Rami
I'm Rami Gibran, Chief of Staff at Drinks, and this is the Drinks Podcast, the business of online alcohol. The alcohol business is at an inflection point, the way people discover brands, how they research what to buy, where they're actually making purchases, it's all shifting. A lot of traditional approaches just aren't working the way they used to. Every episode, I'll talk to founders, operators, and executives who are figuring this out in real time. Some are finding real success with new strategies. Others are learning expensive lessons, but they're all navigating the same fundamental challenge.
How do you build a sustainable alcohol business in a digital world? Whether you're running a winery, exploring e-commerce, looking at alcohol as a new category at a retailer, or building technology for regulated industries, these conversations will hopefully give you the context you need to understand where the industry is heading. Today's guest brings a rare combination, deep operational experience and a global macro view of where the industry is headed. Dan Copman is a professional professorial lecturer at American University's
Cogod School of Business and Senior Policy Advisor to the World Brewing Alliance. As co-founder and former CEO of St. Louis Brewing and former CEO of Heavy Seas Beer in Baltimore, has spent over 25 years building beer businesses. And as a member of the Brewers Association and Beer Institute boards, Dan worked on US excise tax reform leading to the passage of the Craft Beverage Modernization and Tax Act. Now he studies global shifts in the alcohol industry and works on policy issues.
What makes Dan particularly valuable for today's conversation is his work with the World Brewing Alliance, where he's built tools to track how beer performs against other beverages across a hundred plus countries. His perspective, most businesses need to pay attention to macro trends, notably demographics and other structural trends. And non-alcoholic beer isn't just another category trend, it's fundamentally different. Today we're exploring what the data actually shows, what making more
Why making more is no longer the answer to solving problems for consumers and what digital alcohol businesses need to understand about where this industry is heading. Dan, thank you for joining us. You went from running breweries to studying global alcohol data and policy. What prompted that shift? And what did you start seeing in the data that operators on the ground were missing?
Dan
So I finished up with a career in directly working in or helping to lead breweries, notably small and mid-sized breweries in the United States. I started my career to brewery in London as a trainee brewer. So I was finishing that up at the end of the pandemic, 2021, and I was...
During my time at both the St. Louis Brewery and at Heavy Seas, I was active in our trade association boards and the work that we were doing. And policy has always been an area of interest for me. My undergraduate work was just economics. I wasn't particularly very clever, so I wasn't gonna become an academic economist.
Rami
Mm-hmm.
Dan
So I headed for the brewing industry, because it really interested me. I'm from St. Louis and was lucky enough to get a position at Youngsbury in London right out of college. So that's what I chose to do. It was really interesting. I took a break though when we were living in Edinburgh over in the early 90s. And I went back and did a degree in policy studies at Edinburgh University. So I was interested.
in the area. And so when the opportunity came up to work on excise tax reform, when I was on the Brewers Association Board, I did that. And then that work continued when I was at Heavy Seas and I was the craft brewer board member on the Beer Institute Board. And that's when we got the Craft Beverage Modernization and Tax Act passed, which all of your listeners will be familiar with, isn't it?
it affected all producers of beverage alcohol, whether that's beer, wine, or spirits in United States. Shortly after retiring, I was approached by American University where we had done a project with students and that's how I ended up teaching at American University as a second career, which has been fantastic. Spending time when you're in your 60s,
If you can spend time with people in their 20s and 30s, learning from them really and hearing what problems they are trying to solve, that's really great. It's a tremendous second career for one of a better way to describe it. And at the same time, I was approached by colleagues that I'd worked with on the craft beverage bill and they approached me about helping stand up the World Brewing Alliance.
And I've ended up working or focusing on the work that I do is focused on economic impact studies, looking at trends from a volume and value perspective across 185 countries. I work closely with a colleague who's a great expert, a real expert on excise taxes across all of these countries.
Dan
well, you know, understanding how the systems are put together, et cetera, because they're all very different. So Steph is a real expert there. it's it again, it's it's eye opening to work on some of these issues and really to understand and to understand how different countries are in terms of the beer, wine and spirits, where local spirits come into play or local wine, specifically in Asia, what's going on these days in India and Africa.
Rami
Mm-hmm.
Dan
So there's a convergence of the work in that I teach a course on global entrepreneurship. So we look at the determinants of entrepreneurship across different geographies. And then at the same time, I'm looking at these geographies with a lens of a brewer and saying, okay, where are there opportunities, but where are there real challenges from a demographic standpoint, economic standpoint, cultural standpoint? That's what I, that's.
That's what I just do. So it's really interesting.
Rami
It's really interesting. When you look at the US, like we can talk globally, but I want to talk about the US. When you look at the US, what is the, what does the macro data tell you about breweries? I feel like we keep going through this ebb and flow of we've had so many open and now I feel like now they're all contracting and I feel like a lot of them are getting purchased up by other ones as they're starting to decline. as a, as a, if you put on your economist lens here, like what do you see as the
Dan
Yeah. Yes.
Rami
future like are we gonna keep seeing this constriction?
Dan
So I would step back because there are real macroeconomic and macro trends that are driving the business ecosystem, especially for consumer goods. And so if you're in the food and beverage world, what you're seeing is what some have described as peak calories or peak production. And what's driving that simply is population. Not only the
the size of the population, but how it breaks down across different age groups. So in my lifetime, I think the US population has gone, and this is 60 years. So the world's population has gone from 3 billion to 8 billion in my lifetime alone, from 1961 to current. So we've added 5 billion in population. In the US, we've added, not, yeah, well.
Rami
Mm-hmm.
Dan
almost double. We've gone from, think, 170 or 180 million in 1961 to 345 million today. In the 1960s and 70s, that was partly driven by population growth, meaning internal growth. But in the 90s and 2000s and today, that's all driven by immigration. So without immigration, we actually would have declining population in the United States.
And we may see that in the 2025 numbers. We may see the first population decline in the United States. And you'd have to go back a long, a long way. It could be, there might've been a population decline at the time of the Spanish Flu, 1917. It could have come later. You had such large immigration numbers.
Rami
Mm-hmm.
Rami
wow.
Dan
in the late 1800s and early 1900s that maybe that doesn't hold true. But for example, the US population today is about 15 % of that population was not born in the United States. That's legal population. The last time we had that percentage of the US population being foreign born was the late 1800s.
Rami
Mm-hmm.
Dan
And we saw similar political and social upheaval, late 1800s and early 1900s, that one could say we see today. I'm not saying we've come full circle. I'm just saying there are similarities that we can call on there. So we're at peak calories. And so if
Rami
Mm-hmm.
Rami
Mm-hmm.
Dan
If what defined my business career, my career in the brewing industry, well, let's just make more, right? We're doing something right. Let's just make more of it. If you don't have more population, you know, that's pretty hard to do. On top of that, we have an aging population. So the boomer generation is about 60 million Gen X. We wonder why there are fewer younger people coming through.
Rami
Yes.
Rami
Mm-hmm.
Dan
that's legal drinking age population, whether that's into universities. And some people talk about a drop in the birth rate around the Great Recession, 2008, 2009. Yes, that data is there. But at the same time, there's only 40 million Gen Xers compared to 60 million Boomers. So there's a reason why for a long time, the largest population group consuming wine, for example,
Rami
Mm-hmm.
Dan
has been boomers. I read recently where finally millennials are now the largest group of wine consumers, which I think is an interesting comment. can come back to that. It's an interesting data point, whether you run the numbers differently, you could maybe get a different result and say it's still boomers. But if millennials are finally getting closer, and millennials, again, as a population size bigger than Gen X, a little bit smaller than boomers,
Gen Z again, we're not getting any population growth. The younger population growth we've had has come from immigration and most of immigration is younger people. So that's kept the US average age population wise younger than say Europe. Europe has an average age population of 47.
Rami
Mm-hmm.
Dan
The average age of a person living in the European Union is 47. Same for the UK. The average age in the United States is I think mid to late thirties, but we could start to see that really ticking up if we don't get younger immigration continuing to come in.
Rami
So sorry, just to double click on that, the US being younger means that we have a larger group of younger people offsetting the older people.
Dan
Correct, compared to Europe. But we're getting older. It's not going the other way. And without immigration, it just gets worse faster. When I say gets worse, it means more older people faster, more older, retired, benefit earning, know, social security, Medicare, consuming less alcohol, all these things we think about.
Rami
Interesting.
Dan
We talk about a lot of different trends impacting beverage alcohol consumers. We talk about Gen Z drinking less, and why are they drinking less? maybe it's because of affordability. Maybe it's because for some reason they decided to be healthier. Maybe they're just consuming a ton of cannabis and they don't need to consume as much beverage alcohol. Then we talk about boomers and...
and maybe everyone else in the mix consume, know, now on GLP-1s of some shape and form, and that's affecting their consumption. But you have to step back and look at the population trends, number and age, and also probably income groups. And that is where you need to start. And don't get too caught up. I think people get too caught up.
in these other factors, whether it's social media trends, social media impacting consumption, meaning people don't wanna over-consume and be videoed on social, and that on social media. There's so many factors influencing consumption, but you gotta start with the big macro picture. So,
Rami
Yes.
Dan
If you pick up a paper, a newspaper, or forget picking up a newspaper, you log onto your computer in the morning, whether you ask chat GPT or perplexity for, what am I supposed to do today? You know, look at my calendar and tell me what I should do first. Or you're looking at a online edition of a paper or some other news source. You're likely to see a story about AI. You're you might see a story about robotics. You
Rami
Mm-hmm.
Dan
are likely to see a story about climate change. And those are two huge macro drivers of the economy and therefore are gonna impact producers of beverage alcohol, beer, wine, and spirits. The stories you aren't reading about maybe every day, but I believe are equally important is demographics. We are not going to get to 15 billion or 12 billion people on the planet as was predicted.
less than 10 years ago. We're at 8 billion. We may not get to 10. We may get to 9 because fertility rates and population growth is just slowing in many, many, geographies. So all the developed world has a negative birth rate.
Rami
Mm-hmm.
Rami
Wana.
Dan
Europe, Japan, Korea. So the developing world has got growth, but even some of that expected growth, say in certain states in India or parts of Latin America, we're not seeing it. Now, whether that is families deciding not to have as many kids, whether that is for whatever reason,
Rami
So it's the third world that we're seeing growth in.
Dan
You know women staying longer in the workplace than they they used to in developing countries now Whether that is Fertility issues right that we're seeing around the world so whatever what I I'm not a an expert on You know population growth. I'm just looking at the numbers. I'm saying to myself These numbers are gonna have to impact
Rami
Mm-hmm.
Dan
the way we do business going forward, the way the students that I'm standing and sitting with, or standing in front of, but more than often just sitting around a table and talking about issues, their business life is going to be very different from their parents, from their grandparents, from their great grandparents. Because one trend that was at a macro level over everything they were doing was population growth.
Rami
Okay, so knowing that
Dan
More people to feed. And now it wasn't long ago that we, again, we were talking about how do we feed the world's population.
Rami
So knowing that if I'm a brewer or if I'm a winery and I know the population isn't going to continue to expand, like how do I start to think about how I adjust in what I'm doing or what else can I learn from the macro data or the trend data that you're seeing to adjust to what I'm doing right now?
Dan
Mm-hmm.
Dan
Okay, so let's talk about it from a revenue perspective. Right? So if I can't grow by just producing more and assuming there's more consumers, especially for what I'd call mature industries and beer and wine are for the most part, mature industries, right? There's no new magic potion. Craft beer was a magic potion, but
Rami
Mm-hmm.
Rami
Mm-hmm.
Rami
Mm-hmm.
Dan
a lot of the growth for craft beer came from big beer.
Rami
It was just a shift, right?
Dan
It's a shift in volume, right? There hasn't been, for the US, there hasn't been global, or sorry, US volume growth for beer for, wow, a long time.
Rami
What about the shift in the boom of like the seltzers and those other just shifting, it's just moving around.
Dan
You're just moving the volume around. If you look at total ethanol consumption in the United States, up until very recently, it hadn't moved a lot. The amount of ethanol being consumed was pretty consistent.
Rami
Yeah, but he was just shifting from one type to the other, right? It was going from big beers to craft beers to cocktails or whatever it is.
Dan
This is different from one type of one.
Right. So overall, the shift was over the last 20 years, the shift was from beer to spirits. Wine stayed about the same. Beer went from nearly 60 % of beverage alcohol consumption to 40. And wine stayed around 14, 15%. And spirits went from, you know, took that 20 share.
Rami
So do you anticipate that beer share to continue to decline over time?
Dan
No. I think that has actually stabilized. Now what we're seeing, which is what we saw in Europe going back. So remember we talked about how Europe's average age had already shifted older, right? No population growth, age shifted to much older, know, average age 47. Consumption in Europe fell by almost a liter over a decade.
Rami
Stabilized? Okay.
Rami
Mm-hmm.
Rami
Wow.
Dan
on a per capita basis. That's a liter of pure ethanol. that's like two liters of pure ethanol. You figure vodka, at 40%, that's two plus bottles of vodka or gin less that European consumers were purchasing. So that happened pre-pandemic. So over a 10 year period, but there was no shift in the shares. Beer, wine and spirits stayed the same.
Rami
Mm-hmm.
Dan
In the US, there was not this loss. I think part of that was driven by immigration. Beer loss share to spirits, wine stayed the same. The reason that beer loss share to spirits was spirits did a very effective job of increasing the number of points of distribution for spirits. So now you can buy spirits
Rami
Okay.
Dan
almost in all the same places for all the same occasions that you could buy beer. Whereas previously, that wasn't the case. You go to a baseball game, there's beer. You go to a bar, some bars in some states, they only sold beer and wine.
Rami
Mm-hmm
Rami
Yep.
Dan
So, Spirits did a very good job of increasing access. They also did an excellent job from a marketing perspective. So they did a lot of things, right? Beer was kind of, honestly, we were looking at beer and not thinking about what was going on outside of beer for a while. At least from my perspective, as small brewers, we were growing, right? We were just, couldn't, you know, this was great, right?
Rami
Hmm.
Rami
Mm-hmm. Mm-hmm. Mm-hmm.
Dan
The world is linear, we'll never stop growing. But Big Beer, we were taking a lot of share from Big Beer. We weren't really taking share from anybody else. And so beer was just kind of moving around, but also going through a decline at the same time. Now what you're seeing in the US with this real slowdown in population and immigration growth, you're seeing that play out.
Rami
Yeah.
Rami
Mm-hmm.
Dan
And an aging population. So aging population, we're drinking less. Who does that hit? That hits wine and that hits spirits badly. Right? So all of a sudden, post pandemic, spirits and wine, you know, the numbers aren't, they're down and everybody knows that, right? We don't need to say how many points they're down. They're just down. Spirit is down, but it's a whole mix of things going on.
Rami
Mm-hmm.
Dan
you know, we're seeing real soft numbers in Mexican imports. We know what some of those drivers are again, immigration, immigration issues, you know, all that's playing can play into it. I don't, I don't want to sort of say why this is happening here is not as soft as what we're seeing for wine and spirits. w the data that I've seen.
Rami
Yep. Yeah.
Dan
It's not great, but it's not as bad as it has been for wine and spirits. We could argue that all day long. They're all getting hit. And the sort of, what are the, you know, there's all sorts of factors that play into that, but you start with the population numbers. You then draw into other factors and you see certain factors. If we're aging, that means, you know, older people are consuming less, generally speaking.
we may see consumers across age groups using GLP-1s, maybe that's having an impact. Affordability for Gen Z is definitely a huge issue as much as health trends. think affordability, health trends, and then the social media issue around consumption for Gen Z. But what we might find
Rami
Yep. Yep.
Dan
that by the time they reach the same by the time that Gen Z cohort is fully of legal drinking age and Getting into their later 20s and early 30s My guess is their consumption patterns are gonna look pretty similar to every age group before They have they are they are they don't have beer money a lot
Rami
Interesting. And you're working with this demographic though.
Rami
That's what I'm saying. like you're you see these students that's your demographic right now. Like they just don't have money. And like I know my friends, my siblings, like they just don't have money.
Dan
Yeah.
Dan
Yeah, rent. That's the one word, rent. Younger consumers are spending a disproportionate amount of their income on rent, probably rent, still paying for education if they have loans, and healthcare. That's driving it. Those are the three things. And those are not, those are rent, rent, healthcare, paying for education.
Rami
Mm-hmm.
Dan
Those are not structural issues. Those are short-term economic issues. That will right itself. The supply and issue, the supply and demand of housing, for example, will right itself. If rents are sky high, builders are going to until all of a sudden rents are not sky high and then demand is back in balance or some degree of balance with supply.
Rami
Okay, so if I'm a winery, I'm seeing my biggest drinking generation, my boomers starting to drink less or aging out or whatever. I'm seeing millennials start to get as big as them in terms of drinking. I'm seeing Gen Z not really doing it at all yet.
What does that mean for me and what should I start to think about doing to make sure that I don't get stuck with just gallons of juice or wine that I can't move? Like how should I be thinking about that?
Dan
So it's going to vary a lot from one winery to another. So I put them into two groups. The first group is the big group, right? That smaller wineries that earn a disproportion of their income selling directly to consumers.
Rami
Yeah, let's talk about that group. That's one I care about.
Dan
Okay. That group is there, they're in a better place than the other group. Okay. Because the other group is really seeing the headwinds of these macro issues. And it all comes down to expectations. So if you're a small winery, whether you're in Virginia or in California, and a lot of your
Rami
Mm-hmm.
Dan
business is based on visits to the winery. You're in the hospitality business as much as you are in the wine business, right? So you want to be really good at making wine and you have to be really good at hospitality. But you don't have to have all that expertise in terms of sales and marketing on a, a FM, what I'd call an FMCG level, like a consumer goods level, right? You're not competing on the shelf.
Rami
Yes.
Dan
in a grocery store. If you're a California winery, you're not competing on a shelf in a grocery store in Virginia. You're just a winery in California. You almost know every customer, and that's hospitality. And you have to be really good at that. If you're really good at that, you're going to do well. And the reason is because while we're seeing all these shifts based on...
Rami
Mm-hmm.
Dan
either macro trends or some of these less structural trends like we talked about, affordability and all that. What all these age groups appear to value is experience. They all wanna live life. Whether you're a younger consumer or you're a millennial with two kids, three kids, one kid, no kids, a Gen X or a boomer.
Rami
Mm-hmm.
Rami
Mm-hmm.
Dan
Right? You're still wanting to be active. You still want to get out. You still want to experience life and wineries, brewery taprooms. These are places that you can go and do that. Much harder for the spirits business. Not really going into even a craft spirits producer. You know, it's 40 % alcohol by volume on the most part. You're not going in and
Rami
Okay. Okay.
Dan
Spending a bunch of time drinking a bunch of spirits. That's a tough ask, but for wine and for beer, you are in a real sweet spot for local experiences. And that should be your focus. And your expectations are built around your home, the size of your market and the spending available in your market and what you're good at doing. Lean into what you're good at.
hopefully really good at making wine and you're proud of that and you're talking about it. And you love throwing parties and just having people come and enjoy it and pay for it.
Rami
Yeah, that makes sense. So the idea is...
Dan
But that group can be very successful.
Rami
as long as they continue to double down on the hospitality, the experience, making it the experience that people are willing to splurge on.
Dan
Yes.
Yes Yes And and stay really focused on that and if you do a bit of distribution quote a quote distribution you sell To a wholesaler or you do a bit of direct distribution on your own That's fine, but don't over invest in it don't Build up a set of expectations Where all of a sudden you think you're gonna go from?
you know, a few million dollars in sales or five million dollars in sales to $50 million in sales or $500 million in sales because the chances of that happening are really, really slim.
Rami
When you think about your time as CEO of two different breweries, what data do you wish that you had then that you now look at? Because most of what you're looking at now is more macro, big picture. We're looking at the world. We're looking at countries. If I'm a brewer, I'm like, that's great for them over there, but I don't know how that impacts me here. Is there any data you wish you had back then that would have helped you?
Dan
down.
Rami
Think about things differently.
Dan
Possibly in terms of setting expectations. It's not just data, but it's also skills. Those that I've learned teaching these classes and learning from students and also learning the material, the academic part, you know, the piece that I have to work with students on. There are definitely some skills that I didn't have that I wish I could have deployed. Mostly from a strict
strategy perspective. When we started in, you we opened the brewery in St. Louis in 1991, we made some really good decisions in hindsight. We made some other decisions that weren't necessarily bad decisions, but it defined us. So the decisions we made defined us as a local brewer, both
Rami
Okay, say more.
Rami
Mm-hmm.
Dan
the brand name we chose, the way we opened the company and built the company, the decisions we made about how much to invest, where to invest, where to focus. That was very much on making great beer and hospitality. So the things that you look at as important today, we were doing that in 1991 because we didn't see a way in St. Louis of competing with Anna Zerbush.
Rami
Mm-hmm.
Rami
Mm-hmm. Mm-hmm.
Rami
I mean you had the biggest giant of the biggest giants right there. Just you're in their shadow
Dan
Yes. Yeah, so and there were less than 200 breweries in the United States at that point, probably less than 100. And most cities did not have a local brewery. St. Louis was unique in that even when there were a handful, 20, 30 breweries left in the United States, St. Louis still had a local one. It also happened to be the world's largest one. And it was run
Rami
Mm-hmm.
Rami
Yeah.
Uh-huh.
Dan
It was run.
It was run like a fortune 500 company, but it was run like a monarchy in many respects and everybody did well in st. Louis and not for profits never went without a donation Bars You know if you were a bar in spokane, washington you had an anise bush wholesaler that was very good to you But if you were a bar in st. Louis, you not only had the wholesaler that was very good to you You probably had an anise bush exec that would take you
Rami
Mm-hmm.
Dan
to Pebble Beach to play a round of golf on an Anasabush airplane. So the relationship between the brewery and especially the retailers in St. Louis was very different. And for us in 1991, that was a brick wall. We were not going.
Rami
Yeah.
Rami
Mm-hmm.
Dan
So the way we had to approach the challenge of building a market for non-Light Lager beer, which is essentially what craft beer was or maybe is, that was our goal. That was our mission. Our mission was to try to get to a point where Americans consistently consumed non-Light Lager beer.
And today, Americans consistently consume non-light lager beer. They still consume a lot more lager than maybe any other particular style, but they consume a lot of pale L's and a lot of wheat beer and a lot of IPAs. so mission accomplished, to use a bad phrase. But in this case, think even though the craft brewing industry is
Rami
Mm-hmm.
It will hang the banner
Dan
undergoing a period of consolidation, which is, if you look at other industries, is not unusual. What we're seeing amongst the craft brewing community, and I think we're seeing it to maybe a lesser extent in wine, but we're seeing it to a certain extent, is consolidation. consolidation comes in two forms.
Rami
you know,
Dan
One, it's consolidating groups of brewers that are.
that are competitive at the FMCG level, meaning they're on supermarket shelves. That business is really expensive. Sales, marketing, production, distribution. That's a really expensive business with a lower margin than when you're selling it directly to a consumer, because you're sharing the margin with the retailer and the wholesaler. And in the United States, you share a pretty large margin with that wholesaler.
Rami
Mm-hmm. Mm-hmm.
Dan
compared to the rest of the world, because in the US, it's a profit center and the rest of the world distribution, for the most part, is a cost of doing business. It's not a profit center. So you're sharing that margin. You have to have a lot of volume to do that and to do that profitably. As a small producer, cost of goods sold are going to, the cogs portion, the cost to make that next beer.
Rami
Mm-mm. You.
Dan
in terms of raw materials is always going to be a challenge for a smaller brewer. And compared to a large, a really large multinational brewer, you're in, you're making a similar product, but you're in a totally different business. And so it's really tough. And that's why you're seeing the consolidation. They need volume and scale to be able to afford, to be able to pay for not just the raw materials to make the beer, but then to pay for the sales and marketing costs.
Rami
Bye. .
Rami
I've seen so many of my favorite Brewers shift from being taproom only with like cans or Fowler fills or whatever to going on shelves and within one or two years they don't exist right because They don't understand how much margin they're giving up in doing that and how much they're leveraging themselves to do that So I think you're exactly right the
Dan
Right.
Dan
Yes.
Rami
Last big question I want to ask you as we get close to wrapping up here is when you think about data and you're a winery or you're a brewery and you're looking at the data, you've got your own data from the people that are coming in. What data should the what data should they be focusing on? I always say we in this age we have so much data that it's hard to. Do much with any of it, so my focus has always been to tell everybody like actionable data.
even if that's two bullet points or if it's three data points, focus on that. Don't worry about everything else because it's all distracting if you can't do anything with it. But are there certain data points that they should be focusing on right now?
Dan
Yes. Well, and I don't think it's right now. I think it's anytime. And I learned this after, you know, in this new career, right? So there's a very interesting case study from years ago on Starbucks. Starbucks was struggling there. Their consumer had shifted from a consumer that wanted to linger, you know, in that third place to a consumer that just wanted to get in and get out. And they were struggling with time, you know, service time.
Rami
Always. Okay.
Rami
Mm-hmm.
Dan
And they decided, you know, they had a proposal out there and the question was, you know, do we invest $40 million more in our U.S. stores in more labor to speed up service? And what's interesting about that case is what that case shows you is how important the satisfied long-term customer is. From a revenue perspective. So there's a lot of focus
Rami
Mm-hmm.
Dan
in technology businesses on adopting, how do we get new customers, right? The cost of acquiring a new customer. And that's important, right? To understand how much is it going to cost us to acquire a new customer and getting very focused on that versus focusing on your long-term customers. So what I would do is if you're doing customer satisfaction surveys, divide them into three groups. Satisfied.
unsatisfied, satisfied, and highly satisfied. Okay? And then try and track data around, how many unique customers do I have? And what is the spending on a lifetime basis? So let's say the unsatisfied customer spends maybe a year coming to your place and they spend $20 on average a visit. Whereas the highly satisfied customer
Rami
Mm-hmm.
Dan
is probably going to be with you for eight, nine, 10 years. They're going to spend maybe $30 on a visit. They're going to visit more often. That customer's really valuable.
That's why we have loyalty programs in retail. That's why these things exist. so think about, understand who your customers are and try to understand who your most valuable customers are. And then put your effort into where those are, right? Like if you're saying, our problem isn't that we, your problem might be that you don't have enough customers.
Rami
Mm.
Dan
So you need to put more effort into acquiring customers and you have an idea of what that's going to cost you to do. At the same time, understand who your most valuable customers are and make sure you don't take your eye off that ball. Because if you spend all your time focusing on getting new customers and you lose those really valuable customers, it's hard to get them back.
Rami
Well, and they're already there. already committed. I always tell everybody, like, if you think about it, you're much better off
Dan
Yeah.
Rami
connecting with that supportive, enthusiastic user base than trying to acquire 10 new people. Like, I can push them just a little bit and they're willing to do a lot more for me than these other people who do not care.
Dan
Wish.
Dan
Yeah. And you can quantify this. It's not going to be perfect, right? Because no customer surveys, survey system is perfect, but you can get pretty close to understanding what it would cost you to move some satisfied customers to highly satisfied or unsatisfied. See where the sweet spot is in terms of doing that. And then you can react from an operational standpoint.
Okay, we need to add more labor at this point, or we need to do something different with our menu offerings, whether that's on the wine side or on the food side. These are very different production models. The production model for the FMCG supermarket model is, I'm going to focus on one or two things. I'm going to focus on one or two skews, I'm going to drive that all day long with wholesalers.
Rami
Mm-hmm.
Dan
The model for hospitality is variety. So it's a very different production setup, too. You're set up very differently. All these companies are different, and you have to sort of adjust your model, your operational model, to suit what you're seeing right in front of you, as opposed to trying to be somebody else.
Rami
Mm-hmm.
Rami
Yeah, I feel like...
I feel like it's variety and consistency because I feel like you have those stalwarts who come in and always want the exact same thing and they want it to taste the same way and that's fine. And you want to make sure that they're always pleased. But I think that's exactly it. OK, Dan, this has been really exciting and insightful. I want to hit you with some rapid fire. I'm going to shoot some beer questions to you. So let's see how we do here.
Dan
Right? Yep.
Rami
My first question is, what is a beer style that you wish would be more popular?
Dan
It was never popular in the United States, and still popular in the UK and that's cast conditioned pale ale, cast conditioned British style beer. Amber and coffee, slightly hoppy.
Rami
It's always fun when someone does have a cask though here in the US. Because it's like, it's such a novel thing for us here. But it's such a standard thing there.
Dan
Yeah. And you can only really do it here in a tap room because that's the, it takes such, you know, you're still dealing with beer that's fermenting. And so it's, it works in a tap room environment.
Rami
What's a beer style that became popular and disappeared that you wish would come back?
Dan
in the US pale ale. It hasn't disappeared. And the volumes on some of them are still very big, whether it's an American style pale ale like Sierra Nevada or an English style pale ale like Schlafly pale
Rami
No, it's just-
Rami
I like a lot of people are drinking the Pilsners now. I feel like that's taken over. That like lighter, not the light, but the like slightly lighter beer that you can consume more of.
Dan
Yeah. Well, the craft brewing community has been talking about how do we how do we embrace light lager? When I say light lager beer, I don't mean light beer, but light colored lager beer. Dortmunder, the hell is, whatever the sub style under lager is. So it's been a it's been a mission for for the industry on the whole to sort of
Rami
Yes.
Rami
Mm-hmm.
Dan
figure that out. And think the industry now has figured that out. And consumers, you know, my generation thinks of probably craft beer as non-light lager beer, but younger generations, I think, approach craft from a different perspective, a more local, small firm. That's what they see as craft. So if craft producers are producing lager beers, that's great.
Rami
Do you think hazy style IPAs are here to stay or are those going to disappear soon?
Dan
No, all the styles are here to stay. Because again, if we end up going from 10,000 breweries in the United States to 7,000, that's still 7,000 more breweries in the United States than existed in 1991 when we started. And the vast majority of those will be taproom breweries. The vast majority of the 10,000 wineries will be direct to consumer model.
Rami
Yeah.
Dan
wineries, whether they are selling simply to consumers who come to the winery or through their wine clubs, where the wine industry has done such a great job of getting these reciprocal state distribution agreements set up so they can ship wine. Brewing and beer and spirits have worked at getting it. It's been one of those things that wholesalers have pushed back on, which is unfortunate, because I don't really think that the wholesalers
would lose, they're not going to lose a lot of beer volume because beer is hard to ship. It just doesn't make a lot of sense for most part. And spirits, they might lose a bit of craft spirits volume, but it would probably help the craft spirits folks a lot if they had direct shipping. But I think they only have it for five states. It's a tricky one because the distributors are looking at the world, they don't want to lose any sale at this point given.
Rami
No.
Rami
Yeah, it's minimal. off.
Dan
the softness of sales. So until they get comfortable and enough consolidation has happened at the distributor tier, which is happening now, where distributors are going to sell everything. You're not going to have beer distributors necessarily and wine and spirit wholesalers separately. You'll still have specialty wholesalers that do one or the other, but big wholesalers are going to, you you don't need three trucks or four trucks showing up at a convenience store.
in Kansas, right? You just need one truck or two trucks. There's other things you can go to those convenience stores that isn't beverage alcohol that could go on those trucks like fresh food. That's a whole second topic.
Rami
Mm-hmm. All right, last.
Rami
Mm hmm. Yes. last question. The what? And this is a hard one. What is the best beer that you've ever had?
Dan
Well, the best beer I've ever had is depends on the experience. mean, the best beers are the best moments. And so I remember the first pint of cast beer that I had in a pub in Edinburgh. It was like, whoa, I was from St. Louis. I went to Edinburgh University as an undergrad and was like, what's this? This doesn't taste like bush. So this is fantastic. So that's a moment. You my first
Rami
Mm-hmm.
Rami
Yeah.
Rami
Mm-hmm. Mm-hmm.
Dan
My first visit to Young's when I was applying for what you would call an internship, but it was a trainee position on that first Young's Bitter in the sample room, wow, that was a moment. That was an amazing moment. And then the number of moments that I can remember, whether that's in that sample room or Young's pubs in London, fantastic, even to today. So we'll be back in Edinburgh. And again, many of the moments are
from my time in the UK. Those tend to be my more on-premise pub drinking moments. But yeah, I'll be in Kay's Bar with a pint of Timothy Taylor's Landlord. I mean, we get there on Thursday, and then we leave, we'll get there on Friday. I would say by Friday, early evening, sun goes down around three, I'll be enjoying a pint of Landlord with some friends in Kay's Bar in Edinburgh. And just the number of
Rami
Mm-hmm.
Rami
I love it.
Dan
memories I have from the 20 plus years, 25 years almost of my time at Schlafly Beer. From the night we opened to so many other great memories, so many great beers, just fantastic. I'm really just so privileged and so lucky to have spent a career in this particular business because
Rami
Mm-hmm.
Dan
friends I have made and the stories we tell. At the end of the day, especially when you get to almost 65, you're like, okay, I'm gonna be 20 years from now, yeah, I'm likely to be, my ashes will be spread somewhere around the world or six feet under. And what am I leaving behind? I think my kids are doing all right. They're leading their own lives and
Rami
Yeah.
Dan
you know, doing their own thing. But, you the memories that I take with me will, are really just fantastic. And yeah, I can't really say any more than that.
Rami
No, no, I love that. love that. feel like it's one of those things where you started talking and I was like, Oh, I remember the first time I had this beer in this place or I had this style of beer and it was like, Oh, I didn't know that was a thing. Or I had so many bad ones that when I finally had a good one, I was like, Oh, is this what this is supposed to taste like? And do I actually like this thing? Which is just mind boggling.
Dan
Yeah. Beer is amazing beer. And to a lesser extent wine, because beer can be, you know, we ship the raw materials around the world to certain extent, even though we use local raw materials where possible. you know, shipping the raw materials is not impossible. It's not not all that hard. And so we're able to make beers locally and often include local ingredients in them. And beer, to a great extent, is what makes
cities and places unique and special. What's unique about one city or another in the US? Well, it's not Starbucks, right? It's not things that are ubiquitous. It's, went to this brewery, or if I went to California, I went to this winery, even other, no, Missouri, I went to a winery, or Virginia, or wherever it is. So that's what makes these products.
Rami
Mm-hmm.
Rami
No.
Rami
Mm-hmm.
Dan
so important is that they make their places unique and special. And we don't, no one should forget that. And that's why the, I don't think we're at the, you know, we might be at peak calories in the world, or at least in the developed world, but we're not at peak memories and beer and wine and to lesser, well, to certain extent, spirits in certain places.
Rami
No. Absolutely.
Dan
can really play into those experiences. Really be a big part, right? So, yeah.
Rami
Dan, this has been delightful. I appreciate you bringing both the operational experience and the macro data. How can people find you or where should they find you if they want to find Dan in the world?
Dan
LinkedIn, guess, is a good place. DanCon at American.edu for American University. And yeah.
Rami
Perfect.
Rami
Perfect. This has been the business of online alcohol. If you found this conversation useful, subscribe wherever you listen. And if you know someone who would get value from this conversation, send it their way. Or if this just makes you want to go have a beer or a glass of wine with a good friend, go do that. And tell them this inspired you. With that, I've been Ramey. Thank you for listening to the business of online alcohol.
Dan
Go do that. Yeah.