For craft breweries, it’s getting tougher every day to sell more beer. Shelf space isn’t getting bigger and on-premise accounts aren’t adding more draft lines. What is a craft brewer to do? Answer: Look in the mirror and grow sales through the taproom. You simply can’t beat the sales growth potential and profit margins on beer sold through your taproom. So, in this article we’ll explore three specific ideas you can use to increase revenue and drive sales through to the most profitable part of your brewery: the taproom.
Before we get into the three specific ideas to increase taproom sales, let’s look at a powerful model you can use to grow revenue in any part of your brewery business. Let’s call it the Triple Increase Method or TIM for short.
There are many, many ways to increase revenue but they can be boiled down into three main categories:
- Increase the number of customers that visit your taproom
- Increase rate of sale — how much customers spend when they visit
- Increase the frequency of sales — how often customers spend money in your taproom
You can use this model to brainstorm your own ideas for increasing revenue. Think about growing sales through the lens of increasing the number of customers, the rate of sale (how much they spend), and the frequency of sales (how often customers spend money in your taproom).
The usual suspects
The typical products/services that make up taproom revenue:
- Draft beer
- Packaged beer to go (cans, bottles)
- Gift cards
You can apply the TIM model to each of the products/services that you currently offer. For example, think about how you can increase the number of customers that visit the taproom using the list above:
- Special beer releases available only in the taproom
- Offering a new package, such as four-pack, 16-oz cans (who doesn’t love these)
- Partnering with a local business for a special taproom event or party
The idea is to apply the TIM method to brainstorm ways to increase customer traffic, rate of sale and frequency of visits using products and services you offer. OK, enough with the theoretical stuff, let’s get specific and dig into three specific ways to increase taproom revenue.
No. 1: Sell to your best customer … again and again
Bar none, the single easiest way to grow taproom sales is to sell more to your current customers. It’s hard to find a new customer, so focus on your current customer base. These are the people who have already visited your taproom and bought from you. Stay in touch, communicate and let them know you want them back to visit soon.
- It costs far more to gain a new customer, than to retain (and sell more) to an existing one.
- It’s easier to sell more beer, merch and tickets to events to your existing customers.
- Do you know who your customers are and how to reach them? Do you collect emails or other ways to stay in touch?
Here are a few ways to sell more to your existing customers. Identify things your customers could buy (or buy more of) and put this in front of them. Maybe they buy draft beer but not packaged beer. Maybe they buy growlers but not merchandise. Maybe they’ve never been to a ticketed event or party that you’ve hosted.
Make your customers feel like they have a special relationship with you. I saw a great example of this at Wormtown Brewery on Valentine’s Day. Every female customer that came in received a red rose. Now, that is showing your customer true love and making them feel special. Keep No. 1 as your No. 1. Market to your own customers so they keep coming back. Give them ways to spend more time with you and spend more with you. The easiest way to grow taproom sales is to sell more to your existing customers.
No. 2: Turn data into dollars
This is probably idea No. 1 A as it is related to selling more to your existing customers. In order to increase taproom sales, you need to know who your customers are and how to get in front of them.
- What are the demographics of your customers? How old are they? How many males vs. females? What do they like to buy from you?
- What are the new demographics of your customers? What are they interested in? What are their passions? Where do they hang out online or offline?
Any good POS system (or customer relationship management system) should be able to track this information and cross-reference it to sales activity. The more you learn about who your customers are (the old demographics) and what they enjoy (the new demographics) the more focused your marketing will be. The more focused your marketing, the more likely you are to turn data into dollars. Gather data. Use it to target your ideal customer so that you can grow taproom revenues.
No. 3: The internet is here to stay; use it to increase taproom sales
Amazon poses a huge threat to the beer industry. This must be true because we’ve been reading about it in beer industry publications for years. However, here’s another way to look at it: Amazon provides a model that ALL taprooms should follow to increase sales. Do you have an e-commerce platform on your website? In other words, if a customer lands on your website do they have a way to give you money?
If you’re like most craft breweries, the answer is no. And this could be a big opportunity. A simple solution might involve signing up for a service like Shopify and adding e-commerce functionality to your website. Check out Night Shift Brewing’s website for an example. A more complicated (or sophisticated) e-commerce solution might be to integrate Shopify or another online storefront directly with the merchandise manufacturer. This way, orders can be placed, filled and drop shipped without you having to do anything except watch the cash hit your bank account.
What can you sell online? How about most anything you sell in the taproom — merch, swag, clothing, event tickets, gift cards, etc. Amazon may be a threat to Big Beer, but it provides a roadmap for taprooms to follow. Explore your options for an online storefront so that you can increase taproom sales.
Wrap up + action items
The heyday of craft beer sales is coming to an end. It’s time to look to your taproom to drive sales and profitability of your brewery. Use the TIM method to increase revenue. Look at ways you can increase the number of customers, the rate of sale and the frequency of customer visits. Try out one of the three specific ideas presented in this article to grow sales. Sell more to your existing customers. Gather information on what they like so that you can offer them exactly what they want to buy. Use the power of the internet to drive taproom sales. It works for Amazon, it will work for you.
Need more of this type of information? Check out the new online course: How to Boost Taproom Profits. It’s chock full of ideas on how to grow sales, profitability and measure taproom performance. You’ve got the ideas, you’ve got the taproom, now get out there and increase taproom sales today.
Kary Shumway is the founder of Beer Business Finance and Craft Brewery Finance, online resources for beer industry professionals. Shumway has worked in the beer industry for more than 20 years as a certified public accountant, chief financial officer for a beer distributor, and currently as CFO for Wormtown Brewery in Worcester, Mass. Craft Brewery Finance publishes a weekly beer industry finance newsletter, offers guide books on topics such as cash flow planning and basic budgeting, and an online course to improve taproom profits. The newsletter with a free four-week trial, industry guides and resources are all available at www.CraftBreweryFinance.com.