A New Religion by Christine Birkner

marketingnewsâ&#x20AC;&#x192;10.30.11

AMA103011_INI.indd 18

9/28/11 6:05 PM

By Christine Birkner//Staff Writer 19

 cbirkner@ama.org Photos by Stephanie Mosir Cordia

A New Religion In the birthplace of Anheuser-Busch, a craft brewery found a way to convert legions of beer drinkers into brand disciples

omparing the opening of a Midwestern brewery to the founding of a new religious order might sound like nothing more than a marketer’s hyperbole, but for Tom Schlafly and his faithful disciples, it’s an apt analogy. Schlafly is co-founder of The St. Louis Brewery Inc., a craft brewery that he and his business partner, Dan Kopman, launched in 1991 just three miles from global beer titan Anheuser-Busch’s headquarters. To set themselves apart in the beer-soaked St. Louis market, the fledgling brewers—makers of the Schlafly line of craft beers—relied on savvy positioning and promotions, offering consumers handmade products from a local microbrewery as the antithesis of A-B’s global conglomerate. Twenty years, many new acolytes and several thousand pints later, their approach seems to be working.

Fermenting a Plan

AMA103011_INI.indd 19

beers and throw some really fun parties,” according to the company. They set up shop in December ’91 with one brewery that in 1992, its first full year, churned out approximately 880 barrels. Schlafly started with four varieties of beer: a pale ale, a hefeweizen, a pilsner and an oatmeal stout. At that time, all of the beer was sold at Schlafly Tap Room, the company’s first restaurant/brewery, and two years later Schlafly started selling to other bars and restaurants in the St. Louis area. By 2001, Schlafly brewed more than 9,000 barrels. This year, with two breweries operating at full tilt, Schlafly is on pace to brew more than 40,000 barrels—or about 1,600 to 2,000 cases and 240 to 300 kegs on a typical day. Schlafly now works with 12 distributors to serve St. Louis and the surrounding area. It brought in $13 million in revenue last year, employs 160 people and runs two restaurants attached to its breweries. Schlafly has won accolades from the beer community as well. Its KÖlsch, a golden ale that uses a centuries-old yeast strain sourced from KÖln, Germany, won a gold medal for best German-style KÖlsch at the 2010 World Beer Cup, hosted biannually in different locations throughout the United States by the Brewers Association, a Boulder, Colo-based trade association.

The Beer is the Brand

This is, of course, a marketing success story, but Schlafly and Kopman— and even the company’s head of marketing—are hesitant to acknowledge that they’ve drawn up an official marketing playbook of any kind. They even shy away from labeling Schlafly as a brand with a capital “B.” “I came from a brewery in England where marketing was a fourletter word. It was about the beer. It was about the pub. It was about the experience,” Kopman says. “My impression of a marketing organization is, you find out what consumers want and then you develop brands

marketingpower.com

St. Louis natives Tom Schlafly—a lawyer by training—and Dan Kopman met through Kopman’s father, who was Schlafly’s law partner. Kopman had spent a decade working for breweries in England and Scotland after college, and when his business brought him to St. Louis, he and his father would meet Schlafly for lunch and discuss the growth of microbreweries throughout the country. Kopman eventually convinced Schlafly that there was a market for craft beer in St. Louis. In 1989, Kopman and Schlafly took the first steps in incorporating The St. Louis Brewery Inc., which was founded in 1991. While that remains its official company name, the brewery and its portfolio of offerings now go by the brand name Schlafly. It was a bold move to even attempt to open a brewery in a town that A-B practically owned, Kopman acknowledges. “There wasn’t a part of [St. Louis] society, even if it didn’t have to do with beer, that wasn’t touched in some way by that company. They were it,” he says. “It was a huge help in the beginning because it provided a lot of free publicity. ‘Here’s somebody stupid enough to open a brewery in St. Louis,’ was essentially the story. ‘They’ll never make it.’ And then we survived and kept surviving. There were enough people in St. Louis looking for something different.” Schlafly and Kopman decided to create a fiercely local, sustainabilityminded microbrewery whose mission is to “make a wide variety of great

“ ‘Here’s somebody stupid enough to open a brewery in St. Louis,’ was essentially the story. ‘They’ll never make it.’ And then we survived and kept surviving. There were enough people in St. Louis looking for something different.” Dan Kopman, Schlafly’s co-founder

9/28/11 6:06 PM

“We’re not trying to tell anyone, ‘If you drink our beer, you’re a better cyclist or hot babes will like you better.’ We’re not trying to be a lifestyle brand. We’re trying to say: ‘Here’s some good beer. You should try it. We’re also local, so that’s pretty cool.’ ”

Susan Haberer, Schlafly’s marketing director

around that concept, and the actual product and its packaging falls downward. [Ours] is more of an uphill approach. We said, ‘We like to drink these beers and we believe that there are going to be other consumers who want to drink these beers, so we’re going to make these beers, and we’re going to create an environment in which people can enjoy these beers and learn about these beers.” The goal was to be local, or at most regional, without going national and becoming too corporate, Kopman says. “At this point, we’re still not a ‘brand.’ We’re a local brewery that makes these beers and we felt this brand image better reflected that.” Schlafly Marketing Director Susan Haberer agrees. “We’re not trying to tell anyone, ‘If you drink our beer, you’re a better cyclist or hot babes will like you better.’ We’re not trying to be a lifestyle brand. We’re trying to say: ‘Here’s some good beer. You should try it. We’re also local, so that’s pretty cool.’ ” Terry Lozoff, president and CEO of Antler, a Boston-based experiential and digital marketing agency that is the agency of record for Magners Irish

Cider in the United States and was previously agency of record for Miller, says Schlafly is following an effective marketing road map for a craft brewer. “That’s part of the make-up of a successful craft beer: that the founders and the people behind it are fully invested in it for the love of the craft or for creating a really quality product. It’s hard to be successful if you’re in it to establish a brand first, and they’ve established a product first and built a good name locally.” If one were to put traditional marketing labels on Schlafly’s business plan, one could easily pinpoint the branding, positioning, event, experiential, digital and cause marketing elements, to name a few, as well as a carefully considered distribution model, a sophisticated CRM strategy and a savvy application of customer research.

marketingnews 10.30.11

A St. Louis Thing

AMA103011_INI.indd 20

Schlafly’s distribution model is, as mentioned earlier, all about St. Louis. “St. Louisans tend to be very loyal to things that are unique to St. Louis, whether it’s the Cardinals or Gus’ Pretzels, or Fitz’s Root Beer, or toasted ravioli,” says Schlafly Event and Tour Manager Stewart Wolfe. To leverage that hometown pride, Schlafly beer is only available within a 300-mile radius of the city (and in Washington, D.C.—see the sidebar on the next page), and the company has no immediate plans to expand its reach. There’s also a product quality reason for that, Kopman explains: Beer stays freshest when it’s shipped shorter distances, so the quality of the beer stays intact. The local distribution also saves money on transportation. On the cause marketing and sustainability fronts, Schlafly is deeply involved in shoring up the St. Louis community from both a business and an environmental standpoint. The brewery won a “Heroes of the Planet” award from the St. Louis Business Journal in 2008 for its sustainable operations. As a member of Ameren UE’s voluntary renewable energy program, Pure Power, Schlafly pays an extra one and a half cents per kilowatt hour on its energy bill to support wind farms and the development of renewable energy. Schlafly also recycles light bulbs, batteries, shrink wrap and plastic strapping from the breweries. At its two restaurants, it

composts food scraps—diverting 55 tons of organic waste from entering landfills in 2009—and uses locally produced, EPA-approved cleaning chemicals. Schlafly’s brewery-restaurants, Schlafly Tap Room and Schlafly Bottleworks, are housed in long-abandoned, rehabbed buildings. At Bottleworks, Schlafly hosts weekly farmers markets and has a garden that grows some of the food served there. Schlafly also purchases food from local businesses and farmers for its restaurants, and teams up with local businesses to create specialty beers, working with St. Louis-based Kaldi’s Coffee Roasting Co. on its coffee stout and raspberry coffee stout beers. Schlafly’s farmers market came about when local growers who were supplying Schlafly’s restaurants stopped into the Tap Room for some beers and mentioned to Schlafly execs that fuel prices were spiking, increasing their cost of deliveries. “The whole idea was, how can we help them by connecting them with consumers? If we sell a few more beers, then that’s great,” Kopman says. “It’s all about personal relationships. St. Louis is a community that is fighting to maintain its relevance, its size, its scale in the country. Finding a new way forward is going to be all about building up the new local companies. We derive 90% of our revenues from the local economy and that’s unlikely to change dramatically. We have to play a part in the work to rebuild St. Louis.” To that end, Schlafly is involved in BUILD St. Louis, an independent business alliance that promotes locally owned businesses. Schlafly’s sustainability initiatives are a normal order of business rather than a marketing ploy, Kopman says. “It was not about following a trend. I would describe all of that in one word: local. … The money has driven us

to focus on our local market and, naturally, we want to support other local companies and other local producers. It’s all about building a sustainable community, but that started long before the idea of a sustainable community came about.” There is, of course, a marketing benefit from such sustainability initiatives, according to Properties and Sustainability Manager Tom Flood. “They make us look good,” he says. “[People say,] ‘They do the right thing.’ ”

‘Really Fun Parties’

Event and experiential marketing play a big role in boosting the brand’s customer loyalty, as St. Louis’ craft beer enthusiasts seem to enjoy the “really fun parties” aspect of Schlafly’s business and marketing plan. Hundreds of Schlafly loyalists show up at sponsored events, music festivals and art fairs within the city and at Schlafly’s restaurants. Schlafly sees these events as a way not only to maintain loyalty among its existing consumer base, but also to educate new consumers about its beer, Haberer says. “Before Facebook and Twitter, events were the main way of talking to our consumers. We used to beg to get into events and then when we couldn’t get in, we would create our own. Now we are bombarded with [requests]; we’re higher up in people’s minds,” she says. Beyond the farmers markets and other events, Schlafly hosts brewery tours to educate consumers on its products and hopefully indoctrinate them into the Schlafly brand culture. “[People] are actually knocking on our door saying, ‘Tell me more about your product; I want to taste it.’ We pull about 1,000 beers a month and have a staff of seven trained tour guides. The goal is to turn our tourists into beer advocates themselves, to give them information to turn around and tell their friends,” Wolfe says.

Ramping Up Research

With an intentionally restricted market, it’s imperative that Schlafly finds ways to attract new customers within the confines of the St. Louis marketplace, so customer data is key. When asked if Schlafly has a marketing

9/28/11 6:06 PM

Schlafly Goes to Washington Schlafly is all about St. Louis, but it also has a small fan base in Washington, D.C., as Schlafly co-founders Tom Schlafly and Dan Kopman both have friends and family in the area. Schlafly earned his law degree at Georgetown University and Kopman has worked with the Brewers Association, a Boulder, Colo.-based trade organization, on its lobbying efforts for tax relief for small brewers.

21 Left: Schlafly Co-founder Dan Kopman and Properties and Sustainability Manager Tom Flood. Below: Schlafly Bottleworks.

The small-brewery bills—the Brewer’s Employment and Excise Relief Act of 2011 and the Small Brewer Reinvestment and Expanding Workforce Act—were introduced in March and are still up for debate, but in the meantime, politicians and beer aficionados alike can enjoy Schlafly beer throughout the Washington region, including parts of Maryland, Delaware, Virginia and New Jersey.

AMA103011_INI.indd 21

“I came from a brewery in England where marketing was a four-letter word. It was about the beer. It was about the pub. It was about the experience.” Dan Kopman, Schlafly’s co-founder about its beer styles. And most participants weren’t even familiar with the term “craft beer.” “We were better off calling it ‘fancy beer,’ ” Haberer says. Schlafly bottles six styles of beer year-round, has six seasonal releases, 10 styles in 750 ml bottles and more than 20 rotating seasonal beer styles available on draft at its breweries, but focus group participants didn’t know the difference, for instance, between a hefeweizen and an oatmeal stout, and if they didn’t like one type, they would assume that they disliked all Schlafly beer. So Schlafly continued its emphasis on education in its advertising. Kopman and Haberer also learned from the focus groups that craft beer is very occasion-driven, so when the media planners suggested they do billboards, they realized that their previous slogan, “Handcrafted, in Small Batches” wasn’t going to work. “To them, that meant men with beards who make beer that nobody else wants to drink,” Haberer says. The new slogans use clever plays on words or occasions, such as: “It’s Summer Lagerific,” “Time for a Beer-B-Que,” “Witness a Beeracle” and “Welcome to Brewtopia.” The seven billboards across the St. Louis metro area will run during the summer, Halloween and Thanksgiving seasons, all major beer-selling seasons. The brewery also is running ads on St. Louis Public radio and in St. Louis Magazine, Sauce Magazine (which is geared toward St. Louis foodies) and the Riverfront Times (an alternative weekly newspaper). “The conclusion we came to was, we’re not going to change who we are and what we’re doing. We’re not going to leave behind

marketingpower.com

research department, Haberer laughs. “Dan [Kopman] has always been our market researcher. He’ll go to the Schnucks by his house and kind of lurk in the beer aisle and watch what people are buying. I’ve caught him doing it.” All kidding aside, Schlafly takes its marketing research seriously, particularly after the sale of Anheuser-Busch in 2008, after which Schlafly sales doubled thanks to St. Louis consumers’ hometownpride-led purchase behavior. With higher expectations for the brewer, its advertising needed to be ramped up in the years that followed, Kopman says. “From 2008 to 2010 during the growth we experienced, there was so much press, so much public discussion.” There was no need for Schlafly to step forward and demonstrate the points of differentiation between itself and A-B because “others were doing that for us,” he says. “We were baited to join the conversation and say things that we would’ve regretted saying about A-B. These people were our friends; so many of them had lost their jobs. We didn’t need to join the chorus. We just needed to figure out how to make more beer,” he says. So in mid-2010, Haberer and Kopman hired a media buying company to show them the bigger picture for Schlafly’s consumer data. Schlafly already had a store of both qualitative and quantitative research on customers. “There are people we see at our restaurants three times a week. I know their name, I know their middle name, I know their social security number,” Haberer laughs. “We had this information all along. They just took it and organized it and showed it to us differently,” she says. They used the data, including Schlafly’s highest-selling zip codes, to determine new ad buys. Schlafly also conducted in-person focus groups made up of different types of local beer drinkers: those who prefer American light lagers, like Miller and Budweiser; craft-beer-only drinkers; and so-called crossover drinkers, who drink both, which Schlafly considers its target market. They found that focus group participants knew of Schlafly as a company, but they were uneducated

9/28/11 6:07 PM

anybody who [helped] us get to this point—stakeholders, consumers, retailers—but we need to do a better job of reaching people with our message,” Kopman says.

This Round’s on Us

Another peg in Schlafly’s marketing strategy is its SIP Club, a loyalty program started in 2006 that attracts about 500 people every year, according to Haberer. For an annual fee, SIP Club members get perks like the opportunity to drink from an imperial pint glass, which is bigger than the restaurants’ standard glasses, as well as discounts on beers and retail items, and exclusive invitations to attend events and volunteer at festivals. “That circle of 500 people is really helping to pay the bills around here, and we’re inviting them to special events and they’re coming,” Wolfe says. Loyal drinkers also stay plugged into all things Schlafly via its website, iPhone app and social media pages. Facebook and Twitter pages for its beer and restaurants keep fans updated on events, seasonal beer releases and which area grocery stores carry its special-release beers, and also allow customers to report quality control issues. If customers see a case of beer on a store shelf that is several weeks old, Schlafly can learn about it quickly via Facebook and work to solve the problem right away, which is a huge advantage, Haberer says. Communications Director Troika Brodsky, who runs the page, answers individual questions quickly. “If there’s a [Cardinals] baseball game, he’ll spend the first hour of that baseball game

[on Facebook] telling people where to find our beer” in Busch Stadium, Haberer says. A handy map on Schlafly’s blog also points customers to the locations where the beer is sold in the stadium. From its local focus, to its sustainability initiatives, to its social media efforts, Schlafly’s instinctual approach to marketing has served the business well, experts say. “Over their history, they’ve stayed very true to their roots. They’ve had this laid-back approach. That, in itself, is a pretty effective strategy. There’s a lot of allegiance in consistency,” says Colin Gold, general manager at Taphandles, a Seattle-based beer branding and product development company. “It’s important for them to … make sure they communicate effectively that they still want to be local. … It’s always a challenge: How do you grow and still maintain some of the magic that kept you popular at the beginning?” Whatever the future brings, Kopman says that Schlafly will remain committed to its personalized approach to reaching consumers. “We accept and embrace the fact that there are aspects of our business that are not scalable. … It was all about making personal connections, whether it was inside the restaurant or outside at tastings or other events. It’s all about building those relationships between ourselves, our retail partners and our consumers. Everything we’ve done plays into those strengths we’ve established.” Legions of faithful beer drinkers across St. Louis no doubt would say a fervent amen to that.

H E T B T U ARREL O L L O R Since the microbrewery’s first full year of business, Schlafly’s beer production has grown exponentially:

marketingnews 10.30.11

40,000 barrels

AMA103011_INI.indd 22

880 barrels

1992

9,000 barrels

2001

2011 9/28/11 6:07 PM

A Brewer’s Musings Schlafly Co-founder Tom Schlafly’s book, A New Religion in Mecca: Memoir of a Renegade Brewery in St. Louis, offers several bon mots on Schlafly and St. Louis history. For instance, when Schlafly beer first became available in Busch Stadium in 1997, as a nod to the famous Budweiser Clydesdales, the first Schlafly keg was brought into the stadium on a red wagon pulled by Tom Schlafly’s Chesapeake retriever, Sparky. Here are some other tidbits from the brewery leader’s very quotable tome: On Schlafly history: “The history of Schlafly Beer has involved a lot more improvisation than careful orchestration. At times it seems that we’re almost like a football team that runs nothing but busted plays. While some might decry our apparent inability to follow a business plan, I am convinced that we would not have survived … if we weren’t able to adapt to changing and unforeseen circumstances. … In countless instances, we have made the right decisions for the wrong reasons.” On running out of beer at Schlafly Tap Room in January 1992, a few weeks after Schlafly’s grand opening: “While we thought we had brewed an adequate supply of beer, we realized that we were going to run out before the next batch was ready to be tapped. Shortly before midnight, Dan stood on the bar and announced to a crowded room, ‘I’m terribly sorry, but we’ve run out of beer.’ The reaction among the patrons was not the disappointment or anger he had anticipated. Instead, a spontaneous, triumphant chant arose: ‘We drank ’em dry! We drank ’em dry! We drank ’em dry!’ ” On a visit to Schlafly Tap Room by Anheuser-Busch scion August Busch III in 1993: “Mr. Busch showed persistence in trying to order Anheuser-Busch products in the face of being told repeatedly that we only sold Schlafly Beer. Despite his disappointment, I have been told by the server who waited on him that he seemed to enjoy his lunch and left a generous tip.”

On a 1995 column by the St. Louis Post-Dispatch that jokingly suggested that Schlafly buy the St. Louis Cardinals baseball team when Anheuser-Busch put it up for sale: “We put a jar on the bar to collect donations to help us finance the purchase. Then we drew a graph on a chalkboard to show how the campaign was going. ‘Amount needed: Over $150 million. Amount raised to date: $134.’ An unidentified employee added the helpful observation, ‘This could take a while.’ ” On creating a beer to commemorate Pope John Paul II’s visit to St. Louis in January 1999, and resulting media coverage from across the United States and Mexico: “Because the pope is properly referred to as His Holiness, the name we chose for the beer—possibly with the aid of divine inspiration—was Holy Smoke Papal Porter. It’s safe to say that nothing we have ever done in the history of the brewery has generated publicity on the same scale as the media frenzy that surrounded this beer. … Demand at the Tap Room was so high that we had to stop serving it weeks before the pope arrived, in order to ensure that we had an adequate supply while he was in town.” On beer: “Beer is indeed a strong brown god, a beverage with its own deities in the ancient religions of Sumeria and Egypt. … Perhaps it was inevitable that a business built around brewing would be as unpredictable as the beverage at its core. And just as much fun.” m

Editor’s Picks @ MarketingPower.com For More on Beer Marketing and Sustainability Initiatives:

Articles Bud Parent Company Tries to Be ‘Weiser’: Changes to A-B’s Marketing Driven by Cost Cutting Find out how Anheuser-Busch changed its marketing structure in 2010 after its takeover by Belgian brewer InBev in this Marketing News Exclusives story.

Visit MarketingPower.com/marketingnews.

AMA103011_INI.indd 23

marketingpower.com

Green Global Brands: The New World Order This Marketing News Q&A explains how consumers’ green concerns and marketers’ sustainability efforts vary worldwide, and how the global green phenomenon impacts marketing stateside.

9/28/11 6:07 PM