New Belgium Brewing Marketing Strategy to Expand free essay sample

New entries to brewing have a relative ease in creating home micro-breweries, which is aided by the simplicity of the brewing process. Micro-breweries are measured as producing less than 15,000 barrels of beer per year with 75% or more of the beer sold off-site. However, in order to mass produce beers to competitive market levels, more expensive technologies are needed. This provides some protection to established firms in the industry. In addition, the expert knowledge of the brew-masters in the established firms takes years of hands-on experience to acquire, knowledge which is not readily available to most new entrants.The bargaining power in the industry belongs to the customers due to the variety of craft beers throughout the country and specialty, regional beers. Substitutes for beer include liquors, wines, sodas, teas, juices, and sports drinks. The wide variety of alternative options for consumers is a general threat to the brewing industry. Supplies are generally bought by brewers, with New Belgium providing an example by getting their raw malt materials from the United States and Canada, hops from the Pacific Northwest, and packaging material from Colorado. We will write a custom essay sample on New Belgium Brewing Marketing Strategy to Expand or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Then the rivalries within the industry are pretty intense, with the three major players in the domestic market (Budweiser, Miller, Coors), mid-major players (Sam Adams New Belgium) and the craft/homemade breweries. At any level, a brewing company will have heated competition for consumers. The brewing industry remains to be an attractive industry for the owners to invest in because of the worldwide appeal of the product, the longevity of beer’s position as a beverage for humanity, and the United States’ cultural inclusion of beers.New Belgium has found a niche for higher-quality, craft brewing. In addition, the demand for these specially made craft brews have increased despite an overall decline in beer sales in the United States. Growth of the craft brewing industry in 2010 was 11% by volume and 12% by dollars compared to growth in 2009 of 7. 2% by volume and 10. 3% by dollars. Overall, U. S. beer sales were down an estimated 1. 0% by volume in 2010. New Belgium states that they opened distribution in six new states in 2009, and increased production by 15%, despite the declining economic climate.Thus craft brewers, like New Belgium, are a threat to the established powers of the beer industry, the Big Three (Bud, Coors, Miller). Craft Beer Sales Growth BEFORE 2010 New Belgium ought to be more aggressive in their desire for growth. The intense rivalry of specifically craft-breweries, not to mention the beer industry as a whole, demands aggressive growth policies. With the continued growth of craft breweries in the domestic market, New Belgium has the potential to gain market share with their mass-production capabilities already in place, and their niche as a specialty, craft beer.Particularly, they must be more aggressive in their marketing campaign. Facebook and Twitter are essential to any Internet advertising campaign for a company nowadays. New Belgium has been proficient in gaining attention through Facebook, as the numbers of â€Å"likes† for New Belgium Brewery’s Facebook has grown from 63,000 in 2010 to its current number of 179,714 (as of June 27, 2011). The brewery’s Twitter account currently has 27,415 followers, and then the company is following well over 15,000 of their customers and other businesses in the area.These connections give them a huge opportunity to communicate directly with consumers. In order to maximize this opportunity, they should promote their existing events like the Tour de Fat bike race and beer festivals across the country. New Belgium should also open a second brewery in the eastern half of the United States to accommodate more growth into uncharted territories. Putting the new brewery in an already established eastern market like Indiana would allow New Belgium to solidif y their hold on current markets while giving them the potential to grow into neighboring territories. Introduction to the Northeast is critically important because as of now they are ceding the whole region to rival competitors like Samuel Adams. The pluses to this second brewery include additional capacity for production of beers, wider reach of distribution, and ultimately higher sales due the territorial growth. The minuses include a possible loss of company culture at the new brewery due to its distance from Fort Collins. Another minus would be the loyalty current consumers have for regional craft beers already in the market. However these minuses can be addressed by implementing a couple different measures.First, in order to acquaint New Belgium products into new markets, the company should employ a specialized sales team that will go into local bars and pubs and buy New Belgium products for locals. This will begin the grassroots campaign which New Belgium has thrived upon throughout their history. In order to keep the company culture in the new eastern brewery, the co-founders Jeff and Kim Lebesch should be sent to head the new branch. Because the culture and values are already entrenched in the Colorado brewery, the New Belgium culture would be more easily maintained there without the founders being present.Then the founders could personally oversee the implementation of the culture in the new branch. The market positioning of a product is characterized by its pricing, quality, service, distribution, and packaging. For the Fat Tire Ale is the flagship beer of the New Belgium Brewery. It is priced competitively with other specialty beers in the industry, with a bottled 12-pack sold for $13. 99. This makes it less expensive than imported beers, but more expensive than mass-produced products of the Big Three. New Belgium considers it â€Å"one f the most affordable luxuries around†. This also implies that the quality of Fat Tire is superior to its competition. New Belgium assures the quality of its beers by using suppliers who meet their expectation according to the criteria of quality, sustainable practices of the company, supplier support and price. Having these expectations ensure that the highest quality materials are used to go into their brands, Fat Tire included. Service-wise, they do not ship beers to individual vendors, but only to distributors and retailers of beers.The sustainability practice of New Belgium illustrates how they serve their community and the environment, which then appeals to community-conscious consumers. In distribution, New Belgium currently supplies Fat Tire in 26 states as of 2010 and plan on expanding it into additional states in 2011. Consumers can access it from alcohol retailers, in local pubs and bars, or straight from the brewery in Fort Collins, Colorado. Fat Tire’s packaging is central to New Belgium’s marketing efforts, as the bike featured on Fat Tire bottles is now part of the official company logo.The bicycle image is meant to convey New Belgium’s â€Å"whimsical approach to business, the history of [the company’s] beginnings, and their emphasis on sustainability. † The design of the label on the beer gives a vintage and rustic look to Fat Tire, which appeals to its inspiration from the bike trails of Belgium. In addition, the bottles are all made in Colorado for New Belgium, which is in line with the company’s pledge to support the local community. One recommendation for the Fat Tire brand is to elevate its marketing to a mor e mainstream level. This would push Fat Tire from simply being a craft beer with a strong cult following, to a top-tier, household-name brand. This would entail more traditional marketing endeavors such television and magazine ads, as well as a greater Internet presence through advertisements. The advertisements would focus on the story behind the Fat Tire and its superior quality compared the mass-produced beers of the Big Three. The pluses to this sort of re-positioning would include initiating the marketing push into the mind of the average consumer, thus creating opportunity for similar growth with other brands.The minus to this would be if they miss the mark on their marketing campaign, then their loyal followers could be turned away from the Fat Tire brand, thinking that the company has lost touch with its roots. An interesting note would be the question of how competitors would react to a mainstream Fat Tire. Competitors could either anticipate a successful New Belgium launch and react accordingl y, or try to stomp out the mainstreaming efforts of New Belgium to keep them in their current place in the market. New Belgium appeals more to the consumer customer in their marketing focus.They list their core audience and target market as â€Å"craft beer drinkers†¦college educated, more affluent than the average beer drinker, and in their career years (30-50 years old). † Additional markets that New Belgium appeals to include â€Å"fans of Belgian style brews, folks who admire the Colorado lifestyle, and people with more socially aware buying habits. † In this, they can try to focus their marketing efforts towards these particular people then allow them to spread the word about New Belgium to other segments of the market.New Belgium’s transactional customers include smaller bars and pubs, and alcohol retailers within their distribution areas. Typically, New Belgium targets retailers who support the â€Å"slow food movement† and other sustainable practices in line with New Belgium ideals. The marketing program at New Belgium is currently based on mostly grassro ots efforts, with some additional online support through Facebook and Twitter. They generally do not advertise strongly in television or print media such as magazines as of now.They heavily promote company events, beer festivals and their annual Tour de Fat bicycle race. In order to become more competitive and stand out from the competition, they must more aggressively market their products to the consumer. We recommend that New Belgium host a second Tour de Fat bike race in the Eastern United States, where New Belgium has yet to expand to. The Appalachian Mountains provide a similar environmental backdrop to the race, which would be ideal in expanding the company’s sustainability principles to the new markets.The pluses to this include expansion into new markets and the continuation to spreading their core values and culture to communities in the area. The minus is the relative lack of brand recognition in the area, thus increasing the risk of an unsuccessful turn-out for the event. It would be interesting to see if the people of Appalachia are as environmentally conscious as those from the Rocky Mountain area where New Belgium comes from. In order to broaden the base and accessibility of the New Belgium brands, in is essential for marketing to play a greater role in the company than it currently does.This expansion would require television exposure, print advertisements in environmentally-conscious magazines, and expanded usage of the Facebook and Twitter platforms. In television, they reach many more target consumers. Their target consumers (ages 30-50) watch TV on average 4 hours in a 24 hour span, and having these advertisements would put their brands on the consumers’ minds. The magazine ads would be effective because they could pick and choose which magazines to place ads, which focuses on readers who are active and environmentally minded.Then the internet resources of Facebook and Twitter ought to include contests and giveaways for followers of Ne w Belgium. For instance, New Belgium could host a â€Å"Green Project Contest† in which Twitter followers can tweet green project ideas to support and maintain ecosystems, and then New Belgium would award the winner $10,000 to implement their project idea. This would both advertise New Belgium commitment to sustainability and boost the traffic to their Twitter page.The pluses of the television campaign include more exposure to consumers and additional legitimacy to their brand name. The repetition of the ads would also drive the brand name into the consciousness of the consumer mind. The minus of the television ads would the relative high costs of putting it on air as well as creating the commercial, which needs to coincide with the core values and ideals of the company. The pluses of the magazine are the choice of magazine in which to place ads as well as spreading the detailed imagery of the New Belgium brand.The minuses include a possible contradiction to the environmental ideals by using additional paper to promote their ‘sustainable’ measures. The pluses of the internet campaign include encouraging interaction with consumers to post or ‘tweet’ their experiences with New Belgium and their products. The Green Project Contest would add to their sustainability efforts while at the same time promoting the brand. The minus of these internet efforts would possible over-exposure to loyal followers and the uncontrollable variables of the internet.