A Case for Beer Clubs
You don’t have to look much further than breweries such as Cigar City Brewing and The Bruery to see who’s really doing beer clubs right. These companies have mastered the art of the club, and the demand by beer lovers to gain membership into these exclusive societies can resemble that of children chasing after candy that spills out of a broken piñata. This demand has been known to cause employees to call in sick to ensure they don’t miss a special release, and for some of the more popular clubs, the influx of website visitors trying to grab a few remaining memberships can reach into the thousands.
With the explosion of the Craft Beer Industry and the demand for clubs being so high, should your brewery consider setting up a beer club?
There are several benefits and a few challenges that a brewery should recognize when considering establishing a beer club. Below you will find some bullet points outlining the two sides.
Beer Club Benefits
It’s hard to think of a business which has a more loyal customer base that truly revers being acknowledged for being a regular, than beer. I personally enjoy heading to my local taproom and being recognized by the people who work there, being called by name (insert Cheers reference), exchanging pleasantries and having my favorite beer remembered or being recommended a “can’t miss” special release. There’s no question that if my favorite local taproom offered a beer club I would join. The truth is because I feel like a “regular”, I already consider myself part of the club-they just haven’t asked me to make it official.
A beer club offering can act both as a formal recognition of a customer’s loyalty by the brewery as well as the customer’s formal commitment to the brewery.
Here are several benefits to establishing a Beer Club:
• Brand Loyalty
• Up-Sell & Repeat Purchase Potential
• Offering Exclusivity (The VIP Treatment)
• Establishing Brand Ambassadors
• Building Valuable Relationships
• Recurring Revenue Stream
– Brand Loyalty
It’s assumed that customers who are loyal to a brand will buy that brand with any opportunity they get. However, competition in the beer space is fierce and there are thousands of beers available at almost every turn with more popping up every day. Not to mention that when it to comes to beer, it can be considered “cool” to walk into a bar or down a grocery isle and order or buy the latest and greatest of another brand. This makes it extremely difficult for you to build what might traditionally be considered a loyal customer.
Establishing a beer club provides extra incentive for your customer to make the effort to purchase your brand. For example, if I know as a club member I can receive a discount on my favorite growler, case or pint, it may be that I’ll bypass alternative purchasing options and head straight to the taproom to pick up my beer for the weekend.
– Up-Sell & Repeat Purchase Potential
The first time a visitor purchases from you, you’re typically not turning a profit on that sale. When you consider all of the factors that it took to get that visitor into the door to buy your beer, you’re likely in the red overall. This means that you need to maximize this opportunity to make sure they buy as much beer or merchandise as possible and more importantly make sure they come back over and over again.
Offering a club membership is a natural up-sell. If someone loves your product and is enjoying their experience, use that opportunity to entice them to join the club and don’t feel bad because they may have had a buzz when they said “yes”.
When it comes to repeat purchases, club members have already made a commitment to your brand. They have done so by taking the time to sign up and in some cases even pay for a membership. These types of customers are waiting for you to tell them what else they should purchase.
– Offering Exclusivity (The VIP Treatment)
By creating a beer club you’re telling your most important and profitable customers that you appreciate their commitment and to show your appreciation you’re going to give them the VIP treatment whenever possible.
Give your beer club member’s first access or even a special section at events. Offer merchandise (that you sell at a profit) to beer club members only. Have club member pick-up parties. If you plan to release a new beer, give them first access or even a VIP line in the taproom.
Your beer club members will love the VIP treatment and others who are not club members will see this treatment and want in the club themselves.
– Establishing Brand Ambassadors
Beer club members could prove to be one of your most valuable marking tools. Once someone joins your club they will use this as a social status amongst other beer lovers. Not only will they sport your merchandise at every drinking event they attend, they will also tell others about their favorite brewery, the benefits of being club member and why at the very least the person they’re speaking to should try your beer the next chance they get.
Club members are walking sales representatives and they are more than happy to help spread the word about your beer. Word-of-mouth advertising can be difficult to come by but offering a beer club can formally empower your club members to recommend you and your beers and suggest that others should join the club too.
– Building Valuable Relationships
If you went to Google and ran a search for what it takes to build a healthy relationship you’re going to find terms such as “commitment”, “mutual tastes”, “communication”, “shared values” and “compatibility”. Like it or not you’ll share a lot in common with your beer club members and these relationships can help you shape your business.
Let’s face it. Most beer club members dream of owning a brewery themselves and they likely won’t be shy about providing opinions. However they can also be an educated resource from which you garner feedback from that may help you push yourself to be a better brewer. You’ll spend time creating beer that you know your favorite customers will be happy with, and if you can make them happy, it’s likely that others (non-club members) will follow suit.
– Recurring Revenue Stream
Up to this point we’ve only brushed by the financial benefits of a beer club however a successful club can provide a profitable, steady revenue stream that adds predictability to what can be considered a very unpredictable environment.
When a company is budgeting/forecasting they are making some very large assumptions based on past behavior. For example over the last 3 years you’ve generated approximately $100k in sales during the month of March so you’ll anticipate that you’ll do $100k this March. However anyone who’s run a business knows that there are several factors that can contribute to this amount fluctuating significantly and there are no guarantees that you’ll come close to your forecast.
Beer clubs help solidify a portion of your anticipated revenue stream. If you have a beer club with hundreds of members and you have a release every three months you can predict with precision what type of revenue that’s going to generate. Ultimately this ability to rely on a guaranteed revenue stream significantly reduces your company risk and increases your brewery’s value.
Mary Brettmann of Beverage Business Builders www.bevbizbuilders.com states, “The three-tier system takes a lot of money off the table for brewers. The trick is to save that margin and sell your beer on-site if you can. One of the biggest emerging trends that I see is the growth of premium beer and beer clubs are the best way to deliver that beer.”
Beer Club Challenges
As discussed above, membership has it privileges. However for some breweries managing clubs can also present some challenges. One example in 2014 was the announcement by Crooked Stave that they were canceling their Cellar Reserve Program. Some of the challenges mentioned in their blog might be considered specific to their club configuration or company procedures but they are worth noting as potential challenges that others might face.
• Infrastructure
• Brewery Focus
• Space/Barrel Usage
• State Laws
– Infrastructure
Running a beer club may require extra effort on several different fronts. If you’re not already selling direct-to-consumer you’ll need to have people and processes in place for managing marketing, club sign-ups, order processing, customer service and more as the beer club grows.
While the thought of having to hire extra bodies to manage a beer club initiative might seem unappealing, if you get to a point where you need to bring on more people it will likely equate to you having more club members aka more beer sales aka good problem to have.
There are also also technology companies out there who help manage beer clubs. Now I may be just “slightly” biased, but I feel that Nexternal & HighJump handle this the best (shameless plug).
– Brewery Focus
When you started your brewery you likely had a mission. It could’ve been to make the greatest beer known to man or to simply sell as much beer as possible so you don’t have to go back to your 9:00-5:00. Whatever your mantra may have been you’ve likely had to adjust your thought process here and there to adapt to the industry.
While setting up a beer club may not have been in your plans, it can be one of those things you need to embrace so you can keep doing what you love, which is making great beer.
– Space/Barrel Usage
If you’re a small brewery, barrel space can be limited. Dedicating the resources to producing special releases just for your club members can be challenging.
While you want your beer club to say “exclusive” you don’t always have to provide exclusive beer. Providing your club members with an allocated bottle of beer can be a great way to build demand for membership however just giving club members first access to a public offering will also suffice.
– State Laws
This one is pretty self-explanatory but you’ll want to check your local laws to determine if establishing a beer club conforms to the rules and regulations set forth for breweries in your state.
Conclusion
One of the most important but also challenging things to do for any business is to retain customers. It can be argued that this is even more challenging for breweries. Beer drinkers have so much selection to choose from. Grocery stores, sports bars, convenience stores and now even fast food restaurants offer hundreds of alternatives daily.
Offering a beer club provides you with the opportunity to let your customers know that you’re willing to commit to them and reward them for their loyalty if they are willing to commit to you and to your brand. This matrimony of beer makers and beer buyers uniting as beer lovers, can lead to a long-lasting and profitable relationship.
For more information on setting up Beer Clubs or the technology powered by Nexternal/HighJump please contact Ty Nunez at 800-914-616 x 228 or ty.nunez@highjump.com.
Brewers’ Edge is set of technology modules powered by HighJump that are specifically catered to the craft beer industry and is the technology choice of Cigar City Brewing, The Lost Abbey, Ballast Point and Odell Brewing just to name a few.
HighJump, which is a global leader in supply chain management, offers a suite of tools including commerce applications, warehouse management, business integrations, transportation management and retail/DSD solutions to form a complete, powerful and adaptable platform that allows our customers to drive growth, customer satisfaction and revenue.
eCommerce Ninja by day and husband & father by night. Since 2003 Ty has been part of the fast growing eCommerce industry both as an Account Manager and online retailer. Ty has played a vital role in the conversion, launch and day-to-day operations of hundreds of online businesses ranging from multi-million dollar corporations to one and two person companies.
