Beer Marketer's Insights

Beer Marketer's Insights

On path to fill new 100K bbls of capacity, Saint Arnold founder Brock Wagner maintains he's happy with slow(er than some craft competitors') and steady 20% volume growth, he said in recent Houston Biz Journal interview. After shipping just under 60K bbls in 2013, the co has plenty of growth potential just in local Houston market where ? of Saint Arnold biz still centered, Brock said. He notes Texans typically drink about a barrel of beer per person per year, so at Houston population around 5 mil, "that's 5 million barrels just in Houston," he told HBJ, "huge room for growth." To help improve Houston visibility, Brock and co purchased land across the street from new brewery with plans to put in "internationally known beer garden."

Saint Arnold "just pulled out of Colorado," according to Brock, with interest in paying closer attention to Fla and Gulf Coast states. Brock considered selling the brewery "a couple of years ago," and got some eye-popping offers, he said. But he decided against it, saying "it's certainly not in my plans" still. Indeed, while he's happy with Saint Arnold size, current employees keep pushing to grow brand bigger. Tho Brock owns majority of co, Saint Arnold still has about 200 investors, who "lined up" for recent chance to purchase stock of one who wanted to sell some shares. "I probably could have gotten more" for that stock, Brock said, noting he'll look to set up a bidding system if another investor wishes to do the same. He's also considered entering politics even more recently, calling up former brewer/current Colo Gov. John Hickenlooper before nixing the idea to stick to beer. Speaking of the gov: pic making rounds on internet today of President Obama with him at Denver brewpub the governor founded, Wynkoop Brewing, shooting pool and sipping flagship Rail Yard amber.  
Both federal and state-level regulations being called into question by brewers home and abroad, seeking equal treatment and end of "discrimination." Brewers of Europe org using Transatlantic Trade & Investment Partnership (TTIP) talks between US and EU leaders to reduced federal excise tax for small importing brewers, according to a Beverage Daily report. Recall US brewers producing less than 2 mil bbls pay reduced tax on 1st 60K bbls. Now European brewers could be moving towards getting same treatment. Adding to their case: small US brewers exporting to EU also pay reduced rate in 21 of 28 EU countries, Simon Spillane of Brewers of Europe said. Elsewhere, Texas regulations "heavily slanted against out of state brewers" called into question by folks at Jester King Brewery via company blog. Making clear its intentions to address issue in 2015 legislative session, Jester King reminds of high licensing fees to sell beer in state, limiting availability of small brands there (including collaboration Jester King did with iconic Belgian Brasserie Fantôme), even at special events.

These attempts to lower taxes on brewers echoed, but oddly, by guest opinion column for the Albuquerque Journal on the 4th. Columnist shares that NM's excise taxes (just over 40 cents/gal) is reason one in-state brewer is considering expanding production in nearby Ariz or Colo. The state isn't home to "any mega-breweries…with high-paid lobbyists," but small brewers becoming big biz in state, he argues. Yet rather than offering typical defense of graduated tax scale (taxes go up when a brewer hits 10K bbls and then again at 15K bbls), columnists thinks "this makes no economic sense at all" and is "an out-and-out lien on production." Instead, taxes "ought to be a flat rate," he argues, "at the very least," because "it's wrong for a brewery to be progressively penalized for being successful."  
Craft trends slowed slightly in scans for another mo, but still up solid in Nielsen data for Jun; dollars up 14%, 1 full share point to 9.5, and volume (+10%) just cracked the 6 share mark (to 6.2) in Nielsen All Outlet + Convenience for latest 4 weeks thru Jun 28. That's just about same trends we saw for 4 weeks thru May 17 too, tho yr-to-date craft still trending a few points higher. Craft pricing still healthiest of all segments, and much healthier than premium pricing in Jun. Avg price for case up $1.09, 3.4%, to $33.37 vs 30-cent, 1.5% increase for case of premium, further increasing the pricing gap between the two segments. Meanwhile pricing on imports up $0.74, 2.7%, super premiums up $0.50, 1.9%, FMBs flat-to-down (tho case still just 50 cents lower than craft, $4.60 higher than avg import case). Cider pricing actually down 1.6%, tho still a buck higher than avg case of craft.    
Big bucks keep being spent on expanding brewing capacity and brand awareness by fast-growing brewers. Founders plans to spend around $25 mil to build another Grand Rapids, Mich facility with matching 300K-bbl capacity as current plant. Trending up 54% so far in 2014, according to a Grand Rapids Press report, the brewer hopes to choose a location in town quickly and have the facility up and running as soon as next Spring. Recall the co just finished a $26-mil expansion of its current facility that allows it brew at 300K-bbl per yr rate; it's been pushing at a 250K-bbl run-rate for much of the year, co-founder Mike Stevens told the paper, and expects to finish out this year just shy of 200K bbls. It just passed the 100K-bbl mark in 2013. Other trends: lead brand All Day IPA +138% in 2014, Centennial IPA +63%, Dirty Bastard +48%, and Porter +87%. If those trends continue, could mean well over 70K bbls of All Day IPA in just its second full yr and right around 35% of volume the co expected. At this rate, those 4 brands to be over 70% of Founders biz, 140K bbls, almost double their collective volume in 2013.

Out on the West Coast, Speakeasy Ales and Lagers is in the middle of expanding capacity to somewhere around 90K bbls, after shipping just under 30K bbls in 2013, according to SF Weekly. President Forest Gray didn't key the paper into any plans to expand distribution territory tho; it's already available across much of West Coast and some Eastern states. Further out into the Pacific, Honolulu could be home to another Kona Brewing pub/restaurant in Hawaii, where parent-co Craft Brew Alliance already operates a pair of pubs, one each on Oahu and the Big Island, reports Pacific Business News.  
>That's the kind of mundane-made-newsworthy headline that's brought The Onion's satire much attention in the digital age, as it ventures into innovative digital advertising territory with longtime sponsors like New Belgium. The Onion's been sending up American culture and the way it's reported since 1988, and New Belgium's been an advertiser with the publication for 7 or so years, starting solely with print, according to NBB's Brand Activist Man Adrian Glaseknapp. That transitioned to more digital activity 3-4 yrs ago, which was turned up another year or so later. But when NBB started working with Vizeum's NYC office a coupla years ago, the agency's digital-heavy work encouraged the brewery to think about co-created native content. "Digital paid needs to evolve," Adrian said, and "this is where it's going." That is content, like satirical news article "Insufferable Man Utters Words 'Craft Beer Movement,'" that lives on The Onion but has been at least partially created by folks at NBB. Other work with The Onion and sites like Thrillist, Gawker and Buzzfeed similarly blurs the line between content and advertising while at the same time highlighting that distinction.

Take the above "Insufferable Man" piece, outed above the headline as a "Sponsored Post" and "commercial endeavor" ok'd by The Onion as "fit for publication." The "article" includes a mention of said "insufferable man" ordering a Fat Tire, but it's the disclaimer of sorts that points readers to NBB's site (along with familiar click-able digital display ads surrounding the post). That pointing is the point, Adrian explained to CBN. NBB, like other brand-owners, are "moving towards owning the audience," Adrian said, getting fans to spend time on NewBelgium.com, sign up for newsletters, download the mobile app and generally "bring them into the New Belgium fold." Whereas social media sites, particularly Facebook, used to play host to such interactions, "the game is kind of up" there, Adrian noted: Facebook has "become a publisher." So "as social became more and more monetized," the co started "migrating that process to our own properties."

NBB isn't creating all sponsored content on The Onion and others in-house. A video clip for the site's Newsroom about "Hipster Molting Season" was pure-Onion staff, but NBB gets wraparound display ads and "sponsored by" status for the post. Adrian and the co get to "steer and choose which kind of content" the brand is "associated with," he told us. A heavily shared picture-chronicle of an NBB brewery tour created by Thrillist is "presented by" NBB and bears an "ALLIED" banner before the headline. Thrillist writers created the post, but NBB went above and beyond typical tour standards to get it there. While this kind of content can be "more cost-intensive internally," mostly because it's "time-intensive" and "higher-touch," Adrian explained, "at the end of the day" the total cost is "probably comparable" to traditional advertising. But NBB has found "deeper engagement" with this kind of content, which is what the co's aiming for since it "drives preference." So while there could be "a little more risk" associated with these efforts, Adrian said, it fits right in line with NBB's general movement toward investing in "content and experiences" that tell the co's brand story, spokesman Bryan Simpson added. Digital content, "film in particular," backed up by experiences like Tour de Fat and Clips of Faith will remain points of focus for NBB, Bryan said, as it continues to "test and learn" effective strategies for reaching and engaging with beer drinkers.  

 Five of top-10 and 10 of top-20 beer brands in L2 Think Tank's annual Digital IQ Index were craft brands, including #2 ranking for New Belgium, just behind Bud Light, and #5 for Sam Adams, behind Bud and Heineken. Based on study of digital marketing "competence" of 56 different beer brands in US mkt back in Apr, the report found plenty of small brands making it work on digital platforms, some way outperforming brands with much bigger market share. Both NBB and Sam Adams given "genius" status, the crème de la crème for this ranking, but plenty of "gifted" craft marketers too: Dogfish (#6), Sierra (#8), Stone (#10), Deschutes (#12), Harpoon (#13), Shiner (#15), Brooklyn (#17), and Lagunitas (#18), plus Blue Moon at #14. Success of small brewers "punching above their weight class" in survey called out in introductory video on L2 site but questioned in report: "given their small size (and lower level of scrutiny), this segment is notorious for skirting industry guidance," according to authors. But "as industry standards trickle down to small players," current advantages "may be neutralized." The rest of cos/brands received lower scores, considered "average," "challenged," or "feeble" in Digital IQ. All cos' IQs were measured based on work in Digital Marketing, Social Media, Site & E-Commerce and Mobile effectiveness. (Get a taste of NBB's "genius" below.)

Shift to Online Retailer "Could be Key for Beer"; "Critical" Retail Locator Feature "The fight over beer is increasingly tied to the rising grocery wars and the new battlefront online," according to Digital IQ Index. Study points to more online grocery options such as FreshDirect and expanding AmazonFresh; tho "online sector represents only 3.3 percent of grocery, analysts expect that share to grow to anywhere from 6.7 to 16.9 percent in the next ten years," and "could be key for beer brands." That's as efforts with broader geographic but narrower beer-focus have struggled (also, see below).

Then too, "critical feature" for beer cos, digital "retail locator" that allows visitors to find nearby stores/bars that sell brands, becoming more prevalent and more sophisticated. Now 63% of the 56 surveyed provide retail locators compared to just 46% last yr. The majority (86%) of these cos now offer the ability to differentiate search between on and off premise, from just 35% in 2013. And now "two thirds provide the ability to search by specific products (up from 43 percent)." But few locators detecting locations of visitors to narrow results for them. And gotta note, beer is behind spirits on being able to "direct visitors to major retailers." Interestingly, when folks searching for beer brands on Google, results rarely include additional links to other places on brand websites and retailers barely come up at all. Instead, search results commonly include hits for "community sites," BeerAdvocate.com and RateBeer.com taking the lion's share of those results. And about 61% of folks landing on beer website got there from a search engine.

Makers of Synek, draft beer dispenser gadget for home-use, taking cues from coffee world, like those we wrote about extensively last issue. "The idea here is to have a Keurig in the morning and Synek at night," Mike Werner, Synek's strategic director told the Pittsburgh Post-Gazette. He and founder Steve Young identify perceived "packaging problem" for small and home brewers: bottling/canning on a small scale may not always be profitable. Growlers, while allowing drinkers to bring fresh draft beer home, "only last as long as a toddler's attention span," according to the Synek website. Users can fill a cartridge holding a 1-gal pouch with beer from taps or tanks then load cartridge into counter-top dispenser for home-poured draft beer with no quality or carbonation loss, according to the makers of Synek. Young and co launched a Kickstarter campaign this week to raise $250K for a 2015 launch of the product, tho he also cites talks with other potential investors, the paper wrote. Based in St Louis, Synek touts ex-AB employees as team-members. The co is targeting small commercial and home brewers looking for new packaging options. Will Synek be embraced like Keurig and Nespresso machines, Soda-Streams and more in ever-expanding market of small kitchen appliances? When we checked in with Kickstarter efforts this week, less than $30K pledged on Monday, well over $40K Tuesday, but by time media outlets like Mashable and Business Insider picked up bid, campaign hit $115K Weds. Near $180K at presstime.

Here’s to a happy and successful July 4th holiday for all. Cheers!  
Mendocino Brewing (MENB) stock "closed Friday [June 20] at $0.275 and reached as high as $0.91 in the Monday trading day" as "shares went from a daily average volume (3 month) of 1,623 shares to near 500,000 in Monday's session," reported Market Watch last week. That caught the eye of several analysts, which listed MENB as top "penny stock" on the mkt. Recall, Mendocino hasn't fared too well in last coupla yrs. In 2013, "North American Territory" beer sales decreased 18% to 69,000 bbls, "because…our largest contract brand…constructed its own brewing facility," and "increased competition," sez Mendocino in end-of-yr financial report for 2013. Total "North American Territory" sales were down $849,500 in Q1 2014, and $$ sales down 21.5% in IRI multi-channel + convenience thru Apr 27. Currently MENB stock back down to $0.64 per share. Initial jump in stock price was possibly driven by news that Diageo reportedly completed 1.1 bil euros ($1.5 bil) acquisition of United Spirits, India liquor biz that's been part of Mendocino owner/Indian mogul Vijay Mallya's overseas empire, according to The Spirts Business. Deal makes Diageo majority (55%) owner from previous 26% stake.  
While Sierra Nevada founder Ken Grossman will be riding the Beer Camp Across America bus Jul 19-Aug 3 with lotsa colleagues, craft making inroads in the skies as well. As Goose Island announced partnership with Chi-based United, Atlanta-co Delta will expand availability of local favorite SweetWater aboard its flights. Goose Island Urban 312 Wheat Ale will be available on "flights worldwide and at United Clubs in the continental United States beginning July," co announced late last week. Beer will be sold for $7.99 a serving in United economy, $3 per serving in United Clubs, and "complimentary for premium-cabin customers." After launching program for flights between ATL and NY's LaGuardia airport this Spring, Delta will now offer SweetWater 420 cans on flights between an addition 7 airports (DC National and Dulles, Fort Lauderdale, Orlando, Miami, Tampa and New Orleans). On the ground, LA's Golden Road announced additional partnership with HMSHost to offer new canned Carry On Citrus Ale at 10 western airports this month (major Calif cities plus Las Vegas, Phoenix), followed by additional 17 (including Chicago, Denver, Minneapolis, Seattle, Salt Lake City and a bunch of Fla spots) by the end of 2014.

Then too, Ninkasi Brewing announced peculiar partnership with Civilian Space eXploration Team to send "a payload of 16 strains of brewer's yeast above Earth's atmosphere" and back, co announced. The project, dubbed Ninkasi Space Program (NSP), has been about a yr in the works, and will (literally) launch this mo. "If successful the NSP team will return to the brewery with healthy yeast, ready to make its way into a very special beer for craft beer and space aficionados alike," according to the co.

Oddly enough, Ninkasi ain't the only ones in Oreg lookin' to send beer (or beer ingredients) to space. "Thanks to a kickstarter project, a group of Portland beer lovers (who also happen to be amateur rocketeers), are getting ready to launch the first ever two-stage rocket filled with kegs of beer," with a 5 gallon keg and 15 gallon keg of Burnside Brewing's Pale Ale this September, reported 9News. It isn't even the first time this group has accomplished what they call "kegetry" or "keg-lofting"; in 2008 "they successfully launched and recovered their first single-stage keg rocket" of IPA from Roots Organic Brewery over 6200 ft. And they did it again in 2012. This time they're lookin' to launch the beer 20,000 ft high. Likely have to let the beer settle a while before tapping those kegs.  
A handful of craft brewer mkt expansions to keep an eye on for the month of July. Shiner will enter Mass with old Corona/Gambrinus distrib footprint: L. Knife & Sons, Burke, Atlas, Quality, Merrimack Valley, Williams and Girardi. Lagunitas will enter Iowa in July with MC house, Iowa Beverage Systems, distrib announced late last week via twitter. That's the 1st new state Lagunitas entered since it began shipping beer outta Chicago. Fleck Sales (MC) will also reportedly "handle the brand" there, according to Iowa Beer Baron blog. Recall, founder Tony Magee said Lagunitas plans to fill out natl footprint as soon as it has the capacity to do so. Another brewery planning to enter Iowa in July; Left Hand re-entering state after pulling out in 2011 with Johnson Brothers this mo, tho full distribution won't begin til Aug, according to Sioux City Journal Blog.

Meanwhile, Deschutes entered its 4th new state this yr, Wisc with Wirtz Beverage Co; plans to enter Mich next, this September. Smuttynose entered eastern Tenn with Carter Dist, marking its 24th state plus DC, Puerto Rico and 4 mkts overseas. Knee Deep Brewing entered NC with Mutual Dist, and will enter NY with Sarene Craft Dist in either July or Aug. Also announced it will enter NorCal counties with DBI Beverage, same distrib co partnered with in SoCal this May.

Then too, click here to see round-up of craft brewer distribution territory expansions from June. Organized by state, this list includes craft brewer distribution expansions with sales expected to begin by the end of June, 2014, as well as a handful of announced mkt entries coming soon.