Identifying and exploiting an under-served market is Start-up Strategy 101. Why compete in a crowded space when you can stake a claim of your own?
That logic often gets flipped on its head when it comes to craft beer, however. Other brewers have already paved the way in more established markets, which also tend to have achieved critical mass and beer-savvy consumers who embrace new experiences. And while it’s easier to stand out in under-served areas with less competition, it’s also more difficult to attract and educate consumers and create demand. Ideally, potential new markets include promising elements from both ends of the spectrum. Here are several strategies to help identity those opportunities.
Do the Research but Trust Your Gut
Fieldwork Brewing Co., headquartered in Berkeley, California, operates a series of taprooms along the California coast. While Berkeley’s craft-beer scene is no slouch, Fieldwork’s other outposts aren’t exactly located at the nexus of California’s craft-beer culture.
In addition to Berkeley, Fieldwork operates taprooms in Napa and Sacramento, with additional locations set to open this year in Monterey and San Mateo.
Alex Tweet, Fieldwork’s owner and head brewer, says that he and his partner, Cofounder Barry Braden, first looked at discretionary income when evaluating possible new locations but soon decided that they were giving that criteria too much weight.
“We thought about it in terms of craft beer, which is not a luxury item whether you want to believe it or not,” Tweet says. “And the financial diversity among craft-beer drinkers is massive. So really, discretionary income wasn’t an issue. It was more about finding places that were under-served markets.”
After zeroing in on a few of these under-served regional markets, they then began layering in other bits of information—such as drinking patterns and amount of socializing—that could give them a clearer picture of what they might expect.
“Sacramento (pictured at top) I went for because people in Sacramento drink seven nights a week,” Tweet says. “We thought about opening up [a taproom] in Marin. People in Marin have a lot of discretionary income, but they’re not going out drinking during the week.
“Having one very busy day may pay your bills, but you’re not going to thrive. You need to be busy seven nights a week.”
Sometimes you also have to trust your gut and go with the vibe.
“There’s also something so contagious about being in Sacramento, and people love local there. It’s just too cool of a town,” Tweet says. “So that was more of a passion play, and then Napa (above) is more of a quintessential under-served market for craft beer. For us it was a no-brainer. There’s a strong drinking culture in Napa, and wine people love drinking beer. Plus we’re in Oxbow Public Market, which is an amazing indoor marketplace.
“And then San Mateo is a perfect storm for our satellite station. Yes, there’s a lot of discretionary income, but there’s also a strong tech industry presence and people who are going out and socializing a lot.”
By combining socioeconomic data with old-fashioned horse sense, Fieldwork has been able to successfully find its way into strong new markets.
Don’t Overload the Life Raft
Another reason not to open in a congested market? You might be cannibalizing your own customer base.
“All you have to do is go to San Diego, and you can see what’s happening there,” Tweet says. “All these breweries keep opening up tasting rooms in the exact same neighborhoods, and not only are they opening in the same neighborhoods, they’re opening in the same neighborhoods as all of their draft accounts.
“Why open a satellite tasting room in a congested market where you’re going to be competing with your own draft accounts? Go to an under-served market where there can be demand. I like to make a life-raft analogy. A life raft is fine when you’ve got ten people sitting in it and you’re waiting to get help, but if people keep jumping into your life raft, everyone is going to sink together.”
Know Your Own
While Colorado boasts one of the nation’s most robust craft-beer scenes, the town of Greeley is certainly not its hub. At the most, it’s an outpost.
Greeley is located about an hour north of Denver by car and yet a world away in feel. You’re more likely to see dudes in cowboy hats sipping cold Budweiser in Greeley’s bars and restaurants than waxed-mustachioed hipsters in tight jeans checking in their latest finds on Untappd.
And yet, when USA Today readers chose the nation’s best new brewery during a 2016 poll, they named WeldWerks Brewing Co. (above) in downtown Greeley, Colorado, as their top pick. WeldWerks also has an impressive number of awards to its name, among numerous other distinctions.
That WeldWerks makes award-winning beer is one reason its owners have been successful in bringing the mountain to Mohammed, so to speak. But they also understand the micro-variations at play within their local market. Markets can fluctuate by county line, even by city block.
“I think every brewery needs to get to know its market and also realize that, even with the best data at its disposal, there is going to be a lot of variation even within the same market,” says WeldWerks’ Co-owner and Head Brewer Neil Fisher. “There is a lot of data about production and taproom sales in Denver, but that isn’t very helpful to us. It is totally different from what we have in Greeley and our demographic.”
And the volume and habits of WeldWerks’ taproom patrons tends to fluctuate, with more locals during the week and people coming from out of town on the weekends. That all leads Fisher to recommend that owners look at the big trends but also be careful in considering whether they’ll work in their market.
“We get inquiries from breweries across the country in totally different markets about crowlers and our crowler sales,” Fisher says. “Crowlers do extremely well in Colorado, but that doesn’t mean they’ll do well in Missouri, for example. People there may respond better to growlers or bottles. We always caution people to get to know their own markets.”
Stake a Spot and Make It Your Own
Jaime Dietenhofer chose California’s Santa Ynez Valley as the location for Figueroa Mountain Brewing Co., which he cofounded with his father, because that’s where he grew up and always wanted to start his business.
Since its founding in 2010, Figueroa Mountain has grown to include a total of six taprooms throughout the region with robust regional distribution, as well.
“I don’t think most breweries are looking in the Central Coast, per se, because it is a lower populated area—your first thought might be San Francisco, Los Angeles, San Diego, or Sacramento, just because of the populace,” Dietenhofer says. “But we established our mother ship here and have grown out from the center.”
This strategy has allowed Figueroa Mountain to establish a strong foothold in the region, claiming it as their own, as well as to forge strong local ties in the communities where they locate.
“People have embraced us and our brand and feel attachment to what we do because we’re a local, family-owned business,” Dietenhofer says. “If your aspirations are to grow outside your market quickly and expand your footprint, I think that’s a dangerous path. Try to grow from your home first and have buy-in from the people around you because once you have that foundation, it’s a much stronger model.”
Build a New Tradition
Billings, Montana, is a trailhead town. Thousands of people pass through Billings each year on their way to Yellowstone National Park and any number of the national parks and national forests in the area.
Billings is also an Old School craft-beer town in a state that, while sparsely populated, is steadily adding new breweries each year. Although a relative newcomer, Überbrew (above)—which won both Small Brewing Company and Small Brewing Company Brewer of the Year awards at the 2016 Great American Beer Festival, as well as two gold medals, a silver, and a bronze for its beers—is helping lead the charge to bring new luster to the area’s strong brewing heritage.
“Billings has had a great, award-winning beer culture for at least twenty-two years and has the distinction of twenty-four GABF medals in that period,” says Mark Hastings, co-owner and head brewer of Überbrew, who also worked at Montana Brewing Co. when it opened in 1994. “There are two great homebrew shops here, and the beer culture really started in the late eighties and early nineties with the homebrew culture.
“Right now there are seven breweries within walking distance of each other, but some of what holds us back is the legislation.”
Montana is one of seventeen states that have a quota system for awarding liquor licenses, and manufacturers are barred from also holding a retail beverage license. “The way to sell your beer if you’re a manufacturer is through what’s called a taproom exception,” Hastings says. “So, from the hours of 10 a.m. and 8 p.m., we can sell 48 ounces of beer per customer, per day.”
Despite laws that limit sales and a relatively small, spread-out population—or perhaps because of it—there’s a feeling of camaraderie that unites local brewers as they work to raise the stature of craft beer in the town and throughout the state.
“I think it also pushes us to put Billings on the map,” Hastings says. “It’s like, ‘Okay, there are some strange laws in Billings, but we also have a great beer culture, too.’ I also think that’s what pushes a lot of brewers to enter competitions—to be able to say, ‘Look at us. Yeah we’re small, and you may only think of Big Sky when you think of Montana, but there are sixty-five to seventy breweries in Montana now, and most of them are making pretty phenomenal beer.’ ”
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PHOTO AT TOP: SUNI SIDHU, COURTESY FIELDWORK BREWING.