The Boston Beer Company Essay
The Boston Beer Company
The Boston Beer Company, Inc., founded in 1984, is a leading brewer in United States, offering wide variety of high quality full-flavored, handcraftedbeers. It is distinctive due to the time-honored recipe of brewing and authentic, consistent quality of alcoholic beverages. Samuel Adams Boston Lager is the pride of BBC, regular handcrafted beer “stands for quality, inner self-worth, authenticity, and unique New England or Yankee toughness” ( Martin Roper, Chief Operating Officer).
Unfortunately, the company experienced the failure of conquering light beer segment in 1998 as the beer market is a highly competitive industry, which requires not only the great product but also high brand awareness. Right now there is an attractive opportunity for BBC to enter the field of light beer once again. Should Boston Beer Company capture this chance or let it slip? Before presenting new light beer and cut the risk of second epic fail, Boston Beer Company have to examine in detail the feeling and thoughts of light beer drinkers.
Moreover, BBC should understand why such an extraordinary flavorful and heartiness Lightship did not succeed. To find out what is light beer experience1700 males and females (ages 25-39) were surveyed to find out what is light beer experience. The field study (Exhibit 8A) proved that light beer is more about simplicity, energy and group identity rather than full-bodied, hoppy and flavorful drink. Because of this misleading concept, which BBC heavily invested in, creating strong brand image, Lightship sales have eroded to 3,000 sales per month in 1998. In the first place, Light beer consumers are aware of simplicity of a drink.It has to be simple in taste, appearance and scent.
* The taste should not be complex and bitter
* The scent has to be barely perceptible
* The label should deliver lively colors as a symbol of energy, sports activity and celebrations Secondly, interviewees consider light beer with refreshing andself-control. The gulp of light beer should be positioned as jumping into refreshing pool and energy giving, which links to healthy environment. Lots of people would like to drink light beer after any sports or physical activity like basketball game because it is low-alcohol beverage, which gives self-consciousness and control over alcohol effects.
Furthermore, light beer can be a fuel that will drive you to continue swimming match, for example. Thirdly, surveyed males and females drew the link between the light beer and group identity. Certain drinks delivers a certain message about who you are, your social position and activities that you do. Light beer can be a social sign and the effect of group awareness. Light beer drinkers may have a perception about their choice of low-alcohol beverage as maintaining the control over the weight and “bloatedness”. All things considered, the identified constructs about light beer experience are interrelated and can be easily combined in a map with its core and links to other concepts.
This is a summary of characteristics that light beer should have according to Field Study Team’s Narrative Summary of the Light Beer Experience. It might be useful to compare this map to the vision of successful giants as Corona and Bud Light to observe common and distinctive constructs. Corona positions its product with happy moods, joy to life and “don’t try so hard” concept. Here is the obvious matching with simplicity and maybe sports activity as it brings us joy and happiness to life. Most of the pictures associated to Corona’s constructs show the social belongingness of people spending their time together. It can be considered as group identity that is reflected by social drink. Bud Light is focusing on refreshment and flavor. Their website targeted thirst quenching, which is very important for light beer consumers.
This concept appears on our map and it is not surprisingly. What is truly surprising is that Bud Light taking for credit flavorful construct. We do remember that BBC invested in this mainstream andthere was no change in brand awareness of customers. That is why the importance of fully-flavored concept is out of the map. The question is should Boston Beer attack light beer market? And the answer is yes. Here are the main reasons why BBC should capture their opportunity. – The recent market position of Samuel Adams beer is very strong, as well as growth prospects. According to Boston Beer Portfolio (1997) showing that Boston Lager and Seasonals have grown by 5% and 10% respectively since 1996.
Moreover, if we take a look at Exhibit 7 showing men preferences over regular beer we will see that 45% of weekly servings are SAM (Boston Beer Product). People may rely on their past experience of drinking regular beer by BBC and take a chance to try light beer by the same company, switching from Bud and Amstel to Lightship. – Best rankings in preferences over other light beer alternatives In 1987 when Lightship was introduced, 90 out of 100 voters preferred Lightship and marked it as their favorite. One decade passed, but the preferences did not change according to Blind Test (Exhibit 7).
Lightship received the lowest point sum average (the best results) struggling with powerful players as Coors, Bud and Amstel. This test included men and women in participation, who evaluated beer’s color, taste/aftertaste, freshness and smell. Lightship earned 1.69 among men and 1.79 in women sector. Comparing to the most popular Amstel (63% of males, ages 26-34) under weekly servings, which gained 3.47, Lightship is unquestionable winner. This is a signal that product quality is essential for BBC to maintain their brand image and prestige. – Robust network of breweries for local distribution
Boston Beer company has a significant advantage in advertising, sales force and profit value to local distributors. There are 200 of salespeople in BBC, while Corona, for example has only 120. Furthermore, advertising budget is high enough to take the opportunity to enter Light Beer sector – 20 million dollars, almost like Heineken one. This makes BBC the dominant craft brewer in United States. Let’s now imagine that Boston Beer made a difficult decision and entered the market. Obviously, if they follow the way started in 1987 and throw “more marketing muscle” Lightship will fail once again. What can prevent the failure or at least reduce the risk of it?
1. Reposition Lightship
As mentioned earlier, researches demonstrated that people do not feel that full-bodied, hoppy and flavorful drink is related to light beer. For 4 years BBC invested to create this brand image and the result was leaving the battlefield. What truly matters is simplicity, energy boost, refreshing and group identity (refer to our map). Jim Koch determined that ” Light beer is fundamentally half-baked beer”, and that is why it’s purpose is different from regular beer. There is a strong ties between light beer and healthy environment and refreshing after physical activity. It is enjoyment and control at the same time. It is more social drink, connected to group activity, rather that solitary environment.
2. Cut the price
Despite the fact that net income is declining (from 7,558 to 2,076 in 1997/1998), the prices should be reduced to reach low switching costs among consumers. Those who are willing to pay a higher price for a bottle of beer are not light beer consumers. Boston beer should recall simplicity concept and also reduce the total cost of Lightship production. BBC have to take for credit the facts that barriers to entry at the microbrewer level are low. In addition, intensive effort to penetrate the market from industry giants is also leads to price reduction.
3. Change the label
The front of Lightship do not deliver the message of energy giving, simplicity and refreshment. It is a faded red boat in the storm, colors are washy, sorrowful and tragic. In Exhibit 7, some respondents claimed that label is unattractive and hence, unknown. The idea is to symbolize the easy way to enjoy the life, freedom and refreshing qualities. The ship has to be more colorful in the light of the sun, the sea should be crystal clear and calm. After these changes the name recognition will be reached as well as high level of brand awareness.
Make Lightship “lighter”
To sum up, Boston Beer Company, as US leading brewer of handcrafted, full-flavored beers, have to take a chance of entering light beer segment. It should make the most of its research data, uncover consumer insights and respond quickly to changes in the market while maintaining high product quality. BBC might be able to achieve the same or even greater success than Amstel or Bud. High-end light beer is wanted, Lightship can be a powerful supplier despite the first failure in that field. If Boston Beer will count mentioned recommendations, the chances of success are high enough.
University/College: University of Chicago
Type of paper: Thesis/Dissertation Chapter
Date: 22 November 2016
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