A new Maine company has launched at the intersection of two of the state’s most talked about industries: forest products and craft beer.

Maine Coasters & Bio-Boards, founded by Falmouth native Kai Smith, plans to manufacture ancillary products used in the craft beer industry using Maine’s abundant natural resources and existing forest-products industry infrastructure.

The company’s first product is beverage coasters made from a combination of Maine softwood pulps and leftover, or “spent,” grain from local breweries.

The Maine Technology Institute recently gave Maine Coasters a $25,000 seed grant to fund the manufacturing of prototypes at the University of Maine Process Development Center—the state’s leading forestry lab, located in Orono. Smith said he’s still testing the market, but has already received sales inquiries from local breweries and plans to have prototypes ready to provide to breweries this spring or summer. He plans to offer some initial products at no cost in exchange for the breweries’ participation in two surveys to help conduct a market study.

“I have about 15 to 20 Maine breweries interested in the product right now, and I will be releasing surveys to more brewers in the coming weeks to get a broader sense of the market and the numbers,” Smith said.

Currently, nearly 100% of coasters in the United States are made from German pulpboard, according to Smith. They are processed using softwood pulps, mainly spruce from the Black Forest, and then shipped to the United States for printing, he said.

But Smith sees an opportunity to onshore the manufacturing of coasters and create a niche market in Maine.

Upwards of six billion coasters are manufactured each year and rough estimates put the size of the market at around $500 million, with American craft beer representing the fastest growing segment, he said. For comparison, Maine’s entire forest products industry is around $8.5 billion.

“This is a great way to think about reinventing a product that’s commonly used in marketing for breweries like ours,” said Heather Sanborn, who is co-founder of Rising Tide Brewing in Portland. “It’s also very encouraging that we continue to see new types of businesses emerging in relation to the beer industry.”

There are both challenges and opportunities ahead for Maine Coasters, Smith said. On the one hand, the challenge is trying to develop a business in an industry that has suffered mill closures and shrinking paper markets. On the other, the craft beer industry is growing and, with its buy-local underpinnings, is ready to embrace locally made products, Smith said.

“As an entrepreneur, I find this framework really fascinating, especially in Maine, and I wanted to pursue the idea,” Smith said.

 

 

Roadmap

Maine Coasters will begin manufacturing the coasters in small commercial runs at the University of Maine Process Development Center, which he said is able to process up to two tons of wood pulp per day.

“For our purposes, that amounts to approximately 300,000 coasters, which is significant for our size,” he said. “That is a very rough estimate though and I won’t know for sure until they are made. When we scale up we are going to need to find a larger mill that can die-cut and maybe print. I am very hopeful this will happen in Maine.”

A critical part of Smith’s plan is to gain Maine’s largest breweries as customers.

“They are absolutely critical because they purchase coasters in bigger volumes,” Smith said. “The smaller and mid-size breweries have expressed an interest too, but many have not purchased coasters in the past because they are viewed as a luxury and not a necessity.”

Smith also has ideas about other industry verticals, besides craft beer, that could be sales channels for his company’s products, including the food industry, as well as commercial packaging and printing companies and some retailers. Because the per-unit price of coasters is so low (he said printed coasters will typically sell for anywhere from 6 to 11 cents), he said it’s important to be able to find additional sales channels.

In expectation of a need for additional revenue channels, Smith plans to sell more than just finished coasters to local breweries. He plans to also sell the raw pulpboard to existing die-cutting and print shops around the country that serve the beer industry, and which currently import the pulpboard from Germany.

“My hope is that they might see value among their customers for a local, American-made pulpboard with brewers’ ‘spent’ grain incorporated,” Smith said.

Assuming the beverage coasters find traction, Smith also sees future opportunities to offer Maine-made six-pack cartons and other wood pulp-derived products used in the craft beer industry.

A Local focus

Maine Coasters is Smith’s second company. He founded his first company, Buoy Local, in November 2013 with co-founder Sean Sullivan. Buoy Local—I wrote about the company back in 2015—was created to provide a gift card only redeemable at local businesses. The company started in Portland, but expanded to Bangor. Bangor Savings Bank acquired Buoy Local in September 2016 for an undisclosed sum.

Sullivan, his former business partner, is now director of the Maine Brewers’ Guild and is advising Smith and his new startup. Smith’s other advisors include Sanborn at Rising Tide Brewing, who’s also a state House rep, and Charlotte Mace, executive director of Bio-Based Maine.

Both of Smith’s companies so far have had a keep-it-local focus. Asked why this local focus is so important to him, he answered: “To be honest, I think it’s just a big part of doing business in Maine. And, it’s a nice way of doing business.”

He continued: “Our state is so small, population-wise, that it makes good business sense to be doing something that directly benefits the local economy and your neighbor,” he said. “I think Mainers are great customers too, and can be loyal if they like an idea. That’s so important as a startup, to get traction. With this in mind, I’ve tried to focus on products and themes that I know Mainers will like and that seem to have a following.”