THE GIST
Yuengling’s recent expansion to Oklahoma, Missouri, and Kansas will be a test of how far a Pennsylvania brewery’s family-owned story can travel and whether new states can offset stagnant sales volumes across the rest of its distribution footprint. The westward push—for a Pottsville, Pennsylvania-based company synonymous with the Keystone State—will also offer more insight into the health of the brewery’s joint venture with Molson Coors Beverage Company. That 2020 agreement promised expansion into 25 new states beyond the 22 in which Yuengling was already sold.
Adding new territories has become a necessity for maintaining sales for one of the largest breweries in the country. Yuengling has declined in chain retail sales for two straight years; its portfolio had an all-time high in those stores in 2017. Losses continued even recently despite entering Texas, the country’s No. 2 beer market. Sales momentum in the Lone Star State has slowed considerably since Yuengling’s debut.
A strong launch in Texas in August 2021 saw Yuengling’s combined portfolio in chain retail stores briefly outsell homegrown competitor Shiner Bock.
Since then, Shiner Bock’s sales have dwarfed those of Yuengling Traditional Lager in that state by roughly 50,000 cases (3,629 barrels) per month.
In January, Lone Star Beer’s volume sales in the state outpaced those of Yuengling Traditional Lager for the first time. (Yuengling is much more draft-focused than other large beer brands; in Texas, half of its sales are in kegs.)
“[Texas] is the toughest state we’ve ever opened. It’s certainly the largest state,” says Pat Pikunas, general manager of The Yuengling Company, the partnership between Yuengling and Molson Coors, who has worked for Yuengling since 2003.
In Texas, Yuengling’s total portfolio volume was at or above 150,000 cases per month for most of 2022, but began slipping in October. In January and February 2023, monthly volume sales didn’t top 116,000. The combined sales from those two months was 10% less than what Lone Star sold to start the year and 32% less than Shiner Bock. With a partner in Molson Coors, Yuengling now looks to the Midwest for needed volume bumps.
WHY IT MATTERS
Yuengling anticipated certain challenges in opening Texas, Pikunas says. Those include building brand recognition among Latinx residents who make up 40% of Texas’ population, a percentage far higher than the brewery’s home market of Pennsylvania (8.4%), and who have built loyalty to more familiar brands, whether imported Lagers or in-state staples like Shiner Bock. Another wrinkle was the discovery of the need to put a bigger sales and marketing emphasis on Flight, the brand’s Light Lager. Flight made up 6.6% of Yuengling’s national chain retail sales in 2022, but in Texas, it accounts for closer to 25% of sales.
Pikunas admits that while the company foresaw some potential hurdles, it missed others.
“One we didn’t anticipate that we probably should have is: Texas is everybody’s number-one state in terms of gross profits. Whether it’s Constellation [Brands], Molson Coors, [Anheuser-Busch InBev], or Heineken USA, these are big brands in a big state making a ton of money there. The competitive nature of breaking through … was a bigger challenge than we anticipated,” he says.
Competition is fierce in Texas not only from domestic Light Lagers like Bud Light, but from Mexican imports such as Modelo Especial, Pacifico, and Dos Equis.
In the first two months of 2023 in Texas chain retail stores tracked by market research company IRI, Yuengling Traditional Lager sold about 8,000 more cases than Modelo Chelada Limon y Sal and 5,000 less than Michelob Ultra Pure Gold.
Yuengling Flight, meanwhile, sold just slightly more than Milwaukee's Best Ice.
Brand recognition for Mexican Lagers benefits from Texas’ proximity to Mexico as well as the state’s sizable Latinx population. By contrast, in border markets—which Pikunas says are critical for beer sales—Yuengling is starting at square one. Most drinkers are unfamiliar with the company name and don’t immediately know how to pronounce it. In response, Yuengling is working to promote Flight as its own standalone brand among Spanish-speaking communities because it’s a simpler word to translate and pronounce, and because Light Lagers are popular among Latinx consumers, Pikunas says. This includes developing Flight marketing materials that can be translated easily into Spanish and planning to hire Hispanic brand ambassadors. In 2022, Yuengling began to spend more on Latinx-directed advertising to build brand awareness in the state; Yuengling declined to quantify the increase in spending.
Getting drinkers to pronounce your business’ name is a major challenge to start with, but Yuengling also had to work out kinks in its new supply-chain partnership with Molson Coors in Texas. Pikunas says forecasting sales three months in advance, for example, was new to Yuengling; this is a standard timeline for Molson Coors, however. Disconnects between anticipated demand and reality created out-of-stocks on certain packages and brands at the same time that the company had to buy back oversupply of other packages from retailers before they went out of code.
“Maybe Texas wasn’t the best state to launch with a new supply chain partnership because it was so massive,” Pikunas says, with a laugh.
He believes there is smoother sailing ahead for Yuengling in Texas—and in its new Midwest expansion states—now that it’s settled into the partnership with Molson Coors and has a year-and-a-half of sales data to inform its forecasting. The company is betting that the geographic proximity of Kansas, Missouri, and Oklahoma to Texas and to Molson Coors facilities where Yuengling is brewed made those states an “efficient way of expanding the brand.”
It’s a payoff that would be welcomed: National sales volume of Yuengling beer in chain retail dipped -10% between 2017 and 2022, a steeper drop than all of beer (-7%). But the road may not be easy-going, however, as the Beer Institute reports that domestically-made beer shipped to Yuengling’s three new states declined 2021-2022 in two (Missouri, -4.6% and Kansas, -4.7%). Oklahoma (+1.5%) was one of just six states last year that saw increases in beer shipment volume.
As Yuengling discovered in Texas, opening new states with a portfolio of styles that vie with beer’s most-established names (Bud Light, Miller Lite) and white-hot brands (Constellation’s Mexican Lagers) is no easy feat. These beers are all competing on similar sensory attributes and sometimes similar prices. What sets these beers apart for consumers is literally the brand itself.
Yuengling’s most compelling story is its long history of family ownership. With the tagline “America’s oldest brewery,” the company is today owned and operated by four women who are the sixth generation of the Yuengling family at its helm. That family ownership, though, comes with decades of political baggage, including support for former President Donald Trump, anti-labor stances, and violations of environmental protection laws.
And regardless of the politics, it’s not clear that the brewery’s long American identity moves the sales needle much in 2023, let alone from a couple thousands of miles away. Yuengling has for at least a decade occupied a middle ground between the general public’s perception of “craft beer” and “big beer.” In 2014, it became the largest craft brewery in the country, according to the Brewers Association trade group’s definition. But it’s since partnered with Molson Coors for a national expansion built on the back of affordable Lager beers that compete directly with Budweiser, Coors, Modelo, and more. For some retailers, it puts Yuengling in a difficult sales position.
Yuengling’s prior expansion markets offer lessons in how its size and brand perception play out. After pulling out of Massachusetts decades ago, Yuengling reentered the state in 2014 to much fanfare. But today, according to Matt Bevins, store manager and beer buyer for Gordon’s, a small chain of four liquor stores in the Boston area, “it’s taken a backseat to other brands.”
“It’s a quadruple-A baseball player that keeps hovering between smaller leagues and the pros,” says Bevins. Last year, Yuengling moved its Boston-area sales from a craft-focused distributor, Craft Brewers Guild, to Burke Distributing, which also carries Molson Coors beers.
In his stores, Yuengling is displayed in coolers next to other domestic lagers, not in the craft section. Yuengling 12-packs are priced at $14.39, the same as 12-packs of Bud Light and 50 cents less than 12-packs of Coors Light. But Bevins says Yuengling still hasn’t managed to convert regular drinkers of those macro brands, who are some of the most loyal customers in his store. And yet Yuengling also isn’t a brewery that he would mention to a customer asking about great locally brewed Lagers; he instead points those shoppers to in-state breweries including Notch Brewing and Jack’s Abby. Even if a customer wanted to support a “heritage lager brewery,” Bevins says Rhode Island’s Narragansett has more cachet among locals.
“I don't really know what the [Yuengling] market is anymore,” he says. “I hadn’t thought much about it until you asked me.”
Pikunas would disagree: He says it’s Yuengling’s streamlined, Lager-focused portfolio that makes it appealing to distributors, retailers, and ultimately, drinkers. Unlike competitors that have spun off beer brands into hard seltzer, or who are increasingly focused on “beyond beer” products, Yuengling only sells beer. The broader Molson Coors company, meanwhile, has made non-beer brands a huge priority, renaming itself a “beverage company” in 2020 to reflect that.
“Big retailers in Texas, they were thrilled that we were coming to them with true beer and true beer styles,” Pikunas says. “We’re really focused on the beer section of the beer aisle.”
But as more consumers turn to other kinds of beverage alcohol—and total beer sales continue to falter—successfully making that argument to bring consumers back is going to be key for Yuengling in Texas, Missouri, Oklahoma, Kansas, and whatever states come next.
Words by Kate Bernot