that's, um, and, and I think, you know, people are using persistent preservatives in that space, but I think really just kind of keeping in mind. Um, how that product tastes on day one versus, you know, day 90 or day 180, whatever your shelf life is, and really trying to maintain that product quality across shelf life with, you know, some stability measures at packaging.

Speaker 1 [32:18] Yeah, Dan, you touched on non-alcoholic beer. Could you expound on that particular category?

Speaker 3 [32:24] Well, clearly it's growing and the technology is still expensive though, so you know when you're looking at getting into any production. Uh, first you have to make the beer, then you have to de-alkalize it and recarbonate it, and that's, um, you know, an added cost, uh, so. It's amazing how expensive it is to make good non-alcoholic beer. The technology has gotten a lot, a lot better, and I know there's, um, we, we actually looked at it, um, the only surprising element for us when we were, were getting ready to to pull the trigger on putting in a unit. Is the amount of refrigeration it requires, um, the, the load for us to operate adiop unit that was using a, you know, vacuum distillation, which is one of the, one of the more popular prevalent uh techniques I believe that, you know, Heineken Zero is using, for instance, it, it gets to double your refrigeration demand. So for instance, when you have 300 horsepower of compressors or 400, except for Jeff who has natural refrigeration in Juneau, Alaska, he just opens up his windows, um, you know, you're, you're looking at adding on another 300 to 400 horsepower of compressors to be able to handle a Dalc unit. So it gets very expensive from, uh, from an infrastructure, you know, the investment on the de-aling equipment is probably going to be in the. You know, a small system that can do 22 hectolitres an hour or so, you know, you're getting into the 800 a million range pretty quickly, plus the added cost of refrigeration can be another 5000 pretty quick. So it's a big investment and when you're looking at only producing, you know, 15,000 barrels of, of Dial beer, so what you're gonna have to have is some, some contract producers or some centralized production that That really can crank out, you know, $30,000 to 50,000 barrels a year, um, cost effectively to be able to produce it, and I think, I think that's the barrier right now is, is who's going to be able to want to go into that that sector to provide these services for, for everybody, and that, that wants to jump in and there's some, some obviously great brands and it looks like it's going to be a gigantic growth category over the next, uh, next decade.

Speaker 1 [34:38] Really interesting. It's a high category, but a lot of barriers to entry, it seems.

Speaker 3 [34:42] It's a pretty big one to make good non-alcoholic beer. It's, uh, it's very, very challenging, um, you know, you have to have great equipment to do that.

Speaker 1 [34:51] Jess, um, I don't know, is coconut a fruit? It's kind of a weird question. I know to lead off

Speaker 2 [34:57] with. Oh, I love the weird questions and you, if you're talking about coconut fruit, you just described maybe in a microcosm like what we're up against, like, because, you know, we're food scientists, food people, and we get, and there's my colleagues in the audience, we get questions and it's like, oh, coconut fruit with turmeric powder and acai berry. OK, right, we can do, uh, so I don't, I don't know what the question is, but it already scared

Speaker 1 [35:19] me exactly. It's, you know, we're seeing a lot of fruit infused seltzers, you know, this again we saw one yesterday, uh, coconut-based spiked seltzer. Um, what are some of the considerations when you're thinking about that particular space?

Speaker 2 [35:30] Um, I feel like this conversation's become about stability, right, but the first thing I thought of is what is the pH of that, right, because there's sort of some magic pH numbers where a lot of microbial overgrowth can happen and then below that you're kind of in the safe zone and with just coconut, my first, and I don't know about coconut, but my first thought was maybe it's higher pH so there could be microbial problems. You want to take, what would you do, Nate?

Speaker 4 [35:55] No, no, you're exactly right. I mean, that's why a lot of those, um, I don't know the exact pH of a typical coconut water offhand. Maybe somebody, somebody does, but what you typically see a lot of those coconut waters in the in a very heavy, heavy cans. I think they're, I think a lot of them are retort process. Um, I don't know if coconut water actually takes acidification. Um, very well. Some products do. You can acidify and get into a pH level that kind of makes you, gives you a blanket of safety. Some of them don't. Coffee is very challenging to acidify and make it still taste good, but coconut water, like especially with the product that Um, that we've looked at in the last couple of days. Um, that's got, you know, this added, um, it's got alcohol in it. Um, it's got some other flavors, some other fruit juices. My guess is the pH is low enough that it kind of gives you that protection. I think we want to see things below 4.2 or so, even lower if possible. Um, but yeah, that does get into the space. And, and from a food safety standpoint, if you're, you know, formulating products on the bench, PH is probably something you keep track of in in in brewing for sure, but not something that's a critical, you know, you think of it in a food safety, in a food safety way, where you really need to with some of these products, especially their high percentage, high pH bases, you really have to have to watch pH because as Jessica mentioned, you get, you know, above 4.2, and then pH can start to drift, and then you really get into some, some areas of, you know, potential pathogen growth that Is not, not something you want to play with and, and talk about it, that would be, that'd be a bad recall.

Speaker 1 [37:28] Yeah, um, momentarily I'm going to ask Jess if a hot dog is a sandwich, but I do want to see if there's anyone in the audience that has any questions. If you do, please raise your hand, and one of our, someone from our team will come over with a microphone. We have this gentleman right here.

Speaker 5 [37:45] Hey, good morning, uh, Brian Carlin with Rationale Brewing. Um, this is a complex question, so I'm gonna just, uh, set up the answer. Primary feature, primary liability to reverse osmosis versus tunnel pass or versus, um, vacuum distillation.

Speaker 1 [38:04] Who wants to start?

Speaker 3 [38:07] The The refrigeration demand on reverse osmosis or, you know, ultra molecular membrane filtration is, you know, it's less, so the investment cost would be lower for the filtration method. There's no question about that. The flavor stripping might be a little different, and you know, the reblending that you can do with vacuum distillation, there's an essence collection, and then it can get reblended in. Uh, to get to the 0.5% alcohol that's, that's allowable to still be a non-alcoholic beer, um, that's one of the, the, the advantages right now, but I haven't, um, recently done the, the side by side. I'm trying to get some, some samples of that and. The one company that provides the technology for both of those right now as far as I know is Alpha LaValle. Um, I, I, I believe Gaia also has, has a double choice on on the systems too. So those are, those are the ones that you, you want to look at because yeah, the, the, uh, the membrane might be, uh, just as good from a flavor perspective and certainly is, um, is more affordable. Um, from, from an investment standpoint and then like I said, the refrigeration demand, so it may be easier to pop, pop in and then the, uh, the membrane is, is more scalable so you can, you can parallel hook up, you can start small and grow, just add on additional, additional, uh, chambers, um, which, which is also nice because you can, you know, scale it up more gradually without the, the really intense upfront investment cost. So that's, those are, those are kind of the, that's my, my little bit of an outlook.

Speaker 1 [39:53] Fantastic. Any other questions, please raise your hand and our esteemed, my esteemed colleague Joe will come over. We have another question over here.

Speaker 6 [40:08] Yeah, can you guys speak to the yeast management, yeast propagation types of yeast that are used more in these types of beverages? Obviously some vast differences in performance and killer strains and other things like that. Just maybe touch on the different varieties and types of yeast that are needed.

Speaker 2 [40:25] Well, full disclosure, we sell yeast, so glad I won't be giving you any advice on how to propagate. I don't know why you guys brewers are always propagating your own yeast. Um, on the hard seltzer side though, um, and, and I really look forward to your perspective on this too, Dan, but on the hard seltzer side, what we have found is that, um, when you're asking a yeast, any yeast strain to ferment something that's basically just sugar with no nutrients or anything that's really difficult. And so you need a really big population to go usually into that sugar water to ferment that. You can propagate on your own. Maybe even use your own beer base or whatever to propagate, but a lot of the claims for hard seltzer are based on gluten-free or those kind of things, and so it makes it kind of difficult to propagate your own yeast and to get to the viability and vitality that's necessary to go into what's a relatively harsh environment, so. I, I think the biggest consideration for yeast strains and yeast management, I'm going to encourage you to buy active dried yeast strain from us, um, but to, to use a really, really strong fermenter, um, yeast strains that are more in the category of the champagne strains, those are, they usually have low nutrient requirements. Um, they're able to withstand a lot of stress. I mean, those are yeast that would come out of the second fermentation of champagne, which is low pH and a lot of pressure, so. That's broadly, I could talk for, I don't know, 4 hours on this. I'm not going to do it, but that would, that would be what I would recommend. How, how are you managing?

Speaker 3 [41:51] Yeah, we, we, we're one and done. So it's, uh, it's, we're we're buying pitchable quantities of, uh, of dry yeast for fermented sugar base, and we're typically fermenting it at below the recommended temperature. Um, we find that it produces less volatiles and uh. And yeah, the nutrient base, you have to have that special formulation and and they they package it together. So if you were to propagate it, you would churn up and use up all the nutrients that are already added. So I wouldn't ever try to try to propagate a fermented sugar-based yeast. And even for when we're doing hard ciders, we, we really Look into the specific yeast strains and we'll, we'll test out, you know, when we were originally getting into it, we tested 5 or 6 hard cider, um, yeasts and beer yeast to, to see which ones might, might produce the best flavor profile. So it was, it was a, you know, a little bit of an R&D process, um, but those we, we are able to propagate in-house. And We, we do a lot of propagation in our place. We have 3 scalable propagators that we basically are using as bioreactors, so we pull 50% pitch on, on the 1st, 1st brew or the 1st, 1st tank of juice that comes in and um get based on cell counts and such and then regrow it in 24 hours. Um, so we're always, we're always growing yeast and at scale, scale quantities.

Speaker 1 [43:24] We have time for about one more question back here, Joe. Thank you for the talk. Uh, quick question, so you were talking a little bit about high

Speaker 4 [43:33] pH, um, products. If you had one that wasn't alcoholic and you didn't want to use a retort, what options are there? Um, high pH, uh, don't want to retort. It's really, um, The only The only, you know, viable option, I think is, is UHT ultra high temperature processing and aseptic packaging. So, you know, tetrapack. Um, there are some other, um, near aseptic, um, filling scenarios and PET and things like that. I don't think it gets you true aseptic, but, um, yeah, UHT and so the, the, you know, pastures, a lot of products can take pasteurization, OK. And, and maybe there's a slight difference. It's You know, potentially acceptable, probably acceptable considering what it gives you, you know, shelf stability and shelf life. Um, retort though is a is a whole other beast because pasteurization we're talking, you know, maybe targeting 160 °F for 10 minutes is kind of a standard. You can go up and down, longer, shorter times based on temperature. So 160 is, you know, you can kind of picture that retort. We're talking 250 °F. There's not It's definitely going to have an impact on, on the product. It's not usually favorable, especially when in a beverage, um, with, you know, fruit flavors, things like that. Um, so retort is, is, is a challenge from a product quality standpoint. UHT is, while it's actually a higher temperature, I mean, you're typically in the 200 and 80 to 290 °F. It's for a much shorter time. That retort, you're sitting at 250 for an hour is kind of a typical process. Um, UHT is, you know, 285 degrees for, you know, a number of seconds. So it's a quicker up and down, it's a higher high. Um, but your, your product is in that zone for less time. So it still certainly impacts flavor. I think potentially a little bit less than retort depending on product. Um, but that's really the only other option. And that, you know, you talk about co-packers and accessibility to co-packers that have retort capability or UHT aseptic capability. Um, you know, you're looking at, you know, pretty big minimums, pretty big barriers to entry for, for getting in those types of, um, production scenarios. Uh, but those are kind of the, the, really the two options for, for higher pH, and we're talking above, um, you know, technically, 4.6 is the line, um, but nobody likes to hover around that line. So we like to see things. And by we, I just mean collectively the, uh, the human race. We enjoy a pH of 4.2 or less to be considered a high acid beverage. You get above 4.2, you start to hover into areas where things can drift, and you can end up in areas where there are some, some bad pathogens that you don't want to deal with. So that's where the retort and UHT comes in, comes in line.

Speaker 1 [46:26] Well, I think I can speak for everyone by saying this has been an excellent panel. Thank you so, so much for all the advice, information, expertise that you've offered to our audience. Um, Scott Labs has a table outside, just outside the ballroom. If you have follow-up questions, Nate and Jess and the team will be there. I highly recommend you do so. Dan, you'll be around for the rest of the day, yes? Um,

Speaker 3 [46:46] actually, I have to head back

Speaker 1 [46:47] to the brewery. Dan won't be around for the rest of the day, but, um, I'm sure you can get in contact with him if you need to. Uh, but in the meantime, thank you all so much again.