Resources

Brand Extensions, Line Extensions & Co-Branding

TAPPING INTO BRAND EQUITY TO GROW YOUR BREWERY’S REVENUE AND REPUTATION

This is part 2 of 2 in our series on brand architecture. For part one, click here.

 

Whether your brewery is three years old, or thirty—you will eventually have the opportunity to grow your footprint and offer new things. Be it through internal product extensions or external partnerships, you will be confronted with some tricky branding obstacles to navigate as you grow. Let’s discuss a few potential approaches, so that you understand the pros and cons of each. What broader implications will these new efforts mean for your parent brand?

Line Extension

A line extension lends its established, brand-specific name to another product within the same category (beer A1 begets beer A2, A3, et cetera).

Example: “Voodoo Ranger,” “Voodoo Ranger Juicy Haze,” “Voodoo Ranger Imperial Black IPA,” etc.

 

New brand rollouts can be prohibitively expensive for any brewery—far more so for the regional and national players. Think of all the moving parts. By the time you’ve completed the package design process (including researching the competition, design fees, registering new trademarks, printing thousands of cases / cans / bottles / etc.) and have planned out both on- and off-premise promotion, you’re staring down a staggering bill for even a single product rollout. All of this, and we haven’t accounted for the time (and sheer coinage) that goes into developing the beer recipe itself.

What’s worse: any wholly new addition to the portfolio can be a gamble. Brut IPAs are hot right now. Will they continue to be hot a year from now? Uncertainty sets in, and your mood darkens. Mysteries abound. You toss and turn at night. “We can move 10,000bbls of this, right?” Rather than take on the risk of rolling out a completely untested offering—one that may or may not please your current fans at volume—why not add a twist to an old favorite? Maybe a different hop bill, a rotating type of yeast, or maybe even some sort of seasonal/local adjunct?

By using your established brand’s name and reputation, you can lend that level of trust to the new beer, mitigate risk and achieve velocity with greater immediacy.

When weighing your options for a line extension, it’s important to remain cognizant of the reason customers loved your product in the first place. If you overplay your hand and stray too far from what brought you to the dance, loyal supporters may get confused. At best, you’ll look a little listless: as though you’re throwing different ideas at the wall to see what sticks. At worst, former supporters will come out in droves (possibly armed with pitchforks) to wreak vengeance upon you for sullying their favorite beer.

 

Brand Extension

A brand extension, by contrast, occurs when an existing brand launches a product into an entirely new category. You’ve won over customers with a great product and killer service… Why not cash in on all that goodwill and ask them to try something new?

Example: A popular brewery opens a distillery under the same (or similarly-themed) name. Or, that same brewery uses its spent grain to make new products, like candles or dog treats.

Through a brand extension, you’re leveraging the weight of your parent brand itself to lend credibility to a new product. The more established or respected your company, the more effective this approach will be.

One caveat—you generally want to stay within the same universe as your main category to achieve the best results. If you’re making the best beer in the state, then you could probably endeavor to make a pretty good whiskey as well. If you make the best beer in the state but decide to use your brand name for a new line of boutique wind chimes, it may not land as well. The qualities and promises that make up your parent brand should intuitively link to your new extension.

While a brand extension play seems pretty “safe” on its face, we need to mention another potential negative side effect: If your new extension isn’t well received, your parent brand’s reputation can suffer. Think of this like a referral. You’re careful about who you recommend to family and friends (auto shops, lawyers, design firms, etc.) because the caliber of service they provide is ultimately a reflection upon you: The Referrer. They trusted you enough to listen to you. If that mechanic doesn’t repair your car properly—or if that new thing bearing your brewery’s name doesn’t live up to the hype—backfire! Your customers feel betrayed. Way to go, turkey.

 

Co-branding

Co-branding is a strategic partnership between two companies (can be in the same industry or completely different) to create a product that bears both of your names. Co-branding leverages the strength of each brand to create something cool and premium, all while introducing each company to the other’s customer base. This approach can also help both parties achieve deeper market penetration within their respective categories. Additionally, this approach can help you break into a new category altogether.

Some of these opportunities won’t result in clear-cut ROI. They can instead be measured in the amount of positive association and buzz you generate. Co-branding can also be a way to indulge yourself in a fun project with like-minded people, or to throw your hat in with a business you look up to. You may be able to use your partnership to raise money or awareness for a cause. The possibilities are limited only by your personal inclinations.

Example: Dogfish Head x Woolrich ‘Pennsylvania Tuxedo Collection.’ New Belgium x Ben & Jerry’s collaboration. Backward Flag Brewing x various veteran charities. Sierra Nevada’s ‘Resilience IPA’ x hundreds of breweries around the world.

A few considerations for deciding when and how to co-brand a product:

– a co-branding partnership works best with a company whose brand values align with your own.

– decide up front how to feature each entity on the product (and the promotion that surrounds it).

– discuss openly and commit in writing who pays for what and how profits are split.

 

Many of the same caveats from line and brand extensions apply to co-branding. Be cognizant that any negative perception of a partner brand can transfer to you and your company—as a concrete example, 2015 would have been a bad time to partner with Subway. And, remember to keep your expectations (and investment) reasonable. Pull this off right, and your efforts should raise the excitement surrounding everyone involved.

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Fitted with these three approaches, you should be able to make an informed decision that best serves the needs of your customers—and your brand—as you add new offerings and grow your business.