Posted on | November 3, 2011
Written by | Jim Clarke
The dominant story in the beer world for the past several years has been about the end of dominance. Since the 2008 recession, overall beer sales have slipped a point or two each year, but craft beers, despite higher price points, have seen remarkable growth: up 12% in 2010, according to the Brewers Association (while beer as a whole slid 2.2%), and accelerating in the first half of 2011 with sales up 15%. Large breweries—like AB-InBev and MillerCoors—are responding, and actually already have a bigger chunk of that growth than many would think.
“It’s exciting to see larger, more global brewers addressing consumer needs,” says Craig Purser, president and CEO of the National Beer Wholesalers Association. “It’s a win-win situation if you’re a beer drinker.” Also for retailers, since craft styles can demand higher prices and make a “great margin contribution.”
One style has led the way for larger brewers: Belgian witbier. These wheat beers are smooth, lighter than their Bavarian counterparts, and gently spiced, typically with coriander and orange zest. Blue Moon Belgian White is the leader, cracking the top 15 best-selling beer brands for the first time this year. The beer is produced by MillerCoors’ Tenth and Blake Beer Company, which also includes Colorado Native and Leinenkugel’s plus several import brands.
“People like to call Blue Moon the 16- year overnight success,” says Tom Cardello, Tenth and Blake’s president and CEO. “It has done well for a variety of reasons. First and foremost, it’s the beer itself: it’s the perfect ‘invitation’ craft beer that invites beer drinkers into the craft segment and gives them the confidence to try new flavors and styles.”
AB-InBev’s Shock Top Belgian White is younger; it was first introduced in 2006 as a seasonal summer beer, but its success led to year-round production. The line includes a Raspberry Wheat, and at the end of August they introduced a Pumpkin Wheat beer—one of craft beer’s most popular autumn styles. “The Shock Top family’s popularity continues to grow, up nearly 77% in the first half of this year,” says Paul Byrne, Shock Top’s brand manager.
Amstel’s new wheat beer is aiming for the same smooth character as the Belgian-inspired brews. “Wheat beer is an extremely refreshing style, with a smooth character U.S. beer drinkers find compelling,” says Colin Westcott- Pitt, vice president of Dos Equis, Amstel and Newcastle. He says Amstel Wheat provides the taste beer drinkers are looking for, but with less bitterness. Amstel Wheat is on offer in six markets at the moment, on draft only. Purser says many new craft styles are focused on the on-premise market: “That’s where the experimentation occurs, where people try beers they ordinarily wouldn’t buy as a sixpack.”
Shock Top’s pumpkin beer taps into one of craft beer’s fastest growing segments—seasonal brews, which surpassed pale ales as the top growth category about four years ago. Newcastle recently introduced limited-release, seasonal offerings—a Winter IPA, Founder’s Ale, Summer Ale and Werewolf Blood Red Ale. Blue Moon, too, has a seasonal lineup, recently revamped with new packaging, names and tap handles. Leinenkugel Brewing, another part of the Tenth and Blake portfolio, produces an Oktoberfest, a Nut Brown for winter, a Bock for Spring and a Summer Shandy.
Packaging options have also expanded; variety packs introduce drinkers to several different products in a brewery’s portfolio at once. Craft cans, too, have enjoyed a surge of popularity, inviting beer into settings where glass is a problem—pools, beaches, and hiking, for example. Both Stella Artois and Shock Top introduced cans in 2011.
Routes to Expansion
Founding new brands is one way for large brewers to take part in the craft beer scene; buying established brands is another. AB-InBev’s bought Chicagobased Goose Island this year; the brewery makes a range of traditional craft styles as well as reserve, “extreme” beers that are highly coveted by hardcore craft beer fans.
After newly created brands and acquisitions, imports offer a third alternative for larger brewers wishing to court craft beer drinkers. Pilsner Urquell, for example, recently reached into the heart of the craft beer scene—homebrewers—by sponsoring a brewing contest for amateurs making pilsner beers. “Knowledgeable beer drinkers understand and appreciate Pilsner Urquell’s importance,” says Cardello. “That thought is what led to the Master Home Brewer Competition. Give homebrewers a shot at replicating this difficult style, and in the process create some noise for the brand, allowing us to tell the Pilsner Urquell story and slowly turn these influential consumers into brand advocates.”
Guinness has expanded by introducing variations on their signature dark, roasty style. Their Black Lager, a lighter, easy-drinking dark beer, arrived in September, about a year after the Foreign Extra Stout. The latter actually isn’t new; in fact, it dates back to 1801 and has long done well in parts of Africa, the Caribbean and Malaysia. At 7.5% alcohol it’s stronger than the ubiquitous Guinness Draught, and hoppier, both virtues in the context of craft beer.
Many Ways to Tell a Story
Historic brands like Guinness, Pilsner Urquell, and Newcastle also have stories to tell. For craft beers the story often lies in local roots, with a strong regional aspect; older brands like Schlitz, Rainier and most notably Pabst have enjoyed the same benefits. “There’s always a story behind these local brands,” says Westcott-Pitt, and the story creates the sense of authenticity and interest in the consumer. Newcastle, he adds, got started much the same way, as the beer local workers would choose when they came up from the mines.
“We think the rising interest in craft beers is fantastic,” says Campbell, who says that Guinness and Smithwick’s fit the desired flavorful, high-quality profile perfectly. “When you get right down to it, craft beers are a manifestation of today’s consumer’s demand for authenticity and pride in craftsmanship. We feel very confident that as consumers learn the story behind our brands, they’ll find appeal in them for many of the same reasons they find domestic crafts appealing.”