Pricing in the craft beer industry may soon change in favor of the consumer. According to this Forbes article, Founders Brewing is now making a cheaper beer to appeal to drinkers of premium domestic brands like Budweiser, Miller Lite and Coors, retailing at $7.99 per six-pack.
We asked some of our cousins what this means for pricing in the world of craft and if they expect other brands to follow this trend.
What are your thoughts on the article?
“I think the article is a great example of what we’re seeing in our marketplace today. Market saturation is at such a great level, breweries are willing to try anything to capture the attention of the consumer. In addition, playing the David versus Goliath narrative, Founders can use emotional marketing to support the strategy.” — Dane, chief jargon expert
“I think the article shows that it’s important for the craft beer industry to be able to pivot to the demands of the consumer. The consumer is demanding a lower price point and Founders is giving them that.” — Nicole, marketing marketer
Do you agree that we’ll start seeing more craft available at a cheaper price?
“No question. Some approaches will be similar to what Founders is introducing, others it will be a simple survival technique. Some of the last ditch levers for survival is dropping cost and hoping to land in a segment that can generate enough velocity to be financial stable.” –Dane
“I agree with Dane. Consumers drive the market. Look at how consumers responded to hazy beers. What was thought to be a quick fad is now becoming a staple in the craft beer industry. Hundreds of hazy beers were entered into the Great American Beer Festival this year because consumers are demanding more. If consumers want a lower price point for beer the craft beer industry will have to respond or face losing a piece of the market.” — Nicole
Do you think craft breweries should start making cheaper beer options? Why?
Dane: I’ve seen a couple of different approaches when it comes to price strategy and one is to have a brand that exists in all of the price “buckets”. As long as you’re not devaluing an existing brand and starting fresh, it can be a lucrative proposition. Virtually you’re giving the consumer an option no matter the price point to purchase one of your breweries brands. The macros have done this for years, use ABI as an example – all four segments below have a different price point.
- Value = Busch
- Premium = Budweiser
- Above Premium (Lifestyle) = Ultra
- Import = Stella Artois
“I would be interested in seeing this happen. When trying to convert friends to independent craft beer I find that price point is sometimes a contributing factor. Even though I’m giving them craft beer and they love it, they might not go out and purchase it on their own because they’re drinking so much beer that money truly factors into their decision. I’m not saying all craft beer needs to lower the price, but if a brewery wanted to make a specific brand that catered to that lower price point it might be a way to get those consumers that are currently drinking Coors to try craft.” — Nicole
Does a cheaper beer imply a lower quality?
“Traditionally, yes. It doesn’t even have to be in the beer segment to let that message ring true. It would need to take an exceptional consumer education campaign to erase that perception.” — Dane
“As a consumer that is typically the standard whether it’s beer, food or other goods. However, if I saw an independent brewery I loved making beer at a cheaper price and I already had that brand loyalty I might not think that or I might not care. Personally, I’d be more likely to buy from a brewery or company I’ve had positive experiences with.” — Nicole