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02/10/2021

Category close-up: Private label beer builds back

While wine grows, the private label beer category looks to rebound from a rough year with help from flavorful infusions and specialty beers.

For much of its history, private label beer has remained under the radar. The category dates back to a line of beer introduced by Ralphs supermarkets in the early 1990s. During the ensuing microbrew craze, retailers figured out they could get a high quality lager or ale from a small but reputable craft brewery and sell it profitably under an obscure name. Growth over the next three decades was slow but steady. At the start of last year, private brands accounted for about 2-3% of beer sales across major U.S. grocery chains, according to Bump Williams, a beverage industry consultant in Shelton, Conn., based on an analysis of data from over 1,000 retail stores.

Then COVID-19 hit, and the bottom fell out of the category. “Sales dried up because consumers were going for beer brands that they trusted and knew,” Williams said. “That name recognition matters a lot more in the beer aisle than it does in wine. It’s going to take a long time for [private label] beer to bounce back.” 

It wasn’t just private label beer that had a rough year. Total beer volume in the U.S. is projected to drop by 4.9% in 2020, per IWSR Drinks Market Analysis data.

But it’s not all doom and gloom. Corp-orate partnerships like the one between Dunkin’ Donuts and Harpoon Brewery could provide a model for retailers, said David Steinman, senior editor of Craft Brew News. Last fall, Boston-based Harpoon launched a series of coffee-and-donut-infused beers with the Dunkin’ name, a first for the chain. “It was a smart move for Harpoon to hook up with a massive company like Dunkin’ and get their products out to a wider audience,” he said.

Convenience store chains Wawa and Sheetz have been partnering with local breweries for the last few years to launch exclusive, specialty beers at its stores.  Wawa worked with 2SP Brewing for a Holiday Reserve Coffee Stout this past holiday and the one before using Wawa’s store brand Winter Reserve Coffee blend. Beers are sold exclusively in the stores and at the brewery.

Sheetz has done the same, launching exclusive beers with a few local breweries. Recently the chain used its Shweetz Glazed Vanilla Donut holes, store brand coffee and even its own brand hot dogs to be brewed into specialty beers that they could sell in stores. That last beer was called Project Hop Dog and done with Neshaminy Creek Brewing.

Dessert-infused craft brews are a sweet spot for Trader Joe’s. The retailer launched its own brand beer using its popular Trader Joe’s Speculoos Cookie Butter product. The beer is Cookie Butter Beer and was joined in the fall by Coffee Peanut Butter Cup, Ginger Bread Spiced Stout, Toasty Cookie Spice Cider, and the return of last year’s own brand Howling Gourd Pumpkin Ale beer and Gourd Tree Pumpkin Cider.

The Cookie Butter Beer offering started off as a porter but they worked on it to get more of the cookie butter taste, Trader Joe’s said in an episode of its popular podcast. The beer was switched to an Imperial ale that’s 9.5% ABV and “tastes just as good as what we have in the jars,” the beer developer said on the podcast.

Dessert-infused craft brews also are a sweet spot for Worcester, Mass.-based Wormtown Brewery. The company has partnered with branded pie company Table Talk Pies for fruit-flavored sour ales that earned some retail distribution on the east coast. While not a retailer, it is another example of how brewers can partner with retailers.

Wormtown founder and brewmaster Ben Roesch said that dessert beers can veer from the standard trend too. “Whenever I see a direct-to-consumer brewery launching a product, it’s almost invariably a New England style IPA or a fruit-heavy sour ale,” he said. The sours tend to have bold packaging worthy of Instagram, “which is a big deal nowadays,” he noted.