Missouri-based co-op brewery unveils Pony Express line of beer

Rural Cooperatives, March-April, 2004

TransCon AG, a Missouri based new generation grower cooperative, is positioning itself to become the central business hub for a variety of value-added agricultural products. 1krith a solid business plan and a global marketing strategs; the cooperative has launched a line of spedalty beers as its first products. The beers include: Pony Express Gold, Pony Express Rattlesnake Pale Ale and Pony Express Original vvqaeat. The beers are now selling in Missouri and Kansas, and should be available soon in California and Arizona. Later in 2004, the co-op plans to expand distribution to the majority of the Midwest.

The grower cooperative is pursuing international distribution through office presence in 'lkiwan, China, Japan and Mexico, according to Joe Effertz, president of TransCon AG and chairman of the board for the co-op's brewing operations. The co-op is already shipping beer to China.

"China is a big market for soy-based products, like Pony Express Gold a soybean-based beer," says Mark Vogel, executive vice president for brand management at Osborn & Barr in St. Louis, the co op's strategic partner for marketing. "Marketing research shows that soy products are perceived as healthy, so product perception of Pony Express Gold is immediately high."

Market demand could outpace production capacity, currendy limited to 15,000 barrels, although new equipment is being purchased to double capacity by the first quarter of next year.

The TransCon AG cooperative was formed by Missouri producers who banded together to establish a value added organization to improve the profitability of their farm operations. The co op's strategy may eventually he centered around taking advantage of the Kansas City SmartPort, located at the old Richards-Gebauer airbase. The KC SmartPort is designed to be the major distribution hub of trade between Mexico, Canada and the United States through its strategic location on the Kansas City Southern Railway.

TransCon is initially focusing on three areas of concentration: distribution, malting and brewing operations. TransCon has acquired the trademark of the former Pony Express Brewing Co. and is operating under the name "Great Plains Brewing Co."

The co-op has 153 members, 90 percent of whom are producers.

"The other 10 percent are involved in other businesses which add value in other ways that an everyday producer could not, i.e., marketing, finance, retail, distribution, etc.," Effertz says.

Stock sold at $10,000 per unit, with the option to buy 1-3 units.

"We started our drive Jan. 1, 2003, and we were funded by May 15th," Effertz says, adding that the co-op may do an additional membership drive or spin off one of its three operations into a separate co-op.

TransCon is researching the opportunity to malt alternative grains from the fields of its producers. These grains include sorghum, soybeans, rice, corn, buckwheat and others. Having the ability to distribute these grains, whether in raw form or in any other stage of production, down to a final product, is the ultimate goal of the coop, says Effertz.

Extensive research was conducted to determine the initial product offering, brand positioning and marketing strategies. Consumer research was conducted with key beer-market target segments across the country and with Chinese nationals. Research indicated brand positioning that could have high appeal with both young and more mature beer drinkers.

The brand attribute most valued by the target market is the brand's American persona. The distinction of a brewery solely owned by the agricultural producers of the ingredients is greatly valued by beer drinkers and seen as an additional assurance of quality and freshness. The market research led to a campaign focused on American themes of patriotism and independence.

The label design and packaging feature eye-catching photographs of grain fields and patriotic imagery that position Pony Express as an all-American beer. In addition to glass bottles, polyethylene terephthalate (PET) bottles allow the beer to be sold at sports stadiums and golf courses. The Pony Express bottles use a multi-layer construction that incorporates a patented oxygen scavenger. In the past, beer in plastic bottles had a short shelf life, but the multi-layer technology keeps the beer fresher longer by minimizing light strike and oxygen ingress while protecting against C[O.sub.2] loss. The 16 oz. PET bottles were specifically designed to run through existing glass lines to minimize the cost impact of adding PET bottles to the packaging mix.

Minnesota ethanol co-op producing premium Vodka

Another farmers' co-op has entered the "adult beverage" industry with a premium vodka that has met with early success. A farmer-owned ethanol plant in Benson, Minn., is using a small portion of its distilling capacity to produce Shakers Original American Vodka, which was unveiled last year. So far it's been a huge hit at least on its home territory, That suc cess has the co op and the beverage company that markets the vodka looking at much broader distribution.