One of the first lessons Noah Glanville learned about selling overseas was to double check the shipping container specs.

“The first [shipment] to Australia, I got a quote for a 40-foot container. [The shipping company] said that 280 units would fit into the container, but it was only 240,” explains Glanville, founder and president of Pit Barrel Cooker Co., which manufactures a proprietary hanging meat smoker that offers “set-and-forget” cooking and is highly rated by barbecue aficionados. He says the mistake changed his shipping cost from $10 to $15  per unit, reducing the profit on his bare bones pricing.

“But unless it will flat out bankrupt me,” Glanville says, “I keep my word if it’s my mistake.”

A Marine corpsman combat and security veteran in Afghanistan and Iraq, Glanville takes the export market learning curve in stride. It turns out that everything in business is easier after getting attacked and coming under fire.

“There were times where I thought, ‘I’m dead.’ There was no way we were going to live through this—and there were a couple of days where that went on for eight hours straight, thinking I’m going to die any second. Other people around me were getting killed and … any second I’m going to catch it,” Glanville recalls. “There are not many days in this business that would be worse than some of those days in Iraq.”

That combat experience is paying off in the export business for Glanville, his wife and company co-founder Amber, and their employees. They started Pit Barrel Cooker Co. in 2010 and were in the black by year three, enjoying two- to three-times growth when comparing monthly sales to the previous years’ monthly totals. The company recently moved beyond spot shipping overseas and implemented full export programs to the Australian and UK markets. Glanville expects to expand throughout Europe, Southeast Asia and New Zealand soon.

According to a 2013 Small Business Administration Issue Brief, veterans account for about 9 percent of all business owners. Global Trade spoke with two other military veteran CEOs and an expert who helps vets start their own businesses, to discuss how military experience is a business benefit in global trade. Together with Glanville, they identified five traits learned from their service experience that have helped them succeed in business and exporting.

PERSEVERANCE

Complete the Mission

Steve Wilburn founded FirmGreen Energy, Inc. after working in large global companies Monsanto—where he was loaned to NASA for a while—and Allied Signal, taking a five-year hiatus in-between to care for his wife who was battling cancer. As FirmGreen’s chairman and CEO, Wilburn says it’s vital to research the needs of the clients when entering global markets, especially when competing with much bigger and better-known competitors. To win business, he works to understand local cultures and establish a personal relationship around both the business and social needs of his foreign clients. FirmGreen holds several patents and sells sustainable energy and alternative fuel solutions in Brazil and the Philippines, primarily through word-of-mouth references.

Severely wounded while fighting in Vietnam, Wilburn spent nine months recovering at a VA hospital and endured a dozen surgeries to his knee, shoulder and face. The recovery process, he says, afforded him a lot of time to think and ultimately define the problems he wanted to solve in the world. Such vision is key in business success and vital in global markets.

“I was always curious about energy,” Wilburn shares. He eventually earned a degree in chemical engineering and took continuing education courses in business. He says he benefitted from good mentors. In his early career he worked to figure out how to reduce energy consumption in wastewater plants and then switched to working with some of the earliest solar energy designs.

“I was able to get permitting in the 1970s for the then-new fluidized solar sites in San Francisco, home to the Sierra Club,” he says. “That was a difficult process, but it turned out to be a good source of renewable energy.”

According to Wilburn, it’s not enough to be aware of cultural differences between countries, but one must also identify with the client’s values. His business partners in Brazil, for instance, had a strong desire to improve the circumstances of its poorest citizens; Wilburn won his first contract over bigger and better-known companies by proposing a deal that gave back to the local community.

“That built trust that gave me a chance to get into another country,” he explains. “My clients know they are dealing with someone who has integrity because I want to help people, just the same as they do. They know now that I don’t quit, that I suit up and finish the project.”

CULTURAL INSIGHT

Global Understanding

Under the leadership of president and CEO Craig Carson, Jeco Plastics Products morphed into a small American company that figured out how to penetrate overseas markets. A West Point engineering graduate, Carson was Army Airborne stationed in Germany. He says that it’s not a good strategy to try to compete on price for products made locally in a foreign market. Rather, he recommends developing a product that features high-tech qualities to produce indirect savings, such as making line equipment more efficient. His specialty line of rugged plastic containers and pallets for the printing, automotive, warehousing and other industries offers thermoforming capabilities unique among North American producers. He says he spent five years knocking on doors in Germany, speaking fluent German to build progressive relationships needed to get his first sales. Today, Jeco sells into 25 countries, with its largest accounts in Germany, Japan and Mexico.

Carson advises that language is critical. Speaking English and German covers his bases in Europe, but in Japan he hired an interpreter who brings much more to the table than language.

“I depended on an older and more experienced translator. I made sure that he had status in the eyes of my customers,” Carson explains. “He coaches me about body language and protocols so important in the Japanese culture.”

Wilburn agrees. He says he had to learn local customs, cultures and to be respectful during his service in Vietnam—lessons which have served him well in his business. “It wasn’t just all shooting and destroying things—not everyone was the enemy,” he says. “We had to work at building relationships and try to not make the people any more miserable than they already were.”

Both Carson and Wilburn spoke of the help they found in the U.S. Commerce Department, local embassies and the Export-Import Bank of the United States. In the end, Carson says, the same key principle that applies in stateside business is important in the export market: “You have to have something different to offer, a value proposition for the customer.”

Ayse Oge stresses that veterans often have experience working in global markets. Oge owns international trade consultancy Ultimate Trade and is a speaker and author who served as senior international trade consultant at the Center for International Trade Development in Long Beach, California. Early in her career, she ran her own import/export business in high-end luxury food items between the U.S. and Europe. “Vets are comfortable working with different nationalities. They understand the world, they respect cultural differences and they often speak a second language,” she says.

According to Oge, such nuances are vital in dealing with foreign nationals and building overseas relationships. Her recently published book, World Smart Veterans, is based on her ongoing experience in advising veterans starting up businesses. “Veterans are natural team players and also have learned how to be great negotiators,” she adds.

EFFECTIVE DECISION MAKING

Trust Your Gut

Glanville of Pit Barrel Cooker says he learned to trust his instincts in combat, a trait vital to his business experience. He says that if he gets a call from someone overseas who claims to be an importer but refuses to pay the upfront $400 to get a sample shipped, or doesn’t seem to understand his product, or has to work through a few credit cards during a Skype call to find one that will accept the charge, he passes on the opportunity.

“You know, $400 is a cheap investment to decide if you want to go into a business relationship with someone,” he says, adding that he credits the one-time purchase cost back if it leads to a bigger order. “If they are super passionate (about the product) that gets my attention.”

ETHICS

Discipline and Honor

Carson recalls that, initially, he struggled a bit when he left the Army. “In the military, money does not have direct meaning. Our values revolved around issues of honor, loyalty and a sense of duty,” he explains. “In the civilian world, money governs all relationships.” He says this makes for more emphasis on short-term relationships, which was a big deal for the West Point graduate.

“Maintaining my ethics in the civilian world took some work,” he says. But it was an approach that he now believes his European clients value. For example, he says that the hierarchy in the military teaches a forced listening experience.

“Silence is okay in a military environment. And I learned that long spaces of silence and quiet are often okay in Europe and Japan too—you don’t have to feel compelled to speak,” he says. The use of humor in overseas markets could be very dicey, he adds; even the most innocent of joking around can be easily deemed inappropriate.

Military experience was a positive factor in Carson’s European and Japanese experiences. When he went on a planned trip to Europe right after 9/11, a young executive shook his hand to tell him, “We will never forget Normandy.”

“In Japan, a place we nuked, I had a (business) contemporary tell me over a mandatory one beer that he was just short of finishing his training to be a kamikaze pilot. He told me that the U.S. ending the war saved his life,” he recalls. “I wear my West Point ring because duty, honor and country are so positive in my mind. On balance, this has been helpful in my overseas business relationships.”

ADAPTABILITY

Handle Stress

Oge says that veterans possess a wide range of remarkable leadership qualities that make them especially well suited to work in international markets. 

“Veterans make effective decisions on the front line without any guidance,” she says. “They receive very different training in handling unstable and unexpected events.” She cites military support not just in combat and business, but in recently responding to civilian challenges such as a tsunami or Ebola outbreak.

Veterans have global insight and economic understanding, asserts Oge, who believes this makes them expert in dealing with shipping agents and distributors in foreign countries. And, she adds, veterans handle risk well. “As I learned in my own global trade experience, getting paid is a risk,” Oge says. “My global clients always wanted to know what I had that was new. Well, veterans handle change and uncertainty really well—this is all a perfect fit.”

She cites the experience of her father, a Turkish military man who quit the army and immigrated to the U.S. He went on to study management and started a business consulting company. Eventually, her father became a business consultant in the U.S dealing with the Turkish government.

“I learned my own business discipline from him,” says Oge.

Summing up his journey to global exporter, Glanville says that as difficult as it was, he would not be who he is today without his military experience.

“My military career … had a huge influence on who I am. Going through combat and losing people I knew really well and seeing a lot of people get hurt changes you,” Glanville reflects.

“I definitely have struggled with PTSD (Post-Traumatic Stress Disorder) and it’s something that has … given me my drive,” he adds. “That kind of experience creates an energy. If not dealt with or not channeled right, it gets negative really fast. How I chose to turn it into a positive was to go hell-bent on this business and work harder than anyone can imagine.” n

Ocean Spray CEO Randy Papadellis leads under an unusual business model. As an agricultural cooperative, his company is committed to accepting 100 percent of the crop that its member suppliers can produce.

Lately, it’s been quite a lot.

“The industry is in an oversupply situation so we have to sell in new ways,” says Papadellis. “Ocean Spray is more than 700 growers who individually own their farms. Farmers love to grow and with new agriculture practices they are increasing cranberry yields. The expectation is we will find more ways to sell.”

Ocean Spray is the largest seller and enjoys the highest rate of brand awareness—thanks to the success of its signature cocktail juice and Crazins brand—but it competes with nearly 30 cranberry brands and suppliers in the wholesale, raw product, direct and retail business lines, according to the Cranberry Marketing Committee, USA (CMC).

Papadellis has a tough assignment, but after seven years at the helm the former Cadbury Schweppes marketing expert has learned a thing or three about selling cranberries. His plans for Ocean Spray growth include focusing on global markets. In 2014, Ocean Spray got the attention of the Department of Commerce, which awarded the company one of its Presidential “E” Awards for Exports, owing to its track record in expanding agricultural exports (see sidebar, “Harvesting Exports”).

Papadellis says there’s an important distinction in their export business: the difference between sales under the Ocean Spray brand—or “finished” product—and ingredient cranberry products that are sold to a wide range of food manufacturers to use in their own goods. Ocean Spray exports now account for 25 percent of sales, though there has been a learning curve in selling its branded products abroad, according to Papadellis. In the U.K., for example, the company knows that blending black currants with cranberries is a good match for that region’s taste.

“We’ve gone back and forth the past five to 10 years to tailor our finished-brand products and advertising to specific countries,” says Papadellis. “But we’re finding the world is getting smaller and what works in the U.S. often translates to export markets.” Most of the company’s global advertisements depict growers in bright red cranberry bogs, offering a humorous marketing pitch.
The global marketing doesn’t just help introduce foreigners to a fruit native to America, it’s also building Ocean Spray’s brand awareness against the competition, which, as it turns out, is also overseas.

Growing global markets is the trend across the entire cranberry sector, according to a 10-year report through 2013 from CMC. The committee’s data shows that sales of fresh cranberries have averaged right around 56,000 barrels (100 pounds each) for the past decade. In the same time span, however, foreign processed (ingredient) cranberries have jumped from 1.5 million barrels in 2004 to 2.6 million barrels in 2013.

“In 2013, about 30 percent of the crop was exported,” says Scott Soares, executive director of the CMC, which consists of 1,300 growers and 70 handlers (including Ocean Spray). “In 2013, we saw a 16-percent increase in exports, with a 104-percent increase in China, a 109-percent increase in Korea and more than a 200-percent increase in Hong Kong.”

Soares says awareness of “America’s Original Super Fruit,” as cranberries are dubbed on the CMC website, is almost nonexistent in many overseas markets, requiring some groundwork to create product interest. To that end, the CMC conducts international press and food-processing events in such cities as Beijing and Shanghai, as well as sponsored events in the U.S to reach journalists and consumers.

All of which is welcome by Ocean Spray, which must also spread the cranberry gospel to establish its brand in foreign markets. The company recently expanded its 10-year-old “Bogs Across America” campaign globally, recreating a New England harvest at a Dublin, Ireland, garden show attended by 100,000 visitors. Some 50,000 cranberries in all their fiery-red glory were used in the “berry tableau,” which won Ocean Spray the show’s gold medal.

“Cranberries—which are just one of three fruits native to North America, along with blueberries and concord grapes—are often a new commodity in a market,” says Lisa Hill, Ocean Spray’s senior manager of Global Trade Strategies. “So we promote cranberries using three pillars: taste, health benefit and as a uniquely North American heritage product. (Think pilgrims and Thanksgiving). But once consumers taste cranberries, they are hooked and love the product.”

“We’ve got 80-90 raw products, from juices to dried fruit, being shipped to a number of countries, from Australia to Mexico to China,” says Papadellis. “It would be nice if we could put one juice in one bottle and sell it that way, but it takes an individual understanding of each country where you want to do business.” One past strategy was inking distribution agreements with Coca-Cola to sell cranberry drinks in new overseas markets.

Papadellis notes that although Ocean Spray has been exporting for 50 years, regulations such as food-safety laws, import laws and labeling requirements are always evolving. The export learning curve has been key for Ocean Spray, Papadellis says.

“For example, in the U.S. we can say on the label that the cranberries help cleanse and purify the body, but we can’t make the same claim in Canada,” he notes. “So we have to be alert to the ad messages we use in export markets. At the same time, whether it’s cocktail juice or Crazins, we have to stay true to our core finished product and its message.”

The universal appeal of the cranberry helps foster this tricky balance. Because it’s rare for Ocean Spray or its associated global producers to develop a unique product, Papadellis says the company works with international partners to bottle and package core products for efficient placement on grocery shelves.

Ocean Spray’s quality representatives make periodic inspections of overseas production plants to ensure its products are being produced to standard and safely. “We ship a lot of fruit to the southern hemisphere, so we have to pay attention to transit times and refrigeration when crossing the equator,” Papadellis says.
According to Hill, most of the company’s exports are sent in full container loads via ocean, although they will send smaller orders as air shipments via FedEx if that is what a customer needs. “We always work to get product to customers most efficiently and at the lowest cost,” Hill says.

To that end, Ocean Spray has a 20-year relationship with Boston-based Intral Corp., which specializes in international trade and logistic-management services. Hill says Ocean Spray has learned to be a great partner with its logistic provider, which is mutually beneficial. Ocean Spray pre-negotiates two to three primary ship carriers per shipping lane, with Hapag-Lloyd being one of the most frequently used carriers. Hill says that once Ocean Spray receives a purchase order from a client, nearly all shipping orders are arranged via email, with Intral providing a critical EDI (Electronic Data Interchange) information chain on the shipments.

“We act as our own importers with Intral in large markets such as the EU, Canada and Australia,” she notes. “In other markets we rely on the manufacturing parties, sales team and distributor to get the product in-country.”

Hill notes that in her 13 years with Ocean Spray, the company has become more adept at relying on government-agency resources, such as the USDA Foreign Agriculture Service and the U.S. Trade Office, to access global markets. She also says that several free-trade agreements in recent years have helped reduce the cost of duties on exported products, although this has been accompanied by the increase in complexity of rules and regulations to which Papadellis refers.

That complexity is one reason Papadellis cautions fellow exporters against overextending. In China, for example, he notes that the biggest issue was not the language—which was solved by hiring a few people who spoke Mandarin—but the extensive regulatory process for food imports.

“When you look at the world it’s easy to see a huge opportunity,” he says. “And it’s also really easy to get spread too thin. It’s better to focus on a few key markets at a time. Invariably, we encounter a few problems when shipping to a market for the first time.”

HARVESTING ACCOLADES

Ocean Spray was recognized on several fronts in 2014 for its ability to drive the cranberry exports, reduce emissions and improve the business climate in the domestic market.
The company received one of 66 Presidential “E” Award for Exports, an award given to companies “making a significant contribution to the expansion of U.S. exports.”
In recognizing Ocean Spray, U.S. Secretary of Commerce Secretary Penny Pritzker said:

“Ocean Spray cranberries has demonstrated a sustained commitment to export expansion. The ‘E’ Awards Committee was very impressed with Ocean Spray cranberries’ creative, multi-tiered marketing programs. The company’s work with non-profit organizations and committees dedicated to expanding agricultural exports was also particularly impressive. Ocean Spray cranberries achievements have undoubtedly contributed to national export expansion efforts that support the U.S. economy and create American jobs.”

On the green front, the Environmental Defense Fund (EDF) cited Ocean Spray in a case study of its success in reducing shipping emissions by 20 percent. The EDF noted that the company implemented three of EDF’s “Five Principles of Carbon-efficient Shipping” to achieve the results. EDF also highlighted that Ocean Spray reduced its costs on one route by 40 percent by adhering to the EDF standards.

The Associated Industries of Massachusetts (AIM) awarded Ocean Spray its 2014 Chairman’s Award. The company was cited for its expansion into 90 global markets, exporting 100 million pounds of cranberries and redistributing all proceeds to its grower-owners, 40 percent of whom reside in the state.

Jack White, CEO of San Diego’s Ballast Point Brewing and Spirits, says his company first exported in 2009 when approached by Nagano Trading out of Yokohama, Japan. “That our brand would actually sell in Asia was exciting,” he says. “Plus we like to travel. … And we would have to go to Japan to taste our beer!”

Ask the brewery’s VP of Sales & Marketing, Earl Kight, about exporting, and he speaks with an uncommon candor for a marketer, a breed who often pepper their speak with talk of brand identity and unique selling propositions.

“When you sell craft beer domestically, you start small and hope customers like it,” says Kight, vice president of Sales & Marketing for the award winning Ballast Point Brewing in San Diego. “But when you export your beer, you pray like there is no tomorrow that it will sell once it gets to wherever it’s going.”

Kight says overseas markets are worth pursuing. According to Eli Raffeld with Global Craft Trading, Ballast Point’s export distributor, the brewer exports four 40-foot shipping containers filled to the gills with Ballast beer every month—almost 1,300 cases combined to Japan, Australia, New Zealand, South Korea, Chile, Brazil and Sweden.

But is it worth it, what with the high costs of temperature-controlled shipping containers and long transit times? Raffeld notes he can send a refrigerated shipping container of craft beer to Japan for the same cost and in the same amount of time it takes to send craft beer from San Diego to Boston.

“When I walk into a bar in Japan and order a Ballast Point beer and it tastes the same as at our brewery in San Diego, I know we got it right,” Kight says. It took Kight five years to get on the same page as Global Craft Trading, but he now sees the distributor as a trusted and vital partner in satisfying a thirsty global market. Even at $14 per beer, Japan’s bars can’t always keep Ballast beer in stock.

Still, the company doesn’t act on every opportunity, but makes selective decision. “Items we take into consideration: refrigeration, how well do we know the distributor, is the region a craft hot spot,” says White. And getting it right is particularly rewarding. “It is great when folks that drink our beer in New Zealand show up at our brewery on vacation and thank us for sending it overseas,” he says.

It turns out the global village knows better beer when they taste it. According to the Brewers Association (BA), craft beer exports were up 49 percent in 2013, the 10th straight year of increases. While the 282,526 barrels—a measure of volume equivalent to 31 gallons—is not yet an ocean of new trade, craft beer gurus understand that establishing and growing brand preference overseas now is a good market hedge as craft beer brewers continue their relentless overtake of the U.S. market.

“Right now, Americans make the best beer in the world,” says Mark Snyder, export development program manager with the BA, the largest trade group for American craft beer. While his assertion may be provocative to brewers in other countries, such as Germany where beer has been made since the Middle Ages, other experts in the U.S. craft beer export market echo his sentiment.

Raffeld thinks craft beer breweries that export are peeking around market corners: “While there is still a lot of real estate left in the U.S. market for craft beer expansion, some locations are starting to experience saturation.” Export, he says, is a great way to sell excess capacity. “The brewers who get into overseas markets early to establish brand loyalty are going to be the most successful as craft beer competition increases in the U.S.,” he predicts.

Global Craft Trading relies on shippers such as Kuehne + Nagel, Samskip and Dependable Global Express (DGX) to send all of Ballast’s beer in refrigerated containers, Raffeld says. The shipments are tracked through online portals and GPS. He also says that, depending upon the shipper, destination and insurance arrangement, he will sometimes place embedded thermometers within the containers that measure temperature every six hours. The thermometers are retrieved by the buyer upon delivery and returned to Raffeld in California for analyses.

Last fall, New Belgium Brewing—brewer of such consumer favorites as Fat Tire and Ranger IPA—entered Canadian markets, the largest export destination for American craft brewers in 2013. Kim Jordan, New Belgium’s CEO, said at the time that she thought it would be a good time to release an export “trial balloon.”

“We still do not have enough capacity in our Fort Collins [Colorado] brewery to add high-density markets along the East Coast,” says Jordan. “At the same time we realized [British Columbia] and Alberta were in fairly close proximity. [Exporting] made sense logistically and we’ve learned a great deal.” To address its capacity issue, New Belgium just held a groundbreaking for its second production brewery in Asheville, N.C., a town with a rich craft beer heritage. The new plant is schedule to open by the fourth quarter of 2015.

According to the Brewers Association, 47 percent of exports last year went to Canada. With 75 percent of Canada’s population within 100 miles of the U.S.-Canadian border, this is not surprising. Canada allows its citizens to return from the U.S. with up to a case of beer per trip, which has helped to generate a thirst for America’s craft beers.

“We have a very methodical process for choosing new markets,” says Rich Rush, New Belgium’s regional director of the Pacific Northwest, including British Columbia and Alberta. “When we scouted our Canadian markets and walked into liquor stores with our New Belgium shirts on, people immediately recognized our brand and asked, ‘When are you going to sell in Canada?’ That’s a good sign.”

Rush says in the past six months the company has learned a few lessons through trial and error.

“We had a shipment in which the volume amount on the label was incorrect,” Rush says. “It came from our supplier that way and no one noticed it on the filling line. That small detail didn’t match what was on the manifest and the shipment got held up in customs for a week. You have to be really buttoned-up on the details when exporting.” He also admits that the company is learning about the impact of exchange rates. The price of a six-pack of Fat Tire just went up about a $1 because the Canadian dollar declined in value against the U.S. dollar.

“The exchange rate is something we didn’t think about,” he says. “Our distributors and retailers are our partners and it’s not fair that our partners on the Canadian side bear the full cost of the exchange rate disadvantage. So we’re working on a sliding scale price list to help them.”

New Belgium works with Container World for transport and storage. As part of its quality assurance program, Rush oversees quarterly on-site inspections of storage and distribution facilities, as well as checking tap lines for cleanliness.
Beyond Canada, Japan and the rest of the Asian basin are prime targets for American craft beer exports.

“The potential is fantastic,” says Charles Finkel, president of The Pike Brewing Company in Seattle. “Not a week goes by when I don’t get a call from someone in Taiwan, Singapore, Japan or Denmark.” Finkel currently sells beer in Japan, which is sold FOB (freight-on-board) to the buyer who tracks the refrigerated shipments.

Finkel himself is established in America’s craft beer history—he pioneering the import of European beers in 1978, especially from Belgium. The man knows craft beer. For the price of a pint, you can even tour his craft beer museum in his sprawling Pike Place serving room and restaurant in Seattle’s historic Pike Place Market. Finkel, who sends beers such as Pike Kilt Lifter and Pike Stout to Japan, says that what is going on right now with American exports is reminiscent of what happened 30 years ago when he opened up new markets in the States.

“Once you convince brewers there is an interest, that the beer can be moved in reasonable quantities and the quality can be preserved, you have a new market,” he explains. Once overseas customers become knowledgeable about better beer, Finkel predicts there will be no stopping the demand. He cites Japan and China as examples.

“People in Japan and China were impoverished when it came to good beer,” he says. Both countries have some of the greatest food in the world, he says, but their beer was “awful.” Japanese beer is traditionally very bitter without much body and China suffered through a scandal that uncovered formaldehyde in some beers. But Finkel asserts all this is changing. In recent years both governments altered existing taxes and regulations that have spawned a small local craft brewery scene with good beer and beer knowledge.

American craft beer has set an unprecedented example in the nation’s business history: About 3,000 small-time craft producers are chewing away at a sector that was for 50 years owned by a handful of big corporate producers. And they are doing it with the efficiency of an ant colony devouring an elephant carcass, tiny bite by tiny bite.
But to understand craft beer exports, it pays to first know what has transpired in the U.S.

According to the Brewers Association, craft beer consumption in the United States increased 18 percent by volume in 2013 and 20 percent by sales. Over the past decade, American craft beer sales have increased an average of 10.9 percent per year. Yet it still only accounts for 7.9 percent of the total domestic market by volume and 14 percent by sales, so the upside is still enormous. This gain is significant considering that, overall, the consumer beer sector is stagnant, according to a Demeter Group Investment study, which shows beer is losing market share to wine and spirits.

To put a fine point on it, craft beer’s growth is coming right out of the hides of big-beer producers such a InBev, the biggest of the big, which owns more than 200 beer brands internationally. These include Budweiser, Corona, Stella Atrois, Beck’s, Hoegaarden and Leffe. Other big American producers include MillerCoors and Pabst Brewing Company.

For decades the response of the big U.S. producers was to ignore craft beer and the tiny group of brewers slowly carving out a market. After all, following the repeal of Prohibition in 1933 big beer dominated, with only one craft brewery—Anchor Steam— left in the U.S. by the mid 1960s. For decades, big beer companies made a fortune on golden lagers that all pretty much tasted the same—fizzy, yellow, undistinguished. The recipe didn’t change much until 1975 when Miller nationally introduced its highly successful Lite beer. American brewers got rich all over again as light beers further watered down the category and expanded the female market.

Today this long-standing business model has been crunched flatter than a beer can on a jock’s forehead. American beer drinkers are no longer interested in “less filling:” sales of light beers have declined by 25 percent in the past five years, according to USA Today. Now big brewers are scrambling to emulate craft brewers, triggering claims that big beer companies are “crafty” brewers. Coors has developed Blue Moon and Colorado Native; Budweiser has Shock Top; and InBev owns 32.2 percent of the Craft Brew Alliance, which features such brands as Redhook, Widmer Brothers and Kona Brewing.

Tim Cochran has served on both sides of the beer wars. He spent 16 years working for SAB Miller Brewing to develop Asian and Latin American beer and beverage markets. These days he and his wife Carol own the Horse & Dragon Brewing Company in Ft. Collins, Colo.

“Choice is part of the human condition,” he says. “People are very interested in craft beer, especially in countries where there is not a strong craft beer scene.” Based on his experience working in overseas markets, Cochran thinks it will be easy to move the needle for American craft beer exports as long as the beers are handled properly in packaging, transport and storage.

“One thing you can say about big beer companies is they know how to duplicate the taste of a golden lager all over the world. The Budweiser you have in Asia or South America is going to taste the same as the Budweiser you have in America,” he notes. “That’s because they pay attention to the finer points of moving and handling beer.”

While Cochran has no immediate plans to export beer, his experience offers insight into the right protocols.

“The enemies of beer are light, heat and oxidation. So the first thing I would be looking for in a company that exports craft beer is one with a really good packaging line. Beer has to be sealed with as little oxygen as possible getting into the head space,” he advises.
He also says that it is wise for a craft brewer interested in export to have a close relationship with the distributor on the other end, which includes traveling to the country of export to review on-the-ground accommodations.

According to Steven Meier, one of the owners of Western Export Services in Denver, it takes from 11 to 40 days to get beer from the United States to his customers in South Korea and Japan. Craft brewers generally agree their product stays fresh for between 90 to 120 days.

“We always request below deck storage for our containers when we ship product overseas,” Meier notes. He adds that each month his company ships about the equivalent of 100 20-foot shipping containers—which includes but is not limited to their beer exports—working with logistics partners such as Blue Water Shipping, Panalpina World Transport Ltd. and “K” Line Logistics. Meier relies on freight forwarder or steamship online tracking to monitor the shipments. Among his biggest sellers are Boston Beer (maker of Sam Adams), which exports to 30 countries, and Brooklyn Brewing, which reportedly exports up to 25 percent of its production, according to New York Business Journal.

Meier reports that his export volume is picking up, with craft beer shipped to Korea alone up nearly 50 percent in 2013. His experience is similar to the figures cited by the Brewers Association, in which the Asian Pacific market (non-Japan) shipments were up 73 percent in 2013, with big export leaps to Singapore, Thailand and Hong Kong. Meier attributes Korean growth to the government’s action to lower its taxes on imported craft beer by 25.7 percent over five years starting in 2012.

The very quality that makes craft beer a hot commodity in foreign markets is the same that could keep supplies tight for global traders. It’s the paradox of craft beer, that its roots are in small batch production to serve a local, even neighborhood market. The BA’s own definition of craft beer stresses “craft brewers are small brewers,” which it defines as a brewery that has production of 6 million barrels or less.

Boston Beer, the largest craft brewer in the United States, which has built a brand presence in 20 countries, produces about 2.5 million barrels a year. Budweiser, by contrast, produces 125 million barrels a year. Most craft breweries are well below 100,000 barrels a year, so there is built-in scarcity in the U.S. craft beer market. Fred Mendes, director of International Sales for Boston Beer, reports that Sam Adams Lager is the company’s most popular export.

“More and more drinkers outside of the U.S. are asking for quality, full-flavored American craft beer—the demand is only increasing,” Mendes says. “U.S. craft beer is a brand now. We’re on the forefront of providing drinkers what they want.”
New Belgium’s Kim Jordan thinks American craft brewers have good reason to be optimistic—and proud.

“The America craft beer scene is the most innovative in the world right now. The U.S. scene is where you go to be inspired these days. It really speaks to American brewers’ willingness to progress and transcend traditional ideas about brewing as well as beer drinkers’ willingness to take risks and try something new. There’s a great deal of energy around that now.”