Suds & Buds: Complements or Substitutes?

How Legalization has Spurred Innovation

It’s a question at least a few of us have pondered while paging through our Firms and Markets textbooks. For some Sternies working in beer, the trend toward cannabis legalization can be viewed more as an opportunity than as a threat to brewers.

That’s particularly true for nimble craft producers who are willing to push the envelope with product positioning and able to quickly roll out new line extensions that capitalize on people’s love for both forms of recreation. A case in point is “Puff,” a hazy New England-style IPA from Brooklyn’s craft Sixpoint Brewery that launched on – you guessed it – April 20.

“I think it creates room for innovation,” Stern alum Mike Schwartz said, noting the possibility of a hemp-infused brew.

The complementarity of suds and bud was one of the topics covered at “Beer (Marketing) Blast,” a panel event with four current and former Stern students working in the beer industry. Over complimentary beers, Sternies shared their experiences in craft, macro and beer media, and discussed industry trends, from brewing and packaging innovations to alcohol responsibility.

One trend of interest was “flagship fatigue” among consumers: as brands proliferate and brewers fight for shelf space, some larger, more established entities are finding it harder to grow flagship product sales. Some craft brewers’ responses have been to innovate with new line extensions. Sierra Nevada, for example, is offering “Tropical Torpedo” and “Sidecar Orange Pale Ale” in hopes of breathing new life into its overall brand.

It’s a familiar challenge for Langone student Max Nevins, director of marketing at Sixpoint.

“We definitely see flagship fatigue with some of our core beers in our more established markets, which is why we have to introduce small batch beer,” he said. This year alone, Sixpoint is supplementing its core line with some half-dozen seasonal or limited releases, from a Gose-style called “Jammer,” to an India Pale Lager dubbed “Tesla.”

“Our answer to flagship fatigue is, if you’ve been doing things the same way for the last 100 years, you’re doing something wrong,” Nevins said. “We constantly update the hops, malts, etc., as we get different contracts with hops farmers. That keeps it fresh.”

Large global brands like Heineken don’t have the same flexibility as craft brewers to regularly change recipes or extend their product lines, noted Schwartz, brand director for Newcastle and Amstel at Heineken. That said, competition has forced large producers to innovate as well, often via packaging to help them stand out on the shelf and capture different segments.

“There will be different pack sizes …, or a 16-ounce can, or a twist-off – just to meet the (consumer) need and gain shelf space, more share and more sales,” Schwartz said.

The responsible side of beer marketing was also a focus for panelists. Langone student Melanie Goodman said a major part of her work as associate media director at MediaVest is ensuring beer-brand clients are legally compliant in targeting of-age consumers.

“Before we place a buy with any sort of vendor, we look at the composition of their audience,” she said. “We never buy anything that’s dipped below 75% (of potential consumers ages 21 and up), just because we want to be cautious.”

As director of corporate and social responsibility at AB InBev, Langone student David McKenzie focuses on sustainability and responsibility in the beer giant’s brand programs. One campaign partnered with Matt Damon to raise awareness of the global water crisis through the sale of limited-edition Stella Artois chalices.

Low-alcohol and non-alcoholic beer is also an area where AB InBev is betting big, he said.

“There’s an opportunity there to use our responsibility message to actually sell beer.”

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