Case Study: How Santa Fe Brewing Co. Started Brewing Cider & Hard Seltzer
Cider and hard seltzer drinks are projected to continue growing in the market as popularity for these types of drinks build. Consumers today are looking for gluten-free alternatives to beers but still want something that tastes amazing. Is it possible for an established brewery to successfully introduce cider and hard seltzer to their portfolio and follow the market trends? Definitely! At Santa Fe Brewing Co., they did just that. Learn why they decided to diversify and started brewing cider and hard seltzer to add to their beer catalog.
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About Santa Fe Brewing Co.
Santa Fe Brewing Company was established in 1988, making it the oldest and largest brewery in the state of New Mexico. They are not beer snobs and are always looking for the next opportunity to position themselves to be “every person’s beer.” SFBC takes a market-focused approach to brand development, product release, and portfolio management, which has helped their company over the years to continue to grow. Even with the COVID-19 crisis, their 12 pack sales have gone through the roof. This year, they are on track to make 37,000 bbls of beer. Doing a double-digit growth in this climate is impressive. The brewhouse is still at capacity, and their package sales have covered the gap from on-premise sales.
Bruce Boyce, the brewmaster at Santa Fe Brewing Co., talks with MARKS about their decision in diversifying into brewing cider and hard seltzer.
Q&A with Burt Boyce About Brewing Cider & Hard Seltzer
Q: With continued growth and success, what prompted the discussion about adding/diversifying products in your lineup?
A: Our core mission is being consumer-focused. A lot of our competitors struggled with “should we make a seltzer, are we still craft brewers?” I don’t care about any of that. The market demand was out there. We drank a lot of them before we started making them, we thought we could do it differently in a way that we could be proud of. Our customers wanted it, so we went for it. I have a degree in brewing and winemaking; cider isn’t that different from making wine, so brewing cider wasn’t a big leap either.
Q: Did you need to increase the capacity to take on the new product and could you utilize existing equipment?
A: We are maxed out with inside capacity and are now looking outside, we have (2) 300 bbl outdoor fermenters on the way that we will need this summer. We need de-aerated water capability, blending capability, as well as more fermentation space. We are out in the country, so we have a lot of space, so growing doesn’t present the same challenge for us that some might have in a dedicated warehouse space in the middle of the city. We have a dedicated space for the outdoor cellar, and now it’s just time to pull the trigger. We just installed a 70 bbl, five vessel brewhouse last year, and now it’s time to get the cellar caught up to what the brewhouse can produce.
Q: How will you bring the spirit of Craft Beer’s ingenuity and experimentation into your new product and how does the new product align or deviate from your craft beer model?
A: We have a traditional straight apple cider, as well as a tropical cider that we took a cue from a tropical beer we did last year. With a tropical fruit-forward cider, we believe it complements the beer well and dovetails nicely into our portfolio.
The seltzers, on the other hand, needed a very different approach. We made lemon and lime seltzer. A boozy lemonade and limeade. It was challenging, but they have some opacity to them, some haze. They are flavored with 100 percent natural lemon and lime juice, not from a bottle or dropper. So, for better or for worse, there are no artificial flavors. It’s just like drinking lemon or lime juice. On the first try, they weren’t great, and it took many reps to get the balance right. They still present challenges, but we felt like it was worth it to differentiate it in the market.
We have a network of suppliers who do these kinds of things. For the seltzer, it wasn’t a supplier we were already working with. But we knew who to call when we tried to find these ingredients.
Q: Did your existing customer base take on the new product or was there an effort to reach a new sector of consumers?
A: We are continually trying to expand our market and customer base. To grow the category and not just take share. We aren’t trying to go after the “traditional craft beer drinker.” From the start, we did heavy social media marketing around all these new innovative products, spent a lot of time with our wholesalers, and made sure they liked the product. We did a lot of education with the staff at the wholesale level, so they understood what we were making and why. We already had them all slotted in for spring resets at major grocery store chains. They were all ready to go. We did not just roll it out and hope people like the new products. We’re thankful for the trust we have built with them that they’re willing to take on a new product like this and work with us.
Spring resets happen in March or April. While they were ready to take them, a lot of our retailers put spring resets on hold this year. So, we were only able to get the new products into about a third of the major retail partners before COVID-19 put everything on hold. It has still been a challenge to get retailers to take new products. But credit to our sales staff, they have worked really hard to find a way to get them on the floor and shelf, even though many stores aren’t doing major resets right now.
Q: Were you able to use the same method of distribution/logistics to beer?
A: Absolutely! It all goes through our major wholesaler here in New Mexico. Most breweries look at New Glarus (Wisconsin brewery) as a shining example of how to do business. Be a mile deep in your home state. So, we are focusing on the state of New Mexico, even though we do focus on a few other key states. The vast majority of our distribution is here in New Mexico.
Q: The packaging design, look, and feel of the new product is very similar to your craft beer. Was that deliberate to align with your brand?
A: Absolutely! We discussed in the early stages, “Is this a new company, or is this just a new product line?” In the end, we decided that we wanted to capitalize on the trust of our brand. The design looks like a Santa Fe Brewing Co. Cider and Santa Fe Brewing Co Seltzer. Both the cider and the seltzer have our logo and a design that looks very similar to our beer. It all comes down to the trust we have built up with our customers. They trust what we’ve released so far, and we’ve decided to stick with that.
Q: Were you able to utilize your existing packaging equipment? Did it require any additional equipment?
A: Yes, and no. Our 6-packs are in PakTek, and our co-pack is in cartons across our beer line. We have put our seltzer in our first 6-pack cartons. Very little additional equipment was required for packaging since we already had the packing equipment. It was a deliberate decision not to put them in sleek cans and to make it look and feel like our original product line.
Q: Were you able to utilize and cross-train your existing labor of brewers or did you have to recruit new employees with a cider/seltzer background?
A: We did not get new staff. We did a lot of re-training and re-assessing how we processed things on the cold side. So, we were able to do it with the same staff and the same equipment we have already.
The cold side was really challenging because there is a lot more work for the cellar staff to make cider and seltzer. There was a lot of frustration, even on my part, to try and get them right. We are very “for the people” kind of brewery. Everyone bought into the mission and recognized that’s what the market wants right now. So, everyone was willing to jump in and make it happen.
Q: So was training your staff the biggest challenge you faced with the new products?
A: No. After we had gotten over the hump of getting the pipeline filled and the product made, the hardest part now is trying to figure out how to make them more efficient. We use a lot of tanks, a lot of work by hand, and manual intervention. Once we re-assess how we make them, we will probably need additional equipment to make it more efficient. That’s the next phase. Phase 1: figure out how to make it, then Phase 2: how to make it more efficient.
Q: Were you able to exploit existing synergies in the brewery to help your transition into this new market segment?
A: We are process-oriented here. It’s my personal belief that a lot of people talk about your recipe as if the exact percentage of this malt or these pounds per barrel of that hop, make it taste the way it does. But I think its 50% process and 50% ingredient. We spend a lot of time just figuring out how to do it and have the experience of being process-oriented and how to do things.
Q: What steps have you taken to mitigate the risk of this new venture?
A: We didn’t put together a full HAACP plan for the new products. But we did try and recognize any critical control points that could give us issues later down the line. For example, how do we keep these cans from blowing up in the marketplace? We had questions, and we came up with answers. We are ready to invest in equipment. That is the next step to address any unforeseen issues. Overall, we have a tight quality control program, and it has not changed.
Q: Has the process improved your brewery or changed the way you operate on the beer side?
A: Any time you have to sit down and think critically about what you’re going to do, and how you’re going to change your operation, that ultimately benefits the entire operation. Even though nothing major has changed at our brewery, I think it’s good to sit down, look at everything under a microscope, and make sure that you’re doing everything correctly.
Q: How would you approach this project again knowing what you know now?
A: If you opened a new business and you didn’t have that strong process background, you’d probably spend all your time trying to figure out what ingredients to use. Then you’d figure out your process later. Luckily, at Santa Fe Brewing Co., we have that strong process background, so we were able to jump right in.
To reiterate, we do what we think our customers want. We exist solely to provide for them the products they are asking for. We make sure that we have buy-in from our distributor partners and that they also want these new products. We would never shove a product down their throats that the distributor doesn’t want or need. It’s a top to bottom system approach. We don’t do anything because we want to do it; we do something because our customers want us to do it.
We are in the business of selling beer- not making beer. Making beer costs money, selling beer makes money. We don’t release things we don’t think will sell. We have fun beers that we release only in our taprooms to keep our regular customers happy. When we release something large scale, we make sure there is a market for it and that it will sell.