A Shot in the Arm: 2021 Craft Beer Preview (Part 2)
Craft brewers continue to thread the needle, injecting a steady stream innovation and nostalgia into their portfolios, all while wondering if alternatives to beer are a viable antidote to the losses suffered throughout a challenging 2020. Many operations are already set up with the capability to produce a multitude of beverages, but that’s where the easy part ends and the real challenges begin. Craft beer fans leave a trail of breadcrumbs on the internet, helping brewers understand what they want and what they’re all about. The uncharted waters of alternative drinks require a more sophisticated approach to brand, audience, messaging, and go-to-market strategy.
#11 - “Better For You” Intensifies
Guest Prediction
Chris Furnari, Business Writer (THCnet.com & Forbes.com)
Chris has done a great job covering the rise of better-for-you beverages for quite a few years now. The proposition has proved tricky from a marketing perspective, particularly when alcohol is involved. Boston Beer went national in 2019 with their 26.2 brew under the “Marathon Brewing” name. Targeting runners and using Himalayan sea salt & coriander, a 4.0% ABV, 9g carbs and 120 calories, the “golden hazy ale” did not get out of the gate strong enough to remain a wide focus in their portfolio.
Sierra Nevada’s 2019 acquisition of Bay Area start-up Sufferfest Beer Company, whose focus was gluten-reduced and also marketed toward runners, validated the better-for-you concept for those eyeing it down. However, the brand was just put on an indefinite pause, less than two years later.
While these examples are likely isolated, I’m growing more appreciative of the challenges that come with connecting flavorful, alcoholic craft beer to the health & wellness conscious drinker. As Chris mentions, breweries looking to attract drinkers in this broad, better-for-you movement are putting considerable resources into Seltzer, Kombucha, and Non-Alcoholic Beer + Spirits, while planning for CBD & THC’s more universal acceptance.
12 - Low Cal Loses Weight
Boston Beer’s decision to cancel its wide-reaching plans for 26.2 was likely influenced by the merger with Dogfish Head, who had already established themselves as an early leader in craft beer’s better-for-you space. Their 2017 launch of SeaQuench, a Session Sour with lime juice, sea salt, and black limes, obtained early media opportunities with publications like Men’s Health Magazine, touting lower calorie (140) and lower carb (9 per 12 ounce serving). In late 2019 however, Dogfish Head shifted its calorie conversation away from SeaQuench to one of the first “Low Cal” IPAs, Slightly Mighty. Hard Seltzers and Michelob Ultra had narrowed the goal posts of what would be considered a calorie count worth touting and Slightly Mighty’s 95 calories and 3.6 carbs was better positioned to compete with the big dogs. SeaQuench, which remains a great seller, would begin focusing on other points of differentiation in their comms.
As Chris pointed out though, the new bell of the ball is non-alcoholic beer, which is beginning to turn a major corner taste-wise. Currently a significant part of European beer culture, a growing list of US breweries with overseas influence are leaning heavy into this “white space” in the states. As a result of the flavor improvements + marketing efforts by Heineken, Lagunitas, Brooklyn, Brewdog, and Athletic around the NA category, combined with the turbulence that the pandemic caused for all the “Low Cal” brand launches in early 2020, I see “Low Cal” IPAs failing to find their footing, at least as far as messaging goes, patience growing thin, and many (not all) putting their egg whites in a different basket.
#13 - Social Media’s Focus on E-Commerce Serves as Rocket fuel for the Non-Alcoholic Beer Category
Guest Prediction
Sean McNulty, Selling Craft Beer Podcast (New York, NY)
The pandemic’s restrictions have lead to new doors being opened for craft breweries. In my home state of Illinois and many others, breweries were given the temporary ability to deliver beer direct-to-consumers. In states like New York and California, those liberties include shipping direct-to-consumer, but in general the ability to ship beer is still extremely limited, especially when crossing state lines.
Sean brings up a great competitive advantage of Non-Alcoholic beer and it’s ability to ship worldwide. Instagram’s renewed emphasis on e-commerce through it’s well-integrated shopping feature provides an amazing opportunity for NA breweries to convert compelling social content and ads into direct sales, delivered right to their consumer’s front door.
#14 - N.A. BEER USES VARIETY TO PUSH VOLUME
Guest Prediction
Sean McNulty, Selling Craft Beer Podcast (New York, NY)
Great point from Sean here that I wish I’d thought of first. We’re just beginning to see a broader offering of styles and variations from NA beer producers, which will open the door for variety pack experiences. For NA consumers simply looking to mix it up, or the NA-curious drinker looking to sample styles with less of a commitment attached, variety packs should be a big hit. If the breweries push to the lengths that Sean mentioned with variety suitcases (24+ packs), then online orders that originally may have been for two six-packs will start doubling in size.
I would add that it’s only a matter of time until a single IPA is not enough and NA breweries start rotating the flavors using various hop varieties and combinations. As craft beer has shown over the last decade, this is the way.
#15 - Athletic Emerges as Most Prized Free Agent
The branding of most NA beers from established breweries fall under the same banner as their alcoholic flagship (i.e. Heineken 0.0, Lagunitas IPNA, Brewdog’s Punk AF, etc). There’s key advantages to doing so, including from a reputation and notoriety standpoint. But one could also make the case to avoid the conflicting messages coming from the same voice and bet on the NA category using a completely separate name. Creating and building that new ethos is incredibly difficult and expensive though, so acquiring the most successful example will be a tempting route for a major player with deep pockets who is looking to push their chips into the NA pot.
There’s one brewery in particular in the US who is focusing exclusively on NA Beer and standing out from the pack in both sales, marketing, and reputation. I’d challenge you to find an article blind tasting or ranking the available NA beers that doesn’t crown Athletic Brewing among the winners in flavor and authenticity. Athletic is unique in that they’re not part of a brewery with International reach. They’re a recent start-up out of CT with seemingly endless white space, and while I don’t think they’re ready for an exit, their phone will likely be ringing off the hook in 2021, and even more so when…
#16 - Athletic Becomes a Top 50 Craft Brewer
Having just started in 2017, Athletic isn’t necessarily a scrappy underdog story, despite the uphill climb this category faced. They’ve raised over $20M, including a $17.5M Series B round in early 2020 that per Chris Furnari in Forbes, “includes investment from a suite of well-known backers, including Timothy Barakett’s family office, TOMS Shoes founder Blake Mycoskie, and sports business reporter Darren Rovell’s Tastemaker Capital Partners.” This funding enabled them to purchase an 80,000 sq ft location from Ballast Point, located in San Diego, CA, planting their flag in the same state as their biggest customer base and the most progressive state for E-Commerce beer laws.
It was just announced via Bloomberg that pro football stars J.J. Watt & Justin Tuck, along with bicycling legend Lance Armstrong, are among Athletic’s financial backers. Even more interesting in this article to me was the mention of their $2.5M in 2019 sales growing into $15M in 2020, then noodling on what that could mean for 2021. Knowing how to translate $ into BBLs, this has me confidently crowning them as a Top 50 Craft Brewer by volume in 2021 for many reasons. Athletic is not reliant on draft sales, just getting started on widening their National distribution plans and more importantly, gaining exposure in chain stores. With endless running room for distribution, the growth of e-commerce, and the media opportunities happening during this Dry January, I would assume Athletic will at least double in size in 2021, if their operations are set up to handle it.
#17 - Local SeltzeR Prepares For Battle This Summer
We’re going to find out this Summer whether local can carve out a s̶l̶i̶c̶e̶ crumb of White Claw & Truly business in their respective area. I don’t envy the challenge that these local breweries are facing as they try to build second identities through a new hard seltzer brand, but I certainly don’t blame them for trying. It’s reasonable to expect that there’s a segment of Hard Seltzer fans who are looking for more. More/exotic flavors, more fruit, more potency, and the desire to support local businesses.
Building an organic social following from scratch right now is so difficult though, with platforms heavy in monetization mode. It’s harder and more expensive than ever to make your way onto consumer newsfeeds. With most opportunity for discovery happening in store and limited opportunities to sample, consumers reducing their time scanning shelves and touching cans, becoming risk adverse, and wallets tightening, the Claw remains in the driver’s seat. But craft breweries are creative and in some cases, their backs are against the wall, so I won’t count them out and will be rooting for them to crack this nut.
#18 - CBD & THC BEVERAGES Continue to FACE SUPPLY CHAIN HURDLES
Guest Prediction
Chris Furnari, Business Writer (THCnet.com & Forbes.com)
Craft breweries considering the alternative beverage space may not be set up with the infrastructure to produce competitive Non-Alcoholic beer. Brewing authentic tasting NA Beer, as I’ve come to understand it, requires significant capital investment and therefore an “all-in” approach to have any chance at winning in this emerging space. As Chris will explain, CBD & THC have a ton of growth potential and he believes that beverages will emerge as the preferred vehicle.
The build toward CBD, and especially THC drinks becoming accessible in the market is likely to be a slow one with a lot of logistical and legislative hurdles standing in the way. Here’s a little more on why CBD & THC drinks are likely to stay niche in the short term, but not forever:
#19 - The Great Tea Exploration
Boston Beer’s Twisted Tea has been an absolute monster for quite some time now in the Flavored Malt Beverage world. If you look at scan data, you’ll find Twisted sales make up more than 1/8 of all craft beer. Breweries experimenting with tea is not necessarily new, in fact one of my favorite beers in Chicago is a Pale Wheat called Jungle Boogie from Marz Community Brewing, made with Roobios Tea. Goose Island released a Bourbon County variant in 2020 called Kentucky Fog, using Earl Grey Tea and Black Tea, to create a take on the London Fog. Innovations like these convince beer drinkers like me, who don’t really drink tea, that there’s an exciting frontier to explore, similar to that of hops.
The Lost Abbey’s founder Tomme Arthur confirmed to John Hall this past October on the Drink Beer Think Beer podcast that he expects these alternative beverages to become a part of brewery portfolios. Tomme is on the cusp of launching a dry-hopped Hard Tea of his own, with complimentary notes to beer, while also separating itself in many ways. The brewery has been sharing Tomme’s passion project, beginning with an agave-based red tea with orange, hibiscus, and lemongrass in their Southern California Tasting Rooms. They also have a Black Chai Tea version that I’ve tasted and has fascinating parallels to low ABV Stouts, Black Lagers, and Black IPAs. While using tea is not necessarily new, I think we’re going to see a massive leap in the way tea is being explored by breweries to create new beers, as well as alternative beverages for their portfolio.
#20 - Final Words
I read a quote recently that I really enjoyed from a writer named Marian Deegan, having nothing to do with the beverage industry. She said, “Distraction leaches the authenticity out of our communications. When we are not emotionally present, we are gliding over the surface of our interactions and we never tangle in the depths where the nuances of our skills are tested and refined.”
So many of us got into craft beer out of pure passion, which is evident in how we communicate and leads to consumers matching that level of enthusiasm. The same commitment can jump off the page when craft brewers explore all the alternatives beverages discussed above, however when motivations are not genuine, today’s savvy consumer will spot the lack of soul and the product will die on the shelf.
Thanks for reading! I’ll be chopping up some bonus content from these conversations and sharing them on my Youtube channel over the rest of January. Please support this blog by subscribing and helping me build that additional vehicle for sharing interesting conversations. As always, you can follow my daily antics on Instagram or Twitter.
Cheers,
Doug