Lagunitas Keeps Focus on IPA with New Campaign

Four months after joining Lagunitas Brewing Company, chief marketing officer Kelly Murnaghan has big plans for the Petaluma, California-based, Heineken-owned craft brewery.

“It’s a really exciting time,” Murnaghan told Brewbound. “It’s just at that tipping point of truly shifting from a domestic brand into an international brand.”

Murnaghan joined Lagunitas in July, a month before the company rolled out 12 oz. cans of its flagship IPA, and the company began promoting the packaging addition earlier this month with a digital campaign called the “IPA Can Shopping Network Shop.”

Lagunitas IPA volume sales in off-premise multi-outlet and convenience stores were up 5.8% for the 12 weeks ending October 6, according to market research firm IRI. Year-to-date, Lagunitas IPA dollar sales are up 1.7%, to $64.7 million, and the brand has sold 1.7 million cases, making it the top-selling IPA in the nation.

The addition of cans provides even more runway.

“It makes a ton of sense to go to cans from a distribution perspective,” Murnaghan said. “People will be able to take the product with them wherever they’re going. We’re excited about it because we still have a lot of growth available.”

To support the can roll out, Lagunitas introduced the Home Shopping Network spoof featuring head brewer Jeremy Marshall and other Lagunitas employees promoting IPA-branded merchandise.

“It feels very homegrown and self-deprecating,” Murnaghan said.

The ads, which will run online through the end of November, was planned in-house and designed to bring buzz to the can announcement.

“We really thought about it from a consumer perspective, and they’ve had IPA for two decades, and they’ve had cans for much longer than that, so this wasn’t really a big deal moment for them,” Murnaghan said. “The whole point of the Home Can Shopping Network was to come up with a really tongue-in-cheek, humorous way to let people care a great deal about cans and put ourselves in the position where we’re able to speak with a large amount of precision about the features and benefits of the can itself.”

The videos direct consumers to an online store where they can purchase the featured items, which include succulents planted in IPA cans, enamel pins, a shuffleboard set with pucks made from crushed IPA cans, body pillows printed with IPA cans, and the “giant inflatable flappy IPA thingy,” an IPA-branded version of wacky waving inflatable arm flailing tube men.

Murnaghan shared that the campaign’s engagement rate is 34%, compared with the consumer packaged goods industry average of 4%. Two weeks after the campaign launched, Lagunitas sales are up 7% in Illinois and and 8% in New York City compared to the four weeks before its start.

Global Growth

Murnaghan came to Lagunitas from skateboarding shoe maker Vans, where she was vice president of marketing. The similarities between the two California-based brands made her feel at home.

“It was very much a founder-led vision; the way that marketing was driven was very grassroots, DIY, word of mouth, hand to hand, which was exactly how Vans grew up,” she said. “When Vans was 25, which Lagunitas is now, they were very much a SoCal company; 74 of the 75 stores were based in California and the other one was in Hawaii. They really did need to grow across the rest of the country and internationally and that’s exactly what’s happening with Lagunitas now.”

Heineken International acquired the remaining stake in Lagunitas in May 2017, after purchasing a 50% stake in August 2015. Having one of the world’s largest beer manufacturers as a parent company has helped Lagunitas expand into 35 countries by brewing at Heineken facilities in Amsterdam and Blumenau, Brazil.

Though international volumes are not publicly available, Lagunitas crossed the 1 million barrel threshold last year, producing 1,044,450 barrels, up 6% from 2017, according to data from trade group the Brewers Association.

On tap for the coming years are more taprooms in other countries to join Lagunitas Tapkabinet in Amsterdam. The brand has a marketing team in the Netherlands and also access to Heineken’s worldwide teams.

“Next year we’ll be launching our first-ever global marketing initiative produced in partnership between the domestic team and the international teams, and the Home Can Shopping Network is kind of a prelude to that big global campaign,” Murnaghan said.

Committed to IPAs

In the U.S., Lagunitas will focus on its IPA portfolio in 2020 in accordance with that style’s growth drivers, which according to Murnaghan are cans, higher alcohol by volume products and hazy beers.

“It’s really the segment within craft that is continuing to grow, so we’re feeling positive about continuing to spend in IPA,” Murnaghan said.

The company introduced a New England-style IPA in September called Hazy Memory, which checks in at 8% ABV. Murnaghan said Lagunitas is working on a 6% ABV version to complement it.

Before launching its flagship IPA in 12 oz. cans, Lagunitas offered it in 19.2 oz. cans, a popular format for convenience stores.

“We’re seeing really positive momentum in that format so we’re definitely looking there for growth,” Murnaghan said. “It’s a really good trial size if someone wants to try a different style before they commit to a 6-pack or a 12-pack.”

Taking the Taproom Experience on the Road

Research and development continues at Lagunitas’ domestic taprooms in Petaluma, California; Chicago and Seattle. Lagunitas plans to take its taproom experience on the road next summer through a series of pop-up taproom events in other yet-to-be-determined markets, Murnaghan said.

“One of our focuses is definitely to shore up our taproom experiences,” she said. “Coming from Vans where your retail stores are kind of the nucleus of your brand and the place you want to make sure someone has the best possible experience with your brand, that’s certainly true here, if not more so.”

Last month, Lagunitas shuttered its Portland, Oregon-based “Community Room,” a taproom that charitable organizations could rent for free to host fundraisers. Events scheduled for the rest of the year were effectively canceled with little notice to organizers.

“We’re continuing to work with the non-profits who were impacted to make sure that they are taken care of as much as we possibly can,” Murnaghan said. She added that Lagunitas reimbursed any cost they had incurred and will donate beer to rescheduled events.

Beyond Beer Innovation

Although Lagunitas hasn’t waded into the hard seltzer category, it produces two varieties of non-alcoholic sparkling water: Hoppy Refresher, a nationally available, hop-infused sparkling water made with Citra, Equinox and Centennial hops; and Hi-Fi Hops, a joint venture with Santa Rosa, California-based cannabis company CannaCraft.

Hi-Fi Hops comes in three styles, with varying dosages of CBD and THC — 5:5 offers 5 mg of both THC and CBD, 10 offers 10 mg THC, and newest release 18:1 offers 18 mg of CBD and 1 mg of CBD. The 18:1 is only available in California and the 5:5 and 10 are available in California and Colorado, where they launched last month.

However, Lagunitas’ attention remains primarily on its IPA family, Murnaghan said.

“From a major commercial focus, we definitely need two feet in on IPA and really focus on package formats and focusing on hazy,” she said.

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