A Man Who Loves His Beer – An Interview With Terry Michaelson of Craft Brewers Alliance

As I hung up the phone, I couldn’t help the immediate urge to pop the cap off a Widmer Hefeweisen and kick my feet upon this desk, even though my more responsible judgment was bitterly convincing (it’s mid-afternoon on a Thursday).

What the hell- I’m the only one here in my office anyway, and besides, it was time to taste the experience-in-the-bottle that is Craft Brewers Alliance.

I had the privilege of speaking at great length with the top executive of a company who is on the forefront of changing consumer tastes; with absolutely no guarantees for the future other than that people obviously love the product. I couldn’t help but wonder what that would be like, so I asked. What I found was that this man absolutely loved beer.

But he doesn’t love just any beer; just his. Terry Michaelson is the chief executive officer of Craft Brewers Alliance, a craft brewer that makes, markets, and distributes craft beer under the labels Widmer Brothers Brewing, Redhook Ale Brewery, Goose Island Beer Company, and the most recent addition that Terry and his team have been giddy over, the Kona Brewing Company.

Craft also owns and operates a small pub-brewery in Portland, Oregon, and sells a few of their more prominent beers nationally to liquor stores, supermarkets, pubs, and more;  the company’s headquarters are also located in Portland, a city known for being creative and edgy, a fitting environment for this small brewer.

But Terry and I’s conversation really wasn’t about the history of the company, and we didn’t spend a whole lot of time discussing the capital liquidity of the company’s floated shares or the intrinsic value that could lie beneath. We didn’t talk about enterprise values compared to revenues, and we didn’t make any attempts to dissect or analyze the stock’s recent movements using Fibonacci Retracements. We talked about beer.

Let’s start with the merger. In early August, Craft announced it would be buying Kona Brewing Co., based in Hawaii and recognized as one of the fastest growing craft breweries in the last 5 years, for just under $14 million in cash and stock.

The merger was the unanticipated result of a relationship that had been developing and growing for over 9 years between the two companies, and so it made sense, Terry said, to bring the companies together and allow Craft and Kona to aggressively grow their brands and bring more value the now much larger table.

Mattson Davis will stay on as the chief executive of Kona, further solidifying a bond that was already pretty strong. Davis was quoted in the original early August press release as saying, “we’re getting married, so to speak”.

In the second quarter of 2010, Craft reported some pretty decent numbers and developments in addition to the announcement of the merger. The company successfully modified an existing credit facility to more favorable rates and terms, indicating the bank clearly demonstrates confidence in Craft’s business going forward.

Operating profit was up for the quarter by $.4 million, from $2.5 million in the same period last year to $2.9 million for the second quarter 2010. Terry mentions as Craft releases earnings there has been a trend of positive reactions in the marketplace with these earnings, released August 13th, being no exception.

Perhaps it’s a result of the merger and the anticipated jump in production and revenue that will be coming down the line, or perhaps it’s the fact that investors are finally waking up to the fact that craft beer is in higher demand than ever – either way, the company’s stock has been hitting all-time highs.

Every publication from theStreet.com to Investor’s Business Daily has been all over Craft since the stock price starting a steady climb in May 2010 from $3.41 a share on average trading volume of about 17k. Last Friday, September 10th, the shares closed at $8.10 a share with a volume of over 300k.

I speculated to Terry that I think investors always follow consumers, and consumers started changing their tastes a while ago. I thought the ubiquitous and burnt out, water-flavored major beer brands are out and sexy, creative, small craft labels are wrestling their way into drinker’s hands to take advantage of those changing consumer tastes.

Terry agreed, saying “people are seeing the progress and they’re seeing our unique strengths. More and more people are aware of it, and it’s causing a reaction in the marketplace. This is a segment that is fairly new that has tremendous upside. Investors are looking at that, and we’re very excited. Those investors are just looking for something to invest in that they understand and can connect to.”

That makes sense, I thought. After all, what better facilitator of connections is there than a tasty and tall, cold beer? If investors can relate to the product and relate to the business model, they can and will believe in the company itself, and potentially make a lot of money when the product catches on to the mainstream – just look at Sam Adams.

TC: Tell me a little about your marketing plans and efforts. How is your model distinct from the big boys who have exorbitant million-dollar advertising budgets?

TM: For us, this is about creating personal connections and there is a personal approach than what a big brewer would typically do, so we want to build broad awareness of our brands. If we can get people to hear our story and sample our beer, then we’re successful.  

We still focus on some traditional things like print and radio, and are involved in sponsorships and festivals. We are also focused on marketing over the internet with blogs and Facebook and finding places where people are going to spend the time to find out about the brands. We spend only in markets where we think the brands belong to create those long-term connections.

TC: I heard you touch in there on social media marketing. Has that avenue become valuable for your brands?

TM: Definitely, the social media marketing is a big effort for us, because we can get to the consumer and surprise them in a positive way. People want to get to into these brands and understand their story, and then participate with them. They can drink craft beer because it makes them feel good and it’s affordable.

TC: Sounds to me like your company is on the forward edge of two very new and untested frontiers: the craft brewing industry and social media marketing. What does that feel like?

TM: As we look at it, there’s two ways we see that: one, it’s certainly a challenge. We’re paving new paths in terms of how things are done but we also see that as mostly a tremendous opportunity because it allows us to create new experiences for consumers, because overall, they are looking for something fun and something that makes them feel better in their lives. It’s a tremendous opportunity for growth. The challenge isn’t so much creating the business; the business is there, and it’s strong. It’s more how do we make certain we maximize those opportunities because we don’t just want a nice business, we want a great business.

TC: According to OregonLive.com, “Widmer produced 286,000 barrels of beer in 2009 and 184,000 barrels of Redhook. Adding Kona’s production puts the company at 583,000 barrels, or more than 18 million gallons”. Is that a fair assumption going into 2011?

TM:  Yeah, that’s a fair assumption.

TC: How does that level of expansion change the underlying value of CBA?

TM: What it changes for us is that it continues to give us the opportunity to put more people in the marketplace to sell the brands and help people find our brands. It helps us put more dollars in the marketplace to make create those all-important connections. The other thing it does is continue to make us more important to the retailer because the key to all of this is getting some distribution so the consumer can actually have a chance to find the beer and try it. We’re one of the larger craft brewers in the country, certainly in the top 2 or 3, and that’s important because that’s retailers are looking at for.

TC: Is there a defined line between a craft brewer and a typical brewer, and if so, as CBA grows, how close are you getting to crossing that line and losing the “craft stripes”, so to speak?

TM: We’re not there. I think it’s changed where there it’s no longer about a volume level anymore. It’s more about subjective valuations – what type of beer is it, what’s the brand all about, and where does it come from? Retailers are looking at the story behind the beer, and aren’t so much worried about the volume to determine whether or not a beer is craft. It’s about the quality and authenticity of the source.

It’s the segment growing up – look at Kurt Widner, he was a home brewer and was passionate about doing what he loved and having a business. He used to talk about, if I could just get 10 accounts, I’ve got a good business, because in the beginning of this, that’s what people were thinking. Now that the expectations have changed for the consumer, they want to be able to find it and experience it whether it’s on premise or off-premise.  It’s more about the experience and less about how big you are.

TC: So we’re talking about creating an identity.

TM: You’re exactly right. People are excited about having craft beer in their life. It provides them with a unique environment and experience. The pioneers of the industry – the Jim Kochs and Ken Grossmans of Sierra Nevada and Kurt Widmer – those people were really at the forefront and really risked a lot when they were starting their companies. I think the consumer can really connect to that kind of passion those people have behind their beers, and because they can relate, they love the drinking experience.

TC: Tell us about your relationship with Anheuser Busch.

TM: We have a distribution agreement with AB, because this being a three-tiered industry, the only way to get to market is through a distributor. The AB has traditionally been the strongest with the most market share and has high standards in how they deliver and care for the beer. That is a strong component of our business.

TC: AB owns a sizable, albeit minority stake in CBA. Care to comment on the buyout rumors that are flying out there?

TM: What I can tell you is that they are just rumors. We’re very dedicated to continue being an independent company and growing our business. That the plan at this point.

TC: How do you think those rumors came about? They sort of exploded all over the net during August.

TM: It’s hard to tell. I think people look at the changes in the business. We had a modification to our agreement with AB, so that could be a driver. Quite frankly, I think people just start throwing darts at the wall hoping it hits something, because there wasn’t anything specific that we could point to that would lead people to believe that.

TC: What’s your favorite beer?

TM: (Laughing) that’s an interesting one because it’s almost like asking which one is your favorite kid. I’m a fan of the Widmer Drifter, the pale ale. It has a really unique hop profile. I loved our summer seasonal red pilsner under the Rope Swing brand, it’s a great beer. Goose Island has some really unique reserve line beers; the Belgian-style Metilda is another one I really like. I think Kona Longboard is just a great Craft Lager. It’s really easy to drink and has a nice flavor…

Terry drifts off for a few minutes rattling off more beers he and his teams have created. I got the feeling his face was lighting up on the other end of the phone and that this was undoubtedly a man who truly loved his beer. He went on to chat about how he makes it down to floor all the time to check out what new brews the crew is working on.

We wrapped it up. I thanked him for taking the time to talk beer with me, and mentioned how interesting it was to interview a CEO that was literally brimming with delight about his brands. One of the last things he said: “That’s great, I really appreciate that Tom. Thanks for your interest and I always have a good time talking about beer and our company”, as if I couldn’t tell. 

Top 10 Ways to Increase Your Summer Promotional Products Sales!

Is the summer traditionally a slow time for your promotional products sales? It need not be.
While some may view the summer season as a time to relax and kick back, savvy promotional products sales professionals are out there exploring new opportunities and revving up their sales.

Here are my top 10 ways to increase your summer promotional products sales.

1. Get out of the office. The summer is a great time to get to know your prospects and clients better. A casual breakfast or lunch can yield great results. In my own business whenever I’ve had breakfast or lunch with a client amazing opportunities presented themselves. Remember, people buy from others they know, like and trust. Meeting your clients on more casual turf builds that know, like and trust factor.

2. Send a promotional idea of the week email blast. Your prospects and clients are always looking for new ideas. Send them a new, innovative promotional idea every week. Preferably send it out the same day, so they will come to expect it. Keep it short and don’t just push products. Provide marketing tips along with new product ideas. This helps position you as a marketing professional and puts your company name top of the mind as the first one they’ll think of when they’re ready to place an order.

3. Host a Christmas in July party. It’s never too early to start thinking about holiday gifts. Host a Christmas in July party and invite your top clients. Show them innovative holiday gifts at a cost savings when they order early.

4. Form strategic alliances. Who else serves the same target market but is not a direct competitor? Meeting planners, trade show display companies and graphic designers can make great alliance partners for promotional products sales professionals. Explore ways that you can work together for mutual benefit. Consider hosting an open house for all your current clients and prospects.

5. Spotlight fall promotions: Now is the time to be selling fall promotions. Back to School, Halloween, Breast Cancer Awareness month and Thanksgiving are all coming up. Make appointments to get in your prospects office to share new ideas and secure promotional products orders for upcoming events before your competitors do.

6. Explore new networking opportunities. In person networking is still one of the best ways to grow your sales. Get out there in a big way and look with an open mind at new groups to join. Many promotional products professionals have had great success with organizations such as (Business Networking International (BNI). Go a few times before you join to see if the group is a good fit for the markets you’re targeting.

7. Re-activate dormant accounts. Just because someone hasn’t purchased in a long time doesn’t mean they’re not interested. A casual phone call telling an inactive account about an innovative new product or idea that can help them promote their company or service can reinstate an old relationship. At the very least, ask if you can put them on your idea list and continue to send them new marketing tips. The important thing is to keep your company name on their radar screen.

8. Energize your social network. Social networking is here to stay. If you don’t currently have a Facebook fan page or a Twitter account the summer is a great time to get started. Read books and take classes on social networking. Take a look at what others are doing in our industry. The key to social networking is to engage your clients by posting interesting questions or hosting fun contests. Social networking can be a great research tool to find out what’s important to your most wanted clients so you can best meet their promotional needs.

9. Self promote. Self promotions help you sell more. Your core suppliers will have great ideas and special offers to put your logo on. When networking don’t just hand out your business card, give a small self-promotion with your company name such as a box of mints, or a post it pad or a business card holder. You’ll be remembered for what you do and you will get new business. No matter where you are this summer, on the beach, at the supermarket, on an airplane, always have a business card and self promotion handy. You never know where your next big order is coming from.

10. Stay informed. Opportunities abound when you look for them. Consistently read the business section of your local paper and get to know what’s happening in your area. Corporate name changes and new business openings are good opportunities for you to sell more.

Enjoy the summer and keep on selling!

© 2012 Rosalie Marcus

Light year Alliance Review

Light year Alliance is one of the biggest digital phone and broadband internet providers that was founded by John S. Henderson in 2003. The company boasts of 80,000 sq. ft World Headquarters and about 100,000 customers. It is the direct sales section of Light year Network Solutions that serves as its parent company. The customers are mainly residential users, small offices and home office users.

The company is led by an expert team of individuals who have a great deal of experience in the phone and Internet industry. It also consists of a representative who is making efforts to help Spanish speaking people benefit from the company’s services and products. It has also found a place in magazines such as USA Today, the Economist and Red Herring, as per the Light year Alliance news room division. Not only this, the company is involved with the USA Harvest, an NGO that is committed to serve the hungry in the US.

Light year Alliance provides digital broadband phone services and broadband Internet to its customers. The company has various local and long distance calling packages and other options like three-way calling, call waiting, call forwarding besides the usual services. There is an option of unlimited calling to the United States and Canada. However, only the cost of the digital phone service is mentioned on their website. Any other information can be obtained by contacting the company only.

All these products are sold through the independent sales representatives of Light year Alliance. These representatives are paid every week. The company has a program called ‘My Wireless Rep’ which they can use for making business. There is an Online Wireless Store that helps customers to join for the wireless phone service from the whole of U.S. One more novel thing is the Extraordinaire Magazine $2,000 Guarantee. The website claims that if you follow their 4-step process for 6 months, you will earn at least $2000, or the company will pay you the difference.

The whole idea is that the greater number of people that a representative has working under him, the greater will be his earnings as commission and bonuses. It is nothing but a pyramid scheme sales opportunity. The Online store has Flash videos that a probable representative can view for details. However, Light year Alliance website does not mention anything about the training given to them and the start up costs. It is advisable that you clarify all your doubts with an existing customer or representative and then think of joining.