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JULY/AUGUST 2019

The Voice of Craft Brands

This Time, is a Great Time

Inside the Dogfish Head Craft Brewery success story PLUS: 5 key social media things you can focus on

Sam Calagione, founder, Dogfish Head Craft Brewery


contents

VOL. 3 : ISSUE 4

JULY/AUGUST THIS TIME, IS A GREAT TIME Inside the Dogfish Head Brewery success story

6 IN EVERY ISSUE: 3 EDITOR’S NOTE There’s a bill for that 4  INSIGHTS Industry News

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5 KEY SOCIAL MEDIA THINGS YOU CAN FOCUS ON

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editor’s note

There’s a bill for that

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With a stroke of his pen, Connecticut Governor Ned Lamont signed into a law that enables craft breweries to sell more of their product to the public. Can we get an amen for craft lovers in The Nutmeg State? Surrounded by an enthusiastic group of beer industry members and state government officials all holding glasses of beer, Governor Lamont passed legislation that will raise limits that had severely restricted sales in one of the state’s fastest-growing industries. It is not like it was prohibition in Connecticut. Breweries were able to serve as much of their beer as they want in taprooms on their premises, but due to tight restrictions, there were limits on how much of beer people could take home. The new law bumps up the amount of beer craft lovers can take home from not more than 19 16-ounce cans or bottles in a day to 9 gallons, 72 16-ounce cans (three cases if you are using beer math at home). To note, the bill also enables craft breweries to manufacture wine, cider and distilled spirits, and gives wineries the ability to sell Connecticut craft beer. It is a home run all the way around. Perhaps more interesting than anything else was beer fight that played out in the legislature. Big breweries and their distributors fought hard against increases for small breweries—an industry that is burgeoning in Connecticut, which boasts 90 breweries today. More than the number of jobs the legislation will help add (and that matters a lot) is the fact that there had to be such a battle. Without the obvious answer here, why does the big guy want to keep the little guy down? Why throw your weight around in a battle that involves something everybody loves—beer. In a time when consumers love what they love and will do what it is necessary to get it, why stand in their way? Why be that brand? Why not be the brand that supports the thing that we all love—a good beer? I know, lots of questions. The answer that matters right now is that Connecticut craft beer drinkers can get themselves more of the good stuff. Here’s to winning the fight.

Michael J. Pallerino

In a time when consumers love what they love and will do what it is necessary to get it, why stand in their way? Why be that brand? Why not be the brand that supports the thing that we all love—a good beer?

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insights

Where the beers are

Survey shows beer tourism is on the rise (believe it) Beer tourism is the new Disneyland. Well, okay, while we may be pushing it a bit there, beer tourism is a growing a phenomenon. According to a recent Gallup poll, when 42% of Americans say they prefer beer to wine or liquor (and it is the third-most popular beverage after water and tea), you get the feeling that people are seeking out beverages like craft beer while on the road. Compared to wine tourism, which has been a thing for decades, traveling for beer is becoming the new go-to destination. Take cities like Portland, Oregon and Denver, where beer tourist festivals are drawing tens of thousands visitors a year. Or that tap rooms in airports like The Squatters Airport Pub in the Salt Lake City International Airport is open year-round from 6 a.m. to midnight or the popup pub Voodoo Brewery in the Pittsburgh International Airport is a must-drink location on the road. With more consumers interested in beer-related travels, the trend is worth looking into how to get in the game.

“The largest change is the power shift to customers having more control in their brand choice and purchasing decisions. The momentum will continue to empower customers in more and better ways. Product business models will increasingly be reinvented as service business models.” – Former president of Pepsi Cola and CEO of Apple John Sculley on how the relationship between brands and consumers is changing

Book Rec

You Can’t Know It All:

Leading in the Age of Deep Expertise

By Wanda T. Wallace

Today’s brands are packed full of experts in every area. But how many of them truly lead? Thought leader Wanda Wallace says the toughest transition in business comes when expert leaders who are asked to move beyond their expertise and lead a less homogenous group. But what happens when they face a new set of problems? Or they struggle to gain basic competence in dozens of areas without having to become the expert in every aspect? In “In You Can’t Know It All,” Wallace presents the coaching model she has developed to address the challenges of this transition. She offers strategies for individuals to navigate their new roles and learn to combine their expertise with their leadership responsibilities. She gives essential advice on the fundamental change in mind-set that this requires. This invaluable handbook can offer today’s rising entrepreneurs and experienced managers insights into their own careers, explains why their star performers may suddenly be floundering, and provides essential tools for guiding development.

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been working with Communicators for the last three years. “ We’ve The results have been absolutely remarkable. I would recommend this firm to anyone! ”

– Scott Banda, Director of Marketing & Business Development, Bostik

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This Time, is a Great Time Inside the Dogfish Head Brewery success story

By Eric Balinski

Here is a recipe for building a well-differentiated company: Mix one part hospitality, with two parts brewery and distillery, and two parts restaurants, stir continually with the inspiration of a highly spirited culinary and beverage alchemist. What would you get? If you are lucky and wholeheartedly committed to the outcome, you could end up writing an entrepreneurial success story similar to that of Dogfish Head. Dogfish Head is the company Sam Calagione, the Epicurean Edison of the Craft Beer industry, founded back in 1995 in coastal Delaware as a mere 10-gallon-batch beer maker within their original Rehoboth restaurant, Brewing & Eats. From that simple beginning, he and his co-workers have trail blazed styles and tastes, not only in beer, but in creating a unique culture that pioneers across a number of business endeavors. Any craft-made production endeavor takes dedication and focus to be successful. Blending some very different businesses seamlessly together seems almost a route to failure. From Calagione’s view though, they were inherently linked, feeding upon each other to make each endeavor a source of ideas, inspirations and new loyal fans. The reason their mixology of hospitality, brewing/distilling, and culinary works is they take each element very serious, but don’t take themselves serious, allowing for their hard work and dedication to be enjoyable even when some experiments don’t always come out exactly as planned. Craft Brand and Marketing Magazine had the chance to speak with Sam and his wife Mariah,

shortly after their merger with Boston Beer Co., which is run by Sam’s longtime friend Jim Koch, chairman and founder of Boston Beer Co. We explored the merger and Dogfish’s history and future.

Give us a snapshot of today's craft brew market. Historically, brewers followed the Brewers Act of 1516, The Reinheitsgebot, the "German Beer Purity Law." After more than 500 years, the Reinheitsgebot is considered the world’s oldest, still valid food safety and consumer protection legislation. For beer making that meant ingredients could only exist of the traditional beer foursome: barley malt, hops, water and yeast. Dogfish Head was the first craft brewery to completely challenge the ingredient list for making beer, by creating the first coffee stout beer. We feel we’ve helped inspire many craft brewers to become more creative with their offerings and have contributed to the explosions of craft beers across the U.S. Today, there are more than 7,000 craft breweries in America, with craft brewers having 14.5 percent share of the domestic beer market. A significant number of these brewers are hyper-local in scope, offering direct to consumer freshness and integrating themselves into the community. The top 50 Craft Brewers, while still part of their local communities, have 99 percent of their sales go through a three tier distribution system, the same as the global beer companies. Currently, more than 80 percent of the beer produced in America comes from only two international

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cover story

players: AB/InBev and Molson Coors. These companies also have acquired many great craft breweries over the years. Other major international breweries have also acquired once-indie American craft brands. Ballast Point is now 100 percent owned by Constellation Brands, which also owns Corona. Lagunitas Brewing is 100 percent owned by Heineken. As these companies are integrated into the larger parent, distribution is gained, but often the craft identity and magic gets lost with consumers. Every craft brewer who contemplates selling their company faces the decision of keeping a lifetime of passion and running the brand they founded or taking the money. Often when a craft brewer sells out, the international brewer that acquires them is not seen on the product packaging or in the brand marketing, ultimately making it hard for consumers to know who makes the beer. Dogfish Head founders Sam and Mariah Calagione have not sold out. They have bought in. They converted their Dogfish ownership stake into Boston Beer stock and are now the second-largest

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non-institutional owners of Boston Beer behind founder Jim Koch. They still run the Dogfish Head brand alongside their talented co-workers, and Sam has a seat on the board to help drive the strategy and the future of the Boston Beer Company. All beer sales in the U.S., including craft beers were flat in 2018, as consumers considered other options such as teas, tonics and ciders, which grew in 2018. This however creates opportunity for those willing to innovate.

What’s likely to happen next? We see “The Smiling Jaws of Death” scenario. The top Jaw has the big teeth of global breweries who have the power to control store placement. Along with them are the larger craft breweries who make 80,000 to one million-plus barrels of beer per year. Before the merger, Dogfish was the 13th largest and on the upper jaw, but with resources finite. Now with our merger with the largest American-owned craft brewing company, Boston Beer, combined we’ll have 2 percent domestic market

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share and enough strength to grow, adding our 400 co-workers to their 1,400 co-workers, coupled with Boston Beer’s top ranked sales force as the best high-end alcoholic beverage in the country. The teeth on the bottom jaw represent the thousands of small craft breweries. The ones who are local and sell direct to consumer whether in their brew pub or tasting room. Brew pubs are okay as a model, but they have low margin food and food handling issues to deal with. Also, on the bottom jaw is the Tasting room model, no food, just tasty, high quality beer, available for carry out too. The customers typically are hardcore beer geeks who line-up to try and buy without the cost or hassle with low margin food. In the middle of these jaws are the breweries with 5,000 to 80,000 barrels per year. Their size and reliance on the three-tier system dictates they must grow to survive, but it will be hard given the pressure of the top and bottom jaw eating at any market and customer opportunities.

What trends are defining the space? I would say the dominant beverage trends are tonics, canned cocktails, lower ABV beers, Hazy IPAs and active lifestyle oriented alcohol-based beverages like Michelob Ultra or our Slightly Mighty, a true indie craft beer that has all the character of

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a world class IPA, but with only 95 calories, 3.6 gram carbs, 1 gram of protein and zero fat per 12 ounce serving. As far as trends with restaurants and bars, we see the craft casual space growing, led by beverages and food that is focused on wellness, an active, healthy lifestyle, with customers willing to pay a premium price.

What is the Dogfish story from a brand perspective? The idea for Dogfish Head was incubated when my wife, Mariah, and I were living in NYC in the early ’90s. I started doing research on trends in smallbatched beer and the artisanal food movement that was underway. I noticed no one combined the two. This led to me to feel we could be the first culinary created and oriented brewery. We left New York for Milton, Delaware to start Dogfish 24 years ago with a 10 gallon brewery in our restaurant. We intentionally did the brewing and restaurant under the same roof as I saw beer as “liquid food”. The introduction of our Ta Hanket® in 2011 represents this. The label has the oldest hieroglyph of the brewing art that is a universal symbol of both beer-and-bread. Meaning beer has been considered liquid bread since the earliest era of human civilization.

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We also recognize creative chefs don’t limit their spice or ingredient cabinets, so we looked at chefs and the kitchen for culinary food ingredients to inspire what we create in beers as brewers. This naturally led to pairing craft beer with food when we started, along with championing a culture centered around being fun, creative and highly-interactive with our customer base. We have consistently maintained this mind-set in all we do. Our efforts were recognized in 2017 by winning a James Beard Award, something we had been nominated for annually since 2010.

Walk us through your branding strategy. Our rallying cry is “off-centered goodness for off-centered people.” We work hard to innovate and establish new concepts in the beer/spirits/ hospitality spaces rather than adopt the fast follower model of hopping on trends others have established. We have been early innovators in fast-growing categories such as IPAs, fruited sours, craft-distilled spirits and active lifestyle beers like our yoga-themed white beer Namaste® and our Slightly Mighty®. This approach has been good for us, as we typically sell a barrel of beer for $49.90 per case, while the IRI average craft beer case price is $35.

What does your recent merger with Boston Beer mean for Dogfish Head? In a word: growth. Growth for our brands which complement the brands in the Boston Beer portfolio. Dogfish focuses on IPAs, sours, active lifestyle beers and distillery spirits while Boston Beer has a great portfolio centered around: lagers, cider, seltzer, tea and kombucha (lightly effervescent sweetened black or green tea drinks.) I believe that together we have the most dynamic and complimentary high-end alcohol beverage portfolio of any company in the country. To help with portfolio diversification, we are adding our distillery spirits line-up of Gins, Rums, Vodka, Whiskey and other distilled concoctions into the merger. We started distilling fourteen years ago when I drove by a rural scrap yard in Pennsylvania and saw a thing shaped like a Scottish Pot Still in the field. It aroused my curiosity so I bought it, restored it, and started tinkering with distilling. Today we have triple digit growth and are only in five states so far.

What's the biggest item on your to-do list right now? Finishing our sales and marketing plan with my Dogfish and Boston Beer fellow leaders. We intend to significantly amplify our marketing spends and resources for our three core beers of 2020, which we will announce at our September meeting in Boston.

How does the taproom space integrate into today's branding/marketing strategies? Dogfish has tasting rooms in both Rehoboth and Milton. And Boston Beer has additional tap rooms in a number of states. They are import innovation hubs for our brands and will continue to be important resources and destinations for our brands. That said Dogfish and Boston Beer proudly sell more than 99 percent of what we produce through the three-tier system. And that focus will continue for decades to come.

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And a really great thing about the merger for me personally, along with Jim Koch who is still a passionate and energetic voice of the company, is that I will also be a brand Ambassador for the Boston Beer brands, a role I thoroughly love at Dogfish Head. With our combined product portfolio, we have something to share with all customers.

Is the merger a good thing for the craft beer industry? How so? I think so but obviously I am biased. At least in the context of the top 50 alcohol beverage companies selling in the U.S. There is consolidation in all three tiers. And fewer bigger stronger retailers and distributors are focusing on fewer bigger stronger brands. Dogfish Head and Boston Beer are now in a position to bring one great portfolio to market. That is good for all of July-Aug-2019.pdf

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our stakeholders, especially the consumer. As it will now be easier to find the stuff from our company they have been looking for, and with more streamlined and powerful logistics and sales capabilities, they will find it fresher than ever.

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Why do you think some DFH fans and other craft beer lovers are not in favor of the merger? Of course when the announcement is made the smaller entity takes more arrows than bigger entity as fans of the brands process the news. Jim and I have been loud and proud on the merger and as we tell the story of why we are joining forces the sentiment has swung way more positive. The fact of the matter is, even combined,

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we are a David up against the same international Goliaths that we and the other 7,000 true indie American craft breweries have been up against for a very long time.

How will Dogfish Head customers benefit from the merger? Boston Beer has been consistently ranked the best beer supplier by distributors. Our beers and spirits will surely be easier to find and be fresher going through the Boston Beer distribution system.

Mariah we understand you and Sam are using a significant chunk of the proceeds from the merger to add to your philanthropic foundation. Please share what will be the focus. “Beer & Benevolence” started 24 years ago to creatively collaborate with nonprofit organizations to foster community, nourish artistic advancement and cultivate environmental stewardship. Taking a chunk of proceeds from the Boston Beer stock and using them to create a foundation gives is the opportunity to grow Beer & Benevolence and continue giving back to the communities and non-profits that are meaningful to us, our co-workers, and our customers.

Here are some of our Beer & Benevolence highlights for 2018 & 2019 (YTD):

2018 • Inaugural “Dogfish I.P.A.” bike event raised $40,000 for bike safety and advocacy in Delaware; $15,000 to Sussex Cyclist and $15,000 to Urban Bike Project plus $10,000 for “Bike Service Stations” throughout the state to include one across from the Draper Memorial Kiosk. • Pledged $50,000 to the construction of public dock along the Lewes-Rehoboth Canal • Dogfish Dash raised $150,000 for TNC, DE (largest year to date)

2019 • Raised over $5,000 for the “Camp Fire” relief via the Sierra Nevada Brewery’s Resilience Beer effort • Tour Tips (tips generated by our guests in the brewery’s Tasting Room that are donated to various local non-profits) are a big item for 2019. In 2018, we raised about $75,000, and we are looking to double that in 2019 • Received the “Maker’s Award” for supporting the arts in Delaware; this is awarded by the “Delaware Contemporary” Art Museum

“This time, like all times, is very good one, if we know what to do with it.” – Ralph Waldo Emerson

Sitting down with... Sam Calagione, founder, Dogfish Head Brewery What’s the most rewarding part of your job? I consider myself a brewer first and a businessman second. My favorite days are when I come up with a concept for a beer that has never been brewed before, and then share the idea with a bunch of co-workers who have complimentary superpowers and together we take that work of fiction and turn it into a work of non-fiction.

What was the best advice you ever received? Never let the tail of money wag the dog of inspiration. What is your favorite brand story? There are so many brands whose stories I admire: Patagonia, Rodenbach, Grateful Dead though come to mind, as we have been fortunate to collaborate with each of these brands.

Eric Balinski is the owner of Synection, LLC, which is a strategy and growth consultancy firm. For more information, visit: synection.com.

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social media

By Dalana Morse

5 key social media things you can focus on You may feel that it is vital to have an active social media presence for your business. But you will only be wasting your time if you do not know what you are doing. Getting social media right is an art. Getting things wrong could be detrimental to your brand. Here are some important basics to help you direct your focus so you can get it right.

1. First impressions count Before you even think about writing your first tweet or Facebook update, it is crucial that you get the

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basics right on your social media profiles. You want great visuals to use as cover and profile images. Keep your bio descriptive but concise, and be sure all your relevant information is listed—contact info, business hours, etc. Branding is crucial. You will use different images across your social media platforms, but make sure everything fits with your brand style. The same is true of the language and style of your updates. Getting these basics right ensures that as your brand grows, your followers will feel you operate a professional company.

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2. Don't sell all the time A common mistake new brands make on social media is they immediately use their new profiles as a place to sell. While digital marketing plays a significant role in increasing sales for goods and services, successful social media management requires a balance between communication, engagement and direct marketing. At the start, your principal objective should be to grow your account by gaining new followers and encouraging engagement. Remember, customers will want to learn more about your brand before deciding whether to purchase from you or not. Furthermore, the more successful you are at growing your account and increasing engagement, the easier it will be to divert traffic to your website when you want to promote it.

3. Be active

media sites see visual, or video content perform better while others are more conversational in style. There are also more basic considerations to take into account. For example, you will need to adjust images to the correct size for each platform. Failure to do so will make it obvious the image was initially designed for a different purpose, and it looks unprofessional. So, the main message here is you need to put some work into adjusting your content for each platform—and you want to give those that follow you on one platform a reason to also follow you on another.

The more successful you are at growing your account and increasing engagement, the easier it will be to divert traffic to your website when you want to promote it.

One of the biggest keys to social media success is updating your profiles regularly. Of course, this can be tricky if your business does not have a dedicated social media person. Either way, the key is to do what you can and be consistent with it. Even if you manage to secure a viral update, that will only give your social media presence a boost for a day or two. Many people think that you can only find success on social media with viral updates, but you can actually do very well with regular updates that receive a low level of engagement. Focus on consistency rather than a one-off success.

4. Tailor your content for each platform A common mistake that brands make is they post the same content across all their social media profiles. Of course, you can get away with this occasionally, but it is worth remembering that every platform is different. So, for example, some social

5. Interact with your audience It's crucial to create content for your audience based on the things they are interested in, rather than just trying to flood the feeds with your latest product. Also, it is critical that you interact and engage with your audience. This can be anything from asking questions and setting polls to responding to comments. Keep in mind that social media is twoway communication. It is a good idea for the vast majority of brands to now have a strong social media presence. Getting things right with digital marketing is not always as simple as it looks. Keep in mind that first impressions count, social media is not always about selling, being active is crucial, content should be tailored for each platform and interact with your audience.

Dalana Morse is the founder of DAM Media and Design, a boutique design and digital marketing firm located in Fort Worth, Texas. Dalana is a seasoned professional with a diverse background in marketing, web and media design, digital and social media marketing, and search engine optimization. Having served in marketing leadership roles for close to a decade, her experience spans both B2B and B2C industries including multifamily and single family real estate, electrical and utility technologies, and visual branding agencies. For more information, visit dalanamorse.com or dammediaanddesign.com

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