THE GIST
Boston Beer announced this morning that its Samuel Adams brand of beers will become the "official beer of the Boston Red Sox," entering a "multi-year partnership" in January 2018 that replaces Budweiser as the beer of choice in historic Fenway Park. The publicly-traded company will pair with its hometown baseball team, inking a deal through the 2025 season, according to The Boston Globe.
Among the changes fans will notice at the ballpark, the Budweiser Right Field Roof Deck will be renamed the “Sam Deck," and a bar area located beneath the third base stands will be known as “Sammy’s On Third.” Boston Lager and Summer Ale will lead off in terms of beer selection, with additional choices from 2018's new launches, including Sam '76, a Lager-Ale "sessionable" hybrid that uses Citra, Mosaic, Simcoe, Galaxy, and Cascade hops.
Boston Beer also announced that Sam Adams will have opportunities to partner with the team across New England and in the Red Sox's spring training facility in Fort Myers, Florida.
WHY IT MATTERS
Financial details of the deal weren't disclosed, though Boston Beer founder and chairman Jim Koch told the Globe that the cost was "significant enough that Boston Beer will need to shift some funds away from its traditional advertising budget to pay for it," in addition to potentially asking its New England wholesalers to help cover some of the cost. (Wholesalers and brewers often have a shared marketing dollar commitment as part of their contracts.)
According to the company’s most recent earnings report, Boston Beer is on pace to spend somewhere around $250 million on "advertising, promotional and selling expenses" in 2017, which would be a rebound after bouncing the budget line from $273.6 million in 2015 to $244.2 million in 2016. In that same report, Koch and outgoing CEO Martin Roper noted that 2018 investment in advertising, promotional, and selling expenses was expected to increase between $15 and $25 million, though nowhere was the newly announced partnership with the Sox mentioned as a source of the extra spend. Meanwhile, just last year, Boston Beer created its first-ever role for a Chief Marketing Officer when it hired former Moet Hennessy executive Jonathan Potter.
But ultimately, this move isn't just about exposure to fans at the ballpark. Rather, Boston Beer is finally waving off longtime strategies that may have stunted connecting with drinkers locally. As mentioned by the Globe's Dan Adams, this new deal "doesn’t mean there will be more Sam Adams — or less Bud — on tap inside Fenway." It does, however, further identify the geographic tissue that connects Boston Beer to its community, even if its operation has historically been disconnected a bit, with more than a thousand employees across its Boston, Cincinnati, and Breinigsville, Pennsylvania breweries.
The connection with the Red Sox comes a month after the brewer opened a real taproom at its Jamaica Plain HQ, replacing a space long used as a tasting room for tours. The 80-seat space is an important evolution for Sam Adams, as own-premise spending by consumers has been on a steady rise in recent years, now accounting for about 10% of craft beer volume, according to the Brewers Association.
As Boston and Massachusetts have become bigger hot spots for beer lovers, upstarts have inched closer to stealing home from a business that had been around for more than 30 years. A summertime beer garden proved so popular for Trillium Brewing Co., it decided to open an indoor version this month. It's not exactly a high-and-inside warning shot, but it was the latest example of Sam Adams losing something of a home field advantage.
An important part of Boston Beer's deal is noted in contract details reported by the Globe, highlighting that Sam Adams can now use the Red Sox name and logo in marketing and host contests with Red Sox-related prizes, including a "day at the park.” Tying together Boston icons makes sense, and provides an additional way for Sam Adams to dig in among home markets at a time when Boston Beer’s flagship alcohol brand is losing traction to its own flavored malt beverages like Twisted Tea.
But as the beer industry has evolved, so too have the marketing strategies that enable success. While Boston Beer utilizes advertising during televised sporting events, the return on investment can be a swing and a miss. Connecting with consumers is increasingly about creating experiences, not just offering a particular product.
These new ways of highlighting Sam Adams—through its taproom and spaces in one of Boston's most beloved historical sites—are key to reinvigorating the brand. Boston Beer has the money to make it happen. Perhaps now is a good a time as any to play a little hardball.
—Bryan Roth