THE GIST
Against the backdrop of a sluggish craft beer category, some of the country’s largest breweries have recently taken the rare and costly step of reformulating their flagship beers with new recipes and marketing. Despite investments to renew the liquid and branding, chain retail sales of the most high-profile examples have mostly continued following existing slumps.
Boston Beer Company and Kirin-owned New Belgium Brewing earlier this year debuted new versions of Samuel Adams Boston Lager and Fat Tire, respectively, that both breweries described as “brighter” and “easy drinking.”
Boston Beer debuted a “remastered” Boston Lager in early February, the first time the recipe for the pioneering craft beer had changed in its nearly 40-year history.
It came after years of declines: Volume chain retail sales of Boston Lager fell -36% from 2017-2022, according to data from market research company Circana (formally IRI).
In January, New Belgium began rolling out its new Fat Tire, no longer described as an Amber Ale and appearing lighter and more golden in color.
Since its apex in 2016, Fat Tire had lost -52.2% of its volume in chain retail by the time its new version was released.
In the first quarter of 2023, both beers sold roughly half the volume they did in the same time period five years prior in chain grocery, convenience, and big box stores. Fat Tire (-17%) and Boston Lager (-31%) also had far worse performances in Q1 2023 vs. Q1 2022 than craft beer overall (-8.2%).
Both beers are iconic brands that helped establish an industry that now seems to be passing them by as beer styles like Amber Ale and Vienna Lager no longer show growth opportunities for these breweries. Even after going through new rebranding, but not recipe reformulation, Anchor Steam lost -12.5% of its chain retail volume after its first year with a new look. Atlanta Brewery—which describes itself as Georgia’s first craft brewery—has gone through a few renaming and rebranding efforts, and has similarly faced hardships. Boston Lager and Fat Tire remain as two of the top-selling craft beers in chain retail, but it’s not clear that heavy investments in developing and marketing new versions of beers can pay off as the “new” flagships mostly continue to shed volume.
Boston Beer supported the Boston Lager relaunch with a 30-second, regional Super Bowl commercial featuring basketball star Kevin Garnett and comedian Lenny Clarke. National spots cost an average of $7 million this year but regional commercials vary in price, with estimates ranging from $15,000 to promote a small regional airport in central Texas to $150,000 for JuneShine Hard Kombucha’s 30 seconds in San Diego. It's not known what Boston Beer spent for this ad. The company says it has aired ongoing commercials since then and has spent money on updated point-of-sale materials and packaging. A spokesperson for Boston Beer declined an interview request to provide additional information.
Matt Bevins, store manager and beer buyer for Gordon’s, a small chain of four liquor stores in the Boston area, says the commercials appear to be motivating drinkers who have affection for Boston Lager to purchase it again. He’s noticed Baby Boomer-generation shoppers picking up 12-packs, but says he hasn’t seen a new demographic of younger drinkers suddenly flock to the brand. Still, sales of the beer in his store doubled their normal monthly 20-case volume in March, and appear on pace to do so again in April.
“When a band tours again after 20 years, everyone wants tickets for that first show,” Bevins says. But he’s not sure how long that momentum will last once the novelty wears off and the commercials eventually cease. “But after that first tour it’s like, ‘Do I really need to see Bon Jovi again?’”
WHY IT MATTERS
With a goal of bucking the overall decline in craft beer sales breweries have two options: They can try to add sales through the launch of new products or through increased investment in existing beers. Given that Boston Lager and Fat Tire are still some of the top-selling nationally distributed craft beers, their parent companies are likely loath to give up the shelf space that they occupy, even as sales have fallen from historic highs.
But new launches or updating flagships can be a gamble. New products are to a large extent untested, and lately they have been anything but a sure bet for beer makers. Citing data from NielsenIQ, Bump Williams Consulting earlier this month described new product launches as less “efficient” than in years past:
New brands accounted for 12.6% share of total beer brands in the latest year period ending Feb. 25, but only 1.2% of total beer dollar sales.
New craft beer brands had an even wider gap between their share and dollar contributions.
“I truly believe that we have thoroughly confused the consumer with too much variety and assortment within portfolios today, that all we do with ‘innovation’ is switch a loyal buyer from one brand within our portfolio to another flavor without generating any new purchase[s],” Bump Williams wrote, as reported in Brewbound.
The alternative to debuting new products is to increase sales of existing ones. However, sales of the new versions of Boston Lager and Fat Tire in the months following their launches don’t appear to have reversed their overall downward course:
Boston Lager had double-digit, negative growth rates in chain retail sales for each week in February versus the year prior.
Its sales then shot up in March, presumably as Boston Beer and its distributors created displays and promotions around the new formula. Sales were up +37% and +58% in the first and second weeks of March compared to the same weeks last year. (Multiple Boston Beer distributors did not return requests for information about the new Boston Lager rollout.)
Those gains were short-lived though, as sales fell -43% and -45% in the final week of March and first week of April versus last year, drastic declines that saw Boston Lager sell little more than half of the volume it sold in the same time periods in 2022.
Fat Tire’s refresh is also having a hard time reversing trends.
Sales volumes for Fat Tire 2.0 declined versus the year prior during every week since its relaunch, with losses especially steep between mid-February and mid-March.
After a 2023 high mark of volume sales the first half of February—a month after 2.0's launch—volume declined toward January levels and plateaued throughout March: Its growth rate was -13.8% comparing March to February while the craft category was -1.3%.
After selling almost 24,000 cases of beer the week ending February 26, Fat Tire hasn't broken 23,000 cases of sales within the last five weeks of collected data by Circana.
A spokesperson for New Belgium attributes this slow start to the fact that Fat Tire is sold in fewer stores than it was years ago, adding that it may take “months or years” before the company gets a clear and honest picture of the rebrand’s results.
Data from Circana shows that the brand registered sales in about half as many stores so far in 2023 as it did in 2018. However, there has still not been a significant uptick in volume sales in the stores where Fat Tire is stocked. The spokesperson says they were encouraged by drinkers' excitement and curiosity about the rebrand, which New Belgium sales teams are using to try to rebuild placements. But it will be a challenge for New Belgium to convince new retailers to take on Fat Tire if sales in existing stores aren’t growing.
The spokesperson further highlights the brand’s dollar gains, noting that Nielsen data shows the brand’s dollars per weighted distribution have increased +1.2% versus last year. But that boost is partially explained by rising prices: Fat Tire packages have increased weighted price on shelves, including six-packs of bottles (+40 cents), 12-packs of cans (+82 cents), and 12-packs of bottles (+86 cents).
Finally, the spokesperson pointed to growth in draft sales for Fat Tire in the first three months of this year, the first time the brand has grown on draft in five years. Analysis for Sightlines+ has shown that new packaging, branding, and reformulations often create an initial bump in sales, so an increase in draft would be expected, especially if draft accounts brought Fat Tire back for the first time in years as part of the brewery’s marketing and communication push.
In total, it’s a damned-if-they-do, damned-if-they-don’t scenario for breweries with lagging flagships. Allowing iconic brands to flounder isn’t a winning strategy, but constantly releasing new brands is potentially an even greater undertaking with no guaranteed return on investment.
Bump Williams acknowledged as much in his report earlier this month.
“The fight for keeping your shelf space, never mind expanding your space at retail, will be the true battleground in the future … and the future is today,” Williams wrote.
Some breweries, including Saranac and Boston Beer, have tried to thread the needle by swapping out lagging flagships and bringing them back as seasonals or occasional releases. Stone Brewing followed a similar path, revamping its Ruination Double IPA recipe in 2015, then discontinuing it after a continued downturn in sales, and announcing this January it would temporarily return with its original recipe as part of the brewery’s “Fan Favorite Series.”
It’s a hard mental exercise, though, to imagine Boston Beer without its namesake lager or New Belgium without Fat Tire, even as those beers’ influence in the overall companies’ sales portfolios atrophies.
Twisted Tea is now Boston Beer’s shining star (and the main image on the company’s homepage), and the brewery has expanded the Truly Hard Seltzer brand into the ready-to-drink cocktail space as well as partnered with PepsiCo on HARD MTN DEW. For New Belgium, the Voodoo Ranger line—which includes IPA, Imperial IPA, Juice Force Hazy Imperial IPA, and others—makes up 83% of the company’s chain retail beer sales volume year-to-date through mid-March, as tracked by market research firm Circana (formerly IRI), up from 80% in 2022. Fat Tire accounted for 13% of sales last year, while Voodoo Ranger Juice Force Hazy Imperial IPA was the biggest craft beer brand debut in history.
Going forward, once-flagship brands such as Boston Lager and Fat Tire are likely to still exist, but less as sales engines perhaps than as symbolic vestiges of craft’s past.
Words by Kate Bernot