In June, the Brewers Association rolled out a new seal designed to help craft drinkers differentiate which beers on the shelf or on tap are from small and independent brewers. As the membership organization dedicated to promoting and protecting small and independent craft brewers in the United States, it’s clear why the Brewers Association is passionate about promoting the seal. But there are plenty of reasons for distributors and retailers to be excited about the seal as well, and ways to incorporate it into their promotions and selling tactics.
Let’s start with customers. A recent study commissioned by Brewbound and conducted by Nielsen found that:
- “Independent” and “Independently Owned” strongly resonated with 81% of craft beer drinkers.
- More important than resonance is purchase decision. Craft Insights Panel conducted by Nielsen, 55% of craft drinkers said it was very/somewhat important to their purchase decision if a beer was made by an independent brewer. That number rises to 69% among weekly craft drinkers, with one-third of that group selecting “very important.” That’s similar in importance to local, where 36% of weekly craft drinkers selected “very important.”
Unfortunately, many shoppers don’t always know which of their selections are made by an independent brewer. This should be a concern for both distributors and retailers for numerous reasons. The first is that they are missing an important opportunity to differentiate— and hence premiumize—the products they are selling. Looking at recent scan data, independent craft brewers offer a price premium to retailers. Independent brewers have averaged a case price $1.37 higher than the larger craft category in scan data YTD (through 7-23-16; compares average case price on BA Craft filter on IRI Craft versus overall IRI Craft average case price). That price premium is one of several reasons why beers from small and independent brewers earn 21.9% of consumer dollars spent on beer, despite craft beer’s 12.3% market share by volume.
Secondly, many shoppers, who may or may not be aware of a brewery’s independent status, are purchasing for others, so offering them clear information may be a way to increase purchase frequency or volume. The same Nielsen CIP survey found that only 51% of drinkers say they consume all or most of the craft beer they purchase. Among females, that percentage drops to 29% saying all or most of their purchases are for their own consumption. Another recent study (Zondag and Watson, 2017) found that 31% of shoppers who buy craft beer do not consume it personally. Giving those shoppers information may help them in a complicated purchase decision.
This leads to a third, larger point. In the increasingly complicated beer aisle, there is strong evidence that providing consumers with more information can increase purchases. A 2017 experiment published in the Journal of Behavioral and Experimental Economics found that offering consumers at a bar more information about their choices increased purchases, even as the choices increased (Malone and Lusk, 2017). In their experiment, they offered a beer menu with either six or 12 options, and then offered three menus: one with a special, one with ratings, and one without ratings or a special. With the original menu (with six choices), consumers bought beer 16.9% of the time. The best result occurred when they were offered 12 options but also scores (from BeerAdvocate). Under that system, beer went up to 20.4% of sales. The combination of choice and information proved to be the ideal scenario for beer sales.
As choices continue to proliferate, retailers who provide information and curate their selections for their customers will hold an advantage in the marketplace over those who don’t. This type of value-added behavior has long been in the DNA of both independent distributors and better beer providers, so transmitting information to consumers about brewery independence is a logical next step. Beer drinkers, especially Millennials, expect transparency when it comes to their food and beverages, and retailers who show they are committed to aiding that transparency will likely win the loyalty of customers.
Lastly, it is important to the craft community that you show them and their customers that you value the independent craft movement, support the independent craft seal, and are supporting them in the marketplace. Independence is a hallmark of the craft brewing industry, and it matters to the brewers who make the beer and the beer lovers who drink it. We hope it will increasingly matter to their partners in the middle: distributors and retailers.
This article was written by the market development committee as part of the BA Insider—a free email publication sent quarterly by the Brewers Association. Each issue covers topics relevant to craft beer distributors.