The Shrinking Sandbox and Style Domination

August 25, 2017

By Bryan Roth, August 25, 2017

A “go-to” beer can be a blessing. In today’s world, full of options in any style or flavor, having a tried-and-true brand you can always rely on can feel like a safety net when that new fruited gose or IPA didn’t taste exactly like you hoped. Want an amber? There's one easy name to remember.

Look closely at those go-to options and it’s easy to spot a variety of flagship brands that in one way or another “own” their style.

It’s a good thing “local” is increasingly the name of the game for beer, as brands like Sierra Nevada Pale Ale and others have laid claim to many styles of beer on a regional and national level. Unless your favorite brewery is changing drinkers’ perception of a particular style – or making a whole new one – it’s probably too late to think too big in today's scene.

“The hard work of the brewing business is, for us, finding the things that matter within scenes and being a local participant everywhere,” said Tony Magee, founder of Lagunitas. “Thus the term ’national’ becomes a fact rather than business model or a way of making friends.”

Magee, well-known for his verbose and metaphorical explanations of business and beer, notes that trying to “own” a category is “straight-forward, MBA-driven, market-part segmentation business sense.” However, there’s a fact that can’t be denied for his national brand of Lagunitas IPA: it does sort of “own” the category alongside one or two other brands.

The brewery would produce about 600,000 barrels of Lagunitas IPA in 2017, a similar amount to what what Dogfish Head, Harpoon, and Abita might make combined.”

According to sales tracked by market research company Nielsen, Lagunitas IPA made about $58 million in sales in 2016. That’s roughly $17 million more than the #2 IPA, Sierra’s Torpedo Extra IPA, and more than twice as much as #3 – Lagunitas’ Little Sumpin' Sumpin', an IPA masquerading as a wheat ale.

“You could decide to own something, maybe a wild mustang, but in the process of bringing it under ownership, it will be changed and it will cease to be a wild mustang at all,” Magee said. “So a brand new and genuine one will appear just outside of your reach to be that.”

On a community level, that “new and genuine” IPA may be something made in a city or state near you, but in a big picture, national sense, Lagunitas has IPA as a style locked down pretty solidly. In 2011, the brewery estimated its IPA was 70% of production, a number that is likely to have come down in recent years as Lagunitas has expanded and diversified its portfolio. But even if it counted for 60% today, that would still mean the brewery would produce about 600,000 barrels of Lagunitas IPA in 2017, a similar amount to what what Dogfish Head, Harpoon, and Abita might make combined.

“At the time we just wanted to find a blank spot on the flavor map and develop our own voice as a brewer: our own brand identity to tell the story of our own ideas of beautiful flavors,” Magee explained about the rollout of IPA two decades ago. “This is the most important thing you can do, more important than hitching your cart to that mustang, or a certain style or trend.”

All the same, there are still plenty of other examples of breweries that have planted their flag via a flagship to more or less claim a style. Wheat beer is led by Blue Moon and Allagash White. Shandy/radler by Leinenkugel’s Summer Shandy. Amber has New Belgium Fat Tire.

But don’t think every category is locked up.

The Boonville, California brewery will have stiff competition for national interest in the style and the broad sour category from DESTIHL.”

Adjunct lager (think Bud, Miller and Coors) has always been a fierce battleground among the biggest brands in beer, but the full-bodied Vienna Lager, with a bigger malt profile that offers more body and flavor, has Sam Adams Boston Lager set to go toe-to-toe with AB InBev’s Blue Point Toasted Lager and Devils Backbone Vienna Lager.

Brown Ale, a style that isn’t too sexy but offers a great gateway for new drinkers, features two breweries in Avery and Bell’s that continue to expand their distribution across the country. Nobody has fully stepped up to take on the niche barrel-aged stout market, but New Holland has made it very clear that’s their intention after partnering with Pabst to get the Michigan brewery’s Dragon’s Milk imperial stout and its many variants in more states across the U.S.

One of the most interesting cases may be within the category of “sour” beers, a style that has been cited as a growing trend for at least the past seven years. In this space, Anderson Valley has a headstart with its lineup of goses, tart and sometimes fruited versions of a traditional German beer.

Anderson Valley distributes to 30 states and has used its goses as a lead brand, but the Boonville, California brewery will have stiff competition for national interest in the style and the broad sour category from DESTIHL, an Illinois-based company that is already in 19 states and recently expanded operations with a new facility that will allow the brewery to eventually reach 150,000 barrels to produce its “WiLD SOUR Series” and a variety of other “clean” beer brands.

Mike Duesenberg / Good Beer Hunting / BeerGraphsThe race to dominate the Gose style reaches new heights every summer, judging from new Goses added to the BeerGraphs database over time.

“It was sort of between them and us in a race to offer the first canned sour,” said Giotto Troia, DESTIHL’s marketing and communications manager. “Unfortunately, they beat us to it, but people are realizing that sour beers aren’t just mouth puckering sour bombs. There are so many different styles to choose from, and our portfolio has everything from dry-hopped sour ale to a blueberry gose and flanders red. We’re appealing to people that may not have liked a certain style of sour beers, but we’re able to offer something that’s across a spectrum.”

DESTIHL’s interest in capitalizing on a variety of sour beers highlights the broader issue of national scale: there simply aren’t many styles of beer left for which a brewery can say they’re a leader. With an opportunity like this for a rapidly-growing business, it makes perfect sense to figure out a way to connect DESTIHL and “sour” in as many ways as possible. Expectations haven’t been set, so the brewery has a chance to do it themselves.

“Nationally, it’s still a new style that not everyone has experienced yet, so people haven’t become jaded or polarized about it,” Troia said. “There’s such an open market for sours. Entering new areas and this is the first thing they see can open their eyes to the opportunities it offers as it gains notoriety within the industry.”

ZX Ventures, a division within AB InBev, is an investor in October
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