Many craft breweries have made distribution and packaging changes in the last few years to combat changing off-premise trends and consumer purchasing habits. But transitions don’t always mean immediate positive changes, as Belching Beaver can attest.
The San Diego-based craft brewery recently laid off four sales representatives as part of an off-premise reorganization strategy, Belching Beaver CEO Tom Vogel told Brewbound via email.
“One had two reps in one city – we reorganized the manager’s position, so having two reps was redundant,” Vogel said. “I did ask his manager if he could relocate, but he is happy staying in his city.
“Another in Texas, where the distributor was going through management changes,” He continued. “This reduced our rep’s ability to keep the area profitable. We let him know, once they get their reorganization completed, he will be our first call, but it’s likely the distributor will hire him.”
The other two affected employees covered the Los Angeles area, where Belching Beaver is changing its strategy “to be consistent with our distributor’s performance model,” Vogel said.
“We have spoken to other companies to pick them up and two are already working elsewhere,” he added.
Belching Beaver will also be hiring for the LA area in early 2024, but the “position will be modeled differently than positions we had previously,” Vogel said. The craft brewery still has 170 employees.
Belching Beaver distributes its beers in Alaska, Arizona, California, Colorado, Idaho, Minnesota, Nebraska, Nevada, Oregon, Texas, Utah, Washington and Wisconsin, according to an April press release noting the company’s expansion into Pittsburgh, through Wilson-McGinley.
Brewbound was first notified of layoffs at Belching Beaver last week, with a former employee saying the craft brewery’s sales were “heavily in decline,” particularly with Harbor Distributing, a Huntington Beach-headquartered wholesaler within Reyes Beverage Group. The distributor’s portfolio also includes offerings from major beer brands, including Constellation Brands, Molson Coors, Boston Beer and more.
The former employee also alleged that there were disagreements among leadership and some of the affected sales team members on the craft brewery’s off-premise strategy.
In the last 52 weeks (ending September 9), Belching Beaver dollar sales declined -38.1% year-over-year (YoY) and volume (case sales) declined -40.1% in NIQ-tracked off-premise channels, according to data shared by 3 Tier Beverages. In the last 13 weeks, dollar sales declined -37.4% YoY and volume declined -42.4%.
Vogel attributed the decline in sales to the company changing packaging formats across its entire distribution network, from 16 oz. to 12 oz. cans. The change resulted in the company losing placements in stores “that only carried the previous sizes” and “distributor incentive programs are the only way to get them back,” Vogel said.
“Now we have to work really hard to get all the accounts that were in 16 oz. over to 12 oz.,” he continued. “Most of the chains have made the transition, but for a while we were off the shelves. We are still seeing gaps, but it’s getting better.”
Belching Beaver made the packaging change to offer “better quality,” wanting “the last sip to be as good as the first,” Vogel said. He added that the company’s draft sales “are up.”
Six-packs of 12 oz. cans are the No. 1 package format for craft in NIQ-tracked off-premise channels, accounting for 26.9% of craft dollar sales year-to-date (YTD), according to Bump Williams Consulting in its Q3 craft report (ending September 30). The package format recorded a +0.3% increase in dollar sales YTD. Twelve-packs of 12 oz. cans have also significantly increased share YTD, increasing craft dollar sales +11.6% to claim 18% share of total segment dollar, the second largest share, usurping 12 oz. bottle 6-packs.
Meanwhile, craft dollar sales for 16 oz. can 4-packs have declined -0.3% YTD, accounting for 8.3 share of total craft dollars. Single-serve 16 oz. cans recorded a -9.6% decrease in dollar sales, with 1.5% share, and 16 oz. 6-packs recorded a -3.3% decline in dollar sales, with 0.7% share.
Some Belching Beaver 16 oz. offerings remain in the greater San Diego area to offer the brewery’s hometown consumers “a less pricey alternative to $15 6-packs,” Vogel said.
“[The San Diego] broad market is a whole other consideration, and we have to work especially hard at that transition,” Vogel added. “We expect to be in a good spot, but we won’t see that until next year.”
In the Pacific region, Belching Beaver’s dollar sales declined -41.6% YoY in the last 52 weeks, while volume declined -44%. In the last 13 weeks, dollar sales declined -40.8% and volume declined -45.7%.
In 2022, Belching Beaver produced 38,700 barrels of beer, a -10% YoY decline, according to the Brewers Association (BA) in the May/June issue of New Brewer Magazine. The company’s production peaked in 2020, producing 43,635 barrels (+15% YoY).