Drinkers Already Think Sam Adams Isn’t ‘Craft.’ What If It Won’t Be for Long?

A week from today, leadership overseeing the Boston Beer suite of brands – most notably Samuel Adams beer – will present their Q1 earnings report. If recent hints by founder Jim Koch are any indication, there’s reason to suspect (conspiratorially or not) that it may not be all sunshine and roses.

The last few years have been tough for Boston Beer. Declining interest across a variety of brands accounted for a 7% drop in dollar sales for the Sam Adams portfolio in 2016, sentiment that has only continued into this year.

Through nearly the first quarter of 2017, Boston Lager dollar sales dropped around 8% compared to the same timeframe last year. Rebel, the IPA that was supposed to reinvigorate interest in the brand, got remade to start this year. It’s down 20% in dollar sales so far in grocery, convenience and other bread-and-butter stores for the company.

I, like many others, see Sam Adams as the brand that launched a lifetime of beer geekdom. But things are changing rapidly for the company. For longtime devotees, it’s not much for better as it is worse.

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

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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.

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What’s Happening to Sam Adams?

sam adams logo eye

As every day goes by and yet another brewery opens, things keep getting interesting for one of the stalwarts of the industry.

By now, you may have heard about the rough go Boston Beer (read: Sam Adams and brands) had over the first four months of 2016. Shipments are down, projections are off and that stock price took a Humpty Dumpty like tumble last week. But really, it’s all activity that was expected. Going back to 2014, Boston Beer leadership was candid that they “expect the competitive environment to be tougher” across beer.

Here we are, with that challenge front and center. Competition not just coming from the growing behemoth of AB InBev, but from the rapidly expanding craft beer base, increasingly comprised of the local and regional breweries that play such a pivotal role in customer choices. People want “craft” in their goods these days and beer is the place to find it. One Nielsen poll showed 56 percent of respondents see craft as a “small, independent company” while a Harris poll indicated themes of “handmade/handcrafted” and “limited edition” were the most likely sign of quality.

At a time when consumers are looking for these kinds of connections across all kinds of goods, it’s no wonder Boston Beer is simply trying to tread water. From the company’s own admission of increased difficulty with distribution to drinkers’ localized tendencies, it’s only getting harder for Boston Beer.

Strangest of all, could these changes officially spell the end of Boston Beer as “craft”?

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The Road Ahead for Boston Beer: Where They’re Going, They Don’t Need Definitions

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Over the last few posts, we’ve tried to take a deep dive into Boston Beer to better grasp their business practices and more important, highlight how their decisions are influenced by a beer-loving culture established by chairman Jim Koch.

Depending on your level of beer nerdom – *points at self* – there may be a question underlying all the business talk and expansion and product creation: is Boston Beer too big to be craft beer?

My answer: who cares?

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Diversifying Boston Beer: How a Company Mindset Leads Growth, Innovation

sam lineup-boston beer

“They all want to grow, but the more they grow the less crafty they are,” he said. “They are getting fairly large and they are getting into each other’s space. They are having a hard time defining themselves as craft brewers because of their size.”
Pete Coors

You may recall the above foolishness of the MillerCoors chairman in May, when he made some rather wrong misguided surprising comments about the beer industry – especially the craft segment. Throughout Coors’ gripes, it was clear he has a disconnect from the state of the industry, but especially a misunderstanding of his main competitors in craft.

While a definition of “craft beer” may be bestowed upon companies like Boston Beer, there is little difficulty for these breweries to adhere to their own roots and belief systems. Especially when product diversification continues to play a pivotal role in daily operations.

Today’s plight of breweries isn’t just making good beer, it’s making a variety of beer that is also good.

When it comes to marketing and production, a brewery may focus on the biggest demographic of craft beer drinkers: Millennials. If the largest group of potential customers takes a laissez-faire attitude toward brand loyalty, a brewer needs to focus on variety:

Craft beers appear to be the biggest beneficiaries of that adventurous character. Julia Herz, craft beer program director for the Brewers Association, says 46% of new craft beer drinkers are Millennials. Even when craft beer drinkers do “commit” to a brand, that “adventurous” character seems to mean they’re still interested in variety.

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Jim Koch and his … variety.

But this post is not about Millennials. It’s about Boston Beer. If the idea of new discovery is pivotal to your brewery’s fan base – increasingly so for all demographics – what are you supposed to do when you’re a successful company nearing $1 billion in annual revenue?

You either double-down on what you have, stay satisfied and minimize your overall potential or you recognize the opportunity to grow, innovate and continue to push. Which one do you suspect Boston Beer chariman Jim Koch would learn toward?

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Marketing Boston Beer: When Ad Spending Is About More Than the Ads

tv with sam

Believe it or not, Sam Adams is kind of small in the world of beer.

Yes, on the continent of craft, it’s the largest country around, exporting about 3 million barrels of beer, almost 2 million more than second-ranked Sierra Nevada. But put that into the context of a globe filled with nuclear powers of AB InBev, SABMiller, Heineken and more, and all of a sudden Sam Adams annual output doesn’t seem so powerful.

It’s not clear cut, given that Sam Adams six-packs and boxes of seasonal releases adorn the shelving at supermarkets and convenience stores across the country, but Boston Lager, Rebel IPA and all their friends only hold 1.3 percent of beer market share. In the grand scheme of the industry, that’s quite a lot, but it’s also roughly the same as Bud Light Platinum.

Which is why Boston Beer has been upping its advertising game. But it may not be as simple as a perceived land grab to take up more space on TV or radio, leading to the annexation of of space in your beer fridge.

Rather, there are hints that the Sam Adams’ marketing strategy simply adheres to co-founder and chairman Jim Koch’s outlook on the beer industry and where Boston Beer sits among it all.

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There’s Craft in Your Beer: A Giant, An Industry and a Definition

sam adams-dictionary-beer-definition-craft-crafty

Something that has always struck me about the beer industry is its white-knuckled grasp on definitions.

We have BJCP guidelines to tell us how a beer should look and taste, but we also have a definition of beer itself. Or, at least, what constitutes the artisanal aspect of beer production, better known as “craft.”

All the “little guys” earn a title of “craft brewer” depending on a variety of standards set forth by the Brewers Association. Namely, that breweries be independently owned (or at least 75 percent so), they create beers whose flavor comes from “traditional” or “innovative” brewing ingredients and they produce 6 million barrels of beer or less, approximately 3 percent of annual sales in the United States.

That last marker – size of production – might also be recognized for its relationship with the Boston Beer Company, the largest member of the Brewers Association. In 2010, the Association upped its threshold of allowable barrel production from 2 million to 6 million as Boston Beer, maker of Sam Adams, was preparing to break through that cap, thus nullifying its existence as a “craft brewer.”

As it stands today, Boson Beer produces about 3 million barrels of Sam Adams annually, and that number is going up. Fast.

For beer enthusiasts, defining the difference between Big Beer (AB InBev, SABMiller) and everyone else has been a hot topic in the past year, as the Brewers Association works to inflate craft’s market share in order to sell 20 percent of all beer by 2020.

But the thing is, these definitions come across more fermentally-challanged than anything, especially when you consider they are placed upon businesses in an industry that thrives on bucking trends and setting their own paths. Even if a brewer is producing 3 million barrels of beer, they are more than the definition we provide for them. They are not a descriptive term, they are a story.

Instead of focusing on Boston Beer’s place in terms of the definition of craft, we should instead train our eyes (and livers) on the company’s commitment to the industry. As a profit-driven company, the growth and business acumen of Boston Beer is kind of amazing, but if you look hard enough, you’ll see that owner Jim Koch has never lost sight of his roots as a plucky, upstart brewer.

Which is why I’m devoting a few posts this week to a deeper look at Boston Beer and what they’ve been doing in recent years. To some, the company may seem to be a giant in the beer industry that simply is adorned with the title of “craft.” Their ever-expanding profits and ad dollars certainly create that point of view.

But ultimately, the flexibility of the company and commitment to its homegrown culture is what drives its products (and company) forward. But don’t just take my word for it:

“We are reminded every day that we are still a small business,” [Jim] Koch told Entrepreneur.com in Washington D.C. during National Small Business Week. “We have to compete with these enormous global companies that are 50, 100 times our size, and you have to bring the small business game to that — just innovate, try to think of a better way to do things, try to be more nimble and smarter about all your decisions.”

I hope you’ll join me this week to share your own impressions of Boston Beer, Sam Adams and why being nimble is valuable when you have to wiggle out of a definition thrust upon you.

Posts in this series:

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