Wednesday, September 19, 2018
Business

Yuengling tries to survive craft beer craze by staying in the middle

When Richard "Dick" Yuengling bought the former Stroh's brewery in Tampa Bay in 1999, no one was talking about blueberry wheat beers or India pale ales.

The then-fast-growing Pennsylvania brewing company, D.G. Yuengling & Son, was ready to expand its footprint and start selling its signature lager in the Southeast. Fast forward to now, and Yuengling is still growing, but feeling the pinch as consumers' palates have changed and more buy craft beers from independent breweries.

Yuengling is the largest brewer in Tampa Bay and the second largest in the state behind the Anheuser-Busch InBev plant in Jacksonville. It produces up to 1.5 million barrels in Tampa every year, about half of all the beer the company produces in a year from all three of its breweries — the two others being in Pennsylvania. Yuengling is the oldest operating brewery in the country and one of the largest American-owned ones.

But times are changing. Big beer companies that sell the traditional line-up of yellow, fizzy domestic drafts at sports games, in bars and in cans at gas stations pretty much worldwide, have seen sales slide as craft breweries grow larger in number and stronger in overall market share.

MillerCoors announced this month that it will close a brewing plant in North Carolina — the first one to ever brew Miller Genuine Draft — partly because of a steady decline in sales. The company has seen a loss of 10 million barrels of beer in seven years, which executives attribute to "economic challenges, an explosion of choice and fragmentation within the beer business, and a dramatic change in the way consumers engage with brands," according to a news release.

Two of the biggest beer companies in the world, Anheuser-Busch InBev and SABMiller, are considering a merger, a mammoth deal that could put antitrust authorities on alert as it has the potential to drive up the price of a pint of beer.

"Big brewers are being hit by a lot of things in the U.S. right now. Millennials are more varied than previous generations, especially when it comes to alcohol. There's a strong desire to support local and independent businesses," said Bart Watson, chief economist with the Brewers Association.

That does present some challenges for Yuengling, but it doesn't affect this mid-sized brewer as much as it would affect the bigger guys, like Budweiser and Coors, Watson said.

"Yuengling has stayed pretty focused on its two core regions — the Southeast and the Northeast — which has enabled them to keep their market share more easily," he said. "They're still growing, though their numbers over the last few years have been slightly mixed. They are affected by this, just at a different level."

It doesn't help Yuengling that the craft beer scene is exploding in Tampa Bay right now. Names like Cigar City Brewing, 3 Daughters Brewing and 7venth Sun Brewing can be found at restaurants, pubs and some gas stations across the state. There are nearly two dozen craft breweries on both sides of the bay.

Last year, craft breweries made up 11 percent of the volume of the beer market and 19.3 percent of consumer sales in the country. Florida breweries, including Yuengling, produced 1.1 million barrels, ranking the Sunshine State fifth in terms of production in the country in 2014.

"Florida has always been below average nationally, but is starting to catch up," Watson said. "It's become one of the fastest-growing states for openings of craft breweries in the country right now. And there's still a lot of room to grow."

So what does that mean for Yuengling? Last year, the brewing company renovated its Tampa Bay brew house and has plans to expand distribution to more Southern states in 2016, said Jennifer Holtzman, spokeswoman for Yuengling. She declined to elaborate on the details.

"We've stayed true to who we are as a company while being mindful of the flavor profiles consumers now demand. Today, even the entry-level drinker has a more developed palette," Holtzman said. "We've expanded our portfolio with some unique brews that are sessionable for the everyday drinker, as well as the craft beer enthusiast."

In November, Yuengling will debut a new India pale lager, a more bitter, hops-based beer than its traditional line-up. The IPL will be offered seasonally in the winter months, and join the line-up of the brand's other seasonal offerings, a summer wheat and Oktoberfest.

This move will help it appeal to more millennials and craft beer fans, said Brian Connors of Connors Davis Hospitality in South Florida.

"Yuengling stands out in a line-up of other domestic beers. It's a trade up from the Miller Lites of the world, but often cheaper in price than a local craft beer, which can get pretty pricey," Connors said. "They're sort of an outlier as a medium-sized producer. They have an intensely loyal following and still can keep pace in this great beer race."

Contact Justine Griffin at [email protected] or (727) 893-8467. Follow @SunBizGriffin.

 
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