Good Beer Hunting

Plus One — How Does a Beer’s Brand Extension Benefit a Brewery?

Photo by Stephanie Byce

Photo by Stephanie Byce

With spring just around the corner, the U.S. beer industry is about to start its annual ramp-up toward the busiest months of the year. The gray skies and cold temperatures of winter have always put a damper on a beverage that thrives during sunnier, warmer months. There's a reason holidays like Memorial Day and the Fourth of July are always among the top-three biggest beer-buying occasions for Americans.

Perhaps with that in mind, Anheuser-Busch InBev is set to launch its latest iteration of its sagging flagship, Bud Light. First spotted by My Beer Buzz and called out by the MillerCoors blog, Bud Light Lemon Tea will soon look to capture Bud drinkers' attention and money as a lower-ABV (4.2%), flavored option to build off last year's Bud Light Orange. Bud Light itself was an extension when it debuted in 1982, and there have been plenty of versions since then, from Platinum and Ritas to Select and Repeal Reserve editions.

These are among the beer world’s biggest and most noticeable extended brands, but it’s not hard to find examples from multinational conglomerates all the way down to small and independent breweries. Great Divide Brewing Company has its own Yeti Clan, which comprises various seasonal versions of  its Yeti Imperial Stout, with flavors ranging from tea and spices (Chai Yeti) and fruit (Chocolate Cherry Yeti) to barrels (Vanilla Oak Aged Yeti and Barrel Aged Yeti). And the Yeti Clan is just one of many such craft beer extensions.

For many people, it was hard to ignore AB InBev’s latest variant. In 2018, Bud Light Orange moved more volume than Shiner Bock in IRI-tracked grocery, convenience, and other stores nationwide. In dollars, it pulled in almost the same amount as ABI's entire Goose Island portfolio in those same stores. It was last year's biggest new release.

Orange and Lemon Tea not only represent new experiences for the most popular beer in the country, but showcase a new mentality for brewers large and small. Flagship beers aren't dead, but with ever-increasing competition, in-house approaches to those anchor brands have certainly changed. In the case of Bud Light, these flavored releases act as a tourniquet to slow the brand’s bleeding sales and staunch shareholders’ worries. Thanks to ABI’s massive distribution footprint, sales are easier to come by than for most, though Bud Light Orange also wouldn’t sell $67.8 million in IRI stores unless people genuinely enjoyed it, too.

“Without that innovation, the craft segment would be in decline,” Patrick Livingston, director of client insights for IRI, said during a Brewers Association “Power Hour” event last year. “Obviously, innovation is an extremely important part of continuing growth within the craft segment, as it is throughout the beer category.”

In a case like Sixpoint Brewery, innovation shows up each year for Resin Day. The event is both an annual excuse to celebrate Resin, its Double IPA flagship, and a chance to offer modern takes on a hop-forward beer that could be considered a bit "classic,” due to its focus on hops like Chinook and Centennial. This year's event featured three different versions of the beer, including "Anti-Resin" and "Atomic-Res," which expanded the family of Resin-influenced brands. Some of these versions will become available at the Brooklyn-based brewery for packaged sales, with an eye toward broader release, too. Sixpoint’s OG beer continues to grow in sales volume thanks to new markets, but the brewery has found additional ways to attract drinkers to an orbit around the original beer and recipe.

With that kind of expansion in mind, it shouldn't be a surprise that, among 2018's highest-grossing new entrants, spin-offs ruled the day. Bud Light Orange and Michelob Ultra Pure Gold were at the top, with New Belgium's Voodoo Ranger Juicy Haze IPA representing a BA-defined "craft brewer" who made a splash—this time with an extension from its ever-growing Voodoo Ranger lineup.

That lineup is a perfect example of what a full-on rebrand can do. What was previously a Ranger collection of brands got a cartoon-mascot makeover, creating the skeleton character-led Voodoo Ranger line that has since found great success. In its debut year of 2017, regular Voodoo Ranger IPA jumped $10 million in IRI sales (selling $33.3 million) from the previous year, and Voodoo Ranger Imperial IPA doubled in dollars, going from $11.1 million to $22 million in 2016–2017.

At the time, Voodoo Ranger 8 Hop Pale Ale (now discontinued) was among 2017's top-selling new craft brands in grocery stores before Juicy Haze took the mantle in 2018.

[Disclosure: New Belgium is a GBH underwriter that supports our Into the Wild series.]

However, this all raises a philosophical question: if breweries create new brands for the sake of sales, do they detract from the original products from which they grew? In most cases, the desire behind these “innovations” is to create awareness of a brand’s first iteration, in the hope that a new version might rekindle interest.

In 2015, Widmer Brothers launched Hefe Shandy to capitalize on a growing category and to boost sales for its flagship Hefeweizen.

“There’s obviously cross-branding opportunities,” Kurt Widmer, co-founder of Widmer Brothers, said at the time. “When we looked at doing a shandy, it made most sense to come back to the Hefe as the perfect starting point, rather than reinventing the wheel.”

Sierra Nevada also recently attempted to get eyes and pint glasses back to Pale Ale and Torpedo Extra IPA, both of which have been sliding in sales for years. The brewery released Sidecar Orange Pale Ale (now reformulated to be an IPA) and Tropical Torpedo IPA in 2017. At the time, chief commercial officer, Joe Whitney explained the extension of a classic brand like Pale Ale to Brewbound matter of factly: “The signature of the west coast style [sic] is a citrus and piney note. Our thought was to take that citrus note and bump it up a bit.”

John Holl, then the editor of All About Beer, added the obvious business spin to the beers’ existence: “Sierra Nevada hopes to widen its appeal with a generation of hop-minded drinkers.”

That said, neither Tropical Torpedo nor Sidecar—in either of its forms—have stopped the year-to-year slowdown of Sierra's two biggest sellers. It’s been a similar situation for Ballast Point, whose fruited versions of Sculpin not only have lost sales themselves, but have declined alongside the original IPA, too.

Photo by Bryan Roth

Photo by Bryan Roth

But these kinds of brand extensions aren’t always made as a way slow sagging sales. New Holland Brewing Company has pushed Dragon’s Milk to act as its flagship—a tactic born from the desire to commandeer as much of the Stout category as possible, with a keen eye toward promoting its barrel-aged and flavored versions alongside.

Recent releases of Banana Coconut, S'mores, and Orange Chocolate variants have done nothing to dampen enthusiasm for the Dragon’s Milk brand. In New Holland's first year of a distribution partnership with Pabst that allowed for more volume and placements, IRI dollar sales grew by almost 32% in 2017, then jumped another 53% on year-to-year growth in 2017–2018. What's even more impressive is that Dragon's Milk grew in dollar sales every quarter of 2018—it’s quite a feat for an 11% Imperial Stout to sell in spring and summer as well as winter.

New Holland is now going a step further with the new release of Dragon's Milk White, a 6%, “White Stout” version of the bourbon barrel-aged beer.

“This is not by any means something like Dragon’s Milk Light Seltzer,” Dominic Bergquist, the Stout’s brand manager, says with a self-aware laugh. “We wanted to offer a beer that offers more drinking opportunities at a lower ABV, and this still remains a thoughtful product. It’s a responsibility to the brand and also the craft drinker.”

Bergquist says extending the popularity of Dragon’s Milk into new flavors isn’t about flooding the market with any kind of beer, but building on interest and feedback. At a local event where the brewery unveils Banana Coconut, for example, New Holland may pour 10-15 variants of Dragon’s Milk alongside it to see what flavors pique the interest of festival-goers.

“Some versions are fantastic, and some don’t pass muster for everybody, but it’s something we like to do to experiment,” he adds.

These brand extension successes and failures hint at shifting priorities in today’s industry. To start, there’s the changing notion of what a “flagship” brand can be—working within a certain brand or style can now function in the same way that a single product once did, and brand extensions may offer brewers a professional-development approach to learning new skills while offering customers novel drinking experiences. The changing approach to distribution is also at play, and allows companies to maximize rotating shelf space (and find new ways to coordinate with wholesalers) by offering updated versions of beloved and recognizable brands.

It's no secret this approach is a boon for a monolith like AB InBev and its various Bud Light extensions, which offer some relief from slowing sales of the flagship adjunct American Lager.  “Just the pipeline fill is bigger than 90 percent of craft companies in the country,” Bud Light marketing chief Andy Goeler said last year, as reported by the MillerCoors blog. “You can get a lot of volume really quick.”

And ultimately, if Americans are drinking less beer, that volume play is important. Whether for Big Beer or a small and independent brewery, finding new ways to boost core products has become a regular part of a modern portfolio. By extending these popular brands, businesses are being the change they need to see in the beer world.

Words by Bryan Roth