Six Pack of Brewing Success – Part 1 The Product

Let’s start with what every beer geek will tell you is the most important thing, in fact they will tell you it is the only important thing – the product – what’s inside the bottle, can, growler or keg.  This is also the reason that most brewers get into the business, they love beer, they love creating beer recipes, pushing the boundaries and producing great, high quality product.
But what should you brew? If you are a brewer chances are you have beer tastebuds that are developed far beyond the general public, including most beer geeks, but you are running a business here and you can’t sell your beer to yourself so you have to consider what the public want.
And here starts one of the biggest fights in the beer geek community. God forbid you are a craft brewery that is ‘playing it safe’ by producing what there is demand for. All beer geeks think everyone should produce beers that are targeted absolutely directly at them, even though we can’t actually agree on what beers we like.
I’ve discussed Thunder Road before; they are a Melbourne brewery putting out perfectly acceptable, if a little boring (to beer geeks) pale beers. The strange thing is there is an unnatural level of hatred for them amongst the beer geek community.
Thunder Road are unashamedly going after the mainstream beer drinker. Phillip Withers the owner of Thunder Road told the SMH:
”It’s important to respect the 98 per cent of beer drinkers who don’t drink craft beer, because they are the ones we need to convert,” Withers says.
”They deserve to have as close to what they enjoy already but better. We would love people to all be drinking IPAs but some are going to be scared off.”
It’s a simple enough philosophy; produce a better version of the style of product that the market is already drinking and it’s the exact model that a brewery like Thunder Road would need. If you don’t know anything about them, the description in this article sums it up nicely as a ‘money-is-no-object brewery’. I’m sure money is an object (rich people don’t get rich by being dumb) and they know that if you want to make serious money you need to produce mainstream styles.
Sure do them in a craft beer way with a focus on quality ingredients, but if you want to carve out significant market share you are going to have to go after the pale lager loving, beer garden market. 

The Moondog Boys in their makeshift brewhouse

At the other end of the spectrum is Moon Dog who I have also discussed on here a few times. Now these guys are absolutely the brewery that all beer wankers love to see. Three guys (unfortunately only two and a half beards between them, but we can forgive that), completely ramshackle, a do it yourself vibe and small scale. I assume they have low overheads (for the notoriously capital intensive brewing industry) and therefore they can take risks.

They produce risky beers; pumpkin, plums, coffee, pineapple, coconut, all sorts of things are in their beers They are playing at the ragged edge of where Australia’s beer tastes are and are heading. Some people will love the beer, probably just as many will hate it. It’s a niche within a niche and I’m not entirely convinced it’s actually big enough to sustain a brewery, but I could be, and often am, completely wrong.

To make this approach work you have to accept that you are only going after a small market and you have to treat them as special. It’s going to be a huge amount of one on one communication, talking to people at bars, on twitter and in blogs.

I would suggest you might need to be charging a premium for the product as well and you’d have good cause to given it’s unique and one assumes it’s limited. Of course with a higher price comes an expectation of higher quality, unfortunately quality control has been a little patchy at Moondog, but beer wankers are a forgiving lot (assuming we like you to start with) so they will be fine.  

Which approach is right? Well both, or none, or maybe one of them. I’ve discussed this article before, but let’s face it in the blog world no one reads old entries so I’m going to quote it again. There were some dudes in the US who did a correlation study between sales growth (and you should note it’s growth not volume) and ratebeer scores and found:
By analyzing hundreds of thousands of beer reviews, Clemons found that the brewers whose sales grew the most were not just those with high ratings, but those with the biggest gaps between their highest and lowest ratings.
“It is more important to have some customers who love you than a huge number of customers who merely like you,” the paper concludes — even if your beers are so intense that they turn off a lot of potential customers. “Good, solid, likable, average, middle-of-the-range new products that consumers neither love nor hate will not sell.”

So that suggests that raspberry-infused coffee stouts that half the beer wanker population love and half hate will produce sales growth. Having said all that the article goes on to speculate, when discussing the success of Three Floyds brewery:
But one factor trumps the others: “They picked styles that America truly loved and they made them extreme but not too extreme.”
It’s possible, Clemons notes, to make a beer so edgy that nobody likes it. The key is to be as different as possible without being just plain weird.
So maybe success actually lies somewhere between the two approaches. Produce styles that people like, or perhaps more importantly styles you think the market will grow to like.
We can see that the two biggest selling craft beers are Little Creatures and Fat Yak (both pale ales at around 30-35 IBUs) so perhaps the best approach would be to produce a more extreme version, say a 45 IBU pale ale and then grow them to a 60 IBU IPA and then to a 80 IBU Imperial IPA.
And this is the approach of EPIC brewery, which is one of the most popular craft breweries in New Zealand and increasingly pushing into the USA. Their entry level beer is the pale ale (45 IBUs), but also in the range is the Armageddon (60 IBU) and Hop Zombie (80 IBU). And for the ‘I did a weird fruit infused beer’ crowd they have the Portamarillo, which is made with tamarillos and the Fig and Coffee Stout.

So there are a few approaches that you can take, play it safe lagers all the way through to completely nutbag weird shit. You can probably find a market for both, even if they are different sizes, you just need to understand the market you are making the beer for. 
     
Possibly interesting epilogue. GABS is approaching later this week. 60 craft beers, some relatively safe, some way out there. There is a ‘People’s Choice’ award where the punters vote for their favourite beer. The questions, what will win? A ‘safe’ choice like Thunder Road’s Richmond Pilsener, or maybe Bridge Road Imperial Lager or something way out there like Moondog’s Mr Mistofflees (clearly the brewers are big musicals about pets fans) which is a passionfruit and mango wild ale or The Monk Brewery’s Sweet Potato Porter.  My guess is it will be a ‘safe’ beer.

The Six Pack of Brewing Success

I wonder what this "Beer" they speak of is

So last week I briefly mentioned that I believe that there is a six pack of craft beer marketing success. I chose six because I know that all beery folk think of things in 6 pack units. See already I’m targeting my message to my audience, that’s number one. Well actually it’s not number one, but you should know that all good marketing starts with an understanding of your audience, the best advice I could give anyone when selling anything, ‘Know your audience.’

Think about it, you are at a party and you spot a fine specimen of the opposite sex, or same sex if you are that way inclined. You would like this person to be your lifelong partner/special friend for the rest of the night. If you know absolutely nothing about her it is going to be tough going, you are going to pussy foot around and you run the risk of throwing something out there that is going to get you slapped in the face.
But what if you’ve done a little scouting mission, talked to her friends, found out that she loves horses and the musical stylings of Burt Bacharach circa 1964, then all of a sudden you drop into conversation that you think Riwoche horses are so cute, then you serenade her with ‘There’s always something there to remind me’ and bada bam bada bing, you’re in.  
So as you read the rest of this remember you should always try to see everything from your customers’ perspective, they may not be as enlightened as you, not as educated as you, and they certainly will not care about your product as much as you do. But they are willing to hear about it, try it, and love it. 
So, without further ado here is The Six Pack of Microbrewing Success. 
1. Get the product right – Make the right products for your target and for the market conditions. If the market is full of pale lagers, should you go with the flow and make a pale lager, or do you Zag (as in zig zag, I’m not suggesting you hire a clown) and produce a stout?
2. Getting people to remember it   – There are thousands of beers out there, how is anyone going to remember yours?
3.  Getting people to try it – We all know that ‘if people just try it they will love it’ so how do you get people to give it a go?
4. Getting people to buy it – Or more specifically making it easy for them to buy it. Distribution has to be the biggest downfall of most craft brewers, could it be overcome with innovative thinking?
5. Get people to talk about it – How do you build brand advocates and how do you stop them destroying your brand?
6. Get people to buy it again and again – Building loyalty.
My theory is that you have to have a strategy for dealing with all of the above, get most of it right and your craft brewery should be a success, get them wrong and you will struggle.
Over the next six weeks (and I can’t believe I’m committing to a six week/six post long entry) I’ll be looking into all of these areas in detail.

Or you could just back a truck of money up to Charlie Sheens door like Bavaria did (This is for their non-alcoholic “beer”)  

The Craft of Beer Marketing

Sports Sponsorship Craft Beer Style

Last week we discussed how the big boys of the beer industry are managing the slow death of their cash cows, spending their time reinforcing what many people see as bad stereotypes of beer swilling fat guys hanging around in womenless environments, slamming down the same low flavour, low strength lager year after year. Or as the marketer will call them ‘high volume users’ and ‘rusted on loyals’
I wasn’t surprised that there ain’t much love for the ‘big beer marketing arseholes’ amongst the craft beer scene or anywhere else for that matter; advertising execs myself included and big corporations are right up there with real estate agents and bankers as the most hated people in society. It’s okay we are so shallow that it washes right over us. The beer wankers seem to think that the craft beer scene is some utopian land where everyone loves each other, shares a beer and the dreaded M word is never spoken.
I’m here to tell you that beer geeks are generally deluded (seriously, how many times have you heard a beer wanker complain because there are only 12 beers on tap at the pub and they’ve tried them all? I myself was guilty of this just two days ago) and if the micro breweries out there aren’t thinking about marketing then they are deluded too, and won’t be in business for much longer. 
I know what you’ll say, ‘microbrewers are different it’s all about the beer, they make beer styles that they want to make, styles that challenge me, they use the best ingredients and they care about me, and hug me, and read me bedtime stories of brewers dancing through hop fields and IPA flavoured rain’.
Sure all of this is right (well maybe with the exception of the bedtime stories), brewers constantly claim they brewed ‘insert beer name here’ because that’s what we wanted to drink,  but I assure you they won’t make a second batch if they can’t sell the first.
They will make challenging styles, but only because there is a market out there who want challenging beers, or they think they can develop one through marketing. Hell being ‘challenging’ and weird could even be your USP (unique selling proposition), it certainly seems to work for Moondog, they just need to hope like hell that the market for their weird shit is big enough and that they can remain the crazy kids on the block if someone more innovative and wacky comes along. 
Of course we all know that the craft guys use premium ingredients, unusual hop varieties, don’t cut corners and have special artisan based techniques but this just classic premiumisation. And I mean this as a marketing strategy not a ‘James Boags premium’ way, although James Boags premium is actually psedu-premiumisation done by a major brewer.
The basic concept is this the craft beer guys can never compete with the big guys on cost, they can’t get volume discounts on ingredients, they can’t afford the economy of scale of brewing millions of litres at a time, they don’t have the distribution and they have no power negotiating with retailers like Woolies and Coles who dominate the alcohol retail in this country like a fourteen year old playing the in under 8’s.
What is the only arena you can win on? Taste. You have to produce a product that is different. I should mention here that your product doesn’t actually have to be better (beer taste of course being such a subjective thing anyway, and many people thinking a good beer is one that is easy to drink) it only has to be different, the fact that it costs more than VB will lead the customer to understand the product is better.
This is also why the microbrewing community should be happy that SAB Miller and Kirin Holdings are happy to stick with the beer swilling bogans. To be premium a) you have to have a product that you are perceived to be better than and b) the buyers of premiums beers need people (read beer swilling bogans) to look down on.
Oh and there is no point pretending that we aren’t all massive beer snobs. You know more about beer than the masses, you have a right to look down on them.  Don’t worry, although no one will mention it out loud but proving that you are better than other people is the primary motivation why people buy pretty much everything. If people really wanted equality Communism would have worked.  As an aside my high school debating coach once told me (and yes I am aware that this is the dorkiest sentence ever written) that I had a special skills for bringing either Nazis or Communist into all arguments.
Make no bones about it, craft brewers are marketers just as much as the big brewers are. It’s just that the big brewers are using big media to do it. Their market is huge and mainstream so they use huge mainstream media to reach it. If they sponsor sport they’ll sponsor the NRL or the AFL, if they want to get involved with music they will sponsor the Red Hot Chilli Peppers’ national tour, when they run sales promos they give away fridges. Sure it’s generally impersonal and plays to the stereotypes, but they are mainstream product, that’s what you do. And yeah it feels irrelevant and out-dated because, for you (and me) it is, we have evolved into enlightened craft beer drinking guys, but before you judge them, remember they aren’t talking to you.

I love the name, poster and sponsor of this concert

Craft beers use all the same tricks, just on a smaller scale. Sure they can’t afford to sponsor the AFL, (and let’s face it the wastage would be huge) but you might see a Mountain Goat logo on the Rockdogs jumper at the Community Cup, or they might sponsor a fundraising concert for a community garden, or give away special Goat packs for Christmas. And where VB uses television, Bridge Road use Twitter.  It might look less sophisticated, but it is just as sophisticated as the big guys and it’s just as hard, if not harder because we think of small breweries like friends, we expect them to treat us special, all the time. And some breweries probably don’t even know they are ‘marketing’ as such, they are just running their business and talking to their customers. 
So don’t hate the mainstream guys, without them craft beer would lose their point of difference. And don’t fool yourself into thinking that you are not being marketed to by the craft guys, it’s just that you don’t mind them talking to you because you like them and their products.

Next week – Could the Craft guys market better? What I consider the six pack of success for Microbreweries.

How to Sell beer and not change the World.

The XXXX Gold Bogans

We are doing something a little different today. The following post is in response to a very interesting article written by Matt Kirkegaard on Brew News. So go here and read this and then come back here.
Beer has a terrible image. It is seen as the drink of bogans and slobs whilst wine and spirits are a high end classy choice, even though from what I see most of the problems with alcohol come from wine, spirits and RTDs rather than the amber liquid that we all love so much.
So far so agreeable, but here is where myself and Matt’s thought diverge.  Matt seems to think that the major beer companies should be running something akin to an education campaign about changing the perceptions of beer. 
 If they did they would be shithouse marketers. Their job is to get you to drink as much of their (generally low taste and generic) product as possible. That’s it. It’s not to make you love beer as a category, understand hops varieties, try new styles or God forbid drink less beer (those little ‘drink responsibly’ logos in the corner of ads are more about avoiding government legislation than getting you to actually drink responsibly).
 Of course there is no reason that you have to portray beer drinkers as bogans to sell beer, Corona and Peroni prove that. But let’s look at it this way, you are the marketing manager of XXXX Gold, already everyone thinks your beer is for fat, blue/grey collar workers who are down to earth, sociable and love watching or playing sport with mates. This group lives the good life and loves recreational and social sports like fishing and cricket. Also keep in mind that on about day 2 of your uni marketing course you have been taught that it is close to impossible to change market perceptions. So the smart marketer plays up to the stereotype, takes the path of least resistance and sells beer to the people who drink a lot of beer.

The VB Metrosexuals (Real men wear cardigans not lifejackets)

Now what happens if you try to buck the trend and modernise you brand. Well then you replace the fishing dudes with young dudes with beards and hand cream issues at bbqs, where shock horror there are women. Of course then you are VB. And if you are VB your market share has dropped by 12% in the last year (whilst XXXX grew by 9%) and if you were the advertising agency working on VB you’d get sacked.
The big beer marketers out there aren’t dumb (contrary to what the fixie bike riding, double IPA swilling beardies out there believe). They know there are people out there who aren’t beer swilling bogans, they also know that to reach these people you don’t run big mass TV campaigns. This is why you don’t actually see that much mainstream advertising for Matilda Bay and James Squire, and Little Creatures and White Rabbit (all of which are the biggest selling craft breweries and all owned, at least partly by Kirin/Lion beverages or SAB Miller). 
Of course the existence of these brands shows that the major brewers have a foot in both camps, they know that generic mainstream brands like VB and XXXX will die out, but they also know that it will be a very slow death, and they will be there with Corona, Summer Bright, Fat Yak, Pure Blonde and Little Creatures that will be the brands of the next generation (or maybe just the next year before some other new hot brand comes along).
Oh and I know this isn’t a popular view amongst the beer geek mafia, but it turns out although we all think we are God’s gift to beer drinking, and think we are sticking to the man by boycotting the Kirin and SAB Miller brands (although let’s face it we all still drink their brands that we like) but the big beer companies couldn’t care about us. They want to target the beer drinker that has one favourite beer (theirs) that they buy by the slab not the beer geek who are buying a mixed dozen, and asks the bar tender ‘what’s on the rotating tap?’ You and your philandering palette are their worst nightmare.   

The next question of course is ‘What does this mean to Craft brewers?” …….