Sink vs. Swim: Strategies of Successful Craft Breweries

Let’s be real for a few minutes… Things have gotten really challenging in the craft brewing space over the last couple of years. A decade ago, new breweries were popping up everywhere and it seemed like there was more than enough to go around. Breweries could lean into their niche and find an enthusiastic enough audience to stay afloat. Now, there’s too much competition and an economic environment forcing consumers to be more frugal with their consumption choices. More and more craft breweries are struggling to stay or become profitable and fewer new craft breweries are coming online. We know this is affecting every single person receiving this email or reading this blog post. Instead of putting our head in the sand and pretending this isn’t the case, we want to leverage our unique position as a funding partner to help all of our friends and colleagues keep their breweries in good standing. We examined the strategies that our most successful brewing partners are using to stay afloat in this challenging economic environment and compiled them into this (hopefully) helpful article for you.

Lean in to Local Distribution

A few years ago it was considered a major victory for your craft brewery if you were able to sell your product through a national distributor. This strategy, however, in our current market can stretch small craft breweries too thin. Today, we’re seeing the most successful breweries leveraging a local distribution model. Instead of trying to get your beer on the shelf in liquor stores halfway across the country, focus on ensuring your product is available in all of your local liquor stores. This will pair perfectly with any and all local brand recognition you’ve been able to develop with your local consumers who will be exponentially more enthusiastic about supporting a local brand. Scaling back your distribution model might make your business more profitable in the long run.

Tackle Your Tasting Room

The second most effective strategy for keeping your craft brewery profitable is to tackle your tasting room. Offering a tasting room is a great way to invite local consumers into your brewery to engage with you. Soon you’ll have regulars and visitors coming into your business to try your beers, drink a few pints, and take a crowler to go. If you already have a tasting room, make sure that it is advertised sufficiently in your local community. Do you need to improve signage to draw more customers in from the street? Have you checked your Google Business listing to ensure your address and hours are correct? Can you add more seats and other attractive amenities to your tasting room to draw in more prospective customers? This is one of your biggest opportunities to improve your profit margin with local customers and tourists.

Focus on Your Mainstay Beers

As a brewer, there’s a lot of appeal to testing out small batch, unique or flavored beers. This is where you truly get to practice the artform of brewing. However, small batch beers are not a financially lucrative strategy, especially in today’s economic climate. We’re seeing the most successful breweries focus on their mainstay beers and even limiting the number of options they are providing. Gone are the days of small batch rhubarb beers and summer shandy’s mixed with citrus fruits. What are the 3-5 most popular beers your brewery offers? Focusing on your staple beers can keep your profit margin strong and reduce excess expenditures on specialty ingredients.

Emphasis on the Upsell

Train your staff to identify opportunities to upsell customers in your tasting room. For example, a group of locals are enjoying a round of beers together after work. Can you offer them a round of crowlers to take home? Or, your bartender notices a group huddled around your outdoor fireplace sipping their pints. That’s your chance to say, “Brrrrr, it’s cold! Did you see that we have several hoodies available for purchase?” This type of upselling does require some staff training, but your bartenders and servers should be motivated to help your business succeed. Don’t be embarrassed to shamelessly pursue an upsell when it’s available.

Localizing your distribution, building up your tasting room, streamlining your selection, and upselling your customers are all strategies to help your craft brewery be successful in our current economic environment. If you find yourself needing financial support to execute any of these strategies, for example, building out a tasting room or purchasing a crowler machine, we are always here to help support you with Working Capital loans, Equipment Loans, and more. Please reach out to Brewery Finance to learn more about how we can help your craft brewery.