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MAY/JUNE 2018

For the Craft Brewing Professional

Nick Tanner, founder/brewmaster, Cherry Street Brewing Cooperative

Meet me at Cherry Street

How Nick Tanner’s Colorado-born beer became the toast of Georgia

PLUS: Say what now? Swear by the oath


contents

VOL. 2 : ISSUE 2

MAY/JUNE 96 97 98 144

EDITOR’S NOTE Go tell it on the mountain (and other ways to share your story) INSIGHTS Industry News FOR THE LONG HAUL Eight essential strategies for achieving business longevity

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100 105 108

FOR THE LOVE OF THE GAME Inside the magic that is Revolution Brewing CRAFT BEER’S ACE IN THE HOLE THINKING (IN AND) OUT OF THE BOX How do you stand out in a global marketplace

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editor’s note

Go tell it on the mountain (and other ways to share your story)

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Customer experience. It all starts there. Take a look at anything that’s being written these days about marketing and branding and delivering on your customers’ expectations is the main topic at hand. Your brand—your beer—sits at the top of that list. But there’s more to it than that—and you know it. It can be about the presentation your customers receive when they take that first sip. That’s what makes the difference. “Wow” them and they will tell everybody about you and your brand. Think about it. Every successful craft brewer knows that it all starts with the beer. Generating word-of-mouth referrals happens when you offer a consistently excellent product. Michael J. Pallerino But then what? Do you want the quick answer? You tell that story—your story. And along the way, along with building a marketing and branding campaign that compliments your blood, sweat and beer, you must get everybody else to tell your story. Automated text reviews. Facebook Messenger. Digital marketing ad campaigns via Google, Facebook and Instagram. Each of these channels enable your customers the flexibility and convenience to share your story. And yes, we know, there are myriad new tools and approaches happening out there every day. And no, you can’t try them all. But there are things you can do stay in step. It stars with being a planner. Start by teaching your community of beer drinkers about what makes your brand different from everybody else. What are the three most common characteristics, other than price, that you want your customers to walk away with? This will help guide the marketing direction you want to take. That means keeping up with every way there is to tell your story— social media, local media, customer referrals, etc. On the online side, Facebook can give access to data. Google Adwords is still the place to get questions answered. You can target zip codes there, too, and advertise your name and your answers. As for offline, lean on local media sources such as local newspapers, community publications, direct mail and customer referrals. Your community is there to help you, so let them. People still read their mail, so send them something useful. Hold taste tastings. Give people an opportunity to stop by and sample the merchandise. Don’t be a secret. If you can get to know your customers—their likes, dislikes, etc.—you will start to get to know the lay of the land. One of the best ways is to channel your own experience as a consumer. When you experience these innovations as a consumer, ask yourself how you can employ the same innovations in your own marketing practice. The world of craft beer branding is growing as fast the product landscape. To cut through the noise, so to speak, you have to stand up and shout your story to the masses. If they love your product, they’ll love what you have to say. So, what are you waiting for, start talking...

Along with building a marketing and branding campaign that compliments your blood, sweat and beer, you must get everybody else to tell your story.

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insights

Book Rec

Extraordinary Influence: How Great Leaders Bring Out the Best in Others By Tim Irwin How do you get the most from your team? It’s a question every leader asks today. Finding ways to help others excel and realize their potential is critical today. So, what if we could speak words that help transform those under our influence and ignite fires of intrinsic motivation? What if those you lead were able to find a greater purpose and passion in their jobs? That’s what Dr. Tim Irwin set out to do in “Extraordinary Influence: How Great Leaders Bring Out the Best in Others.” What Irwin found is that recent discoveries of brain science show that affirmation sets in motion huge positive changes in the brain. It releases certain neuro chemicals associated with well-being and higher performance. Amazingly, criticism creates just the opposite neural reaction. The most primitive part of the brain goes into hyper defense mode, compromising our performance, torpedoing our motivation and limiting access to our higher-order strengths. “Extraordinary Influence” book calls for a new approach to align workers with an organization’s mission, strategy and goals, called Alliance Feedback. It’s worth the read.

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The percent of all purchases by consumers that are driven by conversation, according to the “TotalSocial® Version 3.0” report by Engagement Labs and Northeastern University. To note, almost half of those conversations take place on social media, with the slight majority taking place face-to-face.

Everything personal How personalization strategies are helping compete for consumer attention Want to engage more with your audience? You'd better get personal. According to the "2018 Adobe Consumer Content Survey," 67 percent of consumers say it’s important for brands to automatically adjust content based on their current context. To make things more interesting, 42 percent admit to getting annoyed when their content isn’t personalized. It's a good lesson for craft brewers wanting to strengthen their bonds with their consumers in today's highly competitive race for attention.

“The fundamental truth–and challenge–is people buy experiences, not products. Products used to differentiate businesses, but now companies have to compete for the hearts and minds of their customers. They have to exceed their expectations and always operate with a subscription mindset. Customers can renew or go to a competitor with every click.” – Adobe CEO Shantanu Narayen on why customer engagement is so critical for today’s brands

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Meet me at Cherry Street

How Nick Tanner’s Colorado-born beer became the toast of Georgia

Nick Tanner had to write a business plan for a senior project. His topic – how to open a brewpub. It wasn’t all that surprising of a choice, being Tanner was studying in what is known as “The Napa Valley of Beer” – Fort Collins, Colorado. If his paper didn’t inspire him enough, after his friend invited him to help make a batch, Nick was hooked.

By Michael J. Pallerino

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The next day he purchased his first kit – an Irish Red Ale, a style that's still on tap today at the craft brewery he calls his profession. Cherry Street Brewing Cooperative may have been born in a little garage in Fort Collins as part of a bike, food and agriculture co-op, but today, it is the pride and joy of Cumming, Georgia, a upscale community 30 miles north of Atlanta. The son of a father who owned a chain of successful restaurants in the Atlanta, Nick moved back home to begin the actual brewpub process. Today, Cherry Street Brewing Restaurant and Taproom is in a partnership with Rick Tanner’s Grille & Bar, a relationship that combines classic eats with a mix of traditional and off-the-wall brews. Cherry Street's identity is defined by applying cooperative ideals to everyday life. These ideals focus on community, education, and sustainability. “We are here for the community, just as the community is here for us,” says Nick, founder and brewmaster. Five years into the game, Cherry Street recently was recognized as the "2017 US Beer Open Grand National Champions." Thanks to cutting edge new styles and recipes, and experimenting with unusual ingredients and wild yeast, Cherry Street always has something fresh and exciting to enjoy on the 25 taps pouring daily in the Taproom at Vickery Village in Cumming. CBAM sat down with Nick to get his insights on where the brand started and where it's going.

product home from the grocery store. There has been a shift in consumer purchasing decisions to a more artisanal and local focus. Consumers want to know why they should buy that product because they know they have a decision now. People are making educated decisions in where they spend their money. This allows brewers to charge what they need to survive and grow with the use of taprooms and effective retail sales.

What trends are defining the space? While modern craft beer has always had a "fresh is better" approach, the biggest trend, which is difficult to call a trend, is consumers getting the beer

Give us a snapshot of today's craft brew market from your perspective. The number and volume of large breweries has plateaued and the number of smaller breweries has drastically increased. For a long time, the focus was to grow large and fast and get the beer out there. While some have been successful with this model, it has sacrificed core ideals like quality and ingredients. Today, smaller brewers are able to use a wider selection of ingredients to make a difference in overall taste and quality. In addition, consumers are more likely to visit a brewery taproom versus taking the

We have a strong charity focus in our daily mission. I’ve learned that beer is more than just an alcoholic beverage.

as fresh as possible, and mostly from the source. Beers are actually being designed to drink immediately, not for shelf stability. There is definitely truth to the difference between one and 30-day old cans. Many breweries will have lines to get same day canned beers on release days. It’s amazing to see the IPA beer style continuously grow and evolve. I used to say in training classes that IPAs are the style people love or hate the most, but the newer takes on IPAs with New England/Hazy styles have created an IPA for the non-IPA drinker. I experienced first-hand in our taproom people getting

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burnt out on breweries pushing the bitterness threshold. People want the flavor without the bitter. Hazy IPAs have changed the way people look at and approach beer. It is completely contrary to popular and traditional brewing methods.

Walk us through your branding strategy. We were founded on three basic ideals: community, sustainability and education. We are here for the community, just as it is here for us. We have a strong charity focus in our daily mission. I’ve learned that beer is more than just an alcoholic

beverage. It’s humble and social, and also charitable. We let the beer do all the work bringing people together and being charitable. We are just the vessel. We are a community place where people come to gather and enjoy themselves. Our tagline is “Know Your Brewer.” This is really meaningful to us, as I was involved in CSA agriculture programs and their motto is, "Do you know your farmer?" which essentially means know where your products are coming from. We are a local’s pub in a thriving community only trying to make it better.

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We want it to go beyond just purchasing a beer. Craft and independent beer is simply about creating an honest product from honest ingredients by honest people.

MAY/JUNE 2018

Talk about your distribution strategy. Originally, we never intended to do the amount of distribution we produce out of our current facility. Our business plan called for more brewpub locations, not to have expanded twice, and start canning and distribution across the state. Our distribution strategy came out of demand and opportunity. We setup our brewpub operations more on a production brewery style, instead of a traditional brewpub serving from serving tanks. Since we keg all our product, we had an opportunity to distribute a certain number of kegs and brew another batch before it ran out in house. That changed our business model forever. In the past five years, we expanded from a 3 bbl. to a 10 bbl. brewhouse and went from 3 fermenters to 12. Our original projections were to sell about 600 bbl. s in house per year, and we will do about 1800 bbl. s this year for in house and wholesale. Since our production is more limited in quantity and we have a higher return in our pub, we can focus on using ingredients we want to use and brewing beers that are different than the next tap over. All our beers are approached to stand out and make a difference, and have balance and likability. When we distribute our product across the state, it drives more business back to our pub.

What's the biggest issue related to the marketing/sales side of the craft beer business? There is a false sense of security. The biggest issue is quality control and knowing where your purchase decision is coming from. Just because it’s in the craft beer section doesn't make it good or even a craft beer. Everyone has different taste buds, but that doesn't mean you send out any and all batches of beer without some quality control points. Also, the market has shifted to where the big guys are buying up the smaller guys, making it look

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cherry street

like nothing has changed. Even though the quality or expectations of that product probably hasn't changed much, hopefully better if anything, it has impacted the playing field and the pockets of where that purchase ultimately ends up.

What is the secret to creating a successful branding story? Our brand runs and thrives on passion. There is always another great recipe. There is always another great ingredient. There is always another great process or way to do something. We find ourselves constantly trying to make the next batch better than the current. We may tweak something, but only so next time you’ll say it was better than ever. The biggest secret is keeping up with people's palettes, because there’s always something better or different to brew and share.

What’s the one thing every craft beer brand should be doing in the way of marketing? Create an experience or spark a feeling or behavior. Our saying is, “Know Your Brewer.” This is an action statement that makes you stop and think about your surroundings. It represents the paradigm shift of enlightened decision-making. We want it to go beyond just purchasing a beer. It can impact the way any decision is made. It can even impact one's daily life and interaction with others. Craft and independent beer is simply about creating an honest product from honest ingredients by honest people.

What are your biggest opportunities moving ahead? To stay focused on what we do well, especially in our local market. The harder you work for something, the higher the reward. Exceeding your customer's expectations every time is a major opportunity. You have to set this standard high and constantly work toward it.

What's the biggest item on your to-do list? I’m trying to figure out how to brew more beer. Our demand has increased well beyond our supply point and we need to get more beer flowing for distribution. Georgia law is tricky with licensing, and since we have a brewpub license, we have certain restrictions to production and a production facility without food sales for wholesale. We’re currently under construction for a second brewpub location.

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Nick Tanner, founder/brewmaster, Cherry Street Brewing Cooperative What’s the most rewarding part of your job? Creating a community within a community. During a speech to my brewery staff at the end of last year, I remember saying, “The word ‘team’ was never in a business plan. Sure, it mentions positions and salaries, but it doesn’t talk about building a team. It’s the team that has created our success over the past five years.” Watching them grow and creating a family is the most rewarding part of my job.

What was the best advice you ever received? “That will never work.” In college I came up with what I thought was a brilliant idea, when a colleague said it would never work. So I set out to prove him wrong. Those four words changed my life.

What's the best thing a customer ever said to you? It’s not so much about what a customer said as it is about seeing and feeling his excitement. We were a restaurant long before we opened the brewery with many long-term, regular customers, many of whom we call family now. I feel their pride in me and in our brand.

What is your favorite brand story? When I was in college I began collecting beer bottles. I noticed in the corner of the old Avery Brewing labels a slogan that read, “Yeah, it is.” It wasn’t until I began brewing beer that I understood what that meant. One of the greatest rewards of brewing your own beer is sharing it. One time I shared a beer with a friend who said, “Dang, that’s good.” I replied, “Yeah, it is.”

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customers

By Eric Balinski

Swear

oath by the

Inside Honor Beer's mission—its customers

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I’ll admit it up front, every time I hear someone in the craft beer industry say something like, “It’s all about the beer,” it makes me flinch. I wonder where the customers fit into the person hierarchy of priorities. Yes, this statement is intended to show pride in the brewer’s craft and its view of what will make its customers happy. But having worked with and advised numerous companies over the past 30-plus years, this is one of the toughest challenges—convincing the company leadership their business’ success is less about their product. The reason is, overtime this focus often results in a company disconnected to customers, uninspired value for customers and disappointing sales. Today, the craft beer consumer has an overwhelming number of choices, all of which are pretty darn good beers, available for any palate. That makes these good brews more of a commodity in the taste buds of customers and a growing issue to every brewer’s prosperity and survival. Recently, I was introduced to Honor Brewing in Chantilly, Virginia by the wife and agent of musician Dave Bray. Becky Bray told me great things about the people behind Honor Brewing,

what its mission was, and how it is dedicated to doing extraordinary things for its customers. Our whole conversation was such a testament to Honor’s efforts with its customers. Needless to say, I had to learn more about this mission-driven craft brewer. When I spoke with David Keuhner, co-founder of Honor Brewing, my first question was, “Please tell me about your mission, because it doesn’t sound much like the rest of the craft beer industry?” Keuhner explained that Honor Brewing started with the idea to find a way to pay tribute and recognize all the men and woman who served our country, as well as their families. He noted that there are more than 3 million American men and women who served in Iraq and Afghanistan alone. “We may not be able to help all, but we can help some.” This noble mission has propelled Honor’s expansion into 14 states in only two years. As we talked further, it was clear Keuhner was more passionate about his customers than about beer making. He talked a

Today, the craft beer consumer has an overwhelming number of choices, all of which are pretty darn good beers, available for any palate.

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lot about people and their lives, not flavors, styles, The mission defined or new products. Keuhner shared story after story of Honor Brewing’s branding and marketing is comcustomers, their families and what Honor Brewing pletely centered on its target audience. The beer’s does to pay tribute to those who have served and name, Honor, to its packaging, social media and those who are no longer with us. For example, Honeven a patented tap handle for dog tags are all deor Brewing recently started selling in California, with signed to remember and pay tribute to those who its first buyer being the Dodgers. served America. At a home game, the Dodgers The packaging for Honor and Honor Brewing paid tribute Golden Ale and Honor IPA each to a Gold Star mom whose son has a story about the fallen. grew up outside Dodger Stadium. These stories are written by the The ceremony acknowledged families, wives, mothers, etc., to her son’s and family’s sacrifice for celebrate their family member’s our country. The mom noted that life and service to our country. the worst isn’t that her son died, Truly this craft beer that has a soul but that he would be forgotten. tied to it. Her overwhelming gratitude and What about the beer? Honor’s thankfulness will never be forbeer, or your craft beer, is actually gotten by anyone in attendance. only a means to deliver value to Dodger Head Coah Dave Roberts Now this is a mission that makes customers. In Honor’s case, its and Kat Leon. a difference. mission is bigger than any of its six different beers could ever be. And isn’t this the point of creating an inspiring and powerful mission for a company in the first place? If the product is the mission, at some point, it’s just another beer to any consumer no matter how enjoyable it may be. Another interesting aspect of Honor brewing is the beer plays a larger role than a tasty beverage. With Honor beer, each time customers raise a beer, it symbolizes honoring and saying thank you to those who served and sacrificed. As a result, Honor’s beer transcends beer hops to an emotional experience for all who drink it. That becomes pretty powerful brand reinforcement. A company mission, such as one like Honor Brewing’s, can be a mighty force for a company. Soon after the conversation with Keuhner, I spoke with an old friend, Gregg Young in Michigan, about the idea for an CPL Leon. unrelated article.

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As summer kicks in, if you’re in one of the 14 states that carry Honor Beer, lift one and say thank you to all those who sacrificed and served our country. In doing so, you’ll recognize and respect these Americans. Additionally, through the sale of its products, apparel and merchandise sales, as well as charitable auctions and events Honor Brewing contributes to related military charities. Through these fundraising efforts, Honor Brewing Co in the last two years has been able to contribute more than $250,000 to charities of the fallen and injured. God Bless America and those who serve and sacrificed. Eric Balinski is the owner of Synection, LLC, which is a strategy and growth consultancy firm. For more information, visit: synection.com. MayJune-2018.pdf

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Young didn’t know I was writing, so I shared my work with Craft Brand and Marketing, mentioning too that my next article was going to be about Honor Brewing to coincide with the kick-off of summer and Memorial Day. Explaining how I write an article, I shared the Dodger/Honor Beer’s Gold Star mom story. Little did I know, Young knew folks in one of the Dodger’s development teams, The Great Lake Loons. Shortly after, Young had a chance encounter with the incoming president for the Loons and shared the mission of Honor Brewing and its availability in Michigan. His reaction was: “That’s a great idea, and I’m going to run with it.” Imagine if the conversation was only about craft beer. Sure, it would have been business oriented, likely with lots of varying opinions of what may or may not sell in the stadium or what existing beer contracts might have to be reviewed. Instead, the Honor mission immediately sold Honor beer, the rest are just details of getting it into the stadium. C

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By Eric Balinski

Say what now? Why it's not good to skunk your customers

In the story, “Strategic Thinking—The New Game Board,” in our second issue of 2017, we discussed how the founders of Yeti figured out an offering that delivered better value to customers in a world full of popular low performing products. In the fourth issue of 2017, the story, “More Pie Please,” we discussed how a new competitor to Yeti could potentially take share from Yeti or create new customer share without pursuing Yeti’s customers. As a supporter of the NRA Foundation, a member of the NRA and a fan of Yeti products, it was intriguing from a professional marketing perspective to watch what transpired in April when Yeti notified the NRA Foundation (a group that raises money to support gun safety and educational programs) that it was eliminating the discount program. Yeti further explained it was offering an alternative program available to consumers and organizations, including the NRA. The NRA viewed the situation stemmed from early March when Yeti refused to fulfill a previously negotiated NRA order, citing “recent events” as the reason (presumably the Parkland shooting). Next, Yeti notified the NRA Foundation that it was terminating a seven-year agreement and demanded the NRA remove Yeti’s name and logo from all NRA digital assets, as well as refrain from using any Yeti trademarks in future print materials.

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My intention here is not political. Rather for any marketer, what’s particularly strange was Yeti told a long-time customer that it could in no way show or represent any identity of the Yeti brand with the NRA brand. This suggests something more going on than just a new discount program for the NRA. Regardless of where you stand on this debate, what you should consider is how your company can make the same mistake—alienating or even betraying long-time customers. Maybe your actions may not grab headlines, but nonetheless the result can be the same. All too often, companies lose-sight of what’s meaningful and important to the customers. This becomes more complex as you grow, as different customers types show up in your customer mix over time. Your original craft beer aficionado customers, now includes folks who are more casual about their beer consumption. This Yeti story is also similar to what plays out when a craft brewer sells out to a Big Beer producer. The Big Beer buyer just wants the customers of the craft brewer. The craft brewer’s beer is the hook to keep the customer, without necessarily keeping the same values and mission the craft

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brewer funded the company on. It’s inevitable, too, as Big Beer companies have entirely different metrics and financial performance objectives.

Your customers have a vision, too In Yeti’s case, the two founding brothers, Ryan and Roy Seiders, are passionate outdoor enthusiasts. Their customers related to the founders’ ethos and intense outdoor lifestyle. But after the brothers sold equity to a private equity firm in 2012, their destiny with customers was pretty much sealed, as private equity only holds an investment for four to seven years and then exits, hopefully for much more than the $67 million the PE firm invested into Yeti. This generates the return on the funds they manage. To make it more valuable, the PE firm must cut costs and grow sales. Yeti started

The craft brewer’s beer is the hook to keep the customer, without necessarily keeping the same values and mission the craft brewer funded the company on.

producing more of its products in China to cut costs. To grow sales, it needed to either find more customers exactly like its current customers or, more likely, customers who buy coolers for other reasons. Concurrently, competitors had figured out Yeti’s magic, and put Yeti’s customers under fierce competitive pressure. Simply, it was becoming incredibly difficult for Yeti to grow with the same customers who now have many equally performing, less expensive options to buy. Enter the non-rugged outdoor brand buyers into Yeti customer-mix, who will buy expensive Yeti products for other reasons. For example, my significant other passed a shop window last spring while we were on vacation and noticed a “beautiful beach bag”—actually a soft-sided Yeti Hopper 30. I talked her out of buying it, and then in the summer gave it to her for her birthday along with chilled Veuve Clicquot champagne and frozen King Crab Legs. I’m sure the Seider’s never envisioned a proud card carrying girly girl as one of their customers. (she does love to fish with me though.) The story between the lines with the Yeti and the NRA is that many NRA members truly are within the original customer base of Yeti customer. They are extremely dedicated to all things rugged and outdoors. The Yeti move felt like a total betrayal to them. And it was. On the other hand, the PE firm planned to exit its Yeti investment through an IPO announced in late 2016, and probably were concerned over customer sentiment around the issue of guns. Its move away from the NRA suggests it believed other buyers were needed more than its rugged outdoor folks to pull off the IPO. And given the outrage by the rugged outdoors folks, it better be right, as many rugged types are likely gone from its mix.

This case holds many lessons for craft brewers. They are: • There are only so many craft beer aficionados to go around for the 5,500 brewers. • Inevitable, you will need to find new customer types. Choose them wisely; don’t just believe all customers want the same thing. Many of my prior articles offered helpful methods to figure this out.

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• If you want to sell your operation, more than likely, it’s to Big Beer. They will never keep the same ethos and mission you created, even if you stay aboard. That’s reality. If you are fine with cashing out, no matter what happens after, so be it. Don’t look back.

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• But there may be an exception. In my other story in this issue (see “Swear by the Oath,” page 152), about “Honor Brewing,” its mission is so compelling, it’s more important than the beer they brew. If it ever sells the company, and any future buyer would likely buy it for its mission more than the beer it brews.


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