Jim McCune, executive director of craft beverage marketing at EGC Group, a marketing agency, told BeverageDaily that no one really knows how the future will play out for many of these craft brands, but he can predict confusion of ownership in the marketplace.
“I think a lot of consumers, especially new to craft, don’t really see a line between big and small,” he said. “I think there are craft beer aficionados who keep their eye open and really want to stay open on independently owned and operated small and local microbreweries. I definitely think we’ll see some divide in consumer perception.”
Big brewers must adapt
One way companies have tried to balance this is leaving the original brewer in control of making the beer, in the case of Lagunitas Brewing Company (sold 50% of its stakes to Heineken) and Ballast Point Brewing Company (sold to Constellation Brands for $1bn). However, other companies may handle it differently, as big companies purchasing small brewers is still a new trend.
No one truly saw the craft beer explosion coming, including big brewers, McCune said. The growth of the market has been “unprecedented,” he said, something that he believes woke up big beer businesses in recent years.
“When you own 100% of something and seemingly right under your nose someone takes a big piece of it and continues to take more of that market share, I think craft beer really has big beer's attention,” McCune said.
The taste profile of the US and world at large is changing when it comes to beer. Consumers now want beers that are innovative and new, but also offer full-flavor. McCune believes that until big brewers look at that, they’ll continue to lose market shares to craft breweries.
One specific point McCune brought up was last year’s Budweiser Super Bowl advertisement that mocked craft beer. This has fueled “the age old struggle between big and small,” McCune said. This year, he said Bud Light is redesigning their packaging for the first time in a decade in an effort to appeal to millennials.
“I think that still shows they’re making the same mistakes by not understanding millennials and especially centennials, their younger brother and sisters,” he said. “If you understand those two generations, two of the first to grow up on the internet, [you’ll understand] why they demand such transparency from their brands.”
“I just don’t know until they change the way they market and brand if they will ever truly embrace those two generations.”
Appealing to a younger generation
Big brewers need to focus on what the younger generation’s buying habits are to truly take advantage of the craft trend, McCune said. This is something that they “really focus on” at EGC Group, as the ages 21 to 27 are a “critical demographic for beer clients,” he said.
“As long as you understand they want innovation and personality and full flavor and variety and local, but above everything they want authenticity in a brand,” he said. “I think anyone that can bring that, big or small, can tap better into that demographic.”
Moving forward will be a challenge for big players trying to carve out a niche in the craft market, McCune said. Much like small brewers would have a difficult time running a big business, those big beverage companies may have a tough time adapting to working as a craft company.
“They’re going to have to force that brewery they purchased into their existing channels,” he said. “So I guess that’s going to take some time to see how that pans out as well. I think they counterbalance it usually with their massive distribution arm, so I don’t think we’re going to know [how it will work out] for a while.”