craft beer + social mission

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While overall beer production has been falling,

craft beer production and sales have been growing

BUSINESS QUESTION

/ Given the increase in craft beer sales in the US, how can a

new craft beer brand differentiate itself and capture a portion

of the growing market?

/ We looked to our favorite brands* – the ones that really

make an emotional connection – and tried to decipher their

secret mojo

/ What we found is that the brands we love, were also the

brands that loved others – in the form of giving back to the

community

/ Now, a brewery can’t necessarily give back beer to the

community, but we wondered whether craft beer drinkers

would be more inclined to purchase a beer that supported a

socially conscious mission

* For those that may not know, both Tom’s shoes and Warby Parker

glasses have risen to fame through a “buy one, give one “ sales

policy, while Patagonia outdoor clothing pioneered the 1% for the

environment movement

RESEARCH METHODOLOGY / Using Google’s Consumer Survey platform, we reached out to a sample of online streaming video users* (e.g. Netflix, Hulu, Amazon Prime)

/ 322 respondents were asked “When out at a pub or bar, what do you usually order?” and given the following randomized options: Craft Beer, Spirits, Bud/Miller/Coors, Wine, or I don’t drink.

/ 120 respondents were screened into the survey by answering “Craft Beer” and were split into 6 independent cells, each with an n=20

/ Each cell was asked to indicate purchase intent for a single purchase option on a scale of 1 to 5, with 1 being “very unlikely” and 5 being “very likely”

/ Purchase options included a control case and two test cases of either $1 being donated to a socially conscious mission or being brewed by a non-profit company

/ In addition, two pricing levels were tested for the control case and test cases to assess price elasticity of each option

/ Our hypothesis was that the purchase intent would be higher for the socially conscious choices vs. the control case

* Streaming video users tend to skew younger and more urban,

which is a hypothetical target demographic for a socially conscious

brewery. In addition, streaming users tend to over-index in “Market

Mavens”, e.g. consumers that are more likely to adopt new products

and actively share their opinions on social media. Source: Civic

Science May 2014 Insight Report

SURVEY QUESTIONS

CONTROL CASE:

How likely are you to pay [$4/$8 ] for a pint of hand crafted beer brewed with premium ingredients?

+$1:

How likely are you to pay [$4/$8] for a pint of hand crafted beer brewed with premium ingredients where $1 from every beer is donated to support a socially conscious mission?

NON-PROFIT:

How likely are you to pay [$4/$8 ] for a pint of hand crafted beer brewed with premium ingredients by a non profit brewery committed to a socially conscious mission?

Pricing $4 $8

Control 20 20

+$1 20 20

Non-

Profit

20 20

SAMPLE SIZE (n=120)

DRINK CHOICE

Of the 322 respondents, the

highest number, 120 or 38%,

choose ”Craft Beer” when

asked, “When out at a pub or

bar, what do you usually

order?”

This confirms the previous

assumption that streaming

video users are a likely target

demographic* for craft beer

Craft Beer

38%

Spirits

24%

Bud, Miller, or

Coors

17%

I don't drink

15%

Wine

6%

* For more demographic breakdowns of drink choice, please see

the appendix

PURCHASE INTENT: CONTROL CASE

85%

55%

40%

50%

60%

70%

80%

90%

100%

$4 $8

Lik

ely

to

Pu

rch

ase

Top 2 Box* Purchase Intent: $4 vs. $8

* Top 2 Box is a standard market research convention by which

the top two responses are combined to provide a proxy for

purchase intent. In this case, scores of 4 and 5 were combined

Purchase intent at a price of

$4 is high at 85%, perhaps

indicating a generally

accepted price point

Unsurprisingly, purchase

intent at a price of $8 falls to

55%, indicating that there is

some price elasticity in the

craft beer market

PURCHASE INTENT: TEST CASES

85%

55%

95%

70%

95%

65%

40%

50%

60%

70%

80%

90%

100%

$4 $8

Lik

ely

to

Pu

rch

ase

Top 2 Box Purchase Intent

Control +$1 Non-Profit

With the addition of the

socially conscious test cases,

the purchase intent increased

to 95% and 70%, respectively,

proving our hypothesis

Of particular note, the

purchase intent for the $8+1

option increased 15 points vs

10 points on the $4+1 option,

perhaps indicating the ability

to take a premium price* while

serving a community mission

* Further pricing analysis may be required to determine the

optimal price to maximize revenue and social giving; however, it

does appear that the idea of +$1 is more powerful than a non-

profit entity. Additional test cases could include a % give back vs.

a specific dollar amount

+15 Points

GEORGIA: LAGGING BEHIND IN CRAFT BEER

Source: Brewers Association

According to the Brewers Association, Georgia has 28 craft

breweries as of 2013, ranking near the bottom of the US (47 of

50) in breweries per capita with 0.4 per 100,000 adults. By

comparison, Oregon, the number 1 state for craft beer, boasts

6.3 breweries per 100,000 adults

THE SOUTH: A CASE FOR UPSIDE IN CRAFT BEER CONSUMPTION?

39% 49%

28% 41%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

MIDWEST NORTHEAST SOUTH WEST

% o

f R

esp

on

de

nts

Drink Prefernce by Region

Wine

I don't

drink

Bud, Miller,

or Coors

Spirits

Craft Beer

The numbers from our survey

independently confirm the Brewers

Association findings in that the South

region shows the lowest preference for

Craft Beer in the country at 28%.

A case can be made that the South

lags behind the rest of the country due

to recently repealed “blue laws”

restricting the sale of alcohol and

prohibitive distribution codes.

As the South discovers craft beer,

there is potentially more upside in

market growth as places like Georgia

catch up with national trends

CONCLUSIONS

/ Our data supports the hypothesis that a brewery supporting a socially conscious mission has an opportunity to differentiate itself in the marketplace

/ In addition, such a brewery may be able to charge a premium price above what a non-socially conscious brewery could capture

/ Data from the Brewers Association along with our own data indicates an optimistic craft beer growth outlook for Georgia as it catches up with the national trends

QUESTIONS FOR FURTHER ANALYSIS:

/ What is the target customer for a socially conscious brewery?

/ What is the optimal price point / pricing structure to maximize revenue and giving?

/ What business model is most likely to succeed: brewery for distribution or brew pub?

/ What does a pro forma revenue and cost model look like?

/ What level of investment is required to start a brewery?

ABOUT THE AUTHOR Chris got his start brewing for his church’s Wednesday night suppers and firmly believes that if Jesus were around today, he’d be turning water into beer – not wine.

By day, Chris takes care of global strategic marketing insights for a company that affords him frequent trips to Belgium.

By night, he is working to get his socially conscious brewery, Yoke & Table, off the ground.

You can contact Chris at

email: [email protected] Twitter: @chrisprotos

POTENTIAL TARGET CUSTOMER PROFILE

Based on the demographic data captured in our survey, the potential target craft beer

drinker has the following characteristics:

/ Male

/ Age between 25 and 44

/ Income greater than $100,000

/ Urban residence

Note: the sample is not large enough to determine the profile likely to respond to a

socially conscious product – additional testing is required. Our hypothesis is that this

group may skew younger, more urban, and show greater gender balance between

men and women when compared to the general craft beer drinker

DEMOGRAPHICS: GENDER MORE MEN PREFER CRAFT BEER COMPARED TO WOMEN

23%

48%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Female Male

% o

f R

esp

on

de

nts

Drink Prefernce by Gender

Wine

I don't drink

Bud, Miller, or

Coors

Spirits

Craft Beer

130

185

0

20

40

60

80

100

120

140

160

180

200

Female Male

# o

f R

esp

on

de

nts

Respondents by Gender

DEMOGRAPHICS: AGE THE 25-34 AND 35-44 AGE COHORTS SHOW THE GREATEST PREFERENCE

30% 41% 44%

36%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

18-24 25-34 35-44 45-54

% o

f R

esp

on

de

nts

Drink Prefernce by Age

Wine

I don't drink

Bud, Miller, or

Coors

Spirits

Craft Beer

94

141

55

28

0

20

40

60

80

100

120

140

160

18-24 25-34 35-44 45-54

# o

f R

esp

on

de

nts

Respondents by Age

DEMOGRAPHICS: INCOME HIGHER INCOMES SHOW MORE PREFERENCE FOR CRAFT BEER

37% 28%

42% 38% 44%

55%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

% o

f R

esp

on

de

nts

Drink Prefernce by Income

Wine

I don't drink

Bud, Miller,

or Coors

Spirits

Craft Beer

54

105

74

29 27 20

0

20

40

60

80

100

120

# o

f R

esp

on

de

nts

Respondents by Income

DEMOGRAPHICS: URBAN DENSITY SUBURBAN AND URBAN PREFER CRAFT BEER COMPARED TO RURAL

37% 40% 33%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Suburban Urban Rural

% o

f R

esp

on

de

nts

Drink Prefernce by Urban Density

Wine

I don't

drink

Bud,

Miller,

or CoorsSpirits

Craft

Beer

167

96

58

0

20

40

60

80

100

120

140

160

180

Suburban Urban Rural

# o

f R

esp

on

de

nts

Respondents by Urban Density