Marketing Plan for Sierra Nevada Brewery

The purpose of this document is to create a marketing plan for Sierra Nevada Brewery (SNB); specifically, developing a plan to expand the product line depth by launching a new product variation that incorporates Sierra Nevada’s traditional ale, with the flavor of blackberry. First, objectives are clearly established, followed by a situational analysis using a SWOT protocol. A market analysis is performed based upon the STP procedure, which directly leads to the marketing strategy. Financial projections are provided, along with strategy to implement the marketing plan, which leads to the final segment; evaluation and control metrics, which will be used to analyze the efficiency and effectiveness of the marketing plan.

SNB is a financially strong company, as represented by research and their ranking as the #2 producer of craft beer in the United States. They have positioned themselves as being an elite craft beer producer by using high-quality ingredients, producing esteemed beers, being socially responsible and ethical, and focusing on a niche market. The need and desire to be innovative, in conjunction with SNB’s goal to have a brewery on the East Coast in order to enhance their supply chain management, led to the proposal to introduce the of Blackberry Ale; their first flavored ale. Since SNB has effectively marketed all of their beers, adding the Blackberry Ale followed a similar strategy.

The target consumers are educated, middle-to-upper-middle class professional men that refer to themselves as beer connoisseurs, and revere artisanal brewing. Blackberry Ale will be packaged and marketed as a premier craft beer and placed in urban areas with an upscale atmosphere. Pricing will be set competitively at $9.59 for a 6-pack of 12oz bottles. Based upon research, trends, and SNB’s history, the recommendation is for SNB to launch Blackberry Ale in the first quarter of 2014, mirroring the grand opening of the new East Coast brewery in North Carolina. Blackberry Ale is expected to increase SNB’s profitability and value; thereby, helping to continue the increasing strength of the SNB family brand. Marketing Plan for Sierra Nevada Brewery

Company Overview

Sierra Nevada Brewery (SNB) was officially founded in 1979, in Chico, California. This small, college-town, located 90 miles north of Sacramento, sits at the foot of the Sierra Nevada foothills, for which the brewery is named after. What makes this brewery unique is its history. Ken Grossman, the founder and master brewer of SNB, started experimenting with homebrew in 1970, under the tutelage of his friend’s father; this is where his passion for brewing beer began to flourish.

In 1976, Ken partnered up with Paul Camusi to take home brewing to a higher level. Since hops were scarce for home brewers in the 1970’s, Ken traveled to Yakima, Washington, to obtain whole-cone Cascade hops, which produce a citrus-pine flavor and aroma that makes SNB distinct. SNB is renowned for its illustrious beers, specifically for the hop-forward brewing method, which adds distinctive flavors and aromas to the beers. As the demand for SNB’s esteemed beers rapidly began to outpace supply, Ken expanded into a local warehouse, brewing out of defunct stainless steel tanks that he recovered from dairy farms in California and Oregon. Since 1980, SNB has continued to expand and capture a larger portion of the market share.

Objectives and Goals

SNB wants to provide high quality beer to consumers throughout the United States; furthermore, they want to introduce new specialty products, such as flavored beers. With the determination and resources that SNB possesses, they have positioned themselves into becoming the top-rated premium brewery in the U.S. According to McCurry (2012), “Sierra Nevada is the No. 2 U.S. craft brewer in terms of sales behind Sam Adams. It plans to have an initial capacity of 300,000 barrels and will employ 90” (para. 2). An increasing demand for SNB beer in the Eastern U.S., combined with additional transportation costs has necessitated the establishment of an East Coast brewery.

A major objective of SNB is to build a brewery on the East coast, allowing them to efficiently market their premium beers to include all states east of the Mississippi River, while adding value to the overall organization. McCurry goes on to state: For a decade, Sierra Nevada served eastern markets very efficiently, using a lot of piggyback rail with refrigerated containers. Bottle-aged beer has to be refrigerated, and it’s expensive to run across the country, but the company did it very successfully. As the market grew in the East and capacity constraints started to be reached in Chico, it became obvious that what is needed is a new brewery and it should be built in the East to address cost and service issues. (para. 9)

The addition of an East coast brewery should strategically position SNB above Sam Adams, therefore claiming the number one spot in craft beers, and further increasing the SNB brand. Specifically, the objective is to expand their product line and break into the growing flavored ale market. Situational Analysis

SNB holds a relatively strong position in the beer industry. Their strengths are perhaps the organization’s greatest asset. SNB’s state of the art, on-site R&D Department, has positioned them to be an elite brewery, by providing pristine and innovative beers. This allows them to differentiate themselves from competitors. “The investment in the science of brewing made Sierra Nevada widely regarded as one of the most sophisticated research and quality focused breweries in the world” (Sierra Nevada, 2013, para. 23). Additionally, SNB prides itself as being a progressive-green and socially responsible company; the nation’s largest private solar array provides 1.5 megawatts of electricity, while the on-site auditorium houses community events.

Strengths
Weaknesses
Opportunities
Threats
On-site R&D
#2 craft brewery
Expand to the East coast where SNB has a small presence.
Intense competition from other craft breweries
Strong brand name
Small company; limited resources for promotions and advertising Enhance supply chain management
Anti-drinking campaigns
Green and socially responsible; sustainability
One manufacturing location
Growing preference of consumers for higher quality craft beers and flavored ales. Health concerns of consumers about beer consumption

One key element that adds value to SNB is Ken Grossman’s continuous concern for the environment and the community: Their installation of four 250-watt co-generation fuel cells earned them a visit from Governor Arnold Schwarzenegger. They have long had the first largest private installation of solar panels in the nation. They engage in heat recovery, CO2 recovery, water recycling, bought their own cows to eat their spent grains, and they don’t believe in buying carbon offsets.

And now, they have a new composting system—all presented with “again, it’s not the greatest ROI” from Grossman, “but it’s the way we want to do things around here, it’s part of our story.” (Chang, 2010, para. 4) SNB sets the bar high for organizations in being ethically and socially responsible. Although SNB can save money by cutting corners, they continue to take the high road and focus on the well-being of the community, as well as the environment.

Market Analysis

Current trends and data indicate craft breweries are gaining market strength. The long term dominance by large beer manufactures is declining. According to Ciccone (2012), “In 2011, all top 25 craft breweries experienced increases in revenues. Craft breweries recorded 15 percent growth in volume of barrels shipped, compared to a 1.5 percent decrease in the beer industry overall” (para. 2). SNB received second place honors during 2011 in Best-Selling Craft Beers. #2 – Sierra Nevada Brewing Co.

Location: Chico, Calif.
Barrels Sold in 2011: 858,000 — 9.2 percent increase since 2010 Popular Brands: Sierra Nevada Pale Ale, Ovila Abbey Ales

Julia Herz, Craft Beer Program Director for the Brewers Association, stated, “A light American lager no longer satisfies every taste. Americans have developed a discerning palate, so if it’s not world class quality, it won’t survive” (Ciccone, 2012, para. 3). The market for craft beers is growing, and SNB is positioning itself to dominate the craft beer market. SNB’s strength is becoming more apparent, as they continue to gain market share every year. Clarke (2012) stated that a 2011 study indicated craft beer grew by 16.3%, the largest growth by any beer category; furthermore, 11% of craft beer’s growth arose from new drinkers in 2010, compared to an astounding 46% in 2011. An import element for SNB to consider it that Millennials account for 46% of new craft beer drinkers.

The market for craft beer continues to grow at a rapid rate; additionally, all of this growth is occurring during difficult economic times. The overall success of SNB can largely be attributed to its marketing strategy. They segmented the market by focusing on beer drinkers in the U.S. market. SNB further segmented the market down to craft beer consumers. The craft beer segment does not include low-income, uneducated, party-oriented beer drinkers. SNB targets male craft beer consumers, as marketing strategies have indicated that targeting woman can have an adverse effect. Clarke (2012) goes on to say that women are apt to project contemptuous ridicule towards beers that are marketed as being women-friendly, especially if the beer is specifically targeted to them.

Specifically, SNB targets College educated, middle-to-upper-middle class professional men, ages 21-44 years old that refer to themselves as beer connoisseurs, and revere artisanal brewing. “By volume, 80% of craft beer was enjoyed by white (non-Hipic) consumers, over half of them in the 21-44 year age bracket. More than 75% earned at least $50,000/year, and 43% were college-educated Craft beer connoisseurs, as they prefer to be called, savor the distinctive taste and aroma of craft beers” (Clarke, 2012, para. 6). With the target consumer being established, SNB can effectively position themselves.

Craft beer connoisseurs are already aware of the prestigious SNB image; therefore, positioning the new craft beer innovation will ensure that consumers perceive the product as a premier, black berry-flavored craft beer, created for the affluent craft beer connoisseur. Marketing Strategy

SNB’s product, a blackberry flavored ale, is the first flavored beer that they will produce. “There are a lot of new flavors out there, and beer drinkers are willing to try brands they haven’t tried before because they trust the category, Gatza says.” (McCurry, 2012, para. 62). By offering flavored ale, SNB strategically appeals to its current consumer based, as these consumers will want to try the latest creation, while increasing market penetration by acquiring new consumers who are intrigued by the new product and want to try it.

The new product is Blackberry Ale; an amber colored light ale with the subtle flavor and deep notes of blackberry. This premier brew will be packaged in dark glass bottles. Tastings (n.d.) emphatically encourage the use of dark glass bottles, as they inhibit the photochemical effect produced by daylight, specifically, the ultraviolet spectrum, which can create “off flavors” and degrade the freshness of the beer. Additionally, twist-off crowns don’t protect beer against oxidation as well as pry-off crowns; therefore Blackberry Ale will include pry-off crowns. An adhesive label, containing product information and displaying the illustrious SNB logo, will be applied to each bottle. Finally, the label will display the brand-Sierra Nevada Blackberry Ale; thereby, using a family name brand strategy. Distribution Strategy

Blackberry Ale will be distributed strategically through select retailers as to protect SNB’s premier image, while increasing market penetration: Taprooms
Upscale restaurants
High-end bars and clubs
Gourmet specialty stores
Beer and wine bistros
Prosperous grocery stores

Indirect distribution using established partnerships will facilitate the placement of Blackberry Ale into the selected retailers. This link provides a list of all established distributor partnerships throughout the U.S.: http://www.sierranevada.com/distributors/ Pricing Strategy

SNB’s price will reflect a premium price as their products are known for being high-quality and in accordance to the product positioning. They already benefit from having an effective pricing strategy; therefore, Blackberry Ale will be priced in-line with SNB’s current beers that are already on the market, while being competitively priced with SNB’s strongest craft beer competition, Sam Adams Blackberry Witbier. Therefore the price for Blackberry Ale will be set at $9.59 for a six pack of 12oz bottles.

Promotion Strategy

In order to promote the latest addition to the Sierra Nevada line, a multitude of media and promotions will be used to facilitate the product’s introduction into the market: Advertising Promotion

Social media including Facebook, Twitter, Linkedin, and Google+ Advertising in key magazines: The Beer Connoisseur, DRAFT, Ale Street News, Northwest Brewing News, The Celebrator Beer News, Great Lakes Brewing News, Yankee Brew News, Brew Your Own, Beer Advocate , Ask Men, Maxim, Esquire, GQ, Details, and Sports Illustrated Sales Promotion

Free 4oz sample coupons (limited time only-90 days)

Free 4oz samples when product is only available on-tap (limited time only) $2.00 off introductory coupons (expires after 90 days)

Buy 3, get 1 free (buy any 6-pack of SNB beer, get 1 free 6-pack of Blackberry Ale-90 day promotion) All promotions will terminate after 90 days of product introduction to assess the effectiveness of the promotions and determine future courses of action. Financial Projections

The chart below, provided by the Brewers Association, clearly illustrates the continuous growth of the craft beer industry. Based upon research and the strong financial position of SNB, adding the Blackberry Ale brand to the organization can only increase the profitability and value of the organization. Each time SNB has added depth to the Sierra Nevada line, the company has only prospered financially, and in terms of gaining exposure, which adds value to the organization. Additionally, the community has benefited from SNB’s success, as SNB has been proven to be a strong player in social responsibility.

SNB anticipates the production of a new, East Coast brewery in 2014, will support its objectives, and while increasing the profitability of the organization. The addition of a second brewery strategically adds value to the organization as it enhances supply chain management, increases awareness, while potentially doubling production and capacity. it is estimated that after introduction sales of Blackberry will grow, reaching 1% of SNB beer sales after 1 year. Blackberry Ale is expected to break even and become a profitable product, based on expected sales and costs of introduction into the market. Implementation Plan

Blackberry Ale has already passed all necessary guidelines established by SNB. As the fourth quarter quickly approaches, SNB will continue its successful strategy of producing Celebration Ale; a highly demanded brand that is synonymous with the holiday season. SNB is fearful that launching Blackberry Ale during this time would conflict with the established and successful release of the seasonal Celebration Ale; therefore, the launch of Blackberry Ale into the market is planned to coincide with the grand opening of the new brewery, under construction in North Carolina, which is the first quarter of 2014.

Evaluation Metrics and Control

SNB has determined it will analyze the addition of Blackberry Ale, ninety days after the launch of the product into the market. All introductory promotions will terminate after ninety days to access the future profitability of adding flavored ale to the brand line. Additionally, Blackberry Ale will be analyzed again each month, for the next three months to determine how the new product sales without added promotions. After six months, a thorough analysis focusing on sales, market share, brand recognition and profitability will be used as evaluation metrics, to determine the profitability, and future of Blackberry Ale.