A recentish Brewbound article talks about Anheuser-Busch growing its high end brands by creating 15- and 18-packs. The article also suggests independent craft brewers will struggle to compete with Big Beer on price for multi-packs.
Iron Horse Brewery produces a 24-pack of Irish Death and six-packs of Send It, Life Behind Bars, Hand Cannon, Irish Death and seasonal offerings. We asked our Chief Revenue Officer, Dane Williams, and marketing mastermind, Adam Ransavage, what they think of this latest industry trend.
To read the original Brewbound article click here, then let us know what you think.
This is an interesting article and certainly a question about the direction the segment will go in regards to Craft package offerings. In the current state, we have grocery sets with a high index of both 6pk can and bottle, dying single serve section (22oz bottle,16oz and 19.2oz can) and multi-packs (8pk/12pk/15pk). 6pks continue to take share away from all other packages and will continue to as it seems to be the most cost effective route for the majority of brewers and in high demand with the consumers. But…as the single serve continues to shrink (with the exception of ultra-high end), breweries struggle to find an outlet for sampling. How do you get your new offerings and flavor variances in the hands of the consumers, if there isn’t a single serve offering? Solution = variety multi-packs. Unfortunately it comes with a cost, outside of the National and Large Regional Brewers who can afford to automate the process, most breweries would have to hand pack such a variety multipack…which in turn isn’t profitable. But what comes first, the chicken or the egg? My feeling is that we would need to invest in such a pack to better balance our brand mix and continue to introduce new offerings in that Off Premise space.
Outside of variety packs and speaking directly to just core brands, high velocity brands will continue to go the route of 12pk and 15pks. Not 18pks so much but certainly 12 and 15. It comes down to the PTC (price to consumer) and being able to bucket price your package with other high velocity packages, while creating value for the consumer. For instance, Import 12pk glass bottles might get an “ad” price at $15.99, so it would be in our best interest to create an attractive margin for the retailer on a Craft 15pk at the same price of $15.99…this would be a price per unit of $1.06 versus a 6pk of $1.66 at $9.99. In addition, if Craft wants to continue to errod the Domestic share it will need to fill the need for a higher consumer purchase ring (which it could with 12/15pks) and take schematic real estate which these packages would in the “well”.
I think this speaks to the maturing that we’re seeing in off premise craft beer sales. In the past, you could walk into a grocery store and gaze upon hundreds of different beers in 22oz bottles to decide what you wanted to try out. Now, the 22oz segment of most store shelves has been reduced to make way for more varieties (of IPAs) in cans and 12oz bottles. While this is great for grabbing a 6 or 15 pack for the weekend, it has shifted the consumer experience of trying out new or different beers to the on premise. Some of those not-so-mainstream beers will continue to lose shelf space to established brands being put into larger packs. This will continue to push smaller, innovative beers back to tasting rooms, but that might not be a bad thing.
I think we’re seeing the tasting room experience growing concurrently with the larger packages offered on store shelves. As breweries are able to open tasting rooms in different markets they’re able to further refine their business. This means the consumer is getting more specialty beers at the tasting room, but less variety at the grocery store. I just hope that this is genuine creative destruction in action and less of a gimmick because at the end of the day what’s the point if a better product isn’t produced for the consumer.
Would Iron Horse ever go to a 15- or 18-pack? How about wider distribution of the 24-pack?
“Yes, I would venture to guess at some point we might see an Irish Death 12pk or 15pk, but it will be dictated off of the demand we see in the market.” — Dane
Do you want to see more Iron Horse Brewery products in multi-packs? Do you prefer to pick up variety multi-packs or do you like 22 oz bottles?