While Colorado remains one the largest and most developed craft beer markets, its breweries have struggled to bring back their draft beer business post-pandemic.
Many breweries, wholesalers and retailers alike have focused their attention on combating off-premise declines, but “as a beer community, we’ve got to fight for draft,” Holidaily Brewing founder Karen Hertz said on stage in Denver last month during Brewbound’s Brew Talks meetup.
Hertz shared the stage with Ska Brewing president and co-founder David Thibodeau and Elite Brands of Colorado account manager Katie Nierling. The conversation followed a national-focused panel discussion featuring Dogfish Head co-founder Sam Calagione, Buffalo Wild Wings director of beverage strategy and innovation Jason Murphy and Tamarron Consulting co-founder and president Lori Scheiffler.
Ska Brewing has established itself as a mainstay craft brand in Colorado with more than 25 years in business under its belt. However, the makeup of its sales has changed significantly since the start of the COVID-19 pandemic.
A few years ago, Ska’s taproom sales were about 75% draft and 25% food, Thibodeau said.
“And then once a pandemic started, everyone had to sit at the table, the tables had to be six feet apart, all that cornhole playing and just mingling around the bar went away, and it still hasn’t really come back,” he continued. “So we’re now over 50% food, just under 50% draft beer.”
The change has created a consumer behavior shift that extends beyond the lingering effects of the pandemic. However, draft still remains a key part of breweries’ business, particularly when trying to attract new consumers or introduce brands such as Holidaily, a dedicated gluten-free beer company.
“We’re a premium product – we sell in a 4-pack 12 oz., and it sells right around $12.99 to $13.99 on the shelf – and people are a little hesitant to spend that kind of money for 4-pack 12 oz.,” Hertz said. “So being able to buy a beer at a bar and confirm that there is really good gluten-free beer is really important to breweries like Holidaily.”
Additionally, draft beer provides better margins than packaged beer, and the loss of that business could in turn affect how breweries can maintain other aspects of their businesses, Hertz continued.
“If traffic goes away, a lot of breweries are not going to be able to keep up with the costs for cans, and boxes that are short, or lids, or all the things that go into these packaged products,” Hertz said.
With draft sales down, bars and restaurants are looking for more from their brewery and wholesaler partners than before, according to Nierling.
“For us and for any wholesaler, it’s incumbent upon us to add a value statement behind any draft keg we’re selling,” Nierling said. “I like to preach that there should be an ‘and’ statement behind everything that we as a sales team are projecting in the marketplace. We can tell you the story of the brewery, we can tell you the story of the brand, and then also how we as a distributor wholesaler partner are going to support that account.”
Bars and restaurants are also looking for more face-to-face contact with their wholesaler and brewery partners, a practice that was lost during the pandemic, Nierling said.
“I found a lot of retailers, we have to go back to old school, we have to teach them that you can make more money on a premium keg and walk them through the profit that they can make on that keg,” Nierling said. “But then also use the tools in your back pocket of kegs you may have in your portfolio that you can do some price programming on and go back and forth between the two. You really have to become a consultant in their business because people still buy from people.
“Honesty and transparency and good conversations with your buyers, which I think we got away from in COVID, need to happen again so that you can figure out their needs,” she continued. “You can figure out their wants and you can figure out where you fit in that space.”
Rewatch the full panel here to hear more from Hertz, Thibodeau and Nierling, including how they’re trying to reverse trends and bring consumers back to draft.