Innovation, New Products Highlight Sierra Nevada’s 2014 Strategy

Sierra Nevada Brewing had planned to brew one million barrels in 2013. The company had also planned to open its new brewery in North Carolina and grow production more than four percent.

It’ll have to wait a little while.

Sierra Nevada sold 985,000 barrels in 2013 — just shy of the one-million it was hoping for — as growth was stunted by capacity constraints at Sierra’s home base in Chico, Calif.

The company could be shipping beer from its new East Coast facility in Mills River N.C. as early as next month, but Joe Whitney, the company’s national sales director, isn’t holding his breath.

“This afternoon would be good,” he said jokingly, when asked about the timeline.

Despite the slower-than-expected growth in 2013, there were plenty of bright spots for the country’s second-largest craft brewery, which still boasts the top-selling pale ale and India Pale Ale brands (Pale Ale and Torpedo Extra IPA).

Dollar sales for flagship Sierra Nevada Pale Ale were up 9.8 percent, to more than $112 million, in IRI’s multi-outlet and convenience store universe.

“I think there is a lot equity in Sierra Nevada and Pale Ale in particular,” said Whitney. “There is so much selection out there. People are trying new things like crazy and when they get reminded of Pale Ale, it is a warm, fond memory.”

Meanwhile, dollar sales of Torpedo were up nearly 25 percent to $42.8 million.

Much of the growth for both brands came from cans, Whitney said. Pale Ale cans enjoyed considerable growth in C-stores – dollar sales of 12-packs were up 90.8 percent. But that growth may have come at the expense of Sierra’s bottled 12-packs, dollar sales for which were actually down 2.1 percent in the channel.

Sierra — which will roll out four-packs of 16 oz. Pale Ale cans next month — said its not worried about cannibalizing bottle sales.

“There could be some retailers that switched out one package for the other, but my sense is that they were side by side and maybe the C-store customer slightly preferred cans,” said Whitney. “We were worried about Torpedo cannibalizing sales of Pale Ale in year one and we were delightfully surprised when there was nothing in the data that supported that.”

Nonetheless, the company plans to place a greater focus on penetrating deeper into C-stores in 2014, which brewery founder Ken Grossman described as a particularly “tough nut to crack.”

“We have a big opportunity for the four-packs,” said Whitney. “As a company, we have underperformed in that channel. We have the number one selling brand in C-stores, yet our distribution isn’t to the levels of Sam Adams.”

But Sierra’s got more than just a four-pack and a C-store strategy up its sleeve in 2014. The company is projecting between 10-12 percent growth in 2014 and will look to brew 1.1 million barrels.

To get there, Whitney said the brewery is focusing on innovation. So, after holding out for more than 30 years, the brewery will finally introduce its first variety 12-pack.

“We have avoided it about as long as we can,” said Whitney. “We’ve been beat up by every national account in the country for not having them. We used to be able to use capacity as an excuse — which was true — but with the additional capacity coming online it is hard to tell these guys no at this point.”

Whitney was quick to point out that, in IRI scans, Sierra owns the number one IPA and Pale Ale SKUs as well as the number two seasonal SKU.

“Variety is the only piece we are missing,” said Whitney. “Now that we have finally made the commitment to jump into it, we are going all-in. We’ll be rotating them seasonally and placing new beers that aren’t available in the market yet as a way of saying ‘sorry we are late to the party, but here are three new beers to try.”

First up is the brewery’s “Four Way IPA” pack, complete with Torpedo and three never before released IPA variants: Blindfold Black IPA, Snow White and the Seven Dwarf Hops (a white IPA) and Nooner Session IPA.

Fall and Winter variety packs are also in the works and every pack will carry a suggested retail price between $17.99 and $18.99, said Whitney.

“We expect that to be a primary volume driver from a new product perspective,” he said.

At the same time, Sierra plans to expanded its innovation opportunities by growing production of its barrel-aged offerings and creating a “regular program,” Whitney said.

“We’ve made lots of barrel-aged beers in the past, but we never really had a place to put them,” he said. “This year will be the first year that we have made barrel-aged offerings more commercially available. There will be 300-600 barrels, depending upon the offering, in the market marketplace.”

The program will commence in the Fall, with the release of a barrel-aged version of Sierra’s Narwhal Imperial Stout. Whitney said the brewery also plans to release a barrel-aged version of Bigfoot Barleywine in the Winter as well as a third offering, likely from the company’s Trappist-inspired Ovilla series.

That’s not all. Whitney said the company plans to introduce even more hop-forward offerings and has created the “Single, Fresh, Wet and Wild” series.

The series features five different beers, including two single-hop offerings, a fresh hop ale, a wet hop ale and an offering brewed with wild neomexicana hops grown in New Mexico.

“Our DNA is beer,” said Whitney. “The way we tell our story and communicate it with our drinkers is through new product offerings. It’s more for the beer geek and we go to some great lengths to make these products.”

If a barrage of new product introductions and the opening of a new brewery wasn’t enough, Whitney said the company is also investing upwards of $1 million to execute its “Beer Camp Across America” beer festivals.

The multi-weekend beer festival tour will coincide with the release of Sierra’s ultimate variety pack – which features 12 different collaboratively brewed beers.

“It’s a focal point in 2014,” he said. “That is the biggest thing we are doing and where most of our energy is going. It’s our biggest undertaking ever…it’s going to be a fun year.”

Brewery: Sierra Nevada Brewing Co Website: http://www.sierranevada.com
Address: 1075 E 20th St
Chico, CA 95928-6722
United States