Craft Brew Biz is Stout in Minneapolis

The New York Times: “Across the country, in once-bustling manufacturing centers, breweries are giving new fizz to sleepy commercial districts. If alcohol-based businesses were blamed for a breakdown of society in the Prohibition era and beyond, breweries are now being seen as a force for good. In 2016, there were 5,301 mom-and-pop beer makers, which are typically known as craft breweries. That figure rose from 4,548 in 2015, when the country surpassed its historic high-water mark of 4,131 breweries, set way back in 1873, according to the Brewers Association, a trade group.”

“Although they are small, those breweries pack an economic jolt. In 2016, they contributed about $68 billion to the national economy, the association said … In searching for places to make specialty beverages like sour beers and stouts, breweries seemed to adhere to a formula. They like early-20th-century buildings with up to 10,000 square feet and lofty ceilings, said Sandy A. Barin, a vice president with the commercial real estate firm CBRE based in Minneapolis who counts brewers among his clients.”

“Usually renters instead of owners, breweries in Minneapolis typically sign five-year leases and pay $4.50 a square foot annually … Breweries also seek up-and-coming locations that are within walking distance of houses and apartments … Over all, breweries, usually with tap rooms, occupy about 624,000 square feet in the Minneapolis-St. Paul metro region, up from 507,000 square feet in 2016. And in 2017, 11 new breweries opened in that area, according to CBRE, with 11 more expected this year.”

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Craeft & The Wisdom of Daily Life

The Atlantic: “In his new book Craeft, the archaeologist and BBC presenter Alexander Langlands offers a fascinating and surprisingly relevant dive into a subject that might seem niche to many—the origins of traditional crafts in medieval Europe … For Langlands, the Anglo-Saxon word ‘craeft’ is distinct from our modern word “craft” in spirit and in practice. ‘Craeft’ means having the wisdom of one’s surroundings, understanding nature and the seasons, and knowing one’s materials, as well as how objects and systems fall apart.”

“Apart from its use as a marketing term for, say, microbrews, the word today doesn’t usually connote a skilled trade. Unlike ‘working,’ ‘crafting’ is commonly understood as fun: It can be self-consciously silly, feathered, decoupaged, and brightly colored. It’s fun for kids and meditative for grownups. In most cases, the product of a crafting session is less important than the relaxing process by which it was made … It provides the satisfaction of transforming a stack of materials into a tangible, recognizable finished object, often by way of a therapeutically repetitive process. Craft’s magic trick is that it’s play that’s been designed to look like work.”

“What Langlands is advocating for in his book is more widespread knowledge about the time when craft was integral to daily life. In the era he studies, activities like beekeeping weren’t escapes from reality, but essential to it. He also smartly notes that neither ‘craft’ nor ‘craeft’ is a synonym for ‘working with one’s hands.’ At its root, the word ‘manufacture,’ which is associated with mass production, means ‘to make by hand’ … Langlands calls for living and working with awareness of our environments, materials, and challenges in real time.”

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70% Organic: Close Enough for Goldfish?

The New York Times: “The organic movement started out in the last century as an alternative to industrial agriculture, a vision of family farms, green fields and co-ops, and has now led us to 70 percent organic Goldfish … While regulators give out a ‘U.S.D.A. Organic’ label, Goldfish don’t qualify. Still, you are allowed to say a product features an organic ingredient as long as it “contains at least 70 percent organically produced ingredients (excluding salt and water).”

“The Campbell Soup Company, which owns the Goldfish brand, started selling three kinds of Goldfish with organic ingredients in 2016 … The advent of 70 percent organic Goldfish almost certainly has something to do with the rise of Cheddar Bunnies, made by Annie’s Homegrown, which General Mills acquired in 2014. One blog for moms declared Cheddar Bunnies ‘the Goldfish of this generation’ in 2015, the kind of sentiment that probably didn’t sit well at Campbell.”

“While organic crops are not pesticide free, peer-reviewed studies have found they have fewer pesticide residues than conventional crops. Still, the Environmental Protection Agency has found that the pesticide residues found on almost all crops are within acceptable tolerances. But debate on the topic continues.”

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Richard Montanez: Flamin’ Hot Innovator

The Washington Post: “Flamin’ Hot Cheetos — the spicy red version of the classic cheese-flavored snack — are something of a cultural phenomenon … They were invented by a janitor, the son of a Mexican immigrant who dropped out of school because he struggled with English … His name is Richard Montañez, and Fox Searchlight Pictures is making a movie about his life … When he was about 12 years old in 1976, Montañez landed a job working as a janitor at a California Frito-Lay plant. One day, as he told Lowrider magazine, he saw a company-wide video of then-CEO Roger Enrico saying, ‘We want every worker in this company to act like an owner. Make a difference. You belong to this company, so make it better’.”

“Montañez took these words to heart … As he tells it, one day an assembly line at the plant where he worked broke down. A batch of Cheetos didn’t receive the orange, cheesy dust that make them so popular. So he took a few home to experiment. He had formed an idea while watching a street vendor in his neighborhood make elote, or grilled Mexican street corn — corn on the cob covered in cheese, butter, lime and chili. ‘What if I took the same concept and applied it to a Cheeto?’ he thought, according to his memoir.”

“So he did. His friends and family loved the result. Thinking back to the video and figuring he had nothing to lose, he decided to call Enrico to pitch the idea. Enrico took his call and told Montañez to present his product in two weeks … Against all odds, it worked. Enrico loved the idea, and a new line of spicy snack food was born — with Flamin’ Hot Cheetos as its flagship. Montañez has since served in various positions throughout the company, including as an executive vice president.”

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Inman Makes Bricks Fashionable in China

The Wall Street Journal: “In the prospectus for its mammoth 2014 stock listing, Alibaba Group Holding highlighted online-only women’s fashion brand Inman as a success story in China’s e-commerce world … Since mid-2015, Inman founder Fang Jianhua has gone in a surprising direction. He’s abandoned the online-only model to open physical stores. To date, Inman has opened 450 stores, mostly in China’s smaller cities. Last year, while Inman’s online sales rose about 39%, its offline business, which is newer and smaller, grew 300%, to 330 million yuan ($52 million), and reached 35% of total revenue. Mr. Fang expects the online-offline breakdown to be 40%-60% in the future.”

“In changing strategy, Inman had spotted several long-term problems. Online sales growth for brands such as Inman is slowing as China’s e-commerce market becomes more competitive, with megabrands such as Uniqlo, Vero Moda and Gap making big online drives. Meanwhile, the costs of online advertising are rising as are the challenges of standing out in a crowded field.”

“In 2015, Mr. Fang figured it would cost less to reach customers in smaller cities through a physical store than via an online store. Given its years of insight into its millions of customers, Mr. Fang thought Inman could manage its supply chain and stores better than purely brick-and-mortar competitors. For example, women in China’s cold, northeastern rust belt aren’t big fans of Inman’s understated cotton and linen clothes, so no need for stores there.” He comments: “The question is not whether a fashion brand needs to be both online and offline. The question is how big you want to be in the two worlds.”

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Building Belonging: Community & Customers

Fast Company: “The Rapha Cycle Club (RCC), a membership organization grown around Rapha’s cycle apparel business. The RCC has all the hallmarks of traditional community groups: rituals, local organizers, chapters and clubhouses around the world, symbols, shared identity, and social activities. There’s also a code of conduct that creates the conditions for respect and decency between diverse members … This is not the light ‘community’ that brands often speak of when referring to their customers or social media following–this is real, in-person commitment and engagement. And this is not a sideshow to Rapha’s business. It’s core to its business strategy–its spaces are clubhouses not stores, and people are members not customers.”

“Thinking beyond ‘customers,’ ‘fans,’ or ‘followers,’ the next frontier for great brands is stepping into the cultural need and market opportunity for deeper, real-world person-to-person connection … Those companies that help us forge meaningful connections will win deep loyalty. And this needs to go beyond premium brands. If belonging can be built around apparel and technology companies, surely it can also be built around learning, parenthood, food, and health.”

“Although there are some examples of highly engaged communities being developed via technology (e.g., Peloton riders), when it comes to belonging, real connection will most likely come from in-person interaction in real life. But having physical space is not enough: Brands should create spaces, experiences, products, and services that deliberately foster the conditions for diverse people coming together in respectful environments for shared experiences.”

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Airplane Economics: Nickels & Dimes

The Wall Street Journal: “Profit per passenger at the seven largest U.S. airlines averaged $19.65 over the past four years—record-setting profitable years for airlines. In 2017, it stood at $17.75, based on airline earnings reports. In truth, airlines now cover their costs with tickets and get their profits from baggage fees, seat fees, reservation-change fees and just about all the other nickel-and-diming that aggravates customers. You might also call those extra 12 to 15 passengers now crammed onto each flight ‘Andrew Jackson’ for the profit they bring.”

“Given the $20-per-passenger haul ($40 round-trip), it’s easy to see why airlines are so intent on cramming in more seats, even when they know travelers hate the lack of space and complain bitterly about shrunken bathrooms, slim seat padding and skinny rows … Low-fare passengers shoehorned into the back of the plane may not even be covering what it costs to transport them. But they scored a low fare because the airline was concerned it might not fill all the seats on a particular flight, and some fare is better than no fare.”

“Among the big U.S. airlines, Southwest had the largest net profit margin last year, at 16.5%. Southwest continues to defy conventional airline wisdom. It doesn’t charge baggage fees; instead, it believes it attracts more passengers to each flight because many want to avoid the baggage fees charged by competitors.”

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Drinkfinity: A Portable Soda Fountain

Fast Company: Pepsi’s “newest venture is centered on a 20-ounce reusable water bottle that comes with sets of flavor pods … The new product line, called Drinkfinity, is a clear reaction to consumers drinking less soda … The name is meant to indicate that there are infinite combinations of drinks you could make with the bottle and the flavor pods. The Drinkfinity team’s ultimate aspiration is that consumers go online, choose all the ingredients they want, and have personalized pods shipped to their door–a vision that reacts to several consumer trends, including on-demand services and healthy living.”

“For now, the brand … is debuting 12 different types of pods … To make yourself a White Peach Chill or a Mandarin Orange Charge, you fill up your Drinkfinity water bottle, unpeel a pod’s label, remove your bottle’s cap, and push the cap of the lid through a pointed plastic structure. This ruptures the dry storage area in the pod and releases the concentrated liquid, which pours into the container. Then you shake and drink. The bottle itself has a magnetic spot on its side to hold down the cap so it doesn’t hit you in the face as you guzzle.”

“To create Drinkfinity, PepsiCo had to rethink the supply chain, manufacturing, shipping, and even recycling. That resulted in the full life cycle of a single pod producing 40% fewer carbon emissions than the typical 20-ounce drink housed in a plastic bottle you’d buy at the supermarket. The pods also use 65% less plastic than these 20-ounce bottles … The Drinkfinity team likens the product to the new soda fountain: a platform for people to choose what they want to drink, except you can carry it in your bag.”

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Fast Fun: The New Fashion in Toys

The Wall Street Journal: “Hasbro Inc., Mattel Inc. and other companies are rushing to collapse production times and capitalize on fast-moving trends such as slime-making kits, and viral videos that can spawn new games and toys. The goal is to spot ideas and get products in stores in a matter of months instead of the following Christmas. Toy companies need rapid turnaround times if they are to profit from these trends, which spike and dissipate quickly. Copycats, usually smaller manufacturers, also can quickly crowd the market.”

“In a sense, the companies are lifting from the playbooks of fast-fashion retailers such as Zara and Forever 21, which can churn out new coats in just 25 days … Mattel has carved out a team of fewer than 10 executives, including toy designers and manufacturing experts, to develop toys that match up with larger trends in the industry. Mattel Chief Executive Margo Georgiadis said in an interview Friday that she gave the team three months and a ‘next to nothing’ budget to create a few ideas to pitch at a January toy fair. Those items, including a plush toy, are expected to be sold later this year.”

“Hasbro last year established a similar team, called ‘Quick Strike,’ hoping to turn social-media trends into marketable products. The maker of Monopoly and Nerf guns has come up with several games inspired by viral videos.”

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Nordstrom Doubles Down on Bricks

The Wall Street Journal: “Many retailers, beset by online competition and shifting consumer tastes, are slashing costs and closing hundreds of stores. Nordstrom Inc. is doing the opposite … It is revamping some of its 122 department stores and spending more than $500 million to gain a toehold in Manhattan. It has snapped up e-commerce companies including flash-sale website HauteLook and subscription service Trunk Club. And it has launched new concepts, including a store in Los Angeles called Nordstrom Local that doesn’t stock any clothes. So far, those efforts have failed to pay off in rising profits.”

“Nordstrom says it is different from its peers. It has fewer locations than rivals, and most are in the nation’s top malls, which continue to draw shoppers … While other department stores are retrenching, Nordstrom has shown a willingness to take risks. It is jumping into the competitive New York City market with a men’s store opening in April followed by a women’s store next year … At a store in Irvine, Calif., Nordstrom recently completed a test of a showroom that carried samples of 19 brands such as Rag & Bone and Veronica Beard in every size and color; they could be tried on but had to be ordered online. For shoppers, it solved the problem of visiting a store only to find their size sold out.”

“Other changes meant to appeal to customers are smaller. In November, the company unlocked the fitting rooms in its department stores … Although theft has increased slightly since Nordstrom made the change, executives say, the retailer is sticking with the new policy. ‘Analysts don’t like it,’ Jamie Nordstrom said. ‘But I’m thinking about the next 50 years, not the next quarter’.”

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