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Published in Small Business
Grand Rapids-based Oktober LLC has experienced a spike in demand for its can seamers during the pandemic. Grand Rapids-based Oktober LLC has experienced a spike in demand for its can seamers during the pandemic. COURTESY PHOTO

Craft beverage suppliers see highs and lows during the pandemic

BY Sunday, April 11, 2021 06:15pm

Over the course of the COVID-19 pandemic, Dennis Grumm’s brand of can seamers went from a luxury amenity to a requirement for many craft beverage producers.

Grumm is the founder and CEO of Grand Rapids-based Oktober LLC, which manufactures machines that allow establishments to can all types of beverages onsite.

When the pandemic shut down taprooms, tasting rooms and all other forms of onsite consumption of food and beverage, Grumm saw skyrocketing demand for his seamers.

“We saw double the interest for a long time and had to go through ramping up production to meet that demand and making sure our supply chain for cans was solid, which at times it was not,” said Grumm. “So, we had to put a lot of extra work into that. It’s been a humongous increase in interest.”

The volatility experienced by Oktober is shared by the variety of companies that supply the craft beverage space — from metal workers who build stills and brewing tanks to packaging companies that supply aluminum cans and glass bottles.

For Oktober, the pandemic-induced changes to the craft beverage industry ushered in a prosperous stretch, one in which the company brought on around 10 additional employees and experienced unprecedented sales.

Oktober found that more than just breweries were in the market for the seamers.

“Around 70 to 85 percent of (demand was from) breweries, but it was also restaurants, bars, golf courses and all kinds of crazy, different businesses you wouldn’t even expect ordering from us. As soon as cocktails became legal to-go, any place could be canning them and getting some revenue out the door,” Grumm said.

Oktober, which also supplies bulk orders of aluminum cans for its clients, was able to sidestep pains brought on by a nationwide aluminum can shortage last year. Other than indefinitely running out of 8-ounce stubby cans, the shortage did not touch Oktober.

“We have a diverse supply chain of cans. We have several places we could source them from,” Grumm said.

Ramping up production

Chris Breimayer’s Greenville-based Psycho Brew LLC supplies a specific segment of the craft beverage industry, targeting nano brewers with its product offering.

Psycho Brew sells complete brewing systems and also designs custom systems for brewers looking to start with a system under 10 barrels. These are typically the startups that are transitioning from homebrewing to the commercial space.

“We feel the days of brewpubs starting out with larger than a 10 (barrel) brewhouse are over or at least winding down,” said Breimayer, who runs the business with his brother, Pat. “New startups are more gearing toward smaller compact brewing equipment, which is what we specialize in.”

The COVID-19 pandemic has created a less-than-ideal climate for startup breweries, but they weren’t non-existent.

According to data from nationwide industry trade group the Brewers Association, the U.S. saw 716 new breweries open during 2020. This was a 30 percent drop in new brewery openings from 2019, but only half of this drop was attributed to COVID.

The slow down in new breweries meant changing demands from Psycho Brew’s clients, but only after a nearly complete pause in business when the pandemic first gripped the industry.

“From the end of March 2020 until around June or so, we didn’t really have any new work coming in,” Breimayer said. “The brewing industry was so uncertain at that time that everyone was sitting tight. Once existing breweries figured out that their business model was shifting to mostly selling beer to-go, at that point, they needed to produce more beer.”

Breimayer said that Psycho Brew’s existing clients started to lean on his company for additional equipment as they boosted production. Some of those clients have even taken measures to diversify their product offerings.

“We have definitely seen more demand for just wanting to buy more fermenting and bright tanks,” Breimayer said. “We have even had more requests for craft stills in order to produce spirits. (I’m) noticing more existing breweries trying to diversify by adding spirits to their repertoire of products.”

As for disruptions to his own business, Breimayer said he hasn’t had a lot of trouble procuring the needed materials for his systems. However, he did note that prices and lead times for stainless steel have skyrocketed as of late. Currently, Psycho Brew has been able to absorb the added cost and has extended its lead times with clients to accommodate for the changes.

“We haven’t really changed our business plan much,” Breimayer said. “We have been lucky enough to do business over the years without any debt and we have always made sure we had a good nest egg to fall back on in case the market decided to fall. Never in a million years did I ever dream it would be a pandemic that would challenge that.”

‘Bobbing and weaving’

However, not all craft beverage suppliers have found good fortunes during the turbulent times of the pandemic. Grand Rapids-based craft beer equipment maker Coldbreak features a signature product line that has stalled out under the current market conditions.

Coldbreak manufactures jockey boxes, which allow breweries to go mobile with their draft beer — ideal for large tasting events such as beer festivals.

The pandemic has wiped out almost every large event over the past year, and Coldbreak’s sales have reflected that. Company President and co-founder Boyd Culver said that 55 percent of all jockey box sales for 2020 were completed in January and February, which is the company’s slowest time of the year.

“It was essentially like a valve got shut off,” Culver said. “Unfortunately, since (early spring), none of that has changed in regard to jockey boxes. We still have consistent web activity but people haven’t been pulling the trigger.”

Culver and his company have marketed what is a fairly versatile product to mobile bars, which have been growing in popularity as the pandemic wears on.

“It’s very versatile and super applicable to mobile bars,” Culver said. “But, it’s always been so easy for us to sell jockey boxes to breweries because they know what they’re looking at, they know how it operates and they can see with their eyes that it’s far superior to prior existing products. With mobile bars, we have to teach that person how to use a jockey box and what a jockey box is and even how to tap a keg.”

Still, Coldbreak has been propped up by its product diversity. While jockey and jumper boxes might be its marquee products, the company also manufactures home brewing equipment for itself and larger manufacturers.

But even in that segment of the business, Culver has faced skyrocketing prices on materials. 

For instance, the company uses copper as the primary component for its line of immersion chillers. Culver said that prices for copper have shot up 100 percent and lead times for raw copper jumped from five weeks to 27 weeks.

“We’re definitely bobbing and weaving, to say the least,” Culver said.

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