Are Flagships Doomed?

Two decades ago, this was how you built a successful craft brewery: find a market niche that wasn't being exploited, plant a flag with your "flagship" brand, and start buying fermenters to prepare for meteoric growth. Indeed, this has been the American model for decades. A beer is associated with its key brand: High Life, Blitz, Budweiser. The effort to introduce new brands (Genuine Draft, Henry Weinhard's, Bud Light) were extremely slow ventures--and often doomed. In craft brewing, once a company had seized a style, it was very hard for other breweries to do more than chip away at the market. Deschutes grabbed porter, Sierra Nevada pale, Sam Adams lager, and New Belgium amber.

That model is a dinosaur.

A couple weeks ago, it all crystallized for me when I was on an expedition to try the Widmer's most obscure beer. This is the Widmer Brothers who, in the old model of business, seized hefeweizen. The Brothers invited me and a few bloggers to witness this beer in its native environment: a low-ceilinged, claustrophobic room in the depths underneath the Rose Garden. Fortunately, the evening began with a Blazer game (though it was that Milwaukee debacle on March 20, which wasn't ideal). The rare species was not available to plebes in the arena, though.

Instead, after the game, we had a pint at some secret restaurant that only those privileged with extremely good, court-side-type tickets have ever seen. Those VIPs can enter the place privately, away from the rabble, dine finely in soft pools of light while the masses team rowdily above. (I caught sight of Paul Allen roaming outside the restaurant after the game.) I trust this kind of lifestyle is not in my future.

Then we were off to the press room, that aforementioned claustrophobic den. This is where beat reporters cover the blazers and post their stories to the papers back home. And this is where the Widmers offer Off the Record Pale Ale, made exclusively for the press. And it was there, sipping that beer that will never, for love or money, be available to the general public, that I had my moment of clarity.

This year Widmer Brothers will release 23 different bottled beers. Or, put another way, 22 beers not named Hefeweizen. Twenty three beers! (Draft-only, festival beers, and Collaborators are not included in this tally.) If you think about those old companies that raced to early success with their flagships, none of them is close to a single-beer brewery. Sam Adams, Sierra Nevada, and New Belgium all dominate certain segments of the craft market, but they also have vast lines of 48, 17, and 25 beers, respectively.

Brands are still very important. The value of Sierra Nevada Pale, Widmer Hefeweizen, Fat Tire, and Boston Lager is immense. But these brands are sort of like the macro brands--they don't boast the kind of dynamic growth potential of specialty beers. In order to grow, breweries can't depend on a beer that accounts for 80% of production. They need legions of small-sellers, beers that account for a few percent of their total sales, to boost growth. One of the great virtues of beer is its infinite possibilities: a brewery can create a product for a market as tiny as a few beat reporters. Atomization is the nature of US culture, though. No one gets their news, entertainment, or products from the same few titans. For the near future, anyway, niche is the way.

Full disclosure: the Widmer Brothers paid for the whole thing--tickets to the game and beers at the game and secret restaurant afterward. They also gave us pints of Off the Record Pale when we finally descended to the press room after the game.