Modern Brewery Age Weekly E-Newsletter •Volume 63, No. 16• May 8, 2012
Boston Beer chalks up strong
quarter, shipments grow 8%
The Boston Beer Co. reported first quarter 2012 net revenue of $113.3 million, an
increase of $11.1 million, or 11%, over the
same period last year, mainly attributed to
core shipment growth of 8%. Depletions for
the 13 week period ending March 31, 2012
grew by 10% from the comparable 13
week period in the prior year. In addition,
Boston Beer achieved its 2012 planned
price increases of approximately 3% during the quarter.
Founder and chairman Jim Koch said he
was especially pleased with the performance of BBC’s spring seasonal, Alpine
Spring. “We have also been introducing
some exciting new small batch brews,” Mr.
Koch noted. “We are still seeing expanded
distribution of domestic specialty brands
(Continued on page 12)
MillerCoors severs ties with
long-time agency DraftFCB
Leinenkugel family hits to road to celebrate 145th birthday
Jake Leinenkugel (pictured above, at left) president of the Jacob Leinenkugel Brewing Co. and C.J.
Leinenkugel, sixth generation brewer, admired a 145th anniversary cake from TLC's “The Cake Boss”
on a Leinenkugel's Family Road Trip stop in Hoboken, N.J. on Thursday, April 19. “This summer, we are
hitting the road and bringing Leinie’s to the people in the first-ever Leinenkugel’s Family Road Trip,” Jake
said. “Throughout the Road Trip, we will be making more than 20 stops around the country to meet fans,
sample some great Leinie’s beer and celebrate our 145th birthday.”
Anheuser-Busch InBev releases Michelob Ultra Light Cider
Anheuser-Busch InBev has announced
the release of Michelob ULTRA Light Cider,
a naturally sweetened cider containing 120
calories per serving.
"As more people continue to discover
cider, we've found that many view traditional ciders as either too heavy, too sweet or
both," said Ryan Moore, vice president of
premium lights, A-B. "This perception has
often times limited ciders to a seasonal
beverage during fall and winter, but we saw
an untapped potential to expand the category as a year-round option for adult
drinkers. Michelob ULTRA Light Cider fills
this void with a lower calorie cider with a
milder, but distinct, sweetness that can be
enjoyed straight or over ice."
1 MODERN BREWERY AGE WEEKLY, MAY 8, 2012
(Continued on page 5)
MillerCoors is making major changes to its
agency roster, including dropping its longtime lead creative agency, Draft FCB.
Digital and creative for Coors brands will
now move to a new multi-agency group at
WPP, and Saatchi & Saatchi will become
lead creative agency for Miller Lite.
"Winning in premium light is the centerpiece of our long-term business strategy and
(Continued on page 5)
Annual Craft conference
& expo held in San Diego
The Brewers Association hosted a
record-breaking 4500+ craft-brewing conventioneers at this year’s Craft Brewers
Conference and Brew Expo in San Diego,
May 2-5. BA president Paul Gatza reported
that craft beer volume increased 13% last
year, and there were 1,989 breweries in
operation by the end of 2011. That number
has now broken 2,000, Mr. Gatza noted,
and there are an estimated 1,100 additional breweries currently in the planning
stages. There were 250 brewery openings
and 37 closings last year.
Craft Brew Allies: an interview with
CBA’s Terry Michaelson and Andy Thomas
Craft Brew Alliance is the biggest U.S.
craft brewer that isn’t supposed to call itself
a “craft brewer.” Since A-B InBev holds a
32.2% stake in the company, CBA does not
meet Brewers Association criteria as a
craft. Nonetheless, the company, which
comprises the Widmer Brothers, Redhook
and Kona, is the third or fourth largest craft
beer supplier in the U.S., after Boston Beer
and Sierra Nevada, and about on par with
New Belgium. The company has been
working to develop specific identities for
each of its three brand families, with Kona
and Redhook targeting consumers emigrating from the mainstream, and Widmer
expanding in steadily more esoteric directions. CBA is fine-tuning its brands and
adding products, and it is making some
notable progress; In 2011 CBA had three of
the top five new craft brands in Symphony
IRI’s Food numbers. And in 2011, CBA
CEO Terry Michaelson recruited Andy
Thomas, the former CEO of Heineken
USA, to serve as president of CBA. Our
interview with Terry and Andy follows.
MBA: There was a sense a few years ago
that Widmer and Redhook had lost their
way—not much in the way of new products, sales lagging the craft segment...
Andy: It's easy for me to say this as the
new guy, but we talk about this all the time
internally. So yes, sure, we had lost our
way. Widmer and Redhook had become
one dimensional.
On the Widmer side, it had become all
about Hefeweizen. In a world with one
Hefeweizen, it's very interesting, but in a
world with Blue Moon and Shock Top, suddenly it doesn't stand out so much, maybe
it’s not as interesting, not state-of-the-art.
We stagnated on Hefe. When you look at
the new Widmer beers coming out now,
they are true to what Hefe was in the
1980s, bold and state-of-the-art.
With Redhook, it became trying to be what
people thought a craft beer should be. It
was the elegant bottles, the off-beat brand
names. We had a beer named Rope
Swing! We joke about it now, but we all
made that decision, you get caught up in it.
2 MODERN BREWERY AGE WEEKLY, MAY 8, 2012
Terry: We did lose our way perhaps, but
we are taking the road less traveled, and
we are a unique representation of the craft
brew segment, with our distribution and our
national footprint. We took some time, putting into place the infrastructure, but that
was necessary. To be successful, you have
to have brands that resonate with consumers, you can't lose your soul, but you
have to be able to activate the marketplace. So quite frankly, there were challenges for us, but it makes me so proud,
that we had a group willing to take that
road, looking at how you put brands together, willing to look at how we sell to a
Safeway or Krogers in a way that is meaningful, and we had the infrastructure.
At a certain point I contacted Andy, and
said, I want you to come in, help us look at
it differently, and I told our people, O.K. this
guy is a consultant, but you'll like him. And
it took us all about 15 minutes to click. Andy
allowed us to step back and look at things.
The alignment was there.
(Continued on page 8)
Craft Brew Allies: an interview with Terry Michaelson and Andy Thomas
(Continued from page 2)
As much hard work as it was, it was also
fun. We got to sit and talk about brands,
how they started and what they mean,
that's what this industry is about, it's about
interesting beers and interesting personalities. The consumer is so connected at this
point, they are excited when they can discover something. Not just what they are
tasting but how it makes them feel.
As a result of that process, you’ve rejiggered the brands a bit...
Andy: Sure, for example, we were so
worked up about Redhook. We were trying
to be crafty enough, doing limited releases,
all that. We were speaking Widmer language for Redhook and convinced it was
the right thing to do. You can get into your
own head sometimes, but we are much
more confident as a company now. So we
can say to the beer geeks, if you don't want
to pick up Redhook, Redhook is fine with
that. It turned out, we just had to listen to
the brands. You know, the Redhook drinker
loves holding that bottle. The Redhook
drinker loves drinking that kind of beer, and
is comfortable with that beer. Somebody
might come up and say, Redhook is not the
hoppiest beer out there. but the Redhook
drinker says, ‘Hey, that's fine.’
Last year. we talked internally about
Longhammer IPA, over and over, asking
ourselves, ‘what should we do?’ And while
we were busy talking about changing the
name, and fine-tuning the style, and what
else we should change, the brand very quietly grew 14% in the fourth quarter.
Sometimes if you do the right thing, it just
fits. We looked at that, Long Hammer up
14% nationally off a pretty good base, and
said ‘alrighty then.’
I like what you did with the Redhook bottle, by the way, the elongated stubby,
that’s a great bottle...
Andy: I’m glad to hear you say that.
Danielle Katcher [CBA v.p. marketing] and
her team developed this. We looked at a lot
of different designs, we looked at stubbies,
we looked at everything. When we came to
that design, everyone said, ‘Hey, that really fits.’ The idea was not to go backwards,
putting ourselves in an old bottle, in a stubby, that was too easy. This bottle is a throwback to what we were about, but also bringing that forward in a new way. Redhook has
grown up. We had a bottle that was not
very Redhook, a decorated bottle, split
label, it was a little precious for Redhook.
Redhook might be embarrassed to be
walking around in the outfit we dressed him
in. Once we started thinking about it and
once we started listening to the brand, we
were able to make that change.
Craft has been around for a couple of
decades now, are we seeing some of the
older brands hit a generational slump?
Andy: You hear about this in the marketplace—Redhook is tired, Hefeweizen is
tired. If you listen to the chatter too much,
you start to believe the story, and you let
others define you, instead of being who you
are. How old is Betty White? And she is as
relevant today as 40 years ago. She is who
she is, she appeals to millennials, baby
boomers, etc. She's funny and talented, it’s
not a matter of trying to reinvent yourself for
a new generation, it's being who you are.
She has really been successful being who
she is. As relevant in 2012, as in 1960…
“Last year we were
talking internally about
Longhammer IPA, asking ourselves over
and over ‘what should
we do?’ And while we
were busy talking
about changing the
name, and the style,
the brand very quietly
grew 14% in the
fourth quarter.”
If we look at Hefe, and some of the other
older craft brands, we see some softness, even as smaller brands grow...
Andy: There's a little of a lot of things contributing to that. I can speak for Hefe at
least. Clinically if I look at what is driving
the declines for Hefe, we are losing a lot of
draft, so you start to peel it back, why is that
happening? That's because ten years ago,
8 MODERN BREWERY AGE WEEKLY, MAY 8, 2012
if you had a place with 8-10 tap handles,
and if you have one handle that's wheat, it's
Widmer Hefe. Fast forward ten years, now
you’re fighting for that handle. Once they
make a decision for wheat, you are fighting
with a bunch of craft brewers, and Blue
Moon and Shock Top, for that tap handle.
From a very clinical standpoint, you've
gone from being the only game in town to
being one of many. That's the clinical part.
And I've said we stagnated. Hefe is a great
entree in craft beer, a great entree to wheat
beer, an easy-drinking introduction. People
will stay there for awhile, but then they will
start experimenting. We gave them the
gateway, but didn’t follow up with other
styles to drink. So you are getting hit from
two sides. You are not the only game in
town anymore and your brand isn't as interesting as it used to be.
Terry: Hefe still has a lot of loyal drinkers,
it is not going away. There are a lot of
accounts where we're still their number
one, but they've also got Blue Moon on, so
instead of selling 6 kegs a week, we're selling 4 kegs a week. So overall volume its
down, but it’s still resonating.
And of course Hefe is not fully developed in all markets...
Terry: If we look at the East Coast, people
will find Hefeweizen now because of
Widmer IPA. Widmer is growing really well
on the East Coast but consumers are
exploring all the Widmer brands now, not
just Hefeweizen.
Andy: We have the intelligence, the knowledge that when the portfolio is more than
just Hefeweizen—when Widmer in a store
is not just one SKU of Hefe, or several
SKUs of Hefe—we're seeing the whole
portfolio do better, and Hefe do better.
People start to know us for our other
Widmer brands in a lot of markets, and it
halos back on hefe. They are more willing
to pay a little more for a great wheat beer,
because they pay a little more for the IPA
and other styles that they would expect to
cost more.
In new markets, in the East for example,
Widmer may be identified more as an
IPA brewer than as a Hefe brewer...
Terry: Sure, once the consumer finds the
brand, and it's interesting, then they are
(Continued on page 9
Craft Brew Allies: an interview with Terry Michaelson and Andy Thomas
(Continued from page 8)
more likely to try it whether its entry-level or
a more aggressive beer. It goes across
lines. It goes to what we have been talking
about. Andy has made the foundation of it,
looking at occasions. There are a lot of different drinking occasions, so you are going
to drink a different brand depending on
what you are doing.
You seem to be turning the Widmer
brewers loose more often these days....
Terry: Oh, yeah. We now have a lot of different elements for them to experiment
within. We have more room to do stuff that
is more esoteric and experimental, which is
interesting for our brewers, and for the consumer.
Andy: Because of the location of the
Widmer brewery, and our relationships with
hop farmers, we have access to lots of
experimental hops. We recently had an X
series of experimental IPAs we were pouring at our Widmer gasthaus. Brewers took
same grain bill and recipe, and using four
different hop varieties. It was really cool.
Four different X beers pouring and they all
taste so different! Its amazing what a difference the hops can make, how they can
completely change the beer.
The next beer out in the Widmer Brothers
Reserve is a brown ale brewed with
molasses and brown sugar, and aged in
rum barrels. How do they come up with this
stuff? Who had that idea? They are experimenting with so many, but I remember that
one, just because it sounded so good!
As many beers as we have in the Widmer
Brothers portfolio, they are all different. We
have three IPAs from Widmer, all fundamentally different: Nelson, Pitch Black and
Rotator. Couldn't be any more different.
And Redhook, with Long Hammer, again
is quite different, it’s a great sessionable
IPA, which is why we are excited to be
coming out with that in cans.
On that topic, I have to share this story.
We’re just launching Longboard more
widely in the East, and so I was having
a beer with Kurt Widmer, and we were
sampling cans of Longboard. And
when I cracked open the cans, he was
like a little boy, his face lighted up, and
he said, “I’ve got to tell you, I’m a guy
who has been doing bottles for 17
years, but I love the sound of that can
opening, it's awesome!
Andy, the company where you spent a
big part of your career, Heineken USA,
was an early adopter of import cans...
Andy: It was formative for me, in the way I
look at the beer category. When Heineken
launched in cans, everyone said ‘imports
aren't in cans, imports are in bottles.’ The
head of our marketing, a guy named Steve
Davis, and the brand manager, Ken Kunze,
CBA president Andy Thomas
“I was having a beer with
Kurt Widmer, and we
opened cans of
Longboard. And his face
lighted up, and he said,
‘I’ve been doing bottles
for 17 years, but I love
the sound of that can
opening, it's awesome!”
had both come from Pepsi, and they just
challenged the convention. They said
‘You’ve got someone who buys Heineken
in a bottle in a bar, and then they are at the
pool and can't have a glass bottle, so they
don't buy Heineken. It’s not that they don’t
want to buy a Heineken at the pool, it’s that
you are not allowing them to buy Heineken
at the pool.’ And it was such a rational argument! We said, ‘Hey, that makes sense!’
t was a matter of saying ‘OK, so the reason
that imports aren't in cans, is because
imports aren't in cans.’ And the Keg Can
took off, and you had people taking them
to the beach, and poolside, and stadiums.
And the same thing is happening with Long
9 MODERN BREWERY AGE WEEKLY, MAY 8, 2012
Board, when you are on the golf course, or
at a beach bar.
Terry: The irony is that the aluminum can a
great package for beer, and keeps the beer
from being lightstruck. One of the things we
did, was to try to break through people's
perceptions internally. Our guys took
Longboard from cans, put it bottles, and
asked our tasting panel to taste the difference. There wasn't any—except sometimes the beer from cans got a better score,
because cans are good for beer. It’s not
about lowering the image of beer, it’s about
offering the consumer a different option.
Even though Widmer is your designated
specialty craft brewer, will you continue
to do local specialty beers for Redhook?
Andy: We’ll keep cranking up interesting
beers locally. it’s good for the personality of
the brand when you do that. Broadly
speaking, Widmer Brothers is all about the
beer and the hops and the grain; Redhook,
broadly, is all about the personality and the
experience. But, in its local markets, where
Redhook has a local following, we will continue to crank out beers that make it more
locally relevant. Maybe they will be interesting styles, maybe they will be interesting
ideas. So maybe it's a beer done for specifically for the Seattle Sounders, we did that
in the Blue Light series, 22s and draft, and
it’s gone a little insane. That took us by surprise, but that's a Redhooky way, doing
things outside the portfolio.
Redhooky?
Andy: We use that term all the time internally. When we say Redhooky, we mean
irreverent, someone who can laugh at himself, Redhook is the one who will push your
boundaries, but won't push you over,
Redhook is the fun guy to hang with. In
Redhook’s DNA, is the stuff that Seattle
was about in the 1980s—Starbuck’s coffee,
and Microsoft. Redhook is smart, unique,
irreverent. Not a typical domestic.
Since you’ve assigned an identity to
each brand family, doesn’t it work best
in markets where you have all three?
Andy: Florida is the best example right
now, all three brand families doing exceedingly well. Kona is far and away the fastest
growing brand family for us in Florida. That
(Continued on page 10
Craft Brew Allies: an interview with Terry Michaelson and Andy Thomas
(Continued from page 9)
makes sense, Longboard Lager is a
refreshing beer in a warm weather market
that already has an affinity for lagers.
Redhook also does really well. Redhook is
a step up from what is big in the market.
And Widmer can take you on the craft journey, and Widmer is developing rapidly in
that market, Drifter is doing great. From
Drifter, it’s not a huge step to Rotator and
the seasonals. Brands are like relationships. Widmer hasn't let you down before.
Maybe you're a guy who a year ago would
have been intimidated to buy Rotator, now
you have a good comfort level. We're seeing all brand families in Florida do well.
Terry: For the retailer that becomes the
power of our portfolio. Because you look at
all those consumers out there, Redhook
will get this customer, Widmer that customer, and Kona another group entirely.
They feed off each other, and that is happening more and more. And that is what we
are able to activate now, when before it
was kind of piecemeal. In most of our markets, we are getting close to getting there.
What markets in particular?
Terry: The Northwest is strongest in terms
of development, and in California we have
a very strong position. The West is developing, but there is still upside. East of the
Rockies, we are just really beginning.
Andy: It’s interesting, Widmer Bros is
growing faster on the East Coast than
Kona. Which is remarkable, and it's not like
Kona is growing slowly. We are almost fully
covered in Florida. With Redhook and
Widmer, the only markets we're activating
in Midwest are Chicago, Minneapolis, and
a couple of cities in Ohio. In the East, outside the orbit of New Hampshire brewery,
we’re in Boston, and D.C. We're just
launching in Metro NY, we have three reps
now. We are launching in Pennsylvania
and Delaware. We are doing well in D.C.
and the Mid-Atlantic growing, but then
there is an opportunity gap all the way
down to Florida. So there are a lot of holes.
As a light lager, Longboard is one of a
growing number of craft brands that
trespasses on mainstream turf…
Andy: Just to play a little bit, why is that
trespassing? The reason I say that, Sam
Adams Boston Lager was the flagship for
craft for many years, that was a lager. I'm
saying craft has as much license to compete in lager as anybody does. And I think
we are finally getting comfortable in getting
CBA CEO Terry Michaelson
“Domestics have historically
provided that lighter drinking experience. But if you
talk to the consumer, they
are often saying, ‘No, even
in that session situation, I
won't choose a light domestic,
because I want more flavor’.’’
there, and saying that there are a lot of
people who like this profile of beer.
I think it’s interesting because it will
allow craft to source yet more volume
from the mainstream...
Terry: On that point, I was with four or five
guys at a basketball game recently, and the
group started talking about how they liked
sitting down and drinking a nice flavorful
easy-to-drink beer. So we're having this
whole conversation, and I had to start asking them what kind of beers they drink—
they knew I worked for CBA—and the interesting thing for them, is that they are looking for a different experience. They talked
about Stella, about Sam Adams, about
Longboard. Those beers, to them, gave
them a better experience than a mainstream light. So even if they wanted something sessionable, they wanted it to have
more flavor. And it's not all consumers that
are looking for that, but I was pretty interested that these guys, who ten years ago
would have been drinking Miller Lite, are
thinking about beer in a different way. It
may look like we are competing in the
same arena with Longboard, because the
domestics have historically provided that
lighter drinking experience. But if you talk
to the consumer, they are often saying, ‘No,
even in that session situation, I won't
choose a light domestic, because I want
more flavor.’
Do you see a continuing trend towards
lighter sessionable crafts?
Terry: It's driven by where the consumer is
going. We wouldn't be putting out
Longboard Lager, if there wasn't a market
for it. A lot of consumers are in that space.
They want something sessionable, but they
want flavor too. It's so different from the way
we used to think about craft. It used to be,
‘OK craft is over there, and domestics are
here, and they better not cross over.’ For a
lot of years, people said the big domestics
wouldn't be able to put out a craft beer, and
I think Blue Moon proved that wrong. They
may not be making double IPAs, but they
can make craft-type beer.
Andy: There is a school of thought, and
some evidence to suggest, that when beer
loses share to cocktails and wines, the
taste experience that people are looking for
is lighter. On those occasions, they drink
gin & tonics, vodka tonics, light white
wines. Consumers are looking for something lighter, but they also want it to be different. A richer experience. A richer product
profile, they are not looking for the same
old lagers. They are not looking for the
shininess of an import; or the sameness of
a domestic light beer, but they are looking
for this. If if you can match that lighter taste
experience, that profile, with a little richer
experience, a richer story, then you are on
to something. On that occasion, craft is as
much about the beer as it is the beer experience, and that's where we can start to win
as a beer category again. I get heated
when people say craft is bad for beer…
Who is saying that?
Andy: The big guys. It’s déjà vu all over
again. I can close my eyes, and it’s 1998,
and everyone is saying imports are bad for
(Continued on page 11
10 MODERN BREWERY AGE WEEKLY, MAY 8, 2012
Craft Brew Allies: an interview with Terry Michaelson and Andy Thomas
(Continued from page 10)
beer. They are running ads about skunky
beer, and date coding, and saying imports
are bad for beer. Now, 15 years later,
imports are now 14-15 share, and thank
God they grew the way they did. Now people—and I’m talking about the big brewers—
are saying craft is bad for beer. I don't hear
anyone saying that premium spirits are bad
for spirits. I don't hear anyone saying esoteric cocktails are bad for spirits, or boutique
wineries are bad for wine, yet the beer business eats its young.
You're talking about A-B and MillerCoors
hinting that craft is siphoning away profitability from retailers?
Terry: That's right. MillerCoors made a
presentation at Harry Schuhmacher’s Beer
Summit about how we have to protect premium light. And just think about the absurdity of that assumption, that if we don't offer
them a craft beer, they will drink premium
light….that the consumer will drink whatever you put in front of them! I'm going to
have a cabernet, or a martini or a domestic
premium light. Wait a minute, how about an
IPA instead, with a really nice hop profile! In
the beer industry, too often, we get caught
up in a strategy, if we push it hard enough,
the consumer will swallow it. But consumers are saying, no, I won’t, not if you
don't give me something that interests me.
If you are going to offer me just light beer,
maybe I'll have a martini instead. You better give me something that excites me!
And the consumer will not be denied...
Andy: Exactly. There was a great case
study of Ben & Jerry’s, that covers a period
when they were running into questionable
trading practices from Haagen-Daaz.
Pillsbury, that owned Haagen-Daaz, was
trying to knock Ben & Jerry’s out of distribution. So Ben & Jerry’s developed this
campaign with the tag-line ‘What's The
Doughboy Afraid Of.’ It was a whole assault
on Pillsbury, on why they were afraid to
compete. It got so bad, Pillsbury settled,
and pledged to stop using those questionable trade practices, and Ben & Jerry’s had
to promise never to use the ‘What's The
Doughboy Afraid Of’ campaign again.
Never to even talk about it to the trade
press! That was in the 1980s. It’s a great
study on power of the consumer, because
the consumer always prevails. Even in that
case, the consumer prevailed. It’s interesting to me, that Anheuser-Busch InBev and
MillerCoors are telling people ‘if you don't
stock it, they won’t buy it.’ There is no evidence of that being a sustainable, tenable,
long-term strategy. Even in ice cream,
where you can control the frozen space.
Even there, the consumer won. And it's
interesting. Whenever I hear these big
guys talking about excluding craft, I think to
myself, ‘What's the Doughboy Afraid of?’
“Whenever I hear the
big brewers talking
about excluding craft,
I think to myself,
‘What's the
Doughboy Afraid of?’
Terry: There has been so much discussion
about beer losing share to spirits and wine.
Compare the growth of craft to spirits and
wine! Craft is outgrowing spirits and wine.
It's not about choosing wine and spirits
over beer, it's choosing what fits the occasion. Take craft beer out of the equation,
and you have to ask yourself what would
happen to beer.
What’s your take on the current state of
the craft business, with so many new
entrants...
Andy: Small guys are popping up. That’s
part of the challenge. To me it’s an indication, that the interest is there and the category is developing. But a lot of the smaller
players are not yet to the point where they
are delivering consistent beers. When we
taste some of these beers, it drives our
taste panel guys crazy, they are fanatics
about quality and consistency. One of the
non-negotiables for us, is to deliver a great
beer anywhere in the country, stable and
reliable, and that makes us a little unique.
We have a couple thousand small breweries, and maybe a thousand more in
the pipeline, how many is too many?
Andy: We are bumping up to 2000 brew-
11 MODERN BREWERY AGE WEEKLY, MAY 8, 2012
eries. A lot depends on what people want
to do with their little breweries. If you are
comfortable with the old German model,
selling around the chimney, as they say, in
a 5-10 mile radius, a 5000- to 10,000-barrel brewery, yeah, that's sustainable. But
beyond that, it becomes challenging from a
distribution, sales, and brand perspective.
Being local is a real good reason to be a
brand. Outside your area, it becomes challenging to become relevant to those consumers. And the stability of the beer will
become an issue.
Shakeout? I don't know. A lot of these breweries can't sell off premise, they might not
be able to bottle, they won't have the sales
organization to sell, they won’t be able to
serve a chain from the footprint perspective, and they might not be able to distribute over state lines if they don't have the
network. Yes, I think there will be a shakeout with those guys. It will be nothing to do
with their beer, nothing to do with how great
their brands are. That business model just
won't allow you to survive.
For those that can reconcile in their minds
that the business side is as important as
the production side, and can win in their
local draft accounts and compete locally
with the independents and maybe the
chains that will service you in two or three
of their stores—those guys will have a
decent chance.
In the craft segment, when you have a marketing department, and a sales organization, there is this perception that you have
sold out. From my perspective, it’s not
about selling out, it’s about being true to
who you are. If I want to take our beer to
more places, I’ve got to have that business
system, or I can’t do it. If your beer is not
stable, you can’t ship it across the country.
If you are going to satisfy consumers with
fresh beer on both coasts, you have to
have breweries on both coasts. If you are
true to yourself, you have to do those
things.
We talk about our company having the
body of a big brewery, and the soul of a
craft brewer. We have ambitions to bring
our beers to more consumers in more
places, so we have to have the business
system to do that. We remain true to who
we are—we are not selling out—but we
want to replicate the local experience of
drinking our beers all over the country.
Thanks for your time, Terry and Andy.