 It's a non-alcoholic beer, even though it's less than 0.5? Well, that's the definition of a non-alcoholic beer. Less than 0.5. There's a lot of things you can go for, like, making a beer. And I think if you put this beside a few other beers, like maybe somebody's doing a non-alcoholic IPA, or maybe somebody's doing a non-alcoholic milk stout or something, and you ask, like, somebody who's kind of just coming in blind, to say, well, which one's, like, the most interesting. I don't think ours would be the most interesting. That's not what we're going for. Sure. What we're going for is we want something that is going to be drinkable. But also, they're going to be able to have, like, one or two. Like, if they're trying to drink with one of their friends. Right. Who's having a few pints. It almost is, like, a holiday drinker. Like, I could be at a holiday party just drinking a ton of these and feel good about it. And then drive home and be fine. This is Startup to Storefront. Today's guest is Ronan McGovern, founder of Sandy Mountain Technologies, N.5, a non-alcoholic pilsner that recently became available in stores. The single biggest cost that beer manufacturers face is to transport weight of their beverages. The vast majority of that weight is water. Ronan has developed a technology that enables him to remove 75% of the water from beer so that manufacturers are only shipping the essentials. The water can then be added back in wherever the beer is sold with no loss and taste. Think of this like using a soda fountain. Coke syrup is mixed with CO2 and water on site, giving you the beverage that you know and love. So listen in as we cover everything from why he decided to make a non-alcoholic beer, the importance of his taste match process, and how he named his company after a beach his grandmother used to take walks on, only to find out after all the paperwork was signed that he got the name wrong. Now, back to the episode. Welcome to the podcast. On today's show, we have Sandy Mountain Technologies. Sandy Mountain Technologies, yep. What's up, Ronan? How's it going? Going very well. Ronan, what is Sandy Mountain for people listening? Right. Well, the easiest analogy is to think of Coca-Cola for beer. Okay. In terms of... We have technology that allows brewers to distribute their beer in a much more compact format. Yeah. And they can ship it as a concentrate and directly to bars where water would be added in. Kind of like a fountain. It's a more sophisticated dispense machine we have. Or they could ship it in bulk in large tankers internationally. Again, as a concentrate, so much smaller volume. So the way... When people ask me, like, oh, you're coming... We're here in Boston right now. We're in Wuburn Mass. And they're like, oh, who are you going to see today? What's on the podcast agenda? Right, right. And I'm like, you know, we're going to see Ronan. And he was at MIT and you guys found a way to create a polymer. And you were using that polymer or trying to use it to desalinate water. Is that right? That's right. Yeah. You know, I wouldn't give myself too much credit on the chemistry. I'm not an epic chemist. I'm a mechanical engineer. So I'm more about building processes. You know, we do have a unique membrane that's the filter that allows us to pull water out of beer while retaining all of the flavor, the source, water, minerals and the proteins. And you're right that I worked on membranes at MIT. And I did look at them for seawater desalination, which is where polymer membranes are largely used today. What we've done at Sandy Mountain, though, is we've taken technology, you know, from seawater desalination. And then we've developed that. We've developed systems. We've developed membranes related to what's used for seawater desalination that can be used for the beer industry. And I guess the problem you're solving at the end of the day, or one of the biggest ones is transportation, right? These huge companies, when you think about it, it makes sense. There's so much beer at any liquor store. But what is really being transported in these trucks and vans is water, right? 98% of beer or something like that is water. It is. Do you know the number of how much money these companies spend just shipping water around the country? Yeah, I mean, transporting beer is probably, you know, 40 billion plus. Depending on how much of the last mile distribution you pull in, the number can even go higher. So it's expensive. It's a big line item for any company. It's a big line item. I think it's a big sustainability line item as well. This bottle of beer, if this was to be imported with Sandy Mount technology, we'd be taking out 150 grams of CO2 just for this bottle. So there's a big... But is that much CO2? There's a lot of CO2 in transport. I mean, you're transporting water. And so if you can bring that into a bar and you can bring it in a high-gravity form, which is kind of the compact beer that we allow growers to make, yeah, you're knocking off about 150 grams there for every point that's been poured. And then you're adding it on site. And you're adding it on site, yeah, from the mains water, which is being filtered with our little box that goes into the bar. So when you first started the company, at some point the question is, can you make the beer taste the same, right? Or even before you did that, was it you just reaching out to these huge companies saying, I have a concept, you know, how did you go ahead and get your first pilot in place or even your first customer to test this out with you? Yeah, so, and that's how it started because I was looking at different industries and I didn't know I was definitely going to do beer. I was looking at wastewater treatment. I was looking at oil and gas. I could talk about why we did beer maybe versus some of the others, but I did talk to some of the supply chain executives and they found it surprising that somebody could make a compact beer that would not compromise on taste. A concentrate. Yeah, because they're so focused on brand, like the whole value of their business is based on that brand and people's perception. And they, it's funny because I can imagine having a meeting with you and you've taken it for granted already. You've already taken for granted the cost of shipping. You've already admitted that you're... On their side? Yeah, right. Yeah, so they know that like transport is huge. Right. So they're not thinking about, they're not thinking about at that stage, specifically, where are we going to put this? Specifically, how are we going to, you know, deliver beers to the bar at 150 grams SEO2? What are the savings for that? They're thinking just, okay, like I just want to taste this. I want to get something going to see if it's true that you can get a match on taste. And so we've been running for about three and a half years since we raised the first money. At the start of that time, I had a prototype making one bottle per day. And... Very efficient. Right. Right now we make systems that are like a very large craft brewery in one machine. But back then we spent probably the first year scaling that process and demonstrating that we could get the taste match. And that's pretty involved because what does taste match mean? But it means that a brewer has to run their trained sensory panel. So they will take the beer before our process. It'll go through the reverse technology, as we call it. And then they will add back in filtered water. So they'll compare that blended sample with the original. And they will run that on a taste panel. So they'll have three samples. They'll have two of the original and one of the blended or two blended one original. And then they'll have between usually 15 and 30 people that are trained and they're all testing to see whether they can see the difference. Oh my God. And then they run statistics on that to see whether there's a statistical difference between the original and the blended sample. When you say trained, these are like Ciceroans or like how trained? Yeah, they're like trained on that specific brand. Okay. They would be an expert in that. That's incredible. Really specific lager. Somebody's a Corona expert. Somebody's a Heineken expert. Somebody's a Sam Adams. These people exist. They know the brand back to front. They literally know how it tastes after two months, after three months. They know if it's been stored at room temperature for a month versus whether it's been stored cold. The first time this happened was that a little bit nerve wracking? Just being like, I hope we got this and they don't come back and be like, no, this doesn't taste anything like the original. So it's not like that of much of a brick wall because they'll start and they'll send in a brewmaster and somebody who's kind of technical slash business, like good at both, and they'll just be sitting around a table with us and we'll be tasting with them. Okay. So we get a sense from that, like how's it going? And then you run through to like the taste panel, but... But are you able to take anything in the process? Like, is there anything on your side? If it's not right. Yeah, are you coming back and saying, okay, we got it? So like at the start, the biggest issue that we had, we were still learning about like cleanability and cleanability of the systems and exactly how you clean them exactly right. And that was a factor. Clean what systems? The machine for making the beer concentrate. Got it. Got it, okay. So that we hone pretty fast. The next issue then, and this like persists not just for us, but any process, oxygen. Tell me more. Beer is incredibly oxygen sensitive. What does that mean specifically? It means like, if you have more than 50 parts per billion of oxygen. It's that specific. Yeah. And that's a case and aging in that beer pretty rapidly. And so 50 parts per billion, like that's, you know, that's a typical standard that brewers will look for having less than that amount of oxygen in their beer. But so I know something about brewmaking. When you're making beer, you're not taking it into account any sort, you're not taking oxygen, PPM at all, are you? In our process? In your process, you are. But I mean, any brewer, the recipe would just contain ingredients as opposed to like, or would it be that specific? Is it that granular? Like there's. Yeah. So there's a few steps as you know in making beer. You make the wort. So you have the grains, you extract the grains into the water. Now during that process, you might need quite a bit of oxygen and that's beneficial during that phase. But once your beer is fermented, so once the alcohol is there, it's ready to go. At that point onwards, you do not want any oxygen. Cause the oxygen's gonna affect the flavor profile that you have in the beer from there. So that's where they're starting to measure, okay, I need to be below 50 parts per billion. Got it. And yeah, a thing that is not immediately obvious, but it's true is that it's really hard to do that at small scale. So actually, brewing at home, really hard to brew like a lager, a pilsner, because actually a pilsner is probably one of the most sensitive. It doesn't have a lot of flavor. It's like a kind of refreshing taste. So if you have that oxygen, then you're gonna be more susceptible to noticing the off flavor. So that's why it's so hard to brew a pilsner at home that's gonna have a good shelf life, you know? It's funny, I always ask brewers, whenever they go to a brewery, I'm like, what is it that you ask for? That would tell you everything about the brewery that you're visiting, and they always say the pilsner. Right, right, right. And then I'm like, oh, really? And then I had asked like, how come not the IPA? And they say the IPA hides all the imperfections, actually, it's a beer for imperfections. And so it masks all of it. Yeah, so like, what do you think the hardest beer, what's the hardest non-alcoholic beer to make? I've never even had the water. I don't know. Like if you look at styles like ale, stout, I see, you know, lager, IPA, which of those do you think would be the hardest to make? Stout, I'm gonna go stout. I'm gonna go IPA. You're gonna go IPA. Is it a pilsner again? Well, you said non-alcoholic beer, right? Yeah, let's say you want to make a non-alcoholic beer. Yeah, well. Let's back into this. Yeah, so. So stouts typically have a, well, they can, but I would say IPAs on average would have a higher alcohol percentage than the other ones. Right, right. Okay, so I mean, it's a nuanced answer because there's different reasons it can be harder. You know, there's an answer I want, but yeah, there's a few answers. If you have more alcohol to start, you've got to take more out. So yeah, that's gonna take you a bit longer. So it's harder in that sense. You know, a stout kind of like, if you have a beer that's really heavy or that has a lot of, say, cloudiness, haze, then that's also gonna be harder. If you're doing a filtration process especially because it's got kind of more suspended matter in it. Yeah. But I think from a flavor standpoint, what's gonna be difficult is the same with the oxygen comment that if you try and de-alcoolize a pilsner, well, a pilsner's got such a subtle flavor, that's gonna be pretty hard to maintain when you're pulling out the alcohol. And that's what we're doing with the 0.5 brand, which I'm sure we'll talk about a bit later. Yeah, we'll talk about it now. So we're drinking this beer. It's called less than 0.5. It's a non-alcoholic beer. Technically, even though it's less than 0.5. Well, that's the definition of a non-alcoholic beer. Less than 0.5. Yeah, exactly. Can, if I'm an alcoholic, can I still drink this? Sure, you can drink it. Yeah. You can drink any? Yeah, you can still drink it. I mean, yeah, I think honestly, honestly, that would really be the preference of whoever is gonna drink it and where they feel comfortable. So I wouldn't necessarily recommend for or against, but it's certainly a non-alcoholic beverage. And certainly, you know, I will have a few of these and I'll be driving home later today. So yeah. It's pretty delicious. Yeah, you didn't tell me what you thought of this. I like it. It drinks easy. Right. It's great. So that I think is what we were going for with this. Like it drinks easy. There's a lot of things you can go for, like making a beer. And I think if you put this beside a few other beers, like maybe somebody's doing a non-alcoholic IPA or maybe somebody's doing a non-alcoholic milk stout or something, and you ask them, and you ask like somebody who's kind of just coming in blind to say, well, which one's like the most interesting? I don't think ours would be the most interesting. That's not what we're going for. Sure. What we're going for is we want something that is gonna be drinkable. Yeah. And that people are gonna be able to, you know, have at their lunch, cause it's fairly good pairing. But also they're gonna be able to have like one or two, like if they're trying to drink with one of their friends who's having a few pints. Like I've had a few of these in a row and I still feel like, yeah, you know, I'm happy with the taste of this. Yeah. And so, so that's kind of more what we're going for. And it almost looks like a holiday drinker. Like I could be at a holiday party just drinking a ton of these and feel good about it. And then drive home. And then drive home. Be fine. I mean, yeah, you gotta have some. You gotta mix up your holiday parties, I think, but. Don't you worry. There's plenty in town. Is this a low carb thing? Is it a no carb thing? Yeah. So here's the thing about non-alcoholic. Once you go non-alcoholic, you're cutting out a ton of carbs. Right. Because alcohol is like, in a lager, alcohol is going to be like close to half of the carbs. So you're down below 50. In this? For the 0.5, yeah. Okay. And so when you choose to, let's say, market it a certain way, it's funny. So I look at this, I say less than 0.5. Right. And so I think it's a low alcohol beer. Right. To your point, it's enough for you to constitute a non-alcoholic beer. But because I know it's less than 0.5, I don't even know if that's true, but you've branded it that way. It makes me feel better about it than a completely non-alcoholic beer. That's totally psychological. I'll take it. From a marketing perspective, I dig it. It's like, there might be some in there. I don't know how much, just 0.49. So yeah, I think a lot of brewers right now are they're trying to figure out what do consumers generally understand to be non-alcoholic versus say, alcohol free or low alcohol. Okay. And I would say, generally isn't a clear understanding of exactly what all these different terms mean. Yeah, that's very true. I certainly have no idea. Now, there are important technical points though, because this is less than 0.5%. So you would literally need to drink like a six pack or a few six packs per hour to come close to your limit for driving, right? Okay. Now, the taste here is a very close match on the alcoholic version. Now, alcohol does have a flavor. It's kind of a sweetness. So you're never going to get exact match, but this is designed to get an extremely close match. Now, the further you go down in alcohol, so if you want to go down like from say 0.45, which is this, it's a bit lower than 0.5. So you want to go down to 0.05 or 0.02. And we can do that as well with our technology, but you do move further away on the flavor. Interesting. Yeah. Does it taste more and more like water or is it just, is it a different taste? I wouldn't say more and more like water because you do retain very, very well like things like sugars and some of the larger flavor molecules. You just start losing the aroma profile a bit more. Okay. Yeah. And so when I also, when it comes to this beer, is there a big market? Is there a growing market? What does that look like in terms of, because I know in, let's say London as an example, I have a friend in London who's currently making a non-alcoholic gin. And I ask him like, what's the story with this? And in London, obviously there's a huge pub culture. You leave work, you're at the pub. Yeah. And it's huge. I mean, I've been there on Monday and Tuesday and these places are full. And so there's a growing concern for just people who want to go to the bar and be at the bar and still be social, but they don't want to drink. They don't want to have alcohol. And so I realized like there might be a market in, and let's say places like London, is it the same nationwide or what is it? Yeah. So I think, and we're seeing a lot of it because we have a product now in Ireland. Okay. Which is non-alcoholic and we have a product here. So we're seeing like how both markets compare. Yeah. And the European market is just way ahead in terms of non-alcoholic. Okay. And I would say Ireland is even like, it's later on the curve. Well, it's later in time. Later in America or? So it's basically like Germany, Netherlands is really, really early. Okay. And then there's Ireland, probably Ireland, UK. Okay. Yeah. So like Germany I think is doing maybe 10% or more. Really? Beer is non-alcoholic. What's driving it? Germany historically has done quite a bit of non-alcoholic. Okay. So I think some of it is just there. In Ireland, a big driver's drink driving laws. The limit is very, very tight. And people really can't like drink a beer if you want to be driving. At all. Do you know the limit off the top of your head? Cause I think in the US it's what, seven? 0.08. 0.08, yeah, yeah. Yeah, I don't know it offhand and in others like a few different metrics like blood or urine and all that. Sure. Actually the Irish limit has dropped I think a few times but I just know from friends like we wouldn't even drink a pint if we were going to drive. So. Oh, it's that low? Yeah, yeah. Do the laws change? So I was in Australia and during their holiday, during holiday in Australia, it's like one they're everywhere, the police. They can pull you over for any reason. And it's one of those where the rules get tighter during the holiday. Oh yeah. So the rules go up like double to five times. Dynamic. Dynamic, yeah. Yeah, exactly. Dynamic rate setting as it comes to fines. Is it the same or not? Do you know? I don't think we're as big on dynamic. I think we're trying to get dynamic on speed limits and stuff. It's so crazy. Yeah. No, the thing in Ireland is just the limit is low plus if you do get caught drink driving, I think you lose your license immediately for like six months maybe. So there's a very, like I have a friend who's a veterinarian and he, his life relies on driving around from, you know, from farm to farmer, from clients. And so he says to me like he would never, ever risk, you know, not having his license because he'd be in real trouble then, you know. So in this case, basically what's happening is the laws are creating a market for people to be social, enjoy some sort of alcoholic beverage or not non-alcoholic but have the taste and then be able to carry on with their lives without the fear of getting or losing their license. Yeah, so I think that's a factor. I don't think it's the only factor. I think there's kind of the low calorie side of things. I think there's also just the kind of mindset of, you know, working maybe with folks our age. Sure. Where you want to work and you don't want to be impacted by having an influence of alcohol while you're working. Yeah. So I think that's playing in as well. Okay. I also would say the market obviously has fallen a lot for sodas, first, you know, fizzy drinks as we say in Ireland. And, you know, that's all liquid that people were consuming. And people are still going to be consuming liquid. So there's got to be something that's replacing that. That's so interesting. Yeah. And so, yeah. I mean, people are not just stopping to drink liquids. Right. They're drinking something else. The liquid business is booming. It's moving. It's what liquid that's booming. I think sparkling water has done very well in that category. I think playing off that, the hard seltzers have done well. Sparkling flavored waters have done well. The kombucha's are maybe a bit more niche. I'm not sure the penetrations is large on that. Sure. But yeah, sparkling water. And I do think non-alcoholic beer, I think it will definitely play a role between kombucha and sparkling water. Yeah. And I would call it that, but that's where I put it maybe. I guess it makes sense. In terms of your marketing, do you, is it mostly males that you're trying to go after? Is it thoughtful to that degree? Male, female, what's the market? Cause I know like in terms of beer drinking, so like the female's been neglected in a lot of ways as it relates to marketing. And so the fizzy drinks have like the spike seltzers are all of a sudden the female market, but there's some females that just want to drink a beer and they don't, they actually hate the spike seltzer. And so there's a sort of this land grab of opportunity on that market. Do you know how this does? Or where do you distribute this? Yeah, wow, a lot of questions there. Yeah. I don't think at this point, like there's enough intent on our side to directly market to specific demographics. We were optimizing for getting something on the market that would allow us to get some feedback and also would allow us to get non-alcoholic on draft, which is something that is very new to have non-alcoholic beer on draft. Yeah. So that's what we were optimizing for. I think there's improvements to be made on design. So I think when we go around the next iteration, there's things like, will we make the fonts a little bit softer? Will we go for a little bit more neutral color? I think we do want to try and go for broad appeal because we've already made the decision. We're going for a Pilsner that then has alcohol removed. So we want that broad appeal. And I think we would probably want to try and get that with the branding as well. And so where is this now on draft here? Anywhere here in Massachusetts? Right now, we're just on bottles in Central Square. Okay. Yeah, in Cambridge. How is that looking? How are the sales? We literally launched last week. Oh, congrats. Yeah, yeah. What does that look like? Or like in later this month? Yeah. Do you get to decide where it goes or it's up to them? Well, we target specific venues. Okay. And then we, you know, see if they'll take it in or not. Yeah. And you're at an advantage when you're coming out of MIT and you're saying, this is a local brand here. Totally. I think the non-alcoholic is also in a good place because it's at the early stage of the peak. I guess I didn't answer that question, but the US non-alcoholic penetration is probably less than 1% right now. Wow. So it's got like the lowest level, but it's got probably the most growth. So in Ireland, we find it a lot easier with getting draft machines installed. So this is on draft in Ireland? In Ireland, we have non-alcoholic on draft. Yeah. And we're gonna twist it barely brand. That's right. You mentioned that. And so from your perspective, what are the advantages to using your process when you're going to deliver more of the product? You're not bringing a keg. Right. Even like in terms of shipping, we have been like, because time is of the essence right now to getting launched, we've been air freighting kegs and like the cost would have been insane if there were full kegs. With water, right. So like we're able to fit the equivalent of like, I think we can fit the equivalent of 80 normal kegs on a single pallet. And for a fraction of the cost? Yeah, I mean, that normally. That's the other part. Normally you'd have that on five or six pallets. Yeah. So that's an interesting advantage that you have there as what do you, what is it that they get? What is it that they're actually installing at the bar? Yeah, it's a box. How big is the box? The box is the box. This size. Okay. Okay. So like a shoebox size? Yeah, I mean, if you're literally talking about a shoebox, it's probably like six shoeboxes. Oh, okay. Okay. You know, kind of a two by three matrix. Got you. Two on the bottom and then three layers. Okay. Yeah, that's what it looks like. And that box, you know, filters, cools, carbonates the water and blends it with the high gravity beer. And is that size troublesome for the bars or is it the same size as the normal size keg effect? Like the same space? Yeah. So there's two options for you put it. You either put it under the counter if you're in a restaurant or cafe or if you're in a bar and you have bar lines, like keg lines coming up, you put it down where the kegs are. Okay. Yeah. So it could go on the cold. Oh, does it have to go in the cold room? It doesn't have to know. It could go outside the cold room. Yeah. So that makes it even easier for them. Yeah, right. So the big thing for bars is like instead of having to lug these massive kegs, which weigh, you know, 120 pounds, you have a keg that weighs like 10 kilos. And like anyone's able to just carry that, you know, one-handed walk down the stairs. Yeah. So you're talking about space savings, handling and then deliveries are much less frequent. So you're gonna be, you're gonna be good on that front. Yeah. I find this so fascinating. Do you ever envision going to a brewery and the entire space is full of your concept? A bar? A bar, yeah. That's gonna happen. It will, right? Yeah, we're already looking at machines for doing eight to 10 taps next year. One machine? Yeah, for the bar. That's right, cause you can share a lot of the processes. That's right. That's right, yeah. And so you're just swapping out the concentrate. Yeah, you have your lines all coming into the bus. Oh, so many questions. Then the lines coming back out to the taps. So have you ever just thought about becoming like the Coca-Cola of the world or you're just literally creating the concentrate and then, right, seems like a no-brainer than you just have different lines. You have your Coke, you have your Sprite, you have your orange soda. Come back to me in one year. I don't think this will change though. Our business is providing technology to brewers, providing the Rivas machines which remove the water and being the step in a process that provides that quality assurance and secondly, providing the machines and the quality assurance around the point of dispense to ensure the water quality is good and it's being blended accurately. So that's where I see our business providing those machines and services. We do have this .5 brand. I would love to see .5 be successful. I enjoy drinking a few myself. Yeah, they're good. They're easy to drink. They're too easy to drink, I think. But it's a support for the main business. We do also have a site in upstate New York where we can provide as a service. We can provide kegs of concentrate. So if somebody ships us a tanker of beer, we can reduce that down for them and then they can supply our network of draft machines and we're setting up one in the UK as well that'll be able to do that as a service. So you could take any beer? Yeah. So if I'm a brewer, I have this amazing beer, I give it to you. Yeah, right. You can bring it down to a concentrate format and then you can get those kegs out to the draft venues. On a national scale though, right? Right. Do you have anything in California? Not yet, no, no. Okay. I think the site in New York should be fine at least because we're reducing the transport so much it should be fine for serving the US at least for the next year or two. Yeah. And I would love to get some draft machines out in California. Right now we're focused on Cambridge, Boston and that's where we want to get up to 100 machines by second quarter next year. Okay. But definitely think we would go, I mean New York probably first but then just because it's closer. What's the cost per machine? So you said 100 machines, what kind of money are we talking about? For the machines that go into the bars. Yeah. Yeah. I mean you could be looking at, depending on how many taps you're going to be doing, you could be looking at a few thousand dollars. You're not going to be much different than the costs incurred in like putting in normal kind of keg lines, machines, all of that set up for doing draft beer. It's going to be pretty much in line with that. So that's a good competitive advantage then. You can say that, look you're going to be spending this money either way. Why not make it go our way? Yeah. There's a change in how bars are doing things. So I wouldn't say people see it as no burden. They see it as having to adopt to a new way. Now I would say the feedback from bars is generally being positive. And the thing that they're just thinking about is, yeah, I saw somebody falling down the stairs with a keg. Right. And they're like, yeah, that's not as much a money decision. It's kind of like. There's a liability there. There's a liability and there's also, I walked down to my, this is what one guy said there, I walked down to my keg room two weeks ago and I don't know who manages that, but it's an absolute mess. Yeah, keg rooms are tough to manage. Heavy items and a lot of lines going around. That's the thing I was thinking about too. And so if I'm a brewery in existing space, I'm spending money one on the lines, right? So the lines have to run underground from the cold room. If you're a bar? If I'm a bar, yeah. They have to run underground. I'm spent money there to the sump pump. I spent money there. And then I'm basically locked into where my taps are because they all connect. The lines all go from the tap all the way down into the cold room. Right, right, right. With you, they could have taps everywhere, in essence, right? Cause they don't need to connect at all to the tap, to the tap room, the cold room. Yeah, that's true. If they wanted to put an isolated unit out somewhere. Yeah, it makes it easy. It would be like no different than them just taking a keg. Obviously it wouldn't be refrigerated, but they could just do it for whatever, for an event. Just like a quick serve. Yeah, so that's definitely true. For an event, it's definitely, it's a good option for that. Yeah. You know, bars, depending on the bar, they'll serve a lot of volume. So they go to quite some effort to have very well-organized lines going from kegs to taps. And they'll have like a single keg in the basement that's able to serve multiple taps. And the industry is very expert at setting that up in a very high quality way, you know, for delivering the beer. I would say current lines deliver very good quality today if they're well maintained and everything. So I think that'll be essential for us to make good headway. Will be to provide the reassurance around the quality that each brand is going to still have a beer that tastes the same, regardless of which premise it's been served at, because that means a lot to a beer brand. How much does one of these six packs go for? I think there may be around $11 in Central Square. Okay. When you first started your company, at what point did you have to raise money? At what point? How do you define what point? So you had your concept, right? Right. You sort of had it vetted. Yeah. At what point? I guess it's interesting with your company in particular. I mean, you needed some capital to just move along, right? Were you bootstrapping it yourself? Yeah, so I was bootstrapping it by myself and I had kind of a bottle a day. So I had a kind of demo and taste. And the kind of chicken and egg problem I had was I had brewers that would be willing to do some trials and to get samples. But the value they saw from the samples was not quite as high as the cost of me setting up a facility that could make those samples. Yeah, what was their value that they saw at the beginning? Just to have it in class and trade for what though? Right at the start, we would have been doing samples a few hundred dollars. Yeah, yeah. What would they do with it? They would just taste it. They might run it on analysis. And that's it? That's it for the samples. Yeah, I mean, that's what they want to know. They want to know it tastes good. That means a lot. Okay, and then what was the next step once it sort of checked that box? Like, was it you introducing the whole concept to them around being able to save a tremendous amount of money on shipping? Or were they able to piece that together pretty quickly? That, I think they piece together. Okay. So that was not a lot of time spent in the first year and a half of the business. Okay. And then- Pretty much time was spent on delivering high quality samples and then delivering systems of progressively larger scale to show that it was technically feasible as it scaled. And how long did that take? Well, we built our first at scale system around this time last year. So we delivered our first one to a client this year. The first unit was for rentals. That system still is owned by us and then we delivered a unit. And did you have to raise money before that? Yeah, so we raised money three and a half years ago in 2016. Okay. And with that, we set up a test facility in Somerville, just near Cambridge. Yeah. And that allowed us to produce the first batches of samples. Plus it allowed us to have people visit and then pay us to do a trial on their beer. So they would send us kegs. We would put the kegs through the system and they would come and taste their own beer. What was that like? That was the part where I was saying about sitting around the table with kind of like the brew master and with some business technical person. And then you're trying to get them to the point of testing a larger scale system. When you say larger scale, what does that mean? Either in terms of production. I guess for those of you who are in Boston area, there's a brewery called Harpoon. So one of our large machines does roughly the same annual throughput as Harpoon as a company. Really? So it's pretty large. And Harpoon would be in the top, you know, 25 craft brewers in the US. Yeah, their facility is pretty big. So your one machine can put out the same output. Right, right. So yeah, I guess one of the ways to think about it is in terms of like barrels per year, you're talking about a few hundred thousand barrels a year. So I guess in terms of liters, you're talking about tens of millions of liters per year. That machine is like the size of a 40 foot container. Okay. So it's not insane. Like it's a very small portion of the brewery footprint. That's incredible. Yeah, I guess technology now is pretty dense at least what we're able to do with the membranes. I mean, that's honestly incredible when I think about like Harpoon is huge. It would be like you walking into five or six border axe breweries. So anyone listening, just think of your normal brewery where they're like brewery plus tasting room. Be like five or six of those is kind of the size of Harpoon. Yeah, right. And you're replacing that with a 40 foot container. Definitely not replacing, but you're integrating. The output is equal. Yeah, yeah, yeah. It's a way less of a footprint. Are you not shocked by that? You know, cost savings all around. I'm thinking like you don't have to invest in such a big space anymore too. You don't need, right? You wouldn't need a big. Well, you still need kegs, right? You still need kegs. You still need kegs, but if the machines are being replaced by this one 40 foot shipping container sized machine, then that's much less forum space that you're taking up and back room and the equipment costs, all that good stuff. I don't know. The savings are good. I wouldn't go overboard with saying like it's saving a brewery a ton of space. It saves them some tank space because they're now storing tanks that are at higher gravity, higher alcohol. So they need less tanks for the storage in that aspect. The beer is still traditionally brewed. So it's still going through into wart. It's being fermented. So all that stuff is standard. And I think that's one of the things that has allowed us to get traction with brewers is that we don't change how the brewing works because beer profile is still not something fully scientific. It really matters what kind of yeast and conditions and recipe that's almost trial and error. And if you want to make a high gravity or high alcohol beer for transport by reformulating the brewing process, I'm pretty confident you wouldn't get the same flavor profile. And when you're talking about brands that have been around for decades, centuries, that's not something that a brand will want to change. And you're working with some of those brands. Yeah, right. What is that like? You know, we're doing transport. So if we're doing transport, you got to focus on the brewers transporting a lot of volume. And yeah, a lot of the volume is owned by a relatively small number of brewers. So that's an important world for us to play in if we're going to be successful. I think just kind of like on the top down, we've got our machine business. And then from bottom up, this is a bit more bottom up because we're doing our own brand here to show attraction of the technology. What made you want to do this? The beer part of creating your own beer. So I wanted to find the quickest possible way to get machines into bars. And the quickest way that our team came up with was, why don't we just like make product ourselves? And why don't we make it non-alcoholic? Because then it's going to be a lot quicker to distribute because there's a lot less regulation around distribution. Then if you had to get wholesaler license and that's a lot more complicated. Right. And also because you always, as you would probably say, you want to be in a growing market if you want to get traction. So you're much easier to convince somebody to take in an NA if that's a growing category than if we'd to try and go in with a beer. So would we create our own beer brand? I wouldn't rule it out, but I wouldn't say it would be, it's not higher on our list of things to do. Yeah, NA, non-alcoholic. But NA, if you want to get in there with draft, well, how about we get in with something that's growing? How about we get in with something where we've competitive advantage on taste because we've got a good separation process? I like that you picked the Pilsner too, because one of the things we talk to other, let's say brewers about is when they create a beer that doesn't have a name or that sounds like something that doesn't exist in the marketplace. It's tough because if I'm just a patron and I come in your bar and I want a Pilsner, but you're not making a Pilsner, you've made some offshoot name that no one knows yet because you're introducing a brand new concept, then how do I order your beer, right? It's tough. But in your case, you've just made it a Pilsner. And so if I want to go, I'm like, hey, can I get a non-alcoholic Pilsner? It's perfect. You've attacked a large market in that way. So technically, by the way, though, you'll notice that we don't actually have Pilsner written on it. Because there's- Can you not? There's a strange law at the moment whereby you can't use beer styles within the name of a brand for a non-alcoholic beer. What's the premise of the law? I'm afraid I don't have any logic. I just kind of have the way that it is. I think that maybe hasn't been as big an issue in the past because non-alcoholic was such a big category. So I'd be hopeful that there'd be some changes there that will allow people to try different styles in non-alcoholic. So yeah, I guess I can say we brewed this as a Pilsner and we removed the alcohol from it. That's interesting. So it's certainly delicious. I always think about, one, how big this market is going to end up actually being. That's one thing I'm super curious about. Right. Like, will it be as big as Europe? Will it be as big as Europe? Is it as much of a concern? I don't know. And then it's almost like once I'm at that point of discussion, my mind goes into- You sort of commented on this earlier. You have to choose, is it the non-alcoholic that I'm marketing or is it the low carb that I'm marketing? In LA specifically, there's a lot of people who want to enjoy something that tastes fizzy, might taste like a beer, but doesn't ruin their weekend and keeps them fit all at the same time. Yeah. And so it's like, which one do you have to choose or do you have to choose? I don't know. There's just a lot of green space. Like, I don't know much about marketing at all. And so I go into it thinking about, well, there's broadly two roads here I could take. One road is I could try to go deep on the analysis and like figure out the categories and decide strategically to target, you know, 25 year old Diego's or whatever the category might be. And the other approach is I can, which is very unscientific, is just saying, well, you know, if I wanted a non-alcoholic beer, I'd have Pilsner's. And so this is the beer I would drink. Right. It might be terrible targeting of the category. At least I'll be passionate about it because I like what it tastes. And I think we've kind of allowed that as a team to drive our choices till now. Apparently also, because it's an expedient way as well to get some product out there that we also feel passionate about. Totally. That's kind of how we've done it now. Whether that's a good decision, time will tell. Time will tell. I think you're in a good spot. Whenever you work with these huge players, so outside of the beer, but back to the, I guess your core business. The core, yeah. Yeah. What is that like working with these huge players? Is it slow? I mean, are you traveling a bunch to visit them? You went overseas, what is that like? Because in some way you're complete, you have the ability to change their business in a very meaningful way. Right. And these large companies wanna be extremely thoughtful about how they spend their money, how they go down that road with you. So as an entrepreneur, I can imagine that's two things, right? One, it's amazing that the opportunity is available to you. But two, it's daunting because you still have to run a business, you still have to keep the lights on, money needs to be coming in the door and you're basically chasing elephants. Yeah. Right, and it's a slow, you're just chipping away little by little by little. I will say first that two things I think are very important are, first of all, working with more than one. So you gotta have at least two. Yeah. Preferably three, four, five. Okay. And you wanna be- But how many are there? There's not that many large super, right? Well, the top 10 have 64% of volume. So yeah, it's pretty consolidated. Okay. And we would consider for doing large scale installations like trying to target the top 40 brewers broadly speaking across the world. Sure. But yeah, very important I found to have multiple players interested and trying to get them at the same part of the process so that you have competition for that trial spot or renting the same machine or getting a week of operation on our unit in New York. So constantly trying to funnel things into scarcity. Yeah. So that's really important. And I'm not saying I've been able to do that at all times but that's been kind of critical to getting the financial support from brewers. Another thing is, which we've done more on with like 0.5 is showing the reality. Showing that it can be real. Showing that it's going to, yeah, sorry, I gotta stop talking in broad terms. It's not useful. Showing them that people are drinking it. They're being served from a Sandy Man Draft machine. They're drinking a 0.5 from our RIVOS NA technology. People are actually drinking this and it's happening end to end because when you look at something that's not in existence there's an infinite number of problem points where you can find an issue. And the only real answer to that is just it's happening. Because if it's happening, anything that might have been an issue clearly wasn't enough of an issue to stop it. Was that a light bulb on for you where you were like we just need to get something in the market so that we can offset some of these what ifs? That was a light bulb moment this year for draft. Yeah, when we thought about what's the quickest way to get draft in with big brewers, we thought let's get draft machines in the field as soon as possible. Yeah, and how long did that take you from the thought process to even making it? Well, we started launching 0.5 over the summer. Like that's when we developed the launch plan. So we really turned that around very, very quickly. To the extent that that's why it's in bottles not cans because the lead time for cans would have been too long to get it done in cans. Is that right? Yeah, yeah. It's basically everybody's going to cans right now. So there's like a lot of long lead times for getting cans made. Do you know why everyone's going to cans? The cost of glass is expensive. So I mean, I'm gonna throw out some reasons. I actually don't think I know the real full reason but craft has moved to cans a lot which is not a fundamental reason but there's been a trend in craft towards cans. Cans are better for quality. They will have lower oxygen ingress. So over time a can will deliver better quality if it's packaged well compared to a bottle. Cans are less heavy. So there's a distribution benefit. There's also like the broken glass issue. So if you have the can, you can maybe bring it more flexibly in a backpack or offered beach or whatever. Of course the bottles, people can perceive higher quality from bottles historically. It stays colder for longer. People associated apparently with them. I'm just replaying back marketing things I've heard but for sure. People associate it with premium quality with import. And actually there's a lot of bottles still in Europe and there's still a lot of bottle in the US as well. Where did the name of your company come from? Sandy Mountain. Yeah, that's a good one. So I actually incorporated the business a little bit earlier than when we raised money because I got an option from MIT to get a license which was important before I'd engage with brewers. So I could say, oh, okay, I've got the option. Now we can talk about it. A license to use the technology. Yeah, yeah, an option to a license. Okay, because MIT, they keep it, right? So if something's developed in the lab, MIT labs, they retain it. Yeah, they own the patent. The IT, yeah. So they own one of the patents that we have. We have other ones that we know on, but they own one of them. And so originally I would have taken an option to license it. And then once I raised money, I executed the option and signed a full license agreement. Got it. So now we've an exclusive license for that piece of IP. Are they pretty good about that? Yeah, MIT have been really good. Okay, they're not on either. They're not sending you an invoice, being like, hey. Oh, we're paying them money, but that's a good thing. I mean, I think that's exciting for them. There's maybe a limited number of technologies that end up getting into the black and paying back royalties. So that's, I think that's really exciting. And yeah, I mean, I obviously have money, just one experience gone through. I think most people have been happy, but the people I know there, I've had a good relationship with. And I see it as a positive that we have IP now. That is from MIT. What question was I answering the name of the company? Oh yeah, I just got interested in what you were saying. Sandy Mount. So the name is, it's basically a beach where my grandmother used to go for walks. Oh, okay. Yeah, and... In Ireland. Yeah, it's in Dublin. Sandy Mount. But the hilarious thing is that actually, this shows how fast I was doing it. The name of the beach is actually Sandy Cove. So it's Sandy Cove Beach. But I wasn't thinking clearly on that day. And so when I came back, all the incorporation documents were filed. And Sandy Mount exists, it's like literally down the coast, like up the coast a little bit from where Sandy Cove is. So it was Sandy Cove. She would also have gone for walks on Sandy Mount. I mean, I really could have picked a lot of beaches in Dublin and I would have been fine, but that's where it came from. Yeah. And when it comes to like growing your company, do you just really just focus on the top, you mentioned the top 45 or the top 25 and you're constantly in touch with them or what is that like? Are you engaged with all of them in some way? Have some people said no? Is it just a function of you just continuing to kind of poke at them? Yeah, so I mean, that 40 is global. So, you know, there's a good chunk of those in say China, Japan, where we don't really have much penetration at the moment. We're pretty focused on kind of North America and Europe. I think we're starting to learn. We have a team member, Abby, who's in Asia at the moment, but we're more just learning about the market and seeing, you know, if and when it'll make sense to do some projects there. Is there anything that's vastly different about the Asian market? Yeah, I mean, I think there's a lot of significant differences and I don't fully appreciate them, but the stage of, you know, adoption of beer, beer is something that's more recent. I'm not saying like the last few years, but it's more recent in history than what it would have been in Europe and the US as I understand, you know, the stage of progression towards non-alcoholic, the stage of progression towards craft is at, you know, a much earlier stage than what it would be in Europe. Got it. You know, the price points are different. You know, the price points are different. They're just lower for what beer has been sold for. Shipping routes also are kind of interesting. So, there's this weird thing whereby so much product comes out of Asia, not beer, but I mean, there's some beer, but a lot of electronics, you know, I don't even know specifically, but yeah, we've got a lot of consumer goods from Asia. So all these containers are coming this way and then that means there's a ton of containers available to go back. So there's actually like a lot cheaper to ship stuff to Asia than to ship stuff from Asia. Interesting. You see? Yeah. So it's close to, I won't say it's free, but it's pretty cheap to send containers back to Asia, whereas the cost of shipping out of Asia is pretty high, which obviously impacts how we think about things because, you know, we're thinking about transport. So as we begin a new decade, do you, when planning your business, when thinking about, let's say, 2020, yeah, do you, what does 2020 look like for you? And then is 2030 on your radar? Is 2030 on the radar? Yeah, yeah. I don't know if 2025 is on the radar. I think 2020 looks like getting our hub is already up and running in the US, getting that hub more established, getting more volume through it, getting our hub up and running in Europe for the first time. We haven't fully finalized the site, but we're pretty close to that. So that'll be two major events. Getting draft machines, we've got a plan for getting 100 machines up and going by the second quarter next year in both the US and in Europe. So that's gonna be pretty critical for us as well. And then that's kind of all of the bottom up activities. Of course, there's the top town engagements with the Brewers and they each have kind of specific rollout plans around what they wanna achieve, either on draft or either for export. So I need to keep us busy on that front as well. Do you ever get asked for acquisition offers from these guys? I think early on, like maybe about two years ago, there was some interest. I don't even know what an acquisition offer or approach fully looks like, because I guess this is my first business going around. Yeah, I guess they'd be buying the technology. It would be one. Yeah, I mean, I think the inability, basically they'd be buying the market from you. One thing I think that's interesting about Sanyamite for them is that we do have a bit of vertical integration now because we provide not just ReVos for making the high gravity beer, but we also provide the dispense unit for the bars. So they're able to kind of go fully along that vertical. Whereas a lot of process engineering companies, if they were doing what we're doing, they would just focus on doing the membrane technology and they would probably not just focus on beer. They would do like beer, orange juice, milk, lots of different liquids. So I think it's actually to our advantage that we really focus on beer. Interesting. And we know beer really well. I'm not saying, like I definitely know less than most of my clients do. Sure. Than all of my paying clients, but yeah. I think it's to our advantage that we're focused on beer. What's your advice to any entrepreneur listening around either starting or, yeah, just around starting a company, taking an idea that you had and where you're at today? I like the reading books one. I like the one about reading books about or by people who were successful. Yeah. Do you have a favorite? Do you have a top three? My favorite startup book is Peter Teal's book, Zero to One. Okay. Yeah. What do you like about that one? I just think he has a few good nuggets about how he thinks about scaling, like the importance of avoiding competition. You know, that's something I talked about with our team earlier this week and how we've got to stay focused on getting RIVOS out there for allowing this new supply chain and not get distracted by developing other products where we've less of a competitive advantage. So that's one thing I like about it. You know, he has a comment about trying to hire people who are full-time because part-time can really take more effort and there's not, you know, the long-term commitment there. Yeah. So trying to build a team and trying to prioritize having people that are that are there full-time is something I think about. Yeah, it's true because you can teach them on your entire system, spend a lot of time doing that and then if they're part-time, they just leave. Yeah, right. And they take the knowledge here and then you're at zero all over again. Yeah, and the other thing is like if somebody's full-time, you can rely that they're gonna be there if something goes wrong, they're not working on another job. Right. Which is important when you're in startup phase for like a, you know, a machine because things always go wrong. So you need, I think it's reliability is a part of that as well. One decision that definitely underappreciate is when you start your business, you don't realize how many decisions you're making at that point when you just get into that business that are gonna like determine the extent of the business's success. Let's just take Sandy Mark. Like we're doing beer and we're doing beer transport. You know, we're not gonna move into doing a software business for finding, you know, a cheap lease on a house. Right. So we're constrained within doing beer. And what does that mean? Well, it means that we have a certain profile of competitive advantage, which for us is mostly IP because we have these patent filings. Right. We also have these strong client relationships with big brewers that, you know, are hopefully gonna sustain over time. So there's that potential to have a lasting stream of revenue. So there are some of the benefits. What are some of the drawbacks? Well, we have got, you know, relatively small pool of clients, which means that the clients have more bargaining power over the pricing. So that's not as good as being in a business where I'm selling to, you know, 20,000 small businesses where they don't have pricing power. Right. Do you struggle with the patience of having to stay in your lane? Or have you just accepted it? You get it. There's some things I know are for sure fixed. And then you have to accept those things as you move forward. But, you know, sometimes there's things in your wonder, well, maybe there's something I could improve about the fundamentals of what we're doing here, that's not already tied in. And how far is it okay for me to deviate from what, you know, the original business I entered into was? And some people's pivot successfully, I suppose. So it's not to say maybe you can't change lane. But yeah, I guess, what am I saying? The impact of your business, I think the original point I was trying to say is that, yeah, a lot of the impact of your business is determined by some pretty early decisions, which for me were made at a time when I knew a lot less about running a business or scaling a business. Your hypothesis is testing almost. I suppose if you do manage to grow a business long term and keep the business, then you do start to be able to maybe have more flexibility in different areas you can get into. Like, you know, Amazon is clearly in a lot of different areas now, whereas they started with books. So given enough skills, success, maybe that buys you some flexibility over time that you can kind of chart that course. But we're talking about a three-year time scale, three and a half since I started. So we're not thinking about moving into adjacent businesses or things like that. Right, still early on. So we're working on the same basis we started this business on. For people listening, tell them where they can find you, website, Instagram. Oh yeah, that's not easy. Yeah. Yeah, I don't know. Send me an email, thegovernetsandimanth.com. Yeah, I do have Twitter. I realize I really thought it's good at going on social medias. I thought it might be. Sure. So I might send out the odd tweet. But yeah. And then people can find less than 0.5 at Central Square. Central Square and Cambridge. 0.5brewing.com. That's correct, yeah. So you can find that online. And we do have social media accounts for 0.5. We have signedumant.com as well. Well, thank you for coming on the podcast. Yeah, of course. Thank you, brother. Yeah. We here at Startup to Storefront would love to hear feedback from you. Reach out and let us know what you think, either through rating us on the podcast app or by sliding into our DMs. You can find us both on Facebook and Instagram at Startup to Storefront. Our theme song is composed by DoubleTouch. If you want to learn more about the products and businesses featured on today's episode, check out the links in the show notes. And if you enjoyed the episode, consider subscribing because we've got a lot more great guests coming up that you won't want to miss. Thanks for listening and we'll see you next time.