Photo, Andrea Renault
DRIVEN BY TREND-CONSCIOUS CONSUMERS, new beer brands and styles have emerged and faded as fast as fashion fads in Paris. Dry beer, packaged draft, red beer, ice beer–all quickly grabbed a respectable share of market, only to disappoint brewers with declining sales when the honeymoon ended.
So when the previously dynamic growth of the craft beer segment slowed dramatically last year, many saw doom on the horizon and the word on the street was “shake-out.” But according to many operators and brewing experts, the reports of craft beer’s demise have been greatly exaggerated.
“Despite several media reports, there is no shake-out,” says David Edgar, director of the Institute for Brewing Studies, Boulder, CO, in March. “A shake-out occurs when half or two-thirds of an industryshuts down simultaneously and stainless steel starts selling for pennies on the dollar. Yes, growth is slowing and brewers are facing more competition, but there is a limit to the number of years any industry can sustain 50% growth.”
The phenomenal growth Edgar refers to–since 1990, the volume of craft beer brewed and sold in the U.S. has jumped more than 850%, according to the Institute–has more than doubled the size of the segment each year. By 1997’s end, the number of regional craft breweries, microbreweries and brewpubs operating in the US had grown 600% since 1990. And brewery and brewpub openings continue to outpace closings, pushing the total well above 1,300.
Though craft beer supply seems to have finally begun to catch demand, consumer interest in craft beers doesn’t seem to have abated.
“I think there’s been an increase in people’s desire for crafts and imports like Belgian ales and German wheat beers,” says Ed Berestecki, owner of Mugs Ale House in Brooklyn, NY. “We’ve expanded our draft selection to 30 lines from 24.”
Consumers seem to have two minds when it comes to craft beers. Aficionados seem willing to experiment, but they now demand and can identify quality.
On the other hand, occasional craft drinkers seem to be reining in their impulse purchases, sticking to established brands now considered more mainstream.
“Quality is coming more to the forefront,” says Maurice Coja, owner of Brickskeller, Washington, D.C. “The public is more discerning and educated in terms of taste, and they’re judging beers on the basis of their dollar value. They’re saying, ‘It’s a good beer, but is it worth what I paid for it?'” Stocking more than 800 beers, the Brickskeller has been offering customers craft beers far longer than most of today’s generation of brewers have been in business.
“There’s even more customer interest now,” agrees Paul Yeghiayan, cellar master at Redbones Barbecue, Somerville, MA. “But we’re very liberal with opportunities for people to taste a small sample before they put down $3.00 for a pint of beer with an esoteric name.”
“We have a reputation for serving great beer,” says Yeghiayan. “We really work hard at making sure we have quality beers customers can’t get anywhere else, so we’re not about to compromise. We’ll get rid of a beer that isn’t moving before it gets stale. Fortunately, the quality and consistency of craft beers just keeps getting better.”
Redbones changes its beer list daily, with as many as 18 of its 24 draft lines tapping domestic craft beers, most from such local breweries as Ipswich, McNeil’s and Boston Beer Works. But Yeghiayan rotates the selection constantly. In a recent six-month period, Redbones featured 350 different beers.
The operation also boosts customer interest by regularly hosting beer “festivals,” bringing in a selection of beers from a particular geographic area or brewed in a certain style. At a recent “Northwest” festival, Yeghiayan brought in 70 kegs from northwest brewers. Another festival featured more than 50 cask-conditioned ales.
Old Bay Restaurant, New Brunswick, NJ, another operation focusing on unfamiliar or hard-to-find new beers, keeps about two dozen craft beers on draft and another 40 domestic and imported beers in bottles.
“We tend to go for more eclectic stuff,” says manager Chris Demetri. “Sometimes we change the beer list a few times a week or even daily. Customers understand that most of these beers are in limited supply and hard to get. They look at them as something great we managed to get our hands on–it’s why people come here.”
Old Bay, too, favors local brewers, featuring styles from Yard’s in Philadelphia, Baltimore Brewing, Flying Fish, Stoudt’s and Brooklyn Brewing. But Demetri also features imports from England, Belgium and Germany.
“We’ve seen the interest in craft beer spread out,” Demetri says. “At first people knew very little about them, and we were the only game in town. Now everybody has at least one ‘radical’ beer on tap, which has probably driven us to become even more eclectic.”
But a number of operators have decided that leaner is better. “We may cut down a little,” says Megan Dunn, special events manager at Wyndham Northwest Chicago Hotel, Itasca, IL. The hotel’s Oak Bar stocks an extensive list of international bottled beers and about 30 domestic craft beers. “I think people are looking for more mainstream tastes, which is why Sam Adams and Pete’s are coming out with products like White Ale and Easy Ale–they’re easier to drink.”
What beer consumers choose to drink is as heavily influenced by marketing as any other product. After all, Budweiser and Heineken didn’t become two of the world’s biggest beer brands by taste alone.
“I definitely see a trend of consumers leaning towards who’s spending the most money in advertising and promotion,” says Mike Schuba, owner of Schuba’s in Chicago. Local brewer Goose Island’s beers sell well there, but not as well as in the past now that such brewers as Boston Beer and Leinenkugel have invested in marketing at his place.
The dual consumer trends in the segment are having a singular effect–increased competition. Even at operations catering to experimental consumers, it’s sometimes difficult for brewers to gain a foothold. In operations where bigger brewers move volume with marketing dollars, smaller brewers may be getting squeezed out.
The increased competition has led a number of brewers, to focus sales efforts geographically. Regional brewers are scaling back or abandoning plans for national expansion. Small brewers are defending their turf even more aggressively.
Faced with slower growth and brand proliferation, a number of distributors have been forced to examine their brew portfolios more carefully.
“It’s harder to get small brands now,” says Robert White, owner of the BrewHouse Pub, Helena, Mt., which shares space with Sleeping Giant Brewery. “We’ve had to adjust the beer list, and I haven’t set my sights as high as I did a year ago. The good Northwest breweries–Deschutes, Hart, Widmer, Redhook, Pyramid–are pretty well established, but you really have to commit to the long term to get specialty brews.”
“The market is saturated with local brews,” says Great Lost Bear manager Mike Dickson, “but they’re all doing well. We’ve been able to hold onto them all. Locally, it’s not a problem because they can deliver beer themselves if they have to, but wholesalers aren’t picking any more brands up.” Pyramid Ales, for example, are no longer available in Maine, he says.
Discontinued product, a change in a distributor’s portfolio or a suddenly defunct brewery have always been realities of the business. But now when a product stumbles, many more are poised to take its place.
“When a beer is discontinued or changes distributors, and we run out of stock, customers often ask what happened,” says Kevin Sand, manager at Goat Hill Tavern, Costa Mesa, CA “We refer them to something new in the same style.” Finding something similar is usually fairly easy; Goat Hill lists 145 beers, about 50 craft beers on tap.
The increased competition brings operators a broader range of selections, and even if competition forces some craft brewers to close their doors, those left standing are likely to include some of the best. The difference between the craft boom and recent fads like ice and dry beers is that craft beer encompasses a wide range of traditional styles. Beer drinkers, having been exposed to the permutations beer can take, are unlikely to accept fewer choices anytime soon.
“There has been a shake-up,” says Demetri. “Some breweries are gone–the weaker ones. That will strengthen the market as long as we don’t go too far, and I don’t think we will. I don’t think we can ever shut that box again.”
Michael Sherer is a Seattle-based writer specializing in beverages and foodservice.
CRAFTY SALES TECHNIQUES
Consumer interest in craft beers still seems strong, and you can drive sales with some simple merchandising techniques.
EDUCATION. Like the guy on television says, an educated consumer is your best customer. “For us, education is the important part,” says Paul Yeghiayan, Redbones Barbecue in Somerville, MA “Customers couldn’t know all these brands. Anything we can do to promote a beer, we’ll do.”
Start by educating your staff so they can answer customers’ questions. “The staff is one of the biggest reasons we sell beer,” Yeghiayan says. “They’re enthusiastic and want to learn with customers. They sample beer together with a customer and discuss it. Customers love to be actively engaged and involved.”
OTHER WAYS TO EDUCATE YOUR CUSTOMERS:
Beer lists with descriptive information.
SAMPLING. Where legal, offer customers a taste of any of your draft beers. The BrewHouse offers customers 2-ounce samples of beers they have recently introduced. More and more operators also are offering sample-size orders at a reduced price, and sampler trays sometimes called “flights” continue to grow in popularity. Goat Hill Tavern offers a “Five-Five-Five”–five 5-ounce samples for $5.00–and single 5-ounce samples for $1.25.
PROMOTION.Raffles, contests, games, celebrity bartenders, giveaways and discounted prices all can draw attention to a brand and help move volume. Be sure to plan carefully and select events that not only will boost traffic and sales but also conform to your operation’s image.
Beer festivals give you an opportunity to showcase a brewer, a beer style or beers of a particular geographic area. For the last nine years, Old Bay Restaurant has held a Maifest every spring and an Oktoberfest every fall. Great Lost Bear hosts a “micro showcase” every Thursday, inviting a brewer to tend bar and discuss his or her beers.
Special prices can help, too. Tuesday at Great Lost Bear is “Short Beer” night; customers get 23-oz. beers for the price of a pint. Goat Hill Tavern sometimes has women come in to pass out “beer bucks” for $1.00 off select brands. – MS