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.
Issue link: https://read.dmtmag.com/i/541538
42 Beverage Dynamics • July/August 2015 www.beveragedynamics.com Craft Comes of Age ver since craft beer got a grip on the American drinker's imagination a couple decades ago, it has commanded more than its market share's worth of attention. Craft comprises only 11% of the U.S. beer market, yet craft breweries and beer styles dominate the coverage in the popular press, relegating news about mega brewing companies to the business section. The Brewers Association, a trade group for the craft sector, reports that over 3,400 craft breweries operate in the United States today. Through a combination of good brewing and business savvy, 135 of these have exceeded 15,000 barrels in annual pro- duction, and are now categorized by the association as "regional" breweries. Most of these distribute in the majority of states, while some have national reach. Together, the "regional" breweries churn out nearly 80% of our craft beer. These breweries see their beers featured in airport bars and ballparks. Their fl agship brands are the reliable choice in convenience stores, a channel where craft beer sales have risen sharply in recent years. And, because success of this kind only comes with longevity, these are brands that have naturally been around for a long time: California's Lagunitas Brewing Company, the youngest of the ten top-producing craft companies (according to the Beverage Information & Insights Group), is older than a new LDA consumer. IS LOCAL BETTER? Although the big craft brewers have the advantage in volume, the fastest rate of growth for many years has been among the microbreweries (under 15,000 barrels annually) and brewpubs. Consumers love local, and they love what is rare, seasonal or new. That is a challenge for brewers and retailers, alike: the big fl agship brands are widely available to the point of over-familiarity, dependable, and generally brewed in styles with broad appeal. The smaller brands are harder to fi nd, often more extreme in style, and more variable in quality. A recent Nielsen study (February, 2015) concluded that an increasing number of people say that knowing a beer is locally made is important to their purchasing decisions—a prefer- ence that is greater among the drink- ing-age Millennials. "It's something all the national craft breweries are facing, and it's a very del- icate balance point: how do you main- tain your brand's relevance?" asks Jeff Billingsley, director of marketing at De- schutes Brewing Co., the seventh-largest craft brewery. "In a craft market with so many new breweries, and the interest in all things locally sourced and produced, it's not easy to go about it." When Deschutes enters a new mar- ket, the company makes an effort to acquaint consumers with its values and origins, and to contribute to communities in ways that are locally meaningful. That way, "we become more than just another new beer placed on the shelves," Billing- sley adds. "That approach is pretty wide- spread across craft. A lot of breweries our size are doing similar things." Sierra Nevada (number two in size) retains a local edge by producing beers that are, indeed, local—exclusive to a few limited outlets, through small-scale pilot brewhouses at both the original Califor- nia brewery in Chico and the new facility in North Carolina. "In recent years, we've brewed more than 100 different beers annually, though many of those don't reach much farther than our on-site taprooms," notes Ryan Arnold, Sierra Nevada's communications manager. "That's part of what makes it BY JULIE JOHNSON