Six Pack: Beer Buzz of the Week

Written by Tom Rotunnofor

Six things that have consumers buzzing in the world of beer, wine and spirits this week:

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1. Converting Consumers to Craft Beer:The craft beer segment is booming, but it still makes up a small part of the overall beer market at just 5 percent. A recent study looked at which craft brewers have the most success at turning consumers into repeat customers.

The study first looked at product availability, the obvious key to getting consumers to try a brand. According to the Consumer Edge Insight, Samuel Adams Boston Lager led all craft brewers with a product availability rating of 76 percent. Kansas City-based Boulevard Brewing was the least available craft beer at nine percent.

But despite its limited availability, Boulevard comes out on top in the study in terms of consumer conversion, with 19 percent of those who try the brand becoming regular users. Second place is a three-way tie with MillerCoors’ Blue Moon Belgian White Ale [TAP  43.46    -0.34  (-0.78%)   ], Samuel Adams Boston Lager and Michigan-based Bell’s Brewing, each converted 17 percent of triers into regular users. Coming in last in the study was Anchor Steam Brewery, converting triers into regular users at rate of just 6 percent.

In addition, Consumer Edge Insight says craft beer brands “suffer from having a high percentage of triers not consume the brand on either a regular or occasional basis.” The brand losing the highest proportion of triers wasLandshark Lager, with 63 percent of those who try the beer failing to become a regular or occasional user. Samuel Adams Boston Lager has the lowest share of triers who don’t return to the brand at 43 percent.

David Decker, president of Consumer Edge Insights, said the study of conversion rates is a sign of good things to come for smaller brewers like Bell’s and Boulevard as they expand distribution. Which leads us to…

2. Boulevard Brewing Expands Territory: For a long time, Boulevard Brewing has been one of craft beer’s territorial gems, wildly popular in its distribution territory, but largely unavailable outside the Midwest. Soon more consumers on the coasts will get the chance to experience the brand. Boulevard said it isexpanding distribution in California, Georgia and North Carolina, growing its East Coast distribution to five states and its West Coast presence to four states, including Alaska. Boulevard beers are now available in 24 states and the District of Columbia.

3. Founders Celebrates 15th Anniversary: Michigan-based Founder’s Brewing is celebrating its 15th anniversary by taking a look back at its early days. While the brewery is now among the top 50 craft brewers based on 2011 sales volume, its outlook wasn’t always so rosy. In fact, the brewery had to fight off bankruptcy in its early years as it was defaulting on its loan. At one point the bank called and threatened to chain the doors shut if the brewery failed to make its next payment. “So I bought a pair of bolt cutters,” said Co-Founder, Vice President of Brand & Education Dave Engbers. “We were determined to keep our doors open and to keep brewing beer, no matter what it took. Luckily, we never had to use them.” Engbers said the bolt cutters remain in the brewery as a reminder of its early struggles. To mark its 15th anniversary, Founder’s is releasing Bolt Cutter, a limited-edition barley wine with 15 percent alcohol by volume.

4. House of Shandy Hits New York: Beer cocktails have become a trend among beer consumers, with one of the most popular beer cocktails being the shandy. A longtime staple in Europe, a shandy is beer mixed with citrus-flavored soda, carbonated lemonade, ginger beer, ginger ale, or cider. One company seeking to bring the shandy to U.S. consumers is the House of Shandy Beer Company. The House of Shandy is the first company to result from Alchemy and Science, the recently formed craft beer incubator funded byBoston Beer [SAM  105.75    0.43  (+0.41%)   ] and run by Alan Newman, the founder and former owner of Magic Hat Brewing.

House of Shandy features two styles: the Curious Traveler, a fresh lemon-and-lime-style shandy and the Tenacious Traveler, a ginger-and-honey-style shandy. While initial distribution growth has been limited, this week House of Shandy expanded into New Jersey and New York, bringing its total distribution level to 17 states.

5. Root, Root, Root for the Hops Team: Beer and baseball have been a long-time match. Now an Oregon minor-league team is paying homage to the state’s craft beer business and its hops heritage. The newly formed Hillsboro Hops, the single-A affiliate of the Arizona Diamondbacks, will begin play in June. “The name ‘Hops’ recognizes Hillsboro’s proud agricultural heritage and the fact that Oregon is the second largest hop-producing state in the United States,” said K.L. Wombacher, general manager of the Hillsboro Hops. “Hops is also a term used regularly in baseball — short hop, bad hop, crow hop. We feel ‘Hops’ encompasses several different components we wanted to include in our team name.”

6. ODDKA: Flavored vodka is driving vodka sales and now Pernod Ricard is looking to capitalize on the trend with the creation of ODDKA by Wyborowa Vodka. As the name implies, ODDKA will specialize in “curiously odd” vodka flavors. The company will start with five “unconventional” flavors, including Apple Pie, Electricity, Fresh Cut Grass, Salty Caramel Popcorn and Wasabi. ODDKA products are currently available in a limited number of states including Alabama, Massachusetts, Pennsylvania and Rhode Island. The brand plans to expand its global distribution in spring 2013.

-By Tom Rotunno, CNBC Senior Editor; Follow him @tomrotunno

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