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Craft Beers Go “Mega” in America: Food Tie-Ins and Thirst for New Styles Drive Record Sales

Posted on  | October 1, 2012   Bookmark and Share
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Craft beer sales have definitely blown up in the last three years,” says Nick Anderson, beer buyer at Arrowine & Cheese in Arlington, VA, not far from the Central Intelligence Agency. But, happily, there’s nothing covert about the growing appeal of small-scale beers. Americans not only have discovered the pleasures of craft-brewed ales, porters, stouts and seasonal beers, but also how well they go with food.  

If a generation ago American consumers learned how embrace finer wine with open minds and arms, finer beer’s wider acceptance is triggering a similar phenomenon. One noteworthy distinction: whereas the wine culture thrived via people reaching out to the corners of the globe, the beer culture has gained much of its mojo close to home. In 2011, craft beers accounted for a record 5.6 percent of total U.S. beer volume, according to Charlie Papazian, president of the Denver-based Brewers Association. Papazian, who is considered the father of the home brewing and craft beer movements, predicts confidently that by 2017 craft beer sales will double.
In practice, though, the “crafting” of the beer market has already taken root. While Papazian is actually focusing on brews best categorized as “local” and/or “micro,” marketers and front-line sellers alike are tuning in to the fact that modern beer drinkers are embracing beers that are artisanal, not just brewed in nearby zip codes. Case in point: Arrowine’s website presents its selection as “eclectic,” and changing with the seasons. Spanning both American microbreweries and imports, the emphasis is on beers “of the highest quality made with the best ingredients”—all served as fresh as possible thanks to optimal storage and fast turnover.

Experimentation and Access Up

Brett Pontoni, corporate beer buyer for Binny’s, a 28-store group based in Chicago, IL, says, “Growing numbers of our customers have shifted from mass-produced domestics. They’re experimenting as never before. Our three best-sellers are Goose Island, Sam Adams and New Belgium.” Pontoni adds he has increased craft beer case-stacking displays to great effect.

Craig Purser, president of the National Beer Wholesalers Association, notes, “There was a great deal of sameness among domestic beer brands; this helped drive interest in craft beers. What’s more, the entire farm-to-table trend in the food and hospitality industries also helped raise awareness of local and regional craft beers.” Purser adds that as of mid 2012, there were more than 2,000 enterprises now brewing and selling craft beers across the country. (By comparison, half a century ago their numbers had dwindled to about 50, following waves of consolidation beginning with Repeal in 1933.)

Today’s beer consumers are accustomed to seeing a lot of beers—with crazy names, from far-flung places as well as just around the corner. At the same time, with mainstream availability of and national advertising for specialty beers increasing, the green light inviting consumers to branch out has never been brighter. In turn, the tilt toward experimentation is motivating smart retailers to offer a healthy variety while growing the premium category. A mix of local and  imports, dark and light styles, plus seasonal bottlings broadens the appeal for drinkers with varying levels of comfort vs. curiosity.

Big Brewers Think Small

Mindful of the remarkable ascendancy of craft beers, the nation’s leading brewers and importers are busy beefing up their specialty beer portfolios, via both line extensions and acquisitions of established regional brewers. Against a background of flat sales of major national brands, in 2010 MillerCoors established a division to focus solely on these higher-margin brands, setting up Tenth and Blake to further develop its best-selling Blue Moon brand, as well as its other specialty and imported beers, notably Pilsner Urquell.

In 2011, Anheuser-Busch acquired an interest in the fast-expanding Chicago-based Goose Island brand. Guinness broadened its American appeal with the introduction of Guinness Black Lager in bottles; still dark in color but lighter in style, it proved to be a bold but successful move by a brewer known for its stout. Heineken, already well positioned in the upscale import arena, has made several moves: expanding the availability of seasonal offerings from Newcastle; offering Amstel Wheat Bier in bottle after successful trials on tap; and pushing the envelope in Mexican beer by launching Tecate Michelada, the first canned RTD michelada in the U.S. (essentially a cocktail made with beer, lime juice, tomato juice and spices).

At Tenth and Blake, Craig Morris, director of chain and customer solutions, states: “Thanks to crafts, beer is being talked about again. And with food and beer, there’s a new emotional dimension to the conversation we can have with consumers.” And to further the conversation with its trade customers, Morris says Tenth and Blake is introducing its proprietary JourneyFlow, “a drinker-centric organization and merchandising approach to manage the craft segment and facilitate the discovery and education of craft beers.”  

 

Mark Mahoney, communications manager at Goose Island, says, “Overall, A-B and Goose Island are investing in this segment; and we believe the whole category can double in size in a decade’s time.” Demonstrating the clout that can come from combining national distribution with regional identity, Goose Island ran a “Live Like a Local” promotional contest, which brought a winning couple on an expenses-paid, Labor-Day-weekend trip to Chicago, its home town, and included a visit to the brewery.

Teaming Up on the Bandwagon

The nation’s beer distributors have also ramped up their artisanal beer efforts. John Dannerbeck, president of San Francisco-based Anchor Brewing Company, says: “Distributors have stepped up their capabilities to sell craft beers. Today, it would be unusual for a medium to large distributor to not have a sales team managing their craft portfolio. This was not the case two years ago.” The brewery’s full complement of on- and off-premise promotional materials—from tap handles and bottle openers to posters and books—are designed both to educate and keep the brand on distributors’ and re-sellers’ minds.

Rhett Orem was hired only this past June as a “specialty beer salesman” at Guiffre Distributing, an Anheuser-Busch wholesaler in Springfield, VA. Orem says, “Guiffre really wants to focus on selling more craft beers, taking these brews everywhere from small pubs and shops to local diners and pizza parlors.”

An important sign of craft beer’s arrival has been the ability of some artisanally oriented national brands to retain their small-brand feel. Sales of Boston Beer Company’s Sam Adams accounted for an astonishing 1% of the U.S. beer market. And Jim Koch, founder and CEO, thinks America’s embrace of artisanal beer is just getting rolling: “In our consumer tracking, for the first time a majority of beer drinkers drink craft beer either regularly or occasionally.” As in past years, Boston Beer is readying a host of seasonal on- and off-premise brews and promotions this fall, including the 24th edition of its Octoberfest and a new Double Pumpkin Ale. For on-premise customers, Boston Beer is hosting stein-hoisting competitions—customers hold one-liter steins (filled with Sam Adams, naturally) with their arms fully extended to see who can hold on longest.

Sierra Nevada, partnering with its local distributors, hosts a year-round calendar of beer and food dinners at pubs and restaurants. For its off-premise accounts, Sierra Nevada sponsors consumer and trade competitions to attend its much-admired Beer Camp at Sierra Nevada’s brewery in Chico, CA. Founder Ken Grossman says, “We’ve seen a lot of growth in the last few years. More retailers have jumped on the craft beer bandwagon. It’s been a win-win, as we have  higher-margin beers.”

Summing up the changes in the U.S. beer market since Sam Adams was first launched 25 years ago, Boston Beer’s Koch comments, “Craft beer has entered the mainstream; we are seeing the arrival of mega-crafts.”

Food Factor

Arrowine’s Nick Anderson confirms that along with quality, food is on the mind of today’s American beer fan. He reports that customers come in daily asking which beer they should try with this or that dish. And thanks to regular staff tasting sessions—importantly these sessions include servers in the store’s deli and food departments—customers leave happy with one or more beers from among the 200 brews the award-winning store stocks.

Savvy restaurateurs are climbing on the artisanal beer bandwagon, too. At Birreria—a beer garden in New York City, 15 floors above the Eataly Italian food arcade—domestic craft beers, hard-to-find imports and their own proprietary beer exist happily all atop one roof, so to speak. Peter Hepp Jr., head brewer and beer program director at Birreria, says, “There has been a bursting of styles in the craft beer category in just the past few years. We pride ourselves in brewing beers that go extremely well with our menu.”

Just as wine marketers have sponsored wine dinners for years, brewers and restaurants are collaborating more. Cigar City Brewing in Tampa, FL, for example, happily hosts dinners at Fleming’s Steakhouse, where their beers are matched up with variations of both surf and turf.

At Rudyard’s British Pub in Houston, Texas, bartender Robert Gay, senses a dynamic between on- and off-premise beer popularity. “Our most popular craft beers are St. Arnold’s, which is the state’s oldest continuously operating brewery, Devil’s Backbone [from Blanco, TX], Dogfish Head [from Milton, DE] and Anchor Steam from San Francisco.” Gay adds that “customers have become more savvy about what’s out there,” thanks in part to specialty brands like Sierra Nevada, Sam Adams and Blue Moon becoming more widely available.


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