She said.......
It's about the beer
              He said........

Gina Miller            and                Bill Keeper
GINA-

Hey Bill,  

I was doing some beer shopping the other day (the only kind of shopping I don't do online) and
was struck by the number of craft beers I saw in 15 packs.  I'm not a fan of craft in six packs so
you can understand my dismay.  I want craft in four pint cans.  And that's it.

I do actually remember buying a 30 pack when I was still in school. That's college Bill, not high
school . It was from the Stroh Brewery in the early 1980s. Volume for anything not named
Budweiser was down so Stroh’s beer had a great idea it seemed.  Instead of the usual year-
end price promotion on suitcase (24 loose) cans, they were selling an in-and-out 30 pack for
the same price as the 24 pack. Even you Bill have to admit that's one good deal.

Next time I went looking for the 30 pack I found that Stroh's was selling 15 packs at alternate
periods versus the 30 packs.  Then after a while I couldn't find any size of Stroh's.  They had
gone out of business.  Too bad.  I was hoping for a 75 pack for the price of a 6 pack. That's a
joke Bill.

My point is that some of those breweries that sold 15 and 30 packs found that their short-term
competitive advantage eroded after a while. As more “craft” brands are being produced in 15
packs will those breweries also be cutting their own throats too?.  And for the record a lot of
those "craft" 15 pack breweries just happen to be owned by the big brewers.

Over the last few years, we’ve both seen the bigs putting more of a focus on price-point craft
beer. Oskar Blues has been pushing $8.99 to $9.99 six-pack pricing for some time with
products ranging from G’Knight Imperial Red IPA to its famous Dale’s Pale Ale. Last year,
Founders Brewing Co., not technically a craft brewery by the Brewer’s Association’s definition,
released its Solid Gold “premium lager” in 24-packs for $18.99. It started the trend a few years
earlier by releasing its uber popular All-Day IPA in 15-pack cans for the same price as a 12-
pack.

So called "crafty" beers like Elysian, Devils Backbone and 10 Barrel, meanwhile, have
effectively cut prices by at least $1.25 per case, as all of InBev's acquired craft brands
average prices dropped 2.5% to $37.91 per case recently,

I'm concerned that this cut rate approach will impact true craft beers and make them less
competitive in the marketplace which in turn may force many to shut their doors due to low
margins.  That's just another reason why I support local, independent brewers,  I'm happy to
pay more for higher quality and to keep the true craft industry growing.

That's it from me, chug-a-lug, Bill.....see you next time!
BILL-  

Hello Gina -

You get what you pay for. It’s a common cliché that fits nicely into the craft beer formula. Small
breweries take the extra time, employ more labor-intensive techniques, use extra ingredients
(like five times the malt, for instance) and give customers a personal, localized experience that
inevitably costs more per beer.

Of course, big brewers can employ larger corporate strategies that can increase efficiency and
reduce cost. Anheuser-Busch is famous for its aggressive budgeting strategy, running very lean
organizations, controlling precious distribution channels, acquiring new products like craft beer
and then applying its efficiency strategies to those brands to lower cost and leverage the
synergies between a zillion different players on a global scale to optimize profit. That’s obviously
difficult for small operations who make the kind of beers we like to do.

Now don't get too upset Gina.  Low-cost marketing strategy doesn’t always work. I'm sure you
remember MillerCoor’s Two Hats though if you blinked you might have missed it's deservedly
short life in the marketplace.  They used the slogan: Good Cheap Beer, Wait, What? And more
they claimed to be "craft".  The beer was  fruity lager that targeted at 21-year-olds (and younger
it seems).  The good news is that it barely even lasted a year in production before it was shut
down.  It wasn't good but it was cheap beer.  It's nice to know that being cheap didn’t save it.

I'm sure you agree with me that Jim Kock of Boston Beer is truly one of the people most
responsible for the craft beer movement.  I recently read that he said that he sees 15-packs as
fuel for a race to the bottom. He thinks the package will put “downward pressure on price” of
craft beer and will ultimately reduce brewery revenues forcing some to close.

As you know Gina, Founders’ great success with 15-packs got other breweries in on the value
play, with many focusing their efforts on variety. From 2017–2018, 21st Amendment’s Variety
IPA Pack (243%), Magic Hat’s IPA Playlist (132%), and Southern Tier's Overpack'd (111%) all
saw huge gains.  Interestingly, so far this year their gains have slowed dramatically.   

As you noted, with production facilities across the country and financial support for its "craft"
beer producers, Anheuser-Busch InBev is set to be the biggest beneficiary of evolving
packaging preferences for 15 packs.  That alone is enough to get me not to buy one.

One final word to breweries.  There's nothing wrong with staying small and independent.  Your
customers understand quality and will support your growth and success.

.
Here's looking at you, Gina.
Round 97
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