Alcoholic beverage producers that want to market their products beyond their home markets are facing many tough realities as competition continues to ratchet up and as consumers’ preferences shift in often unexpected ways (see: hard seltzer). For its part, regional cider maker Vander Mill LLC continues to expand its markets geographically as it makes sense and with the right wholesale partners, said co-founder Paul Vander Heide. To start the new year, the company is focused on commissioning a new large-scale apple press with the aim of improving product quality and margin.
How would you assess the craft beverage market as you look out to 2020?
For us, 2019 has been a year of positive growth in some areas and negative growth in others. A lot of that is market dependent. We’re distributing to nine states right now and some of those are new, and that has led to an increase in some volume. But our existing market in Chicago has been very competitive lately. 2019 definitely reared its head for us in that market. Overall, we feel we know what we need to do moving forward to try to combat what is a very busy marketplace for craft beverage in general.
How is Vander Mill approaching geographic expansion?
We’ve always sought opportunity when we have the right distribution partner. That relationship is so very important to the success of the brand in the marketplace. We continue to keep our ear to the ground and respond to folks when there is a level of interest to make sure we pick the right partner. That being said, our two newest markets, North and South Dakota, were somewhat of a logistics fix for us. We ship to Minnesota and we’re now with the same wholesaler in Minnesota and North and South Dakota, which allows us to achieve full truckload orders out to that area of the country, which improves everybody’s efficiency by saving on freight. It’s an example of how we’re looking at the pipeline and trying to make sure that we’re both finding the right partners and keeping things efficient.
Are you planning any major capex next year?
For a number of years, we turned to some other processors here in Michigan to press apples for us, mostly because the equipment that we have out at our Spring Lake location just isn’t sufficient enough to keep up with our needs for hard cider. We’re still in the process of commissioning our new press, but we’re excited about that and to be back in control of the raw material. We believe our quality will continue to improve and it will hopefully stand to give us a bit more margin on our products as well.
Does pressing all your own apples offer any ancillary benefits for Vander Mill?
We’re excited to have that in our space here in Grand Rapids where people can see it work. We’re going to be pressing on the regular, and it’s always been a part of our businesses to let the consumer in as much as possible to see what we’re doing. Cider, the way we make it, is a very honest product. It’s local apples getting squeezed into juice and fermented. We’re excited to have that ‘from apple to glass’ experience here in Grand Rapids now.
What does the recent explosion of hard seltzers tell you about the alcoholic beverage industry?
At least in my experience thus far in this industry, there’s always a great deal of noise in the market, whether it’s alcoholic root beer or other sodas. Now obviously seltzers are the biggest example of noise in the marketplace. It’s definitely disruptive to everybody: craft beer and cider, big domestic cider, and wine and spirits. Everybody gets impacted one way or another when something this big comes rolling through the industry.
Outside of seltzers, how do you see the larger market playing out next year?
One thing the craft industry is learning is that it’s incredibly expensive on the distribution side to maintain and support a brand. We’re noticing that as well. You’re dealing with very large companies in this industry, and to keep up with many markets or multiple states is increasingly difficult for not just sales focus and brand awareness, but the efficiency of logistics. The alcohol industry hasn’t grown as a total in volume for over a decade, so everybody’s growth is coming from somebody else.
Do you see that continuing to drive M&A?
What some of these larger breweries and more recent acquisitions have seen is somewhat of a realization that to be in that many states, or certainly to be a national brand, there is a certain amount of infrastructure that needs to be in place. That’s incredibly expensive and complex. It’s going to prove to be difficult for brands that are trying to compete in many markets.
As competition keeps getting more intense, what do companies like Vander Mill need to do to thrive?
We’re realizing that we just need to continue to do the hard work of supporting our wholesalers, supporting our retailers, and supporting and thanking our customers. By thanking, I mean continue to innovate, bring out quality products, stay true to our brand. But there’s a certain amount of the ABCs of this business that you really have to settle into no matter what else is going on, and that’s working with your wholesalers and retailers to continue to drive product to the consumer.
As an industry, what can you do to help convert more American drinkers to cider?
The small producers in our industry are going to continue to do the local work of changing people’s palate to cider, and I don’t see that letting up. It just takes time. Many times, I feel like how could I be in business for this long and still have so many people not understand what cider is, but we face it every single day so we know there’s a long way to go.
What’s keeping you up at night as you look at 2020?
Since I’ve been in business, I’m kept up at night — there are so many moving parts. But as I’m in this industry longer and as I’m a business owner longer, I get a little less frantic and I lose less sleep than I used to because the cookie crumbles all the time, and you’ve got to sweep it up and keep moving forward.
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