Beverages: How Grocery Store Brands Are Winning Over Craft Beer Fans

Why it is the topic trending:

• Rise of Private Label Beer: The increasing popularity and sales growth of store-brand beers from major retailers like Aldi, Trader Joe's, and now potentially Walmart, are challenging the established craft beer market. This shift in consumer behavior is noteworthy.

• Cost-Conscious Consumerism: In an economy burdened by inflation, consumers are increasingly looking for value and are more open to trying private-label options that offer quality at a lower price point than traditional craft beers.

• Quality Perception Shift: The article highlights that even dedicated craft beer fans are being won over by the quality of some store-brand beers, particularly those where the brewing partner is transparent (like Costco's collaboration with Deschutes).

• Evolution of Craft Beer Market: The article suggests that craft beer might be moving from a "shiny new toy" to just another beverage option, leading consumers to be less willing to pay a premium for independent craft brews.

• Strategic Move by Large Retailers: Grocery stores, with their vast customer data and resources, are strategically entering the beer market with their own brands to increase profit margins and cater directly to consumer preferences.

Overview:

The article discusses the growing trend of grocery stores like Aldi, Trader Joe's, and Costco successfully offering their own private-label craft beers that are gaining popularity among consumers, including dedicated craft beer enthusiasts. This rise is attributed to factors like cost savings, improving quality perception, the "craft beer" market maturing, and the ability of large retailers to leverage consumer data to create appealing products. The article provides examples of store-brand beers and the varying consumer feedback they receive, while also exploring the reasons behind this shift in the beer market and its implications for both retailers and traditional craft breweries.

Detailed Findings:

• Sales Growth of Private Label Beer: Sales of grocery stores' private-label beer brands grew by 122 percent from 2023 to 2024, according to Brewbound.

• Aldi's Expanding Beer Portfolio: Aldi has doubled its beer offerings to 16 SKUs in the last two years, with sales growing over 100 percent.

• Walmart's Potential Entry: Speculative reports suggest that Walmart, the largest grocery chain in the U.S., is also planning to introduce its own beer brands.

• Examples of Store-Brand Beers:

  • Aldi: Wernesgrüner Pils, Wild Range Brewing Company IPA, White Tide Wheat Beer.

  • Trader Joe's (Josephsbrau): Drive Thru Red Dry Hopped Red Ale, Stockyard Oatmeal Stout, Boatswain IPA (American, double, hazy).

  • Costco (Kirkland Signature): Helles-style lager brewed by Deschutes Brewery (Prinz Crispy repackaged).

• Consumer Feedback Varies: Reviews for store-brand beers are mixed, with some praising the quality for the price (like Aldi's Wernesgruner Pilsner and Costco's lager), while others find them milder or not as good as traditional craft beers.

• Cost Savings for Consumers: Costco's Kirkland lager is significantly cheaper per can than Deschutes' similar King Crispy Pilsner, representing a cost-saving for consumers.

• Transparency About Brewers: Stores like Aldi and Costco are increasingly open about their partnerships with contract brewers, which can build trust with consumers.

• Maturing Craft Beer Market: The article suggests that craft beer has become mainstream, and younger drinkers may not see it as a distinct, premium category anymore.

• Data-Driven Approach by Retailers: Grocery stores have extensive data on customer preferences, allowing them to tailor their private-label beer offerings to what their shoppers want.

Key success factors of product (trend):

The key success factors for the success of private-label craft beer from grocery stores include:

• Price Point: Offering comparable quality to craft beer at a lower price point is a significant draw for consumers, especially in an inflationary environment.

• Convenience: Being able to purchase beer along with regular groceries is a major convenience factor for shoppers.

• Improving Quality: Grocery stores are increasingly focusing on the quality of their private-label offerings, often partnering with established breweries to ensure a good product.

• Trust in Store Brands: Consumers are generally becoming more trusting of store brands across various categories, including beverages.

• Data-Driven Product Development: Leveraging customer data allows retailers to create beer styles and flavors that are likely to appeal to their target audience.

• Transparency (in some cases): Openness about who is brewing the beer can build credibility, particularly with craft beer enthusiasts.

Key Takeaway:

Grocery stores, led by the success of brands like Aldi and Trader Joe's, are increasingly entering the craft beer market with their own private-label offerings. Costco's successful partnership with Deschutes Brewery exemplifies this trend, attracting even dedicated craft beer fans with high-quality beer at a more affordable price. This shift reflects evolving consumer preferences, the maturing of the craft beer market, and the strategic advantage that large retailers have through their access to consumer data and resources.

Main trend:

The main trend is the growing strength and consumer acceptance of private-label brands in the craft beer market, challenging the dominance of traditional independent craft breweries.

Description of the trend (please name it):

Private Label Craft Beer Ascendancy: This trend describes the increasing market share and consumer approval of craft-style beers produced under the store brands of grocery chains and other large retailers, often brewed through partnerships with established or contract breweries.

What is consumer motivation:

• Value for Money: Consumers are motivated by the opportunity to purchase good-quality beer at a more affordable price compared to many traditional craft beers.

• Convenience of One-Stop Shopping: The ability to buy beer while doing grocery shopping is a significant convenience factor for busy consumers.

• Curiosity and Desire for Discovery: Some consumers, especially craft beer enthusiasts, are drawn to trying new beers, including store brands, to discover hidden gems.

• Trust in Familiar Retailers: Consumers often have established trust in their regular grocery stores and are willing to try their private-label offerings.

• Perceived Quality: The increasing quality of private-label beers, sometimes brewed by known breweries, is motivating consumers to try these options.

• Simplicity in Choice: With an overwhelming number of craft beer options available, some consumers appreciate the curated and often simpler selection of store brands.

What is driving trend:

• Consumer Openness to Private Labels: There's a general increasing acceptance and preference for private-label brands across various product categories.

• Inflationary Economy: Consumers are more price-sensitive and actively seeking value, making lower-priced private-label options more attractive.

• Retailer Market Power: Large grocery chains have significant resources and data to develop and market their own beer brands effectively.

• Maturing Craft Beer Market: As craft beer becomes mainstream, the perception of it as a special or premium category may be diminishing for some consumers.

• Transparency in Brewing Partnerships: When retailers are open about who brews their beer, it can build trust and attract craft beer enthusiasts.

• Consumer Data Utilization: Retailers leverage their extensive customer data to identify popular beer styles and flavor profiles, allowing them to create private-label beers that are likely to appeal to their shoppers.

What is motivation beyond the trend:

• Enjoyment of Beer: The fundamental motivation remains the enjoyment of the taste and experience of drinking beer.

• Social Connection: Beer often plays a role in social gatherings and relaxation.

• Desire for Quality: While price is a factor, consumers still want a good-quality beer that they will enjoy.

Description of consumers article is referring to:

The article refers to several groups of consumers:

• Dedicated Craft Beer Fans: This group, initially unlikely to consider store-brand beers, is now being won over by the quality and transparency of some private-label options, like Costco's Deschutes lager. They appreciate quality and sometimes the opportunity for discovery.

• General Beer Drinkers: This broader group may be more price-sensitive and less concerned about the independent or "craft" status of the beer. They prioritize value, convenience, and a good-tasting product.

• Younger Drinkers: The article suggests that younger drinkers may not differentiate between "craft" and other types of beer, seeing it all as just "beer." They are likely more influenced by price and what is readily available.

• Bargain Hunters: These consumers are actively looking for ways to save money and are more willing to try private-label brands if they perceive the quality to be similar to more expensive options.

These consumers have varied preferences, motivations, and levels of engagement with the craft beer scene, but they are all contributing to the growing success of private-label beers from grocery stores.

Conclusions:

The article concludes that private-label craft beer is on the rise due to a confluence of factors, including cost-conscious consumers, the increasing quality and transparency of store brands, the maturing craft beer market, and the strategic advantages of large retailers. This trend signifies a potential shift in the beer landscape, where grocery store brands are becoming serious contenders alongside traditional craft breweries, meeting consumers where they are with appealing options at competitive prices.

Implications for brands:

• For Traditional Craft Breweries: Increased competition from well-funded and data-driven grocery store brands may put pressure on their sales and market share, especially if consumers become less willing to pay a premium for independent craft beer.

• For Private Label Brewers/Grocery Stores: Significant opportunity to expand their market share and profit margins by offering appealing and affordable craft-style beers. Transparency and partnerships with reputable breweries can further enhance consumer trust.

Implication for society:

• Potential for More Affordable Craft-Style Beer: The rise of private labels could lead to more accessible and affordable options for consumers who enjoy craft beer flavors.

• Shifting Perceptions of "Craft": The definition and value associated with "craft beer" might evolve as store brands successfully enter the market.

Implications for consumers:

• More Affordable Options: Consumers will have access to a wider range of craft-style beers at more competitive prices.

• Increased Convenience: The ability to purchase craft beer while grocery shopping offers added convenience.

• Potential for Discovering New Favorites: Consumers might find new beers they enjoy from store brands, sometimes even brewed by known breweries.

Implication for Future:

• Continued Growth of Private Label Beer: The trend is likely to continue as more grocery chains enter the market and further refine their offerings.

• Increased Competition and Potential Consolidation: The beer market may become even more competitive, potentially leading to consolidation among smaller craft breweries.

• Evolution of Craft Beer Branding and Marketing: Independent craft breweries may need to further emphasize their unique qualities, local connections, and the experience they offer to differentiate themselves from store brands.

Consumer Trend (name, detailed description):

Value-Driven Beverage Consumption: Consumers are increasingly prioritizing value in their beverage choices, seeking out options that offer a good balance of quality and price. This trend is particularly evident in categories like beer, where private-label brands are successfully competing by providing comparable quality at a lower cost than established brands.

Consumer Sub Trend (name, detailed description):

Acceptance of Transparent Private Labels: Consumers are becoming more accepting of private-label brands, especially when retailers are transparent about the sourcing and production of their products, such as revealing partnerships with established breweries. This transparency builds trust and encourages trial.

Big Social Trend (name, detailed description):

The Democratization of "Luxury" Goods: What was once considered a premium or luxury category (like craft beer) is becoming more accessible to a wider range of consumers through more affordable alternatives like private-label brands. This reflects a broader societal trend towards value and inclusivity.

Worldwide Social Trend (name, detailed description):

Global Rise of Strong Retailer Brands: The increasing power and success of retailer-owned brands are not limited to the U.S. This is a worldwide trend across various consumer goods categories, as retailers leverage their direct access to consumers and data to create compelling private-label products.

Social Drive (name, detailed description):

The Pursuit of Economic Efficiency and Smart Spending: Driven by economic pressures and a desire to make informed purchasing decisions, consumers are increasingly motivated to find high-quality products at the best possible price, leading them to explore and embrace private-label alternatives.

Learnings for brands to use in 2025:

• For Established Craft Breweries: Understand the increasing consumer openness to value-driven options and consider strategies to remain competitive on price or emphasize unique qualities and experiences.

• For Grocery Retailers: The beer market presents a significant opportunity to expand private-label offerings, leveraging consumer data to create appealing styles and partnering with quality brewers to ensure product satisfaction. Transparency about brewing partnerships can be a key differentiator.

Strategy Recommendations for brands to follow in 2025:

• For Established Craft Breweries: Focus on building strong brand loyalty through unique offerings, experiences (brewery visits, events), and highlighting their independent and local nature. Explore niche markets or collaborations to differentiate themselves.

• For Grocery Retailers: Invest in thorough market research and data analysis to identify underserved segments and popular beer styles. Partner with reputable breweries and be transparent about these collaborations to build trust and credibility among consumers. Consider offering a range of styles, including both familiar favorites and more experimental options.

Final sentence (key concept) describing main trend from article (which is a summary of all trends specified), and what brands & companies should do in 2025 to benefit from trend and how to do it:

The prominent trend of private label craft beer ascendancy signals that in 2025, established craft breweries should emphasize their unique value proposition and community connection, while grocery retailers should strategically expand their private label beer portfolios with a focus on quality, transparency, and data-driven product development to effectively cater to the growing consumer demand for affordable and accessible craft-style beers.

Final Note:

• Core Trend: Private Label Craft Beer Ascendancy: Grocery store brands are successfully entering the craft beer market.

• Core Strategy: Value Proposition and Strategic Partnerships: Craft breweries should emphasize unique value, while retailers should focus on quality and transparent partnerships.

• Core Industry Trend: Blurring Lines Between Retail and Brand: Grocery stores are increasingly becoming direct competitors to established brands.

• Core Consumer Motivation: Value and Convenience: Consumers are seeking affordable quality and the convenience of one-stop shopping.

Final Conclusion:

The rise of private-label craft beer marks a significant development in the beverage industry, driven by evolving consumer preferences and the strategic moves of large retailers. While traditional craft breweries will need to adapt to this increased competition, consumers stand to benefit from more affordable and accessible options. The success of Costco's collaboration with Deschutes Brewery serves as a compelling example of how quality and transparency can pave the way for private-label brands to win over even the most discerning craft beer enthusiasts.

Core Trend Detailed:

Private Label Craft Beer Ascendancy signifies a notable shift in the landscape of the beer industry, where major grocery and retail chains are no longer content with simply stocking craft beers from independent breweries. Instead, they are actively developing and offering their own branded craft-style beers, often in partnership with established breweries or contract brewing facilities. This trend indicates a maturation of the craft beer market, making it less of a niche and more of a mainstream beverage category that is now being targeted by large retailers seeking to enhance profit margins, leverage their strong brand recognition and customer loyalty, and cater to the growing consumer demand for quality beer at competitive prices.

Key Characteristics of the Core trend:

• Retailer-Owned Brands: Major grocery and retail chains are launching their own beer brands under their established store names (e.g., Kirkland Signature, Josephsbrau, Wild Range Brewing Company).

• Craft Beer Styles: The private-label beers often mimic popular craft beer styles like IPAs, lagers, stouts, and wheat beers to appeal to craft beer drinkers.

• Price Competitiveness: A key driver of this trend is the ability of retailers to offer these craft-style beers at a lower price point than many independent craft breweries.

• Partnerships with Brewers: Retailers are increasingly collaborating with existing craft breweries or contract brewers to ensure the quality and authenticity of their private-label beers.

• Increased Transparency: Retailers are becoming more open about who is brewing their private-label beers, building trust and appealing to informed consumers.

• Leveraging Retailer Data: Grocery chains utilize their extensive data on customer preferences to develop beer styles and flavors that are likely to resonate with their shoppers.

Market and Cultural Signals Supporting the Trend:

• Significant Sales Growth of Private Label Beer: The reported 122% growth in sales of private-label beer indicates strong consumer adoption and market momentum.

• Expansion of Private Label Offerings: The doubling of Aldi's beer portfolio and Walmart's potential entry into the market signal a growing commitment from major retailers.

• Positive Consumer Reviews: The article highlights instances where craft beer enthusiasts have praised the quality and value of certain store-brand beers.

• Consumer Acceptance of Store Brands: There is a general increasing acceptance and trust in private-label brands across various product categories.

• Maturation of Craft Beer Culture: As craft beer becomes more mainstream, consumers may be less inclined to exclusively support independent breweries and more open to value-driven options.

• Economic Factors: In an inflationary environment, consumers are actively seeking ways to save money without sacrificing quality.

How the Trend Is Changing Consumer Behavior:

• Increased Purchase of Private Label Beer: More consumers, including craft beer enthusiasts, are choosing to buy store-brand beers.

• Shifting Perceptions of Quality and Value: Consumers are recognizing that private-label options can offer comparable quality to branded products at a better value.

• Less Emphasis on Brand Loyalty for Some Consumers: For some beer drinkers, the brand of the retailer or the fact that it's brewed by a known brewery might outweigh loyalty to specific independent craft brands.

• Greater Price Sensitivity in Beer Purchases: Consumers may become more price-conscious when buying craft-style beer, leading them to consider more affordable private-label options.

• Increased Convenience as a Factor: The ability to purchase beer along with groceries is becoming a more significant driver for some consumers' beer buying decisions.

Implications Across the Ecosystem:

• For Brands and CPGs:

  • For Independent Craft Breweries: Increased competition, potentially leading to pressure on pricing and market share. Breweries might need to focus on differentiation through unique offerings, local identity, and direct-to-consumer experiences.

  • For Grocery Retailers: Significant opportunity to increase profit margins and customer loyalty by offering high-quality private-label beers that meet consumer demand.

• For Retailers:

  • Opportunity to enhance their beverage aisles and attract more customers with a compelling beer selection that includes value-driven private-label options.

  • Potential to gain a competitive edge by offering exclusive or co-branded beers that cannot be found elsewhere.

• For Consumers:

  • Access to a wider range of craft-style beers at more affordable prices.

  • Increased convenience of purchasing beer during regular grocery shopping trips.

  • Potential for discovering new and enjoyable beers through store-brand offerings.

Strategic Forecast:

• The Private Label Craft Beer Ascendancy trend is likely to continue to grow as more retailers enter the market and further refine their offerings.

• We may see more collaborations between grocery chains and well-known craft breweries, further enhancing the quality and appeal of private-label beers.

• The pricing gap between private-label and independent craft beer may become a more significant factor influencing consumer choices.

• Independent craft breweries will likely need to adapt their strategies to compete, potentially focusing on niche markets, unique styles, or direct customer relationships.

• Transparency regarding brewing partnerships will likely become a standard practice for successful private-label beer brands.

Areas of innovation (based on discovered trend):

• Brewery Collaborations with Retailers: More formal and exclusive collaborations between well-regarded craft breweries and grocery chains to create unique private-label offerings.

• Data-Driven Flavor Profiles: Utilizing retailer data and consumer feedback to innovate and develop private-label beers with specific flavor profiles that cater directly to local market preferences.

• Sustainable and Locally Sourced Private Label Beer: Retailers could differentiate their private-label offerings by emphasizing sustainability and sourcing ingredients locally.

• Interactive Packaging and Brand Storytelling for Private Labels: Enhancing the packaging and brand storytelling of private-label beers to create a more engaging and appealing consumer experience.

• Omnichannel Beer Retail Strategies: Integrating online and in-store channels to promote and sell private-label beers, potentially including online ordering and delivery options.

Final Thought (summary):

The rise of private-label craft beer represents a significant evolution in the beer market, driven by the increasing acceptance of store brands and the strategic initiatives of major retailers. By offering quality craft-style beers at competitive prices, brands like Costco are successfully attracting consumers, including dedicated craft beer enthusiasts. This trend underscores the importance of value, convenience, and transparency in today's consumer landscape and signals a potential reshaping of the traditional craft beer market dynamics.

Source: https://punchdrink.com/articles/grocery-store-craft-beer-costco-trader-joes-aldi/