The future of the beer business was once again on display during the Winter Brewbound Session, held November 29 in Santa Monica.
Leaders from all three tiers of the industry discussed ways to grow the category and reach future consumers. The event also featured the Startup Brewery Challenge business pitch competition.
Ninkasi Brewing Company co-founder Nikos Ridge and CEO Cheryl Collins opened the day with an analysis of their evolving approach to product innovation, including a more rigorous vetting of potential beer releases. The duo also discussed how to maintain a brewery’s culture during and after a leadership change.
“We’ll brew a lot of things, and try a lot of things, but part of our process is not expecting every one of them to make it to market,” Ridge said. “Your sales and marketing dollars become much, much more effective when the foundation of the beer that you’re putting out is much stronger.”
Collins added that there’s a misconception that creativity and innovation are synonymous.
“What we’re talking about is a very methodical approach to how we’re generating new products and how we’re going to measure their success in a more objective way,” she said.
Part of this intentional approach innovation involves conducting sensory and consumer testing, refining recipes and, sometimes, dumping beer.
“We’re staking our reputation on every beer now,” Collins said. “And there are more people coming into craft so we really have to put our best foot forward. It’s pretty much a no brainer that if you’re being customer centric, you dump the beer if it’s not what you want.”
Following the interview with Ninkasi, Drizly co-founder Justin Robinson and vice president of strategic partnerships Taylor Burton opened a window into the growth of their ecommerce platform.
“We’re helping our partners go out and meet consumers where they are and on their terms,” Burton said.
In 2017 alone, 12 million consumers – or 5 percent of the legal drinking age population – visited Drizly’s website. The company also processed 1 million transactions, Robinson said, noting that alcohol ecommerce could account for between 8 and 15 percent of industry sales in the next five to seven years.
The morning session wrapped up with a presentation on Generation Z consumers (also known as “centennials”), the first members of which turned 21 on January 1, 2018. Kantar Futures vice president Lindsay Kunkle and Tropos Brand Consulting founder Mike Kallenberger explained the differences between centennials and the millennial generation that preceded them.
Centennials are the first generation to have grown up with the Internet and social media from day one – and to come of age in an era of economic volatility and terrorism, Kunkle explained.
“Change is the one constant of Centennials’ lives,” she said.
The afternoon session resumed with Total Wine & More senior manager Matt Bardill and spirits category director Amanda Batchelet giving an overview of beer sales at the retail level. Beer sales at the liquor store chain were flat in 2017, accounting for about 15 percent of the company’s business, they said.
From Bardill’s perspective, innovations such as hard seltzers are one way in which the beer category can “steal some share back from spirits and wine” and reach female consumers.
“It’s more approachable,” he said. “That’s one of the things that we have to work on as an industry – how do we talk to more than just the young male customer?”
Also joining the afternoon program were Uinta Brewing Company chief marketing officer Jeremy Ragonese and Omnicom Media Group managing director Darrell Jursa, who examined the future of beer marketing, highlighting digital marketing strategies.
“Even before you think about tactics, it’s a good idea to develop the right personas,” Jursa explained. “Trying to get an understanding of what an 18-22 year old is doing. And I say 18 because you still need to figure out how people are coming into a particular franchise. They are not at LDA yet, but you have to figure it out. The best thing to do, first and foremost, is to gather everything that you have and package it up so that you know what you’re dealing with.”
The day concluded with Constellation Brands chief marketing officer Jim Sabia and Craft & Specialty division president Marty Birkel giving insights into their strategy for the high end. According to Sabia, the high-end segment could add about 500 million more cases of beer in the next decade.
“We believe it’s all about premiumization,” he said.
Constellation Brands’ Craft & Specialty division president Marty Birkel said the company currently owns a 27 share of the high end – defined as products priced at $25 per case and above.
“The high end growth is significant,” he said. “It’s all of the growth in the beer category.’
And craft will play a critical role in the future growth of the segment, the executives said. Birkel added that he expects craft to grow in the mid-single digits in the coming years, making it the industry’s second greatest source of growth behind Mexican imports.
“It’s an area that we’re really committed to and focused against,” Birkel said. “And we continue to build our presence in the category.”
Ballast Point is the “centerpiece” of Constellation Brands’ craft division, and the brand that the company plans to build around nationally, Birkel said.
And the brand has plenty of room to grow, according to Sabia, as Constellation’s research found that 80 percent of consumers are still unaware of the Sculpin brand.
“It’s a great brand,” Sabia said, “and it’s taught us so much about the craft segment, and I think it’s helping us now with the latest one, Funky Buddha.”
Startup Brewery Challenge
Chula Vista, California-based Novo Brazil Brewing was named the winner of Startup Brewery Challenge 9, a business pitch competition sponsored by Craft Brew Alliance at the Brewbound Session.
The competition featured five brewery entrepreneurs, who were given four minutes to showcase their beers and business plans in front of a panel of industry judges.
Novo Brazil CEO and master brewer Eduardo Pentagna pitched his company’s strong country-of-origin story, a product that uses Brazilian ingredients and a brand identity featuring vibrant colors.
“I came just wanting to introduce us and show our hard work, and it is amazing they could recognize us,” Pentagna said following the competition.
The judges chose Novo Brazil’s pitch over a field of competitors who offered alternatives to traditional beer offerings. Partake Brewing, a Canadian non-alcoholic beer maker, and Prospect Cider Works, a Boston-based cidery, highlighted the diversity of products being introduced into the increasingly crowded beer market. Meanwhile, Fifty West Brewing Company and Shotgun Beer pitched their unique approaches to connecting with consumers via community programs and niche packaging.
During the competition, the five contestants pitched to a panel of judges that included Karmen Olson, director of emerging business partnerships at Craft Brew Alliance; Tom Bleigh, innovation brewmaster at Craft Brew Alliance; Matt Bardill, senior manager for beer at Total Wine & More; Kit Wanty-Lambert, vice president of marketing at O&W Inc.; and Martin Favela, the winner of Startup Brewery Challenge 7 co-founder of Border X Brewing.