Tuesday, August 16, 2011

Branding is such a dirty word

I get Daryl Rosen's e-letter on beer sales. Not about what beers are selling; it's about selling beer. Rosen comes from the Sam's beverage retail chain in Chicago -- it was his family's business -- and when the family sold 80% of the business in 2007 (the chain would later be bought by Binny's, their Chicago rival (and an excellent booze supplier, love to see something like that in PA post-privatization!)), Rosen set up shop as a lecturer and sales consultant. And he's good. Not only does Rosen give me an insight on how beer sales works, his advice -- listen, focus on finding needs and filling them, help the customer even when it doesn't directly benefit you or your product -- works for me, and potentially for anyone. I've never met Rosen, but I owe him.

Anyway, I wanted to share something I read today at his Beverage Professionals site: "Split Personality." It's about how the beer industry looks at branding. A lot of craft beer drinkers -- the hardcore -- look on branding, marketing, promotion, and advertising as pretty much tools of the Devil...because that's what the big brewers use. When craft brewers use them, it confuses these people; witness the way some of them trash Samuel Adams, a beer brand that has done amazing things to establish craft's credibility across the country, and one that produces excellent beers, exceptional and experimental beers.

However, as Rosen's colleague Michael Browne points out, it's not so much the branding the bigs use that should be disturbing; it's how they do it. Here's how he starts the piece:
'So a bunch of states that have this 3.2 ABW law. You have to sell a watered down (‘non-intoxicating') beer to distribute in many channels.'
‘Okay, I get it,’ says the newcomer to the beer industry.
So we take our biggest brands -- the ones we spend hundreds of millions of dollars marketing - and water down the product by 25% so we can sell it in these channels.’
‘Use the same brand name for this watery version of your product?’
And you know it's true. Just that example alone is completely true; you'll see 3.2 versions of well-known brands -- like Budweiser -- in states like Oklahoma, and it won't say "Bud 3.2", it just says "Budweiser." (I'm not picking on Budweiser in particular, it's just an example.) 

What do you care? Well, Browne does, and for reasons that might intrigue you.
...the beer industry has convinced itself that playing fast and loose is okay, as long as there is a lot of volume at stake. And consumers are keenly aware of this. They know that craft brewers and specialty imports do not have compromised versions in these markets. They are able to draw a bright line between the mass producers and the small brewers that don't compromise… more evidence of the split personality in the beer industry. There are a bunch of large brewers who will put one brand on 2 very different beers; and there are craft Brewers that won’t.
Just one more chapter in a larger narrative that crafts are all about the beer; mass brewers are all about money.
Branding doesn't have to be a dirty word if you play it straight. After all, when I see "Deschutes," or "Victory," or "Bell's," or "Sierra Nevada" on a label, I know I'm getting a good beer. It may not be exactly to my taste, but the solid experience and integrity going into it makes it an easy decision to give it a try. Brand integrity is important, and it's been one of craft brewing's best practices (even through re-branding and the occasional slip -- Rogue's multi-labeling experiments come to mind). 

When craft is seen to have clear lessons for big brewers on basics like this, it's another sign that the whole industry might be changing. It's slow, but if the sales pros are chiding big brewers about this kind of, well, this kind of deception, that's a good sign.


Greg said...

It's actually stunning that this is going on, and especially funny that the business term for it is "brand dilution." Talk about accurate terminology.

This isn't the 1700s. People in low-abv states travel to other places, and if you're Budweiser, do you really want them surprised to find your beer - labeled and identified identically as what they are used to - is different somewhere else? I'm mystified that this practice persists.

Steven said...

While I see the point of the branding misrepresentation, I have to wonder what it would cost for A-B (again, the example only, anyone in the position) to re-brand all of their cans, bottles, cases, six-packs, tap-handles, glasses, to reflect "Bud 3.2."

It would be the same as a roll-out of a new "flavor." And then who eats the cost? The consumer, of course.

Do you suppose that consumers in the states mentioned just automatically know the beer they're getting is the "watered down" version of what the rest of us get? And at that point, does branding matter?

Flagon of Ale said...

I think he is 100% incorrect.

Craft breweries DO play the same game. Deschutes absolutely REEKS of brand-ing (just look at their website if you're unsure). Furthermore, here in MN you can only sell 3.2 beer in grocery stores, and Sam Adams, Summit, and other craft brands are happy to play the "watering down" game, not just Bud.

Also, I think the making of 3.2 beer is much more complicated than simply watering beer down like he suggests.

Anonymous said...

Lew, I hadn't realised that some states still maintain the 3.2% limit (by weight, thus about 4% by volume). This came in as you know after Prohibition ended, in some states.

How does it work for the light beer brands of the big brewers though? If your regular beer is 4% ABV, is your light version even less?

Also, in these states, does this mean craft beers, almost all of which would exceed 4% ABV, are not available, ditto imports over that level, or does it apply only to beer brewed in the state?



Derrick said...

No branding in the craft brewing industry? If you believe Stone Brewing, Dogfish Head, New Beligium, or Lagunitas to give four notable examples aren't branding themselves, I have several bridges in Brooklyn I'd like to sell you.

They just do it differently than the big boys (as your example attests, I really can't see a craft breweries watering down their product and selling under the same name) but the most successful craft breweries are some of the saviest marketers on the planet.

Lew Bryson said...

I don't believe anyone -- me, Browne, or anyone making comments here or on Facebook -- said craft brewers didn't do branding. The issue was about doing it well, and with integrity. Branding is not inherently wrong/bad/treacherous. Crappy branding is a bad thing, but there's nothing wrong with branding done well.

Derrick Peterman said...

Looks like I missed your point. Craft brewing branding seems more about a certain seal of quality, an experience you get when drinking the product. Corporate branding seems to more about simplifying the consumer choice so they reach for the familiar bottle, sort of reinforcing a habit.

Greg said...

Sorry, fixed some typos.

I think I did not read this the same way as Flagon and Derrick. Of course craft breweries use branding; everyone uses branding whether they want to or not.

The question is whether they - like Budweiser - brand two different products with the same name.

Flagon seems to say they do, which renders the whole piece kind of wrong, but that's still quite an issue to bring up. I do not believe that a 3.2 version of anything - Deschutes, Bud, Sam Adams - tastes the same, and so it should not be branded the same way, for a whole lot of reasons.

Lew Bryson said...

Actually, Derrick, I think there are elements of both of those aims in the branding of both types of brewer. But I think craft brewers -- and oddly enough, Budweiser, as opposed to Bud Light or Coors Light -- focus more on the experience and the quality. Nothing's cut-and-dried, one-size-fits-all.

Lew Bryson said...

Gary, to the best of my knowledge -- which is limited on this -- 3.2 is mostly about not being available at all licensed establishments. There are exceptions, of course, but it's about where you can sell it. It's weird, and I'm really glad it's not in PA. Although I am jealous of Utah for the great 4% beers the craft brewers there put out...

Jeffrey said...

I don't have a problem with the branding issues involved, but can see why it might present some problems. But I have to ask: If McDonalds is required to eliminate transfats in some jurisdictions, can it still be branded McDonalds? I think the answer is yes. It's not exactly an apples to apples comparison, but it's close.

Anonymous said...

"...craft brewers and specialty imports do not have compromised versions in these markets."

This (from the piece Lew quoted, not from Lew himself) is not true. In Colorado grocery stores can only sell 3.2 beer. Some craft brewers (including at least one very highly respected one) sell "watered" versions through these channels.

Gary Gillman said...

Lew, thanks for that. This sounds like an anomaly, a heritage from early post-Pro days.


JP said...

Bud has been brewing 3.2 beer for specific markets for over 70 years I would hardly call it compromised any more than any other Global brand adapting to the specifics/sensitivities of a given market. Look at McDonalds in Asia, or Coke in Mexico, or any other of the 1000's of global brands out there that adapt to regional markets are they compromised? Sort of a ethnocentric view in my opinion. This happens all the time, in every market, for decades if not centuries. Anyway you look at it this is a specific cultural, adaptation to meet a market demand. To me it sounds like it would not hurt in the least for this consultant to take a marketing class or two

Nathan said...

Isn't this just a matter of labeling? Nobody complains that Jim Beam sells a watered-down "light whiskey" in Ohio and other states, because it says right on the bottle what the ABV is. Maybe the problem is merely outdated beer labeling laws?

Syllogism said...

The craft brewer that I think has played fast and loose with rebranding and rebottling of its different beers is Rogue. I am not sure if they still do it, but they seem to repackage the same beer and give it a different label, almost by season. (Now off the top of my head if you ask me what are the names.. I cannto remember. I want to say the Shakespeare Stout was one.. but obviously the branding didnt work because it didnt stick in my head.)

In terms of 3.2 beer, I do not know how other states work, but in Kansas where I did grad work, the license was a 3.2 beer license. All beers in the establishment were 3.2. Liquor stores can sell full strength beer but some beer bars and convenience stores only sell 3.2 beer. Right now its a liquor store lobbey that is keeping the 3.2 beer the same (sound familiar Pennsylvania?).