"Flagship Beers Are Failing Because Consumers Get Bored Quickly"

The largest craft brewers are certainly feeling the pinch from the hyper local brands. Distro friends of mine are always bitching about it. Small producers in NY can self distribute, and it is really chipping away at the largest craft brands. It is no easy task for SNPA or Fat Tire to maintain thousands of handles and acres of shelf space when there are 5 or 10 small producers coming after their real estate in every single market across the country. This has been the story for a while now. Reference Victory/Southern Tier alliance.

Is boredom playing a part? Probably. But let's not kid ourselves. The bulk of these buyers have been buying and drinking the flagship beers for years and it's not like they just woke up to something new. Tickers and BA's are still just a small group in a small slice of the worldwide beer market. Flagships need much more than our minority to survive.

For me, most flagship brands could go. Except SNPA. I never get tired of that old favorite. Always reliable.

Cheers.

 

While true, were these previous "buyers of flagship brands" truly loyal to the brands? As loyal as say, a Bud Light drinker?

Or, were they purchasing the beer because they just wanted something a bit better than a macro lager? And now when they go to the store, there's hundreds of options, so are they swayed by other products?

Moreover, the fact there's so many brands, means many of these flagships have been pushed off the draft lines. You see ALOT less Boston Lager and Sierra Nevada Pale Ale on draft, at least in my area.

 

There is no doubt in my mind that these are challenging times for larger, distributing breweries.

Within the article there is comparison of the decline of beers like Sam Adams Boston Lager, New Belgium Fat Tire, SNPA vs. ‘new’ beers like Jai Alai IPA, Space Dust IPA, etc. I used quotes with the word ‘new’ since these brands have been around for some time but under their new ownership these beers are now being made available to new markets. I personally have just seen Space Dust a couple of years ago into my area. It would be useful to see more data here but I would suggest that beers like Space Dust are growing because their distribution region is expanding. In contrast beers like Sam Adams Boston Lager and SNPA have been available nationwide for a long period of time. Whenever Space Dust reaches nationwide distribution I believe that beer will no longer be in a growth mode and will over time decline just like SNPA, Boston Lager,…

In my opinion larger, distributing breweries have two (and likely more) major challenges:

· There is presently more brewing capacity in the US than beer consumer demand

· The number of small, local breweries is over 7,000 and more are opening at a rate of 2-3 new breweries per day

Why drink that same old ‘tired’ beer when you go down the street and drink fresh beer from your hometown brewery? How do beer brands like SNPA, Boston Lager, Space Dust,… compete with this market dynamic?

Cheers!

 

I know my interests change. Beers that I would buy all I could get my hands on two or three years ago, I no longer buy. Examples are FBS and KBS. Boredom is a big part of it. Two years ago, FBS and KBS were high on my list, but now there are other beers I prefer at the same or lower price point. Availability/rarity do enter into it, because if I know it's easy to get I can put off buying it knowing I can get it later and don't need to stock up. On the other hand, favorites such as BCBS/variants, Avery BA beers, and Prairie BA beers I do stock up on since they only come around once a year at best.

 

Just went on a date with someone who likes saisons. I previewed the menu and cooler space to see if there was anything worthy of sharing and named a few options, but she stuck to her familiar Fat Tire due to the social setting. I don't blame her. I wouldn't say flagships are done, but they may not be as prominent as years past.

I still reach for a Boulevard Wheat or Pale Ale when in a local social setting, as those are two commonly available, solid offerings. Now do I keep my fridge stocked full of that? No.

 

I'm less of a ticker now and also buy more flagship beers than before, but I guess I'm just contrarian

 

Flagships from larger breweries will have to rely on a different form of consumption to maintain the volume they sell now and to increase that volume further, with larger average pack sizes bought by more people. How do companies achieve this? Successful marketing coupled with occasional price promotions. These breweries can't hope to sell the amount of beer they need to sell/wish to sell the same way a smaller brewery does (where a handful of individual consumers picking up a single of one of your company's beers makes a difference on the bottom line), they need to evolve their selling methods, and not everyone will be successful at it since it involves skill, and skill is not evenly distributed. There is also an element of art to it of course, people do not simply respond to rational arguments (no, paying more for Corona will not mean that you will find yourself on a beach), and if skill is not evenly distributed, the art aspect isn't either. So there will be sales declines for some and gains for others year over year, but not necessarily with linear projectories.

I think genuine competition for volumes and dollars is coming, and alot of breweries might not be prepared for that reality. But as long as the market remains roughly the same volumewise and valuewise there will be opportunity abound for those that succeed.

 

I think larger producers like New Belgium and Sam Adams could stand to drop the flagships for a bit just to build up the hype and FOMO of "I cant find it anywhere" shoppers only to bring it back and watch their sales soar. Seemed to work for some Canadian breweries in the past.

 

Analysis in the article way too supefical, almost glib. Focuses on customer boredom when other factors are much more important, e.g., rise of number of competing alternatives and things such as "drinking beer within sight of the brewery" (i.e. freshness)

If I give up Sierra Nevada Pale ale for either the Victory Headwaters Pale Ale or the Troegs' Solid Sender (or both) it's because I like all three but two of them are near by and so it's easier to find their beers fresh, etc.

 

She's a keeper.

 

I could not agree with you more. I am a 40+ year veteran of the beer and wine industry and have seen trends come and go and come back again. I worked diligently to bring better beer to the citizenry because I knew good beer from the world. Self distribution by a small brewers has been legislatively stifled in North Carolina. It was written into law years ago that any brewer producing over a certain amount HAD to use a wholesaler for distribution. This self-serving statute was penned by a group underwritten and largely beholden to the North Carolina Beer and Wine Wholesalers Association. This is and has been utter corruption for decades.

 

Any size brewery can self-distribute or own wholesale distributors in New York State as I understand it. AB owns Anheuser-Busch Distr. Of New York Inc., in the Bronx and both Rheingold and Schaefer self-distributed in NYC (in fact, Schaefer in the 60s and 70s even had the contract to distribute Anheuser-Busch's beers in the city). P. Ballantine & Sons owned wholesale "branches" in NYC and most every major city (Rochester, Syracuse, Buffalo, Albany) as well as Hudson Valley and on LI in the post-Repeal era

Not sure about the upstate pre-craft era breweries like Genesee and Matts - but I do know that when I had a off-premise retail license in NYS I had no problem buying cases of Matt Premium in brown refillables (T/A's came in clear glass) at the loading dock in Utica.

 

Capacity increase is outstripping demand increase by a large margin and had been for several years running.....so that means someone has to suffer sales reductions. It’s logical that it’s gonna be the big craft brewers that take the hit. Nano and little craft are eating big craft’s young. I could care less as 98% of my beer $ is going hyper local.

 

Agreed. Founders is certainly proving there is still opportunity to grow, but it's a different landscape now than 10 years ago.

I think larger/older craft brewers could also take a page from AB-Inbev playbook and target markets like sports/music/convention centers/airport. That gets them out of the game of competing with every local mom and pop brewer for tap handles, and back to a comfort zone of competing with AALs. They also have the ability to make products better suited to those venues, like the 19 oz "stovepipe" can. I can see some craft brewers doing this already (New Belgium, Lagunitas/Heineken, in particular), but it seems like a weak effort so far.

 

Patrik, an example of a ‘craft’ brewery that is doing what you advocate here is Founders. Over the past few years they have adopted a 15-pack packaging (a new format for the US) and simultaneously they priced these beers economically. Examples are the brands of All Day IPA, PC Pils, Solid Gold, Mosaic Promise, Azacca IPA,…

Below is a link discussing this new 15-pack format:

http://allaboutbeer.com/article/craft-beer-15-packs/

Founders is eating Boston Beer Company/New Belgium/Sierra Nevada’s lunch?

Cheers!

@SierraTerence

 

Randy, you will see this in action at Phillies games at Citizens Bank Park. I personally prefer to drink the draft craft options instead (Victory, Troegs, etc.).

It would be interesting to see the Phillies craft beer sales vs. BMC (e.g., Miller Lite, Bud Light,...). I see a lot of Miller Lite/Bud Light cans (16 ounce and larger) at the games.

Cheers!

 

Yeah they are a good example of selling in volume at a decent price, but I wonder how solid their marketing is once their competitors copy their model (which I assume some of them will, not all, but some). How do they stand out then. Solely on price? That can get destructive. They want to keep their margins and if anything increase them (like Boston Beer Company with their annual 1-2% beer price creep strategy). If another brewery undercuts them on price, and they eventually get stale in the eyes of the consumer, they're in a bad position.

I think sometimes of Yuengling, here's this brewery, oldest in the country, with one hell of a story to tell, yet it seems that they are not as talked about these days as before, and instead they seem to have ramped up the speed at which they go into new markets trying to achieve growth through expanding their market rather than growing organically. Meanwhile sales over all seem to be slipping. To me it seems like even a good story risks getting old after a while, once people have heard it too many times. That doesn't necessarily mean that things will only go downhill from here on out, but they might stumble for a bit unless they can find something new and exciting that works in bringing in new consumers.

I think Founders might very well find themselves in that situation in the next few years as the competition increases, and some other brewery will have found a combination of product and marketing which works better.

I don't envy these people having to reinvent themselves trying to sell the same beer. Why did you buy my beer last year and not this year? What changed? What should I change, what can I change to make you buy it again (or maybe the question is, who can I get to buy it instead)? Those are million dollar questions. I would think that there must have been literary thousands of breweries in the last century alone, now closed, who failed to come up with answers to those questions.

 

There is 25,000 bbl. annual cap on self distribution here. Otherwise one would need to franchise the brand to a wholesaler. It's a well calculated quantity. Even as a wholesaler I despised the law.

 

Excellent post. Brand quality (and story) never equals brand loyalty. Marketing is always changing and can be like stabbing at the wind. What sticks is what works. It's tough to see favorites die and it's fun watching the new be born.........