6 ways craft beer can pour profits into your bottom line

| by Amanda McNamara
6 ways craft beer can pour profits into your bottom line

Editor's note: This is part of a series called, "Now trending."  Each story will dissect an upcoming fast casual trend. Click here, here and here to read past installments. 

America: land of the free, home of the beer. 2017 was a landmark year for the U.S craft beer market, with the total operating brewery count exceeding 6,000 at year's end. The United States hasn't seen this number of active breweries since the mid-1870s.

According to a 2017 year-in-review report by The Brewer's Association, 98 percent of these breweries fall into the small, independent craft brewing category. To be considered craft, a brewery may not surpass producing 6000 barrels of beer within the timeframe of one year.

And though she be but little, she is fierce

In 2016, the 5,301 active craft breweries contributed a whopping $67.8 billion to the U.S economy, meaning these small, independent businesses accounted for 63 percent of the total $107.6 billion the entire beer market generated that year.

As the number of operating craft breweries continues to rise (The Brewer's Association has reported there are another 2,739 breweries in the planning stage for 2018), how best can businesses in the foodservice industry play to this overwhelming consumer preference for artisan craft beer choices and keep up with the never-ending list of new breweries and beers popping up each week?

Over the next 10 years, the industry grew eightfold, with 858 craft breweries operating in 1995. By 2005, that number increased to just shy of 1,450. Now, 12 years later, dotted the American landscape. Since the late 1980s, the U.S craft beer market has found itself in a renaissance period. In 1985, a there were a mere 110 craft breweries. Now, there aresix times that amount brewing and pouring pints. Prost!

Though considered by most a member of the umbrella food service industry, the craft beer category has managed to remain unscathed by the new business curse. While an estimated 30 percent of restaurantswill close their doors for good within one year of opening, a mere 97 breweries (both veteran and green) turned off their taps in 2016, amounting to only 1.6 percent of the entire population.

Growth in terms of production has somewhat stagnated in the past two years, with mid-year production by craft breweries only seeing a 5 percent increase over last year's numbers; the year prior they saw an 8 percent YoY mid-year production increase. Sure, their unprecedented, explosive growth may be slowing, but business is undoubtedly booming for the craft brewing underdogs: in 2016 the U.S craft beer market brewed approximately 24,570,469 barrels of hoppy goodness.

The shift in consumer preference away from "big beer" is palpable in bars and restaurants all over the country. Shunning both the products and the conglomerates that make them, business owners and recreational beer drinkers alike have made a significant economic impact on some of the biggest names in the biz, including the international mammoth, Anheuser BuschInbev.

Back in 2008, Belgium's InBev purchased America's iconic Anheuser Busch International Inc. for $52 billion, and then, in 2013, bought the remaining 50 percent(or $20.1 billion) of Grupo Modelo that the company did not already own. In 2016, the renamed Anheuser Busch InBev made another power play, completing a $106 billion merger with England's SABMiller, officially making them the largest beer producer in the entire world.

Name still not ringing a bell? Here are some of their more popular brands: Budweiser, Bud Light, Stella, Modelo, Corona, Spiked Seltzer, Michelob, Rolling Rock, Busch, Landshark, Shock Top, Presidente, Goose Island, Löwenbräu, St. Pauli Girl, Hoegaarden, Bass, Beck's, and Labatt's — to name a few.

Since 2014, however, the megacorp has seen sales falter in North America, with a reported 6.7 percent drop in sales of Budweiser and a 5.8 percent drop in sales of Bud Light, up from the 2 percent and 3 percent losses the company reported just a year earlier.

A recent feature by The Washington Post explored the new trend of restaurants removing "big beer" from their drink menus altogether. When asked, quality of product and the supplier's business practices were the chief reasons as to why they made the move. Opposing the monopolization of the market, business owners and beer drinkers are taking a stand, choosing to fill their pints in support of local, independent "mom and pop" breweries.

Beside the moral upside to carrying independent breweries' beers, craft choices usually involve a wider variety of highly curated ingredients, leading to more complex flavors in each pour. They also tend to have a higher alcohol content than their domestic counterparts, yet another reason why they've become such a fan favorite among recreational beer-enthusiasts.

As the popularity around craft beer has continued to mount, the industry has garnered a cult following comprised of beer lovers of all shapes and sizes. Though no official name has been bestowed upon this fanbase, like The Grateful Dead's "Dead-Heads" or Star Trek's "trekkies," they're widely recognized under the affectionate pseudonym, beer snobs.

While some consider this label a backhanded compliment, there is some merit in the moniker; this group is a fan of "the finer things" when it comes to what is being poured into their pint glass or snifter. They place emphasis on the consistency of the pour, the aromas emitted, flavors noted in the taste, list of ingredients,varietyof hops,areaof origin, and other defining qualities that make a beer, and brewery, stand out from the fold.

Restaurants and bars looking to profit off of the booming craft beer trend are faced with a difficult task when it comes to curating their beer list.

With thousands of new breweries popping up each year, providing (potentially) millions of flavors and tastes to choose from, where does one begin when it comes to sifting through the noise and finding quality, revenue-generating brews that pass the beer snob sniff test?

Here are few ideas.

1. Use the industry's "flavor of the week" cycle to your advantage, and keep your offerings rotating with new options for customers to enjoy. One of the best qualities of the craft beer industry is that it's constantly changing; there's always something new and tasty to try. Extend that philosophy to include the taps in your restaurant, as well as the bottled choices you keep stocked behind the bar.

2. Research breweries in your area through Google and Social Media, then reach out to their representatives; supporting your local community is not only good for your bottom line, but it's also a business practice your customers want to see in action.

3.Using your bar POS system, track the performance of individual beers and use the insights uncovered by your reporting to influence your craft beer purchasing strategy. If you haven’t already, you aught invest in a robust bar inventory management system, like BevSpot, that can monitor beer volume and the sales performance of each beer on the menu. If you notice a certain beer, or brewing company, sells better than the rest, invite the company in to host a promo event. Try to do this once monthly or bimonthly with a different brewery, both to establish a reliable cadence with beer-loving customers and to strengthen the relationships you have with individual breweries and distributors.

4. If you're looking for semi-guaranteed money makers, try including the winners from local and national craft beer competitions, like the U.S Open Beer Championship, or The World Beer Cup. At these two competitions (and many others) winners are crowned in a wide variety of categories; when deciding on who to include on your beer list, try peppering your offerings with some gold medalists, like Jack's Abby's Framinghammer or Wormtown's Be Hoppy (and Be Hoppier)

5. Another great way to stay up on the latest in the craft beer industry is to leverage the insights of your local beer snob population. Have your staff to be on the lookout for any patrons who have an especially keen interest in your craft beer offerings. Ask if they'd be willing to give feedback about what you're pouring in exchange for a promotion or deal; they'll be keen to let you know if what you're serving is "so 6 months ago" or if there's a hotly awaited release coming up from the brewery du-jour.

6. Besides popularizing delicious small-batch beers, the craft brewing industry also introduced us to another novel invention: flights. The craft beer version of "wine tasting," when ordering a flight a customer selects multiple beers (usually four or five) to try, which are then served in smaller glasses usually attached to a wooden tray. Customers pay per flight, not per glass. Try offering a flight option on your menu, where customers can pick a small number of your craft offerings to be served in smaller glasses for a fixed price.

Topics: Coffee / Specialty Beverages

Companies: Toast, Inc.

Amanda McNamara

An experienced digital marketer and veteran of the server life, Amanda whips up easy to digest tidbits for Toast’s Restaurant Management Blog and beyond.

wwwView Amanda McNamara's profile on LinkedIn

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