Know thy enemy. If you’re a brewery trying to make it in today’s crowded alcohol marketplace, that means understanding the strategies that wine and spirits brands have used to snatch 10 percent of total U.S. alcohol shipments away from the beer category over the last 20 years.
For many beer industry stakeholders, addressing the “threat” of wine and spirits is a top priority, and executives at companies as large as Anheuser-Busch InBev and as small as Flying Dog Brewery have all vocalized their concerns about the continued loss of share to non-beer brands.
Just this week, MillerCoors CEO Gavin Hattersley addressed a room full of beer executives attending the annual Beer Institute meeting in San Diego, specifically calling out wine and spirits as a “common enemy.”
If that’s the case, Monday’s hiring announcement from New Belgium Brewing appears to be at least partially aimed at clawing back some of the market share breweries have lost to spirits brands in particular.
The Fort Collins, Colo.-headquartered company — known as much for its iconic Fat Tire Amber Ale as it is for sustainability, philanthropy and a 100 percent employee ownership structure – named Steve Fechheimer, the former chief strategy officer at Beam Suntory, a subsidiary of Japan’s Suntory Holdings, as its next CEO.
Beam Suntory makes a bevy of popular liquor brands, including Jim Beam, Maker’s Mark, Sauza Tequila and Effen Vodka, among others.
In an interview with Brewbound, New Belgium founder Kim Jordan, who spent nine months trying to identify a new CEO, said her company was interested in Fechheimer’s combination of “experience and drive,” and attracted to his exposure with high-end alcohol brands.
“We’re always working to increase our share – whether that is from spirits or big beer,” she said. “Did we hire him thinking that we would be able to focus on the spirits category and get some share there? No. But what he has learned, related to all types of legal drinking-age customers, will be really useful.”
Next month, Fechheimer will officially take the reigns from Jordan, who originally stepped down as the company’s top executive in late 2015 but had recently been leading the organization following the departure of her successor, Christine Perich, last October.
Fechheimer is joining the company at a pivotal time: Two key executives – vice president of marketing Ruairi Twomey (who left for UK grocer Tesco) and brewmaster Peter Bouckaert (who is launching a small craft brewery) – are on their way out the door just as New Belgium has established itself as a truly national craft beer brand with large-scale brewing facilities in Colorado and North Carolina.
Jordan contends that those departures, as well as Perich’s exit, which she characterized as a “surprise,” are not symptomatic of key leadership wanting to fly the nest.
“Each one is very different,” she argued. “It’s not quite the pattern that I can imagine one might assume it is.”
But a recent Forbes profile painted a slightly different picture. According to the outlet, employee turnover has “doubled,” to 10 percent (over the last 12 months), at a time when “more people question whether New Belgium is still a special place to work.”
When asked if the recent departures were disruptive to day-to-day operations, Jordan rejected the notion and pointed instead to a team of recruiters who are specifically tasked with finding top-level executives to join the company.
“It is a general human condition that change makes us feel nervous,” she said. “We have talked, a lot, with people about how organizations evolve. Just like biological systems evolve, so do organizations. In most cases, this provides opportunity and new, fresh thinking.”
Fresh thinking is exactly what Jordan is hoping Fechheimer will bring to New Belgium, where he will be tasked with sharpening the company’s marketplace strategies and “figuring out how to express the brand,” she said.
He’ll also need to navigate New Belgium through a crowded craft beer segment that now includes more than 5,400 companies while helping the company identify new growth opportunities at a time when sales of craft beer at U.S. grocery stores are up just 1.4 percent through June 11, according to retail data from research firm IRI Worldwide.
“That’s priority number one – continue to grow the value of the business,” she said.
And how will a clean-cut liquor executive from the greater Chicago area mesh with New Belgium’s laid-back group of bearded brewers in the small town of Fort Collins?
“We don’t need a cookie cutter copy of some hipster brewer type,” she told Brewbound. “I think for us, where the culture piece really comes into play, is how a person feels about things like open book management, a high-involvement culture, employee ownership, philanthropy and celebrating the bicycle.”
The upside for Fechheimer is that he is joining an established craft brewery that, unlike other similarly-sized outfits, is growing faster than the category. Off-premise sales of New Belgium beer are up 5.7 percent through June 11, according to IRI.
According to Jordan, New Belgium’s “Voodoo Ranger” portfolio — which includes an IPA, an imperial IPA and an “8 hop pale ale” — is “doing really well,” and Dayblazer, the company’s 4.8 percent golden ale, is “picking up momentum” as the company’s secures new points of distribution.
“Our core portfolio is generally doing well,” she said.