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The "Brew Crew" Uses Financial Tools to Help Craft Breweries Grow

Eno Sarris, August 03, 2015 -   

If you run a craft brewery and have wanted to expand, you've probably noticed that there really aren't a lot of bankers that know the space well. And knowing the difference between the financials behind featuring barrel-aged sours versus hoppy lagers can be the difference between making money and running out of money. Given the pecularities of the legal system regulating the alcohol industry, too, you'd have to feel good sitting down with an advisor that understands beer.

Enter the 'Brew Crew' at Merrill Lynch. Mike Faircloth, Phil May, and Eddie Martin have nearly a quarter-century of experience as financial advisors between the three of them, and they all love beer.

May has been friends with Dust Bowl Brewing founder Brett Tate since high school. So, according to Faircloth, the three friends headed to Dust Bowl for a few of their big DIPAs and asked: "What can we do to help you grow?"  For Dust Bowl, the answer was to place the three of them on a financial advisory board. 

And that's a great way to think of their usefulness, because their expertise runs beyond lending. Even if getting breweries funding is always important, there are more ways to serve the industry and help it grow.

Ask them what they love about the space, and the response is immediate: "The people in this industry are so amazing," said Faircloth. "Most of the time, in our business, we spend all day in suits talking to different people that, honestly, hate each other." And so the three advisors have spent their time meeting as many people in the industry, so that they can help the collaboration along, and send inquisitive brewers to the right people, no matter what the need. 

"There's no group that can do everything," Faircloth admits. "But we wanted be knowledgable to know enough that, even if we weren't the guys that can do it, we have those contacts for the brewers." And so they can help you find the best beer attorneys, distributors, and even hop farmers, if that's what you need.  

For Golden State Brewing, they found the funding for a new Santa Clara facility that will help them move beyond guest brewing at Hermitage in San Jose. The Brew Crew has allies at Bank of America (Merrill Lynch's owner), and has carved out a spot in the beverage section there. Should funding be the issue, they can help. 

But for an example of what they can do beyond simple funding, look no further than their work with the California Craft Brewing Association. Not only does the Crew sponsor tables and help fund the CCBA, which in turns helps advocate for California craft brewers, but now they've come up with a plan that might help employees at craft breweries both big and small.

"We listened to the breweries, and we wondered what we could bring to all of them, at the same time," said Faircloth. After some consideration, they think they've found it. The Brew Crew is partnering up with TransAmerica to put together what is called an Association Retirement Plan for the CCBA's membership. 

This plan, if approved, would allow both big and small breweries to enter into a retirement plan under the umbrella of the CCBA. Not only does this improve purchasing power and give the entity more sway when it comes to discussing rates and returns, but it helps everyone save money. There's a yearly audit that companies with retirement plans must pay for (and pass), and by doing it with the CCBA, they can be tested as one large entity, once. 

"Soon, small breweries will be able to join the retirement plan and help their employees without taking on all the heavy costs associated with that decision," said Fairchild of the plan. And for what it's worth, plenty of large breweries could stand to join the plan -- plans are supposed to be public knowledge, and there's no record that the hundreds of employees at Ballast Point have any sort of retirement help. 

Perhaps even more importantly, this plan will help protect members against possibile liabilities related to the plan. Owners of breweries are not required to monitor all the investments in the plan -- that's done at the association level. And the plan should help the CCBA's efforts to advocate on behalf of their membership. Which includes lobbying to change arcane beer laws. If you want growler fill stations in California, for example, you should like this idea. 

"We want the industry to grow, because we love the industry, and what better way to do that then to help individual breweries grow," said Martin. And what better way to sum up the work of the three men in the Brew Crew, really. 

To contact the Brew Crew, try Michael Faircloth at michael_faircloth at ml.com

Thanks to wiki commons user ingfbruno for the header image.

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