Can craft light lagers break through?

Amid slowing growth across the craft segment, a growing cadre of craft brewers are supplementing their lineup of IPAs with a style of beer the industry once derided: light lagers.

Hoping to corral a piece of the giant market they’ve long avoided, brewers are rolling out their takes on what has long been the public’s preferred style.

Different brewers have different motives for jumping into the style. But there’s little doubt the shift marks a bit of a 180.

“For years, many craft brewers openly mocked light beers. And they’re just now realizing that American beer drinkers are seeking more sessionable beers,” says Pete Marino, president of Tenth and Blake, the MillerCoors craft and imports division. “I guess for some craft brewers it’s a case of, ‘If you can’t beat ‘em in light lagers, join ‘em.’”

Massachusetts’ Night Shift this week said it would begin in April selling its 120-calorie, 4.3 percent alcohol by volume Nite Lite lager year-round in three states. Michigan’s Perrin Brewing last fall released 15-packs of its 3.8 percent ABV Perrin Light Lager in its home state. Firestone Walker, Abita and Ghost Train have released sessionable lagers. Michigan-based Short’s Brewing Co. this winter rebranded its light lager, Local’s Light, and plans to sell it in 12-packs in five states this month.

Then there’s fellow Michigan brewery Founders, which is moving right into the backyard of major brewers like Anheuser-Busch and MillerCoors with 24-packs of its light lager, Solid Gold. And the packs are priced as low as $17.99, about 80 cents a can, a deliberate attempt to get consumers to trade up and begin siphoning away volume from more-established competitors.

Economic pressures

What’s with the change of heart? Simple economics, says Jason Notte, a longtime financial and beer industry reporter and columnist who writes for The Street and All About Beer.

“That 45-degree angle of growth craft posted after the (2008) recession is over. We’re now getting into smaller single-digit growth and shrinking,” he says. “So what do you do? You go where you know it’s a sure thing.”

While Notte acknowledges the new craft entries in light lager are far from a “sure thing,” he says brewers that spent millions of their own and others’ money building bigger breweries and expanding distribution amid the market boom now face the harsh reality that they are not going to grow at the rates projected in their business plans. And all bills come due. Investors want a return. Banks come calling. So they’ve got to find a way to fill their tanks.

An increasing number are deciding to go where the volume is. And to compete in that arena, “you’ve got to look at price,” Founders co-founder and Chief Executive Mike Stevens said in late 2017, according to Beer Marketer’s Insights (subscription required.)

Night Shift co-founder Rob Burns said as much in an interview with Good Beer Hunting’s Bryan Roth: “At the end of the day, we want to challenge the light beer category and put macros on notice that we’re coming. I know that sounds silly, but a war is won after many small battles, and this is how we start chipping away at what they’ve built.”

He also acknowledged craft’s reversal of thinking on lighter beers. “In the '90s and 2000s it was fundamental to be on the polar opposite end of the spectrum, but what we’ve accidentally done, or a byproduct of what we’ve done, is we’ve given the macro brands this perfectly walled-in space, and that’s the biggest space,” Burns said, according to Good Beer Hunting. “We said we don’t want craft to play in that because it’s ‘not what craft is about,’ but why can’t it be about light lagers?”

To be sure, craft light lagers remain a tiny piece of the overall beer market. And the overall craft market, according to IRI. While craft light beer sales rose 29 percent in 2017, they totaled just $15.2 million, per IRI. Sales of pale lagers, meanwhile, rose nearly 24 percent to $75.4 million. Total craft beer sales last year? $4.45 billion, per IRI.

Prospect of success

One of craft beer’s pioneers, Boston Beer Co., was the first to enter the market for craft light lagers when it released Sam Adams Light in 2001. The last four years have been tough for the brand, according to Nielsen all-outlet and convenience data. Sales dollars and units of Sam Adams Light have declined at least 22 percent each year from 2014 to 2017, making the brand less than half the size it was in 2014.

Despite its struggles and an overall downturn in the premium light segment, which is down 5 percent year to date, according to IRI, craft brewers continue to march into the storm. Lower-alcohol craft beer is a clear trend in the industry, as evidenced by Firestone Walker’s California-only 805 Blonde Ale, Founders’ industry darling All-Day IPA and Dogfish Head’s 4.9 percent ABV sour, SeaQuench Ale, which brewery founder Sam Calagione says is on pace to sell 600,000 cases this year, according to Beer Business Daily (subscription required.)

The latter two beers, however, are a far different play than Solid Gold and other new light lagers both because of style and price. SeaQuench, which has a recommended retail price of $10.99, is more than double the price of Solid Gold, for instance. And the falling prices in craft has Calagione concerned, per BBD: “I guess what keeps me up at night, if anything, is I am fearful about the commodification, or potential commodification of craft beer, and pricing strategies that play into that possibility. … We believe, for the long-term future of indie-craft breweries, we’re never gonna be able to compete on price.”

Tenth and Blake’s Marino says craft also needs to worry about quality; after all, companies like MillerCoors and Anheuser-Busch have each been making consistent lagers for more than 100 years.

“Brewing light beer is very different from the heavier styles they know best,” Marino says. “The margin for error is so low and the demand for quality and consistency is so high. As more craft brewers enter the low-calorie world, they need to not only have a great brand, but great quality beer, in order to win.”

So will craft light lagers have staying power in a fickle market?

“I don’t see any way this ends well for craft as a whole,” Notte says. While there’s potential for the regional brewer model to come back, and some breweries that go this route to succeed, “to me, it seems like they’re hitting the panic button and if you get enough breweries taking this tack, it’s not going to be pretty.”