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#1

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COVID-19 Effects Major Industry Trends Craft Beer Branding (& Package Design) Trends Expert Opinions

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Part 1
COVID-19 Effects

Packaging will become the expectation

Can I get this to go?

When the full weight of COVID-19 hit in March 2020, taprooms across the country were shut down. This sparked a mad dash for breweries to get beer into packaging as fast as possible. The most common format was, of course, cans—12oz, 16oz, hand labeled, pressure sensitive labels, shrink wrap labels—whatever you could get your hands on. This crush lead to an impending aluminum shortage (more on this later).

Looking beyond the current moment, I think one of the lasting changes in the beer industry triggered by the pandemic will be the expectation for breweries to continually package their beer—even for those small breweries who have historically focused on taproom and keg distribution sales only.

We’ve now had well over a year to form new habits. Chiefly, grabbing packaged beer from a brewery or grocery store and drinking it at home. There are plenty of people who will get back out there and hit taprooms just as they did before once we’re past this. But there will be a lot of folks with a newly formed habit of drinking craft beer at home. And to serve them, you’ll need to package your beer.

Once a customer enjoys your beer at home (and has had a chance to build that new habit), this will become the expectation. And it will last well beyond when we no longer have to wear a mask to pick up our beer.

Consistently inconsistent?

What are the downstream effects on brewery package design systems? For smaller breweries who are packaging their beer for carryout, as opposed to off-premise sales, does it matter if packaging doesn’t billboard on shelf? Does it matter if the packaging is inconsistent or doesn’t perfectly provide a style and tasting notes and all the things we’ve come to know as need-to-haves for consumer packaged goods (CPG)? 

The designer in me says, “Of course these things matter. You’re still selling a beverage and your branding needs to elevate the product.” But the pragmatic, non-designer in me also realizes that without the context of other beer packaging competing for your attention—these cans are essentially small, aluminum growlers. They can be well branded, but they are utilitarian first—simply a means to get beer home. 

Flagship packaging (and flagship beers for those who can produce it at volume) will always be important because it is easy to market and scale. But for the small brewery that has no problem selling everything it cans, the design language could drift to become more inconsistent and individual to each beer release, style and beer name itself. This has actually been happening for years with small batch, hype-y breweries with line-around-the-block beer “drops.” But COVID-19 could accelerate this trend beyond that niche to mainstream status. 

Direct-to-Consumer (welcome to the “Fourth Tier”) 

Convenience as the ultimate value proposition 

Direct-to-Consumer (DTC) is one of the most exciting things to come out of the COVID-19 pandemic. And smart money says it will be one of the largest forces to shape the industry over the next decade. 

The laws surrounding shipping alcohol are messy and onerous, so DTC manifests in a few different ways. The most common approach we saw throughout COVID-19 has been online ordering in conjunction with curbside pickup. But the more exciting opportunity entails breweries shipping beer directly to customers (on a per-order basis or subscription plan). And there were a lot of legislative changes across the country last year to allow for more of this. 

DTC and alcohol eCommerce sales were already trending up over the last few years, and like so many things in this report, the pandemic acted as a powerful tailwind (Drizly reports seeing a 1,000% increase in year-over-year (YOY) sales during peak pandemic lockdowns last year). 

It’s easy to grasp why DTC is valuable during state-mandated lockdowns. But why will this persist long after we’re all back to some sort of normal? Convenience. 

Convenience will be one of the most important drivers of our economy over the next ten years (this is a natural outgrowth of the Amazon “Prime-ification” of the world). Why go to the grocery store if I can buy something with one click on my phone? And to think that the alcohol shopping experience will be an exception to this trend is myopic. 

The wine industry has been doing this for years (with $3 billion worth of wine shipped in 2019 alone!). And there’s a tremendous opportunity for breweries here. Everyone in America is ready for it—we all understand that by cutting out the middleman (with apologies to the middle tier), you can get razors, eye glasses, mattresses, beer and now even cars shipped directly to your door. 

Third party groups like Drizly have been championing this for years, but expect to see larger alcohol beverage conglomerates move into this space with their own offerings soon. So whether you like it or not, your brewery should move on this if you haven’t already. 

What are some other things that will come from this? 

Look for social media to continue shaping eCommerce opportunities

Instagram became a powerhouse shopping experience with in-post ads linking directly to purchase opportunities throughout 2020. Look for TikTok, Facebook and even LinkedIn to ramp this up as well.

Will a DTC-first (and only) brand fly? 

Will a direct-to-consumer only beer brand ever work? That’s not too far a leap from what well developed contract-brewed brands have been doing for years. Develop a compelling lifestyle brand, pour gobs of money into advertising, get the right technology in place to sell your beer and you’re off to the races. Maybe.

Provenance, authenticity and locality are all perennial value propositions in craft beer, so I have my doubts that a craft brand can credibly operate in this space entirely, but that doesn’t mean that DTC can’t be a major part of a brewery’s distribution and sales plan moving forward. 

On the flip side, I think this model could work well for a non-alcoholic brand (since shipping regulations aren’t an issue) and Big Beer, with its Big Beer distribution network and Big Beer infrastructure. If someone is already buying a 12-pack of Coors each weekend, why not just have it set up for auto-delivery (via subscription) to your front door? 

Shopping on a Mission

For those willing to leave their homes

Quick note: this trend is actually referred to as “Mission-driven” shopping in other press, but we’re rewording it to be clearer since “Mission-driven shopping” sounds like a cool cause-based thing. “If I buy this beer, the brewery will donate a 6-pack of N.A. beer to a thirsty family in need.” But it’s actually a much more mundane concept.

Shopping on a Mission is the idea that people are making fewer visits to grocery stores (or any other physical retail spot), but spending more money per visit to grab everything they could possibly need to hold them over until the next trip.

So what does this mean for craft beer? 

For starters, if you’re in large-chain retail, you’re in a better spot to capture these sales. According to Nielsen, large breweries were posting 18%+ YOY growth throughout Spring 2020. This was driven in large part due to an increase in demand for multipacks (particularly 12-packs). We’ll discuss this in more detail here in a bit. 

Building on that, this shift in shopping might have lead to a slight decrease in exploration (e.g. buying a new, untried 6-pack) and an increase in brand loyalty (e.g. Voodoo Ranger is always great. I’ll buy a 12-pack to last through the week.). But this is hard to quantify. Bart Watson, Chief Economist for the Brewers Association, reported that while grocery channel beer sales obviously increased during COVID-19, the growth that smaller craft breweries and larger craft breweries (and their flagships) saw from this period actually didn’t look that much different from what the sales data showed before the pandemic. 

We’ve spent a good deal of time over the last five years discussing how flagship sales were floundering, but then they weren’t, but then they were again. And COVID-19 has rekindled this conversation. Whether or not flagships are actually selling more is up for debate, but anecdotally, when things went sideways in 2020, we saw dozens of breweries make moves to strengthen their core brands to build a repeatable base.

Aluminum Shortage

Feeling the crunch 

What do ready-to-drink (RTD) cocktails, hard seltzers, kombuchas, hard teas, functional beverages and craft beer all have in common? They’re almost universally packaged in cans. Throw in a few thousand breweries all scrambling to find additional cans as lockdowns went into effect in early 2020, and you have all the necessary ingredients for an aluminum shortage. 

Here are some black and white numbers from Jamie Westfahl, vice president and head of procurement for Molson Coors. “We sell about 11.5 billion cans, on average, every year. So even a 5% swing is material. When demand goes up by 30% over a two-month period, we’re talking hundreds of millions of cans, and there’s just no way suppliers can meet that. It’s affecting the whole beverage industry.” With Ball and Crown building new plants and saying supply levels won’t return to normal until 2022 (at the earliest), the aluminum shortage is very real.

What other downstream effects does this bring? 

Triaging the portfolio and/or retiring underperforming brands

We’ve watched breweries work through some tough decisions to shelve? No. Can? No, obviously not. Retire underperforming (and emergent) brands so they can focus on what sells well. If raw cans are at a premium, it might be hard to justify space in your portfolio for that fourth-place Scotch Ale, or even that seasonal Hefeweizen. There’s no telling whether these changes will be permanent, but my guess is that a lot of these contingency moves will become long lasting and perhaps permanent as the market adapts.

Other commodity shortages 

This won’t make as many headlines as the can shortage, but corrugate, a.k.a. cardboard, a.k.a. the thing you use to create a branded box over your cans or a cool point-of-service (POS) stand or a tray, is facing increased demand as well. (How many cardboard Amazon boxes do you receive each week)? 

Unless you were locked into a contract with a printer before the world went to hell last year, breweries who are boxing their beer could see some small increases in per-unit pricing until demand subsides. 

Format changes?

Another downstream effect that could still happen is a brewery making an outright format change to get around the aluminum shortage. If cans aren’t available, just use bottles! Of course it isn’t that simple, and frankly, we haven’t seen anyone make this drastic a leap yet, though we’ve seen breweries who were previously only canning beer start to bottle some core brands as well. 

We’ve also experienced a lot of in-process projects shift to whatever production format allows a brewery to hit their originally intended deadline. So a new line of seltzers that you were going to have Ball print might now have to be sleeved for the next 9 months while you wait for your spot in line to come up. (A heartfelt shout out to all you in-house designers and marketing folks that had to layout, re-layout and re-re-layout the same label across four or five different templates last year as you shifted between whichever vendors could get you those cans.) 

We’ve even seen breweries use a variety of sleeved and pressure sensitive labeled cans for the same SKU in order to get beer out in into the market. We’ve also seen breweries gut wrenchingly label over an already printed can so they could get a higher performing beer out the door. 

Nothing was off the table as the industry responded to COVID-19. And if you’re one of those beer industry folks that tap danced and pivoted and zigged and zagged your way through the last 15 months, keep it up. You’re doing great. 

Convenience Stores 

Let me get a 60 Minute IPA and 12 Roller Dogs. No time to explain. 

There are a lot of misinformed opinions about convenience stores (C-stores): They only sell cheap beer. They only sell macro beer. No one would ever buy craft beer there (there would be no margin). I’m guilty of thinking this way myself before last year. But it turns out that, counterintuitive as it may be, C-stores can be a great channel for craft. 

We spent a lot more time discussing craft beer in C-stores in 2020 than we have in the last 11 years. Larger craft breweries and distributors saw an opportunity in this channel as air travel ground to a halt. This is an interesting COVID-19 externality, and a viable opportunity for breweries who are able to get their beer into this setting. 

To do this right, you need to be able to keep beer in this channel. The volume requirements are pretty steep with the average full turns happening in just over four days. You also need to get the format right. Single-serve sizes like 16oz cans, or more importantly, Stovepipes (19.2oz cans) work really well. Why? Because you can price them competitively and invite “trial”—it’s easier to take a chance on a $3 beer than spend $12 on a 6-pack you might not like.

Good Beer Hunting put together a great series (with a lot of metrics) on C-stores last year. Go check it out for more background.

Breweries Embrace Social & Digital 

Yes, you need a website

We had a lot of website project inquiries hit in spring/summer 2020. Breweries who had relied entirely on taproom sales found themselves with websites that were completely unable to sell anything online.

Now that the “does our brewery even need a website?” conversations have officially paused, let’s discuss a few thoughts and opportunities to make sure you get this dialed in 2021. 

If you’re thinking of readdressing your website, you should start by figuring out what role it plays in your business. Can it take work off your plate? Can it be selling for you when you’re asleep? By understanding your website’s primary role, you can make better decisions about functionality and content needs. Obvious roles include, listing your available beer and eCommerce (accepting payment for beer, gift cards and merch) and clear contact info like hours, phone number and information on how you’re prioritizing customer and staff safety. 

Beyond these items, you should view your website as an immersive brand experience, especially since people aren’t as likely to visit your taproom until the pandemic subsides. How can you, as best as possible, create a fun experience for fans that visit your site? Check out the cool website and app Great Notion developed last year to promote and manage its beer releases.

What else do breweries need to be doing on the digital side of the house? 

Email Marketing 

Breweries need to be using email marketing. You don’t have to develop fancy nurture campaigns, but you do need to stay in touch with anyone who willingly joins your mailing list. Imagine if every single person who ever walked into your taproom was on your email newsletter list—how many people would that be? And how much more sales volume could you derive from that list when they like your brewery but can’t come on down and grab a beer like in the before times? This works in conjunction with DTC sales and will continue being valuable long after we’re beyond the pandemic. 

Content Marketing 

Let me throw out a curve ball—I think more breweries need to invest in content marketing. This can include blogs, videos, infographics—anything that’s more in-depth than a simple social media post. Your customers want real, honest stories about what you’re experiencing as a company. How has COVID-19 impacted you professionally and personally? What worries you about the industry? What excites you? How is your team holding up?

By going deeper than a simple Instagram post—by giving an honest look behind the scenes—you can create deep relationships with your fans. And this is more important than ever when you’re not able to serve them a beer in your taproom.

Part 2
Major Industry Trends

Major Brewery Rebrands 

Never let a crisis go to waste

In 2020, we predicted that there would be a lot of brewery rebrands due to the number of older (5+ years) breweries and an ever-increasing level of competition. This context is still driving breweries to rebrand today, but COVID-19 has thrown another wrinkle in the mix. 

As the pandemic wore on, CODO continually fielded new inquiries and projects from breweries looking to rebrand. We consistently heard two thoughts during these conversations:

1. “We’ve been thinking about rebranding for several years now. While everything else is essentially on pause (and this year will likely be a wash), let’s knock this project out now so we can be in a good place to relaunch once COVID-19 is gone.”

2. COVID-19 forced breweries across the country to constantly pivot (a pleasant sounding innuendo for all the hoops you were forced to jump through over the last year). Breweries had to pause on big initiatives, retire underperforming brands, completely rethink their their taproom and on-premise experience, and dive headlong into new distribution channels. And as we make our way past the pandemic, there will be a new competitive landscape, new distribution opportunities and new consumer trends to consider.

All of this will spur established breweries to revise their core positioning and messaging as they reexamine what their business looks like and what role they play in their local community post-COVID-19.

Hence, rebrands. 

Packaging Refreshes

A fresh coat of paint 

Similar to rebrands, though less drastic in scope, would be packaging refreshes. We fielded a lot of packaging refreshes in 2020 and in the beginning of 2021. In this case, a brewery’s core branding, messaging and positioning is good to go, but they want to update their packaging for a new look on shelf. Other than brewery rebrands, non-beer beverage work, seltzer extensions and cannabis work, this was actually one of our most common engagements over the last year. Why?

Even before COVID-19, there was a sense that things were getting too crowded. We’ve heard firsthand that breweries are now considering their packaging lifespan like you would a website—“This update should be good for 36 months, then we will reevaluate.” I’m not sure that every brewery needs to be thinking this way, but in the face of growing competition from within beer and other verticals like seltzer and ready-to-drink (RTD) cocktails, this is an interesting line of thinking.

12-Packs (& Variety Packs) 

Why settle for six?

We helped a lot of breweries launch multipacks (12-packs and variety packs) in 2020. So much so that this could’ve just as easily been included in the COVID-19 effects section at the top of this piece.

Variety Packs have been a perennial best seller in craft beer. The pandemic and the aforementioned “shopping on a mission” trend drove even more demand for them, along with traditional 12-packs throughout last year. (Market research company IRI tracked 12-packs of 12oz craft cans growing at more than 52% YOY in 2020. And Drizly reported that 12-packs accounted for 42% of all beer sales throughout 2020.)

Doug Veliky over at Revolution Brewing (and the fantastic Beer Crunchers blog) put together a great breakdown of why the 12-pack format is working so well right now. You should go read it directly from him.

If you can get the cost of goods sold (COGS) and production figured out, this is definitely worth exploring. Here are a few tactical things to think about if your brewery is considering this offering.

1. A carton packaging machine is a major capital investment. You can get around this by using folding 12-pack boxes that don’t require glue. In our experience though, these rarely look as nice as glued up boxes (the graphics never seem to align properly), but this is all about tradeoffs and doing everything you can to get your beer out to your fans quickly (during COVID-19, anyway). 

2. Breweries usually include a rotational or seasonal beer in each case to keep people interested. This presents a problem with how to communicate what that new offering is at scale. Printing a new run of cases every time you add a new beer is usually out of the question for smaller brewers because you want to print as many of one design as you can to get the per-unit cost down. 

So what can you do? Stickers? Check boxes? A window in the packaging to let the seasonal beer peek through? Or, should you simply call it a “surprise seasonal” so you don’t have to mess with this issue at all? Yep, these all work. I can’t tell you which works best because your project context, brand and budget should drive that decision. But if you want to include a seasonal in your variety pack, you will need to figure this out. 

Bonus thought 

We’ve seen a lot of breweries put their beer cans across the front of a box, label it a “variety pack” or a “party pack” and call it a day.

Putting cans on the box is fine (it’s actually become a category convention, stemming from when the first breweries started putting 6-pack cans in boxes. How else will people know what’s in these boxes!?). But this naming convention is lazy a missed opportunity. A variety pack should be viewed as its own unique brand with its own unique value proposition. And it should be positioned and named as such.

Navigating from Brewery to Beverage Company 

A focus on Brand Architecture 

One of the biggest sea changes we’ve seen in the beer industry over the last few years has been a move away from being a single category company (e.g. a brewery) towards being a “house of brands” that offers a diversified portfolio of products in different categories to capture different consumer sets. 

In this context, a brewery’s parent brand often falls to the background (or disappears entirely) as it releases non-beer products. 

What drove this? 

Was it a flattening of the beer category after so many euphoric years of growth? Was it that 8,000^th brewery that finally made competition too overwhelming? Was it the rapid spread of COVID-19 that laid waste to every strategic  plan in sight? Was it consumer trends shifting abruptly to drink other non-beer beverages, or, less alcohol in general? 

Yes. 

All of these factors are at play. The biggest trend driving this shift has been the rise of hard seltzer (the first non-beer beverage breweries have moved en masse to produce). But this has accelerated the already in-motion trend of consumers shifting away from beer specifically and toward a variety of other alcoholic (and non-alc) beverages in general. Think RTD cocktails, CBD-infused everything, THC (where legal), kombucha (about to “tip” if not already there), non-alcoholic seltzer, functional beverages and teas. This is what people in the beverage industry (cringingly) call “Share of Throat.”

At an upstream level, this is a conversation about Brand Architecture. Brand Architecture is a framework for determining how all of a company’s products and brands interact with each other. How do specific brands relate or differ, how are they positioned and named, how are they priced, and how does all of this help you build your business? 

We’ve had more conversations about brand architecture this year than in our last 11 years of working with breweries. And that’s a good sign that breweries are launching new products with proper forethought and due diligence. 

So what does this all mean if you’re thinking about launching a hard seltzer (or other non-beer extension in 2021)?

If you’re thinking about launching an extension in 2021, you need to think about what role these products play in your portfolio and how your current positioning helps, or hinders, their chances for success. Let’s look at 2 examples—the specialist brewery and the generalist, both planning an extension. 

Scenario 1. The Specialist Brewery

If you’re an all sour brewery (and renowned for that), producing anything other than sour beers can harm that positioning. You want people to think of your brewery when they want a sour beer. This example can apply toward any brewery that is known for a singular style—lagers, mixed ferm, Belgians, functional better-for-you beers, big stouts, etc. In this case, it might make sense for the sour brewery to create an entirely new brand, including a name, identity, packaging and website, for this new hard seltzer in order to protect that parent positioning. 

Scenario 2. The Generalist Brewery

If you’re known as a generalist brewery, you have more flexibility in what you can produce because that’s what people will come to expect. Releasing a Pilsner one week and a Baltic Porter the next are the norm and would, in a way, give you more leeway to release a hard seltzer under your parent brand (because you’re not known for any one thing). In this case, it could* make sense to launch the hard seltzer under your current brand.

*But even this isn’t always the right choice. 

We’ve found that Brand Architecture isn’t black and white. Even when building fancy decision trees and rule sets, a decision should be weighed just as much against your core values, market opportunity, demand, and your parent brand’s positioning.

This is an extremely brief look at this topic. But stay tuned—we’re working on a new book aimed at helping breweries manage these complex brand architecture decisions. Join our Beer Branding Trends Newsletter to stay in the loop on that front.

Trend within the Brand Architecture trend

Endorsed Brands 

An “endorsed brand” is one of the most common approaches we’ve seen breweries use to bring new non-beer extensions to market. In this application, there is a fully trademarked product name, branding, packaging, website—everything—but along with a subtle “endorsement” from the parent brand on its packaging. 

Why do this? 

We view an endorsement as a hedge. With so many hard seltzers (as a specific example) out in the market, if you’re a nationally-distributed brewery with nationally-distributed brewery mindshare, putting your nationally-distributed brewery’s name *somewhere* on that hard seltzer makes a lot of sense. 

An endorsed brand leverages your existing brand equity right out of the gate, but it also sets the product up to spin off (or be quietly retired) as needed down the line without dramatically affecting the parent brand. 

A Sub Brand Family? 

When a sub brand outshines its parent 

This is an interesting Big Craft brand architecture strategy for spinning off Intellectual Property (IP) and brands once they have enough velocity to outshine the parent brand. There are some major examples in the market that have been doing this for years—Arrogant Bastard (Stone), Dragon’s Milk (New Holland) and 805 (Firestone Walker). 

2020 saw New Belgium spin off Fat Tire into its own standalone flagship brand. And even more proof of this concept comes from New Belgium’s Voodoo Ranger line, a sub brand family within the brewery’s portfolio that touts four of the top 30 (!!!) best-selling craft beer brands in the country. 

This can be done when the sub brand outshines or even confuses the overall brand. (how many people out there still think there’s a Fat Tire Brewing, for instance?) The interesting trend we’re seeing here is in smaller craft breweries embracing this model. Do you have a lager or IPA that comprises 50%+ of your overall sales? That could be a good contender to spin off into its own brand and build an even bigger business (complete with its own extensions) surrounding it. And this will likely continue happening with craft vanguards over the next few years.

What are some hallmarks of this strategy? 

To do this right, you’re essentially building out a standalone brand, complete with branding, packaging, a fully-fleshed out website, social media presence and merch.

There is a clear, independent brand for the beer that no longer needs an endorsement from the parent. Though there may not be any benefit to completely dropping all connections to the parent brand because this approach allows you to play in places you might otherwise not credibly be able to enter. See Voodoo Ranger bringing in a younger, more diverse craft drinker to the New Belgium Brand where Fat Tire is unlikely to resonate.

Clean Label

When you’ve got nothing to hide 

Clean labels have been a CPG food trend for the last decade and they’re becoming more prominent in beer. The definition is a little murky and hard to pin down, but essentially, this is where you list all your ingredients front and center on your packaging to signal how healthy and “clean” your product is. This can fall along environmental lines (locally-sourced, carbon neutral), health lines (sugar free, 0 carbs, keto-this, paleo-that), and ethical lines (free range, plant-based, cruelty free). All of which is why clean labeling is table stakes in the natural and organic food and bev world.

Craft beer has historically avoided listing calories and carbs on packaging because it’s not really that healthy (hold your horses, we’ll discuss low-cal beer here shortly). Two things changed this:

1. The hard seltzer wave, with its emphasis on product benefits, attributes and label violators was the final push clean labels needed to come to the front and center of beer packaging. 

2. The better-for-you / functional beverage trend cuts right along this line. If you’re going to make a beer with electrolytes, the type of person that cares enough to drink it for that reason would likely also care about how many grams of carbs that beer has. 

This will become a larger part of beer packaging over the coming years. Millennials care about what they’re eating and drinking (hell, my Boomer parents care about what they eat). And you can be certain that Gen Z does as well. So you might as well get out ahead of it now. 

Lo & No + Better for You Segments Continue Growing 

What’s better for you than low alcohol? No alcohol. 

2020 was… an interesting experience. I know several people who set limits or goals on their drinking or gave it up entirely to deal with the stress that came with every news cycle last year. And then there were friends who doubled down, valiantly drinking more to cope. But even amongst the latter group, there was the sense that drinking less was the better move, no matter how impossible it seemed at times. So alongside various 6-packs of local beer, you’d find non-alcoholic beer (almost always Athletic Brewing), lower alcohol beer, hard seltzer, THC drinks (offering no hangover) and kombucha in their fridge.

And there are a lot of brands and beverage options vying for mindshare in this space. It’s become a fast growing segment with many offerings from low alcohol beers to non-alcoholic beers (getting a big boost from easy eCommerce shipping), seltzers, light lagers and the interesting “Seltzer IPAs” (hat tip to Jeff Alworth for this name )—100-ish calorie IPAs that are meant to compete with a seltzer (without becoming one). 

What does this mean for craft breweries thinking about how to navigate the next few years? 

You don’t have to move your entire portfolio to this model, but there is demand for lower alcohol, “healthier” beverages (and no, your session IPA probably doesn’t count). Take a look at what’s selling well in your market. See if you can find any white space (maybe a Seltzer IPA?), and start experimenting to see what people like). 

A quick note on N.A. beer: If you regularly read beer industry coverage, you’d think that non-alcoholic beer commands a 5%+ share. But it’s currently sitting at a cool .51%, so for now, these headlines are a bit overblown. We’ve even heard N.A. beer described as a self fulfilling prophecy—the more people talk them up, the more they will be produced. The big takeaway here is that people are talking about it. So if you can make a great N.A. beer, you might explore this over the next year. As with all emergent categories, you have to wait and see if it tips and becomes a real thing. But if and when N.A. beer does become a thing, the first movers will have the advantage.

Higher Alcohol Seltzers

The be-mulleted yin to your business casual yang

Flying directly counter to lower alcohol beverage trend would be…you guessed it, higher alcohol beverages. 

The hard seltzer category has historically (for all of its approximately four-year history) hung its hat on being low carb and low(ish) ABV. This new trend flips that on its head by creating higher octane offerings. I’m reluctant to say whether this will become “sticky” over the next few years since hard seltzer’s value prop is that it’s refreshing, easy to drink and “healthy.” So upping the alcohol might not make sense for the category as it pushes closer to other fast growing, competing segments like spirit-based RTDs and Tequila.

I think a more immediate move we’ll see this year is a push to “premiumize” the category. Look for organic lines, more fanciful ingredients (e.g. functional super food stuff), more spirit-based seltzers and more colorful (Instagram-friendly) seltzers.

But then, if you had told me that hard seltzers would be stealing share left and right from craft beer 5 years ago, I wouldn’t have believed you either.

Slim Cans

“What’s your brand?” “Anything slim.”

The proliferation of 12oz slim cans has been driven almost entirely by the hard seltzer boom (the hard seltzer market has doubled every year since 2017). And the messaging and perception surrounding the format (slim cans are sophisticated, premium, and healthier than those slovenly fat cans) spill over nicely to RTDs, cold brew coffee and better-for-you beer options (e.g. Blue Moon Light Sky).

With Molson Coors building a slim can-specific manufacturing facility capable of producing 750 million of the things per year, I imagine we’ll see these venturing beyond their traditional styles (seltzers, RTDs) to more mainstream beer and beverage brands.

Bombers are a Dead(er) Format

Keep kicking that dead horse 

I know what you’re thinking. Really? You’re still talking about 22oz bombers being a dead format in 2021? Yep, I am.

We’ve worked with several breweries this year who didn’t even consider bombers for styles that would have otherwise traditionally been bottled in that format. We saw everything from 8oz cans, slim cans, and even premium-priced 16oz 4-packs (sold as a variety pack of barrel-aged beers) considered instead.

Blurring & Blending Beverage Categories

Innovation teams are having a moment

Fruited beer is huge right now. Lagers continue to grow, and there is the ever-present IPA. But the most interesting beverage trend we’ve seen over the last year is the continued blending of beer and non-beer beverages to launch new products.

Hard seltzer, hard kombucha, hard tea, hard tea seltzer, kombucha seltzer, seltzer lemonade, boozy lemonade, RTD cocktails, cannabis beverages, functional beverages… With all this noise, it’s hard to pin down which style will pull away and into the lead.

In beer, you could argue that fruited beer is still “what’s next,” but keep your eye on hard kombucha, hard tea, boozy lemonade and ranch water RTDs to make big beverage waves over 2021/21 (and continue stealing share from beer). While anecdotal, we’ve had dozens project inquiries from all of these categories in the last year.

Here are a few other beverages that are going to be capturing headlines over the next few years.

Kombucha 

Riding the better for you wave

The last few years in the beverage industry were all about hard seltzer. And that still hasn’t meaningfully slowed down. But the next big non-beer vertical (that might actually rival seltzer over time) will be kombucha. 

Why are you reading about kombucha in a long-winded article about beer branding? Because as we outlined above, breweries aren’t breweries anymore. They’re beverage companies. And for your brewery to stay resilient and competitive, it might be worth producing and selling what consumers want. And people want kombucha (and other healthier options).

Organic Beer 

A lesser trend than kombucha, but still emergent

Organic beer is a lesser (much lesser) trend than kombucha, but still emergent. We’ve seen some big craft breweries release organic beers, and have seen an uptick in project inquiries for organic beer brands or all organic breweries (10 in total over the last 12 months). 

I don’t see this becoming a dominant style, but it is worth discussing because it is a somewhat uncontested landscape right now. And whichever brewery can get there first (if Glutenberg and/or Omission aren’t already there) could own most of the market. Though just how much market there is for this category remains to be seen. 

Bonus thought

Organic beer can fall into the same positioning challenge we see in other CPG verticals where some sort of health aspect is the driving value proposition. If your beer is low sugar, for instance, it would be tempting to market it as keto, or diabetic-friendly. That’s a good move for those specific market segments, but it also concretely positions your brand in that spot. 

If I don’t care about watching my sugar (and the 2 DIPAs I drank for lunch yesterday are a sign that I, in fact, don’t), or if I’m not diabetic, then I won’t bother buying your product that boasts that main claim. Similarly, if someone doesn’t worry about eating organic food, then they definitely won’t go out of their way to buy a fancy organic beer.

So be careful what you hang your hat on. And make sure there’s enough of an audience there to scale.

Part 3
Beer Branding (& Packaging) Trends

It’s hard to identify unique visual trends in craft beer packaging like we have in years past. Or more importantly, these trends no longer rise to prominence and clearly affect the rest of the industry like they used to. The market has become so saturated with great design that I’m not sure how valuable it is for me to tell you about a certain production technique or pattern that’s in right now anyway. 

The reason we’re here discussing beer branding trends isn’t to celebrate good design—it’s to explore how that good design can help you sell more beer and grow your business. 

All of that being said, CODO is a branding firm. And since you’re reading this, chances are that you’re a designer as well (or someone tasked with selling more beer). In that spirit, and so we don’t leave you hanging, here are a few fun visual currents we’re seeing this year.

One quick note: a lot of these trends bleed over into, or come from, other beverage verticals. As is the throughline of this entire piece, with so many breweries making non-beer products like hard seltzers and kombucha, plus design blog and Instagram echo chambers accelerating trends, these all inform each other anyway. 

In 2021, beverage branding trends are beer branding trends.

Chobani-fication 

From the dairy case to the beer aisle

Greek yogurt brand Chobani launched a successful (and strongly differentiated) rebrand back in 2017 that took the design world by storm. Chobani’s rebrand sported a look that was at once unexpected and comfortable, tactile and organic; the overall effect somehow effortless and bold at the same time. Perhaps more importantly, the new look tapped into the retro design fetish that Millennial and now Gen Z consumers can’t. seem. to. shake.

This rebrand was so successful that it began to influence art direction in many categories beyond the humble yogurt aisle. Fast-forward a few years and this look has been adapted (and occasionally copied verbatim) across the food and beverage industry as a whole. Predictably, it has taken root in craft beer branding and art direction as well.

What are the hallmarks of Chobani-fication? Soft, tonal pastels and “nude” color palettes. Luscious, organic shapes and bold, simplified illustrations. 1970s serif typography with chunky stroke widths that look like a sleeker, hipper version of Cooper Black. Creamy, slightly off-white backgrounds that suggest paper aged by time and loads of whitespace.

This is a gorgeous aesthetic, but it will likely become a victim of its own success. Given another few years, this approach will probably look dated and feel all too commonplace. 

Slaps

You missed a spot

Plastering stickers (or “slaps,” as the kids call ’em) is a lively visual trend that has gained prominence alongside the growth of small-batch beer drop culture. And it’s seen a bit of a revival during Pandemic Times, as breweries were forced to get more creative with the packaging resources available (think direct-to-consumer delivery programs and shipper boxes, trays and delivery bags, etc.).

Characterized by a field of haphazardly-placed, overlapping sticker graphics, this look evokes an eye-catching collage that has been made over time, perhaps by multiple people. Think of a suitcase covered in stickers from around the world.

It’s difficult to pinpoint the origin of this look. It may be sourced from the visuals of street art and graffiti, or perhaps takes a cue from West Coast skateboarding and sneaker brands. Perhaps it arose organically from tipsy beer festivals (remember those?) from attendees who woke up the next morning with foggy heads and seven thousand different brewery stickers crammed into their jorts pockets. At this point it’s all a little blurry.

Regardless of origin, an industrial cooler covered with dozens of stickers is a universal sight in bars and taprooms across the world, so this aesthetic is a comfortable fit for craft drinkers. 

Bifurcation, Evolved

The reign of terror continues

Visual bifurcation in packaging has been around for much longer than when we first wrote about it (back in 2018). Perhaps this is a testament to its enduring power. For those new to the concept, bifurcation is an aesthetic where the visual surface of the package is “cut” in two by a visual element. Praised initially for it’s professional, consistent look on the shelf, and the ability for multiple SKUs to “billboard” together and create more stopping power in the shopping aisle, this trend has held the craft beer industry in an iron chokehold for years.

But not all is rosy in Bifurcation Land, and this approach to packaging does present certain drawbacks. Many breweries have shifted from relying on a core 3 or 4 beers to embrace more Instagram-friendly “rotation nation” release schedules. Since there are only so many colors in the rainbow, a rigid bifurcated template can become confusing or visually stale, release after release. To say nothing of the sheer amount of breweries that are using some form of bifurcation in their packaging strategy: it’s harder to stand out with this look compared to years prior (unless you were an early adopter and have cemented this look in your market). 

The prevalence of bifurcation has forced breweries to push the limits in order to gain all-important shelf presence. Packages divided by slashes, ribbons and chevrons have cropped up in a bid to stand out from the plain-Jane approach to bifurcation. Increasingly, we are seeing landscapes, illustrations, patterning and other unique elements coming into play to break up the monotony. It will be interesting to see how this evolves as breweries continue to push the envelope.

V. Vibrant 

Can so bright, I gotta wear shades

We’ve been tracking the rise of colorful, eye-catching beer labels for a while now, but this trend has finally hit a new gear. In a bid to get noticed at retail, breweries are peacocking around in fully vibrant, neon, saturated colors to stand out from the pack. As important as a strong retail presence is, we also suspect this trend is informed by the need to stand out on the Instagram feed, paired with younger consumers coming of age and bringing their visual preferences to the table.

Increased competition have forced breweries’ hand to bite the bullet and invest a little more in printing per unit. As breweries continue to improve their packaging and deepen their understanding of the production process, we expect to see greater instances of specialty UV inks, foils, finishes, die cuts and other ostentatious eye-catching packaging treatments.

Vintage Mascots

Whimsy! Ice cold whimsy! Get your whimsy here!

A less prevalent (though no less impactful) trend we’ve noticed recently is the use of old-school mascots. Derived from early cartooning, collegiate sports iconography, and other bits of retro culture, this trend presents a unique opportunity to project a sense of friendliness and personality on a package. Googly Betty Boop eyes, goofy white gloves, and anthropomorphized objects with comically bendy limbs abound!

Mascots can be a tricky subject in branding, and in our opinion, they are rarely done right. For craft beer, the vintage approach to this trope seems to make sense. It welcomes in new drinkers with warmth and nostalgia, and reassures experienced drinkers with a fresh sense of whimsy (and even a little irony). Ultimately, we think this works because there is major precedent for this type of mascot in retro beer advertising (think of old Guinness or Pabst adverts involving burly strong men and beer-obsessed tropical animals).

TLDR: I don’t think you should build your brand around a mascot, but they can be fun to include in the mix to keep things fresh.

Tombstone Typography 

What do you want on your tombstone?

One of the most persistent typography treatments we’ve seen over the last year is a brand name, product name, or other phrase, set on an exaggerated, arched baseline—we call this a “tombstone” build. This element brings an architectural sense of class and composition to a label, and may indicate a renewed interest in art nouveau layouts or influence from old-school record labels.

Why has arched typography caught on? Our best guess as designers: it’s a great way to get longer brand names or SKU names to fit on the face of a package, without having to turn the package around to read it. Be careful with this one though: kerning on a curved baseline is notoriously tricky, and readability can take a hit with more decorative typefaces.

Miami Vice, Baby

Say hello to my little trend

Remember when Grand Theft Auto: Vice City came out, and everyone was suddenly enamored with 80’s pop hits for a summer? Fueled by a late 80s/early 90s cultural revival, we are seeing a rash of Miami-inspired visual cues in craft beer (with a few elements sprinkled in from Memphis patterning and other retro nostalgia). It seems inevitable with the success of shows like Stranger Things that craft beer would dive into this throwback aesthetic; pop culture forever returns in cycles like a pesky neon boomerang.

It would be easy to criticize this look as a fleeting fad, but let’s talk positives: Given the pandemic, this approach is a low-cost way to get a regional kick in lieu of a proper vacation. For this reason, this aesthetic may travel to external markets better than one would initially think. Plus, the clean bright white and poppy colors/visual elements can be fun and refreshing, when handled properly and with a modern eye. Just be aware of the tight window these sorts of trends have.

Illustrate all the ingredients 

“How will people know this is a citrus seltzer if we don’t put a lime on the can?”

It may seem glib to call out “illustrating all the ingredients” as a visual trend, but that’s exactly what’s going on here. Craft breweries (and coffee, and kombucha and seltzers and RTDs) are coming to market with trade dress that, quite literally, illustrates all the ingredients (or at minimum, the flavors) contained within the package. I

This approach serves as an effective way to efficiently communicate the taste profile of a beverage in the mere seconds a customer scans the shelf. Whether the depicted ingredients are actually contained within the drink, or if they represent laboratory-created flavor compounds, this trope begs interesting questions about transparency and ingredient sourcing. Does any of this matter? Does anybody care? 

This creates an interesting opportunity for differentiation by using real ingredients or proprietary brewing methods. But if you set out to illustrate all of your ingredients on your label, just be aware that plenty of other folks are out there doing the same thing, too (at this point, it’s basically canon in hard seltzer packaging).

Visual trends & opportunities moving forward

Unboxing

Packaging as burlesque 

We always encourage our clients to think of packaging as burlesque. Each layer is an opportunity for your customers to engage and undress (cutting a seal, removing a ribbon, breaking paper tape) until they get to the main course—your beautiful beer packaging itself. 

As the industry moves further into DTC, there is a big opportunity for more considered beer shipping and packaging systems. So don’t overlook any touchpoint. It’s hard to measure ROI in this instance, but one unboxing video (or a simple Instagram post) from the right influencer can drive huge sales. 

Better Art Direction

Standing out on the digital shelf 

With eCommerce becoming more important, we see an opportunity for more considered art direction and photography in craft beer. This can be as simple as great can shots or comps, or as complex as a “knolling” composition, with all a beer’s ingredients or fun lifestyle photography. 

Part 4
Industry Experts Weigh In

This year, we’re fortunate to be joined by eighteen industry experts spanning brewery founders, CEOs, distributors, marketing directors, leading industry consultants, writers, strategists and economists. We’ve given each person a few specific questions to add more context to everything we’ve discussed to this point.

Let’s meet our experts (in alphabetical order). Click on someone’s name to scroll right down to their portion.

Jen Adams (Tröegs Independent Brewing)

Jeff Alworth (Beervana)

David Bower (Upland Brewing)

Rob Day (Jack’s Abby Craft Lagers)

Michael Graham (Austin Beerworks )

Keith Gribbins (Craft Brewing Business)

Zeb Harrington (KettleHouse Brewing)

Julia Herz (Herz Muses)

John Holl (Drink Beer, Think Beer)

Joel Hueston (First Key Consulting)

Emily Hutto (RadCraft)

Justin Kendall (Brewbound)

Mandie Murphy (Left Field Brewery)

Julie Rhodes (Not Your Hobby Marketing)

Paige Sopcic (CanSource)

Bart Watson (Brewers Association)

Bump Williams (The BWC Company)

Taylor Williams (Craftroads Beverage)

***

Jen Adams, Vice President of Marketing, Tröegs Independent Brewing

CODO: Is Tröegs thinking about reevaluating its positioning and messaging once we’re beyond the pandemic or are you focused more on the immediate day-to-day work right now? Are you able to look ahead through all this?

Jen: We’re definitely looking ahead, but I wouldn’t necessarily say that we think we’ll need to re-evaluate our messaging or positioning once we’re “beyond COVID-19”. We are who we are, and that has framed how we’ve reacted to this strange and scary time. And that, I believe, will continue to frame our approach to messaging.

I always say that as a marketer, you need to be able to operate in the past, present and future. You need to react to what’s in front of you while simultaneously planning for what’s ahead, and also analyzing and reflecting on the past to make sure you don’t lose sight of who you are or mistakes you can avoid. So, while reacting to the day-to-day has certainly taken up more resources and energy than ever before (things like safety measures, curbside pick-up, and more emphasis on digital and larger pack-types of our most popular beers like Perpetual IPA), at Tröegs it has been therapeutic to make time for the projects that allow us to create and look ahead.

One great example of creative escape for us is our new HopCycle seasonal IPA, Joyous (just released last week). This one had been subtly in the works prior to the pandemic. The muse for the beer was actually not hops but a yeast strain—Hothead Kviek. Our brewing team was excited by the tropical aromas they were getting from the yeast and set out to amplify that with hop combinations.

Once the brewers had a vision for the beer around May 2020, the marketing team began developing the name and the design. We landed on the name Joyous—we thought, “Hell yeah, we hope to be more Joyous next spring!” We liked the vibe of emotive happiness that comes with discovering a new technique, the perfect flavor, the changing of the season. Designer Lindsey Tweed was inspired by the flavor notes of the beer, and her brain went to travel and hand-painted signs she’d see along the road in the tropics. We landed on a bright, citrusy color palette—not typical of the green palette we normally veer towards with hop-forward beers. 

At the end of the day, we’re just trying to navigate as best and safely as we can from our tiny corner of the beer world. Parts of that world—our bar and restaurant friends in particular—have been hit hard, so we fully appreciate how lucky we are. The channels are in flux, but people are still prioritizing and enjoying beer. 

Everything is just so much more raw and human right now, and I don’t think that’s going away. I’m not sure there is going to be a “beyond COVID-19” as much as a “COVID-19 evolution.”

Jeff Alworth, Author, Beervana 

CODO: Can you give us a lay of the land? Where are we right now as an industry as we (hopefully) head into the homestretch of COVID-19?  

Jeff: The pandemic turned out to be far more severe than anyone could have imagined a year ago, yet amazingly, breweries have weathered this incredibly bad period very well. We’ve all been poring over national sales figures to see how habits have changed during the pandemic, but for me the big takeaway was what I witnessed firsthand. While larger breweries were able to survive thanks to increased packaged sales, small breweries leaned into relationships. They told their customers they needed their support, preferably in the form of direct purchases—and customers responded. It’s evidence the power of that direct connection local breweries have established with their customers. 

CODO: Is there a silver lining to all the craziness we’ve experienced over the last year and a half? Are there any positives for craft beer?  

Jeff: Because most breweries will survive the pandemic, the aftermath will be full of lessons. Key insights already emerging include:

• Breweries have been forced to focus, leaning into their core identities and abandoning ever-spiraling side projects. This is visible not just in product lines, but branding and marketing decisions. 
• Market access has been a growing issue, especially as the wholesale tier consolidates. COVID-19 prompted breweries to pursue different direct-to-consumer approaches, and those will become more common. Home delivery is likely to outlive the pandemic. Breweries will open more satellite pubs.
• COVID-19 has revealed how central the social aspect has been to craft beer: pub-going, fests, bottle-shares, travel, and the chatter that emerges from shared experiences. (As a writer, I’ve noticed how sharply discussion dropped once people no longer had things to gab about.) Humans are social and beer is a social lubricant, and I expect people to soak in each others’ company once they’re allowed to again.
• Breweries have been generalists, offering hoppy ales, lagers, sour ales, and specialty lines of strong and barrel-aged beers. The pandemic has revealed which of these are central to a brewery’s purpose. Craft brewing had entered a baroque phase when COVID-19 hit–I expect breweries to focus more on key sellers and refine their identities. 

It’s a harder year than usual to predict where things are headed, but the one thing I expect is the return of joy. Beer is supposed to be fun, and people are aching to get back to its simple, easy pleasures. 

David Bower, President, Upland Brewing 

CODO: Upland recently released its first hard seltzer, Naked Barrel, a differentiated seltzer that aligns with some other cool stuff Upland is known for. Which came first: the idea for this specific seltzer, or the idea that you needed to release a seltzer (and then you worked backward to differentiate from there)?

David: The direction for a wood-aged blended, real-fruit seltzer preceded a full commitment to bringing a new seltzer to market. I originally kicked around the idea of what I was then calling a “sour spritzer” in late 2019. I was working on an answer for the question of ‘how can we bring something unique & authentic to an intrinsically commoditized space?’ It’s kind of fascinating how narrowly defined the space continues to be. This focus on iteration vs innovation left a huge gap in the market to bring something entirely new to the table. The on-going puzzle, I believe, is determining how far you can push these seemingly impliable stylistic boundaries while still remaining recognizable and approachable within the category.

I also took an experimental approach to the Naked Barrel branding process. I didn’t want to simply make the Upland Hard Seltzer, I wanted to create a completely new brand identity with a completely different customer in mind. All working from the same brief: Production, Marketing, and Sales were all asked to contribute a recipe, a brand, and a strategy respectively, but were asked to create those components in relative isolation. My working theory being that the comfort of our conventional collaboration process would result in something too predictable. I wanted to create something adjacent to planet Upland, but with its own unique and self-sustaining ecosystem.

CODO: Is there room for breweries to not produce a hard seltzer (or any other non-beer beverage that people want) right now, or has the pandemic forced everyone’s hand to produce whatever they can to remain viable? 

David: I believe there is absolutely room for breweries to be viable without creating a hard seltzer. The size of the hard seltzer category does not equate to the ease in which one can find success within it. The hard seltzer space is as embattled as the rest, and you have to be dedicated to long-term, perseverant brand building efforts to be a contender. It’s not simply a choice of turning on the seltzer money faucet. It’s the familiar slog. Like anything else, it’s critically important that you love what you do and stay true to your passions. Hard seltzer or not, it’s a big, beautiful world out there with plenty of room and appetite for interesting, new ideas.

Rob Day, Sr. Director of Marketing, Jack’s Abby Craft Lagers

CODO: How did Jack’s Abby’s marketing evolve as the pandemic progressed? Any shifts in core messaging or brand voice?

Rob: To best answer this question, I need to bisect the term marketing. We’re referring to both mission/brand and tactics in one single term and I think it’s most effective to look at each discreetly. 

Mission & brand: I’m proud to say that this did not change. It actually proved to be a source of strength and a valuable compass. When the world started to shake, we certainly reexamined the brand and asked some of the tough questions of whether we’re relevant in this environment. The answers were HELL and YES. Before we could think we were acting. Jack’s Abby took early steps before any mandates to separate and protect employees. We started a free lunch program when the first school closed. We spoke honestly and directly to our audience about what we were experiencing. This is who Jack’s Abby is and it’s who we needed to be at this time more than ever.

Tactics: this is the obvious place for change. I would estimate that about 40% of our plans for 2020 were experiential and another 30% were for on-premise efforts. Then beyond that—the 30% we had left intact all needed adjusting. As many did, we made a quick change to off-premise, packaged marketing which involved some new tactics—especially eCommerce and B2B marketing. Merchandising took a back seat with less staff to execute and fewer people browsing. Digital events of all kinds moved to the top of the list. Overall, a general attitude was born to try it small and fail fast or scale.

CODO: Has the pandemic forced Jack’s Abby to shelve any in-progress opportunities? 

Rob: Absolutely. We had a lot of video media planned for last year that would have been unsafe to produce over this time period. We’re reworking a lot of that, but some is just scrapped indefinitely. We also had a very cool local music effort in partnership with some of our favorite venues that is waiting for that infamous “some day.” There’s a handful of other specifics, but suffice to say that everything went on ice the first week of March and it’s been a very slow thaw.

On the flip-side, we were able to push through and complete our partnership with the Boston Celtics during this same time frame. That’s a pretty remarkable accomplishment against the odds and a testament to how special it is for us.

Michael Graham, Co-founder, Austin Beerworks 

CODO: You guys have been killing it on your limited release cans over the last year. It’s always fun watching the new cans hit social. Has the success of this model impacted how you view your flagship package design and/or portfolio?

Michael: Our taproom exclusive can releases were one of the main things that got us through 2020—financially, emotionally, and creatively.

We released about 30 new cans, each with unique artwork, between March and December. They were all designed by Helms Workshop (two were actually done on a freelance basis by ex-Helms Workshop employee Alana Lyons). We considered doing a generic can that we could just change the name/style with each release, but we decided it was worth the extra design costs to give our customers weekly reasons to stay excited about our brewery. Plus, designers gotta eat, too.

The taproom cans were a really fun departure from the way our distributed beers are branded. For beers we send out into the world, we really want everything to be part of the same family and easily identifiable as Austin Beerworks. That means our primary logo is always front and center. We also prominently feature the beer’s name/style/ABV to give customers browsing the beer aisle all the information they need to make a purchasing decision. With taproom beers, none of that context is needed. The customer knows who’s beer they’re buying and our taproom staff can talk to them about every aspect of the beer. That allows for pretty unlimited freedom in how each beer is branded.

This hasn’t affected our core branding yet, but the possibility exists that if a taproom beer really takes off, we might be stuck with that existing branding if we want to scale it up for widespread distribution. But we don’t let those theoretical good problems keep us up at night.

CODO: Can a larger craft brewery thrive without releasing smaller batches of limited release beer? Can a brewery just pump out flagships and seasonals at scale in 2021 and survive?

Michael: Yes, but not forever. Larger craft brewers rely on flagship beers. The larger they are, the more they rely on them. But, what those flagships happen to be can certainly change over time, and that’s where small batches come in. I don’t know of any successful large brewery that doesn’t have a pilot system. Those small batch beers are typically taproom exclusives, and are generally a brewery’s best source of market research.

Of the ten most successful craft beers launched in the last decade, I’d almost guarantee all ten started out as a limited release. You just never know which beer will take off, or why, and it takes a lot of trial and error to find out the next big thing will be. The breweries that continue to thrive are the ones that are always testing out something new, and listening with their customers tell them they like it.

Keith Gribbins, Editor, Craft Brewing Business 

CODO: Are there any positive impacts to the beer industry from the pandemic? 

Keith: I’m willfully optimistic about 2021. For the sake of a momentary mental cleansing, let’s put aside the short-term fact that we’ve all seen many breweries go out of business and many beer pros left jobless during the pandemic. Let’s instead consider those beer businesses that adapt and survive to our new COVID-19 economy coming out on the other side (and I think we’re seeing the other side in the distance) that will be leaner, nimbler, cleaner, techier, diversified, better-built businesses. They will be looking at a changed landscape in the beer industry—less competition, new distribution opportunities and the important knowledge that dramatic change is only a virus away (so have a disaster plan). So, let’s see what it feels like to be positive. 

The pandemic took a mallet to beer businesses in 2020 but also to the distribution model. We’re just seeing the cracks with movement on a state level via beer franchise laws and delivery and to-go alcohol beverage sales. Because of COVID-19, Massachusetts brewers and distributors were pushed to finish a 10-year effort to reform and ease constraints on terminating contracts. Alcohol delivery is getting a test run in Georgia. Ohio’s House Bill 669 opened up opportunities for qualified permit holders to sell to-go beer, wine and spirits through the end of 2022. These changes in the law are slight, but those cracks will grow, especially now that brewers and beer fans are more vested in these issues than ever before.

In fact, the pandemic is pushing all types of distribution transformation. Drive-thrus. Beer in the mail. Local delivery from a bottle shop or brewery. Unable to rely heavily on on-premise, breweries are rebuilding off-premise distributor and DTC sales models during the pandemic, which will thrive well beyond 2021. To accomplish this, breweries are investing in tech more than they ever have. POS providers are enjoying huge milestones as the craft beverage space embraces online ordering, online storefronts and mobile payment apps. 

Breweries are finally committing to digital in a big way, employing savvy social media strategies, more content marketing and a bigger commitment to internet outreach. Perrin Brewing’s Interactive Brew Project allowed the brewery to stay in touch with its at-home customers by asking them to decide every aspect of its beer release schedule. Denver’s River North Brewery celebrated International Beer Day with online escape rooms. Ninkasi Brewing spent a chunk of 2020 releasing fun At-Home Sports Challenges for drinkers. These investments are digitizing brewers for the future. 

On the opposite end of digital, outdoor drinking has certainly never been so grand. Outdoor on-premise laws have been relaxed. Outdoor spaces owned or leased by a brewery or located on or adjacent to brewhouses have been turned into al fresco drinkeries. Breweries are getting creative with it too. Cincy’s Fifty West Brewing opened an ice rink this winter to attract drinkers. Houston’s SpindleTap Brewery launched a ginormous new outdoor entertainment complex so folks could drink and play pandemic-safe. The infrastructure for outdoor beer drinking is being built, and it’s here to stay.

These are just a few of the positives I see for beer makers and drinkers moving into 2021. Investments in canning and a refocus on packaging have breweries reevaluating everything from brewery positioning to brand architecture. That’s good! While membership to guilds and trade associations is probably down, remaining brewery members are turning to trade orgs more than ever before for leadership and insights into running their businesses. That’s good! Experimentation is up. Equality and charity are still a heavy focus. Hey, almost everyone still loves an IPA. That’s good! The global health crisis caused by the COVID-19 pandemic has disrupted our economy in unimaginable ways, but hey, let’s not dwell. Instead, let’s move forward.

Zeb Harrington, President, KettleHouse Brewing

CODO: You released the Cooler Times Adventure Pack this year. How was that received, and do you have any plans for future variety packs? 

Zeb: Historically we have bumped up against restraints with the physical capacity to produce enough beer to meet demand in our markets. Several years ago, we built a new production facility to address those issues and this allowed us to start adding some seasonal offerings to our lineup. Our company has grown primarily on the strength of our flagship beer, Cold Smoke® Scotch Ale. 

A side effect of being known for a highly successful beer is that outside of our home market, we were known as “The Cold Smoke Brewery” instead of KettleHouse. We have other award-winning beers that we were looking to showcase, and the variety pack was a great avenue to get those offerings in people’s hands.

Our Cooler Times® Adventure Pack is an 8-pack of 16oz cans containing four varieties, and the initial release was geared toward the warmer months. It was so successful that we changed up the offerings and the carton for a winter release that is currently on the shelves. The package itself has sold well, and we feel that there is an additional benefit in creating an exposure point to develop a following with some of our other varieties.

CODO: KettleHouse was one of the earliest breweries in the country to can its beer. I imagine you’ve got quite a back stock set aside, but are you sweating the aluminum shortage? Have you had to contingency plan yet? 

Zeb: We have dealt with can shortages multiple times over the past few years. The upside is that it has forced us to plan very carefully and build in contingencies.

First, we are fortunate to have built a big enough facility to store a large volume of cans on-site. Ordering well in advance has helped us to avoid some of the short-term volatility, although it does force us to hold more inventory. In the case of the varieties we order the heaviest on, we know we will use them, but the cash outlay is always a consideration.

Second, we have worked on diversifying our potential package options should the shortage impact us. This year we added an in-line labeler as well as the ability to run different can sizes through our line.

Lastly, we set up redundancy by partnering with multiple suppliers. We were fortunate this year to sign a contract with our primary supplier which should guarantee our predicted volume through 2021.

Julia Herz, Beer Educator and Consultant, Herz Muses 

CODO: You’ve touched hundreds—thousands?—of breweries across the country over the last few decades through your advocacy work. What are you optimistic about? What can breweries look forward to as we make our way through 2021? Help us end on a positive note! 

Julia: What a time we are all witness to and a part of. With challenge comes opportunity, and I am incredibly optimistic about what is ahead. Right now, I see thousands of breweries (there were 8,500 on the record before COVID-19 and March 2020) evolve in ways that show how agile and adaptable small businesses are. That said, the public needs to be reminded of the importance of supporting their local brewpub and taproom and supporting better beer providers at retailers who offer an expanded beer selection. Beer style, brewing and packaging innovation, sales innovation, and growing the customer base for beer are top of mind for me in 2021 and beyond. 

Diversity and Inclusion

I am very encouraged by the front and center and concerted effort by so many breweries to advance their staff and beer lovers’ diversity. The whole world needs to eternalize equity, including and the need for this is no different for beer. According to Scarborough PRIME Lingo-Profile Report, in 2017, only 4% of craft beer drinkers were Black/African American—non-Hispanic who had craft beer with thirty days at the time of the survey. The number increases slightly to 8.5% for Spanish/Hispanic origin. That said, these numbers are way too low, mainly based on the 21+ U.S. population. 

Direct-to-consumer sales

In the August 2021 press release from online retailer Drizly, they shared: “As consumers migrate to purchasing alcohol through e-commerce channels, Drizly forecasts 20% of off-premise alcohol purchases—normally at liquor, grocery, and drug stores—will be transacted online within the next five years. Less than 2% of these were online earlier this year.” Letting that sink in, it’s fair to say that due to COVID-19, online sales of beverage alcohol will never be the same, especially for breweries. 

Whereas U.S. wineries already had 46 states that allowed DTC, breweries only had ten (plus the District of Columbia for both). Now every state brewers guild, thousands of breweries, and the national Brewers Association are working to even the playing field to conduct DTC similar to wine. A brewery website is an additional sales channel where breweries can sell not only their beer but also, where allowed, bundle their beer sales with pre-packaged food pairings, offer subscription services for regular beer delivery and ongoing credit card sales, and open the door for ‘treat me’ sales that increase digital shopping carts and a brewery’s bottom line. Look for emerging technologies like predictive personalization and SaaS (software as a service) to enhance and customize brewery and retailer online sales. Companies in this space include BEVV, Ship Compliant, Arryved, GoTab, BrewStubs, and ESTER.ai, along with numerous ‘marketplace’ style websites that sell collections of brands from different producers.

Non-alc / Low-alc

For innovation in beer styles, non-alcohol or low-alcohol beers have more than arrived. According to IWSR, no/low alcohol consumption is projected to increase more than 31% by 2024, with beer dominating the 2020 growth trends and spirits posting the most extensive volume increases. 

The expansion of this category ties to expanded sensory style offerings beyond just n/a lager. As well, new technologies are now reaching the smaller breweries, which has exploded innovation and offerings. One example is ABV Technology’s dealcoholizer that uses a low temperature, low-pressure process allowing for less aroma and flavor loss.

Virtual experiences and breweries

I’m very optimistic about the advanced access to brewers and personalities behind beer as something that will not go away post-COVID-19. Despite the unfortunate interruption to in-person sampling festivals in 2020 and 2021, almost every brewery is now offering guided tastings virtually and often virtual brewery tours. Customers can buy select mixed 6-packs or a designated beer brand that the brewer tastes along with the public.

John Holl, Journalist, Drink Beer, Think Beer podcast

CODO: You speak with a lot of breweries on the Drink Beer, Think Beer Podcast. From a 30,000-foot view, is anyone in the industry comfortable right now, or is every brewery in the world still on their heels from COVID-19?

John: Even before COVID-19 hit there were a lot of breweries in the country that were living week to week or month to month, relying on packed weekends in the taproom or special beer releases each week to pay the bills and keep the lights on. That’s been severely impacted and the smaller breweries are feeling it.

Many had to let staff go, rely on Paycheck Protection Program (PPP) loans and other assistance, but without real meaningful help to the hospitality industry, there seems to be a really big crisis looming and shutdowns coming.

On the other end of it, larger breweries were able to get their beer into the three-tier system, to get onto store shelves at a price point that made a lot of consumers feel comfortable, especially with the feeling of a recession looming. Quality, reliable, and familiar brands are doing well, especially in larger pack formats like 12-packs or 15-packs. That’s been good news for a lot of larger breweries like Sierra Nevada, Bell’s and more.

Still, there’s a lot of uncertainty of what happens next, even with vaccines rolling out. Larger breweries that relied on draft business saw that crushed and if restaurants are closing and won’t reopen that could have an impact on beer sales going into the next few years.

CODO: What are some of the most compelling pivots you’ve seen breweries pull off over the last 18 months? 

John: Most breweries did the pivot out of necessity and the shift to technology, be it online ordering or delivery has been huge. And, I expect to see a lot of states that relaxed those rules keep them in place post-COVID-19. There are also breweries that pushed into new markets to help move inventory, and while it might not last, it’s been a good marketing campaign for them to introduce themselves to eager customers.

Most interesting to me during all of this was seeing the breweries that took a personal touch to social media. Before this, posts might be about food specials, beer releases, or generic pictures of brew days, but during COVID-19, many breweries started sharing personal stories to show how hard it was, to highlight customers that went above and beyond, and to highlight the real personalities of employees. This helped us all feel a little closer and a bit of a better connection when we needed it most. 

Joel Hueston, Director of the Marketing and Sales, First Key Consulting

CODO: What should the sub 2,500bbls brewery (a group that previously focused solely on taproom sales) do right now to ensure they’re around at the end of 2021?

Joel: With the “end” of COVID-19 still a ways off, any small craft brewery that didn’t have packaged beer available needs to re-think this. Whether through mobile canning or installation of a compact can line, they need to have packaged beer available for pickup and delivery and potentially for distribution to targeted retail accounts in the local area. This will require creation of an app or other mechanism that alerts customers to this new offering and encourages them to purchase. In addition, if a solid branding platform isn’t in place, this is the time to do the work to develop one for differentiation purposes. Ideally, all branding elements (including the new app) are tied together for the sake of messaging consistency. This includes a kick-ass website and active social media strategy.

CODO: What does the ideal start-up brewery look like in 2021?

Joel: It’s difficult to imagine a craft start-up surviving today without packaged beer. The previous tried, tested, and true model of draft pours and growlers in a cool taproom just won’t do it anymore. This means additional investment will be required to ensure pickup and delivery and potentially retail distribution capabilities are in place. In states where self-distribution is not permitted, a wholesaler partnership will be required. Either way, it’s going to be more expensive and it’s going to be more complex. The good news is that when COVID-19 eventually subsides (and it will someday) these breweries will be well positioned to serve both on-site and off-site customers and will have the flexibility to adjust their business model accordingly.

Emily Hutto, Founder + CEO, RadCraft

CODO: What trends are you seeing on the social media beer marketing front? What do breweries need to be doing today to ensure they make it through the remainder of the pandemic?

Emily: Much like small businesses themselves, social media takes many shapes and sizes to fit the needs of breweries and their consumers. I’ve been delighted to see brands customizing these channels in the last year—showing more behind-the-scenes content, showcasing their people, and speaking directly, candidly, and conversationally to their audiences. The pandemic has forced us all to get real and own our stories; the authenticity that has come as a result is something I both hope and expect we can see a lot more of going forward. 

I’ve also seen an increase in quality across social media. More time to create and more demand for creativity boosts the integrity of photos, videos (which still drive engagement over still images), copy, and the overall message. I’m seeing that evolution across brands, and I think it’s critical to survival. 

Consumers are discerning, and our budgets are pinched more than ever before. Statistics show we are leaning into local businesses and artisanal products in response to pandemic. As individuals, there’s a greater desire for belonging than ever before—where we spend our money is a big part of that sense of place and community. 

Beer is so much more than a beverage; it’s an experience. Brands who understand and sincerely embody that sentiment will be poised for success during this dumpster-turned-forest fire, and beyond. 

Some other survival skills I’ve found critical for surviving the chaos: patience, acceptance, realism, quality assurance/quality control (QA/QC), and people-forward leadership. These company values might not directly contribute to social media, but I believe when it comes to company ethos it’s all connected. 

Justin Kendall, Editor, Brewbound

CODO: Other than hard seltzer, is there another non-beer vertical that breweries need to keep on their radar for producing over the next few years? 

Justin: RTD canned cocktails. I believe hard seltzer is a gateway to canned cocktails, so they’re somewhat connected. They give drinkers more flavor and a lot more bang for your buck, ABV-wise. According to NielsenIQ, hard seltzer buyers are 214% more likely to also buy RTD spirit cocktails. 

Within RTD canned cocktails, vodka-based RTDs are growing the fastest (207% off-premise dollar sales growth) and made up more than half of RTD spirits dollar share. Whiskey (+192%) and tequila (+97%) canned cocktails are also on the rise.

So, as someone who isn’t about to attempt mixology and likes drinks that are convenient, that’s a space I’m watching. 

CODO: Do craft beer consumers care about craft seltzer? Does provenance and authenticity matter in this space like it does with beer? 

Justin: Yes, with some caveats. Consumers will support craft seltzers, but I don’t believe it’s for the same reasons that helped the craft brewing movement prosper. If you have a strong local or regional brand, such as Boulevard in Kansas City with Quirk, then you have a chance. But I don’t see the same romanticism, overall brand loyalty or desire for authenticity in the segment. Hard seltzer consumers care more about flavor, low calories and drinking something crushable that doesn’t make them feel bloated. 

That said craft seltzers, while growing, are a tiny part of the overall segment. Macro brands hold about 95% of the segment’s dollar share, with White Claw and Truly combined making up about 75% of the segment. That doesn’t mean there aren’t regional winners, whether it’s Quirk or Upslope’s Snowmelt or Harpoon’s Arctic Chill or Lone River’s Ranch Water or Ashland in San Diego, to name a few. But do I think drinkers tubing on a lake or sitting poolside are going to care if you give them a Truly, White Claw or Bud Light Seltzer, versus one from their local craft brewery? Nope. 

Mandie Murphy, Co-founder, Left Field Brewery

CODO: Your team tooled up a successful curbside pickup program early in the pandemic. What lessons did you learn as you set that up, and are there any pointers you can give other brewers who are looking at implementing something similar? (and do you see this lasting once we’re past COVID-19?)

Mandie: When COVID-19 first reached Toronto we closed the shop altogether out of an abundance of caution and moved to strictly home delivery. We had already established an online shop where we had been selling direct to customers and shipping across the province for years. Between that, and a nearing-idle on premise sales team, we were able to pivot really quickly to sell, route, pack and deliver beer directly to people’s front doors. Just about everyone in the brewery has or still is contributing to that program in some way and Home Deliveries now represent more than a quarter of our total sales volume. 

After about a month of the Tap Room and Bottle Shop being closed, we opened a curbside shop. We didn’t actually have a pre-order / pick-up option until much more recently. Customers would just show-up, order from the beer labels that we had pinned to a cork board and we’d grab the beer from the fridge and place it on a table outside for them. We zip-tied our payment terminal to a 10-foot pole, drew some fun chalk distancing lines on the sidewalk and made the best of it. The team put our event tents to very good use to offer guests a sheltered, shaded area where they could stand to order and pay, and eventually started using them to display merch across a clothesline. We quickly eliminated the sale of single cans to improve speed of service and help minimize errors. It felt like a no-fun mix of beer festival and drive thru and was never very polished which was perhaps our way of believing it wouldn’t last for very long. 

We’ve since moved indoors and limit our capacity to three masked and well sanitized guests at once. Shoppers pick their own beer from the fridge and we’re all very happy to again be offering a self-shopping environment including the triumphant return of single can sales. We offer pre-order pick-ups through our online shop and have all our beer listed on three food-delivery apps which has given us the ability to service same-day orders. 

We’ve been reminded through all of this how important the tasting component is for beer shoppers. It’s one of our most precious tools (and competitive advantages) as breweries in order to enhance the shopping experience. What does the Mexican Chocolate Imperial Stout taste like? Here – try it! Engaging customers in meaningful, impactful and positive experiences in a hurried, masked, sanitized, and fearful time and from behind plexiglas is really really difficult. 

Investing time and resources in automation, tech and process innovation has been positive for us and something we continue to focus on. Moving to a single provider for e-commerce and POS was something that we implemented in the fall, and it has helped us better manage inventory across two very fast paced sales channels with lots of incoming and outgoing brands. The change allowed us to offer omnichannel gift cards which is so much better for the customer and the most fun benefit is that it enabled us to launch a digital rewards program. The program works both in-store and online and allows customers to earn points on every purchase that they can redeem for merch and non-beer items. It has endless possibilities and we’re really excited to see where it takes us. 

Like a lot of things with COVID-19, this experience will fundamentally change the way people behave long term and there’s no way we’re going to be able to put the toothpaste back in the tube now that beer drinkers have gotten a taste for having cold beer delivered to their doorstep by a friendly brewery rep. 

CODO: What do you think some lasting changes will be once we’re beyond the pandemic? Emergent beer styles, drinking settings, format changes, etc.?

Mandie: It feels like the major resurgence of clean, crisp craft lagers pre-dates COVID-19 but that reliable and familiar taste profile might be giving us all something comforting right now, in a way. I’m personally much less likely to reach for something really out-there or unfamiliar these days and for that reason, I think core brands from a brewery need to be on-point and more reliable than ever. If you want your beer to keep being someone’s reliable go-to, it needs to be reliably excellent and reliably consistent. I think for that reason and also probably really routine buying habits, whether it be home delivery or walking to your neighborhood brewery bottle shop every Wednesday night – that we will emerge from this with more go-to beers that serve as a badge for who we are and what we believe in or how we might have experienced this traumatic time.

On the opposite side, breweries have had to adapt in a major way to get their beer out to drinkers. As a beer fan in our market, this means we have gotten access to beer from really exciting new and small breweries that we may have not otherwise had if those breweries were able to serve more of their beer in their tap rooms. Most breweries in Ontario now either ship across the province or do semi-regular deliveries to major cities with a minimum order. For that reason, there has truly never been a better time to be a craft beer drinker in our market.

Julie Rhodes, Consultant, Not Your Hobby Marketing

CODO: We’re starting to see more folks in the industry think about Gen Z. Can you tell us why breweries need to effectively market to this group as well as some broad stroke notes on what they buy, how they enjoy beer (if they do) and what they value? 

Julie: By the end of 2021, Gen Z will be in control of about $143 billion worth of spending power and will comprise about 40% of all U.S. consumers. That kind of purchasing power is nothing to ignore, and if growing craft beer brands are intentional with their sales and marketing plans, they can capture a huge segment of new beer drinkers just by understanding a little bit more about this newest customer category.

Taking a strategic approach to marketing your unique beer brand is invaluable, and an important step in the process is to really understand your ideal customer persona. Believe it or not, your beer brand is not right for everyone. The more you can isolate the specific demographics and psychographics of your ideal consumer, the better you can tailor your branded marketing messages and materials to meet them at the right place, at the right time, and in a language they understand. 

If there is any beer consumer that thrives the most on brand customization and specialization, it’s the young drinkers of Generation Z, which correlates seamlessly with the world of craft beer. The wants and desires of Gen Z drinkers play right into the ethos of craft beer—defiance of large institutions, more authentic and human messaging, extreme customization, growth of community, and the desire to make real change in the world. Gen Z drinkers vote with their wallets, so if you work hard enough to grab their attention, you will be rewarded with increased revenue. It takes some work though, considering the average Gen Z consumer gives you all of eight seconds to make a lasting brand impression.

Here’s how you can leverage the spending power of Gen Z beer drinkers. Craft breweries should know what kind of beer Gen Z is purchasing and how they are enjoying it. These modern beer drinkers are very health and wellness conscious. Having unrestricted access to technology their entire lives have exposed them to massive amounts of educational content. Gen Z beer drinkers are very aware of the sugar, caloric, and alcohol content of their favorite brews. And due to the high visibility of social media, the less-than-desirable behavior of those that imbibe too heavily has led this demographic to drink in more moderation. But just because they might drink at a slower clip than other age groups, that doesn’t mean they won’t spend more than others. Gen Z might be buying less beer with lower ABV’s, but when presented with the option for more health conscious beer offerings, they are more than willing to pay premium prices for a product that is customized exclusively for their personal tastes. The only way to capitalize on this trend is to clearly communicate how your brand meets those needs, which means you need a heavy online marketing presence, as the average Gen Z’er spends about five hours per day online.

This younger crop of new drinkers also gravitate towards more traditional beer styles and tend to avoid the next “new shiny object,” like trendy seasonal flavors and varieties. When presented with a choice, of say, the newest pumpkin ale versus a traditional IPA, they will opt for the latter. Gen Z craft beer fans are also homebodies. They have adopted new at home drinking occasions that are causing them to not head out to bars as often as Millennials or Gen X. This is where tech savvy beer marketers can really flex their digital chops by providing the Gen Z audience with value-laden video content online that will entertain, educate, and engage DIY bartenders that are hanging out on their smartphones at home. 

Gen Z expects brands to take a human approach to engaging and interacting with fans. This means having more intimate interactions and conversations with them on online platforms. The more you can curate your branded online community, the more likely you are to attract Z-generation drinkers. The average Gen Z beer drinker also has strict demands in terms of what they expect from brands today. In an era of “cancel culture”, brands can be squashed at a moment’s notice by social media influencers that call out their missteps, hypocrisy, and lack of core values. Gen Z wants to trust where they spend their money, so they opt for brands that embrace diversity, inclusion, issues of social justice and transparency. They want to know that your brand is more than just a business, but an entity that is committed to changing the world for good.

And finally, those craft brands that engage in omnichannel sales and marketing strategies will enjoy the spoils of attracting this new audience to their products. Your brand needs to find the balance of being readily available for purchase in multiple outlets, like retail, on-premise, and online. Plus, you’ve also got to maintain the reputation for being human, personal, and connected with each and every one of your fans. The on-demand presence of information about your brand online translates into value that Gen Z beer drinkers look for when it comes time to make a purchase.

Paige Sopcic, President, CanSource

CODO: Other than hard seltzer, is there a non-beer vertical that breweries need to keep on their radar for producing over the next few years? What other beverages have you seen breweries explore?

Paige: In 2021, if you are a brewer that has not considered producing a non-alcoholic beer (or two or three!), you should start now. The selection of delicious NA craft beer is tiny compared to the overall craft beer industry. Offering a product in this category can be a strong point of differentiation for brewers, especially as the audience interested in booze-free and wellness-forward products continues to grow. NA beer sales were up nearly 40% in 2020 and we see that continuing into 2021 and beyond. This is no longer just a “Dry January” need or a bit in The Wolf of Wall Street after Jordan Belfort becomes sober. We believe this is a fantastic opportunity for brewers to attract a new, loyal, and expanding audience for their brand.

Two brewers that are knocking this out of the park are Hairless Dog Brewing in Minneapolis, Minnesota with four selections and Bootstrap Brewing in Longmont, Colorado with their Strapless IPA (a favorite of our CanSource team headquartered here in Longmont!)

Outside of NA and seltzer, at CanSource we have seen a few breweries experiment in CBD, THC, and coffee and one or two experiment with wine. Often, these are extensions of their existing brand, but some brewers start new brand identity. Successful brewers are naturally creative, entrepreneurial, and important for this topic, skilled at finding ways to keep customers coming back for more. One way to do that is with limited releases or seasonal beers. Another way is to tap into a new category like CBD. Experimenting with small batches in these burgeoning categories is a low-risk path to discover what products have traction with your customers and to learn what new expertise you need to build in-house to make it happen.

Bart Watson, Chief Economist, Brewers Association

CODO: What are you seeing in craft beer sales data right now that excites you? What worries you? 

Bart: The biggest worry is obviously the continued weakness in draught sales, both at the brewery and distributed draught at bars and restaurants as well as what that means for the long-term structure of on-premise. Craft is never going to have the share off-premise it does on, so a healthy on-premise is critical for most brewers. I worry that within restaurants, we’re going to see long-term shifts toward stripping out service and a move toward more fast casual, which isn’t as good a channel for beer, especially for craft.

In terms of excitement, it’s not quite the long-awaited rise of craft lager, but craft breweries are increasingly competing in the lighter, lower ABV spaces. Between lighter blond/golden ales, session sours, low-cal IPAs, and yes, lagers, we’re starting to see more craft breweries make everyday beers that move beyond the high flavor/high ABV occasions. While both have a role, the former is a bigger chunk of the overall beer category and has the potential to invite new customers into the craft category.

CODO: Imagine that COVID-19 disappears tomorrow… does the craft beer industry ever get back to growing like it was pre-2020? We were at something like 1.5 breweries opening a day for years, right? 

Bart: We were at over two breweries opening a day for years and hit three a day at the peak! I don’t think we’re going to get back to that peak anytime soon, and there were signs the brewery opening number was declining pre-COVID-19, with some leading markets definitely seeing slowdowns and investors who are probably always going to be more cautious going forward than they were at the peak. That said, I think we’re still going to see numerous openings in the coming years—1.5 a day is only 550 a year, driven by growth in underserved markets as well as churn. How many restaurants open a day in the U.S.? As concepts age and others emerge, we’re going to still see new brewery openings for a long time to come.

CODO: How has the emergence of hard seltzer affected craft beer pricing? Has the pandemic affected this as well? 

Bart: I haven’t seen huge effects from seltzer or the pandemic on pricing. Pricing growth in off-premise was already slowing prior to the pandemic, and there wasn’t a huge change in trend between 2019-2020. Seltzer pricing isn’t quite as strong as craft, but it’s well above premium, and I don’t think many craft breweries are going to try and compete with White Claw or Truly on price. In addition, the boom in the off-premise has led to less discounting since most off-premise sales are up.

One area I’m watching in 2021 is on-premise pricing. There were some reports of really competitive pricing in the limited on-premise that existed this year as brewers with capacity sent beer further afield to try to keep keg volumes from completely disappearing. In addition, winning tap handles has been really hard in recent years, and I think you’re going to see plenty of people, particularly the large brewers, try and seize what they see as a unique opportunity as bars and restaurants fully re-open. Hopefully, craft brewers can still sell to bars on relationships, differentiation and margin, but I think we’re going to see some fierce competition on the on-premise side.

Bump Williams, President, The BWC Company

CODO: You’ve outlined pricing tiers for craft beer in the past. How has COVID-19 affected this and where are you seeing the most growth and opportunity moving forward?

Bump: The pricing tiers for craft beer (base, premium, super premium and apex) that existed prior to COVID-19 still exist today—nothing has changed on that front. What has changed though are three things:

A.The tasting rooms closed so all of the money that was historically spent directly with brewers was now either being pocketed due to an uncertain employment future, or shifted to traditional off-premise accounts like grocery, convenience and liquor stores.

B. High-end craft beer drinkers could not find their favorite “hard-to-get” craft beer at retail because a lot of the smaller breweries who depended on the tasting room business to survive were shut down. Consequently, a lot of packaged beer wasn’t being produced. So, consumers had to buy whatever craft beer they could find at their local stores. This was largely “old reliable” brands—Sam Adams Lager, Sierra Nevada Pale Ale, Dogfish Head 60 Minute IPA, New Belgium’s Voodoo Ranger, Bell’s Two Hearted, Deschutes Fresh Squeezed, Allagash Belgian White, Blue Moon and the Firestone Walker’s of the world—along with the well-established local craft beer that had a solid three-tier sales program already in place. These beers aren’t the apex priced beers of the segment, so the base and premium priced segments increased their share of this segment in a big way.

C. The last thing that happened came from the retailer and distributor—it was a natural culling of the craft herd at retail. Consumers no longer want to take 30 minutes to meander around the shelves and read the labels of beers they had never heard of. Instead, they simply picked up a 12-pack of whatever the retailer and distributor could get at the time. That long tail of eclectic and high-priced craft beer wasn’t on the shelves, and both the retailer and the distributor determined that perhaps all of that variety and assortment—that takes up so much shelf space—wasn’t really needed.

Retailers came to realize that the old 80/20 rule worked for craft beer too and that 20% of the craft brands (5% of the brewers) accounted for 80% of their sales. So why crowd the shelves with products that don’t move when I can get pallets of craft beer that consumers are buying and repeat purchasing? I do not see this elimination of the craft long tail being reversed in the next 2–3 years. Consumers made it clear that they would drink high quality craft beer (and domestic beer like Bud, Miller and Coors) in place of the mixed six of IPA’s they had grown accustomed to doing in the past.

CODO: What do you make of the DTC wave that arose during the pandemic? Doing you see this lasting or fading somewhat once we’re back to normal?

Bump: So there are two very different definitions of DTC and their futures are very different from one another.

The first definition is from brewers who sell directly to consumers through their tasting rooms and brew pubs, and this model ran into a cement wall during COVID-19. No three-tier relationships where wholesalers would deliver their beer to the local stores resulted in a lot of shuttered-up breweries. I think the vast majority of DTC brewers are re-thinking the “I don’t need distributors or retailers to help me survive” strategy and are quickly seeking out qualified chain people to work with national off-premise accounts to secure distribution. They are working with distributors to get access to off-premise distribution and focus/share of mind so that however long it takes for COVID-19 to “disappear,” their beer brands will always have a place on the shelves of the local grocery store for consumers to buy.

The second definition of DTC deals with the Amazon’s, Drizly’s, Doordash’s, Gopuff’s and Minibar’s of the world that will deliver beverage alcohol right to your doorstep; and this has a very bright future. Consumers who enjoy drinking alcohol but don’t like to leave their home or who are practicing safe quarantining practices have really given these delivery companies a shot in the arm.

My guess is that DTC had no more than a 1–2 share of the volume prior to COVID-19, but since the pandemic hit, this route to home delivery has more than quadrupled its share of the beverage alcohol industry; and I expect it to continue climbing as other traditional off premise retailers are adopting this model too. Call in to your favorite (licensed) retailer and place an order, present a valid ID proving you’re 21 years of age, and you can order anything from their inventory and have it delivered to your front door. Smart move and a long, long runway of growth ahead for these DTC services.

Taylor Williams, Marketing Manager, CraftRoads Beverage

CODO: We saw a big rush for craft breweries to get into grocery throughout 2020. Is there still space for folks to get in there?

Taylor: The opportunity is there, but it won’t be easy. Instead of offering more product variety in 2020, we saw grocery stores start to limit the purchase options available to consumers. Buyer behavior changed drastically once the pandemic hit, and grocery shoppers aren’t browsing the beer aisle for the newest hazy IPA anymore. Consumers now come in and bee-line it for trusted brands they know and love. 

So, if you want a shot at supermarket shelf space, you’ll need to sell your brand, and sell it hard, because the demand for new brands is limited right now, and there are countless other breweries vying for that same spot. Grocery beer buyers are keen to have more local suppliers on their shelves, so local breweries will have more success. Local brands who offer larger quantity packaging will do even better. 

Also, having the correct grocery contact is crucial to getting your foot in the door. And once you’ve started the vendor application process, the decision will then come down to how competitive your pricing is and your willingness to adjust if necessary. 

We’ve had brands work anywhere from 3 months to a year to get on grocery shelves, so it’s difficult, but shelf space is available if you’re willing to work for it. 

CODO: Did you see consumer style preferences (or format preferences) change during COVID-19? What surprised you?

Taylor: In 2020, we saw a surge in brands promoting their “beer series” with limited releases of the new variants. Abomination Brewing’s Wandering into the Fog series would sell out instantly with tons of consumer inquiries asking when the next variation would drop, and the same went for Humble Forager’s Coastal Sunshine series. Instead of asking where to find the newest brands, consumers were clamoring to get the newest iterations from the brands they already love.

We saw an uptick in collaborations as well, which seemed like the best way for lesser-known breweries to garner some attention by co-brewing with an established brand. Because consumers were unable to sample new beer in taps rooms and liquor stores, there were fewer opportunities for unknown brands to get in front of a wider craft audience, so collaborations were a great tool for breweries to get recognition and consumers to sample from new breweries.