What We Mean When We Talk About the ‘Death’ of Flagship Beers

tombstone

Not once, but twice last week I read about a presumptive sweeping movement in the beer industry: the death of the flagship brand.

First, it was Chelsie over at Stouts and Stilettos, followed by Derek at Bear Flavored. Two different takes and perspectives on the cultural rejection of the notion that breweries, as a business, might have One Beer to Rule Them All.

Is there truth to this? Maybe a little, but no more than what we could glean from when Andy Crouch wrote about this same topic in 2012 :

So in the end of an era for some pioneer brands, where consumers appear ready to fully embrace their long-developing beer brand promiscuity, the first era of the flagship is over. The ultimate result of the evolving craft beer consumer’s fickle palate is the end of relations with these former beaus, only to be replaced with a new, younger and hipper string of beer relations.

Let’s for a moment assume we’ve spent the last four years witnessing the Death of the Flagship. The most important point we should talk about is addressing the audience for which “flagship” matters.

I am the 1 percent. If you’re reading this post, chances are you’re the 1 percent, too. We are the ultimate minority, the beer enthusiast who thrives on promiscuity and badges on Untappd. We want to learn about new beers from new breweries to fill our portfolio of experiences, often at the risk of ignoring heritage brands or simply buying beer in “bulk,” opting for single servings instead of six-packs.

There is nothing wrong with that. However, there is still 99 percent of the beer drinking public out there for which that behavior is not the norm.

Then again, this topic is wildly complicated. What we need to be asking, then, is what do the numbers show? Are flagships dying? Maybe, but not like you think.

Addressing Current Flagships

Let’s be clear: breweries across the country have beers that not only are their flagships, but will continue to be the driving force for their overall business.

  • Allagash White is 80 percent of Allagash’s volume.
  • All Day IPA, which debuted in 2012 and accounted for 25 percent of Founders volume one year later, is more than 50 percent of volume now. The brand grew 175 percent in 2015.
  • Goose Island IPA grew more than 250 percent last year and became a $19 million brand.
  • Lagunitas IPA, which won’t stop growing, is the top-selling IPA in the country.
  • New Holland, which refocused its attention on its home Michigan market last year, saw jumps in its top performing brands Dragon’s Milk (+48 percent) and Mad Hatter (+20 percent) in 2015.
  • Bell’s, despite new brands like Oatsmobile and regular specialty releases, still relies on two beers for 79 percent of its volume.

bells sales breakdown

I could go on.

Flagship beers, as a staple and driving force, are not going anywhere. Just ask these guys. For businesses like Allagash, highlighted below by Good Beer Hunting, one beer allows brewers to play and create the one-off Whales beer enthusiasts crave.

Many know them for their volume-leading witbier, and it’s the engine that powers the vehicle. But there’s also a robust, thriving, and innovative barrel and wild ale program that continues to churn out new and interesting beers. I ask Guarracino about the commitment to a program that’s surely a burden to maintain, from the ingredients to the time and space required for aging, the lower yields, and just generally so much work for so little beer, relatively speaking. “One percent of sales, 100% of soul,” he says.

Flailing Flagships

But even as iconic brands continue to sell, that doesn’t mean all is fine.

Per IRI, 15 of the top 30 craft brands showed sales decline in the first half of 2016, including names we all recognize:

  • Sierra Nevada Pale Ale
  • New Belgium Fat Tire
  • Samuel Adams Boston Lager

Seeing these brands in this context may not come as a surprise, especially in the case of Sam Adams, which has been facing challenges to its sales and parent company Boston Beer’s identity for a couple years. According to Brewbound, Boston Lager sold more than $43 million in multi-outlet (grocery, Wal Mart, drug, etc.) sales in the first half of 2014. During the same time frame in 2016, it’s made $37.5 million.

Overall, six of the declining 15 brands have seen declines of 10 percent or more.

The New Flagship

You can’t address the idea of the Death of the Flagship without considering the biggest movement of the craft beer industry. While individual breweries may be more reliant on tap variety these days, that may also be due to the fact that as consumers, we’ve slowly moved to embrace the idea of a cultural flagship. SPOILER ALERT: it’s the IPA.

Of the top-15 selling new craft brands through May 1, eight were IPA and one was a hop-forward pale ale. This comes on the heels of 2015, when nine of the 10 top-selling craft brands were IPA.

Looking at the cross section of this trend with the breweries that are leading the charge of today’s top-sellers show how this need for hopped up beers impacts the companies who are suffering from declines in flagships once wildly popular. They’re just replacing what people may consider their “old” flagships with new ones.

Last year, Sierra Nevada (Hop Hunter and Nooner), New Belgium (Slow Ride) and Sam Adams (Rebel Rouser and Rebel Rider) were all responsible for some of the best-selling new brands.

Through that May 1 time frame this year, Sierra Nevada (Otra Vez), New Belgium (Citradelic and Glutiny) and Sam Adams (Rebel Grapefruit, Nitro Coffee Stout, Nitro White Ale and Nitro IPA) were again among the top new brands. A mix of IPAs and current trends (gose and nitro) far from Pale Ale, Fat Tire and Boston Lager, brands that continue to lead the charge, but don’t get as much attention than what’s shiny and new, perhaps.

Between 2010 and 2015, New Belgium and Sam Adams had three of the six best-selling new releases, all IPA. (Sierra Nevada’s Hop Hunter was 2015’s best if you discount Coney Island Hard Root Beer as a flavored malt beverage and not beer) This year’s top-selling brand through May 1: New Belgium’s Citradelic Tangerine IPA.

Two points of information worth noting here:

  1. The reason these breweries are repeating are because of size (they can produce a lot) and scope (they distribute to a lot of places). So while people obviously really like these products, their excellent performance is aided by wide availability.
  2. The year-to-year need for innovation and offering something new highlights how necessary it can be for these businesses to remain relevant at a time when variety and finding new experiences are at a premium.

“It’s a crowded marketplace,” Alarmist Brewing’s Gary Gulley said on a recent Good Beer Hunting podcast. “You need to evolve who you are and what you’re doing.”

Ten minutes later in the conversation, GBH host Michael Kiser added to the thought.

“If I’m a big brewery and I need to keep things moving, which is what larger companies have to do,” he said, “coming out with something that’s on trend, at a time when people want it, that’s going to soak up in the market, is the perfect place to be for larger brewery.”

All this emphasizes the reality of how and why the idea of a flagship may be waning. “New” is necessary and that means changes for what’s most popular on a yearly basis. Look at how the top-selling styles have adjusted in recent years with extra emphasis on this year’s rankings, as reported by IRI:

2007 2011 2014 2016
1 Pale Ale IPA IPA IPA
2 Seasonal Pale Ale Seasonal Seasonal
3 Amber Amber Pale Ale Variety
4 Amber Lager Amber Lager Variety Wheat
5 Wheat Wheat Amber Pale Ale

In 2016, IPA is set to have nearly a *third* of craft dollar sales in supermarkets and similar stores, followed by two styles that are defined by rotational flavors.

Filling Our Portfolio

One avenue from which to view the Death of Flagship is the Rise of Variety, something I’ve written about before and more recently pointed out in this post about Millennials, beer’s most pivotal demographic.

In IRI’s tracking of supermarket beer sales through May 1, the company noted several year-to-year gains in single packaged bottles. Twenty-two ounce bombers are up 6.8 percent, single 11 or 12-ounce bottles are up 22 percent and single 16 to 17 ounce bottles are up 67.6 percent in 2016. But also think about the bottle shops you visit, where setting out individual 12-ounce bottles or cans is the norm and grocery stores which have made the “mix a six” selection common.

Also, consider the buying behavior of Millennial beer drinkers:

millennial-beer-drinker-chart_web_edit_stats

And the fact craft beer drinkers consume a variety of brands:

other beer craft beer drinkers drink

According to Nielsen, the average number of alcohol drink brands in a craft beer drinker’s portfolio – across all kinds of alcohol – is 24, almost double the national average of 15. Interests range widely and for those who seek out unique flavor experiences, it only makes sense that these drinkers would be promiscuous in their selection of booze.

RIP Flagships?

Is there a definitive answer to this question? Are flagships dying? Or is it just our mentality toward them?

Probably a little of both.

Even as sales decline for classic brands, former flagships are just being replaced by *new* flagships or rotational ones. The variety that we seek and crave is matched by the innovation and creativity of the industry’s brewers, after all. Flagships act as a point of reference for a business. But when a diverse collection of brands is necessary and styles become more important, it makes sense all this would happen.

Or maybe it’s simply because we have thousands of options in front of us when we walk down the beer aisle and brand switching happens because it can.

I don’t think there’s a debate to be had about whether we need to write a eulogy for the idea of flagship beers – there’s too much proof that they not only exist but are pivotal for many breweries – but the psychology and expectation around such a thing has certainly changed. Our old flagships – the beers we personally choose to enjoy – are just becoming new ones. Life, death, rebirth.

(Note: Want to learn more about problems flagship beers face? Read my story “Life and Death of a Beer” for All About Beer magazine.)

Bryan Roth
“Don’t drink to get drunk. Drink to enjoy life.” — Jack Kerouac

38 thoughts on “What We Mean When We Talk About the ‘Death’ of Flagship Beers

  1. So. Many. Thoughts! First, this is a typically Roth-esque balanced, well-research and thought-provoking post. Good stuff. Second, the engine of increasing promiscuity is absolutely the 1% of beer geeks, and their (our!) tendency not to drink a beer more than once and always want something new. Third, to that point, biggish craft breweries whose sales are slowing need to move their focus – their Eye Of Sauron – to the mainstream to keep growing, and the mainstream needs flagship brands that have an air of accessibility and familiarity.

    In sum: promiscuity on the whole is up (I saw numbers recently from Technomics showing that one in three beers drunk in the on premise is brand new to its drinker, up from one in five only five years ago), so the top 20 craft brewers need to take advantage of that to be the flirtatious alternative to the Coors, Buds and Millers of the world. Prolly with their flagships.

  2. Great article. Great use of stats to inform. Craft beer as an industry is maturing and undergoing the same forces that apply to business across a number of industries, like music, food, television: changing preferences, fragmentation and ease of access to variety. There will always be flagships, like Taylor Swift, the Big Mac and Game of Thrones, however they are becoming less common at that scale and will change over time. The universal rule of business always applies, “Innovate or die.”

    • Thanks a bunch, Brian! Taylor Swift as a flagship, her singles as all the one-off hits? That’s a fun analogy.

      There are many difficulties for the biggest breweries when it comes to innovation, but as the stats show, it’s necessary for them to follow through. You can’t ever relax too much when so many businesses are constantly evolving, maturing and looking to offer something new. In an industry based around experimental goods, you just have to.

      Sidenote: you may enjoy this story I wrote for All About Beer.

  3. Well put together post.

    On this topic, and a point very little attention is paid it seems, is the *reason* for these variations in what’s selling and what’s not.

    The unspoken assumption is that all beers are equally available, and the market — end-users/drinkers — decide what they prefer, which determines the sales rates, brewery production behavior, and most of the other figures used to develop insights.

    Unfortunately, this is a false, or at least misleading, assumption.

    While end-user behavior does have some effects on the liquid produced by the brewery and sales figures, significantly more important are distributor and retail buyer behavior, branding, and incentives by the larger breweries.

    To explain —

    if the retailer doesn’t buy the beer or market it appropriately in-store, it won’t sell substantially to end-users (e.g. marketing – Remember a few years back when there was all that talk about macros insisting on mid-level shelving for their products? They wouldn’t make such a big deal about it if it wasn’t important).

    End-users are also at least equally influenced by branding as they are to liquid quality. Look at other people at the grocery store when they’re deciding what to buy. As much as one wants to think consumers are making educated choices, it’s either “same thing I always get”, “what’s cheapest?”, “cool label”, and a distant last, “I read reviews about this beer and I want to try it”. It’d be stellar if that decision-making order was reversed, but eh.

    Retailers are much more strongly influenced by distributor relationships and pricing than by loyalty to brewery or liquid quality. Likewise, these two factors are greatly influenced by brewery incentives. For instance, in all of the examples of growing brands quoted in the post (Allagash, Founders, etc), the breweries offer massive incentives to both retailers and distributor sales teams to buy/sell the product. In point, Goose Island IPA didn’t blow up in the market because it’s good. It’s everywhere because the pricing they’re offering is absurd and untenable for anyone but a huge brewery — roughly half the price of a DC Brau Public keg, for example (when buying at QD). Plus it gets a retailer on track to meet quota to get rare beers by GI when they’re released, like Bourbon County Stout, etc. There are also distributor incentives on top of that to push it in the market.

    In any case, this comment was waaay longer than I expected it to be, apologies. Once again, very solid post, looking forward to more in the future.

    • This is great Graham, and much appreciated. You hit on a very important point about pricing, one I definitely agree with you on. Most important, you drill down a little more on the general statement I made about the availability of shelf space and distribution, which highlights important differences between the tiers/waves of breweries these days.

      Which raises an interesting question, perhaps at the core of the post to begin with: for the smaller businesses (such as yourself) do you see a benefit from relying on a quickly rotating collection of brands or a core lineup to establish a flagship with rotating options as well? Would love your input!

  4. great article with great data points for everyone in the craft beverage world. As we discussed last week, would love to see some crunching on the “1%”—is it 1% or is it 5%? How big is this promiscuous consumer base vs. the total beer (not just craft) universe. Single bottle purchasing is up 22%, but is it from a large # compared to six-pack or 12-pack purchasing?

    Thanks for your work!

  5. There are so many varieties of beer these days, and every place seems to have their own specially crafted beer. There’s also apparently a brewery boom. They’re popping up all over the place (alteast around DC area). I have 2 friends who own breweries.

  6. Being in the labeling industry this means good things, but as a beer drinker I never considered the heart of it all. Some craft beers are amazing, while others make me smack my tongue on the roof of my mouth. The idea of people generating new ideas is great and maybe some will be higher up along with Coors, Bud light, Budweiser, etc. I do not think the originals will fall unless the surrounding homes of the new breweries are just that happy with the new craft beers/environment. When I go to dinner, I go for different choices every time. If I want something sweet, Blue Moon, something refreshing with Mexican food, Dos E., something light at a concert, Michelob, the new beers can’t possibly defeat the cravings most beer drinkers desire, but if they do then that is great for them and for us beer lovers. My family is German and from Wisconsin, my dad and me love to try new beers of the week or month, if we don’t like it, next round is something more common. At least we get to go home with a cool new beer glass, t-shirt etc. Anyways my comment is as long as the last guys and probably nothing like you are initially intending, just an opinion on a subject I love.

    Thanks for the best blog ever about beer in the “now” 2016 world. Just wish the new guys luck and never forget the originals! My favorite.. Coors and Michelob!!! When I feel rich and high class… Miller or Modelo!!! When I am paying for everyone’s beer… Natural Light/Bud light!!! How about classy with a K…..PBR! It is cheap and taste pretty darn good when on budget.🙂

    Have a great day! Stay thirsty my beer lovers!

    Regional Sales
    Tiazirk@gmail.com
    Advanced Labeling Technology Solutions
    Pressure Sensitive Labels and Shrink Sleeve
    Altsolutions.co

  7. I love Lagunitas and Goose Island beers, but then I am a hop head and love IPAs with IBUs well over 100. A good read. If you have not seen it, despite being a little dated, Brew Wars is an interesting look at the beer industry. In the movie, a lot of the major beer brand representatives looked like Old World goombahs. Brew Wars used to be on Netflix, but can be had from Amazon or Hulu, I believe.

  8. Oh. I was impressed by the picture of this post that displayed in my news feed (the picture of 4 glass of beer). But when enter this post, there’s no such picture like that. Do you know why?

  9. Wow what a great passage. Great detail and info with facts I must say. I normally do not write commentsat all but for this article I had to!!great job!!👍🏽👍🏽

    Definitely will share this article with others

  10. Very interesting article and good supporting data! I live in southern Delaware, not too far from Dogfish Head. They built their reputation on 60-, 90- and 120-Minute IPA. Those seem to be the beers people know of and try first when they visit the brewery or brewpub, and then they branch out and try one of the many, many different styles DFH also does very well. I do the same thing when I visit a brewery on vacation that distributes one or two beers to my area.

    Flagship beers will always be a thing, because they tend to be the “gateway” to the rest of the brewery’s lineup, and bring in the cash flow that allows the brewers to experiment with other stuff. Plus, generally speaking, craft beers don’t achieve flagship status unless they’re, you know, good!

    • Lucky you to live so close! I agree with you. We have two fairly “well-known” Houston breweries near us as well. They both have what I guess would be considered a flagship beer. Thank goodness we ventured into the world of craft beers by trying those because in our opinion, the others they offer are much better! But we would have never known if we would have not tried their most popular first! We’ve since ventured more off the beaten path and have started sampling the very tiny micro-brewery beers around us and I can’t say with enthusiasm that we have not been disappointed!

      • Agreed, the smaller microbreweries definitely benefit too! We have a lot around here that only exist because Dogfish Head got the laws changed to allow microbrewing in the first place, and then became so successful, and they are producing a lot of beers that are just as good but not as well-known. Worth seeking them out and giving them a chance though!

  11. I’d be really interested in the impact of Untappd, Rate Beer, Beer Advocate unique check ins as a catalyst (or perhaps an accomplice) to this phenomenon. The other thing is beer freshness (as opposed to product line freshness); since the new thing is likely to be fresher and you’re less likely to be burned by an old 6pack, there’s a desire to buy the newer fresher thing.

    Interestingly enough I find I do two things when buying beer now. One I buy a 6 or 4 pack of rotating local favourites and then something new, whereas before I would normally only buy new. I think this beer maturity that I’ve experienced will eventually come back a little for a lot of folks.

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