After the gold rush: How to win in craft today

While the days of consistent double-digit growth in craft beer are likely in the rearview mirror, smart brewers still have opportunities to grow amid an increasingly difficult operating environment. 

Pete Marino, the new president of emerging growth for Molson Coors, a unit that includes craft division Tenth and Blake, said craft brewers that follow five key strategies can post consistent, healthy growth in the years ahead, regardless of what happens in the overall industry.

In a Thursday speech to the California Beer and Beverage Distributors, a statewide trade group that represents California’s beer distributors, Marino detailed his blueprint for Tenth and Blake’s collection of craft breweries, which together have booked 36.2% growth since the start of 2017, vastly outperforming the overall craft industry, which is up 0.3% during that same period.

“While I’m not here to suggest craft will return to the days of 90% growth, I do believe we can do better than barely breaking even,” he said. Here’s a look at his five key strategies:

Establish a core so drinkers get to know what you stand for

“This is all about creating a strong foundation that everything else you do is built upon,” Marino said.

It’s a strategy he and his team at Tenth and Blake have worked to implement over the last two years, and it’s built on a simple truth: lead and flagship brands matter. In 2018, for instance, nine of the category’s top 20 growth brands were a brewery’s lead or flagship brand, underscoring “the power of a known entity,” Marino said.

And for Tenth and Blake, the focus on building a core is working, data show. While the overall craft trend since the start of 2017 is +0.3%, the five craft breweries under the Tenth and Blake umbrella are up 36.2%, per Nielsen.

Its San Diego craft brewery Saint Archer, for instance, rallied around its easy-drinking core of Hazy IPA, Mexican Lager, Tropical IPA and a 50/50 IPA variety pack. That’s helped the brewery cut SKUs, helped set expectations among beer drinkers around what to expect from the brand and helped the brewery outperform its competition in its home market, Marino said.

Commit to long-term brand building

As few as five years ago, an interesting name and a funky package was enough to set apart a craft brand on retailers’ shelves. Today? Not so much, Marino said.

“You’re not going to grow if your brand doesn’t mean anything to beer drinkers,” he said. “You need branding that delivers a compelling message about what you stand for. Something that quickly grabs the eye of the consumer. Something that stands apart from the competition. Something that can be carried over to everything you create for your brand.”

MillerCoors’ Colorado Native brand, for instance, this year updated and refreshed its packaging to stand out more at retail. It’s helped the franchise to double-digit growth so far this year.

But it’s not all what’s on the can. Marketing tactics like branded sampling spaces can help introduce new drinkers to beers, especially at venues and special events, Marino said. For instance, Hop Valley Brewing’s Hop Boxes – repurposed shipping containers that double as portable bars – pour Hop Valley beers inside stadiums and at golf tournaments and music festivals. Satellite or destination taprooms like Terrapin Beer Co.’s ATL Brew Lab at SunTrust Park in the Atlanta metro also can showcase brands and beers to a broader audience, he said.

Keep things interesting with innovation and collaboration

While building strong brands and a strong core is critical, craft drinkers still crave variety and are eager to discover new beers to tell their friends about. There’s no better way to do that than with innovation and collaborations, Marino said.

Innovating with cryo hops has paid dividends for Hop Valley. Its new Stash Pack variety 12-pack, which includes four beers brewed with the hop dust, has been one of the fastest-growing craft packs in its home Pacific Northwest region this year.

Saint Archer, meanwhile, teamed up this year with well-known California apparel company RVCA to create a special session IPA with sales benefitting RVCA’s Artist Network Program. Sales “blew through our projections,” Marino said.

And Terrapin did so well with its collaboration beer with Miller High Life, Hoppin’ Bubbly, that it’s expanding the brut IPA across its footprint.

Look outside traditional beer

As the runaway success of hard seltzers over the last two years attests, drinkers increasingly are looking beyond traditional beer. And there’s space for savvy craft brewers to augment their portfolios with products like kombucha, non-alcohol beverages, hard coffees and canned spirits.

“It may not be enough to be a craft brewer,” Marino said. “We’re going to see more craft beverage companies.”

For its part, Tenth and Blake is working to expand distribution of its non-alc Clearly Kombucha brand and is exploring hard kombucha options, among other products that don’t fall under the parameters of traditional beer, Marino said.

Recognize that “light” is no longer a dirty word to craft drinkers

IPAs continue to lead the way for craft, which in many ways was built on the promise of offering full-flavored beers. But more and more, craft drinkers are reaching for more-sessionable options.

“Many craft brewers have finally realized there’s a reason American light lagers have been so popular for almost 50 years,” Marino said. “It’s because sometimes people just want a good, crisp, refreshing beer they can enjoy over the course of an evening without paying a penalty later.”

That’s why Molson Coors is betting big on a new 95-calorie light beer under the Saint Archer umbrella that it hopes will recruit new legal-age drinkers into the category “with a fresh and credible brand that will also appeal” to Michelob Ultra drinkers. Saint Archer Gold, which started as a four-market test this year, is prepping to launch nationally January 1.

“With Saint Archer Gold, we’re seeing the potential for a great light option to have a halo effect on the rest of a brewer’s portfolio,” Marino said. “People are trying Gold and then deciding to take another look at what the brewery has to offer.”

That alone, Marino said, is encouraging news for distributors and retailers. “If you can combine the higher velocity typically associated with lighter beers with the higher margins of craft, that’s a win for all of us.”