If you reside anywhere in the United States, whether it’s in a large city, the suburban outskirts or even in a small rural community, you know that craft beer is one of the hottest trends in the American food and beverage industry. At the end of 2017, there were 6,266 craft breweries nationwide, an increase of 15.5% over 2016. Perhaps more astounding is that the quantity of craft breweries has nearly tripled in five short years.
The craft brewing industry contributed $76.2 Billion to the US economy in 2017 and sustained more than half a million jobs. With such impressive growth, the rest of the distribution and manufacturing industries can’t help but pay attention. Here are some of the winning strategies driving the micro-brewery success story.
First, and arguably the most impressive strategy, is the microbrewery’s ability to fire up local spirit that builds fierce brand loyalty. For many, the main business is packaging and distributing beers to liquor and grocery stores, and yet some breweries also offer consumers an inside look at product creation by setting up tap rooms.
Often, these tap houses fill a void in local communities. Breweries have taken to setting up shop in retired warehouses, churches, firehouses, factories, packaging facilities, and more. Instead of leaving old, and often historic buildings abandoned, breweries are breathing new life into these structures by creating a gathering place for locals and a staple attraction for visitors. Residents feel a sense of community and pride in their local brewery, making them more likely to support the business.
Operating in larger metropolitan areas means more competition, and therefore merely existing in the local community may not be enough to ensure a loyal customer base. In these instances, breweries differentiate by offering loyalty programs like “mug clubs,” or put a unique spin on its environment like providing classic arcade games, live music and entertaining facility tours.
Breweries could stick strictly to the business of distributing to stores, however this direct consumer interaction and unique customer experience allows these businesses to build strong brand loyalty.
Many manufacturers and distributors create and deliver its products without ever interfacing with the end customer. Instead, some imaginative companies are leveraging existing facilities to host tours, product demonstrations, and other unique events. John Deere, Ben & Jerry’s and Boeing are great examples of manufacturers that welcome visitors to its facilities to sneak an inside peek at the production process.
Alternatively, other manufacturers – like Casper and Nest Bedding – are starting to open brick and mortar locations so consumers can interact with products before purchasing. Opening warehouses to visitors and launching physical locations aren’t always realistic options, so some businesses have looked to videos and virtual tours to build local spirit and share the company’s story. Manufacturers like Amgen offers an interactive tour of its biotechnology production facility and Double Coin transports visitors to its tire manufacturing plant in Thailand for a narrated tour.
Each approach, from opening physical locations to offering virtual tours, has a common goal: make customers feel like they are part of a one-of-a-kind community when they interact with the business and product.
Many craft breweries double down on the community spirit by engaging regional artists to design unique and attention-grabbing labels. This strategy helps them stand out on liquor store shelves and creates brand recognition through familiar illustrations, in addition to adding that local appeal.
Further, although bottles still represent the most popular packaging choice for breweries, many craft beer manufacturers are turning to cans as a more cost effective and efficient solution. In fact, 30.9% of packaged craft beer appeared in cans in 2017 (up from 24.5% in 2016). Not only are cans cost efficient to ship because of their lighter weight, they also offer quality benefits: aluminum cans are impervious to sunlight, preserving freshness and preventing chemical reactions that can alter the taste of the product. Cans are also a more convenient option for consumers looking for a quality beer that’s easier to transport to activities like tailgating, camping, golfing and boating—many of which are in public areas that enforce a ban on glass containers.
This concept is certainly not unique to the brewing industry. Packaged product companies have always understood the necessity of cost effective materials purpose-built for the merchandise. Unfortunately, in the search for cost effectiveness, sometimes creativity and consumer convenience gets lost in the mix.
However, these details can be critical in grabbing the attention of new customers and standing out against competition on crowded store shelves. As many as 81% of consumers have tried a new product simply because the packaging caught their eye, while 52% of consumers have switched brands because of packaging alone. Offering a new and innovate spin on packaging materials and design can mean the difference between maintaining and attracting customers and driving them to choose a more inventive and conveniently packaged competitor.
Once micro-breweries attract a customer base and a loyal following, keeping customers interested is still challenging. One effective strategy is to drive demand through scarcity. Much like a clothing company keeping up with the latest fashion trends, micro-breweries must understand the modern beer palate, latest flavor combinations and seasonal preferences.
Many breweries create limited release beers, building up hype around a freshly invented product, which stimulates demand from consumers who want their chance to experience the latest brew before it sells out for the season, or possibly forever. Piggy-backing on these specialty recipes, many breweries throw release parties with live music and special pricing that attract large crowds.
We see this strategy applied frequently in the food and beverage industry. Think Starbuck’s Pumpkin Spiced Lattes or the McDonald’s McRib. However, manufacturers have started taking a few pages out of this playbook to stir up demand of its own. Take AllBirds, a manufacturer of environmentally friendly shoes. The company partnered with Shake Shack in New York City to offer limited release shoes for one day, and was at it again with fall and winter shoe colors that quickly sold out.
In an economy dominated by mass-produced goods, consumers yearn for ways to be unique, yet still purchase from the brands they know and trust. Creating limited release products helps customers achieve the best of both worlds. This also creates a sense of urgency for consumers to purchase products.
Of course, craft breweries are partially successful simply because of the nature of the product. It’s easier to get consumers excited about a pint of beer than, say, a standard household product. However, brewery success can be largely attributed to getting back to the basics and employing many of these innovative strategies that are applicable even for businesses that don’t involve hops, wheat and barley.