Unlike most craft breweries whose businesses thrive in the spring and summer months, Great Lakes Brewing Company’s sales pick up in the second half of the year.
Speaking to Brewbound, CEO Mark King and COO Steven Pauwels told Brewbound they’re preparing for a big fall and winter driven by seasonal releases Oktoberfest (out now) and Christmas Ale (releasing in late October).
“We think we’re set to have a really really good fall and Q4 because of the strength of those brands,” King said.
The ramp up started this month with Oktoberfest hitting retailers August 1. But the main focus for Great Lakes’ back half of the year hinges on Christmas Ale.
“Christmas Ale is such a monster and such a big opportunity,” King said. “We have to maximize that brand in the back half of the year. It’s too meaningful to the overall organization.”
In 2021, Christmas Ale was the top-selling craft brand in Ohio from November through December, posting more than $3.8 million in dollar sales, according to IRI data shared by King. The brand was four times bigger than the No. 2 craft brand during that stretch.
In total U.S. scans tracked by IRI, the brand was the 12th largest craft brand during that period, even though the brand is only sold in 14 states, King added.
“Even though it’s only a 15% distribution and its dollars per point of distribution are three times bigger than anybody else’s,” he said. “That’s how big it is, how important it is to Great Lakes.”
Last year, Christmas Ale was sold in cans for the first time — 12 oz. 6-packs, 12 oz. 12-packs, 16 oz. single-serves — in addition to bottles (6- and 12-packs) and draft. This year, the brand will receive an outer cardboard packaging refresh, moving from plain cardboard to full color for retail displays, as well as a club pack, King said. The company previewed the release with a special draft drop for a “Christmas Ale in July” event at Progressive Field with Major League Baseball’s Cleveland Guardians.
The success of Christmas Ale in the latter half of the year makes Great Lakes a bit of a beer business anomaly. Its “slowest times of the year” are in the spring and summer, King explained. This fact has led King and Steven Pauwels, who joined the company as COO in March after 22 years with Boulevard Brewing Company, to focus on plugging those holes and filling out Great Lakes’ IPA portfolio.
“We have to find the right portfolio additions and package mixes to sell basically between St. Patrick’s Day and Labor Day,” King admitted.
“It took me a while to wrap my head around that because I’ve never been to a brewery that had that problem,” Pauwels added. “To me, there’s a lot of opportunity there because that’s just basically an open door that we just need to walk into with good products.”
Great Lakes made strides in 2021. King said the 34-year-old brewery innovated more than at any time in its history. The result: 127,835 barrels of beer, a +21% increase year-over-year, ranking Great Lakes as the 19th largest Brewers Association-defined craft brewery in volume.
Those efforts focused on filling the holes in Great Lakes’ IPA portfolio, with brands such as Tropicoastal Tropical IPA, Hazecraft IPA and the Imperial IPA series.
“We got to make sure we’re getting our piece of that imperial IPA business, then American and hazy and tropical,” King said. “They all serve a different purpose. Two years ago, we only had one IPA; it was an English IPA in bottles. That means that we competed for less than 1% of the IPA category. So we’ve had to fix that.
“IPAs are 60% of off-premise craft consumption, and it was only single digits of our portfolio,” he continued. “Now, they’re about 30% of our portfolio.”
Great Lakes also entered the better-for-you space with Crushworthy low-calorie citrus wheat, which King said became the top-selling low-calorie craft brand in Ohio in 2021. In Year Two of Crushworthy, Great Lakes found itself in competition with several other Midwestern craft breweries that launched citrus wheat beers, King said.
“We got a good head start on everybody, and it’s still selling a bunch,” he said. The brand has also received a boost from the addition of a summer seasonal variety pack, with four flavors — original, watermelon, lemon lime, and grapefruit — that has “done really, really well at retail.”
The company also transitioned the majority of its offerings from bottles into cans, with the exception of legacy brands Dortmunder Gold, Eliot Ness amber ale, and Edmund Fitzgerald Porter. Those classic offerings grew last year for the first time in seven years, King said.
In fact, Great Lakes is cycling “the biggest off-premise year in the company’s history” in 2021, King said. Up against those tough comps, Great Lakes is currently tracking at down about 6-7%.
“We’re way better than we were pre-pandemic, but we’re still trending better than overall craft right now,” King said. “But we’d still like to be doing better. We didn’t expect to be down at this stage, but the whole the whole category has been beat up.”
The on-premise channel hasn’t bounced back to pre-COVID levels, when bars and restaurants accounted for 34% of Great Lakes’ total mix.
“It’s hovering in the mid-twenties,” King said of Great Lakes’ 2022 on-premise business. “Our on-premise business is growing this year. We’re up about high teens, but it’s still only about 24% of our mix.
“If we got back up to that 30-34% mix, that’s another 15,000 barrels of business that we have,” he added. “So we have to continue to find solutions for the on-premise business, but it’s going to be tough.”
The biggest opportunity ahead for Great Lakes is the convenience channel, according to King.
“If you look at that convenience channel, we don’t have the right mix and the right packages for that convenience channel and that’s something that we need to fix,” he said. “We have to have a better strategy for the convenience customer.
“Whether it’s a new IPA or better for you, whatever it is, we know that we’re going to perform well in food,” he continued. “We need to perform better and convenience, and then the on-premise.”
Year-to-date through July 10, craft beer accounted for 6.55% of total beer category dollar sales in convenience stores, according to IRI. Craft’s share declined -0.39% during that period, compared to last year.
The fix for c-stores is expected to come in 2023 in both brands and package types, including single-serve 19.2 oz. and 16 oz. IPAs and beyond beer products. A new IPA is slated to rollout in Q1 2023 to compete in the channel, said King, who declined to offer further details just yet.
“We’re going into full attack mode come September with both food and convenience chains for next year,” he said.