New Belgium will finish 2017 “flat to slightly up,” which newly appointed CEO Steve Fechheimer considers a victory in a crowded craft beer industry that has slowed to single-digit growth.
“In the context of what’s going on out there in the marketplace, I think it is a really good performance,” said Fechheimer, who was hired in July following the departure of former CEO Christine Perich nine months earlier.
After selling 958,000 barrels of beer in 2016, the Fort Collins-headquartered company, which also operates a production facility in Asheville, North Carolina, is setting a sales goal of outperforming the industry growth rate in 2018, Fechheimer said.
“This is unfortunately not a craft market that’s growing at 10 or 15 percent a year anymore,” he said. “We’re going to set up a target and a plan to make sure that we do gain share of a craft market that’s growing at 2 to 4 [percent].”
Hitting that goal would be another victory for Fechheimer, who is a “big believer in winning.” And to win in 2018, Fechheimer, the former chief strategy officer at Beam Suntory, is leaning in on his experience in the spirits industry.
According to Fechheimer, spirits have excelled at building brands, delivering consistent and quality products and investing in personnel to tell those brands’ stories. Those are areas where the beer industry can improve, Fechheimer said.
“I think I can help bridge that gap a little,” he added.
For New Belgium, that means painting a better picture of the company’s history of employee ownership, sustainability and quality products for consumers, Fechheimer said. It’s a message he believes resonates with millennial drinkers.
To amplify the message, New Belgium plans to increase its marketing spend in 2018. Fechheimer declined to share the marketing budget but said it would be “a pretty significant jump” from previous years.
“A lot of the incremental spend will go to reinvigorating, if you will, or telling that New Belgium story a little louder, a little more proudly than we’ve been doing in the past couple of years,” he said.
In addition to continuing to invest behind flagship offering Fat Tire Amber Ale, the company also plans to increase its marketing spend on several newer offerings, most notably the Fat Tire line extension, Belgian White, which launched in August. Fechheimer said there’s a lot of runaway for that brand in particular, which already has 34,000 off-premise points of distribution. He added that the company expects to secure additional placements as large chain accounts reset their shelves in early 2018.
“There are millions of barrels of Belgian White out there to go get,” Fechheimer said.
An increased focus push behind Belgian White doesn’t foretell a decrease in focus on the struggling Fat Tire flagship, however. According to market research firm IRI Worldwide, off-premise dollar sales for the original Fat Tire declined 10.4 percent while case sales dipped 12.5 percent during the first 11 months of 2017.
“Flagships across the industry are struggling right now, but I’m a big believer in continuing to invest in Fat Tire and bringing a new set of consumers into that brand and continuing to grow it,” Fechheimer said. “And I think the Belgian White innovation actually brings a lot of energy and excitement back to the Fat Tire brand as well and is a new way to bring consumers in.”
Other New Belgium core brands fared better this year. Voodoo Ranger IPA dollar sales increased 40.8 percent while case sales increased 39 percent, according to IRI. And the company said sales of Dayblazer surpassed $17.4 million in Nielsen’s U.S. grocery and convenience store universe.
Fechheimer said the company will look to build on those successes with the introduction of two new products. In January, the company will attempt to capitalize on the New England-style IPA trend with the release of Voodoo Ranger Juicy Haze, a 7.5 percent unfiltered IPA with tropical fruit aromas and citrus flavors. Then, in March, New Belgium will begin test marketing Mural, a 4.2 percent ABV ale inspired by the Mexican agua fresca tradition, in Colorado, North Carolina, Texas, Arizona and New Mexico. Fechheimer believes Mural has the potential to reach new consumers, including female drinkers.
“Frankly, my wife and all of her friends are excited about it, as we’ve done some sampling,” he said.
Meanwhile, New Belgium also plans to offer more “premium” specialty releases in the coming year after investing in a cork-and-cage bottling line. In late October, the company released the first beer off the line, La Folie Grand Reserve: Geisha Sour Ale, a blend of the popular sour beer and Panama Geisha coffee, which carried a retail price of $49.99.
“We are trying to better understand what is the consumer occasion and how do we get the right beer in front of the right consumer at the right purchase moment,” Fechheimer said.
In another premium play, New Belgium’s “specialty sales team” is focused on gaining on-premise placements in fine-dining restaurants for Sour Saison, a year-round, wood-aged beer that launched in August, Fechheimer said. Currently, the beer has 1,800 points of distribution, and Fechheimer believes the offering has the potential to reclaim some of the volume lost to spirits brands.
“Sour saison in those restaurants has a great role to play,” he said, adding that the beer “cuts through some of the noise” on cocktail menus. “That’s a way to win in the on-premise and introduce different consumers to New Belgium and what we’re doing with our wood-aged beer capabilities here.”
Additionally, New Belgium will enter 2018 with an eye on growing its retail presence. To that end, New Belgium’s influence on San Francisco’s Magnolia Brewing, which it purchased out of bankruptcy in August with former Elysian founder Dick Cantwell and Oud Beersel, will grow in the new year as the company installs a coolship and foeders in order to start a wood beer program, Fechheimer said.
Meanwhile, New Belgium’s Asheville production brewery will continue to help build the company’s presence on the East Coast. This year, more than 175,000 people visited the brewery, which Fechheimer called “a huge number for a place that is relatively new.”
Beyond San Francisco and Asheville, Fechheimer said New Belgium will dig deeper in its home state of Colorado. The company plans to open a long-awaited 10-barrel brewery at Denver’s The Source hotel during the second quarter of the year, as well as an outpost at Denver International Airport in July.
Although the company has built a national presence in all 50 states, it’s important to maintain a strong presence in its home markets, Fechheimer noted.
“Because we are national, we’re going to invest the money and the time and the attention to tell our story in our home state as well as we can,” he said.