There’s a section of the craft beer business that flies beneath the radar. Well, almost beneath. In their home markets, these breweries are well known and selling a great deal of beer—good beer. Despite that, they are still “lurking in the shadows; almost invisible,” as described by Gary Bogoff of Berkshire Brewing (South Deerfield, MA), one of the companies that makes up this challenging segment of the market.
“If I can’t take care of my own market, then something is wrong with my model.”
A true testament to the independent spirit of craft beer, such breweries may appear mild-mannered enough on the surface. However, these “little giants” are actually capable of superhuman feats, strong enough to wrestle hometown market share away from much larger rivals. Furthermore, these breweries can maintain a flexibility that allows them to grow strategically when and where it makes sense. It’s a tough act, but one with dramatic payoffs: last year, while bigger players grew moderately or not at all, the mis-sized segment grew faster than any in the entire alcohol beverage field.
“Middle-small” craft breweries often don’t sell much beer outside their home territories, nor do they receive a great deal of attention elsewhere. However, they continue to grow, and in many cases, thrive. Although they might not yet be ready to knock down the largest craft brewers, these smaller outfits brew beers that attract and maintain loyal local support. And there’s something in their fascinating story that’s just as inspiring to the beer enthusiasts who support their products as it should be to the major breweries that are competing against those products.
But first let’s establish our terms. Using the amount of beer brewed in a given year is a reasonable way to define middle-small breweries. At the top of the craft beer spectrum is a brewery like the Boston Beer Co., with annual sales of more than 1.2 million barrels. At the other end are brewpubs and tiny microbreweries that produce only a few hundred barrels each year (and sometimes less). In the middle of the pack are breweries in the 4,000 to 10,000 barrel range.
This mid-range size is not always a benefit. “You get kicked around when you’re this size,” said Brian Baku of Mad River Brewing in Blue Lake, CA. Mad River operates on a “shoestring budget” in rural Humboldt County in northern California. Baku figures his biggest block to growth is a lack of support from the large grocery chains and their consolidation.
Tom Atmore of Butte Creek Brewing in Chico, CA, added: “It’s a hard size of brewery to maintain. You need to be either larger or smaller.” A small brewery has the advantage—if it can be called that—of concentrating on a small, local market with a limited amount of beer to brew each year. A large craft brewery benefits from its ability to purchase raw materials in bulk at a discount and to hire salespeople to hit the streets and spread the word.
How Do They Do It?
Each brewery had its own game plan from the beginning (as do all businesses), but the key for almost all of these brewers was to “keep it local.” Attempting to sell beer across the country (or even across an extended region) right from the beginning simply wasn’t an option. The competition from the major national brewers, imports and the few largest craft brewers would have been too intense. The local market right outside the brewery door was the logical first step.
“The home field advantage is important,” noted Gene Mueller of Flying Fish Brewing in Cherry Hill, NJ. “It’s a matter of taking care of my own backyard. And if I can’t take care of my own market, then something is wrong with my model.” For Flying Fish (brewer of Extra Pale Ale, among others), that backyard is a huge one, because Cherry Hill is only eight miles east of Philadelphia. Mueller notes that greater metro area is the fourth-largest consumer market in the United States. Within that territory, the company concentrates on covering a 100-mile radius from the brewery. Through those efforts, Flying Fish has become the largest-selling local brand sold in Philadephia’s ballpark and hotels.
Another microbrewery with a huge local market is Blue Point Brewing in Patchogue, NY, located in the middle of densely populated Long Island (just 60 miles east of Manhattan). “Long Island has three million people,” said Blue Point’s Pete Cotter, “and we took five years to even think about approaching New York City.” The Big Apple now accounts for Blue Point’s largest area of growth—more than 100 percent last year. Toasted Lager is Blue Point’s flagship beer.
Owning one’s backyard is the guiding principle for Oscar Wong of Highland Brewing (in Asheville, NC), brewer of several beers, the leader being Gaelic Ale. “It’s like in a war,” Wong stated. “If you’re spread out too thin, you’re vulnerable.” Wong has grown Highland “organically outward,” even pulling out of Charlotte (130 miles away) for two and one-half years “because we couldn’t consistently supply the area with beer and pay the attention to Charlotte as we wanted.”
Tim Suprise of Arcadia Brewing in Battle Creek, MI, took a measured and deliberate process to grow his company’s sales. He focused for the first three to four years on his core market in Michigan before branching out into nearby states.
“I followed the Peter Austin [an English microbrewing pioneer] philosophy,” Suprise said, “which is to sell your beer only within the distance it takes a horse and dray to go and return in a day. This allowed us to keep fresh beer in consumers’ mouths, but the flip side is we didn’t sell as much beer.”
The advantage for Arcadia (whose number one seller is Arcadia IPA) and other breweries that adopted this model was that strong local growth gave them the confidence to enter other areas and states. The brand equity first had to be built.
“Before we broke ground, the going belief for us was—and still is—to always be the small local brewer,” said Bill Russell of Buzzards Bay Brewing, based in Westport, MA. Buzzards Bay’s core market is the south coast of Massachusetts, Cape Cod and the offshore islands of Nantucket and Martha’s Vineyard. It was two years before Buzzards Bay approached the big Boston market, just 58 miles north. In order to differentiate itself from other New England breweries that almost exclusively produce ales, Buzzards Bay’s flagship beer is Export Lager.
Russell Klisch of Lakefront Brewery in Milwaukee, WI, owns the brewery himself and sells 80 percent of his beer within a 30-mile radius. It’s just “throwing it over the fence to the people,” Klisch recently commented. The brewery’s biggest seller (Riverwest Stein Beer) and other offerings are sold primarily by word of mouth within a local area, because Klisch doesn’t have much of a budget for marketing and advertising.