Microbreweries put ads in mix Beer: Out-of-state competition is forcing microbreweries to devote more energy to advertising and marketing.

September 23, 1997|By Cheryl Lu-Lien Tan | Cheryl Lu-Lien Tan,SUN STAFF

It used to be that all Mike Jaeger had to worry about was brewing good beer -- lots of it.

Four years ago, Oxford Brewing Co. of Linthicum "couldn't brew enough" of its trademark raspberry wheat beer, said Jaeger, its general manager. But two years ago, with a burst of competition from out-of-state breweries, Oxford's sales leveled, then dipped about 10 percent.

Until then, Maryland's eight microbreweries, which began popping up in the late 1980s, didn't have to think much about advertising and marketing.

Bud Hensgen, executive director of the Mid-Atlantic Association of Craft Brewers, an Arlington, Va.-based trade organization that represents 28 microbreweries in the region, said recent competition from several microbrewers doing nationwide marketing has prompted liquor stores and bars to become more selective. They're dropping less popular brews.

Local craft brewers who have seen sales level out are responding by turning to advertising, hiring employees to do bar-to-bar sales pitches and developing interesting new beers to make a mark with, said David Edgar, director of the Institute for Brewing Studies in Boulder, Colo.

"There was a period for most of these breweries when all they had to do was brew the beer and answer the phone to take orders because of word of mouth taking care of their advertising needs," Edgar said.

"Then a lot of breweries found that the phone wasn't ringing any more. Instead of just answering the phone, they had to start picking up the phone and making the calls and devoting much more time, money and effort to creating sales. It drives their profitability down."

At the height of microbreweries' success in 1995, four of the top companies -- Boston Beer Co., Palo Alto, Calif.-based Pete's Wicked Ale, Seattle-based Redhook Ale Brewery and Kalama, Wash.-based Pyramid Ales -- went public with sales growth rates of between 34 and 91 percent, Edgar said. The next year, the numbers ranged between 4 and 45 percent, he said.

The highest number of microbrewery closures also occurred last year, and Edgar predicts the trend could intensify.

These negative figures drove Oxford Brewing Co.'s Jaeger to pour thousands of dollars last year into advertising -- on which he said he spent "almost zero" dollars two years ago. He also hired a salesman to promote the company's product in bars and liquor stores in the region.

Wild Goose Brewery in Cambridge introduced discounted 12-packs of its flagship amber beer last year to attract sales, said Ryan Yost, the company's vice president of finance.

Kevin Brannon, chairman and chief executive officer of Frederick Brewing Co. in Frederick, said the company introduced its much-touted Hempen Ale -- North America's first beer brewed with hemp seeds -- in May as a way to fight the increased competition.

Thanks to the beer, Brannon expects sales this year to be almost triple last year's $1.8 million. Frederick Brewing's beer -- previously sold only in Maryland and a few neighboring states -- now is shipped to 21 states.

Frederick Brewing announced yesterday that it is increasing its capacity by 80 percent this year. The company also has hired about a dozen salespeople to pitch the beer across the country and has been aggressively advertising in publications and on the radio.

Hempen Ale's success "also has made it easier for us to get distribution for [our other beers] in new markets," Brannon said. "We've told salespeople, 'If you want Hempen Ale, here, you can have this but you've got to commit on doing this kind of work for our Blue Ridge [beer] as well.' "

The problem with these efforts is that consumers may be tiring of the fruit and novelty beers that keep coming up. Ron Furman, owner of Max's on Broadway in Fells Point, which has 47 microbrews on tap and more than 100 in bottles, said drinkers have become more experienced.

"In the old days, they would go, 'Wow! Look at all the beers, dude,' " Furman said. "Nowadays, they're looking at the list and going, 'Had that, had that, had that.' "

Hensgen said more people are settling on the beers they like and developing brand loyalty.

"There were an awful lot of people who had never tasted lagers, pilsners, stouts, porters, wheat beers, fruit beers, and they were curious about what these were," Hensgen said. "There are a lot of people who've been through them and now they're saying, 'Now, I'm going to settle for these three or four styles that I like.' "

Even so, Hensgen said he thinks Maryland brewers will do just fine in keeping regional sales up -- especially in Baltimore.

"Of any city in our region, Baltimore is the one that has strongest brand loyalty," he said. "The citizen of Baltimore is different from the citizen of the D.C. area, where there are constantly people coming and going.

"There seems to be a traditional city base, a strong cultural identity as a Baltimorean and [people] want that city identity, they want that local flavor, they want that local brewery."

Pub Date: 9/23/97

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