Six months after taking the helm as president of Anheuser-Busch InBev’s Brewers Collective, Andy Thomas shared his views on how the world’s largest beer manufacturer’s craft beer division is approaching the summer selling season and the rest of the year.
A-B is coming off a 2021 in which its craft beer business unit increased production +3% on a comparable basis, to 2.72 million barrels, according to the May/June issue of the Brewers Association’s New Brewer magazine. The biggest entity within that division is the Craft Brew Alliance brands, primarily Kona, at 660,000 barrels (+8% on a comparable basis). Thomas knows the Kona and CBA brands intimately, following his time as CEO of the craft beer rollup.
Thomas remains in charge of leading those brands as well as a portfolio of A-B acquired craft breweries such as Goose Island (465,000 barrels, -2% YOY), Elysian (330,000 barrels, +10%), Golden Road (230,000 barrels, -4%), Shock Top (200,000 barrels, -17%), Karbach (176,000 barrels, +7%), Four Peaks (145,000 barrels, +10%), 10 Barrel (125,000 barrels, +9%), Breckenridge (110,000 barrels, +5%), Devils Backbone (85,000 barrels, +6%), Blue Point (75,000 barrels, -4%), Wicked Weed (97,000, +39%), and Platform (22,500, flat).
The division is off to a strong start to 2022, owning four of the top 10 share gaining breweries in craft — Wicked Weed, Kona, Four Peaks, and Golden Road — year-to-date through May 1 in IRI tracked multi-outlet and convenience stores. The division also has four of the top 10 share gaining brands in craft — Kona Big Wave, Golden Road Mango Cart, Wicked Weed Pernicious IPA, and Elysian Space Dust IPA — so far this year, according to the firm.
Meanwhile, the Brewers Collective also holds two of the top 10 U.S. craft innovations — Goose Island Neon Beer Hug IPA and Karbach Clutch City Lager — through April 7, an A-B spokesperson shared, citing IRI data.
With the summer selling season underway, Thomas shared his vision for A-B’s craft division, the big bets this year, package strategies and how he’s evaluating its legacy brands. Here are excerpts from that interview.
On the big bets in A-B’s craft portfolio:
A-B’s three main focus areas for its craft brands this year revolve around three anthem areas: easy drinking beers, IPAs, and wheat beers.
Kona Big Wave Golden Ale, the prized carryover brand from CBA, remains atop A-B’s list of priority brands for the summer, Thomas said.
“Big Wave, we believe, can play in a big way in the beer market,” he said. “Its source of authority is craft, it comes from craft origins, but Big Wave is a big bet for us because we think it just plays in this really evolving and enduring space around easy drinking.”
IPAs Elysian Space Dust and Goose Island Beer Hug are A-B’s top two national IPA bets, Thomas said. Space Dust and Beer Hug are bolstered by a “deep bench of regional IPAs,” including Wicked Weed’s Pernicious IPA, Platform’s Haze Juice, Cisco’s Wandering Haze, he added. Pernicious IPA has popped in scan data as a top 25 craft brand (No. 22 year-to-date through May 15), in IRI tracked multi-outlet and convenience stores.
Wheat and fruited wheat beers are another focus area for A-B’s craft division this year, with Golden Road’s Mango Cart on a national scale followed by a regional portfolio of Four Peaks’ The Joy Bus Wow Wheat, Widmer Brothers’ Hefe, Goose Island’s 312, and Cisco’s Grey Lady.
Finally, outside of traditional beer offerings, ready-to-drink canned cocktails are another opportunity for some of A-B’s regional craft brands, Thomas said. He pointed to Devils Backbone’s Smash line of spirit-based canned cocktails, which he said has “found the sweet spot in how you bring the relevance of local insight, the craft of a local craft brand to a different set of consumers in different occasions.”
On A-B’s craft package strategy this year:
Thomas said he spends a lot of time thinking about the intersection of channel, brand and pack.
Taking a bird’s eye view, Thomas said A-B’s craft package focus changes by the channel. “Depending on where you are and how you’re emerging from this kind of cocoon we’ve all been for the last couple of years, if you’re on the on-premise, you’ll see our focus be draft; if you’re in c-store or in small format, you’ll see it’d be in the 19.2s; and if you’re in a large format, be that a supermarket or even a club store, you’ll see us flex into multipacks, can or bottle, depending on the occasion or the brand.”
In the on-premise channel, the “reset moment in the market” is “one of the things that excites me the most,” Thomas said.
“There’s this opportunity to really reestablish the roots of building a brand in the on-premise,” he said. “And I think all of our brands play remarkably well there.”
On how he is evaluating success for brands that have shed volume in recent years:
“I start out with a pretty deliberate analytical kind of approach of saying, ‘Hey, what did we do and what happened?’” Thomas said.
Over a decade, markets develop and mature and location markets evolve, he added. Thomas offered Widmer Brothers’ Hefe, which a decade ago had “pretty decent expansion across the U.S., and “may have been the best, most relevant option for someone in an away market 10 or 15 years ago.”
“A brand … changes over that decade or so,” he explained. “Not just because consumers change, but because markets change, local options start to intensify or start to become more plentiful, and all of a sudden you start to say, ‘Hey, does it really make sense for this brand to try to be competing in this market? Or is it better off either going back home and re-doubling down there or going somewhere else?’ You can ask that question about a lot of brands.”
The question is especially relevant for first-, second- and even third-generation craft brands, Thomas said.
“As local options change, brands that actually introduced consumers to different tastes, and different palates, a different set of options, their relevance actually diminishes, not because the brands get worse, or the brands get tired or the brands get old, but they actually just get repositioned by other options that are available,” he added.
The answers lie in the intersection of “trying to learn who we are and then taking a contemporary view on given where we are and where we’ve been, what do we think tomorrow needs to look like and what brands do we think play where tomorrow and helping them all, working with the founders and working with the GMs to fulfill that role, fulfill the promise of what the next 10 years might hold for a brewery, not what the last 10 years have meant to the brewery.”