How Brewers Can Differentiate in 2024
by Jessi O'Brien
The craft beer market has become more competitive recently, with sales down 1% last year. That might not seem so significant. In fact, it's pretty positive, but it's a dramatic shift from the recent past.
"We had multiple years of double-digit growth, and so some of what we're experiencing now is just the contrast with that era," says Brewers Association Vice President of Strategy and Chief Economist Bart Watson.
There have also been a massive number of closings over the past decade as well. According to the Brewers Association 2023 report, around 385 breweries shuttered last year. However, that was less than the 400 breweries that opened last year.
"You've got more players competing for a pie, which isn't growing anymore," Watson says.
With the golden years of constant growth now a thing of the past, it's become more important for brewers to find ways to differentiate themselves, lean into what makes them different, and find other strategies to stand out in a busy marketplace.
Leverage Your Home Field Advantage
Watson says ten years ago, brewers were racing to distribute in as many states as possible.
"That's not really a sustainable strategy today in a world where there's really good local beer everywhere," he says. "If I'm a brewer from Colorado, what relevance do I have in Florida when there are great local Florida breweries?"
This doesn't mean it's impossible to take up space in store coolers outside your hometown. However, current trends show brewers concentrating on their local markets, "where they resonate and have home field advantage," Watson says.
A classic example of a proud local-focused establishment is New Glarus Brewing out of Wisconsin. Watson said that when everyone else was trying to get into all 50 states, New Glarus remained loyal to the locals. That strategy has worked for the 32-year-old brewery.
Another example, The Lost Abbey out of Southern California, recently pulled out of other states entirely, Watson said. The Lost Abbey had a fairly wide distribution, but they were stretching their resources in the process. They decided to downsize to make more money.
Focus Products and Product Distribution
Many brewers also grew their portfolios to an unwieldy size. While it's fun to experiment, ‘the more, the merrier’ strategy isn't so effective when it comes to distribution.
Watson says brewers should focus on their stronger, more marketable flagships for distribution. That doesn't mean brewers should limit their creativity, but it's necessary to understand what beers are better suited for the tap room and what beer has legs.
"I always point out to brewers that your distributor doesn't care how big you are overall; they care how big you are in their portfolio," Watson says.
Adopt a Mission-Driven Philosophy
Brewers can also stand out by promoting what their company stands for—not just the beer itself.
Data shows 26% of Gen Zers say companies that make sincere efforts to serve their communities or a cause deserve customer loyalty.
"It's still critically important to make great beer even to have a foothold in this market, but what brewers do after they sell that beer, what brands do as a company, is another dimension that's becoming more important," Watson says.
For example, since beer-making is a high-impact industry, there are many breweries that promote sustainability. The 1% for the Planet is a trend where brewers give 1% of their sales to environmental causes.
Watson says he has also seen more breweries partner with charities and nonprofits.
Hone Your Brand And Create New Looks For Special Releases
Today, brewers have a deeper understanding of their core customers more than ever before, and this insight significantly shapes the branding of their cans. Skulls, '60s influences, classic aesthetics, minimalism, and maximalism are common themes in beer branding today. The key is to infuse the label with the brand's unique voice to stand out. Whether rebellious or traditional, it's important to remain authentic.
When branching out from a typical style, breweries are creating a separate look for special releases to avoid confusion.
"Light lagers have come back into vogue for craft breweries, and those are often branded very differently than their core, fuller flavored brands," Watson says.
A popular example is Garage Beer, backed by the Kelce-brother of NFL fame, by Braxton Brewing Company out of Ohio. Garage Beer has traditional, no-frills branding that looks much different than Braxton's colorful, more modern design adoring its other styles.
Try Out The Total Beverage Strategy
Some brewers are also succeeding in branching out into other beverages to capture non-beer drinkers. Exile Brewing in Iowa, for example, recently launched a new cocktail line. Around 650 breweries now have distilled spirits permits.
"We're seeing we're more moving into that space and kicking the tires on whether that makes sense for them," Watson says.
But there are risks involved, too. It's unclear how long hot trends will last (e.g., the hard seltzer movement.) And brewers have to invest time and money to make and brand non-beer beverages much differently than their core beer brands.
"It's hard to say here's what's going to keep growing for the next five years, but a wide range of beverages related to beer have been growing for a long time," Watson says.
Have a Holistic Focus
Using all these tactics together—getting involved with your local community, centering distribution around your flagship brews, promoting your mission, being authentic in your look, and venturing out to capture non-beer drinkers—is more effective than using one alone.
But Watson says there is more than one answer to this problem. He's seen brands take unexpected risks and succeed.
A few short years ago, some companies were finding success with 19.2-ounce double IPAs targeted toward younger people who would maybe buy one or two tallboys rather than a six-pack. But that worked because it was so focused.
"Where we see success is with a more unified strategy," he says. "That kind of focus is where the industry is today."