Predicting and Controlling Craft Beer Demand

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Transcript

Thanks for joining us again on the Augustino Brewing podcast. Today, we are going to talk about a subject near and dear to my heart and, hopefully, to yours. If you’ve got a craft brewery or brew pub that you are opening or have open, this is about predicting and controlling craft beer demand. As you probably know, if you are watching the industry and listening to this podcast that the craft beer market is still growing and growing quite a bit but it is showing signs of slowing.

Now, there’s two reasons for that. Reason number one is there is genuinely some a slow down in the growth, especially the growth per brew pub and per brewery that is open. For us as beer manufacturers we have to take that into account as we are moving forward because the boom time of 20% growth year over year is just not going to be in the cards like it used to be, especially if we’re not growing geographically. That’s something that you need to consider and something that you need get into your craft beer and food plans and schedule appropriately in terms of what you’re going to spend and what you’re going to be able to realistically take in.

However, there is a lot of things that we can do to control that demand and to increase that demand for our products over those of our competitors in the craft beer industry and other brew pubs and other restaurants that may be out there but don’t do as good of a job as we do.

The growth area that is in craft beer, at least as I’m recording this podcast, is in the area of specialty beers, infused beers, in particular. These are beers that have various fruit or spice adjuncts added to them. It’s an area of explosive growth and identifying and realizing that this is the direction that the market, at least over the short term, is going is part of the reason why we are focusing on craft coffee and craft beer together. Part of it is to have it be a situation where you can come in and enjoy yourself at Augustino Brewing in the morning and then you can come on back and enjoy yourself in the evening, as well, with a craft beer in the evening hours.

Even more than that, the various ingredients of beer and the various ingredients of coffee and the various ingredients even of tea, which we don’t talk about a whole lot. That’s more my bias that I don’t really care a whole lot about for most teas but there are others that do and Augustino Brewing will certainly cater to the market that wants various tea beverages, as well. You have to have that ability to be adaptable to where the market is. Right now, the market is looking at infused beers and, I think, especially our newer entrance to the beer market, the new people who are coming into craft beer are really wanting those fruity beers, those beers that maybe tastes like root beer or ginger beers. Basically, there’s a demand for beers that don’t taste like beers.

You need to keep that in mind. Will the infused beer movement die off? I’m sure it will. I’m sure there will be something else that replaces it but right now that’s where it’s at and Augustino Brewing intends to cater, in part, to that market. Really what that shows is that there is a high need to be able to stay fresh and in control of the demand. You can’t just do the same thing over and over and over again and expect that you’re still going to get the same return. There’s something called the diminishing rate of returns and, as it would apply to a craft brewery, if your brewing the same beers over and over and over again, ad nauseum, you’re going to, eventually, tire people out.

That doesn’t mean you abandon your core flight. Every brewery has their reliable beers that are always going to sell really well. You want to have that because at the end of the day, your guests want consistency in their service and consistency in product line. But they also, and this is the heart of the craft beer industry, they also want to be able to experiment and try new things and enjoy new beers that maybe they hadn’t even thought existed. You want to always be able to stay fresh too. In terms of designing when you’re making what beer, you want to make sure that you bill in time into your schedule to be able to create new and experimental products that you can test on your guests. I highly recommend doing this often because for us as brew pub owner, as opposed to regional breweries and beyond, it’s very, very easy for a brew pub to just go ahead and do an experiment and see what people think.

Another great thing that you can do if you’re trying to decide if a beer would be acceptable to a larger population is to have Firkin Nights. Firkins used be the rage here, as least in the Kansas area, about two years ago. It seemed like everybody was having Firkin Nights and they were having them all the time. That has died off quite a lot. I think, part of it was because the experimentation started getting a little too crazy on firkins. Still infusing fruits, vegetables, spices, herbs, whatever you want to play around with, utilizing a firkin to play around is great opportunity because if you do hit on something with a firkin really well there’s always opportunities to scale, provided you can do that economically, scale that beer to something really big.

Another important key to controlling that demand for your product is to always make sure you’re giving your guests what they want. Give them the craft beers that they want, give them the craft coffees they want, give them the food options they want as well. The best way to find out what they really want is to ask them. You can do this, a lot of point of sales systems allow you to add additional content at the bottom of your receipt.

I would always have information leading a guest to be able to take a survey. If you can, get them to take the survey before they leave the restaurant because once somebody has left the odds that they will come back around and take your survey is very low. Moreover, even if they do come around to take your survey by that time they’ve lost the experience a little bit and so you’re going to get not as good of results is they take it later on. Survey them, ask them what they want. That can be just done from your servers too. If they just ask what they liked, what they didn’t like, you’re going to get some real information but you have to have the systems in place and the process in place so that your servers record that information so that you as the owner or manager are able to put those things into play.

I think another important thing to do is to always create new opportunities to increase product demand. Things that we’re going to be doing at Augustino Brewing include, we’re going to have special deals will be certain nights that you’re going to be able fill a growler for less money or that maybe we’re going to have specialty beers that are a little bit cheaper. You’ve got to look beyond just those simple type of things because, number one, all of your competitors do that, and number two, you don’t want to just have discounts all the time and have those be your events because, ideally, you’d rather have people paying full price for your beers.

You’re going to want to also have special events that bring people out. We just did a podcast on that recently. Then, leverage your tee shirts and leverage mug club reward programs. Don’t miss out on opportunities there to bring people back regularly. Once you bring them back a few times you’ve got them as long as you continue to treat them well.

Thanks a lot for listening, and tune back in for another episode.