Vintage (Cidrage?): The Surest Sign of a Cider Underdog

We set up our first bottling line during June of 2008, seven months after pressing, and 8 months after the apples were harvested at Scott Farm and Champlain Orchards.  In our 800 square foot basement we had a pallet of bottles in cartons, a little bottle sparger that screwed onto the tap over our basement sink, a plastic bottle tree to dry the bottles, a hose that ran from the tank through a pump to a small filter to our little 4-head gravity filler, then finally a hand corker resting on a piece of plywood set on two saw horses.  Friends and family had volunteered to come and help our first bottling in return for ice cider.

The team:  One person sparging bottles, one person at the filler, one person on the corker, and a final person wiping the bottles and putting them back into the cartons.  We would pull them out again for labeling and capsuling another day.  Four people working a good eight hours to bottle a little over two thousand bottles.  Not to mention two hours to get everything sanitized and set up, and another ninety minutes at the end to clean everything up. Let’s just say that labor efficiency wasn’t our priority that day – although we noticed a clear linear relationship between good tunage on the boom box  and the pace of the line. The only casualty was the guy on the corker, who couldn’t raise his right arm above his waist for two days afterward.  As his wife I took a little heat for that. But hey, we were done for the year – one day of bottling for inventory with a retail value of a little over $26,000.  One day, one year, one batch of ice cider.

As a cider producer, we are technically a Winery, so we are subject to federal wine regulations, yet we cannot use a number of wine terms on our labels because we use apples instead of grapes.  We produce our ciders with the same techniques and values as used by vintage wine makers, one harvest = one cider, but are prevented from communicating that on our labels with a ‘vintage’ date.  Or maybe we need a new word, since ‘vintage’ itself has ‘vin’ referring to grape wine in it.  Perhaps we should argue for the ability to have a ‘cidrage’ date?

There are all sorts of differences between a cider made in one annual batch from fresh, harvest-pressed apples and aged for at least 6 months before release, versus a cider made from concentrate or from apples pressed out of cold storage, fermented quickly for 2 weeks and released 2 or 3 weeks after that.  Regardless of whether the outcome is pleasing to your palate in either case, a ‘cidrage’ cider is an underdog cider because of the significant economic disadvantages of producing one batch per year.  What are those disadvantages? One is lower asset utilization, the other is higher working capital requirements.  In this post I’m going to cover asset utilization.  I’ll cover working capital later.


In my last post ‘Breaking Bad or Breaking Even‘, I described how equipment is considered an asset, to be expensed over 7 years.  Now consider the impact of producing multiple 4 week batches of cider one after the other throughout the year, rather than one batch per year for the same volume of product.  If Cidery A produces 2,000 gallons of  one ‘cidrage’ cider once per year, they might invest in two 2,000 gallon tanks, one of which will be full most of the year (the other is to pump into).  Cidery B produces 2,000 gallons of 4-week cider.  That means they can produce about 10-12 batches per year, so they only need to invest in two 200 gallon tanks.  Even though the cost of the 2,000 gallon cost is less than 10 times the cost of the 200 gallon tank, Cidery B has significantly lower equipment costs, so their fixed costs are lower, their break-even volume is lower, and their profitability is higher at each volume of production.



Bottling equipment is a little more complicated, but basically Cidery  B can size their bottling equipment for a 200 gallon bottling day, whereas Cidery A may need to use larger equipment capable of bottling 2,000 gallons in only  1 or 2 days.  So just to reiterate, for the same annual gallons of production, a true ‘cidrage’ producer can incur 4 to 5 times the equipment cost of a 4-week cider producer. Now that’s an underdog for you.



What is Cidernomics?

“How do the economics of small, low-tech, agriculture-based manufacturing work?  There is so much romance about these kinds of businesses, but really, what does it take to ensure a happy ever after?”

It had snowed 8 inches overnight as predicted.  I was glad I had parked the UHaul truck on the side of the highway where at least I had a chance of getting it going.  I scraped the snow off our old Toyota Highlander, started it up and drove very slowly down the mile of ice-covered dirt road from our farm, down and up and down again, the last hill having a grade of about 8% and landing abruptly perpendicular to the rural highway.  If you lose control coming down the hill, you have to be grateful for the lack of traffic in Vermont’s Northeast Kingdom that allows you to just come to a stop right across the middle of a State highway without worrying about being obliterated, or even just cursed out.  This morning I used the engine braking feature and only slid a few feet as I turned at the end, managing to line myself right up behind where I parked the truck on the shoulder of the South-bound side.  I left the Toyota, hauled myself into the truck, started it up (it was a balmy 28F), and got on my way.

So began my first foray into buying apples to produce Ice Cider in the basement of our farmhouse, perhaps to sell commercially, although at that point we didn’t have grand plans.  Ice Cider is a sweet, dessert-wine style alcoholic cider that was developed in Southern Quebec in the late 1990s.  It was November 2007, we had acquired an abandoned farm that Spring about 8 miles from the Canadian border, and we thought Ice Cider should be a Vermont product too. I thought it would be fun to try it out ourselves.  I took a short course on cider making at Cornell, I ran some numbers, I bought an apple press, and now it was Thanksgiving week, the weather could be relied upon to be below freezing for the next four months, and I was ready to get started.

I wanted to buy enough apples to make about a 100 gallons of Ice Cider.  That turns out to be more apples than you would ever buy as a consumer, but not enough to make you a meaningful wholesale customer for an orchard.  It took me multiple times calling the two orchards I was interested in for them to return my calls, answer my questions, and agree to sell me the apples in the packing format I could handle – no 600 lb. bins that would require a fork lift to unload.  Commercial orchards will pack apples in bushel boxes (40 lbs.) for stores and restaurants, but they sell those packed onto pallets to a distributor who does the actual selling to said stores and restaurants.  The orchards themselves don’t deal with the individual accounts and aren’t necessarily set up to respond.  They certainly don’t deliver!

Therefore the truck.

What would these apples end up costing by the time I had retrieved them from the sunny, snow-free Champlain Valley and got them back up the icy hill to my Northeast Kingdom basement?  How much would that mean once they were pressed, the juice frozen outside, a small bit of super concentrated juice extracted, then partially fermented?  What about packaging – bottles, corks, labels, capsules, boxes?  Then equipment, labor, and marketing?  It was one big question whether we could actually make something that tasted good enough for someone who didn’t know and love us to hand over real American dollars for it.  It was a whole other question whether doing so would be something that would ever prove to be financially sustainable.

How do the economics of small, low-tech, agriculture-based manufacturing work?  There is so much romance about these kinds of businesses, but really, what does it take to ensure a happy ever after?  What are the key success factors?  What are they up against?  From a broader perspective, is it a viable rural economic development strategy to encourage more of them?  I don’t know all the answers, but I’ve learned a lot.  So I’m going to share my experiences, and perhaps we can start a dialogue that leads to some useful insights.

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