Regional Brewers Hardest Hit

Bingo!

The distinction is critical. The difference between a shakeout and a bubble is that with a bubble, the prices of what is being sold rise dramatically above the actual or projected value of the things that are being sold. While beer prices may be rising in general those rises are most all firmly based in the cost of production and of getting them to the customer.

The other observation that supports your thinking here is that based on historical stats from start up businesses in general, roughly 50% haven't survived more than 5 years. Most of these newer breweries as less than 5 years old and have been riding/thriving on a wave that may be subsideing.

 

Yeah expansion to new market causing growth is very misleading statsistics. Growth should be measured in same markets on year to year comparison.

 

Precisely the problem with some small, "local" breweries' calculations. It's not just the regional places making this mistake.

 

Good points all around imo. I am wondering if the larger craft breweries will have to turn more towards marketing/advertising to help achieve growth. If they are percieved as stale/irrelevant by a certain segment of consumers, maybe they need to aim their message at other segments in a more effective way other than word of mouth/street cred/hype. I could see a brewery like Sierra Nevada having alot of material for marketing in both their history and current brewing practises, some of which, I think, one can already see in this promo film of theirs just to take as an example. In a more compact format which is more broadly advertised/communicated it might have an impact in people's perception of a brewery of that size, which can no longer count on being viewed as hip the way a brewery like the Alchemist or Trillium can. But advertising costs money of course, and it could be argued of course whether much of it is effective in today's fragmented world of entertainment/infotainment. But I'm wondering if we are headed in this direction regardless (I think it is safe to say that something will be done by these larger breweries if their fortunes continue to decline, but how do you grow or try to grow a business of that size?). Anyway, it's something which has been on my mind recently when reading articles such as the ones in the OP.

 

Patrik, Boston Beer Company (San Adams) advertises (e.g., TV commercials) a fair bit but that does not seem to stop the declining sales of their beers. Perhaps it could be argued that the amount of decline would have been greater if they did not advertise?

I wonder how business leaders 'quantify' the effectiveness of advertising for their businesses?

Cheers!

 

It can be done using some of the techniques described here:

http://www.empowermm.com/measuring-media/top-10-ways-to-measure-advertising-impact/

 

That is a good counterpoint to my argument of course. Then again beers like Corona Extra and Coors Light might be said to have benefitted from successful advertising? I.e, not all advertising will be successful or a homerun. But I do think some advertising can be effective in shaping people's perception of a product in a positive way, especially in competition against similar products (i.e Coors Light might be seen by some consumers, thanks to the advertising, as the better buy compared to Bud Light or Miller Lite).

 

This is spot on. Especially in the context of competition amongst similar products. Indeed one can almost estimate the similarity of the products based on how much advertising they all do.

One caveat is that advertising probably isn't going to counter established personal preferences when it comes to one product or another. E.g., Pepsi advertises a lot but Coke continues to out perform then in sales since large numbers of folks prefer the flavor profile of Coke over that of Pepsi.

 

I don't think you can say Shipyard brews the exact same beers. They may not have 30 different styles but they have quite a few and some new ones. I was at the brewery for an AHA rally the other night and they had a NEIPA so that wasn't from the 90's. They had two beers that were tea based, which are pretty new. An Imperial IPA. Don't forget that Sea Dog is owned by Shipyard as well...

 

I can't speak to the Gambrinus-Bridgeport situation, but when Duvel-Moortgat begain there measured process of purchasing breweries they deliberately focused on a few carefully selected type targets and already some specific goals in mind that included making use of their existing "high-end" distribution network for Duvel that was pretty much national and would become more so after their purchases. So when they upped their ownership share in Ommegang from partial (though original investments) to full and then acquired Boulevard and Firestone-Walker they took on a portfolio that focused on high-end products and wider distribution. They also focused tightly on the strengths each of the breweries in their portfolio could be leveraged to support each others. So for example at the newest Ommegang year round beer, Rosetta, was brewed in Belgium and the result of the Ommegang head brewer and the head brewer at Leifman's and is now brewed exclusively for Ommegang by Leifman's. Similarly, within weeks of their purchase of Boulevard we began to find the Smokestack series beers here when they had never been distributed here before. So I suspect that long range planning with achievable goals may trump cash infusion.

 

Tom, have you noticed a change (e.g., improvement) in the distribution of Firestone Walker beers in our area from a freshness perspective? I very infrequently purchase FW beers because the majority of the time they are non-fresh on my retailers shelves. It was this way before the purchase and continue to be that way now.

Cheers!

 

Yes, the selling of a lifestyle has indeed been a successful advertising campaign for Corona.

Maybe some independent craft brewery could come up with a similarly executed advertising campaign to sell something like their independence aspect? Or maybe something else altogether.

Yuengling advertised quite a bit on TV and their theme right now is "Respect. It's Earned".

 

I predict that some regional brewers will combat the pressure from locals by opening their own pub chains in key markets, similar to Brew Dog's model. It's the main reason I give Brew Dog some benefit of the doubt they will weather this shift in the markets. I imagine Stone could pull off a pub chain, by drawing from their experience with the Stone Bistro in Escondido.

It's interesting to me that no large US craft brewers have gone the route of Duvel-Moortgaart in acquiring or investing in smaller successful brewers. Publicly-traded Sam Adams probably has the financial depth to make some acquisitions/investments if they were inclined.

Speculating is fun!

 

Larry, what are the dates on those beers?

There is plenty of FW beers at my local stores but the dates are on the old(er) side. One of my local Retail Beer Distributors has cases of FW beers that are over a year old.

Cheers!

 

They already have .
BBC 2016 Annual Report:

 

But they have been doing this (for quite some time: 2013):

"Alchemy & Science, a wholly-owned subsidiary of Boston Beer Co., acquired all of the rights to the Coney Island brand from Shmaltz Brewing Co."

https://www.craftbrewingbusiness.com/news/boston-beer-acquires-coney-island-shmaltz/

 

Hah! Clearly I wasn't paying close enough attention. Thanks. Good for them!

 

No, not really on the shelves, but I have found the Pivo Pils on tap more frequently than before and in a few places that surprised me. So I don't think much has changed around here but then I don't think we'll be targeted for any increase in amount or freshness until after they ramp up their expansion and get things dialed in there.

 

Which pretty much sucks!

I suppose I will just have to continue to purchase packaged beers produced locally (Sly Fox, Victory, Tired Hands,...).

Cheers!

P.S. FW Pivo Pils is always on tap at The Boathouse (Conshohocken). I had two pints last Saturday in BIG Pivo Pils glasses as I watched the Preakness.