Brewbound Session Reveals the State of Craft

The future was the focus of the Brewbound Session held on June 15 in New York. Industry leaders met to discuss the evolution of the business while maintaining an eye on what’s next.

Bell’s Brewery CEO Laura Bell told an audience of nearly 200 industry professionals during a panel discussion on the “state of the industry” that craft beer is in the midst of an identity crisis.

As the category has grown to more than 5,300 unique craft breweries with different goals, the Brewers Association’s definition of what it means to be a “craft brewer” no longer reflects what’s actually happening within the segment.

“What does ‘craft’ really mean?” Bell asked her fellow panelists Heavy Seas founder Hugh Sisson and Founders Brewing CEO Mike Stevens. She argued for better definition.

Stevens — whose Founders Brewing entity no longer meets the Brewers Association’s craft definition after Mahou San Miguel purchased a 30 percent stake in December 2014 — said it’s time craft brewers get to work on appealing to a broader audience.

“There’s a huge amount of opportunity, but we have to stop trying to put it all in a box,” Stevens said. “I struggle with the confinement of the box. Why the hell can’t a craft brewery do 10 million barrels? What’s wrong with that? Why on God’s Earth would that be a bad thing? So to put a ceiling on something seems quite the opposite of what you want to do as an industry.”

Sisson, meanwhile, said he believes the craft segment has matured and evolved from being a group of companies that defined themselves as the “polar opposite of big beer,” to one that includes thousands of players competing “within the confines of the ‘beer’ industry.”

“We’re having growing pains,” Sisson said of the industry. “Typically when you’re having growing pains, shit happens. And we’re in that shit happens moment now. I’m still pretty bullish, but now it’s time to up your game.”

That means making significant investments into marketing, branding and quality control, Sisson argued.

“You can’t do this by the seat of your pants anymore,” he said.

Bell added that in her conversations with retailers, she’s receiving more questions about quality programs.

“I think this is a great sign of maturity,” she said. “They also understand that quality beer is going to sell.”

Sisson echoed the sentiment: “My customer base has a loyalty to me of one 6-pack. And the day that I forget that, I’m toast.”

In a separate presentation, Nielsen senior vice president of beverage alcohol practice Danny Brager and associate client manager Caitlyn Battaglia revealed the findings of a new 2,000-person Harris Poll survey co-developed by Brewbound and Nielsen examining whether 29 popular buzzwords used to market beer are resonating with regular craft beer drinkers.

The results showed that 81 percent of craft beer consumers were familiar with the terms “independent” and “independently owned.” The next most recognized word to beer drinkers: “traditional.”

That’s good news for the Brewers Association, which defines a craft brewer as being small (less than 6 million barrels), independent (less than 25 percent owned or controlled by an alcoholic industry member that is not themselves a craft brewer) and traditional (a majority of beer volume is made using traditional or innovative brewing ingredients; FMBs are not considered beers).

In all, 23 of the 29 words in the survey helped drive purchasing decisions with the top terms being “drinkable,” “independently owned,” “limited edition” and “West Coast IPA.”

“For craft brewers, [they need] to recognize that while sometimes they use a lot of terms in their marketing and talking to consumers, in many cases some of those terms have a low-level of awareness and they may not have the positive influences on purchases,” Brager said.

Later in the morning, executives from prominent beer-centric retail chains Yard House, Old Chicago (Craftworks Restaurants & Breweries) and World of Beer said the increasing amount of beer flowing through brewery taprooms wasn’t yet a major concern despite the growth in “own-premise” sales.

Gregory Howard, director of beverage strategy for Yard House, said he viewed individual brewery taprooms as “just another competitor,” noting, however, that breweries should maintain price integrity and shy away from building dozens of branded satellite outposts across the country.

Marc Sawyer, the director of brewery and distributor relations for World of Beer, echoed Howard, but said his company is keeping a “watchful eye” on breweries with apparent multi-state taproom strategies

“I don’t think there’s any reason that we can’t co-exist,” Sawyer said.

Working with those breweries includes avoiding out-of-stocks in their respective restaurants, something both large and small craft brewers are struggling with, Howard said.

Out-of-stock issues aside, beer buyers are having an increasingly difficult time sorting through brands from more than 5,300 breweries.

“It’s never been harder than today,” Sawyer said. “We have a lot of local autonomy when it comes to our taverns and we have product managers on site who are making the day-to-day decisions on the beers that they’re bringing in. So for us, it’s about getting into those taverns and training local beer buyers on how to properly critique a beer that we’re going to bring in.”

“It’s pretty easy to identify which ones are good quality and which aren’t,” Howard said. “You have to be careful because there are some really small breweries out there doing some tremendously brilliant work, and so those are those gems that we need to go find.”

A future gem might be be Armada Brewing, which emerged victorious in Startup Brewery Challenge 8, a business pitch competition sponsored by Craft Brew Alliance.

John Kraszewski, the founder of Armada Brewing, competed against representatives from four other emerging breweries: M.I.A. Beer Company, Good City Brewing, Black Star Line Brewing Company, and Torch & Crown Brewing.

“Right now I have mixed emotions. I’m excited, emotional and stoked,” Kraszewski told Brewbound after being announced as the winner. “It means that what we’ve been doing is working and we are going to continue on that path.”

Armada Brewing, a Connecticut-based craft brewery, began producing beer out of East Haven’s Overshores Brewing earlier this year. The brewery’s beers are available in 750 mL bottles at over 100 retail accounts across the state.

“This is just the first chapter,” Kraszewski said during his pitch. “As our fleet is growing, so does the story.”

Kraszewski impressed the judging panel with the quality of his beer, his story and brand cohesiveness. Nevertheless, judges also said the presentation felt a bit “contrived” and questioned the scalability and long-term viability of the company’s large format bottle business.

Armada won a $5,000 grand prize, which Kraszewski said will be used to help gradually boost production of the company’s. Armada also won an all-expenses paid trip to Portland, Ore., where they will brew a special collaboration beer with Widmer Brothers, and spend two days learning from executives at CBA.