[Photo via Doobybrain on Flickr (Creative Commons)]
(Chicago, IL) – Monday was a busy day with both Brewbound’s Craft Beer Session and the MillerCoors Investor Seminar. Yesterday, I wrote up the Brewbound Session with a post titled, “The future through they eyes of industry pros.”
This afternoon, I sat through the MillerCoors webcast. Once the guys got past “Four on the Floor,” “Replace the Space” and so on (these guys come up with names for everything!), they got down to the company’s craft beer division, Tenth and Blake Beer Company. Here are my notes:
Tenth and Blake President, Tom Cardella, started off his presentation talking about the differences between craft consumers and acknowledged the extreme end. It was interesting to hear Cardella use Three Floyds’ Dark Lord Day as an example, mentioning the fact that tickets are sold online and that people stand in line for an Imperial Stout. The rhetoric among craft beer enthusiasts has been that these guys don’t get it but here is just another example that they do.
Then the stats came pouring out…
Tenth and Blake is up 15% on the year to three million barrels. That puts them neck-and-neck with craft breweries (as defined by the Brewers Association) in terms of year-over-year growth. While there are some imports mixed into that three million, take note…about 5% of MillerCoors shipments in the U.S. is now ‘craft.’
Still don’t think MillerCoors is taking craft seriously now? Wait a few years when that 5% is closer to 10%.
Blue Moon Brewing:
- Blue Moon Belgian White
- Up 20% on the year
- Only 38% on-premise penetration with draft
- Starting to see Hispanic demographic discovering the brand in southern markets like Texas and California / Sees big growth potential with low incremental marketing dollars
- Seasonals
- Up 50% on the year
- Only about 10% of the product mix compared to craft peers which is closer to 40-50% mix so a lot of room for growth, just scratching the surface
- ~220,000 barrels total on the year
- Summer Variety Pack will include new Agave Blonde
- New year-round brand
- They think they have found a “companion to Belgian White” in Farmhouse Red (a blend between Saison and Flanders Red Ale)
- Will test in Q1 2012
- Brewmaster’s Reserve Collection
- Double the margin of Belgian White
- Will expand this line beyond Grand Cru with Vintage Blonde Ale, a beer brewed with Chardonnay grape juice. Early indicators are that it is a hit with women drinkers due to wine-like qualities.
Jacob Leinenkugel Brewing
- Most growth happening near brand’s origin in Upper Midwest
- Big Eddy Series
- Will offer Imperial IPA, Scotch Ale and Porter in 2012
- Double the margin of main portfolio offerings
- Part of plan to expand Leinenkugel brand beyond Midwest
- Summer Shandy
- Introduced it three years ago
- Produced almost 200,000 barrels in 6 week period in 2011
- Variants to Shandy are likely to be developed for fall and winter periods
- Part of plan to expand Leinenkugel brand beyond Midwest
Colorado Native:
- Described this venture as being independent of how they deal with some of their others (has its own sales force, etc.)
- 5,000 barrels in 2011
- Will identify areas in Colorado next year that really respond to the brand “where it might be seeded” [ed. note: I really need to jump on some of these conference calls and ask for clarification!]
Killian’s:
- 250,000 barrel business despite getting little focus relative to the rest of the brands
- Is testing Stout line extension
Peroni:
- Growth rate is 9% but not happy with that
- Following the Stella model
- Re-doing some 12-pack packaging
Terrapin:
- Part of “Alliance” strategy
- Is selectively looking for right partners on a regional basis
Miscellaneous:
- Looking at helping retailers manage the sheer number of SKUs they have to deal with because crafts aren’t doing it.
- Also looking to help distributors with long-term planning and strategies for managing craft. Hears “we’re going to get Cicerone training” often but not a whole lot else.
It’s pretty encouraging to see that they’re still so heavily focused on all of the marketing and demographics info like that. As long as the numbers are more important than the beer itself, they’re still just a joke. A huge reason people embrace craft is that, at it’s best, it’s made by people who are in it because they genuinely love what they’re making, not because they have found a way to sell something to 21-24 year old Hispanic males. SABMillerCoors knows we think that way; that’s why they hide behind another brand name.
Surely there’s somebody in that company who loves beer. The company itself, though, is duty-bound (legally, even) to look out for the shareholders. That involves pulling all kinds of dirty tricks to keep small craft brewers from growing into a threat. I’m trying to hate the game instead of the player, but the player here (just like A-B InBev) represents an existential threat to what we all love.
So yeah…screw those guys.
Do you say the same thing about Sam Adams, also a public company?
I find Jeremy Whites cynical appraisal outmoded and a little disturbing, brewers in big breweries are just as passionate about the beers they are creating and I for one do not know any proffesional brewer at any level who is not in the business of demand creation and profitable returns…Jeremy, you should just drink what you like to drink and let other people do the same.
I actually think this is good for the craft market. These guys are opening up a lot of people to better and more variety of beer. I can remember liking Leinies when it first came out. Then I had Two hearted Ale. Then Hopslam and so on. Once you start trying different beers you keep on trying different beers and wanting more different beers. But ultimately its about the beer which they don’t quite get. They think its markets, demographics and segments. If we decide we want to brew a beer with maple syrup, squirrels and acorns, I say to Toni “Whaddaya think?” She’ll probably say – “lose the squirrels.” so we lose the squirrels and try the beer. if we like it it hits the market. Do you know what these guys go through to make changes? Craft brewers are small and nimble and can experiment. The big guys will always be copying and that’s ok.
Hey Adam,
Could you possibly expand on your point about craft suppliers helping retailers manage the number of SKUs? What specifically do retailers need help with, and how do they want crafts to assist? Are there ways that their distributors can help (but maybe don’t have the time/resources)?
Great read – Thanks Adam!
Hi John,
Retailers don’t necessarily have access to data trends in the beer segment beyond just their store. Distributors have better access though not all subscribe to the data. So a company can come in and consult on how to make the space in that store work the most effectively. Got a slow mover? How is that brand doing in nearby stores and other distributors sales-wise? Maybe you’ve got it poorly placed. Maybe it’s slow region-wide and it’s something you just need to cut. Now, you’ve identified a dog. What do you replace it with? Here’s a brand that you can put in there. It’s a hot style and it’s local so it’s moving quickly and trending up.
That kind of help…plays off of the other article I wrote up the day before that. Hopefully you saw that one, too.
Adam
“you should just drink what you like to drink and let other people do the same”–you must believe in the myth of the Magic Beer Truck:
http://beerdorks.com/articles.php?article_id=161
No… parables such us these are constructed by tragic cynics, who in their well meaning but misguided actions to convert people into their own narrow minded dogma inadvertently miss the point of what beer is and who it is for. Fortunately for those of us who actually care about the brewing industry in its entirety the majority do rise above the lowest level of advocacy and adopt a wider view.
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