Founders Brewing Company, new CEO Elton Andres Knight told Brewbound the company will focus on core innovations in 2022 and continue to build upon the company culture initiatives that the Grand Rapids, Michigan-headquartered craft brewery established over the last two years.
Knight took over as CEO for co-founder Mike Stevens on February 1. Stevens announced January 19 that he would step down as CEO and transition to a board role in order to “pursue other personal ambitions and spend more time with his family.”
Knight also serves as CEO of Founder’s Boulder, Colorado-based sister brewery Avery Brewing. He was appointed to that role at the Mahou San Miguel-owned brewery in 2019, and he will lead both breweries, which will continue to run independently of each other. Knight stressed the importance of both breweries maintaining their independence from one another and not becoming “diluted in bigger companies.”
“For craft beer, it’s critical to have brand personality and real differentiated brand propositions,” he added. “If you completely integrate the two companies, you potentially lose that.”
Knight is now commuting between Boulder and Grand Rapids, but will move with his family to Michigan at the end of this school year. He takes the helm of the craft brewery about four years after the company faced accusations that it tolerated “racist internal corporate culture,” stemming from a now-settled racial discrimination lawsuit from a former employee.
Knight said he will continue the internal company culture initiatives that Founders established over the last couple of years.
“Personally, I take that really seriously,” he said. “The truth is, I think the company’s made huge strides in this manner over the last two years.”
In July, Founders added Stephanie Yeatts, director of social impact and sustainability, to its executive team. Yeatts reports directly to Knight. The company also began consulting with Global Bridgebuilders, a third-party inclusion innovation company, to help create a diversity, equity and inclusion (DEI) program and action plan.
As part of that plan, the brewery conducted 30-35 company-wide focus groups to gauge employee concerns and ideas, and created the Diversity Action Council (DAC) – an worker-led group which “helps to educate employees on diversity-related topics,” according to Founders’ website. Employees are now required to complete a virtual “DEI 101 and implicit bias/micrograssions” training, and the sales team is given “culturally competent customer servicing training.”
“It’s not just one-off actions, but it’s a journey and an ongoing one, which we need to keep front of mind,” Knight said.
Breaking Down the Business: 15 Packs, All Day Line Extensions & More
While Avery relies heavily on its on-premise business (about 40% of its sales) as well as taproom sales, Founders’ sales are off-premise-driven, Knight said, adding that the brewery’s 12 oz. 15-pack offerings of its core beers had particular success at the height of the COVID-19 pandemic.
“We didn’t hit the overall targets that we wanted to in volume [in 2021], but especially in 2020, when everybody was bulk buying – we didn’t all want to go 15 times to the store so we would go in and buy the bigger formats – our 15-pack was the perfect solution,” Knight said.
Founders was able to increase production 2%, to 592,000 barrels, in 2020, the most recent estimates provided by the Brewers Association (BA). However, in 2021, off-premise dollar sales of Founders’ portfolio declined -9.9% year-over-year, in multi-outlet food and convenience stores tracked by market research firm IRI. The company’s $128.6 million in sales made it the 18th largest beer category vendor in the off-premise.
Avery’s production declined -15% in 2020 to 46,750 barrels, according to the BA.
“Historically, because of the market landscape, we could innovate and come up with any beer and people would come and might even line up and buy it,” Knight said. “But with the new market landscape, we’re gonna have to be much more thoughtful on that approach. And not just think about the consumer, but also our biggest kind of component to success, which is our distributors, and include them in part of our developing business development.”
Part of Founders’ growth plans for the year include the continued expansion of its All Day brand family, which includes its top-selling beer All Day IPA and All Day Vacay wheat ale. The brewery extended the line in November with the addition of All Day Haze, a 4.9% ABV hazy IPA. A fourth, yet-to-be-named offering in the brand family is teased on Founders’ website. Knight said it is a natural step to keep expanding the brand.
“Why wouldn’t you give that huge consumer base who loves you and has been loving you for years more reasons to enjoy you when you want to have a different style?” he said.
When asked if mix packs for the All Day family are in its future, Knight said it “feels like a little bit of a no-brainer.”
“This is the best way to create something right now, today, when people aren’t in bars and restaurants, through the off-trade and the existing distribution points that we have,” he said.
Although Knight had yet to meet with Founders’ full sales team at the time of his conversation with Brewbound (he had been on the job for about two weeks at the time), he said he sees off-premise growth opportunities in c-stores, possibly with smaller pack sizes, and would like to increase Founders’ on-premise footprint.
While Founders is zeroing in on its core beers this year – including Centennial IPA and the 4 Giants brand family – Knight said there needs to be room for innovation.
“There’s definitely a need for us to be more at the forefront, to really push innovation, make it full, make it big,” he said. “The reality is that we also need to do less things, but do them bigger and better, so they’re much more impactful.
“[The market] used to be about launching hundreds and hundreds of brands, and dynamic innovation is part of the DNA of this industry,” he continued. “So you’ve got to find a way to be able to manage big, impactful, incremental innovation, but also frequent creativity too.”
That creativity will not be extending far into the beyond-beer space immediately – at least not in the coming months – Knight said, noting that the ideas from the Founders’ development team are not lacking.
“For me, it’s about putting some thought and some prioritization so what we do is really meaningful,” he said. “It’s not just launching something for the purpose of launching something, because it really needs to be true to the company and its values and founders, but also relevant for the consumer too.”
Beyond the extension of All Day, Founders will be focusing on its barrel-aged beers. Knight likened the brewery’s players in the sub-segment to ready-to-drink canned cocktails, and noted that innovation in the beer space could compete with beyond beer offerings.
“You can see [beyond beer] as a threat or you can see that as an opportunity,” he said. “That’s when I think craft beer elevates, gets bigger and becomes not just relevant, but contemporary and up to date with the trends that are happening right now in the market.”