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Today’s Reality – What is now normal, is new, how does the industry react? Hmmm…

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The alcoholic beverage world is not the same as it used to be.  It isn’t just the fact that breweries, cideries, distillers, meaderies, and wineries are popping up at record paces.  It isn’t just the fact that there are more stock keeping units, or more commonly referred to on the non-consumer side of things as SKU’s (skyews is how it sounds when spoken), than retailers can possibly keep up with.  It isn’t just the fact that technology has advanced to where there is now a system called Picobrew that allows people to automate brewing a batch of beer in a small volume at home, much like a Keurig system, and it isn’t just the fact that social media has allowed what was once an obscure local brand to be thrust into the national spotlight based on the quality of their product, such as New Glarus and their Spotted Cow.  It is the fact that the consumer, for the most part, can’t, and won’t make up their mind on what they prefer.

Social stigmas are gone.  Beer and bourbon isn’t “just for men” anymore, and that is who they’ve been primarily marketing to for decades.  In one evening a consumer at an on-premises location is more likely to purchase a draft beer, a cocktail, a draft or packaged cider, and a glass of wineall in one night, especially if there are food offerings, than there is a chance of any consumer in the same establishment sticking with the same drink the entire night. Brand loyalty is a thing of the past.  In the beer segment there was primarily the Bud crowd and the Miller crowd.  Now it is the what is new, what is seasonal, the what haven’t I had yet? crowd.  This is the new normal of the industry. WThe past few years the market segment has shifted in the beer category to reflect this trend, with macro beer companies losing market share to the smaller more diverse in brands and styles craft breweries.  We’ve seen this shift with the resurgence of bourbon, and the boom of hard sodas, like the alcoholic “hard” root beer boom. Everything has changed, and it isn’t going back any time soon.

More and more producers have spread their wings and produce within more than one category, even three or more.  There are some companies that are breweries, wineries and distilleries that also make ciders via their breweries and wineries.  Retailers have begun to catch on and at the on-premises level and if they have an option of a case of four 6-packs, or two 12-packs, they are going with the smaller package size.  Why?  Not because of the sales margins, but because of the length of the time spent on the shelf.  Consumers do not want to be committed to a package size as large as a 12-pack anymore, unless it is something that is in limited supply, they need a large quantity for a gathering, or it is simply their favorite.  The casual consumer wants to try it all, they do not want to be locked down by a 12-pack, or even a 6-pack if they can.  That is why in states where by the bottle sales are legal, the mix-a-six, mix and match 6-packs are one of the consistently highest selling SKU’s in the entire beer category.  The same goes for the wine and spirits categories.  The larger the package the slower the sales, unless there is a deep discount creating it to be a value brand, or there is another factor.  The consumer seems to be more worried about missing out on trying something than they are on finding something that they like and sticking with it.  Brand loyalty is dead, and that is trouble for everyone in the industry regardless of size.

If the primary driving factor in the market beside quality is the brand’s “newness” — and that even trumps the price on most occasions — that is a battle that is expensive for producers.  Rebranding, reinventing, and developing new marketing strategies constantly is nor easy nor cheap.  What used to be a staple of the industry — the core brands of a producer — are usually the first to suffer. They suffer because they are always there. It is like living in New York City and always planning on visiting the Statue of Liberty but always telling yourself you’ll do it next month, because there is something that you can’t miss each weekend. Then you move away six years later and you never visited because it was always right there.

The consumer base is a driving force that has created this new normal and the industry has been slow in many areas to react to it.  There are still perceived lines between the categories, where someone is a beer guy, or a wine girl, or a spirits expert, and there is little to no industry cross over, save the companies that are diversifying themselves into multiple categories. Themajority of the conferences and tradeshows are segmented as well, with educational tracks that actually apply across the board but only one category base taking advantage of them. This hybridization of the palate of the consumer needs to drive a hybridization of the way that the industry educates and re-educates itself. 

That is the new normal that the industry needs to catch up to. Consumers are driving the pace at the moment, and that is new for an industry that used to utilize its marketing power to steer the consumers in the directions that they wanted them to go. The new normal is scary for some but that is okay.It is hard to tell what to expect, and not knowing if you’re doing the correct thing with your company and for your employees and their families is scary. It would be not normal to not feel uneasy. 

The positive to it all is that the consumer base is massive and it is growing. Yhe volumes are up and there is opportunity for everyone to stake their claim in this pie of the new normal. Breweries can benefit from learning from distillers, distillers from winemakers, and vice versa.  The more the industry adapts to the changing climate throughout all segments, and cooperates as an alcoholic beverage industry, the rising tide will raise all ships. 

It is time to stop segmenting ourselves and drawing the lines between the categories, styles, sizes, locations, and goals and realize we’re all in it together. The consumer is drinking a lot and a little of everything. We just do not know yet how this new normal will show up in our metrics and analytics once we figure out how to determine the pattern to the randomness.

In the meantime, go out, have a shot or a cocktail, a glass of wine, and a beer during the course of a meal and experiment for yourself.

In the meantime, go out, have a shot or a cocktail, a glass of wine, and a beer during the course of a meal and experiment for yourself.

We're Here to Help

Dear friends in the alcoholic beverage industry,

As we as an industry, nation and planet collectively try to navigate this unprecedented period the coronavirus has brought us, I’d like you to know that we at Craft Beverage Consultants (the other CBC!) are here to answer any question you may have (or not know you have) about not just surviving this time but positioning yourself to thrive as soon as social distancing measures allow your business to function at full capacity again.

If you schedule a free 60-minute phone or video conferencing consultation with me or any of my 11 highly specialized colleagues, we’ll help you figure out any of your immediate and/or longterm business needs, or “everything but the staffing,” as we like to say. We’re not high-pressure sales kind of people, especially these days, so you don’t have to worry about fending off annoying pitches. Make an appointment on our website or Facebook page, or just call us the old-fashioned way at 314-768-0220.

Our experts have a combined 150 years in the alcoholic beverage industry, with deep knowledge in everything from sales and distribution, production, and regulatory compliance to marketing, package design, event planning, IT, (social) media, hospitality, and even values-based executive coaching. 

For example, I can coach you through this season when chain accounts have canceled their spring resets and distributors have drastically cut orders. Our director of business strategy and compliance can save you money – now – on excise taxes, caution you to avoid naming your beers in ways that risk alienating your buyers (Wuhan Wheat? Coronavirus Cream Ale? Groan. No.), and secure TTB approval for the tastefully named beers you do make. Our creative director and web team can get your e-commerce site up and running and launch a social media campaign that keeps you top of mind for current and future customers. Our director of storytelling can put you in front of the press so you can tell your story to your community. 

Once you’re ready, we can look forward together. Now is the time to talk about post-virus. We all suspect the legal landscape to look different. But how? And how do you prepare yourself in a way that positions you to charge out of the gate ready to maximize the potential and profit of whatever the “new normal” turns out to be? Please get in touch so we can talk about it. 

And if you’d like to feel us out beforehand, join me as I answer all of your questions about sales and distro during my free “Ask Me Anything” presentation May 5 at  — p.m. Central on the Craft Beer Professionals Facebook page. Also, at 11 a.m. Central on April 28 Director of Storytelling, Communications and Public Relations Tara Nurin appears as a special guest of “Ask Me Anything” to share unique – and free – ways to use the media to your advantage now and going forward.

CBC’s roster includes local and regional clients like Epic Brewing, Logboat Brewing, Piney River Brewing, SudWerk Brewing and Common Cider Company.  The agency was founded in 2014 by Jacob and Beth Halls; I, Rick Laxague, joined as a partner in charge of sales, marketing and distribution consulting in 2019. 

I have close to 20 years of experience, a bulk of which was with Crescent Crown Distributing in Arizona. My last role there was Area Sales Manager for the dedicated craft beer division, coaching and leading a sales team to be nationally recognized. In early 2014 I helped take a regional brewery national as their Director of National Accounts and increase that segment of their business from 30,000 cases to almost 300,000 cases in two years, an increase that equates to $4.8 million in IRI dollar sales. 

Co-founder Jacob Halls brings 17 years of experience in regulatory compliance, business strategy, marketing and craft brand management to the company. In his former position as craft brand manager for the N.H. Scheppers Distributing Company in Columbia, Missouri, Jacob helped lead his team to winning the 2016 Distributor of the Year award from New Belgium and to a nomination for the Brewers Association’s Distributor of the Year award. Jacob is also the founder and director of the South East Craft Beer Fest/Sampling & Educational Conference. Beth Halls is Director of Business Operations and Coordinator of Charity Operations for the festivals and events run by CBC, such as the South East Craft Beer Fest, MO Bacon & Bourbon, and many more. 

Again, please reach out to me or my partners for anything. I’m at [email protected] and CBC can be reached at (314) 768-0220 or at craftbeverageconsultants.com.

I look forward to meeting/talking soon.

Sincerely,

Rick Laxague