Established brewers are seeing their flagship brands get squeezed

Established brewers are seeing their flagship brands get squeezed

It's seven o'clock in the morning, and the gathering crowd already boasts a few dozen hardy souls. By the time sales actually commence in a few hours, there will be many times that number standing patiently in a line that will snake from the door down the block and likely around the corner. Or, at least, organisers hope the assembled throng will be patient – bad behaviour in lines such as these has been unfortunately growing increasingly common.

One might expect that the object of this mass desire would be coveted concert tickets or perhaps the release of a new high-tech cell phone. But, it is neither. Instead, it is beer; more precisely, one of many limited release brews made available to hard-core beer aficionados by one of the world's reigning cult breweries.

Welcome to the world of one-off beers.

While ales – and they are mostly ales – that drive the self-described 'beer geekerati' wild are certainly the extreme end of the one-off mania that is more and more coming to define craft beer in North America and beyond, they are nonetheless indicative of an overall trend that is seeing established and reliable brands increasingly passed over in favour of what is new and exciting. For many beer drinkers, tried-and-true brews like Budweiser, Coors Light, Heineken and Carlsberg, or even Samuel Adams Boston Lager and Sierra Nevada Pale Ale are no longer considered the 'go-to' brands they once were.

Instead, it's what is fresh and unusual, preferably produced by a brewery that is well-regarded within the consumer's peer group, that is scooping the sales. It is now a well-established trend in North America, is growing in western Europe and is arguably destined to come into force in Eastern Europe and parts of Asia before long.

The most obvious manifestation of this development may be seen in the performance of the traditional flagship brands of the major US brewers, which, with few exceptions, have all been slumping in recent years, in some cases quite badly. True, collectively they still form the largest piece of the North American beer sales pie by a distance, but in a market that has been more-or-less stagnant for some time, it is obvious that when craft and imported brands post double-digit sales growth, those acquired volumes must be coming at the expense of the marquee brands.

Lately, however, even large US craft breweries have begun to see consumers turn away from their mainstay brands. In explaining a third consecutive quarter of declining sales, Boston Beer Co's founder & chairman, Jim Koch, said: "Our Samuel Adams brand lost share of craft due to the increased competition and continued growth of drinkers interest in trying new styles." He noted that while recent new brand introductions had been generally well-received, "…they have not offset declines in Samuel Adams Boston Lager and our Samuel Adams seasonal beers".

Boston Beer hasn't suffered alone in this regard. When Brewers Association economist Bart Watson worked through recent data suggesting that craft beer sales in the US are cooling off to a relatively modest 6.5% growth rate, he calculated that when non-BA brands like MillerCoors-owned Blue Moon and AB InBev's Shock Top were removed from the equation, growth rose to nearer 9%. Further, Watson noted that larger BA-qualifying breweries, such as Yuengling, Boston Beer, New Belgium and Sierra Nevada, were all down a collective 4%, a fact that due to these breweries' sizable volumes, exerts additional downward pull on craft's growth numbers.

The picture this all paints soon becomes apparent: In a market awash with newer players, the wider availability of beers from other regions and the launch of new brands from established breweries, familiarity might not necessarily breed contempt, but it more often than not translates into declining sales.

One way to address this situation, of course, is to pursue other markets for a brewery's flagships, thus transforming what is the 'usual' in domestic markets into the 'unusual' in foreign lands. This has been successfully pursued by several companies, from Sierra Nevada with its Pale Ale in Canada and the UK, to AB InBev's successes with Budweiser in Russia and China.

Domestically, meanwhile, the preferred approach would seem to be, "If you can't beat 'em, join 'em". This is precisely what many flagship-challenged breweries have been doing for some time, be it AB InBev and MillerCoors releasing variant after variant of, respectively, their Shock Top and Blue Moon lines, or Boston Beer branching out with its Nitro project. Regardless of brewery size, the answer to failing flagship sales would appear to be giving the consumer exactly what he or she wants and, if that is 'new"' or 'different', then so be it.

None of this bodes particularly well for the future of the traditional flagship beer. It may even represent a game changer in the way breweries market their brands over the next five, ten or 25 years. Because, where new brand introductions are concerned, that would appear to be where the money is.

Perhaps the only limitation here could be the size of a store's beer cooler or the number of taps on the bartop.