Craft beer is on the menu

Sept. 17, 2012 | by Alicia Kelso

The craft beer industry has experienced staggering growth for the past five years, including a 14 percent jump in sales in the first half of this year.

At the National Restaurant Association Show's International Wine Spirits and Beer Show in Chicago in May, Technomic's David Henkes said that beer mentions have increased 65 percent on top chain menus since 2006, "driven by craft."

This is compared to the domestic light beer category, which has been flat during the last couple of years.

Drivers in craft beer's growth

Drivers of this growth mirror trends in the food industry, according to Julia Hertz, Craft Beer Program Director at the Brewers Association, especially a bigger demand for localization and increased sophistication about what we eat and drink.

"There is a cultural shift that isn't unique to beer. It has become very important to consumers to know what's behind their food and drink – the food's story. We know more than ever that local is good," she said. "Also, more consumers like that variety and craft beer is more able to provide that."

Also lifting craft sales is the coming-of-age Millennial consumers, who are expected to increase spending at eating establishments within the next year, according to new research.

"Craft is a favorite beverage of the Millenials, and the argument goes that those with money, and even some without, see craft beer as an affordable luxury and a trade off for bigger purchases they won't now make," said Jennifer Litz, editor of trade publication Craft Business Daily.

Many fast casual chains, including Starbucks and Fazoli's, are taking advantage of the higher demand by expanding their beverage platforms and incentive programs to focus on local or regional brews. Oregon-based Burgerville, for example,  has been selling beers from a select group of local breweries since 2010. The brand's sommelier Christine Tran chooses beer and wine to complement menu items.

Because of craft's higher price points, operators often incentivize customers. Mellow Mushroom Pizza Bakers' locations, for example, offer a wide range of craft beer options, as well as a members-only beer club encouraging guests to try each variety in the exchange of rewards.

Why it is good for business

Overall, in 2011, craft beer drinkers spent 30 percent more per trip than non-craft drinkers.

Benefits to stocking craft not only include providing a boost to the bottom line, but also attracting new customers while maintaining current ones.

"There are three types of beer drinkers – the beginner, the enthusiast and the beer geek. The enthusiasts and the geeks are growing in numbers and spending a little more. A shift has occurred in the entire category toward more beer lovers, which is good because they have very strong loyalty," Hertz said.

Litz adds that there are four major reasons restaurants are (or should be) gravitating to a broader craft beer platform:

  • It offers high margins, as does any alcohol item, which leads to increased sales and profitability;
  • It attracts an ideal customer – one who is willing to spend a little more on affordable luxuries;
  • It attracts Millennials, who have a long road of drinking ahead of them; and
  • It drives high guest satisfaction and customer loyalty/repeat guests.

"The growth of craft shows a significant consumer movement toward more flavorful, more locally-oriented beer with a transparency to ingredients and operations. The biggest craft brewers are continually converting drinkers and the segment still has a ton of upside in terms of distribution penetration," Litz added. "This includes occasions from convenience stores to fine dining, and tapping broader demographics like females and multicultural consumers."

Picking the right brews

The Brewers Association suggests tying beer into the identity the restaurant concept and offering multiple styles of craft, such as a mix of local, regional and global. Thirty percent of the craft category is sold via draft, and bartenders should know how to pour properly. For example, 1 inch of foam is recommended to showcase the beer's full aromatics.

"There are likely to be craft drinkers at any given pizza restaurant, chain or independent, so operators looking to add it should start simple and educate themselves," Litz said. "Talk to distributors and poll guests to discern brands in demand. Start out with one or two approachable local beers, encourage trial (perhaps via sampler flights) and build from there."

It's also important to make sure the beer is served correctly and the lines are maintained properly – "Quality is the hallmark of the segment," Litz said.

Read more about trends and statistics.

Topics: Coffee / Specialty Beverages , Trends / Statistics

Alicia Kelso / Alicia has been a professional journalist for 15 years. Her work with, and has been featured in publications around the world, including NPR, Good Morning America, Voice of Russia radio, and Franchise Asia magazine.
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