After a long wait, the headline from the Boston Globe spelled it all out last week: “Boston Beer’s side project finally ready for national stage.”
After four years of waiting, Alchemy & Science, a “craft brew incubator” led by Magic Hat founder Alan Newman, is getting its moment in the spotlight. Funded by Boston Beer as a subsidiary of craft’s largest company, Alchemy & Science offers a unique opportunity to launch localized brands using Jim Koch’s money, but not the name of his most famous creation, Sam Adams.
But what’s lost amongst the national rollout, which includes new TV commercials and a feature story in a top-25 newspaper, is that Alchemy & Science has been stealthy over the past four years for a reason. Boston Beer and its side project have been honing in on a major group of consumers everyone has acknowledged as important, but perhaps haven’t made a top-line priority in a singular way.
Alchemy & Science covets minority drinkers. Especially Hispanics.
To be clear, craft beer drinker demographics are changing rapidly and before long, this certainly can’t be the norm:
Which is why businesses owned by Alchemy & Science are strategically placed in locations where craft beer’s next big cultural push can take place:
- New York City (28.6 percent Hispanic/Latino) – Coney Island Brewing
- Los Angeles (48.3 percent Hispanic/Latino) – Angel City Brewery
- Miami (65.6 percent Hispanic/Latino) – Concrete Beach Brewery
And of course, there’s the nation-wide rollout of Traveler Beer Company, maker of the fast-growing shandy style of beer, which saw strong sales across 2013 and 2014. While Mexican imports are most popular among Hispanics, flavored options like fruit-infused drinks and shandies aren’t far behind. With a potential double-whammy, Hispanic Millennials are more likely to purchase flavored beer compared to Generation X.
“There is a belief in the craft beer world that craft beer serves white middle class Americans and what I’ve always believe is that’s garbage,” Newman told LA Weekly last year while discussing Angel City Brewery. “And you come down to the brewery on any given night, one-third of it is Mexican-Americans, one-third of it is Asian-Americans and one-third are white, which if you take a look at our surrounding community, is the exact same makeup.”
Newman believes part of the reason Hispanics haven’t flocked to craft beer as quickly as other groups can partially be attributed to a simple lack of access – taprooms didn’t show up where they were.
“But give them the option to come to the brewery and be educated and drink world class fresh beer, they get excited by it,” he said.
That mentality is doubled-down in Miami, where Concrete Beach Brewery isn’t billed as a taproom, but as a “social hall” where staff must be bilingual to reflect the community they serve.
“We have to turn on the Hispanic market and focus on the culture that is here,” Newman told the Miami New Times. “We need to embrace them.”
In terms of marketing, it should work. Research firm Nielsen found that connections to Hispanic consumers are strengthened through Spanish-language advertising, and it’s even better if it’s based on social interaction. Branding was more effective with the demographic in Spanish than English, too.
Most of all, Boston Beer’s relatively small annual investment in Alchemy & Science, put in context to the rest of its spending, is worth the price of drumming up interest with a pivotal demographic. In its first quarter filings for 2015, Boston Beer noted it’ll spend $3 to $5 million in capital investments on Alchemy & Science and its brands this year, but $10 to $15 million in advertising and promotional materials.
The company admitted they don’t expect to recoup the money in 2015, but this isn’t a short-term game. America’s Hispanic population continues to grow every year, expected to reach 106 million by 2050, double what it is today.
The arrival of Alchemy & Science is an important step for Boston Beer and its up-and-down stock price, but it’s also a move away from Big Beer’s kitschy attempts to capture market share among Hispanics with options like Bud Light Chelada, Coors Light Summer Brew or the always-expanding “Rita” line, gimmicky drinks that come and go.
Rather, this feels like a unique way to bring an important demographic into the craft beer fold and expand expectations of what’s available. Not just for white 20-somethings clamoring for the latest IPA or barrel-aged release, but for everyone seeking a variety of new drinking experiences.
“Don’t drink to get drunk. Drink to enjoy life.” — Jack Kerouac