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Monday, October 19, 2015

Local Relevance: the Latest Catchphrase in Craft Beer

It can easily be argued that local appeal was a huge part of what got the craft revolution off the ground. The demand for locally grown and processed food was underway by the 1980s and it extended to beverages, including coffee and, yes, beer.

The way the movement presented itself early on, at least in beer terms, was a vibrant homebrewing culture. The beers being made were local and that became a big part of their identity when those homebrewers opened breweries. You know who they are.

It's largely a forgotten detail now, but Portland's early craft (then known as micro) breweries leaned heavily on the local angle to sell their product. Doing so fit nicely with the highly provincial nature of Portland. Customers, drinkers in this case, were increasingly attracted to local beers.

As time went by and the early breweries became successful and grew, they looked outside Portland and the Northwest. We saw this with Widmer, Portland Brewing and Bridgeport. In fact, the urge to explore lucrative markets outside core areas has been a theme in the craft beer industry of late. These efforts are not without risk and they don't always pan out. But they are a reality.

So I have to admit I was surprised when I interviewed the folks at Bale Breaker Brewing a couple of months back. They were determined, as part of their business plan, to own their core market in rural eastern Washington prior to chasing the lucrative Seattle-metro market. Some told them there were nuts, that people "out there" don't drink craft beer.

As it turns out, Bale Breaker has been highly successful with their core market strategy. They were unable to keep up with demand for their beer from the day they opened in 2013, and the great bulk of that beer was sold locally. They've since moved into Seattle and the rest of Washington and Oregon is on the horizon. But they say their greatest strength is their home market.

It seems some of the larger breweries are starting to come full circle on the local concept. There's some definite irony attached to that notion, given the fact that all of these guys started out small and local before expanding into distant markets. But never mind.

For many years, Portland Brewing/Pyramid largely ignored its core market on the West Coast and focused on building its brands elsewhere. Those efforts netted mixed results for a variety of reasons. Now they're shifting direction.

When I interviewed Rob Rentsch, the new general manager at Portland Brewing/Pyramid, he talked about the strategic importance of reviving the relevance of his brands in the local and regional market. He was hired specifically to make that happen, and it's a difficult task given the extent of the neglect over so many years. We'll have to see how it goes.

Now I see, via an article in Brewbound, that the Craft Brew Alliance is also focused on the local angle. As you likely know, the CBA is comprised of Widmer, Redhook, Kona and Omission, as well as some partner brands. In the case of Widmer and Redhook, both legacy Northwest brands, the CBA hopes to achieve greater local relevance.

This is a fairly interesting development. Recall that CBA brands enjoy access to the nationwide Anheuser-Busch distribution network. You're app to find at least some CBA beers almost anywhere in the country thanks to that arrangement.

What they've evidently learned is that only Kona has broad national appeal. Perhaps this is because so many smaller breweries are opening up and attracting locals. In that scenario, the people buying Kona are buying an image. It's similar to Corona, which sells well due to its connection to place. Anyway, the CBA will continue to support Kona nationally via a strong advertising campaign. Makes sense.

Widmer and Redhook are where the big local/regional action is. The approach to seasonal releases will be refined with both brands. Widmer Hefeweizen will hit Oregon shelves in cans next March, a move they hope will boost interest in their flagship beer. There's no hint of it in the article, but Widmer will likely do more with its specialty program, which is under-appreciated.

Redhook is a more substantial challenge. Established in 1982, it is the oldest surviving Northwest craft brand. And it has been neglected and mismanaged for years. Part of the plan to revive the brand is retro packaging, an effort to remind consumers of what Redhook once was. Lipstick on a pig, if you will. Then there's American Pale Ale, set to be released nationally. What?

As with Widmer and Portland Brewing, Redhook's path to local relevance will demand effort on the specialty front. Today's vibrant brands are built in beer bars and at festivals and tap takeovers. You cannot reach that audience with mainstream brands. And you have to understand that grassroots marketing like this is intended to generate buzz and credibility. Sales will take time.

Do the established brands have the dexterity and the commitment required to execute the kind of plan that will result in renewed local relevance? I have my doubts, But we shall see.

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