Portland-based Lone Pine Brewing Co. brewer and co-founder Thomas Madden has been peering into the future to a time when the market for locally made craft beer in Maine will become saturated.
New craft breweries are opening in Maine every month, and there is only so much market potential among the state’s relatively small population. Madden said Lone Pine already is selling in six nearby states, but the farther away from Portland you get, the less cachet a Portland-branded beer can muster.
Unless you go international, that is.
Lone Pine co-founder Thomas Madden in the Gorham brewery. Photo by Carla Jean Lauter
For the past three years, Lone Pine and scores of other Maine breweries have showcased their products internationally through a traveling Maine beer exhibition called the Maine Beer Box. The effort has paid off for several participants with a total of over $400,000 in export revenues as a result of Beer Box connections.
“We’ve gotten interest from Spain; we’ll be sending beer to Japan probably in February of the coming year,” Madden said. “People who are in the industry of importing beer from the U.S. are paying attention to us and have been reaching out. The Maine Beer Box is sort of the spark that fired out that opened our eyes to overseas opportunities.”
The events, organized by the Maine Brewers’ Guild, involve a 40-foot-long refrigerated shipping container equipped with 78 beer taps and filled with Maine beers. The project launched in 2017 with a trip to Iceland and has followed up with visits to the United Kingdom in 2018 and Canada this summer. About 90 of Maine’s roughly 150 breweries have participated in at least one Beer Box event.
Brewers’ Guild Executive Director Sean Sullivan said the Beer Box’s primary objective is to bolster Maine’s reputation as a top destination for lovers of quality craft beer by appearing at foreign beer festivals, and that anecdotal evidence suggests it has been successful in that aim. However, with an assist from an export specialty bank, he said the industry-funded traveling beer expo is starting to bear additional fruit in the form of new foreign trade opportunities.
According to the Brewers Association, a Colorado-based national trade organization for small and independent craft brewers, Maine breweries sold more than 350,000 barrels of beer in 2017, the most recent year available, creating an estimated economic impact of about $475 million. Sullivan said the Maine guild’s members recognize the need to develop new markets for their products even though the state is currently enjoying a craft beer boom.
“The industry is evolving so rapidly that it’s critical brewers are thinking about how to not wait until they need to find a new market, but begin to build a brand before the need is there, and that’s part of what we’ve been doing with the Beer Box,” he said. “What we’re trying to do is not wait until we need to seek new markets out of desperation.”
FOREIGN OPPORTUNITY
This year alone, Maine breweries have reported over $300,000 in foreign sales as a direct result of connections they made while participating in Beer Box events. Another non-brewery guild member and Beer Box sponsor has reported nearly $125,000 in overseas business.
Sullivan said most of the guild members’ exports thus far have been to the Beer Box’s three destinations: Iceland, the U.K. and Canada. However, other destinations have included France, Denmark, Norway, Italy, Belgium, Australia and Japan, he said, and a South Korean beer importer is now in talks with seven Maine breweries about bringing their brands to its home country.
Five Maine brewing companies said they have done $50,000 to $75,000 each in export sales so far this year as a result of the Beer Box: Rising Tide, Geary, Baxter, Sebago and Foundation. Most said 2019 was their first year selling any significant amount of beer into foreign markets.
Portland-based Geary Brewing Co., the state’s oldest brewery, is one of a handful of Maine beer makers that have developed a relationship with Beer52, a U.K.-based beer-of-the-month club, as a result of a November 2018 Beer Box trip to Leeds, England. In April, Beer52 chose Maine craft beer as its monthly theme, resulting in large orders for Geary, Baxter Brewing Co. of Lewiston, Rising Tide Brewing Co. of Portland, Sebago Brewing Co. of Gorham and Foundation Brewing Co. of Portland.
“That order came in the first quarter of the year, a critical time for Maine breweries,” said Geary co-owner Robin Lapoint.
Lapoint said the Beer52 experience essentially taught the brewery how to deal with exports, something it hadn’t done in the past. Now, Geary is exploring more overseas opportunities through Beer52 and other potential buyers, she said.
“These are all relationships that came through those (Beer Box) trips,” Lapoint said.
DOING BUSINESS OVERSEAS
Craft breweries are relatively small companies, which can make exporting their products a daunting proposition, said Brent Hoots, principal of Navitrade Structured Finance LLC, a Falmouth-based financial advisory and brokerage firm that specializes in foreign trade-related issues.
The biggest problem is that foreign buyers can be difficult to vet properly, he said, and export deals often involve making, packaging and shipping large quantities of product on the promise of getting paid weeks or months in the future. Many small companies can’t afford to do business that way.
U.S. banks do offer financing to businesses based on the value of future receivables, but Hoots said they won’t offer loans to cover foreign deals unless the seller has a special type of trade credit insurance only offered through the Export–Import Bank of the United States, a federal government-owned corporation established to promote U.S. foreign trade growth.
The bank, known as Exim for short, also vets foreign buyers on behalf of its customers, making export deals far less risky, he said. Exim charges a nominal fee of about one-half a percent of the export deal’s total value for its insurance and vetting services, Hoots said.
“The Exim Bank program allows them to achieve their marketing objectives … and it’s going to protect them against the risk, and it brings financing to the table,” he said.
Matt Albrecht, owner and founder of River Drive Cooperage & Millwork, works on a barrel in his Buxton shop. The company began to export its barrels to Iceland last year after participating in a Maine Beer Box event. So far, it has earned more than $120,000 in export sales to Iceland. American Journal photo by Robert Lowell
Hoots said he has been working with a number of Maine breweries, helping them through the process of signing up for trade credit insurance. Prior to the Beer Box, only four of Maine’s roughly 2,200 businesses that do exports were using the Exim Bank, he said. That number is now up to at least a dozen.
Not all of the Maine companies benefiting from export opportunities developed through the Beer Box trips are breweries. One notable exception is Buxton-based River Drive Cooperage & Millwork, a wooden barrel distributor that said it has become the dominant seller of barrels to breweries and distilleries in Iceland as a result of the Beer Box’s inaugural voyage to Reykjavik in 2017.
River Drive founder and owner Matt Albrecht said the company has since sold three full shipping containers filled with barrels to customers in Iceland, about 650 barrels in total. At an average cost of about $190, that represents $123,500 of revenue for the company, he said.
Albrecht estimates that at least 80 percent of the wooden barrels now being used by Icelandic breweries and distilleries originated in Maine.
“The people who turned around and ordered the barrels were the actual people that I met with in person, firsthand, in Iceland, on that (Beer Box) trip,” he said. “Before that trip, I had zero contacts in Iceland, and I had never sold a barrel to anyone in Iceland.”
This story was updated at 10 a.m. Sept. 2 to correct the date of the 2018 Maine Beer Box event.
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