Item 1: People keep asking me why I see a bright future for craft beer in Brazil despite all the significant obstacles – lack of distribution infrastructure, high prices, no “cold chain” of delivery in which the beer is kept cold from brewery to consumer – and sometimes I wonder about it myself.
Then I come across an article like this one in The Globe and Mail newspaper and it all comes together. In case you don’t want to read the whole story, or the link breaks because the Globe puts the story behind their pay wall, here’s the gist: With 50 million Brazilians joining the middle class in the last decade, that segment of the population is now about equal to the percentage that is poor, about 30% each.
This new middle class is aspirational, and they want to spend their money on items to which they previously had not enjoyed access – the story highlights perfume and cell phones – like craft beer. I’ve seen the gestation of this at bars like Melograno and FrangÓ in São Paulo and I expect to see a lot more of it on my next visit, whenever that might be.
Item 2: I continue to hear American brewers fret about the number of breweries popping up in their country, worried about the so-called “bust” that they think must surely follow the boom. Too many breweries, too many SKUs (brands listed with distributors) and too confusing for beer drinkers are a few of the concerns I regularly hear voiced.
Umm, folks, ever heard of the United Kingdom? It’s a land of about 62 million people, where the total number of breweries just surpassed 1,000! And while they have their own issues to deal with over there, I’ve not yet heard much in the way of griping about the number of breweries and possible saturation of the market.
To put that in perspective, to achieve the same ratio of breweries per capita, the United States would have to add about 2,900 breweries to their existing total, more than doubling the number in place today.
Item 3: This is not so much a numbers thing as it is a bit of a rant. Although it does relate to Item 2 above.
Yesterday’s Shanken News Daily carried a story headlined “Craft Controversy: Rotating Drafts Spark Concern Among Brewers,” in which it was suggested that “some craft brewers are beginning to show concern that the very diversity that they have long promoted…may actually be damaging to their companies and the craft beer category.”
The piece goes on to quote Bob Sullivan, vice president of sales and marketing at Kansas city’s Boulevard Brewing – a craft brewery I know and quite like and the tenth largest craft producer by volume in the U.S. – as saying that bars which rotate their draft taps rather than sticking with a specific line-up of brands are hurting the industry by not giving breweries an opportunity to build their brands.
More egregiously, the story quotes Jim Gray, national draft director at the beer importer Crown Imports, purveyors of Corona and Tsingtao, among other brands, as complaining that “retailers who are focused on rotating draft handles aren’t focused on building brands” and that these beer sellers are only interested in “the shiny new toy that is offered to them each month.”
Here’s a piece of advice for you, Jim and Bob and any other salesperson out there trying to flog draft beer: The job of the licensee is to keep their customers happy, not to build brands. (Ahem, that’s YOUR job.) And if customers want variety in their beer selection, as a vastly growing contingent of beers drinkers do, well, that’s just the new playing field. Get used to it!
The building brands argument is insane. If you think about it properly draught is a marketing tool for most breweries as the margins on draught are poor in comparison to packaged product. As a result you need to think of draught as your chance to promote your brands. In Jim & Bob’s minds that means locking down a tap. In a rational mind that means trying to get as many of your products infront of the consumer as possible. Rotating taps are ideal for this very reason…
Why in the sam hell are these guys running the marketing departments of such great breweries? Would explain some of the weak visual branding mind you…
Craft beer has benefited from diversity because large brewers operated for decades as if only the best performing brands mattered and taste was an afterthought (generally speaking). Decades ago, Canada’s major brewers built brands as they killed off so many other brands. The holding company approach to brand building made it easy for craft beer to fill the void and differentiate themselves from the pack. That’s what gave Sleeman’s, Brick, Connor’s, and Upper Canada a great following many years ago. Having a solid business plan is important for any business. ….. …… brewers are no exception.
The wine industry has always been fragmented and diverse but things are changing. It’s interesting to watch wines try and brand there offerings the way beer has for a while now.
On that building brands article. Another element here is whether the historical model of branding still even applies. Gray may think of brand in terms of single beer–the Bud brand versus the Bud Light brand. But among craft breweries, the holy grail is to brand the brewery, not the beer. You go in and you buy whatever, say, Boulevard has on tap because you admire their beer. The variety enhances the brand in the consumer’s mind.
I don’t think either philosophy excludes the other, but it’s pretty clear that, in the craft beer segment anyway, putting all your chips on a single beer is a bad investment.
Agree with a things. The one things is that we all want variety in beer selection. And it do not help that big brands with average beer is dominating the market. But at the other hand we can’t or want to have a restriction, because that’s unfair. Btw great subject and post.
Shaka / blogger at kindlefiresupport.net