AOTC in the news
March 11, 2021
Industry Experts Offer Advice For Craft Brewers Looking To Succeed In A Crowded Marketplace
Even though there are over 8,000 breweries' in the United States, the market space is dominated by a few large brewing conglomerates. According to the Brewers Association, in 2019, craft beer only accounted for 13.6% of the U.S. beer market by volume. To get the scoop on what small and medium-sized breweries can do to expand their sales and presence in the market we reached out to the founders of Ahead of the Curve Strategy. Launched this year by two long-time industry insiders, it aims to bring new insights to the craft space.
Ethan Stienstra was the Brand Manager of Innovation for Craft Brands and Imports at Molson Coors and New Belgium’s Director of Innovation and Specialty Brands. Dan Kiefer is an alcohol beverage marketing expert who has worked on several national campaigns for large breweries. Rom Van Der Zee is their E-commerce strategist.
What do you see happening over this next year as life goes back to normal?
Stienstra: The roaring Twenties are going to be coming back soon. People have been cooped up for over a year now, and they can't wait to get back out, especially the younger demographic. Just the package sales alone over the last year showed that there is still a high demand for alcohol. Once restrictions are lifted, brands that are well-positioned with the right portfolio strategies are going to thrive.
Kiefer: Pre-Covid, many established craft breweries we're getting dinged as grocery store brands that were not cool. They also were the ones that succeeded during this last year as bars and taprooms shut down. They had their products in the right spot to ensure cash flow when things got tight, I think many breweries have realized the importance of having the ability to offer package products. On-premise will come roaring back quickly as people are cleared to head out, especially this summer. Brands need to be prepared for that and ensure that their products are in stock and have a fresh look.
Stienstra: Health and wellness are going to be top of consumer minds for the foreseeable future. The explosion of seltzers highlights that. You will see so many derivates in the seltzer space, alongside lots of flavorful products and higher ABV. I also think we are about to see a big boom in lagers. It’s another product that strikes consumers as healthy, one with lower calories. That’s going to be a tough one for smaller brewers to compete in. The big boys will flex their muscles there; they have established brands. But if you can make a great lager, you might pick up some extra sales.
What is the one thing that you see most brands struggling with?
Stienstra: Brands need to figure out what their position is overall, who they are, and what do they stand for. Boiled down, it should be a simple elevator pitch, one that their customers can distill in moments. It's shocking how many alcohol beverage companies don't have their brand positioning down. Look at the larger beer companies; you know what they stand for, who they are. Blue Moon is the orange peel and great taste, Coors Light is cold refreshment, Budweiser is the iconic American brand, Corona is the beach in a bottle, Sierra Nevada the independent craft beer. The list goes on and on. Take a page from the big boy’s playbook and create a simple position your consumers will understand.
Kiefer: Craft beer always defaults to quality in their messaging. Well, yeah, that's ubiquitous. Everyone is preaching that message, but what else do you do. Is there a particular procedure used to ensure quality? Do you have better ingredients? What do you offer that sets you apart from all the other craft brewers? You need to figure out what makes your brand different from all the others.
Stienstra: Many breweries have a lot of brands, too many frankly, and they confuse their customers. They get in the way of their being successful. Sometimes you need to retire the weaker products to make room for your stronger ones to run successfully. Every brewery should take a hard look at their portfolio with a critical eye and thin out the non-performers. Your regular customers won't leave you, and in fact, you will pick up new ones as you build out your top-line products in stores and on draft.
Between the Nielsen, IRI, and E-commerce data out there, you can really understand who is buying your product and what moves you should make to expand your reach. Once you know that, you can create brands that specifically target gaps in your sales model. It just requires crunching some numbers yourself or hiring someone to help you understand it.
What’s the biggest thing brands should focus on right now?
Stienstra: Without a doubt, E-commerce.
Van Der Zee: Covid-19 expedited everything in the E-commerce space by about five years. Many platforms have suddenly become very relevant and are doing well. It is crucial for craft breweries and cideries to position themselves correctly on those big platforms and make sure they compete. E-commerce accounted for about 1% of beer business before Covid-19. Now it's somewhere in the 8-10% range, that's huge, and it's not going to go down much. Habits have been formed, and people are used to getting so much delivered now, including their alcohol. The Drizly sale to Uber for $1.2 billion shows the valuation these online platforms are attracting.
Stienstra: From our research, we have found that when people go to an E-commerce site to buy beer, only 25% of them know what they are going to buy, the other 75% search by style. They have not made a decision yet. For wine, those numbers are 5% by brand and 95% by style, and for liquor, it's roughly a 50/50 split. So, figuring out how to influence a shopper when they are on an online shopping site is huge for any brand. That’s where added sales can be created.
Van Der Zee: Now is the time for smaller companies to get into E-commerce. There has been a more fertile space to grow sales. The reason I say this is because of zombie shopping. That's when a consumer goes onto one of these online platforms like Saucey, Instacart, Drizly, or such and makes a purchase. Their sales history is always there. Products they bought in the past are simple to repopulate their carts with, leading to simple resales. That's one way to grow sales. Another way is by micro-targeting your social media advertising. There is so much data available that you can dial in your advertising to go after a specific customer. Once a customer buys your product online, these ads can continue to pop up on their social media feeds, driving home your message and landing to more sales. The data says that 70-80% of people who shop on E-commerce repurchase what they bought last time.
Stienstra: The cost of getting your brand positioned correctly in front of consumers online drops exponentially with every returning purchase they make. The key is to get into their digital carts early. You need to ensure that your digital shelves are clean and have the newest images of your products. You would be shocked by how many old and outdated package images there are out there online. It takes work to clean up your business both in the real world and online but maintaining it is much easier once you get it done. Present a clean look to all of your customers.