Welcome to Sub Brand Summer
In our 2023 Beer Branding Trends review, we outlined an important shift we're seeing in brewery portfolio strategy.
All across the country, breweries are looking to find growth by building Sub Brands—or in the more common, non-Brand Architecture nomenclature, "Brand Families"—within their broader portfolio.
This is a natural move for larger Legacy Breweries for whom finding relevance with new drinkers is a life and death matter. But we're seeing our smaller, younger brewery clients build intra-portfolio Sub Brands with great results as well.
In either case, there are interesting takeaways that you can think about as you shape your brewery’s portfolio over the coming years.
We’ve written a lot about what Sub Brands are and how to build them. In today's issue, we’re going to outline why we think Sub Brands are such a pervasive strategy right now, what this means, and more importantly, how your brewery can explore this path if you think it would be a good fit for your vision and goals.
We're going to dive into Sub Brands and Endorsed Brands in part 2 of this series, but as a quick refresher:
What is a Sub Brand?
From The Beyond Beer Handbook:
A Sub Brand is connected closely to your parent brand—think of it as a little extra spice given to separate each product from one another within your overall portfolio. A Sub Brand still carries the same values that intuitively link it to the parent brand, but targets a specific audience with further defined attributes and benefits that might not be offered by the parent brand alone. This allows you to build stronger bonds with your existing customers while expanding your overall footprint by dipping your toes into new categories and audiences.
A few important nuances here:
1. In Brand Architecture terms, this strategy can manifest as a Sub Brand or an Endorsed Brand. The specific approach isn’t as important as is the long term bet that we’re seeing more breweries make: The future will be more centered around specific brands and brand families, more so than around a brewery’s parent brand.
2. When building a true Sub Brand, your parent brand is still the main purchasing driver.
That is, a customer buys this product explicitly because it is from your brewery. With an Endorsed Brand, the new product brand itself is the main purchasing driver, with the parent brand relegated to an "endorsing" role.
For the rest of this article, I'll use "Sub Brands" as a shorthand for both Sub and Endorsed Brand strategies.
Sub Brand Summer focuses on the Sub / Endorsed Brands section of the Beverage Brand Architecture Continuum.
Why is this happening? (Or at least, how did it start?)
Reason 1: Follow the leader(s)
I believe we’re seeing this strategy so often today because of how successfully it has been implemented by a handful of respected Legacy Breweries.
A few prominent examples include:
– Voodoo Ranger (New Belgium)
– Little Thing (Sierra Nevada)
– 805 (Firestone Walker)
– Beer Hug (Goose Island)
– Golden Monkeys (Victory)
– Dale's (Oskar Blues)
– Wicked (Boston Beer Co.)
– Hearted (Bell's)
We offered a similar theory recently for why high ABV beers are trending right now. (Question starts at the 1 hour 13 minute mark in this podcast). Basically, someone took a shot (in this case, on aggressively priced Imperial IPAs in single serve stove pipes), and it worked. It really, really worked. So other breweries followed suit.
So take this dynamic, sprinkle in the macro trend of beer consumers shopping based more on brand than style, plus shifting Legal Drinking Age demographics and preferences, and you have a perfect setting for Sub Brands to thrive.
(Below) Follow the leader(s): A few leading brewery Sub Brand examples from around the United States.
Reason 2: The beer industry is facing major headwinds
I don't need to outline the myriad economic forces that are constricting the beer industry because you're seeing this firsthand every day in your work.
But for those who aren't following along as closely, let's just say that between a recession and inflation, lingering supply chain shortages and dramatically increased input costs, things aren't looking so great right now.
So how can a brewery survive over the coming rocky years?
One way is to diversify your offerings.
It's good practice to rebalance your investment portfolio every year or two to ensure you're not overly weighted in one asset class. This keeps you resilient and can minimize losses when things go sideways.
This concept applies to your brewery's portfolio as well: By building a variety of brands and products across multiple categories that appeal to different audiences, price points and occasions, you can keep your business more robust as consumer preferences shift and broader economic constraints are brought to the fore.
We saw a lot of this from 2019 to 2022 in the form of breweries releasing hard seltzer and RTDs.
But this move is category agnostic.
For this conversation, we’re not drawing a line between beer or Beyond Beer products. Instead, we're focusing on Sub Brands as a tool to leverage your parent brand to grow your overall portfolio.
Reason 3: Sub Brands create a smoother path to market than creating an entirely new brand
Building a new brand is expensive. And it's challenging. And it takes capacity (that you may not have). And to do it right, you have to invest as much time and energy and capital as you did when bringing your parent brand to market.
But releasing a new brand that can come to market tied to your parent brand in some capacity can create a faster path towards gaining mindshare and driving trial and velocity.
I won't go as far as to call this strategy a shortcut, but it is faster and cheaper to bring a new Sub Brand to market than creating an entirely new brand (with zero tie to your parent brand).
Reason 4: Sub Brands are platform for long term brand building
We've written about the merits of Monolithic Portfolios vs. fanciful names and Sub Brands a lot this year.
One thing that we've heard from our brewery clients is that Sub Brands give your customers one more point of reference to grab onto and understand and bond with. Fernson Brewing mentioned this in our recent podcast conversation.
Think of the Bar Call heuristic. Someone walks into a bar and orders a beer: Which of these sounds (and feels) better?
"Give me a Firestone Walker Blonde Ale, please."
Our recent package refresh project with Fernson Brewing illustrates how Sub Brands aren't just a big, Legacy Brewery move. Smaller breweries are building Sub Brands with great results as well.
Welcome to the Era of Sub Brands (or, why Sub Brands are so hot right now)
For the Legacy Brewery:
Sub Brands are an opportunity to target a specific audience more credibly than you would be able to with your parent brand. You can bring to bear your entire scale (production, innovation, distribution, marketing, etc.) and launch a new brand with more force than a startup ever could.
For a newer, smaller brewery:
Sub Brands are another chance to create something that resonates with your customers. And it creates a platform for future growth via Line Extensions, co-branding and a deeper universe you can flesh out over time.
For your customers:
Sub Brands are an easy way to cut through the noise of today’s cold box and find a new go-to beer brand family that never lets them down.
In part 2 of this series, we'll take a closer look at Sub Brands and Endorsed Brands.
We'll explore how they're similar, where they differ and how you can scale seamlessly from one to the other over time as your brand grows.
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