Every time I go to my local craft beer supplier I see new brands popping up. It reminds me that Beer brands can be launched so cheaply. All you need is a brand, some package design and an hour to make some phone calls. There are several good breweries that will brew for you, probably off some pretty rough requirements. You can email out your labels to be printed then couriered to the brewery. The brewery can then ship your new brand to a craft beer distributor who will push it out to the stores. Pretty easy, aye.
I may be overstating the simplicity to make a point, but you get the picture.
I’m not sure what the cost is but I’d be guessing most people could afford a first batch. So it’s not surprising that there are a few new kids hitting the block. There are also a couple of new well funded breweries trying hard to grow into mass market contenders, ready for purchase by the giant breweries.
Whether any of these new brands are worth drinking is a point of personal taste and a little marketing. In this blog I’m going to do something a little different and discuss the way beer is marketed and some of the problems I see for these new entries.
Diagram from Geoffrey Moore's "Crossing the Chasm"
This is a market model which comes from the technology side of the business world. Most markets, including craft beer, can be broken into the above segments. When new products are released the Innovators are the first to buy. These people are driven to try something new and are generally right out in front. Now, the second set of people who jump on any new product are the Early Adopters, they watch the Innovators and get on board when they see the Innovators really enjoying something.. A company needs Early Adopters on board because, in turn, the Early Majority need to see these people being comfortable with a product before they buy. When you have these guys on board you have a home run.
Craft beer has some of the same problems technology has. If you’re launching a new beer into the market you have a few options. You can spend a fortune on advertising and try to trick the Early Majority into buying in without first getting the credibility of the first two groups. Or you could produce a product the innovators like, then sit back and let the innovators pass their message.
The problem with relying on the innovators is you need a genuinely innovative and cool beer. This is where it gets interesting for me.
I subscribe to the theory that your motivation for doing something is as important as the end product. The reason: your motivation is usually obvious in the end result, even if not to you. We start doing something because of a motivation or a set of beliefs - some theories call this the “Why”. It could be because you totally love black pilsner and want to share it with the world. Or it could be you want to get rich.
We take this motivation and we do something which ends up with an end product, in this case a beer. Often the Why is reflected in the end product. So if your motivation (the why) is a passion for Hoppy Beer you might satisfy your passion by starting a brewery and producing NZ’s most glorious hoppy beer (the what). Your beer will reflect your passion, as will your story. The innovators will buy in and off you go. You might have to produce some other beers as well to get the rest of the market interested but you’re on the way.
On the flip side, if your motivation is purely money and your plan is to build up and sell a brewery to Lion Nathan, then your beer will show this motivation. It will likely be a $2.50 beer which tastes like Monteith’s in an attempt to get popular with the Late Adopters. This sort of beer will never gel with either of the first two market segments so you are going to be relying on some flash and most likely expensive marketing.
There is a bit of this happening at the moment. Perhaps the best example is the Boundary Road Brewery. Their entry into the market was marked by a couple of full page advertisements ( http://thechosenone.co.nz/
) in the herald asking people to test their lager. So they want a mass market beer which is going to miss the early adopters and obviously have the money to do it. Another brand I see a lot is Stoke, which probably falls into the same category. They have the money and a fully functioning commercial brewery to start with.
I wonder if these breweries will crack the gold. It’s any one's guess if their products will resonate with the late majority who are not yet craft beer drinkers.
The smart money would be on Geoff Ross, NZ’s undisputed beverage marketing guru. The man who built up 42 below and sold it for a fortune is out to repeat that process in the beer market. Do you see him creating another Montieth’s? Hell, no, he bought into Moa, a brand that already resonated with the craft beer market and had already started its journey into the mainstream.
So going back to what I said about motivation being visible in the end result. Innovators will only buy new craft beer that supports their own beliefs and values. A great example for me is Yeastie Boys. They are a small label that gets a lot of press and are certainly bought by the innovating few.
It’s easy to see why from their range. They have a peat beer most people find undrinkable, a barley wine and a black IPA. This will never cosy up to the mass market. But it’s very easy to see the Yeastie Boy’s motivations and beliefs in their beer. They simply make beer they like to drink. It’s innovative and bold and therefore they don’t need to advertise to their market segment. The innovators find it themselves, then pass stories around about it.
Perhaps a better example is Epic. Early on, I remember seeing interviews with Luke showing off how many hops were in each glass. Luke's motivations seemed simple, here was a guy who really likes his hoppy beer. They have created a range that fails to get anywhere near middle of the road and yet because of this their range has worked its way carefully up from the innovation segment to the early adopters and now seems paused just in front of the early majority segment.
The Epic story is a classic one which shows how if your motivation is clear, and resonates with an innovative audience you can move your product up into the mainstream as more groups take on your product.
It will be very interesting to see if these new breweries with deep pockets and a business plan can go straight to mainstream without appealing to us craft beer fanatics. These marketing theories say no.