Diversifying Your Business Through Cider Production

Revised on August 3rd, 2020

As the tastes of consumers have evolved, many now want something more unique – they want more options besides beer. According to Nielsen, "Craft drinkers tend to include different alcohol segments in their drinking habits. On a weekly basis, they drink domestic non-craft beer (65%), wine (68%), spirits (61%), imports (65%), FMBs (48%), hard seltzer (51%) and cider (44%). With a growing desire to consume many kinds of alcohol, craft businesses who diversify their product offerings may find themselves at an advantage compared to those who don't.

One of these alcohol segments, cider, is particularly well-known and enjoyed among those interested in craft beverages, and could be a segment your business could produce to diversify and differentiate your business. There is a learning curve when it comes to producing any new type of beverage, but it’s not just equipment and new processes that impact the learning curve. It’s also about knowing your audience, figuring out how to sell it on-premise, reviewing any possible legal hurdles, and how to report production to TTB via WRO.

Through researching over 3,000 breweries, we discovered that only 2.35% of breweries in the US produce cider. Branching into cider could be the key to differentiate your business from others. Once you’ve decided to leap on the apple truck, there are quite a few things to consider before beginning cider production within your craft beverage business.

Why You Should Consider Adding Cider Production to Your Business

The cider market has continued to grow annually since 2011. According to the American Cider Association (ACA) and NPR, the number of cideries in the US have more than doubled from 400 in 2017 to 1,000 in 2020, and cider sales have grown 500% since 2011.

The cider markets growth has been attributed to Millennials desiring healthier drinks that have a lower ABV, according to the ACA. Dry ciders especially are an attractive option to this demographic as they are very low in sugar and carbs compared to traditional beers.

Factors to Think About When Considering Cider Production

First, as with any new beverage venture, make sure you have a business plan in place before investing a lot of money in the new business venture. Not only do you need a plan for procuring equipment and your own blend of apples and/or other fruit (whether you source whole fruit or juice), you’ll also want to anticipate potential demand.

The US Small Business Administration provides an outline on how to create a successful business plan. When creating a solid business plan, you need to consider:

• Creating a market analysis. You need to have a solid understanding of the cider's industry growth, core audience and your competitors' strengths and weaknesses

• How to market and sell your cider. Your marketing plan needs to communicate directly to your core audience your competitive advantage and why they should care about your cider compared to other craft cideries

• Financial projections and demand forecast. You need to figure out if your cider business will be profitable. There's no reason to invest in cider production if producing cider won't be profitable for your business

If you determine that cider production will be profitable for your business, you'll need to determine what equipment you’re going to need and how much funding it will take to purchase it all. It’s always safer to err on the side of things costing more than projected, so be prepared to have a solid financial plan as well. Developing a budget, researching finance options, and solidifying your funding sources all need to be considered.

Setting Your Business Up for Success in the Beginning of Your Cider Production Journey

We always recommend new cider producers to join the The American Cider Association as a “Cidery in Planning” member to make your presence known and start conversations with existing cideries. You will have questions throughout your cider production journey, so it is a great idea to network with more experienced cider makers to get their take. The cider industry is a friendly, helpful industry, and many will be willing to help you achieve success on your journey.

Tips for Breweries Looking to Get Into Cider Production

As if beer and cider production aren’t difficult enough, how does one keep a handle on all of it, especially since one is reported to the TTB via the BRO and the other on the WRO? That’s not to mention tracking your financials, special production processes, barrel-aging and more.

Having a solid beverage management software, like Orchestrated, that can track all your taxable production through both TTB reports, specific expenditures for each product line, the various entities within your business, plus all the custom production methods, is essential.

Utilizing a tool like Orchestrated, which can be customized to handle cider, as well as spirits and other craft beverage production types, will make an expansion into new products easier. It enables craft beverage manufacturers the ability to make the best business decisions by providing a single source of truth for the entirety of their operations.

Conclusion

With cider sales continuing to grow annually, now is the perfect time to start planning to diversify your business through cider production. Remember, instead of producing cider as a one-off or as a trial only, it is important to create a business plan that will help guide you through many market challenges and provide a look into the financial projects you should expect by getting into cider production.

Having the right equipment and financial infrastructure in place is important to ensure you can forecast your production. If you plan ahead, your business will be more likely to succeed in producing cider. Ready to start the conversation on how Orchestrated can help you reduce TTB/WRO risk, reduce costs and expand margins throughout your cider production journey? Speak to one of our experts today to learn more.