MARKET FOCUS FOOD & BEVERAGE: Microbrews face down a flat market - The microbrew craze has settled like an old beer. The small suds makers face competition from re-energized mass brewers and from newly hot imports. As John Frank reports, the master

A decade ago, a river of microbrewers flooded the beverage scene, presenting consumers with a bar full of new beer styles and tastes. The trend began in the Pacific Northwest and worked its way across the country, with tavern taps spewing out exotic concoctions wildly different from the mass-produced, mass-marketed offerings that the majors like Anheuser-Busch and Miller sold.

A decade ago, a river of microbrewers flooded the beverage scene, presenting consumers with a bar full of new beer styles and tastes. The trend began in the Pacific Northwest and worked its way across the country, with tavern taps spewing out exotic concoctions wildly different from the mass-produced, mass-marketed offerings that the majors like Anheuser-Busch and Miller sold.

A decade ago, a river of microbrewers flooded the beverage scene,

presenting consumers with a bar full of new beer styles and tastes. The

trend began in the Pacific Northwest and worked its way across the

country, with tavern taps spewing out exotic concoctions wildly

different from the mass-produced, mass-marketed offerings that the

majors like Anheuser-Busch and Miller sold.

For a while, it seemed like every yuppie executive just back from a

European vacation had found some new beer recipe he couldn’t wait to

start microbrewing.

Brewpubs backed by such enthusiastic new beer lovers became fixtures in

gentrified neighborhoods across the urban landscape. The new industry

took on a host of names including microbrewing, craft brewing and

specialty brewing.

And for several years, just being new and different was enough to get

the beers noticed by distributors, bar owners and consumers. Public

relations was thought of later, if at all, by the horde of new beer


But microbreweries’ heady days are over. The business essentially became

a victim of its own success. ’It just seems like everybody was making

beer,’ recalls Lucy Sholley, director of communications with Boston Beer

Co., maker of Samuel Adams brews.

So many new brands spouted forth that distributors couldn’t handle them

all, and consumers became confused or downright discouraged by products

that often simply weren’t very good or different. Some micros that tried

to expand too quickly beyond their home markets found they couldn’t

monitor key industry concerns, such as quality control or store shelf


’In some areas, there has been saturation of the shelves and tap-handle

space,’ says David Edgar, director of the Institute for Brewing Studies,

a trade group in Boulder, CO.

The majors also hit back. Miller launched new beers under the Plank Road

Brewery label to give the impression of a microbrew. Coors began

importing a variety of foreign beers to appeal to broadening consumer

tastes and Anheuser-Busch bought into several micros to protect its

flank from the upstarts. Imports began stepping up their marketing

efforts as well, eventually luring some consumers who had become

accustomed to new tastes and didn’t mind paying more than mass-market

beers charged to get it.

A bloated market

As a result, growth in the microbrew segment slowed from around 42% in

1992 to 37.2% in 1994 to a decline of 0.1% in 1998, according to

statistics from the New York-based Beverage Marketing Corp. Specialty

beers’ share of the overall beer market peaked at 3.1% in 1997 and stood

at a projected 2.8% last year. ’It became a lot harder to get attention

just because you were a new brewery with a new beer,’ recalls Edgar.

The specialty breweries that have survived the shakeout went back to

brand-building basics, and, in the process, discovered the value of

solid public relations to create distinct images to survive in a crowded


PR offered an important asset for most specialty brewers - it’s more

cost-effective than advertising. ’In the climate today, which is one in

which few of the breweries have large budgets for traditional

advertising, they are working to be as creative as possible to get

people’s attention,’ says Edgar.

For many, PR has meant stressing their local roots and their

community-involvement efforts. Company founders and brew masters have

become adept at getting ink or airtime, not just about their own

products but as experts anytime their local papers or TV stations need

beer info. ’Those that are being successful have a strong link to the

community,’ says Joan Halleran, editor of Beverage Industry


For those like Boston Beer that have long since outgrown the microbrew

label (the industry defines microbreweries as those producing 15,000

barrels or less a year) and now sell their products nationally, PR has

stressed product quality and freshness. ’PR is a big part of our

marketing mix,’ says Boston’s Sholley.

For example, one of the company’s PR ploys, an online charity auction of

a bottle of Samuel Adams Millennium beer late last year, garnered

coverage in The New York Times food section and on 25 TV stations that

used a VNR sent out on the event.

While microbrew PR efforts have been largely homegrown to date, some

specialty brewers large and small are turning to PR firms to get their

message to consumers. Boston Beer, for example, about a year ago began

working with Kratz & Co. in New York in addition to Jackson & Co. in


Madison, WI-based Capital Brewing - which with 13,000 barrels sold in

1999 qualifies as a true microbrewery - took on PR help last year as

well, hiring its hometown’s Stephan & Brady.

The beer maker has already seen results in terms of increased coverage

and rising sales, says its president, Tom Fuchs. If competitors continue

to see such PR users succeed, it could spell opportunities for other PR

shops to grab new business from the frothy world of microbrews as


Creative campaigns

Whether working with agencies or alone, the breweries that have captured

coverage show a keen understanding of what appeals to reporters’ news

sense. When Tom Schlafly decided to open St. Louis Brewing in 1991, he

played up the David vs. Goliath angle of opening a new brewery in

Anheuser-Busch’s hometown. He garnered coverage by contacting local

reporters, often passing along story tips on other topics that he came

across during his other job as a commentator on National Public


He’s also found that ’some of doing PR is being opportunistic.’

When Anheuser-Busch was planning to sell the St. Louis Cardinals, a

local writer mentioned jokingly that maybe Schlafly’s brewery would want

to put in a bid. Schlafly responded by placing a jar behind the bar in

his brewpub to collect money for a ’buy the Cardinals’ fund. The stunt

garnered local press coverage, as did his donating the money collected

to charities backed by the St. Louis Post-Dispatch.

When Schlafly opened a new section of his brewery in late 1998, he

decided to have three clergymen of different faiths bless the premises

in time for the evening news that night. He got his desired TV coverage,

with one reporter using the old gag setup line, ’three clergymen walk

into a bar.’

When the Pope came to St. Louis, Schlafly created a special beer for him

- Holy Smoke Porter - which got him coverage from as far away as Mexico,

where John Paul II had been before arriving in St. Louis. ’We get

attention grossly disproportionate to our size,’ he says. ’A lot of what

we have to sell is being local.’

Indeed. Anyone who grew up in Brooklyn would say there’s no place more

local. And Brooklyn Brewery has been using PR to get news coverage since

before it opened, says cofounder and president Steve Hindy. A former

Associated Press reporter himself, Hindy saw a story in his decision to

open a brewery in Brooklyn, a locale once dotted with as many local beer

makers as churches (Brooklyn is known as the borough of churches). He

opened with only five customer accounts for his product in March 1988,

but ’we have relied on PR from even before the first day we delivered

beer,’ Hindy says.

When he expanded distribution to Manhattan in August 1988, Hindy decided

to turn it into a media event. He scheduled the delivery for the

anniversary of George Washington’s retreat from Brooklyn during the

Revolutionary War and decided to have his beer cross the East River - as

Washington had done - by boat. The beer, accompanied by a flute player

in Colonial garb, was featured on the local Fox station’s morning show.

Last December, Hindy got a profile of his brew master in the December

issue of Gourmet magazine. He credits that to past coverage of his

operation. ’Once your story is out there, people go back to it,’ he


Hindy’s also done a lot of ’grass-roots PR,’ sponsoring a local beer

festival under the Brooklyn Bridge for three years, getting the mayor of

New York to cut the ribbon on his brewery opening in 1996 and holding

art shows at his brewery in Brooklyn’s Williamsburg section, which has

become something of an art colony during recent gentrification. When

local residents were protesting plans to put a garbage transfer station

on the Williamsburg waterfront, Hindy started holding a running event -

dubbing it the Toxic 5K - to protest the plan. The station wasn’t built

and Hindy continues to hold the race each year.

Back to roots

Capital Brewing, in Wisconsin, is rediscovering its regional roots after

being part of the crowd that tried expanding too far too fast in the


Fuchs, who has 25 years experience in the wine industry, was brought in

at the start of 1999 to get the 15-year-old brewery back on track. After

three months of interviews, he hired a PR firm. ’We didn’t have any

in-house expertise’ when it came to PR, Fuchs recalls. ’But our story

had to be told.’

Peter Geoghegan, the Stephan & Brady VP working with Capital, notes

initial PR efforts have focused on the brewery’s core markets - Madison,

Milwaukee, Chicago and Minnesota. Geoghegan has been working to turn

Capital’s brew master into a media personality and to find things at the

brewery that make for good copy. ’There’s all kinds of things you can

talk about, quirky things,’ he says of working with breweries. At

Capital, for example, the barrels used to store beer are named after

Frank Zappa songs.

Fuchs nearly doubled his dollar sales last year from dollars 1.6 million

in 1998 to almost dollars 3 million and credits PR, for which he spends

only from dollars 10,000 to dollars 12,000 annually. Additional media

attention translated into higher sales for Capital’s brands last year,

which allowed the brewery to stop doing contract brewing, a lower-margin

business in which it brews beers for other labels. By doubling sales of

Capital-label products, Fuchs sent income up without increasing


A cover story in Beverage Industry helped pump up distributors to sell

more Capital product. While some small breweries distribute directly to

bars and stores, most work through distributors, so distributor

relations is another key aspect of brewer PR.

Other brewers are aiming their PR at specific market niches, realizing

that as specialty brews they don’t need the type of mass market appeal

the big three brewers - Anheuser-Busch, Miller and Coors - chase


New Belgium Brewing Co. in Fort Collins, CO last year garnered national

PR in the environmental community when it decided to let a local utility

raise its rates 26% so the utility could finance a wind turbine to

produce wind-generated electricity for the brewery and other customers,

says Greg Owsley, who goes by the colorful title of ’brainstorm

meteorologist’ at New Belgium.

Using PR as a weapon

The brewery went along because of its concerns about CO2 emissions,

Owsley explains. ’I felt like a hero,’ he says, when releases he wrote

about the project garnered coverage from NPR, Mother Earth News and

other environmental outlets. Once the first stories appeared, others

followed, with some PR being done by environmental groups eager to

promote wind power.

Other specialty brew PR techniques include sending products to beer

festivals and arranging beer dinners with local restaurants.

The dinners showcase different beers with each course of a meal,

something wineries have been doing for years. Consumers pay to attend

the dinners - proceeds go to the restaurants - and the breweries get

word-of-mouth PR for the cost of the beers they preview. ’Our core

consumer really wants and needs to believe that they discovered our

product,’ says Gary Fish, president of DeShutes Brewery in Bend, OR, in

discussing the value of festivals and dinners. ’Our goal is to connect

to the consumer.’

That’s a goal every specialty brewing company is trying to achieve, more

often than not, using PR as a major weapon.


Growth and market share have fallen ...

Year                    Share of           Growth

             overall beer market

1990                        0.6%                -

1991                        0.6%            22.3%

1992                        1.0%            42.1%

1993                        1.3%            28.1%

1994                        1.8%            37.2%

1995                        2.3%            31.7%

1996                        2.8%            25.1%

1997                        3.1%             5.1%

1998                        2.9%            -0.1%

1999                       *2.8%               NA

... while overall sales peaked in 1997

Year             Barrels sold

1990                1,081,423

1991                1,322,505

1992                1,878,686

1993                2,405,919

1994                3,299,921

1995                4,346,567

1996                5,438,634

1997                5,716,005

1998                5,709,863

Sources: Beverage Marketing Corp, The New Brewer,

Modern Brewery Age

* Projected.

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