Pandemic Prompts Premium Purchases

More Americans are purchasing premium foods during the pandemic. Growth is fueled by Millennial consumers looking to have an “experience” from home, eating fancy food from their kitchen table during the pandemic rather than going out. Many fermented products are considered premium. According to market research firm IRi, five of the top 15 food categories with a “premiumization” effect are fermented products: spirits, beer/ale/cider, wine, coffee and yogurt.

Read more (IRI Worldwide

Digging Up Ancient Yeasts

Would you drink a beer made from 3,000-year-old yeast?

Craft’s new frontier is ancient beer. Archaeologists and scientists are partnering with brewers to use the yeast from archaeological dig sites to make unique craft beer. An article in anthropology magazine Sapiens details Biratenu bar in Jerusalem taking a sip of beer made with yeast from a 3,000-year-old archaeological site. The article reads: “This feat demonstrated that the microorganisms driving fermentation had managed to reproduce and survive for thousands of years. It also settled any debate over the vessels’ purpose — confirming that the jugs with strainers once stored beer for the Philistines some three millennia ago.” Though wine is the historically recorded drink of choice for historians, “beer is telling us about everything from gender roles to agriculture,” says archaeologist Marie Hopwood.

Read more (Sapiens)

As hard kombucha continues to top “best of” lists for 2020’s most popular alcoholic drink, brewers must find ways to differentiate themselves in a crowded marketplace.

“If you’re thinking about coming into hard kombucha, my main point to you would be you’re not in the kombucha business anymore, you’re in the alcohol beverage business now,” says Bart Watson, chief economist for the Brewers Association (a trade group for small craft brewers). “You have to think about this competition more holistically than just within hard kombucha because, as we’ve seen in recent years, customers don’t think in neat categories as they used to.”

The percent of Americans who drink alcohol has remained fairly static over the years (Gallup polls indicate between 60-70%), but what they’re drinking has changed. Beer is losing favor with consumers, and other hard, fermented drinks — like kombucha, cider and mead — are now climbing in the craft brewing market.

“If (people) are drinking more of one thing, they’re drinking less of another,” Watson says. “You’re not going to add to the drinking, you’re just going to have to take from someone.”

Watson shared this data during the “Trajectory of Craft Brewing” panel at the Kombucha Brewers International (KBI) Virtual KombuchaKon 2020. Hannah Crum, president of KBI, said kombucha is a craft beverage, too. She added: “Hard beer has paved the way for hard kombucha. It’s opened up people’s idea to the concept of craft, and kombucha can thankfully take advantage of people’s knowledge of craft.”  

Watson suggests four lessons from the craft beer world that hard kombucha brands can use to grow. 

1. Consumers Crave Experiences

If you want to succeed in the hard kombucha industry, you must have on-premise sales. 

Sales of craft beer are about 25% on-premise, and are especially strong in experiential channels — tasting rooms, music festivals, sporting events or even ax-throwing clubs. These are entertainment-driven settings where people can experience an event while drinking (but watch those axes!). 

“This means they’re not just going to drink, but going to do something and drinking while doing it,” Watson says. “Many of the reasons that people say they go (to a brewery) is less about the product and more about the experience you provide.” 

Over 50% of craft drinkers purchased more of a product after visiting the tap room, driven by having had a good experience.

“Kombucha tap rooms are going to be part of that experience that helps build the market and educate consumers about the product,” he adds. “This has been a challenge for a lot of distributors, but I actually think this is an opportunity for a smaller segment like kombucha.” 

2. Go Where the Consumers Are 

Craft brewers are most successful in bigger cities where there’s already a base of craft drinkers. The growth in the craft beer industry is coming from these concentrated geographic areas.

The craft beer market has steadily expanded over the last 10 years, but growth has been strongest in the West. Kombucha has followed a similar pattern..

“The West is still the strongest place for growth, even if it’s in the highest market share,” Watson says. “Most of the growth has continued to come from the densest market.”

3. Consumers Trade Up

Craft hard kombucha will sell better than a value version. Over the last 30 years, consumers have been purchasing more craft, imported and super premium beer compared to simply premium or value versions. Drinkers are “upcycling” their preferred brands.

“This is true in a lot of industries right now, where they’re not necessarily drinking more product, they’re drinking better,” Watson says.

In the overall beer market in 2015, craft beer makes up over 40% of the dollar volume, while premium beer (like a BudLite or Miller Coors product) are 35% and value brands are 20%.. Compare that to the 1980s, when premium beer peaked at over 60% of the volume, value beer was around 30% and craft was under 10%. 

4. Go High or Low with ABV

When making a hard kombucha brand, think about your alcohol levels. Alcoholic beverages with  higher or lower alcohol levels sell better, what Watson called “a hollowing of the middle.”

Sales are higher for drinks below 5% ABV or above 7% ABV. This is part of the reason hard kombucha, cider and mead have climbed in sales, since the drinks traditionally have higher alcohol levels. 

“This is a market that’s competitive and getting more and more competitive, but at the same time, there’s more and more niches popping up as the consumer base diversifies and more people look for a specific product,” Watson says.

Over 650,000 workers in the brewing industry will lose their jobs due to the pandemic by the end of 2020, and beer sales could fall as much as $22 billion. – John Dunham Associates

Equality in Brewing

Though Black people make up 13% of the nation’s population, they comprise less than 1% of brewers. Amidst rising demands for racial equality, brewers across the nation are trying to change the industry. “It takes nothing to do a one-time act,” says Latiesha Cook, the chief executive of Beer Kulture @beerkulture, a new nonprofit group that brings people of color into the craft-beer world through charitable and educational efforts. “Your brewery is not going to be diverse and inclusive tomorrow, but the work you put in today is going to effect that change five years from now.”

Articles in both the New York Times and Inc. list brewers creating programs to bring more Black people into brewing.

– Brooklyn Brewery @brooklynbrewery (Brooklyn, New York) launches Michael James Jackson Foundation for Brewing & Distilling for brewing and distilling scholarships for Black, Indigenous and people of color.
– Crowns & Hops @crownsandhops (Inglewood, Calif.), a craft beer and lifestyle brand with the slogan “Black People Love Beer,” launch the 8 Trill Pils Fund to give grants to other Black brewers.
– Orpheus Brewing @orpheusbrewing (Atlanta) introduces its Leadership Diversity Program, a six-month paid internship.
– Fremont Brewing @fremontbrewing (Seattle), will offer six- to eight-week internship next year.
– Weathered Souls Brewing @weatheredsoulsbrewing_marcus (San Antonio, Texas), creates Black Is Beautiful project, where participating breweries create a beer with the Black Is Beautiful label and donate proceeds to organizations supporting equality and police reform.
– Finback Brewery @finbackbrewery (Queens and Brooklyn, New York) creates I.P.A. label Breathing: Conversations, with discussions about race printed on the beer’s label to foster dialogue among drinkers.
– Constellation Brands, which imports Corona and other beers, founds a Focus on Minority Founders Program. The company’s venture capital division also announces places to invest $100 million in Black- and minority-owned alcohol beverage businesses over the next decade.

Read more (New York Times & Inc.)

Craft Brewing Volume

Craft brewing volume has declined 10% in the first half of 2020 versus last year.

Brewers Association

A brewery in Sydney, Australia is getting creative with the carbon dioxide emissions produced by yeast during fermentation. Young Henrys, with the help of a local university, is feeding those fermentation gases into tanks of native river algae that turn that CO2 back into oxygen. This process neutralizes the emissions. The CO2 produced to make one six pack of beer would take a tree two days to absorb.

“You have this really amazing yin and yang scenario,” said Oscar McMahon, Young Henrys co-founder. “One tank of algae is capable of creating the equivalent amount of oxygen as one hectare of Australian bush. It takes a long time to grow that, whereas we can grow a tank of algae within weeks.”

Read more (Bloomberg)

Leaders of the wine industry are asking the community to rally and appeal tax hikes. As the industry continues reeling from losses related to COVID-19, a new round of potential tariff hikes threatens the industry. In 2020, a 25% tariff imposed on certain European wines and cheeses was described by some as the greatest threat to the wine and spirit industry since the prohibition era. U.S. President Donald Trump imposed the tariffs in retaliation for a tax imposed in France on several large American tech ferns, such as Facebook, Google and Airbus.

Read more (Vinepair)

Hops used to be the biggest thing in beer to create a powerful flavor — now it’s yeast strains. Brewers are using yeast strains from around the globe for the best flavor.

According to the New York Times: “For some time, it’s been a hopped-up arms race as breweries regularly double or triple the amount of hops to create stronger aromas. With breweries using the same hops, many beers are starting to smell alike. … In search of distinct aromas, brewers are embracing yeast and bacteria strains from across the globe. They’re creating beers that let each type of microbe speak its unique language, and drinkers are listening.”

DeWayne Schaaf, owner of @ebbandflowfermentations Ebb & Flow Fermentations brewery in Missouri, calls himself a “yeast nerd.” He does not use commercial yeasts in his drinks, instead fermenting with yeast strains from Scandinavian farms, bottles of Spanish natural wine and Colorado dandelions. Few hops are required in his drinks as, during fermentation, the yeast converts sugars into alcohol for the flavors.

Other fermenters featured in the article include: @omegayeast Omega Yeast (supplier of yeast strains in Chicago), Berg’n (a beer hall in New York), @alvaradostreetbrewery Alvarado Street Brewery (brewery in California), @yeastofeden Yeast of Eden (brew pub in California), @bootlegbiology Bootleg Biology (yeast lab in Tennessee), @whitelabsyeast White Labs (yeast supplier in North Carolina and California) and Lars Marius Garshol (Norwegian author of “Historical Brewing Techniques: The Lost Art of Farmhouse Brewing

Read more (New York Times)

Weathered Souls Brewing Co., a black-owned brewery in Texas, has launched the Black is Beautiful initiative to bring awareness to racial injustice and “show that the brewing community is an inclusive place for everyone of any color.” They are encouraging breweries to develop their own Black is Beautiful stout. Weathered Souls has shared a stout base recipe, and ask breweries to develop their own creative spin on the drink. A free label has been provided on their website, and the campaign encourages breweries to donate a portion of sales of the stout go to local foundations that support police reform and legal defenses.

Stout is a top-fermented beer that ranges in color from dark brown to almost black.

Marcus Baskerville, founder and head brewer at Weathered Souls, told the San Antonio Current: “The brewing industry is pretty eclectic, with all kinds of different people in it. Why wouldn’t this community be one to join together to support a message of equality and purpose to support the concept of general respect for everybody?”

Read more (San Antonio Current)