How Big Craft Breweries Are Keeping Share of Mind – and Pint Glass

Back in December 2015, I wrote about an important pivot “legacy” breweries were being forced to make as the beer market continued to diversify, led by many of the smaller and more agile breweries.

Examples like Dogfish Head, Founders and Highland – an NC brewery with Mid-Atlantic footprint – were all businesses that had been around for a while. Looking at their 2016 production schedules, something seemed clear: they were trying to find more ways to keep attention on their brands. That meant new products, new packaging and a new pattern of beer releases to keep things fresh and interesting for drinkers.

“In any industry, businesses run the risk of falling behind if they don’t innovate and experiment,” I wrote. “Considering the incredible growth in beer over the last few years, this feels doubly so.”

If anything, what we’ve seen since that initial post has only reinforced this necessary action for long-tenured breweries. No surprise, they’re the ones big enough to heavily influence the supermarket numbers mentioned above in Kate’s tweet.

In some ways, 2016 has been very kind to breweries like New Belgium, Sierra Nevada and Sam Adams, but there’s always another side to the story.

The nation’s top two craft brewers, Boston Beer and Sierra Nevada, “are now both in decline” and “combined volumes for the top 12 craft brewers grew only 1% for the three months to May,” Sanford C. Bernstein stated this week citing Nielsen figures in a report titled “The Dramatic Slowdown of Craft Beer Continues.”

Ouch. Some harsh words in an Ad Age post titled “Is the Craft Beer Boom Ending?

The answer is most decidedly “no,” but that doesn’t mean things aren’t perfect for some of the country’s biggest craft breweries. What it does mean is that these businesses increasingly find themselves in a position where they’ll need to bring new products to market to keep up with other breweries and stay fresh in the eyes on consumers.

Per IRI, 15 of the top 30 craft brands showed sales decline in the first half of 2016, including names we all recognize like Sierra Nevada Pale Ale, New Belgium Fat Tire and Samuel Adams Boston Lager. Six of those 15 brands have seen declines of 10 percent or more.

As we watch this slow fade, it’s hard not to think it may be because of the threat of flailing flagships or a simple cannibalization of “heritage” brands based on the success of new ones.

According to Beer Marketer’s Insights’ Craft Brew News, about 900 new craft brands have been half of craft beer dollar sales growth in IRI-tracked outlets through mid-August. Of that, 18 new craft beer brands surpassed the $1 million mark in sales, making up nearly half the sales for all new brands.

Where is most of that growth coming from? New, widely distributed brands from some of the biggest breweries:

  • New Belgium’s Citradelic and gluten-free beers
  • Sam Adams’ Rebel Grapefruit and nitro line
  • Sierra Nevada’s Otra Vez

(Also of note: Ballast Point Pineapple Sculpin is around $3 million in sales through mid-August and Watermelon Dorado, Mango Even Keel and Sculpin Variety Pack are about that combined.)

The success of these new brands is necessary to offset declines elsewhere in these breweries’ portfolios.

In the case of Sam Adams, where Boston Lager, Rebel IPA and their top-two seasonal SKUs account for 70 percent of volume, those brands have dropped $25.4 million year-to-date in sales. Otra Vez may be doing well for Sierra Nevada right now, but that’s been needed to buoy declines in just about any Sierra brand other than their seasonal and a few other new, 2016 brands, all numbers according to Craft Brew News.

It’s a good thing New Belgium has the $11.5 million in sales from Citradelic IPA to lean on as the top-selling new craft brand (and on pace to be one of the biggest craft debuts ever) because their Ranger and Slow Ride IPAs are both down. Luckily, their Glutiny Pale and Golden ales are both among those 18 new brands that are over $1 million in sales.

All this, combined with New Belgium’s increase in distribution this spring and summer into states like Connecticut, New Jersey and New York, has certainly helped, too.

The biggest benefit for all these breweries is the classic “location, location, location.” These new brands are well liked by drinkers, otherwise they wouldn’t be selling so much or winning blind taste contests, but it’s hard to ignore that you can find these beers across the spectrum of supermarkets, convenience stores, Wal-Mart and more, which helps to drive those impressive sales and is a big reason why 51 percent of craft growth is from new brands.

With the base of craft beer drinkers ever expanding – and the expectation of finding something new and exciting that comes with that – there’s a constant need to innovate and create. It’s a good thing these big breweries are up for the challenge, using their own research and development staff to stay on top of trends as best they can and offer these new tastes to fans. Or, at least, trying to create the next one.

When we enter the beer aisle, we’re now bombarded with a wild collection of choice unlike ever before. In our hunt for what’s new, the breweries that we “grew up” with are trying their best to make sure we don’t forget about them, too.

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

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3 thoughts on “How Big Craft Breweries Are Keeping Share of Mind – and Pint Glass

  1. Yes…innovation is undoubtedly critical to sustaining craft brewers. However, for those larger craft brewers to win they will need to go back and dig deep to re-discover and re-elevate the authentic brand essence of their core brand that put them on the craft landscape map in the first place.

    Fat Tire, for example, is endowed with a treasure chest of iconic credentials and iconographies that can be amplified to , at the very least, triple its potential and anchor its place as one of the leading craft brands for mainstream consumers.

    It is time for these craft breweries to play the brand game like big beer used to. Some tough choices will need to be made. The level of focus, grit and tenacity will differentiate the winners.

  2. Pingback: Has Craft Beer Reached Peak Mindshare?

  3. Pingback: With Eyes on AB InBev, Are We Missing Another Beer Fight? | This Is Why I'm Drunk

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