For this month's Session, Chuck Lennati over at allbrews asks us to weigh in our thoughts on the success and failure of breweries. Which makes me think, maybe I should ditch my day job and become a Brewing Industry Consultant. After all, I do have plenty of qualifications for the job.
I drink beer. I read about beer. I talk about beer. I write about beer. And every two or three months, I try to brew beer in my kitchen. Some might quibble with the fact I have no actual brewing industry experience to be brewery consultant. But when has something like that stopped any consultant from collecting a check?
So without further ado, allow me to put on my consultant's have and give you my three rules for any aspiring brewery to follow
Rule #1: Develop a flagship
Beers like Sam Adam's Boston Lager, Sierra Nevada Pale Ale, and Anchor Steam have become ubiquitous. They may not be the sexiest beers in these breweries portfolios, but lots of people who might otherwise have a Budweiser try them now and then. Flagship beers pay the bills. It's not uncommon for a brewery to earn 75% of their revenue from their flagship. Any brewery that establishes popular flagship beer that is drinkable, yet flavorable and consistent with the brewery identity is going to do well
Rule #2: Budweiser is not your competition, Sierra Nevada is
Or Sam Adams. Or Lagunitas. Or that great brewery just five miles down the road. Sneer all you want at Blue Moon, lots paying customers don't give a damn about contrived "crafty vs craft" debates and happily drink Blue Moon, so that's your competition, too. I still see new breweries positioning themselves against Budweiser and other light industrial lagers. Maybe that worked five years ago. The bar was raised considerable higher than that years ago.
Rule #3: Honestly address the shortcoming of your business
Despite the rising popularity of craft beer, I know of couple breweries that failed in the past couple years. In my opinion, the problem was they simply didn't see obvious problems of their business and correct them.
Mayfield, which specialized in high-end barrel aged beers, failed a couple years ago.
I remember speaking with the owner a couple months before it all went south. He was a very smart man with a Ph.D. in Molecular Biology. He talked about deep subjects like "winery business models" and the historical context of his beer's sophisticated flavor profiles. There was just this small problem. He was charging a whopping $40 a bottle, over twice as much as barrel-aged offerings from well regarded breweries like Firestone-Walker and Russian River, and in some of his beers, those sophsticated flavors really clashed. Any 5th grader can tell you that's a recipe for disaster. And it was.
Another brewery that failed recently was Buckbean Brewing from Reno, NV. I know less about this brewery than Mayfield, but they were relentless marketers and also aggressively expanded their distribution. They sponsored CanFest, a canned beer festival. When Buckbean closed, a lot of people speculated it was due to the rising costs of hops and grain, over-expansion, or other complicated industry factors.
Actually, Buckbean's real problems were fundementally different than that. The beer sucked. I tried a four-pack of their red ale and was overpowered by phenolic off-flavors. Plenty of reviewers on RateBeer and Beer Advocate recognized the same problems. Apparently, lost in all of Buckbean's aggressive marketing is that the product has to be made competently for the marketing investments to pay off.
I have to think that if Mayfield and Buckbean honestly recognized their problems and confronted them, they would be around today. Mayfield tried to intellectualize away a serious pricing issue. Buckbean seemed to sweep serious quality issues under the rug of marketing. The truth caught up with them. So perhaps my advice to anyone wanting to start a brewery, or any business for that matter, is look yourself very hard and honestly in the mirror.
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