SWOT Analysis for Malting

Queen City Malting conducted a SWOT analysis before we started our company. It was based on the assumption that New York State had just enacted a law allowing brewers and distillers to sell at farmers markets without a liquor license if they included New York State products in their goods.

We looked at the number of brewers, probably around 350 at the time in New York State, and the number of distillers, likely between 50 and 100, and thought this was a no-brainer; there was a significant market that could use malt.

You have to understand that beer and whiskey have very few ingredients. Beer has just four: malt, water, yeast, and hops. Whiskey has just three: malt, yeast, and water. Essentially, malt is a cheap form of sugar for these industries.

According to sources, myself and nine other people around the state had the same idea, and we started malting firms. One of the issues we ran into was that New York State didn’t have sufficient grains for malting because most had disappeared when Prohibition in the United States took effect.

Cornell Cooperative Extension began exploring which grains would work best in New York’s environment. The varieties from the Midwest required a drier climate than New York could provide.

After three years, they selected grains from northern Germany because the climate there was closer to ours than any other region. The threats we identified were significant.

Our biggest concern was grain coming in from the Midwest. Because those grains could be produced at such scale, they were essentially a commodity and could be sold for about $0.65 per pound, whereas ours were closer to $0.75 to $0.80 per pound.

One threat we didn’t recognize was that this new law had no real enforcement. Brewers and distillers only had to buy one bag of our product to claim they were using New York State ingredients in their beer or liquor, even if it was enough for just one batch.

They could then use that claim for the rest of the year to qualify for the exemption. This became a major issue for sales, because with our higher costs, our product was only viable for items sold on tap. Canned and bottled products couldn’t absorb the higher prices. I’ll continue with this in the next post.

Next week, I’ll continue talking about the SWOT analysis and marketing challenges in more detail. I’ll see you then.

If you need business advice, contact me at bobchuckpatterson@yahoo.com.

#LeadershipMatters #CEOThinking #AdaptiveLeadership #BusinessInnovation #MarketDisruption #StrategicGrowth #ChangeManagement #FutureFocused