Brewing Report: Taproom Sales Strategies

By Angela Rose | Dec 11, 2019

Brewing & Distilling Consumer & Lifestyle Food & Beverage Colorado

With offsite competition increasingly fierce, some breweries are focusing on taproom sales as a means to increase profits.

When thirst for a pint strikes, beer lovers in the U.S. have no shortage of breweries from which to choose. According to the Brewers Association (BA), there were 7,450 U.S. craft breweries in operation in 2018, with total craft beer sales hitting $27.6 billion.

Taprooms are often the most profitable segment of a brewery's business. After all, margins tend to be better when sales are made directly to consumers without the need to share revenues with distributors and retailers. Because of this, some breweries today are shifting their focus almost entirely to onsite sales or establishing themselves as taproom only from their inception.

The BA's member directory lists more than 2,700 taproom breweries in the U.S., defined as professional breweries that sell 25 percent or more of their beer onsite without operating significant food services. These breweries produce beer primarily for taproom consumption, though they may also sell to-go beer and distribute to offsite accounts where allowed by law.

It's not a bad brewery model in the increasingly competitive craft beer market -- if done effectively. These breweries avoid the need to capture consumer attention on crowded liquor and grocery store shelves. However, driving visitors to their taprooms becomes even more important when it's their primary source of revenue.

How do the successful ones pull it off? We spoke with representatives from Wiley Roots Brewing Company, Grandma's House, and Modern Times Beer about the strategies they're using to doing just that.

Photo courtesy Wiley Roots Brewing Company

Wiley Roots Brewing Company: Release events and taproom-only specialties

When Wiley Roots opened in 2013, taproom sales accounted for 100 percent of the Greeley, Colorado brewery's revenue. Owners Kyle and Miranda Carbaugh gradually increased offsite distribution until it was 60 percent of their business in 2016. But the following year, they began pulling back. In 2019, taproom sales have accounted for 90 to 95 percent of the brewery's revenues.

"The market has changed a lot," says Scott Davidson, Wiley Roots' marketing manager. "Kyle and Miranda saw the trends changing and decided to decrease distribution in order to buy a canning line and focus on the taproom. With the canning line, they're able to sell beer to go from the taproom as well as on draft."

The brewery uses a variety of methods to encourage onsite visits and increase revenues per ticket in the taproom. Scheduling and promoting regular release dates has been a big one. "Every two to three weeks, we plan some sort of big release," Davidson explains. "It always includes beer for onsite consumption and beer to go. Oftentimes, there's also onsite beer that's only available in the taproom."

Davidson says these special release events give Wiley Root's fans a reason to travel to the brewery. "A lot of people come in from Denver, Fort Collins, and other places," he continues. "They're not going to make the drive out for just one beer and then go home."

"We want to make sure they're getting something different than they'd find in their neighborhood taproom," Davidson continues. "Beers like specialty brews with expensive ingredients or that have been aged in barrels. That encourages them to come up to Greeley, hang out in the taproom, and then take home a lot of beers to go."

Photo courtesy Wiley Roots Brewing Company

During the summer months, Wiley Roots' Slush series is one such specialty. On tap between March and September, Slush is a rotational series of fruited kettle-soured golden ales reminiscent of America's favorite drive-in drinks. "The first brewery in the nation to do slushy-type beers was Declaration Brewing," Davidson says. "But we're the first brewery in Colorado to do sour beer slushies."

Last summer, Wiley Roots invested in frozen slushy machines to offer taproom visitors another exclusive way to enjoy the Slush series. "We started off renting them but found that we were spending as much as we would if we just bought them," Davidson explains. "We now have two really nice slushy machines."

Frozen Slush has been a definite hit with the brewery's fans and has had a positive impact on taproom revenues. "The average ticket when we have frozen Slush in the taproom is higher," Davidson continues. "Instead of someone coming in and having one beer for four or five dollars, they choose a beer that is six or seven dollars. And because Slush is a low alcohol beer, they might have more than one. Then, they often purchase a couple four packs to-go when they head home."

Davidson says if other breweries are interested in adding frozen slushies to their taproom lineup, they should do so. "You'll get immediate interest and it's a cool thing to do," he adds. "But you need to make sure you do it right. A lot of breweries around Denver who are doing slushies have contacted Kyle. We're always more than happy to help them out."

Photo courtesy Grandma's House

Grandma's House: Unique atmosphere and niche events

Founded in 2014, Grandma's House is a Denver brewery known for its homey, comfortable, and somewhat kitschy taproom aesthetic. "I found that a lot of brewery taprooms kind of blended together for me," says Grandma's House owner Matthew Fuerst. "They can be sort of repetitive with their industrial vibe, a lot of reclaimed wood or what have you."

A self-described "contrarian by nature," Fuerst decided to take his brewery tasting room in a more unique direction. "I wanted our vibe to be more nostalgic and homey," he continues. "When brainstorming names, Grandma's House was the one that stuck, and it guided the direction of our décor and everything else."

Though the brewery distributes kegs in the greater Denver area, at least 90 percent of its revenues come from onsite taproom sales. "Our esthetic definitely has something to do with it," Fuerst says. "I hear semi regularly from people coming in from out of town that others have mentioned that they need to visit Grandma's House because it's completely unique."

Photo courtesy Grandma's House

That said, Fuerst notes that it takes more than good beer and fun décor do drive taproom sales. "We host a lot of events where you can make stuff, which ties into our vibe and our brand," he explains. "Events like sewing and knitting classes, pottery and canvas painting, all sorts of things like that. I've found that those types of events are very helpful for getting people in the door and hopefully encouraging them to enjoy a beer while they're here."

While Fuerst says he can't quote any concrete metrics, he estimates that Grandma's House crafting events usually triple or quadruple taproom sales for the day.

"The best example I can give is on Sundays during football season," Fuerst continues. "We used to be particularly dead because we're not a sports bar. We'll put a game on but we're not going to have wall to wall TVs. I spent a year trying to make watching football here a thing using various methods, but it just didn't work."

Then Fuerst decided to offer taproom visitors the opportunity to cross-stitch on Sundays. "We bought a bunch of supplies and gave them out with each beer purchased," he explains. "Immediately, the taproom was packed. Events work, especially if you do something that's a little different."

Photo courtesy Modern Times Beer

Modern Times Beer: Multiple taprooms and superior hospitality

Founded in the Point Loma neighborhood of San Diego in 2013 by Jacob McKean, Modern Times Beer has grown to include brewery/restaurant locations in Los Angeles and Portland, Oregon, as well as a tasting room in San Diego's North Park neighborhood and restaurant/tasting rooms in Encinitas and Santa Barbara, California.

"We're an employee-owned company that specializes in many different things including beer, cider, coffee, art, food, and hospitality," says Nic Pelaez, Modern Times Beer's director of hospitality. "In order to continue to grow in all of those areas, our path forward was to open multiple taprooms in our favorite cities where we could control the quality."

When choosing new taproom and restaurant locations, Pelaez said the brewery's leaders focused on areas that they loved and where Modern Times had an existing customer base. "We also did our best to add something unique and fun to those communities while giving our friends a chance to experience everything we do under one roof."

"We plan, design, and operate all of our locations to be financially successful at the retail level while also helping to boost awareness of Modern Times in its respective wholesale marketplace," Pelaez continues. "Our approach by expanding locations isn't to diminish or reduce our off-premise sales, but to compliment them by becoming a local brand in that market."

Pelaez notes that Modern Times has successfully driven its onsite revenues at every location by selling crowlers, merchandise, and brewery specific retail beers while "offering great customer service and going extremely hard on our art installation game."

Photo courtesy Modern Times Beer

He encourages other breweries who want to increase their taproom sales to not just focus on their top products as a brand but also to consider service. "The guest isn't always right but they're always the guest," Pelaez adds. "Hospitality, just like in restaurants, can fix a shitty experience or a bad meal. A successful recovery and a humble approach will create lifelong regulars and supporters of your brand."

Pelaez also suggests listening to your taproom visitors. "Negative feedback can be tough to hear, but it's super constructive," he continues. "If your hope was to be an IPA-focused brewery but people dig your lagers more, be ready to pivot. Trust your staff and your regulars. These seem like obvious things to do, but often businesses forget to take the feedback that's crucial to continued success."