Neal's Notes

Craft breweries have produced scores of award-winning beers over the years and according to the Houston Chronicle, will garner sales over $7 billion nationwide in 2014. But just having a tasty ale or lager is no guarantee these days for long-term business success as the gigantic ad/marketing budgets of the major breweries can drown out craft breweries attempts to snare market share.

“The number of new craft breweries has exploded in the past few years and the market is getting crowded,” said Melani Gordon, who co-founded San Diego-based TapHunter.  The company provides on- and off-premise accounts with time- and money-saving tools that automatically update beverage inventory on social media channels, websites, and print, digital display, and tablet menus. This exposure empowers their customers by helping transform beer, spirits, and cocktail menus into valuable revenue producers.

Gordon said those craft breweries that don’t put some serious thought behind their brand and voice will struggle.

“There’s no magic formula for craft breweries to find consumers so the new breweries need to build a brand and web presence because it’s challenging today to stand out,” added Gordon.  “In addition, there’s a lot of inefficiencies in the retail distribution model, making it even more difficult for a craft brewery to succeed.”

Craft breweries, added Amber Irwin from Denver-based Cirqle Media (a marketing company that works with numerous craft breweries in the U.S.), are also very regional – some may be very popular in a particular state, but don’t ship much beyond its borders.

So these breweries, which by and large operate on small margins, have to go the extra mile (or kilometer) to stand out, not only via a social media presence, but even in the way they raise funds.

Case in point: Tecumseh Brewing Co., a Michigan craft brewery, launched a crowdfunding campaign last year which was, according to MiBiz, the first startup business to mount an intrastate campaign under the Michigan Invests Locally Exemption (MILE) Act, allowing companies based in the state to solicit investments from Michigan-based investors without having to register with federal securities regulators.

The craft brewery’s crowdfunding campaign, noted MiBiz, was, in essence, structured as a revenue sharing offering – when the brewery opens this fall, 7 percent of sales each month pays back the investors until each receives one and a half times their investment. The brewery notched $175K from the crowdfunding campaign; OSB Community Bank provided a $200K loan; friends and family chipped in another $145K.

Tecumseh Brewing also used its Facebook site to corral potential investors to its solicitation listing on localestake.com.

Crowdfunding, noted Tecumseh General Manager Kyle DeWitt, created opportunities for people to get involved in the brewery’s formation from the gitgo.

“They’ll be our customers, and they’ll also have a stake in the business…if we have 120 investors and 90 or 100 of them are from Tecumseh, that’s 90 or 100 customers we’ll always have,” said DeWitt.

Cirqle Media’s Irwin added that viral marketing is huge for small brewers of fine ales.

“Advertising on social media and mobile platforms is inexpensive and targeted to the people that already love their microbrews.  And beer drinking is a social phenomenon so people share information about their favorite beers and recommend them to their friends,” said Irwin.

Irwin said blogs like the South Florida Beer Blog and Beer Therapy help spread the word about craft beer festivals, new brews, even events at local bars.

Websites like Pintly and TapHunter also help people find places carrying their favorite brews when they head out or go to a different city,” said Irwin.  “Untappd is a mobile optimized site that has a mini-Facebook/Foursquare for beer lovers allowing them to check into a bar and say what beer they’re drinking and then connect with other enthusiasts.”

Beer marketing is very competitive – even cutthroat.  Small brewers simply can’t butt heads against multi-billion dollar companies that have enormous TV ad budgets, hence why social media can be an invaluable tool for craft breweries.  Done properly, it integrates into all other aspects of running a brewery and can yield significant dividends long-term without a large cash outlay up front.