Boulevard Hopes New High-End Offerings, Cans Will Boost Sales

In an effort to further establish itself in the high-end craft beer category, Kansas City’s Boulevard Brewing Co. will launch a new line of premium-priced beers in the third quarter of this year, Duvel USA executives told Brewbound.

The yet-to-be-named series will leverage Boulevard’s growing inventory of wooden barrels for aging, as well as its expertise in making unique sour offerings, such as the seasonally released Love Child sour ale.

“There’s a world of small brews, smaller ideas that we want to bring to the world,” Jeff Krum, the president of Duvel USA, which owns Boulevard, told Brewbound during a recent visit to the brewery.

The renewed focus on the high-end of the craft beer segment is part of Duvel Moortgat’s 2018 growth strategy — one that includes returning the Boulevard brand to growth after it declined slightly in 2017, to about 178,000 barrels. Although Boulevard’s overall volume dipped roughly 5 percent, Krum said revenues were “roughly flat.”

He attributed Boulevard’s volume declines to increased competition from more than 6,000 beer companies and sluggish sales of the company’s large-format, 750 mL bottles. To help turn around those trends, Boulevard has slowly redistributed about half of the 30,000 barrels it had been packaging in 750 mL bottles in 2014 to smaller-format bottles.

“Several years ago, we were patting ourselves on the back that Duvel USA — between Boulevard, Ommegang and our Belgian imports — was the single largest supplier/producer of 750 mL bottles in the country,” Krum said. “We’re not quite so proud of that anymore.”

Nevertheless, Krum said he believes there’s still a place for large-format bottles, especially as other brewers abandon them.

“We’re happy to pick up that volume,” he said. “ There are some beers that just demand to be in that format.”

From Left: Bobby Dykstra, Natalie Gershon and Jeff Krum

This year, Duvel is projecting “low-single-digit” volume and revenue growth, according to Bobby Dykstra, Duvel USA vice president of sales.

In order to drive that growth, Boulevard will position the new high-end product line to sell for more than the company’s existing Smokestack Series beers (Tank 7, Bourbon Barrel Quad, Whiskey Barrel Stout, etc.). Those offerings typically retail for $14.99 for either a 4- or 6-pack, Dykstra said.

The new line, however, will sell for $20 or more, and the beers will be offered in a variety of packaging formats, including 750 mL bottles, 4-packs and individual small bottles. The company previously dabbled in the $20 price range with Love Child.

“We have to become more relevant in the high-end,” Dykstra said. “We have to become relevant with the young drinking-age consumers. We’ve got to be cool. We’ve got to be new. We’ve got to hit the flavor profiles that they’re looking for.”

“I think we have the chance to create bigger dreamier, cooler next series,” Boulevard vice president of marketing Natalie Gershon added.

Krum said the new series is the next step in an “innovation loop” that began when the company opened its “Tours and Recreation Center” in 2016 and continued with an investment in a small-batch brewing system last year.

In recent months, Boulevard has been releasing a small-batch line of beers called “Brewhouse One,” which are sold directly to consumers at the Tours and Recreation Center. However, the new high-end series will be more widely distributed throughout Boulevard’s 40-state footprint, Gershon said.

“This is not something that we plan to flood the market with,” she said. “This will be something cool and a little bit hard to get, but it will be worth it.”

Dykstra said there are similar plans in place for Boulevard’s sister company in New York, Brewery Ommegang. A high-end line of beers is currently being developed, he said, and the company hopes to build off of momentum created by the recently released Double Barrel Dubbel.

Both new high-end product lines are part of a broader Duvel Moortgat strategy to grow revenue rather than volumes, Dykstra said. He added that Duvel will maintain its price integrity even as several other craft breweries discount or offer larger pack sizes at low prices.

“What did Hillary Clinton say? When they go low, we go high,” he said, recalling Clinton’s reference to the Michelle Obama quote. “I think that’s applicable in this situation.”

During a recent Brewers Association Power Hour presentation, industry consultant Bump Williams said premium pricing is “not a deterrent” for consumers. He added that the majority of craft growth is coming from the so-called “premium” ($40-$49.99 per case) and “super-premium” ($50-$59.99) price tiers. Although those tiers account for just 21 percent of the craft market, according to research firm IRI Worldwide, they made up three-quarters of the craft dollar growth last year.

Boulevard is also pinning its hopes on a $10 million canning line investment. The company, which introduced canned beers three years ago, had been outsourcing production of its canned offerings to California’s Firestone Walker, also owned by Duvel USA, as well as Minnesota’s Summit Brewing and Cold Spring Brewing Company. However, production at those facilities concluded in March.

Krum said cans now account for about 20 percent of the company’s total volume, and he anticipates a significant increase in volumes as the company begins releasing brand that were previously only available in bottles, including Boulevard Pale Ale, KC Pils, Hibiscus Gose and Berliner Weisse.

“I think cans someday could be the majority of our package business,” Dykstra added.

Among its core beers, Boulevard believes that Jam Band, a fruit ale initially launched as a draft-only release last year that is now in wider distribution, will be its best-selling new beer in 2018, Gershon said.

“Anecdotally, it’s been really great to see day one, 80 cases go into a store and 24 hours later there’s 20 left on the floor,” Gershon said.

The growth of Jam Band could offset losses from flagship Unfiltered Wheat. Dykstra said sales of the company’s mainstay product had been flat for several years, but recently started to decline in the mid-single digits. Nevertheless, he believes 6-pack cans could help stabilize the brand, which is important since Wheat, along with Tank 7, account for 50 percent of the brewery’s total volume.

“We think that many of our established brands have opportunities to continue to help build our business,” Krum added.

Currently, Boulevard holds a 9.4 percent share of the total beer market in Kansas City, according to Krum, who believes there’s still opportunity to grow in its own backyard.

In an effort to grow sales Kansas City, Boulevard expanded upon its existing sponsorship of the Kansas City Royals. Before the start of the Major League Baseball season, the company erected a 34-foot Boulevard smokestack in the outfield stands at Kauffman Stadium, where the Royals play, and released Vamos, a Mexican-style lager that uses the Royals branding.

“I don’t see us growing 20 percent in any given year,” Krum said, “but we believe we will continue to grow steadily, and see no reason why our market share shouldn’t one day be double what it is today.”

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