Beverage Dynamics is the largest national business magazine devoted exclusively to the needs of off-premise beverage alcohol retailers, from single liquor stores to big box chains, through coverage of the latest trends in wine, beer and spirits.
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wine), more congenial beer-drinking settings and the greater emphasis on beer's role as an accompaniment to food. Fully half the participants at Brooklyn Brewery events these days are women, Hindy noted. The next frontier, Hindy added, is ethnic minorities. Demographically, "we've done very little to reach the Latino or African American market, and we know how important they are for the mainstream lager and import markets," particularly for brands like Heineken and Corona at the high end. "At the Great American Beer Festival, we're virtually the only company with African American people serving beer." Brewers are starting to respond to that opportuni- ty. The year-old 5 Rabbit Cerveceria, which is tar- geting Latinos, is building its own brewery in a southwest suburb of Chicago and recently lured Goose Island veteran John J. Hall to its team. Formative efforts are underway in areas like Harlem in New York. A successful effort to bring in minorities could add another leg to craft beers' growth. UBS' Gajrawala believes craft beer can get to 10%: "it's a legitimate category, and the idea of high-flavor, high-end beers will continue," though a consolidation of breweries may be at hand. There are simply too many brewers out there selling small batches in a high-capital- intensity business who are struggling to survive. Brooklyn's Hindy? "I think it could go beyond 10% of the market – we've seen comparisons with ice creams and artisanal breads having 30%," he said. With the peak unclear, brewers like New Belgium and Sierra Nevada have been adding vast increments to their brewing capacity, and even startups seem to get to 5,000 barrels or more very quickly these days. Especially for those whose memories stretch back to that earlier 1990s boom and bust, the trend can seem unsettling. But Hindy, who's taken a conservative tack in building his business over the past 30 years, feels the time is right. "It's the most exciting moment I can remember of craft brewers investing and banking on future growth: we've always been dealing with out-of-stocks, short pro- jections, not enough capacity, always been chasing demand," he said. "This is the first time across the industry really building significant capacity." He added: "I think it's warranted – we're doing it – but absolutely The growing Guinness portfolio saw a 4.0% sales increase in the U.S. last year. it's a big risk. Probably some will get it right and some get it wrong. The capacity being built now will get us well beyond 10%." Still, there are occasional signs that things are getting ahead of themselves. Markstein notes that some independent liquor stores in San Diego, responding to all the noise about special- ty beers, have added warm shelves full of 22-oz craft entries priced at $6.99, despite the fact that their clientele is still mainly blue-collar. Typically, most of those bottles are covered with dust. And some new brewers are opening with what seems to be a very casual approach to dis- tribution: they start brewing, open their tap room doors a few days a week, and take it from there. Those that opt to self-distribute, he notes, are finding that it's hard to instantly turn on 60 new accounts if a chain like Von's comes through with an authorization. Marketing Strategies T Category CONSUMPTION OF BEER BY CATEGORY (000 2.25 Gallon Cases) 2010 Share (%) 2011 Share (%) % Change DOMESTIC BEER Craft . . . . . . . . . . . . . . . . . . . . . .156,620 . . . . . . . .5.5% . . . . . .178,650 . . . . . . . 6.4% . . . . . . . .14.1% FMBs . . . . . . . . . . . . . . . . . . . . .42,880 . . . . . . . . .1.5% . . . . . .44,500 . . . . . . . . 1.6% . . . . . . . . .3.8% Super Premium & Premium . . . .373,100 . . . . . . .13.2% . . . . . .355,470 . . . . . . 12.8% . . . . . . . . .-4.7% Light . . . . . . . . . . . . . . . . . . . . . .1,492,000 . . . . .52.9% . . . . . .1,452,800. . . . . 52.1% . . . . . . . . .-2.6% Popular . . . . . . . . . . . . . . . . . . . .224,650 . . . . . . . .8.0% . . . . . .219,250 . . . . . . . 7.9% . . . . . . . . .-2.4% Malt Liquor . . . . . . . . . . . . . . . . .70,250 . . . . . . . . .2.5% . . . . . .67,850 . . . . . . . . 2.4% . . . . . . . . .-3.4% Ice . . . . . . . . . . . . . . . . . . . . . . .100,300 . . . . . . . .3.6% . . . . . .100,850 . . . . . . . 3.6% . . . . . . . . .0.5% Total Domestic Beer Total Imported Beer Total Beer 2,459,800 362,800 Source: The Beverage Information Group 2,822,600 100.0% 87.1% 12.9% 2,419,370 367,600 2,786,900 100.0% 86.8% 13.2% 22 • Beverage Dynamics • www.beveragedynamics.com • September/October 2012 -1.6% 1.3% -1.3% he erosion of premium and mainstream-import beers at the hands of craft beers on the one hand and wine and spirits on the other seems to be encouraging marketers of mainstream brands to rethink their market- ing strategies, with a tilt toward greater sophistication and wit rather than the sophomoric humor that's too often defined the genre. Even Heineken USA – whose marketing over the years generally has been more elevated than that of domestic premium rivals – is deter- mined to raise the tone of its marketing to conform to the new ethos. "Our approach is to reinvent beer marketing through aspirational campaigns, with an increased focus