While implementing a direct-to-consumer (DTC) shipping program at breweries is anything but easy, participants during the Brewers Association’s (BA) Collab Hour last week agreed that the benefits far outweigh the costs.
Sandra Hess — founder of the DTC Consultant Network and DTC Wine Workshops — facilitated “Direct to Consumer Strategies for Any Size Brewery,” which featured panelists Kevin Darst, DTC manager at Fort Collins, Colorado-based New Belgium Brewing; Matthew Juaire, co-founder and COO of Tampa, Florida-based Bay Cannon Beer Co.; and Paul Reiter, co-founder and CEO of Portland, Oregon-based Great Notion Brewing.
“This whole thing’s [cost] way over a million at this point,” Reiter said of Great Notion’s DTC program. “Because there’s a lot of integrations you’re gonna have to do behind the scenes: integrate with your inventory management system, POS systems. If a customer buys online, can they can pick up at this pub? But what if you have five pubs where they’re gonna pick it up from that? Where’s the inventory pulling from for shipping? Where’s it pulling from for delivery?”
The investment was vital for Great Notion, which relies on DTC shipping for 90% of its sales, the majority of which are ordered through its proprietary app. The brewery added California to its distribution map this week, which also includes Oregon, Washington, New Hampshire, Vermont, Kentucky, North Dakota, Pennsylvania, Ohio, Nebraska, Virginia, Alaska and Washington, D.C. Great Notion also offers expanded delivery in Portland, Seattle and Sacramento through a partnership with DoorDash.
“We tried to do local delivery ourselves, but it’s a lot of work. So then we went with DoorDash,” Reiter said. “And you can private label it so people don’t really know it’s DoorDash. Basically, [consumers are] buying stuff through our app, but DoorDash will bring it to your house if you’re within a 10-mile radius of any of our taprooms.”
According to a DTC beer shipping report released by the BA and Sovos ShipCompliant in March, 73% of regular craft beer drinkers’ interest in purchasing craft beer via DTC shipping has increased during the COVID-19 pandemic. Breweries seem eager to answer the call, with 70% of brewery respondents to the Sovos survey saying they would consider DTC shipping if it were legal in their state.
For those breweries hoping to start shipping to consumers, the panelists agreed that breweries have to find a network to buy their products.
“Find a way to capture emails, whether those are through your internet capture portal, on your receipts, raffles, any way that you can ascertain that information to help you put a list together,” Matthew Juaire said.
Bay Cannon distributes its beer throughout its home state of Florida, as well as North Carolina, Louisiana, Virginia, and Washington, D.C. Juaire said the pandemic forced the brewery to quickly change taproom growth plans and focus on DTC shipping. He emphasized the importance of building a list of potential consumers to promote e-commerce sales to, not only to expand potential sales, but also gather as much feedback as possible on how a brewery’s DTC system works.
“Setting expectations is key.” Juaire added. “Especially now. We just happen to be in this era where there’s 150 ships just chilling out in the water around the country. People will understand if you take the time to have the conversation with them.”
Sandra Hess, who speaks globally about DTC strategies for wine, agreed that obtaining data from potential consumers is critical to building a DTC network. However, she warned that the key to successful e-commerce marketing is not abusing consumer contacts, but rather making contact that encourages reengagement.
“One of our proven models in the last eight years in the direct-to-consumer wine space, is to stay focused on the reengagement strategies of collecting consumer data to then provide meaningful invitations to reengage,” she said. “So while I think we talked about the importance of a name and email to begin with, we start to then obtain ship-to data — addresses, phone numbers, etc. as time goes on.
“A word of caution: Always be meaningful with how you use that consumer data to invite back so don’t get spammy. Don’t get carried away with collecting too much information,” Hess continued. “My word of wisdom there is to always make sure that when you do obtain consumer data for the purpose of inviting back, the first outreach — whether that be a text, an email [or a] social media instant message — that it be really genuine and that the invitation back be meaningful and relevant in this competitive space.”
Engagement with consumers using DTC shipping can be not only vital to a brewery’s e-commerce success, but its overall sales, Kevin Darst said. At New Belgium, Darst helps run the brewery’s membership-based DTC shipping program, Cellar Club Direct. The membership offers monthly shipments to consumers featuring exclusive brews.
“We get a really firsthand look 24/7 at what people think about not only the liquid, but about the brand, about the experience they’re having,” Darst said. “We do monthly surveys, we’ve done some focus groups as part of that, just to really understand, what do you like about this? What do you not like about it? And then we use that to constantly change the program.”
The program has 300 members across Fort Collins and Asheville, requiring production of about one 110-barrel batch of beer a month. Based on consumer feedback, New Belgium is increasing the number of offerings it produces for the club from 12 a year to 39 next year.
“We’re a big brewer and one of the ways we look at DTC is how do we come back and show people that we still are super innovative, we still make super awesome beer,” Darst said. “Not everything from us is Fat Tire and Voodoo Ranger, which are fantastic beers. But, in the localized world here, what else can we do to just remind people [we’ve been] doing this for 30 years, there’s a reason: we make really great liquid.”
Not everyone in the industry and beyond is supportive of DTC shipping. Legislators recently revoked DTC allowances in Nevada, and distributors have been outspoken of their belief that DTC could threaten the three-tier system.
“We went to distributors ahead of going into these markets and said, we want to do this, here’s what we want to do, we’re not going to sell any core brands, like we’re not selling Flat Tire or Voodoo Ranger, this is all super small batch stuff,” Darst said. “There are distributors who are still not really fully on board with this yet. And I think that will change over time.”
“There is a way to play nice in the same sandbox,” Hess added. “From a DTC perspective, as a producer, it’s important to come out of the gate with the plan and how you’re going to better serve that distributor relationship, those distributor reps with meaningful data from the direct to consumer side.”
There are numerous factors that beer producers need to consider that wine producers do not, such as temperature controls and refermentation. Extra measures for these factors create add shipping and packaging costs. However, all panelists agreed that trial and error is necessary to enter this evolving space.
“Regardless of what kind of volume or whatever you want to do with [DTC], I think you need to be testing and learning, because this is going to happen.” Darst said. “It might take a while, it’s probably not going to happen tomorrow, but it’s going to happen. So I would definitely be testing and learning.”