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Strategy
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Craft Beer hasn’t had it easy lately and 2023 isn’t going to be any different. Depending on your interpretation of a recession, we’re either in one, or will be there shortly. Market pressures are pushing the price of beer up as much as 20% from pre-COVID levels in an effort to keep up with costs, but consumer wages aren’t maintaining pace, with layoffs already underway in some industries. Unless you’re getting really specific, it’s hard to make bold predictions that aren’t already playing out. Craft beer evolves quickly, but not that quickly. That being said, here’s 23 thoughts and trends about ‘23:
The West Coast is an aspirational place, a state of mind, and the birthplace of craft beer. And while the IPA (including Pale Ale) didn’t originate in the US, California is where the style became Americanized and the foundation was laid for thousands of brewery openings over the last decade. The West Coast IPA began with a distinct identity, still open to local and regional interpretation, but wasn’t a point of contention among brewers nor confusion among customers. A decade of evolution, hop innovation, and the Hazy IPA interruption has resulted in a splintered understanding of what West Coast IPA means.
Despite some of today’s largest breweries starting out with a focus on English-styles, these low-ABV, malt-driven recipes were abandoned during the last decade’s craft beer boom. Instead, this new era has been fueled by fruit-forward hop exploration, pushing boundaries, and extremes. In other words, the exact opposite of a Dark Mild, Bitter, or Brown Ale. But like lagers, these styles have a little momentum right now fueled by pandemic-related shifts, haze fatigue, and the desire to go against the grain. The opportunity is there for English-styles, they just need a little spark to be activated with today’s experience-seeking consumer.
You’ll struggle to find a craft brewery whose Oktoberfest sales didn’t exceed their expectations in 2020 & 2021. Holiday beers followed suit, over-performing in 2020 and leaving few release calendars without at least one festive brand. The challenge remained unsolved though for the cold, often snowy days beginning December 26th. How do you make consumers feel something during these darker, gloomy months? Craft beer’s #1 style is elbowing its way into the chat because as Don Draper said in Mad Men, "You are the product. You feeling something. That's what sells."
When consumers stare down the intimidating variety of craft beer on store shelves, a series of assumptions, biases, and memories go to work beneath the surface. It’s up to the brewery to position their brand and packaging to not only stand out, but communicate as much with as little as possible. A popular example of this built-in narrative would be New Belgium’s Voodoo Ranger, which is the best selling IPA family in the country. Upon recognizing their popular skeleton character, hoppy beer fans know they’re getting a high quality, approachable IPA. But that’s about to change…
In late January, Russian River Brewing held their annual release of Pliny the Younger. Thanks to California’s liberal intra-state beer shipping laws, orders would be overnighted straight to consumers' front door as part of a mixed 12-pack. Participation in this year’s celebration would never be more convenient for fans lucky enough to purchase an allocation, but there was a problem. COVID trends lead to demand reaching all-time highs, exceeding supply by at least 15X, while patience and empathy from a sub-section of customers fell to all-time lows.
When 22oz bombers began fading as a primary packaging format in 2015, national and regional craft breweries mocked the stickers that began wrapping aluminum cans, calling them amateur. That sentiment didn’t last long as breweries like Treehouse, Trillium, Other Half, Tired Hands, and Monkish changed the game by cranking out same-day sellouts of high-priced Hazy IPAs using this flexible 16oz/4-pack format. By 2018, wrapped four-packs had been validated to the point that Sam Adams released their first ever New England-Style IPA in a printed can, designed to look like it had a sticker on it.
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.
Entering 2021, a great deal of uncertainty still remains, however there’s a few things that we do know. There’s still over 8,000 breweries and, virus or no virus, the need to stay ahead of craft beer’s rapidly evolving and heavily segmented consumer base remains critical. Staying at home and limiting trips has changed the way fans are discovering new beers and experiencing their favorite breweries. Join me, Nostradouglas, and a cast of beer friends via recorded Zoom conversations, as we look into our crystal balls and share what intrigues us most about 2021.
During the pandemic’s initial pantry loading phase beginning in March 2020, no positive trend caught the bigger craft breweries by surprise more than the rapid acceleration in 12-pack sales. The core benefits of “multi-packs” may be obvious, but there’s a number of less talked about, indirect opportunities that can positively impact a brewery’s future prospects. I could have come up with twenty reasons to make a 12-pack, but I love a good theme, so here’s a dozen reasons why every craft brewery should at least be kicking the tires on this package format.
In the early days of the COVID-19 outbreak, breweries were forced to react both for the safety & wellbeing of their employees, in addition to the long-term viability of the business. Unfortunately, these two motivations contradict each other in the short-term. While government intervention was likely, it was impossible to know how soon and the extent to which it would provide relief. Then the Feds came to agreement on the $2 Trillion+ CARES Act which included $349 Billion for the Payroll Protection Program (PPP), leading me to wonder…Who’s Down with P.P.P.?
Influence
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Monopolies are commonly thought to be the result of government regulation, leading to scarcity and high prices. While that can certainly be the case, the term more broadly represents a lack of competition to produce a good or service, coupled with a lack of adequate substitutes. While the barriers to entry are technically low when it comes to beer content creation, the barriers to success are very high. One content creator has managed to navigate the minefields of the last decade so well and achieve a market concentration so dominant, that he’s set a virtually unreachable bar.
What motivates you? Career-wise, that question has always been a moving target for me. I’m a big believer in capitalizing on the opportunities that come my way and allowing fate to have a grip on the steering wheel. While I've never tried to stay any preconceived path, I do believe that you make your own luck.
Prior to working in beer and actively using social media, I was a forensic accountant at a consulting firm and held a designation called a Certified Fraud Examiner (CFE). To pass that exam, you have to memorize every known financial fraud scheme, how to detect it, and how to prevent it. The training teaches you how to identify red flags on a company’s financials, reports, & analysis, instilling a natural suspicion. This background is how I ended up working in Internal Audit and eventually running that department for Reyes Holdings. I mention this only to provide context to why this topic jumps out at me:
Instagram has received a lot of well-deserved credit (and blame) for igniting the New England-style IPA trend, in part thanks to its bright, colorful, juice-like appearance that's typically accompanied by very attractive and 'gramable can art. We were brought up understanding that beer should be clear, but Instagram has been slaying the fundamentals of beer, one after another. We shouldn't be surprised, as Instagram has become a key source of advertisements, inspiration, and [gulp]...influence for all industries. We're watching a lot less TV these days, which is where we used to get our style and pop culture trends, whether intended or not.
If you’re a fan of efficiency, prepare to hate everything you’re about to read. If you enjoy selling more beer, then strap in because variety packs continue to be a phenomenon in craft beer. After accelerating during the pandemic, they’ve continued pressing forward as craft’s largest growth category (in $), up 10% in the last 52 weeks. The blueprint for success has evolved significantly, requiring a more sophisticated and costly strategy in order to stay competitive. Here’s a twelve-pack of considerations to make sure your next Variety Pack has the winning combination.