There is great power in “local.”
It offers pride, ownership and often, a connection to intrinsic values. Between 2008 and 2014, sales of local food more than doubled to $11.7 billion. Local not only makes people feel good, but there’s money to be made in it, too.
So when it comes to the beer industry, the increasing attention paid to what’s local makes sense. Drinkers want a deeper connection to the product they love, but it also offers an opportunity for businesses to tap into the consciousness of a community. “Local” builds relationships.
As Maureen Ogle recently wrote, the idea of local has been that “the narrative helped build and bind the industry” with help from the Brewers Association. But what happens when that knot starts being pulled apart?
Perhaps it’s becoming a case where a successful beer doesn’t necessarily need to be local in geography, but simply in philosophy.
Despite an increase in attendance at brewery taprooms, there remains a continued shift in how dollars are spent elsewhere. “On-premise” sales – at bars, restaurants, etc. – have remained weak, while “off-premise” sales – beer you buy at a store to take home – continue to climb. As Ogle put it, “who cares if everyone lives within twenty-five miles of a brewery? What matters is what’s available at the store.”
Which is why Craft Brew Alliance (CBA) has shifted its growth plans to focus on coming to a location near you. The publicly-traded company that oversees breweries spread throughout the country (more here and here) is working in 2016 under the theme of “The Soul of a Craft Brewer. The body of a Big Brewer.”
While many beer enthusiasts have gotten in a tizzy about mergers and acquisitions led by AB InBev, SABMiller and Heineken, CBA has seemingly flown under the radar, growing its collective of breweries by forging partnerships based on distribution and brewing capacity. In North Carolina, that’s been established with Appalachian Mountain Brewery and recently in Massachusetts with Cisco Brewers.
In both cases, the pairing between local brewers and CBA hinges on sales and marketing efforts that allows Craft Brew Alliance to grow while also finding greater influence in localized markets and regions. This is a pivotal step in the company’s future planning.
Appalachian Mountain and Cisco provide CBA something they haven’t had until recently – core brands in markets relatively untouched by their portfolio of breweries, which also includes Redhook (Washington State), Widmer Brothers (Oregon) and Kona (Hawaii). In all three of those states, Craft Brew Alliance brands have been performing well thanks to localized pushes highlighting their connection to those home markets.
The Northeast (Cisco) and Southeast (Appalachian Mountain) now represent the first moves to regions where CBA lacks presence.
So in addition to their own in-house capacity, Craft Brew Alliance’s newest partners also will brew beer at CBA facilities, moving production of some core brands to Portsmouth, New Hampshire and shifting other brands from Redhook and Kona to Memphis, Tennessee. It’s a bit of a shell game, really, to find efficient means to make the most beer.
And it’s nothing new. The most famous example may be Anheuser-Busch, which even tried to turn its network of production facilities into an ad campaign touting AB as “America’s largest local brewer.” There’s also Boston Beer, which continues to make Sam Adams in Cincinnati, yet thrives off the mythology of its Boston roots.
These moves are made with good reason. Characteristics that push beer sales include thematic aspects that focus on “locally made,” “small batch production” or “handcrafted.” Today, it’s all about finding and curating a “home market,” whether you’re a neighborhood brewery, Big Beer or something in-between:
The entire purpose of marketing is to cause people to choose one brand over others. To accomplish this, a beer brand must highlight a distinctive difference in its product, one compelling enough to interest those other drinkers. A real difference in the beer’s ingredients, its brewing processes, its taste profile, its source, its brewing recipe. Something real to offer beer drinkers a reason to believe, and a reason to switch.
Generally speaking, consumers are fickle creatures, but even more so when it comes to fans of beer, who thrive on variety available to them. When coupled with an expectation for “locally made” brews, the growth of brewery and off-premise sales seems to showcase a consumer who is more focused on the story of what “local” means to them, whether a beer is from down the street or something from a store that makes them feel connected to a particular brew.
Which makes sense for CBA, but also highlights the reason why Big Beer purchases of breweries like Golden Road, 10 Barrel, Saint Archer and others isn’t a big deal for 99 percent of the beer-drinking population. People want something they can feel proud about, even if that means it’s just a beer in their glass.
So continue to pay attention to Craft Brew Alliance, who is not keeping a secret for how they plan to divide and conquer the beer world from local to national. They have a new CFO with plenty of experience in merger and acquisition strategies and the company is set to expand its “Emerging Business” division in 2016 to seek out new partnerships around the country.
Because when it comes to the business of local, it may not need to be a literal thing anymore.
“Don’t drink to get drunk. Drink to enjoy life.” — Jack Kerouac
Images taken from Craft Brew Alliance September 2015 investor report.