Is Goose Island suffering the fate of other legacy craft beer brands?
It is becoming clearer why AB-InBev on 1 January 2018 replaced its North American chief Joao Castro Neves by another Brazilian company veteran, Michel Doukeris: Mr Neves, who was widely seen as a potential successor to CEO Carlos Brito, not only failed to stem the decline of the brewer’s major brands Bud and Budweiser, he was also held responsible for Goose Island’s bruising 2017.
According to media, AB-InBev’s major craft beer brand, Goose Island, saw massive sales declines nationally in the off-premise. Market research firm IRI reckons that last year 312 Urban Wheat Ale fell 19 percent; Green Line Pale Ale and Four Star Pils were each down 35 percent; Honker’s Ale fell 49 percent and sales of Goose Island variety packs were down 33 percent.
Only Goose Island IPA saw significant growth – up 29 percent. But observers say this increase was due to its being priced aggressively. Even that success came with an asterisk: Goose Island IPA was surpassed in sales rank by Founders Brewing’s All Day IPA, which pushed Goose Island IPA from the nation’s third-biggest-selling IPA to fourth.
Goose Island’s decline in its own backyard will have caused AB-InBev another headache: 312 Urban Wheat Ale, Green Line, Four Star Pils and Honker’s Ale were all down double digits in Chicago. Goose Island’s overall Chicago sales were down seven percent, while one of its biggest local competitors, Revolution Brewing, founded in 2010, was up 34 percent.
However, draught beer sales are not included in IRI data. As Goose Island has the most IPA tap handles in the nation, it could still be that overall Goose Island’s sales grew in 2017.
It cannot be much of a consolation to AB-InBev that other major craft beer brewers like Samuel Adams, Sierra Nevada, and New Belgium also registered sales declines because Heineken-owned Lagunitas witnessed yet another sales increase.
Perhaps it is time to reflect on the controversial life cycle theory for beer brands. Its proponent, Mike Mazzoni, a beer industry veteran who has studied the life cycles of brands, already argued in 2017 that legacy craft brewers and their brands (those who have been around for over two decades like the aforementioned) are struggling for several reasons, among them, an inability to reach choice-craving millennial consumers whose drinking tastes are more promiscuous than those of previous generations.
Being perceived of as ubiquitous makes them as dowdy and old-fashioned as any mainstream beer brand. The fact that these craft beer brands are national brands actually makes them offensive to the millennials, Mr Mazzoni said. Thanks to the recent boom in craft brewery openings, today’s craft beer drinkers have learnt to appreciate only something that is local and new or seemingly hard to obtain.
Taking Mr Mazzoni’s theory further – could it be that Goose Island, although smaller in national sales than its craft beer peers, has already plateaued in its own life cycle in the US?
Undeterred, AB-InBev is rapidly pushing Goose Island into international markets. Establishing a brewpub in each new country – a physical provenance, so to speak – has been a key to AB-InBev’s growth tactics.
Goose Island opened its first overseas brewpub in Shanghai in January 2017 and now has brewpubs in Sao Paulo, Brazil; London, UK; Monterrey in Mexico; Toronto in Canada; and Seoul in South Korea. This year it is opening brewpubs in Melbourne, Australia and Shoreditch, London. It also retails its beers in these countries.
Goose Island was founded as a Chicago brewpub in 1988 by John Hall, who was inspired by the variety of European beers and modelled his brewpub on an English pub. A commercial brewery opened in 1995. In 2011, when Goose Island was acquired by AB-InBev, it was present in 17 US states. This quickly expanded to 50 states.
Over the past three years its efforts on international expansion have dramatically accelerated – opening up six brewpubs in international cities in just over a year and with two more to open in 2018.
