It’s been a year and four months since Dogfish Head Brewery and Boston Beer Co. announced their merger, and this summer proved to be a useful lens through which to examine the early stages of their integration. Of particular note are the soft sales numbers for Dogfish Head during what is beer’s busiest annual sales period.
This summer, Beer Marketer’s Insights (BMI) reported Boston Beer would make Dogfish Head a company-wide sales and marketing priority in July, aiming to align 60 Minute IPA, SeaQuench Ale, and Slightly Mighty IPA (the brewery’s low-calorie IPA) at the same price point. Dogfish Head co-founder Sam Calagione has long advocated for his beers’ premium pricing, noting that Dogfish Head’s releases regularly retail for 40% more than other craft beers, calling it a defense against the “commodification” of craft beer. This summer’s recalibrated pricing, then, represents a cultural and business shift for the brand.
BMI also noted Boston Beer had planned to spend $2 million on social media marketing for Dogfish Head in July and August, around the same time redesigned Dogfish Head packaging would debut. That redesigned packaging dramatically shrunk the size of the Brewers Association’s Independent Craft Brewer seal on packaging of 60 Minute IPA, reducing it from nearly one-third of the packaging to a small logo in the corner.
Calagione tells GBH the change of seal’s scale was because "we wanted to illustratively lean-in to 60 Minute’s most unique point-of-differentiation: continual-hopping." He adds that the seal's reduced size on his packaging meant no negative connection to the value it brings to "small and indie breweries" or the Brewers Association, because that kind of signifier is "more important now than ever."
Outside of the seal, Dogfish Head and Boston Beer didn’t answer GBH’s requests for more information about pricing strategy, marketing priorities, and other topics.
Which leaves the question: Did any of this support move the needle for Dogfish Head? Not noticeably, according to sales in grocery, convenience, liquor, and other chain stores, as tracked by market research company IRI. Dogfish Head’s dollar sales in those channels were roughly flat (-0.79%) for June through August of this year compared to the same period last year, while the overall craft beer category was up +12% and overall beer—removing FMBs that include hard seltzer—was up +6%.
Retailers, especially those in Dogfish Head’s historic turf on the East Coast, say the redesign and marketing spend were overshadowed by Dogfish Head’s recent distributor changes as part of a full on-boarding with Boston Beer’s network of wholesalers. Those alignments with Boston Beer’s distributors were often rocky transitions that led to unavailable SKUs, less sales support, and ultimately, suboptimal sales numbers.
While Dogfish Head picked up volume from sales in three new states it added in early 2020—Wyoming, Montana, and North Dakota—all was not well on its East Coast stomping grounds.
At Craft Beer Cellar’s flagship store in Belmont, Massachusetts, Dogfish Head dollar sales were down -51% year-over-year for the 52-week period ending Sept. 10. In two of the company’s other Massachusetts stores in Newton and Plymouth, Dogfish Head sales were down -25% and -31%, respectively.
Craft Beer Cellar CEO and cofounder Suzanne Schalow says those stores reported to her that “brand representation had dropped off” this year, though she says it’s hard to say how much of that had to do with the Boston Beer merger or the social and business upheavals brought about because of COVID-19. One thing is certain, she says: Dogfish Head representatives don’t feel like “bodies in the market any longer” in her state. Dogfish Head’s former Massachusetts sales rep is now a marketing specialist focused on Boston Beer’s hard seltzer brand Truly, Schalow says. That's pouring gasoline on the fire: Seltzer sales are up in every CBC store, at every price point, and gaining shelf space, she says.
IRI-tracked dollar sales of Dogfish Head beers in Massachusetts liquor stores are on track to be relatively flat this year. Those sales totaled $4.68 million last year and are on pace to dip -0.1% in 2020.
Part of the lack of brand representation in Massachusetts may have to do with distributor adjustments, Schalow says. Dogfish Head changed distributors there in March 2018, more than a year before the Dogfish Head-Boston Beer merger. (“We should have been able to read the cards,” Schalow says. “If you’re severing a [distributor] relationship like that, that’s because something else is going on.”) The change saw Dogfish Head leave Atlantic Beverage Distributors, which had sold its beer across the entire state, for five separate MolsonCoors wholesalers, which also handle Boston Beer products.
“All three stores [mentioned above] felt the distribution change,” Schalow says, noting that Dogfish Head beers outside the core brands weren’t as available to Craft Beer Cellar stores. “They stated that many products that their customers may be interested in were no longer available or that current distribution had reduced the number of SKUs being carried.”
At the time, Dogfish Head founder Sam Calagione told Brewbound the new distributors were staffed by “evangelical craft professionals.” But that’s not what Schalow has observed.She says the new distributors have a more conservative mentality and prefer to streamline their portfolios—a practice that became industry-wide in the early days of the pandemic. This reduction in the number of brands led to some specialty beers from Dogfish Head not being available to the stores that wanted them. This year, Schalow’s stores have generally had access to 60 Minute IPA, 90 Minute IPA, SeaQuench Ale, and Slightly Mighty IPA—but not much else.
It’s a similar story in Arlington, Virginia, reports Crystal City Wine Shop general manager Thad Parsons. There, Dogfish Head changed distributors in late February or early March 2020. In Parsons’ telling, Dogfish Head went from being a “cornerstone brand” for an independent craft distributor to just another name in the books for Premium Distributors, a Constellation-aligned subsidiary of Reyes that also carries Boston Beer brands. “This is a ‘premium’ craft brand, as Sam [Calagione] likes to say about Dogfish Head, but [Premium] doesn’t put brands in spaces that are premium craft-focused,” Parsons says. “It’s ‘Oh, Total Wine needs a pallet of the new Sam Adams seasonal’—that’s what they’re used to dealing with.”
Parsons notes that Crystal City Wine Shop doesn’t have a dedicated representative at Premium. He’s received calls from representatives of Dogfish Head and Boston Beer, but said those reps mostly ask him about seltzer and try to push Truly products. This is a tradeoff Dogfish Head might have to accept now that it’s part of Boston Beer. The stores Dogfish Head once relied on to evangelize for its brand (independent bottle shops with beer cred and knowledgeable staff) are too small to be a priority for some of its distributors. Meanwhile, Boston Beer’s fortunes hang on fast-moving FMBs like Truly and Twisted Tea.
Despite the lack of sales support, Crystal City says Dogfish Head’s SeaQuench Ale is one of the store’s “big sellers.” The shop sells roughly a case of 19.2oz cans every week. In the middle of the pandemic, when delivery-order demand for those cans shot up, though, Parsons says his distributor couldn’t get him the inventory he wanted as quickly as he needed it. (He also notes that Dogfish Head’s packaging hasn’t been uniformly updated on Drizly, the online marketplace shoppers use to buy from Crystal City. As ecommerce and online shopping have become critical beer-buying tools during the pandemic, some Dogfish Head brands, like Slightly Mighty and SuperEIGHT Gose, show the updated packaging; others like SeaQuench and 90 Minute don’t.)
Both Parsons and Schalow say diminished sales support and lack of inventory are keeping them from selling as much Dogfish Head as they potentially could. Yet Schalow is hopeful that the kinks will be ironed out. She sees the last year as a transition period for the two breweries, and thinks there’s still an opportunity to regain lost ground.
The question now is how much Dogfish Head will become like a Boston Beer brand—and how much it will retain its niche appeal and craft cred (and pricing).
“I think we’re still in that transition period,” Schalow says. “But I’m looking for those price changes that I heard about. That’ll help Dogfish Head, frankly. […] If they can mass-produce some of those beers and get them into the market for cheaper, it has to be a success.”
Yet what she sees as the path forward for Dogfish Head—lower prices—is exactly what Calagione has distanced Dogfish Head from in the past, railing against the “commodification and homogenization of craft beer.”
Aligning—which likely means lowering—Dogfish Head’s prices across brands was a Boston Beer priority this summer, but its results have been uneven.
Schalow reports seeing four-packs of 120 Minute IPA and World Wide Stout selling for $40 in her market, placing them in their own price tier. (Belgian imports sometimes sell near $25 per four-pack in her market, with beers like Allagash Curieux and New Holland’s Dragon’s Milk clocking in under $20.) In Vancouver, Washington, 12oz bottles of Dogfish Head’s core beers are priced—ounce for ounce—in line with 16oz cans of IPA from the area’s most hyped breweries, according to Ethan Edwards, general manager at Ben’s Bottle Shop.
“Their limited or seasonal labels usually get some sticker shock for those who discover them instead of seeking them out, and are definitely expensive, in the high-highest tier,” Edwards says. As an example, he says Dogfish Head’s 90 Minute IPA prices for $3.29 per 12oz bottle, while “beloved” local Sticky Hands Double IPA from Corvallis, Oregon’s Block 15 Brewing Company costs $3.25. (Sticky Hands carries high ratings on BeerAdvocate and Untappd.) Similar 16oz IPAs and Double IPAs cost $3.79-$4.49 per can, he adds.
Edwards notes that Dogfish Head’s presence has “really retracted” in Washington state this year. He says he’s seen only World Wide Stout and a handful of 90 Minute cases there this summer, and that he doesn’t have much interaction with the brand.
But in one of Dogfish Head’s newest markets, Montana, six-packs of the brewery’s core brands have regularly been discounted as low as $7.99, in line with comparable packages from local breweries (Bayern Brewing, Red Lodge Ales) and national craft breweries (Sierra Nevada, Deschutes). A Bud Light six-pack commonly retails for $6.99. That’s in direct opposition to what Calagione told Brewbound in 2018 when he warned against cheaper craft beer brands: “It could commodify craft into something consumers are only willing to pay a buck or two more than domestic light lager or premium beer,” he said. “It’s a slippery slope.”
Neither extreme—sticker shock nor quick discounting—is ideal. Calagione has long defended higher prices for his beers, saying that drinkers “expect some correlation between pricing and quality.” But as omnipresent Boston Beer seeks to turn Dogfish Head into a volume-driven national brand, it’ll have to find the sweet pricing spot to encourage sales from outside the beer-geek audience.
Words by Kate Bernot