Though still a niche segment, craft beer sales continue to rise.
Ninety-nine bottles of beer on the wall, ninety-nine bottles of beer… Take one down… and there is a chance that beer has come from a craft brewery. In recent years, craft brewing has become a growing force in the beer industry. Thanks to an abundance of consumer interest and education, there are now more craft beers available to retailers and consumers than ever before.
“There’s never been a better time to be a beer drinker and there’s never been a better time to be a brewer. Thanks to the renaissance of craft there’s a lot of excitement in the industry and more people are beginning to understand the beauty of beer,” says Tom Cardella, president and CEO of Tenth and Blake Beer Co. Tenth and Blake is the Chicago-based craft and import division of MillerCoors.
Within the beer category, the craft, domestic specialty and hard cider segments have grown much faster than the overall category, industry observers say. It is clear that drinkers are looking to explore new flavors and styles of beverages.
Industry research shows that sales of craft beer nearly doubled between 2007 and 2012, increasing from $5.7 billion in 2007 to $12 billion in 2012. Mintel, a Chicago-based research firm, forecasts the segment to grow to $18 million by 2017—which would nearly triple sales for the decade between 2007 and 2017.
“While the craft and craft-style beer category remains a small segment of the $78 billion U.S. beer industry, the category has been able to stabilize the overall beer industry, which has experienced volume declines in the domestic and imported categories since 2008,” says Jennifer Zegler, beverage analyst at Mintel.
“We are enjoying an upsurge in consumer interest, refinement and education,” says Jaime Schier, director of quality at Boston-based Harpoon Brewery. “I think craft beer is starting to be regarded as a main part of the gustatory experience. Beer used to be something that you had to accompany a meal, but now people are really considering it to a be a part of the meal in a fashion reminiscent of what happened with California wines in the 1980s.”
Cicerones, the beer equivalent of a sommelier, are popping up at renowned restaurants across the country and craft breweries are looking to strengthen the relationship between their creations and the meals they accompany. No longer is beer just the beverage of the man cave, but rather an accepted and celebrated component of any occasion.
Well-established brewers such as Anheuser-Busch InBev have utilized the craft beer trend to drive creativity and growth within their own companies. “We have been able to produce new styles and flavors, and even smaller-batch experimental brews with Budweiser Project 12, which have excited consumers and showcased our brewmasters’ talents,” says Greg McLeod, vice president, trade marketing—grocery for the St. Louis-based company.
Anheuser Busch’s Goose Island Beer Co., based in Chicago, continues to push the envelope in the craft segment. “We’ve helped them expand their barrel-aging operation, which craft beer lovers go crazy for. Recently, Goose Island expanded the Bourbon County Brand with new barrel-aged beers like Bourbon County Brand Barley wine and Coffee Stout,” says McLeod.
“To succeed in craft you must have a strong brewery brand with a variety of options. We’re seeing consumers become more interested in total breweries and the variety of beers they make rather than simply a brewery’s flagship beer,” says Cardella. “Consumers like to try new things and they like to explore new craft beers within a brewery that they trust.”
Blue Moon Brewing Co., based in Golden Colo., has earned consumers trust with its flagship Belgian White brew, and sustains interest with a rotating seasonal collection. The brewery, which is a member of the Tenth and Blake family, utilizes its Expressionist and Graffiti Collections to satisfy craft beer aficionado’s thirst for more experimental beers. Tenth and Blake is also home to the Jacob Leinenkugel Brewing Co. of Chippewa Falls, Wis. and Crispin Cider Co., based in Colfax, Calif.
While the craft beer industry continues to grow and outperform the total beer industry, the gluten-free segment is growing even faster. “It’s still a niche market but there’s more and more entrance every day with new styles coming on,” says Brian Kovalchuk, CEO of Bard’s Beer, based in Minneapolis. Bard’s craft-brewed American lager is brewed with 100% malted gluten-free sorghum for those with celiac disease and who are allergic to traditional beers.
Officials at Anheuser-Busch say they are seeing success with its own sorghum-based gluten-free beer, Redbridge. Introduced in 2006, Redbridge has allowed the brewer entry into a tricky but lucrative segment.
Brewers are also learning that seasonal brews can be a gateway for getting drinkers interested in craft beers. They are utilizing seasonal and limited edition releases as well as variety packs to drive trial and introduction to this expansive category. “Lager alone is up almost 10% in off-premise while seasonals and seasonal mix packs are up in the 15% range,” says George Ward, director of off-premise national accounts for The Boston Beer Co., citing IRI data through December 22.
Mintel research has found that 84% of craft beer consumers like to choose their beer depending on the season. However, seasons in the beer industry do not match those of the calendar.
“As brewers, we’re like chefs, inspired by the weather and the seasonality of ingredients and flavors,” says Jim Koch, founder and brewer of Boston-based The Boston Beer Co., brewer of Samuel Adams. “I’ve always said that spring is one of the most challenging seasons to brew for. It’s a ’tweener—we’re waiting for winter to be over and longing for summer to arrive.”
In January, Samuel Adams launched Cold Snap, a medium-bodied ale with a complex floral, spicy aroma and character, brewed for spring’s transition away from the hearty brews of winter to the lighter-bodied beers of summer.
Harpoon Brewery chooses to keep its focus on IPAs this time of year and introduced The Long Thaw White IPA to kick off the in-between season.
“A similar beer was originally a member of our limited edition 100 Barrel Series and it made an appearance in the IPA Adventure variety pack,” says Harpoon’s Chris Bonacci, brand manager. “A White IPA that combines the intense hop profile of an IPA with the softness and citrus feel of a Belgian witbier seemed like a nice balance and combination to bridge the depths of January and the desire for warm spring days as we get into March.”
Once The Long Thaw has passed, Harpoon will reintroduce its Summer Vacation variety 12-pack, followed by the Tailgater and Snowed In offerings. In addition to its availability in the IPA Adventure, The Long Thaw is one of Harpoon’s seasonally canned beers. A package reserved for its most popular products, Harpoon’s flagship IPA, UFO White and Cider are available in cans year-round.
The best way to promote a craft beer is by introducing drinkers to the beer itself. “We sample drinkers with a Boston Lager Account Sampling Team or BLAST, where we look to either introduce drinkers to Samuel Adams Boston Lager or remind them of what it tastes like,” says Ward. The brand looks to incorporate Samuel Adams into drinker’s everyday lives with cross promotions such as pairing Samuel Adams beer with beef, seafood and even pies or recipes so that the drinker has an all-around tasting experience.
Sampling is a universally successful marketing technique, and can be especially useful when it comes to specialty items. “We have seen great success when retailers allow vendors to sample Bard’s in their stores, says Kovalchuk. “People who aren’t necessarily avoiding gluten sample the product and discover it tastes like traditional beer. It also raises awareness of Bard’s availability with those consumers that are seeking out gluten-free beer.”
Retailers can leverage the creative display pieces these brewers offer as well as associated programming such as food pairings or recipes. These activities support the retailer with easy basket building opportunities as well as satisfy the customer with easy shopping options, observers say.
“Every beer and brewing company is different, but in general we promote our offerings by telling the authentic back stories of our breweries and cidery, while celebrating the incredible quality of our beers and ciders,” Cardella says.
An apple cider a day
For consumers who are not interested in barley and hops, apples and pears can answer their needs. The craft cider industry has arrived as a unique alternative to beer, wine and spirits, and tons of brewers are getting in on the action. Heineken USA’s Strongbow Cider brand has redesigned its flagship Gold Apple cider and its packaging to broaden the brand’s range with consumers.
“Strongbow’s redesigned flagship Gold Apple is a more balanced and refreshing combination of Golden Delicious and Honeycrisp apple flavors rounded out with hints of fresh pear,” says Charles van Es, senior director of portfolio brands for Heineken USA, based in White Plains, N.Y. The introduction of the new recipe will come in conjunction with the release of Strongbow’s second flavor: Honey & Apple.
“Retailers that capitalize on the explosive popularity of cider by educating consumers through cross merchandising with strategic items, tastings and standalone displays will drive category growth, increase store traffic and customer loyalty and ultimately win higher sales and profits,” adds van Es.