MKTG Insights: Crafting A Strategy in the Beer Sponsor Landscape
Budweiser's $1 billion investment in an NFL partnership. Heineken's $70 million annual partnership with the UEFA Champions League. Molson Coors' $120 million sponsorship budget in 2013. The beer category has historically held a dominant position within the sponsorship landscape across all property genres. As a "companion" product, beer has a natural association with the social experiences and live events that are typically associated with the consumer experience related to the property being sponsored.
However, while the same properties that "Big Beer" has long been associated with have only grown in popularity and cultural importance - from professional sports leagues to prominent music festivals - the buying behaviour of beer consumers is facing a paradigm shift. Despite the mass marketing presence of Molson and Budweiser, it is the much smaller, independent craft beer brands that have marketplace momentum. Since 1995, overall beer sales in Canada have remained flat and have even decreased by 5% in the United States - however, craft beer sales have experienced double-digit revenue growth over the last three years.
There are a variety of market forces that have contributed to this shift - but it is primarily driven by the tastes and preferences of consumers and the role that brands play in their lives. Consumers have a poignant desire for brands that are storytellers and purpose driven; massive corporations can at times seem out of touch, while the value proposition of craft beer is more humanized:
- Sustainably made
- Locally relevant
- Brewed with care
- A story in every bottle
Given the importance of sponsorship in the overall marketing mix of beer brands, MKTG explores how the rise of craft beer can impact "Big Beer", craft beer brands themselves, and sponsorship properties.
CRAFT BEER BRANDS:
The challenge for craft beer against the massive budgets of larger beer brands is gaining awareness and favorability with mainstream consumers. However, even more so than their larger competitors, craft beer brands are values-based brands and sponsorship is ultimately a tangible expression of brand values to consumers. There are unique opportunities for craft beer brands to leverage sponsorship as part of the overall marketing mix to achieve those objectives. From a traditional sports property perspective, craft beer brands that are locally brewed and have a community footprint share an authentic connection with sports teams in that they both are homegrown entities. The same applies to community festivals and fairs. Boulevard Beer, long considered the beer of Kansas City, signed a 3-year sponsorship agreement with the K.C. Royals of the MLB in an effort to generate goodwill in the local community, inspire front-line workers, and wear its Kansas City roots as a badge of honor.
Tactically, there are a number of aspects unique to craft beer that can be exploited in the potential execution of sponsorships. From a social / digital perspective, the top beer brands on Twitter (in terms of engagement) are all craft brands. Smaller, more nimble brands with an established voice on social media can "out-brave" larger corporate brands to activate potential partnerships. Secondly, while Molson and Budweiser operate a saleable product / CPG model, craft beer brands that are micro-brewed often integrate a bricks and mortar location into the brand experience through activities like brewery tours. Sponsorships can be leveraged by craft beer brands to "drive to location" in a way that bigger brands cannot.
To meet consumer demand for craft beer, larger beer manufacturers have begun to roll out their own brands that are positioned as micro-brewed and craft (Labatt - Shock Top, Molson - Blue Moon) and have even placed them adjacent to independent brands at the beer and liquor store to earn the halo effect that more niche brands experience. Historically, beer sponsors in Canada and the U.S. have activated at the master-brand level, choosing to leverage assets to promote the broader corporate brand versus complimentary brands under the umbrella of a Molson or Budweiser. Should the demand for craft beer continue to outpace larger brands, Molson and Budweiser may seek to pass through a portion of their rights to a smaller/craft brand within their family of brands for sponsorship activation purposes, allowing the craft brand to gain the association with the property instead of (or in addition to) the larger brands within their family. This of course will require more in-depth analysis from both the sponsor and the property to ensure the right level of brand fit.
The beer category and pouring rights are one of the most lucrative sponsorship categories for properties to sell. As the beer industry is consolidated through M&A activity (Inbev purchased Anheuser-Busch, Miller and Coors became joint entity), the number of available companies that can bid for these rights has decreased, in some cases hurting revenue potential for properties, in others limiting the creativity that comes through competition. Properties can seek to widen their revenue potential in a way that authenticates their community ties by bringing additional craft brands into the mix as sponsors / suppliers. Properties can experience a positive brand transference impact by offering fans the option of a locally brewed beer. The Colorado Rockies of the MLB recently opened a dedicated craft beer bar which as 52 unique taps pouring craft beers. These sorts of product offerings not only act as a revenue stream for properties, but as value-add partners to the consumer experience.