Category Archives: loyalty

Beer Displays and Brand Equity

You probably don’t notice it. It flies under the radar. The phenomenon of which I speak? The organization of the beer fridge in bottle shops.

To start this discussion, let’s examine the way wine is organized in most any given bottle shop or market. You walk in and you see shelf-talkers or hanging signs that all have a varietal on them. “Cabernet Sauvignon” is over here, “Pinot Noir” is over there, etc, etc, so on and so forth. Region and producer are most often ignored in favor of easy categorization.

The beer fridge however, tends to reveal a bit more variation. If you go to a supermarket, you’ll most often find a wall of two or three macrobrewer products (in many different packaging formats) that create the banner effect these companies covet in such retail outlets. What craft beer they carry tends to be organized by brewery. This of course applies only where they carry more than one beer from a given brewery.

Where we see a bit more variation is in bottle shops (those places whose focus is beer, wine and spirits). It is in these stores that the wine approach sometimes takes over the beer fridge. Rather than seeing all of a brewery’s product in one place, things get spread out by style. Tripels over here, IPA’s over there, Stouts all in one place, etc, etc, so on and so forth.

The question becomes, what to make of this? Having seen the brand-building power of social media in the craft beer world, I can’t help but worry a bit about the effect that organization by style may have. As far as wine goes, people tend to purchase by varietal, rather than by winemaker. In beer however, people still base their purchases heavily upon brewery.

If you enter a shop organized by style and want to buy a couple things from Ballast Point, you have to go to the IPA section to get Sculpin and the Porter section to get Black Marlin. Not good for the consumer, not good for the brewery. Obviously, if you’re looking to try a bunch of IPA, then its easier if the beer is organized by style, but I don’t believe such organization is good for craft brewers in the long term.

Organization by style completely destroys brand equity in the eyes and mind of the consumer. Rather than recognizing a bunch of beers from a given brewery, all the consumer sees is a bunch of Pale Ales. Breweries all have their own strengths and their own unique personalities. Many of them have used Social Media to let consumers get to know them, their philosophies and their personalities. They have spent a tremendous amount of time and resources defining themselves to the consumer.

Working in the beer industry, I find that more people ask what beers are available from “Brewery X” at a given time rather than what beers of a particular style are available. This is especially true at better beer bars, whose focus is a variety of style. You’re unlikely to find more than one Witbier or Porter on tap. However, customers consistently ask questions like, “What do you have from Stone?” or “What’s on tap from Russian River?” These and many other breweries have built a reputation for brewing excellent beer and customers will often drink whatever beer happens to be available from that brewery, regardless of style.

When bottle shops spread beer out by style, they degrade this brand equity and unknowingly move beer consumers into a frame of mind that mirrors wine consumers. Brand starts to matter less than style. Craft brewers and sellers of craft beer must be aware of this phenomenon and fight it. Craft brewers need to maintain brand equity. Sellers of craft beer must realize that they can leverage that equity to sell more beer. Put a brewery’s beer all in one place and you’ll sell more of that brewery’s beer. Do this for every brewery and the math does itself. You sell more beer and you create customers that are more loyal to a given brewery and a given bottle shop. It makes sense for everyone.

Photo Credit: Mike Beningo

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The Goose Island Sale: Another Reason to Go Local

Like many others, I was none too pleased to hear of Anheuser-Busch/InBev’s purchase of Goose Island. However, I was less concerned with Goose Island’s motivations than I was with AB/InBev’s. As far as Goose Island goes, Greg and John Hall were understandably weary from running the day-to-day operations of a business for as long as they had. They wanted the company to grow and needed an infusion of capital. No problems there.

However, knowing what I know of AB/InBev’s sales strategies, I will likely stop buying what little Goose Island product I already did. My previous purchases consisted entirely of Bourbon County Stout, Sofie, Pere Jacques and Juliet so I won’t put much of a dent in the bottom line, but I will miss those products. What are the motivations behind my new shopping strategy? Well, as far as I can tell, AB/InBev bought Goose Island for two reasons. Firstly, Goose Island is an attractive, profitable commodity with lots of room for growth. It’s a great addition to AB/InBev’s portfolio. Secondly, AB/InBev seems to be trying to shore up its slipping market share by snatching up one of the companies that put a decent-sized dent into that market share in the Midwest.

In other words, if I buy a Goose Island product now, the profits go into AB/InBev’s coffers (to at least some degree). I cannot abide such an outcome. Go to the supermarket beer section and you’ll find out why. See that giant wall of Bud Light products? How many different formats do you count? Ten? Twelve? Fifteen? The “wall of product” sales strategy is despicable. Glass bottles, aluminum bottles, aluminum cans, all of various sizes, all in boxes and packs of different quantity, all limiting consumer choice (taking shelf space from competitors) by flooding the market with a load of different formats that all contain THE SAME PRODUCT! It makes me a little sick to my stomach.

But I’m not all that worried that I won’t buy Goose Island products anymore. Surely some in the Midwest, for whom Goose Island is a regular purchase, will experience greater difficulty. In my case though, I will simply continue to focus on the plethora of world-class, local products readily available for my consumption. I need only look a couple hours to South to San Diego to find Port Brewing/The Lost Abbey, Stone, Ballast Point, AleSmith, etc, etc, ad infinitum. One can likely make the same argument in the Midwest. There is no shortage of non-AB/InBev-owned breweries in the middle of the country turning out well-made, readily available craft beer.

My point, then, is simple. In the short term, the sale of Goose Island is really much ado about nothing. As long as those who care about where their money goes keep themselves educated, they can make informed purchases. If you don’t care about AB/InBev’s sales strategies, then you needn’t change a thing. If you do care about those sales strategies, and they make you a little queasy, then don’t buy beer from companies in which AB/InBev holds a stake.

In the long term, I suppose we’ll see whether AB/InBev tries to use Goose Island as a means to muscle smaller beer producers out of the market. If they do, I am confident that there will be a strong consumer pushback. There are few, if any, consumer bases that are better or more informed than the craft beer-drinking public. And their ranks are growing every day. People care more than ever about where their purchases are coming from and where their money is going because it’s easier to find out than ever before. The internet, and the ready availability of relatively reliable information is the great equalizer for smaller companies whose focus is quality and integrity. Let’s hope those companies continue to leverage the internet and social media to get their message out and keep the public well (and accurately) informed.

Photo Credit: AB/InBev Goose Mock-Up: Girl’s Guide to Beer

Desire for Variety vs. Brand Loyalty

What’s a bar to do?

In the interest of full disclosure, I’ll concede that I decided not to write a second GABF post (hence the change in title of the first post). I had some interesting things to talk about, but I have limited time right now and this little op-ed post tickled my creative fancy.

Given my quasi-unique position as both a purveyor and drinker of craft beer, I’ve noticed an interesting phenomenon lately. There appears to be a tug-of-war between the “beer geek constantly on the prowl for a new taste experience” and the “person who just wants to drink good beer and sticks to what they already know they like” (wow, that was a mouthful).

As I see it, both groups of people are absolutely essential to the growth of craft beer. The beer geeks, though smaller in number, push brewers to try new things and extend the boundaries of what beer can be. The “people who want to drink good beer” ensure the sustained viability of the industry through their support of the core brands of successful breweries. The difficulty arises when the interests of one group necessarily infringe (for lack of a better term) on the interests of the other.

Here’s a for-instance:

Beer Bar A has a pretty consistent tap list. They might throw in a seasonal here or there, and have a couple rotating handles, but they carry the same beers most of the time. The regular beers are all good to excellent, but they don’t often change. Regular at Beer Bar A has one or two beers that he always orders there. He tried them the first time he came in a few years ago and has stuck to them since. It took a small leap of faith to even try those two and he doesn’t feel like confronting anew the fear of the unknown. Regular is typical of about half of Beer Bar A’s clientele (most of the rest being casual craft beer drinkers who will drink whatever is on so long as it’s good).

Given the beer geek desire for ever-rotating tap handles, Beer Bar A is missing out on a small, but potentially loyal and lucrative part of its possible consumer base. In an effort to pull in some beer geek business, Beer Bar A pulls off some its old standbys and throws on some new and exciting beers. Regular comes in and doesn’t see his one or two beers on tap anymore. He is afraid. He doesn’t know what to order. He considers leaving. What to do? Beer Bar A doesn’t want to lose the reliable business of Regular, but also doesn’t want to fall woefully behind the craft beer times.

A decade or so ago, this was a legitimate problem. The first craft beer bubble had burst (or was in the process of doing so) and the quality of much of the beer on the market was suspect at best. People had gotten into the brewing business purely for money, and the lack of passion was reflected in the product. The average consumer couldn’t be sure of what they would encounter when a new tap handle was thrown on the wall at the local watering hole.

These days however, especially in larger markets, quality is not a problem. The only problem is that there’s a whole lot of great beer out there and I can’t possibly drink all of it! I understand brand loyalty when it comes to one’s philosophical agreement with a brewery’s approach to production or marketing. However, staying loyal to a particular beer merely for fear of possibly drinking inferior beer can hardly be justified anymore. In fact, it can easily be argued that a fiercely loyal consumer is doing him or herself a serious disservice. If one is doggedly attached to a particular beer or brewery, one may be, and likely is, missing out on something they’ll like even more than their “favorite” beer.

Not only is better beer largely the rule rather than the exception these days, so too are bars who clearly care about the beer they serve. Such places are an equally important cog in the craft beer machine. The brewer can make an exquisite beer, but if it isn’t delivered fresh, at the right temperature, through clean lines and in a clean glass, then the consumer isn’t getting what they ordered. Luckily, with the availability of information these days, it is relatively easy to find out which bars care about their beer, if only you care to look or ask.

In other words, fear not the unknown. For if you find yourself at a better beer-dispensing establishment, and you decide to wade into unfamiliar waters you will likely find the temperature is just fine. If you trust the beer bar you’re patronizing, then that means you trust them to serve excellent beer. It also means that you trust them to train their staff to make recommendations based on your stated desires. It also means that you trust the bar to serve your beer properly. So, find a bar that cares and order a beer you’ve never had before. And don’t worry if your “regular” beer isn’t on tap. The well-trained server will be able to find you something you’ll like and maybe you’ll have a new “regular” beer.

Now, I consider myself a beer geek and spend a lot of time with others whom I also consider beer geeks. I like to think most of us have managed to strike a balance between a constant pursuit of new experience and loyalty to specific beers. It seems to me that the purpose of trying new beers is to find new “favorites.” When I try a new beer, and it’s truly excellent, it gets put into my mental catalogue of favorites. These are beers that I will drink whenever I see them at better beer-serving establishments (unless there’s something new on that I’m dying to try). I find comfort knowing that I can select exactly what I’m in the mood for, all but ensuring full satisfaction. I know enough different beers that cover enough different styles and flavors that I can find something I truly want to drink the majority of the time. If I can’t (I can’t always be at a beer bar), then there’s always bourbon. In other words, even beer geeks have favorites, but we have enough favorites that we don’t panic if one of them isn’t on tap.

I’m not suggesting that every consumer need be hell-bent as I on extreme palate education in order to enjoy themselves. What I am suggesting, is that there are enough passionate people brewing and serving beer that no consumer need worry about their “regular” beer being pulled off the tap wall. Most of the time, it’ll be replaced with something at least as good, if not better. Drink up!