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Thread: Any co-branding watch outs?

  1. #1
    Join Date
    Oct 2003
    Location
    Pittsburgh, PA
    Posts
    407

    Any co-branding watch outs?

    Hi,
    I've got a small (just me) micro startup that I've been selling in to places around town with some decent success, and have found a small but prominent quality restaurant chain that is interested in putting one of my products on as their "house beer".

    Here are some particulars of what's being proposed:

    1. Their house beer is typically at a slightly lower price point than the other draft offerings, but my price to them is the standard price per keg.

    2. They don't have any exclusive rights to my product, so I can sell it to other places at this same price, and under its regular name.

    3. The beer will have a co-branded name that is agreeable to both sides, they will do the artwork, development, tap handles, etc... Name will probably be a merger of my regular beer name and their restaurant name.

    4. They will publically disclose that my brewery makes this product for them, and I personally will do tasting-type events at these restaurants.

    Has anyone out there done anything like this before, and what were the pitfalls? All I can see is solid volume, the beginning of a very steady account, and some good exposure for the brewery... all good things. Should I be concerned about dilution of my "regular" brand identity or things like this?

    Any help - experience based or pure speculation is welcome.

    Thanks,
    Scott

  2. #2
    Join Date
    Mar 2003
    Location
    Nashville
    Posts
    676

    selling beer under two different names

    I have a brewery in Tennessee that started up with the business plan of offering unique beers to selected restaurants, that they would market under their name but would make clear, through their menus, coasters, and other POS materials, that the beer was made exculsively for them by my local brewery. We have the ability to do seven barrel batches, and we structured the agreement so that the restaurant was responsible for consuming the entire batch within three months. We stored the beer at the brewery and delivered it as needed. If a restaurant couldn't meet the three month minimum, we discontinued their beer.

    Our goal was to gain positive exposure for an unknown startup microbrewery without a large advertising budget. We figured that by "piggy-backing" on the brand image of a successful, respected restaurant, that our own brands would benefit. So far it has worked, to the point where we have had to limit the number of custom brews we do in order to keep up with our own brand's growth.

    I call them custom brews because they are unique, they are exclusive, and they are definitely not one of our beers sold under a different name. I have a big problem with the idea of selling a beer under two different names. In our market, it is usually a mass-market beer that is in the mid-tier level of pricing (around $55 to the retailer). The retailer can pass it off as a unique microbrew, made exclusively for them, and charge a premium price for it. I realize that the situation you are describing is different, but I have had to fight this problem and I get disgusted by it. One Irish pub here in town has two "house" beers that are really just a mass-market light beer and cider. When I approached him about a real unique beer, he said, "Why should I pay your price per keg when I can get that light beer for $50, and sell it at $4.00 a pint?"

    Anyway, if it were me, I would create a unique beer for the restaurant, one that complemented their food and atmosphere, and make absolutely sure that the name of your brewery is prominently displayed on everything associated with it. That's what we did, and it worked for us.

  3. #3
    Join Date
    Oct 2003
    Location
    Pittsburgh, PA
    Posts
    407
    Thanks for your reply - quick question: are the pricing numbers you've quoted below for half barrels?

  4. #4
    Join Date
    Jun 2003
    Location
    Austin, Texas
    Posts
    351
    Scott, I've been in situations like yours and like lhall, and I think your situation is a good one. At a Colorado micro that I worked for, we did exactly what you're proposing, with no problems and excellent results.

    I also was the brewmaster for a micro that did exactly what lhall is doing, and quickly found brewing "exclusive" recipes to be a lot of extra work (mostly for marketing purposes) for a negligible return. As mentioned, accounts are fixated on the bottom line more than anything else.

    I don't see a single downside in what you've outlined! Go for it!

    Cheers, Tim

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