Beer Business Unplugged

My bicycle trip across West Texas as a young District Sales Manager required a visit to Wichita Falls.  George, who was the DM I was replacing, and I visited the distributor and then left to visit our number one on premise account.  We ordered two Lone Stars at the bar and a gentleman next to us discovered we were working for the brewery.

For the next 10 minutes this gentleman bashed Coors. Apparently some years earlier he had applied for the rights to sell Coors in Wichita Falls and was rejected.  He had nothing good to say about Coors and criticized the entire selection process and the current distributor, even though Coors was number one in the market.  After bad-mouthing the brewery, he finished his Coors, and walked out.

If I have learned anything in all these years in this industry it is that beer is the most emotional and affordable consumer product available.  The consumer knows that the beer they purchase says something about them.  It reflects how they perceive themselves.  And this emotionalism is all in the marketing.

Today’s consumer has taken that to an even higher level.  Not only is the consumer tied to a beer brand or style, they now patronize bars that support their segment, and often that is an establishment that sells only crafts.  Such enterprises are comparable to Wine Bars.  In other words, these craft drinkers self-segregate.

Much has been written and discussed since the Super Bowl concerning ABs Brewed the Hard Way ad.  The ad was heavily criticized by the craft industry, craft breweries, consumers and pundits and all have crucified ABI.  It is as if ABI personally slandered each craft consumer.

In addition to the game itself, the Super Bowl centers on the half time show and the ads.  If the game is a blow-out, as was last year’s game, the game itself, ads and half time show all fade within a week.  This year’s game and half-time show were favorably lauded, however, what continues to be discussed is the Bud ad.

Did anyone really believe that ABI did not understand what they were doing in airing this commercial?  Does anyone believe they went after craft drinkers in an effort to get them back to Bud?  Than the question really becomes: what is the real reason for this controversial ad?

Perhaps it was ABIs attempt to mimic MC and how they have positioned Coors, which has shown real growth in the last number of years.  Coors seems to be attempting to reach out to those consumers who left them over the years by going back to the core root of the brand.  This technique seems to have worked; in fact, it might have even brought in some new or even younger drinkers.  Either way you cannot disregard the numbers that Coors is posting.

Given Budweiser’s volume diminishing over the decades, AB could be telling its loyal consumers not to leave, reminding their consumers that “this is Budweiser and no one brews beer like we do.  Do not leave, we are your beer and we are good!  If you left, then come back, we have never changed!”

Whatever the reason, ABI has really moved the needle when it comes to creating a stir over their beer. They have gotten ample press coverage, good and bad, and AB is continuing to run this ad in the general market.  The numbers may show a spike in sales as their drinkers may come to their support, and perhaps, some new drinkers will try Bud just to see what all the fuss is about.  The crafts can criticize ABI, but remember…. ridicule is the burden of genius….

Beer Fodder;

http://wallythekat.tripod.com/A_Pages/AA-Videos-YOU-Tube/Clydesdales.html

In the early 1970s when Miller Brewing Co. was testing their new beer Miller Lite, those of us in the beer industry were not certain about the identify of this new product.  We soon learned it was a lighter beer, but with a higher price.  And the consumer certainly was not yet aware of the new product either.

It was not until Miller began advertising their famous tag line, “Great Taste, Less Filling” that the realization of exactly what this new beer was come to fruition. Miller Brewing had created an entirely new beer category.  Light beer, which had not been in existence before, was now a new market segment. Clearly, a lower calorie beer category was now an option for the consumer.

The introduction of this new market category was unlike the introduction of imported beers. Led by Heineken and Corona, imported beers became popular in the US during the 1980s.  Consumers knew by the brand name, for example, that Heineken was imported.  They knew that Warsteiner, too, among many others, was imported.

There have recently been numerous articles questioning just what categorizes one as a craft beer.  The Brewers Association has a definition of a craft brewer on its website.  So the question now is does the industry need to have a craft beer designation?

Consider the fact that a craft brewer has a production of less than six million bbls.  Really?  When Pabst Brewing Co. was peaking in 1960, it did just under five million bbls. of beer.  Does anyone consider Pabst Blue Ribbon a craft beer?  It was not long ago that many regional brewers did over one million bbls. of beer.  Is Lone Star a craft beer?  Is Iron City a craft beer?  What about Drewry’s craft, or Jax craft?  Should volume define a craft beer?

The term independent means less than 25% of the craft brewery is owned or controlled by an alcoholic beverage industry member that is not itself a craft brewer.  If this is true, then many imports would fall into that segment.  Just how does Boston Brewing fit?  The company is public so that makes it craft?

The Craft Brewing Association’s definition of a craft beer is: a beer whose flavor derives from traditional or innovative brewing ingredients and the product’s fermentation.  Maybe that would include IPAs, Wheat’s, Ales, Stouts and Porters?  Again, that means many European brewers would fit the description as they have been brewing IPAs, Wheat’s, Ales, Stouts, Porters and others for centuries.  Is there a disconnect in the definition of craft beers?

Another recent article on branding addressed how certain companies are able to create cults, specifically the mega tech company Apple.  When a new IPhone is released, customers line up for blocks simply for the opportunity to purchase the latest edition of the product.  Apple may just be the personification of a cult following.

If that is the case, than perhaps the term craft equates to nothing more than a cult or following.  By saying a beer is a craft designates it as a product which now is the hottest segment of the beer market.

The definition of craft is not nearly as clear as what the definition of a light beer or even an import beer.  If the above is true, then all the term craft means is that the product is a marketing or branding term and therefore, has no true meaning.

If a beer is one of the most identifiable consumer products that one can afford, and purchasing a particular brand is highly aligned with the consumer’s belief of who he/she is, then does buying a craft beer mean the consumer is part of a cult, like Apple?

This discussion will continue for years as the craft segment continues to grow.  After all, it’s all in the name….

Beer Fodder; http://www.thrillist.com/drink/nation/best-american-craft-breweries-best-craft-breweries-in-america