Craft Brewery Strategy

[stcroixbrewing]

I’m curious about craft brewery strategy. I don’t believe it’s enough just to brew excellent beer. That’s a basic requirement for this business. Given that excellent, consistent beer is a basic requirement (or at least we know it’s something we all must do) what kind of strategies are breweries employing to set themselves apart from the competition? Somewhat by definition craft breweries are differentiated from the mega-brews, but I suppose that’s not necessarily a given. But assuming you’re sufficiently differentiated from mainstream beers how are you telling your target customers you’re different from other craft beers and even imports? Yes, we can say we’re local, and that carries some weight. But beyond that what are people doing? How are you differentiating yourselves in the minds of your prospective customers, both at the retail customer and individual consumer level?

[stcroixbrewing]

Sheesh, I see 450 folks have viewed my post but not one person has commented on it. I find that very strange as it would seem to me that this topic is more important than ever as we continue to see a proliferation of breweries, beers and brands. I don't think it's quite enough to count on "being a craft brewer" as a guarantee of success in this competitive marketplace. You're not just differentiating yourself from the megabrands but from other craft breweries as well. Hopefully nobody regards my initial post as an attempt to steal somebody else's strategy, just to provode discussion on a topic that EVERY small business needs to be concerned about. Believe me I can appreciate the everyday demands running a small brewery entails, and that all the work involved in producing and delivering beer to your customers may leave little time for high-falutin' strategizing. But all that work needs to be done within the context of some idea of what customers you're trying to serve, how you intend to serve them and how you show what you offer is different, in a meaningful way, from the competition.

[callmetim]

I think you're running into a few things:
First if there are 2000 breweries there are probbly 2000 strategies. It is dependant on so many things that it is pretty much impossible to have 1 strategy.
Second there are breweries and other businesses that don't have a strategy.
Third not everyone wants to share their strategy or the secret to their business strategy.

Not to be a smart-ass - ok little bit of a smart-ass - do you know what the secrets to secrets is? Not telling anybody

good luck.

[ChesterBrew]

The secret to making a small fortune in brewing is to start with a large one.

[YSBrewer]

It is an interesting dilemma, something that we are still trying to sort out in our marketing plan... Obviously, we are all competing for shelf space and at the same time it's the most supportive and connected brotherhood i've ever been involved in... Quite a conundrum... I'm counting on no "craft beer" drinker drinking the same beer all the time. I see the craft beer market as a never ending flight of beers that can never be exhausted. That's the draw for many and part of the adventure. Who's going to twist the next style, or have the best beer at the next (insert name here)beerfest... There is plenty of room for everyone, more so, in some states...

[mkunce]

I question the sustainability of the current proliferation of new small breweries. Look for many failures in the next few years. One bright side - lots of used equipment.

[YSBrewer]

I question the sustainability of the current proliferation of new small breweries. Look for many failures in the next few years. One bright side - lots of used equipment.

Not trying to stir anything up but, that's quite a blanket statement, care to expand on that idea? Or is that "secret"

[ChesterBrew]

Quite a blanket statement, care to expand on that idea? Or is that "secret"

http://www.soundbrew.com/small.html

EDIT: I personally believe there are certain circumstances where it can be profitable (depending on distribution laws, the ability to serve pints on-premises, etc.)

[YSBrewer]

http://www.soundbrew.com/small.html

EDIT: I personally believe there are certain circumstances where it can be profitable (depending on distribution laws, the ability to serve pints on-premises, etc.)

Yes, that's a very sobering and somewhat narrow view, depending on your business model and the mountain of other factors involved. I would totally agree though, that it's a "must read" for anyone thinking of opening a brewery. It doesn't change the fact that there are plenty of guys out there doing it and not starving. Family wreckers they be!!!

[Brewtopian]

To address the OP. The beer business isn't really any different than any other manufacturing business, you need to identify your customer. The craft beer consumer isn't monolithic. The first thing you should do figure out exactly who you're brewing for.

You could target a large segment of the craft beer community and brew approachable beers or you could go after the tiny but hardcore beer geek segment and brew extremely high end specialty beers like barrel aged and sour beers. If you're planning to go for the larger segment then your system should be able to accommodate the volume. If you have a large system but are targeting the specialty segment then you may have to much capacity for your needs currently but with strong capitalization you could reach that target.

The middle ground on this is brewing mainstream beers and supplementing that with high end specialty beers. This is the most common model in the industry now with mixed results. Sierra Nevada being the most successful example of this but others like Deschutes, Goose Island, Brooklyn and others have successfully built reputations with both segments while not alienating either.

[liammckenna]

Differentiation

1/ beer
2/ story
3/ package presentation
4/ POS
5/ ethos/community involvement
6/ location
7/ price point

Remember that beer is a 'low-risk' product purchase. If I buy a six pack of a product and don't like it, I'm only out a few bob. It's not like buying a car or a house, or a watch etc.

Buying patterns are easily influenced at point of sale with posters, shelf talkers, radio spots, targeted web media.

Cool, desirable gear (hats, tee's, etc.) can help a lot in terms of creating a following. Make people want to join the club.

Pax.

Liam

[william.heinric]

Planet Money just did a story on craft marketing in a couple different industries; I would listen to that to kind of get a feel for how the basic economics of the industry work. I'm concerned that many in our industry don't have a good understanding of the beer market, either quantitative or qualitative.

As to proliferation of craft breweries, look at it as a bell curve. There is a very steep point at the top of the curve occupied by a small number of top tier breweries. There are also very steep sides that drop off quickly (just look at the volume numbers from the top 50 list; I think that is a great corollary to this argument), and the tails of the curve are long and getting longer. I think that what we're seeing right now is the creation of the market with respect to the long term, and yes, I know that the craft market has been going for a few years. Take a longer view, and I think that you'll see the industry consolidate over the next 50 years via the same economic mechanisms that drove consolidation in the industry among the big boys. For more on this, check out The US Brewing Industry by Tremblay and Tremblay.

When it comes down to it, craft beer is still beer, and beer is damn near a commodity in this economy. And don't forget that it is much easier to disseminate information to consumers now than it was 10-12 years ago. Put all of this together, and I think that it shows that brewers will see a decreased ability to use price point as a means of communicating quality.

This is not to discount the price point effects seen in the wine industry, but again, how many of these wineries are successfully marketing in this fashion, what is the objective quality of their product, and how many other wineries are out there trying to do the same thing?

When strategizing, think about these things. Think about the most popular beers in your local market, both craft and macro. I think that you'll see that less has changed than most people believe, and your strategies need to reflect local market conditions.

Good luck,
Bill

[fvbrew]

Bill,

I enjoy Planet Money, do you recall when that show aired? Or was it an article on their blog? Very interested in looking it up.

Thanks,
Mike

Planet Money just did a story on craft marketing in a couple different industries

[Wicked Daddy]

Ah, my very first post... and strategy is one my favorite topics.

I built and sold 3 successful businesses and currently lead/manage in a $3B global company that bought my last venture. So I'm qualifying my answer. Each of these businesses were different but each followed the same foundation for it's strategy. My next and last business, brewing, will follow the same:

"People don't buy what you do. They buy WHY you do it."

The "why" will determine what differentiates you and therefore your strategy. If your "why" is to get rich, then your product will reflect that and be focused toward low quality, high turnover and a customer base that accepts those terms. Your marketing will need to be positoned toward this demographic and as such, will require constant and expensive reinforcement. Think A-B, Miller-Coors.

If your "why" is of a deeper philosophical need to produce something that satisfies a passion for quality or being unique to whatever else is out there, your ethos should reflect that and will speak to like minded people.

Craft beer appeals to an explorative personality and as such, they will seek to discover your beer. Some will become loyal to you but they will still try others. Those that appreciate your "why" will support it and keep coming back. Of course, you need to make good beer but again, if your passion is in the correct place, that should not be a challenge.

Do you want to learn what other's strategy is? Read their websites and see if you can determine why they brew and why they decided to share their brews with their communities rather than keeping it to themselves. But whatever you find out, you still need to figure out why you want to do this. It will drive everything else. Because on your worst day, when everything is going harder than you imagined, the costs are higher than you anticipated, sales seems impossible and going back to that desk job seems like an easier out, your "why" needs to be more powerful than all that. Your strategy should include building that into your brand more so than anything else.

And BTW, brew beer that YOU love. Then your market will be people like you. So they should be easy to sell to. A pretty simple strategy, indeed.

Good luck.

[GlacierBrewing]

ok
my two cents....
I know it is a very tired metaphor BUT
"You don't sell the steak, you sell the sizzle!"

I have been in the craft brewing world since 1993 and the theme I see repeated again and again and again is:


(wait for it!)



............sell the story.

Kinda' anticlimatic, I know.

I grew up in the craft beer world in Fort Collins, Colorado.
We had several great breweries making beers.
Personally, at that time I loved drinking New Belgium Wheat because it came from a small, quirky, local brewery. (They were actually small then!, I used to get my home brew bottles from them!) The beer in the bottle was good, real good. The label art made me think of summer and sweet, easy times. I loved the story of the brewery: started in a garage and at the time in a old railroad depot. Bottom line: it was all-around cool!

First off, you NEED to make a good beer, period.

Your marketing needs to be the next step. It carries the beer in the bottle. It gives the consumer a story to muse about as they drink it. The beer and the marketing reinforce each other.
You are selling an experience, a thought, a storyline. Your physical brewery and public area MUST tell that story.
Your packaging MUST back that up. Your beer MUST beer good enough that, aside from the story, people want to taste and experience it again.
I guess in my melon it comes down to:
You are not brewing a beer, you are creating an experience, selling a story.
Please bear in mind, this is just my opinion.

Prost!
dave