For the first time in nearly a decade, Harpoon Brewery is expanding its distribution network. Beginning in November, the company’s beers will be available throughout Minnesota and Wisconsin, sold through J.J. Taylor and Breakthru Beverage respectively.
WHY IT MATTERS
Though Harpoon, a pioneering outpost of Boston, is the nation’s 19th largest craft brewery by volume, it hasn’t extended its distribution reach into any new markets in eight years. In fact, in that time it has even pulled out of a couple. Rather, the company has favored a strategy of digging in “a mile deep versus a mile wide” in the 24-state footprint it has long occupied, says co-founder and CEO Dan Kenary. In that regard, Harpoon still does 70% of its business in New England—the company anticipates selling between 195,000 and 200,000 barrels this year. And Kenary still sees “a hell of a lot of opportunity” for growth in its existing markets, including Boston, where its products have been sold for going on three decades now.
Which begs a couple questions. The first: Why expand now?
Kenary says they finally have the “bandwidth” to do so, after saying no for so long. (Harpoon has a pre-existing relationship with J.J. Taylor, which sells its products in Florida.) He adds that both markets are ripe for craft and open minded to out-of-towners.
“I just think they’re healthy craft beer markets,” Kenary tells GBH. “They’ve got some terrific homegrown talent, but they’ve also been receptive to regionals from others parts of the country, so not just a market that’s simply focused on local. There’s been nice growth from northwest guys out there.”
But there’s also an interesting dynamic here as it pertains to larger craft brands looking to spur growth. Asked whether Harpoon has dug in as deep as it possibly can where it has already broken earth, Kenary is clear: “Not at all. There’s tons of room to grow.”
And yet, the company decreased production by 2% in 2015, from a record high of 209,000 barrels the year prior, and the expected 195,000-200,000-barrel output this year represents additional declines. So while the Midwestern appetite for craft is beyond refute, it’s clear that adding new markets, after nearly a decade of drilling in the same places, represent new opportunities for growth. A similar thing is happening at Dogfish Head. Coinciding with the departure of CEO Nick Benz there, the company plans to explore new markets in 2017 in hopes of sparking flat sales.
The second question: Does this mean Harpoon is on the verge of a new market offensive?
Not exactly. Kenary says the company plans to open Ontario, Canada at some point, though was unable to offer a timeline. For now, Harpoon is working on navigating regulatory roadblocks in the country, but it’s a just matter of time. Otherwise, the company has no plans to activate any additional markets to speak of, Kenary says. Given its volume, Harpoon could ostensibly explore new markets in a more aggressive manner. Because it’s not, however, the company is well positioned to serve as a solid case study of a regional brand digging its heels in rather than sprinting to the nearest vacant shelf.