The Art of the Zag
Session Hazies, Hard Seltzers, Low Calorie, Health & Wellness, Better for You, Functionality, Hard Kombucha, Hard Coffee, Non-Alcoholics, Alternatives, CBD, THC...This is where demand is going, or at least where the most powerful breweries are predicting it to be heading. It’s difficult to resist finding a home in one or more of these spaces, with so much curiosity around each. I refer to anyone employing these strategies as Zigging. There’s nothing wrong with a Zig, in fact, a couple Zigs is probably crucial today. Nobody wants to be unprepared for where their customers are heading or where there’s opportunity to ensure the future health of their business. But I’m not here to talk about the Zig...
One of my favorite sports personalities is Ryen Russillo, formerly of ESPN and currently with The Ringer. He introduced me to a term that he associates with sports and media called Zagging. When news breaks, or a big moment happens, there’s always a wave of similar takes. These come from analysts, “talking heads”, and the peanut gallery on Twitter, where everyone is going in the same direction. The first instinct is always to Zig. But then it’s inevitable for a brave soul to come in smokin’ hot 🔥with a Zag, whether right or wrong. Zags can be insightful and provide a fair, alternative stance. They can also be completely ludicrous. But either way, Zags go against the grain.
In craft beer, many are Zigging right now, towards what they see as wide open categories. The trends listed in the introduction are seen as the opportunities without a ceiling, for now at least. Conversely, what we traditionally think of as beer feels like the walls are closing in and many are starting to panic. Those who betray their original mission risk becoming lost in the endless Ponzi scheme of trend chasing. They’re likely to end up like George Costanza in the famous episode of Seinfeld called, “The Opposite”. After returning from the beach after some self reflection, George walks into the diner and says to Jerry and Elaine, “Why did it all turn out like this for me? I had so much promise. I was personable, I was bright. Oh, maybe not academically speaking, but ... I was perceptive.”
Nobody sets out to turn their back on their original ethos, but it can degrade over time as pressure from competition and missed opportunities lead to temptation when the next trend comes along. And breweries should follow some trends, especially when they mesh well with the company’s foundation. But chasing each and every one becomes unsustainable. When these “innovations” lack any logical fit within the brand’s identity, their perceived culture becomes unrecognizable, and that’s going to be a problem in the long term.
George continues, “My life is the complete opposite of everything I want it to be. Every instinct I have, in every aspect of life...it's all been wrong.” For breweries looking at how to position themselves in this crowded space, perhaps it’s time to take Jerry’s advice to George, and do the opposite.
Zag.
Zagging In Style
Given the size and popularity that traditional beer still maintains, I’m reminded of my favorite Warren Buffet quote, “Be bold while others are afraid.” At the speed this industry is evolving, perhaps the white space in beer will all of a sudden become the same styles being left for dead. As larger breweries face shrinking shelf sets and pressure to simplify or rationalize their SKUs, new styles on the uptick gain preference, leaving the classics behind to be deleted. It’s one of the downsides of being big in a crowded market and trade-offs of being well-scaled. When you’re not local, you need products that will perform and do so immediately. But with over 7,500 breweries, even the long tail is under pressure to focus on the styles that sell the fastest, especially once the newness wears off.
I am a believer that if breweries are passionate enough and take the time to educate their consumers and convey why they’re so excited, that most styles can become successful with the brewers and their personality behind it. I blame the previously weak performance of lagers from craft breweries as a failure to communicate, not a failure of the style itself. As Revolution’s Head of Communications for the last 2.5 years, I blame myself for Rev Pils not being a bigger seller for Revolution. I never blocked off enough time and resources to convey why our brewers are so passionate about it. I never figured out how and never allowed it to be a high enough priority. That’s going to change and I think we’ve all been sensing the increasing respect around lagers as beer lovers begin to see the light.
Just like 2014 through 2019 was not the year of the lager, I have bad news...2020 won’t be either, BUT the slow and steady shift is beginning. Here’s some data on the most popular styles of lager by craft breweries, including their rank at the big box stores tracked by IRI:
I realize that we have plenty of craft breweries already making a lager. I’m talking about really going all-in on the style though, if its a passion like so many brewers say. Lager has been neglected for far too long and been the victim of so many failed predictions for breakout beer style of the year. While others are figuring out how to evolve into a beverage company, do the following if you truly love lagers:
Brew them and brew them well. Focus on nailing the recipes, not on variation after variation.
Go out of your way to educate your fans about the styles and your process. Invest time in better storytelling to explain the inspiration and why these beers are so important to you.
Teach them something. Fans who you’ve made smarter are destined to become more loyal. Build appreciation for why they need to be expensive, nearing IPA territory, and warrant that premium price tag.
Be patient with it. This isn’t going to get a line out the door and it’s going to take a lot of time. Be genuine, get creative, and I’d wager that it will work.
Spiteful Brewing (Chicago, IL) Schadenfroh German Pilsner
This isn’t some passionate plea from a lager lover. I’m an IPA guy first and foremost, but the handful of breweries who have been quietly Zagging hard to lagers are seeing a lot of success and are currently among the most respected and recommended breweries in Chicago. They’re not Zigging toward the demand, they’re Zagging by creating it themselves.
There’s other styles that are surprisingly thriving over the last year as well, including Golden Ale (Rank 7, +8%), Tripel (Rank 18, +17%), and Cream Ales (Rank 20, +13%). Sure, a category like Tripel is made up mostly by a few beers. Victory’s Golden Monkey series leads the way, followed by New Belgium’s, but third on the list is from a much smaller Tampa, FL operation called Coppertail Brewing. Their Unholy Belgian Tripel outsold Allagash’s Tripel and across a smaller footprint.
Breaking the Glass Ceiling
Most craft breweries use cans now, or so it seems. Longtime holdouts like Allagash, Three Floyds, Off Color, and Russian River added cans in 2019 and are currently benefiting from the new format. If I asked you to guess the percentage of beer is sold in cans vs. bottles, this chart showing the breakdown for all beer (including macro) would unlikely surprise you:
This makes sense given that so much of the high-volume packs push cans over bottles, which accounts for such a high percentage of beer’s overall sales. But did you know that if you drill into just craft, the story still flips the other way by a significant margin? While the spread between cans and bottles is inching closer and closer together with each year that passes, bottles are still a strong majority of sales and represent an interesting chance for a Zag:
I love cans myself, but buy plenty of bottles too, and if I were bootstrapping a brewery in 2020, or a can brewery looking to widen my audience, I’d be thinking about bottles. With most breweries zigging toward cans, the capital investment in a used bottling line may be available for cents on the dollar. There’s a significant portion of consumers who primarily buy beer in glass and perceive it as better and more premium. While that core might be aging and getting slightly smaller by the day, it’s still massive and potentially underserved as far as options goes. Here’s a fun chart showing of the various formats in craft beer and the percentage of sales they each make up:
Bottles are far from the perfect solution. They’re heavier, they shatter, they let light in. Other risks include that those bottle customers you’d be targeting are more brand loyal to the larger established breweries and a tougher nut to crack. All that being said, I’d strongly consider that battle over trying to stand out among all the cans. You may think I’m crazy, but that’s what makes this a Zag!
Doubling Down
One time I was playing Blackjack and was dealt 7-7, then the dealer flipped over a 7 of her own. I shrugged at the unpopular position of a 14 and looked across the table. Five other people sat there shaking their heads saying, “gotta split it…” Meaning, double my bet by turning each of the 7s into the beginning of a new hand. So I’m sitting on 14 and have to invest twice as much money into two 7s, which also aren’t the most desirable starting card, when the dealer herself has a 7? According to “the book” (statistics) you do…
I ended up winning both hands.
But not every situation has a book to follow like Blackjack. In fact, sometimes you have to ignore the data completely and bet against it. I want to touch on one more topic and my favorite of the Zags. I’ve been working on it with the team at Revolution for quite awhile now. It’s all about ignoring data, and betting big even when the data tells you otherwise.
Being successful in 2020 will require setting yourself apart from the rest and since we all see the same data and trends, that means going all-in on what got you to this point. Established craft breweries have a lot of brands by now, many of which have been being made for quite a few years. Short of major market expansions, over time those brands eventually max out on distribution opportunities and peak. They may still represent a lot of volume, just a declining number each year which needs a solution. When the data says that you should kill a brand, sometimes you certainly should. The alternative is to double your bet.
I’ve been hearing predictions for many years now that consumers will be fatigued by the rapid fire releases of one-off specialty brands and fall back into those they trust. Some were wishful thinking and others just came a little too early, but it does feel as if demand is finally shifting from innovation to quality (including consistency). If true, that doesn’t mean you should just sit around and wait for the pull-through to come to you. It’s never going to be that easy in 2020. You’ve got to raise your bet on the brand(s) that built your brewery and make it easy for people to fall back in love with them. There’s a lot of ways to do that, including freshening up the packaging, but I recommend going much deeper with internal discussions where you ask yourself why this beer is so important to you and how it got you this far. Take that feedback and ask yourself if that’s been reflected in your social media, website, to your distributors, bartenders & servers, sales team, or however you get your messaging across to your consumers. Don’t just refresh the packaging, refresh your own view of the beer and brand’s place today, then get that information to your fans in an engaging way.
Wrap-Up
Conventional thinking, like the number of breweries in the US, is near its saturation point. The science of employing tested theories and data as a core strategy is an important discipline, but might not be enough anymore. Challenging this wisdom and swimming upstream is an art form worth pursuing. Look at your product mix, packaging, and messaging, take a deep breath and say:
You might just find your point of differentiation.
Thanks for reading! Got any more good Zags? Hit me up in the Twitter, Instagram, or in the comments.