How brewpubs and tasting rooms are redefining the beer market, and what we can learn from their success.
"We’re gonna need a bigger boat.”
This is what, in a CSP column earlier this year, one former Anheuser-Busch employee and current beer connoisseur predicted c-store retailers would need to accommodate the increasingly successful craft beer segment.
It’s a success that the numbers clearly support. “Last year craft brewers grew 15% by volume, having sold more than 13 million barrels,” says Jennifer Litz, who covers craft beers for Beer Business Daily. “Craft reached a 6.5% volume share and a 10.2% dollar share during the same time.”
Yet during that same time, craft accounted for only 2% of convenience-store beer sales. Perhaps some retailers are indeed strapped for space to stock both the c-store standard brands and the dizzying number of craft and local options. Perhaps others feel it’s not worth the space, anticipating a burst in the craft-beer bubble. Either way, those closest to the craft scene warn it’s a subsegment that’s not going away.
“Contrary to what some people are saying, we are not in a bubble,” Brewers Association president Charlie Papazian said at the April 2012 Craft Brewers Conference. “We are knee-deep in foam, and the level is rising.”
Though the number of breweries in the United States dipped to fewer than 100 in the 1980s, the Brewers Association reports there were a record 2,538 U.S. breweries as of June 20—with nearly 2,500 designated under the label of craft. And 1,605 breweries are already in the planning stages.
Of those craft breweries bursting onto the scene, most belong to a segment that historically would not be considered competition—or as an opportunity—for the c-store industry: the brewpub.
“Brewpubs are restaurant-breweries that sell 25% or more of their beer on site,” says Litz. “Of last year’s 2,347 total craft breweries, 1,132 were brewpubs.”
The majority of these brewpubs have centered their business model on the simple concept of a tasting room, providing consumers great, fresh beer offerings from knowledgeable employees in a unique setting.
It’s a concept that has worked well for a number of brewpubs, as well as for brewers who technically fall into the category of a microbrewery or regional brewery, but who have recognized the power of the tasting-room model. Not only does it allow consumers to sample fresh products, but it also draws a variety of new beer drinkers into the segment.
“They can be from anywhere; they don’t have to be rich. People want to drink something that tastes good,” says Eric Kapraun, cultural coordinator for Chicago’s Half Acre Beer Co. “I think once people go outside from the macro and drink something with the intention of being fresh and not consumed in mass quantities, they’re not going to go back.”
So space limitations or not, it’s important for c-store retailers to at least sample what the local craft segment is brewing up.