Brewers association

Craft brewery marketing and branding ‘more important than ever’, says Brewers Association chief economist

As the number of American breweries has grown to around 8,000 and competition has intensified between these companies for consumers, it may be time to pull the lever on advertising, especially as they begin to compete with a growing number of local wineries and distilleries.

“In a world of intense competition, marketing and branding are more important than ever,” said Bart Watson, chief economist at the Brewers Association. Speaking at the Beer Tourism and Marketing Conference last week in St. Petersburg, Florida, Watson also touched on changing consumer habits around beer tourism amid the growing need to differentiate.

According to Watson, an average of two breweries are open daily, and there are now 11,500 brewery licenses filed with the Alcohol and Tobacco Tax and Trade Bureau (TTB), which he says has always been a strong indicator of the number of breweries over the next two years. years.

“Anyone who thinks this explosion in the number of breweries is going to end soon, I think they’re kidding themselves,” he said. “It’s going to end at some point, but most of the data suggests that we’re not there yet and there are a lot of breweries that are going to open. And some of them are second locations.

The headwinds for craft brewers aren’t just limited to their growing ranks, but also the stream of local wineries and distilleries opening up across the country.

“You’re going to have to compete with people trying to get people into their distillery tasting room, into their winery tasting room,” Watson said. “We are seeing these numbers increase at rates similar to what we are seeing in brewing.”

Another challenge for craft brewery owners is the aging population of craft consumers and the growing number of consumers who shop from home.

“We’re at the peak of 21-34 right now, but we’re going to be a lot more 35-44,” Watson said.

Young consumers looking for variety who once bought brands they didn’t know or stood in line for can releases will likely begin to settle into different models in the coming years, including reducing the number of races and the number of brands they purchase.

“When people make fewer choices about what they buy, it’s more important that you capture their minds,” he said, adding that brands need to resonate with consumers who are taking decisions in a split second when their children are crying or throwing tomatoes. in the supermarket.

As well as reducing the number of brands they buy, there are signs that “fewer people are devoting their lives to going to a brewery every weekend as they get older and change their habits”, said Watson.

“We get more people visiting breweries, but then on average they might be visiting breweries a little less, which makes sense,” he added. “Anything that becomes more mainstream, you’re going to have a less engaged core.”

Meanwhile, millennial consumers are changing where they drink, shifting their occasions from traditional venues to so-called “third spaces,” experiential places where drinking happens but isn’t the goal. main venue, such as concert halls, ax throwing bars and other experienced venues. -based locations.

Third Spaces account for a quarter of drinking opportunities for millennial consumers, Watson said, adding that he counts tasting rooms and brewery tasting rooms among Third Space outlets.

“We are moving from a country where we used to go to places specifically for drinking, to now a country where you can drink wherever you go, but fewer of them are specifically for drinking,” said he declared. “It creates real marketing challenges when the business isn’t about the drinking itself, but about that experience.”

For craft breweries, however, these experiences often take place within their own walls, and they attract “beer tourists,” people who have been to a brewery within two hours of their home.

In 2019, 55 million people visited a brewery more than two hours from their home, up from 37 million in 2015, Watson said.

“We are seeing quite a strong growth in the number of brewery tourists,” he said. “Even though average visits are down a bit, the total number of brewery tourists has steadily increased.”

The increase in the number of tourists to the breweries has led to an increase in sales at the brewery. Watson, citing preliminary figures, estimated that around 3.5 million barrels of beer were sold directly to consumers in the brewery’s tasting rooms and tasting rooms in 2019, which Watson called growth ” strong enough” compared to the 3.1 million barrels of sales at the brewery in 2018. .

“It’s probably your best opportunity to influence someone,” he said.