At a time when the beer industry seems to be drowning in a sea of seltzer, Craft brewers need to find their “authentic alternative,” The Lost Abbey co-founder and chief operating officer Tomme Arthur told executives and entrepreneurs from across the beer industry during Brewbound Live 2019, held in December in Santa Monica, California.
During his state of the industry address, Arthur announced plans for his own alternative, a standalone line of canned sour beers called Tiny Bubbles, which is slated to launch this year.
“We’ll take all of the equity and knowledge we have learned making Lost Abbey beers, and we’ll bring to life a living Gose-style beer finished with Brettanomyces, all the while having fun promoting our new friend Brutus,” Arthur said, referring to the brand’s mascot, Brutus T. Bubbles.
Arthur purchased the Tiny Bubbles brand from Goleta, California-based Hollister Brewing Company, which was brewing the brand as a small-batch series. The goal is to attract drinkers out of the reach of Arthur’s other brands — The Lost Abbey, The Hop Concept and Port Brewing — by offering an in-demand product.
Arthur urged fellow brewers to remain authentic as they weather storms and to be wary of making rash, reactive moves.
“Everybody has to figure it out on their own, and that’s where we’re all headed,” he said. “If you make bad decisions now because you’re doing it out of fear, you’re going to have to deal with that later.”
But some craft breweries have indeed embraced hard seltzer, and there’s no question why: According to Danelle Kosmal and Caitlyn Battaglia of market research firm Nielsen’s beverage alcohol practice team, the segment has shown no signs of slowing down despite passing the $1 billion sales mark at the end of the summer.
“There were some questions at the end of the summer — were we going to see this big drop off?” Kosmal said. “We saw a little bit of a dip in September, but really not that much and they [hard seltzers] continue to maintain share.”
At its summer peak, hard seltzer accounted for 5.4% of beer category dollars; it currently accounts for 5% of the market.
Annually, hard seltzer drinkers spend $477 on off-premise alcohol purchases, which increased 10.2% from last year, Kosmal said. Meanwhile, the average household spends $258. That increased spending on seltzer isn’t taking away from other alcohol purchases.
“A lot of the volume, the seltzer volume, is coming from people just purchasing and expanding their alcohol purchases, so not necessarily swapping out one for the other,” Kosmal said.
And those drinkers keep coming back; 40% of hard seltzer drinkers make repeat purchases.
Although 90% of hard seltzer dollar sales come from the top three national brands — Mark Anthony Brands’ White Claw, Boston Beer Company’s Truly Hard Seltzer and Anheuser-Busch InBev’s Bon & Viv Spiked Seltzer — Nielsen found that some local players have made inroads regionally. Data also showed that men and women were buying the product equally in 2019.
“I have never seen another segment in alcohol that is so gender neutral; it’s almost a 50/50 split of male and female buyers,” Kosmal said. “That’s something that the hard seltzer segment has been able to do and to capture better than the craft beer segment has.”
Nevertheless, hard seltzer drinkers share similar demographics to craft beer drinkers: They’re white, college-educated millennials (ages 21 to 44) living in affluent neighborhoods with disposable income. Hard seltzer drinkers also spend almost twice what drinkers of other categories do.
For the craft brewing industry to sustain itself and grow, Arthur said new drinkers must be recruited into the category.
“We cannot for a moment think there’s enough white space to innovate our way out of this funk,” he said. “If we’re going to turn the proverbial corner, we’re going to need new consumers. I’m doubtful that this is news to any of you.”
Among those trying to cultivate new craft beer drinkers is Day Bracey, co-founder of Fresh Fest, the first U.S. beer festival to celebrate black-owned craft breweries. Bracey shared how the annual festival comes together each August in Pittsburgh, a predominantly white city.
“It’s important for people to see people doing well who look like them,” Bracey said. “We are able to provide a safe space, build a space where people don’t feel weird about going in and asking about a product.”
Fresh Fest started in August 2018 in Pittsburgh with 10 of the country’s nearly 60 black-owned breweries. To fill out the rest of the festival lineup, Bracey, Ed Bailey and Mike Potter asked Pittsburgh craft breweries to collaborate with black artists, entrepreneurs and politicians to brew exclusive beers to pour at the fest. As word spread, craft breweries nationwide asked to join and each provided another chance for local artists and entrepreneurs to get involved.
“How do you build those bridges?” Bracey asked. “You do that by going to the community and offering them opportunities.”
Bracey encouraged brewery owners to hire employees of color and reach out to the people living in the areas near their breweries if they want to create a more diverse industry.
“Craft beer is a blind spot for the black community, but it’s largely because the black community has been a blind spot for the craft beer community,” he said. “Nobody’s coming into our neighborhoods and saying ‘Hey, we’ve got jobs over here, we’ve got opportunity.”
Crowns & Hops Wins 2019 Brewbound Pitch Slam
Inglewood, California-based Crowns & Hops Brewing Company emerged as the winner of Brewbound’s 2019 Pitch Slam competition.
Crowns & Hops CEO Beny Ashburn and head of beer operations Teo Hunter impressed the judges with a pitch centered around promoting craft beer in the African American community, as well as a strong slate of beers led by an American Stout. The company was founded six years ago and is now in the process of opening its first full-time brewery in Inglewood next year.
“Six years ago we noticed a big void of black and brown cultural representation in the craft beer industry,” Ashburn told the judges. “Since then, we’ve been dedicated to promoting diversity and inclusion in craft beer. Our brand mission is to preserve culture, expand the palate, and build the community.”
Crowns & Hops impressed a panel of judges that included Arlington Capital Advisors principal Ryan Lake, Deschutes Brewery brewmaster of new product development Veronica Vega, Brew Pipeline president of sales Marty Ochs, pH Experiment co-founder Tom Bleigh and Willie’s Superbrew CEO Nico Enriquez, winner of the 2018 Pitch Slam.
On stage, the judges highlighted the importance of social missions in helping early stage breweries to differentiate themselves and create connections with consumers. On that front, Crowns & Hops delivered the clearest vision by highlighting the lack of representation for people of color in the craft beer industry and the need to promote and foster that community.
“There are so many lessons from the craft beer community that we can use if we truly hold true to the concept of being community and what it means to be community,” Hunter said. “We have all the lessons and all the tools and all the recipes — pun intended — to really build some serious bridges.”
With the victory, Crowns & Hops won a paid trip to Craft Brew Alliance’s headquarters in Portland, Oregon, where they will engage in strategy sessions and a $10,000 industry awareness package from Brewbound.