When the MillerCoors facility in Golden, Colo., experienced a small flood in its basement a few years ago, little did the company know what it was about to

stumble upon. As brewmaster Keith Villa was moving boxes stored in the basement to safety, he realized one of them contained archived beer recipes from the pre-Prohibition era. The brewer took one of the recipes and revived the beer for present-day consumers. Batch 19, named for the last batches of beer destroyed in 1919, became available in May 2010 on draught in limited quantities in select markets, according to the company.

“Back in the early 1900s, mainstream beers were definitely more robust with a little bit higher alcohol, but definitely a lot bigger malt bills and a lot more hoppiness,” says Tom Cardella, president and chief executive officer of Chicago-based Tenth and Blake Beer Co., the craft and import division of MillerCoors, which formed just three months after Batch 19 launched. The taste profile of the beer and the timing of its launch meshed well with consumers’ interest in more flavorful beers as well as Prohibition-themed drinks, TV shows and movies, he added.

After the creation of Tenth and Blake Beer Co., Batch 19 joined the portfolio and followed a scarcity model, which only allowed the brand to expand into new locations when it reached a certain level of performance, Cardella explains. It also enabled consumers to discover the brand for themselves, which is important to many millennial consumers, he adds. Eventually, the beer became available in bottles and recently launched nationwide. This fall, the company also plans to test another one of its pre-Prohibition beer recipes, which is a bock beer, he adds.

Since Tenth and Blake’s inception three years ago, it has experienced double-digit growth ranging between 12 and 14 percent, according to Cardella. Although its beers do not fit the Brewers Association’s definition of “craft” because they are owned by MillerCoors and the company produces more than 6 million barrels of beer annually, Tenth and Blake does brew a variety of experimental beers in addition to more mainstream offerings. In fact, the company took its name from its two smallest breweries with an experimental focus: the 10th Street Brewery in Milwaukee and the Sandlot Brewery located at Coors Field on Blake Street in Denver.

Tenth and Blake’s two major craft brewing companies are Jacob Leinenkugel Brewing Co. and Blue Moon Brewing Co., which both are growing in the double digits, he notes. Blue Moon Brewing is growing in the 10 to 12 percent range, he says. Prior to becoming part of Tenth and Blake, however, Jacob Leinenkugel Brewing was not demonstrating a lot of growth, but last year it grew approximately 20 percent, he says. In addition to these breweries, the Tenth and Blake portfolio includes other craft/specialty brands, such as Batch 19, as well as import beers and hard ciders, which help to diversify the company’s portfolio, enabling it to reach a variety of consumers in a number of drinking occasions, Cardella says.

“Over really the last five to seven years, the overall beer industry from a volume growth standpoint has been relatively flat to down slightly,” Cardella says. “The one segment of the beer industry that has been demonstrating significant growth is the craft and specialty segment.”

This growth comes from the changing culture in the United States, which is partially driven by millennial consumers who are very interested in experimentation and product variety, he says. Therefore, within its Jacob Leinenkugel Brewing and Blue Moon Brewing companies, it offers three different product groupings: invitation, exploration and experimentation.

Levels of beer

Beers within the invitational grouping typically are more recognizable brands, such as Leinenkugel’s Honey Weiss and Blue Moon Belgian White, and feature

more intense flavors compared with American-style light lagers, Cardella explains. Beers in the exploration segment usually have higher alcohol by volume and more flavor, he says. For instance, the company recently released Leinenkugel’s Canoe Paddler, which is a Kölsch style of beer originating in Germany, and this summer it will introduce Hoppin’ Helles, which is a traditional German-style beer with more hop-forward notes than usual, he adds. The experimentation segment includes more robust styles and flavors, such as Jacob Leinenkugel Brewing’s Big Eddy series and Blue Moon Brewing’s Vintage Ale Collection and Graffiti Collection.

Designed to take back some share from the wine category while enticing experimental consumers, Blue Moon Brewing’s Vintage Ale Collection combines ale and wine grapes in 750-ml bottles. Available in limited locations, the line features Crimson Crossing, a wheat ale brewed with Merlot grape juice; Impulse, a wheat ale brewed with Cabernet Sauvignon grape juice; Golden Knot, a wheat ale brewed with Chardonnay grape juice; and Proximity, a wheat ale brewed with Sauvignon Blanc grape juice. The Graffiti Collection contains Pine in the Neck, a double India Pale Ale (IPA) made with juniper berries, and Tongue Thai-ed, a beer made with lemongrass and basil. Both varieties are packaged in 22-ounce bottles with limited availability.

On the Jacob Leinenkugel Brewing side, the Big Eddy series features more robust beers with higher alcohol content and more intense flavor profiles, Cardella says. The first product in the series was Big Eddy Russian Imperial Stout, which is brewed with three different styles of hops and 11 different barley malts, he explains.

Within the exploration segment, Blue Moon Brewing will release its Expressionist Collection this fall. The line includes Rounder, a Belgian-style pale ale, and Short Straw, a farmhouse red ale. “They’re a little bit hoppier than what you normally would see with the [Blue Moon] Belgian White family and have different flavor profiles,” Cardella says.

The invitation grouping includes all of the seasonal releases for both brands. Although the seasonal beers do not make up the majority of the brand mix, they are high-growth products, he says.

“What we try to do is continue to have an incubation process of different styles that we can bring into the family, and we’ll release different things within the seasonal variety packs,” he explains. For example, Jacob Leinenkugel Brewing is releasing a fall seasonal Orange Shandy this year; however, consumers can try the beer now as part of the Summer Shandy variety pack.

Like the seasonal releases, Tenth and Blake’s experimental beers deliver high growth off of a very low base, Cardella says.

“It’s an interesting thing when you work the upper Midwest where Leinenkugel was established and where it’s evolved and really become a pretty significant craft player — just the reaction from retailers and consumers when they start seeing a lot of these more experimental beers that are in the marketplace,” he says. “Part of our strategy is to really continue to build out these two brewing companies in those three areas of invitation, exploration and experimentation so that we’re providing our core drinkers with the ability to move from more sessionable, less flavor-intense to more hoppy, higher flavor-intense, higher-alcohol products within the family.”

Although Tenth and Blake releases some of its brands in limited locations in order to create a sense of discovery, it made the decision to push Leinenkugel’s Summer Shandy nationwide because of demand outside of the Midwest, Cardella says.

Leinenkugel’s Summer Shandy launched approximately five years ago and doubled its volume last year, he says. Eighty percent of the SKU’s business is in the upper Midwest near the home of Jacob Leinenkugel Brewing, “yet what we’re seeing over the last couple of years is Summer Shandy is really starting to take hold in California and Texas and New England and Florida, so we made a decision to say, ‘We want to drive a higher level of awareness [for] Summer Shandy,’” Cardella explains. “So we have a campaign that’s running right now, but when you look at that campaign, the critical element is making sure that that communication is core to what Jacob Leinenkugel is about, and one of the core pillars of the Jacob Leinenkugel Brewing Co. is the fact that it is run by fifth-generation family members and there are sixth-generation family members coming into the business.”

Therefore, the Leinenkugel’s Summer Shandy TV ads all end by showing the family at the brewery in Chippewa Falls, Wis., where the brewery started 146 years ago, he says. Likewise, its Blue Moon TV commercials use the tagline “artfully crafted” and reflect the craftsmanship of Blue Moon Brewery brewers by merging paint and film in the commercials.

“I think it’s really important that if you’re using more mainstream approaches to communication, you’ve got to be really good at making sure that you stay really tight within what you’re about,” Cardella says.

Premium and prestige

Like craft beer, prestige and specialty import beers are helping to drive growth in the category. The imported beer category overall has been flat during the last five years, Cardella says. However, the prestige import segment is growing at approximately 15 percent, he says. Furthermore, specialty imports, which are similar to experimental craft beer offerings, are growing quickly, he adds.

Tenth and Blake’s lead import brand, Peroni Nastro Azzurro, from Birra Peroni in Rome, falls into the prestige import segment. Imported from parent company SABMiller, Peroni is a high-end Italian beer that has been steadily growing in the high single digits to low teens for the last five to eight years, Cardella says. In the specialty import group, the company offers Pilsner Urquell, from Plzenský Prazdroj in Pilsen, Czech Republic, which was one of the first golden lagers produced in Europe in the 1800s, Cardella says. Also imported by SABMiller, it is Tenth and Blake’s only European import that has expedited shipping and ships in refrigerated containers, he adds.

“We keep it refrigerated all the way until it gets to retail to help preserve the shelf life,” he says.

Apples and pears

Often sharing similar drinking occasions, distribution and merchandising as beer, hard cider has become an important piece of the brewing industry. In 2011, the hard cider segment produced approximately 400,000 barrels; last year, it increased to 700,000 barrels, Cardella says. Plus, according to several sources, the segment is growing at more than 100 percent, he says. And in the case of Crispin hard cider, the brand currently is growing at approximately 250 percent, he adds.

The Crispin Cider Co., which includes Fox Barrel ciders, was acquired by Tenth and Blake early last year. Crispin ciders are made with fresh-pressed, unpasteurized apple juice, whereas Fox Barrel ciders are made with fresh-pressed, unpasteurized pear juice.

“The fun thing about the Crispin Cider Co. is, as with craft beer, there are different segments that we look at,” Cardella says. “So you’ve got what we consider to be mainstream ciders, which is where a lot of the competition plays today. We are more into a higher-end side of the cider business. Particularly with Crispin, which in itself is more of an invitational [hard cider], it’s a relatively sessionable product.”

The Crispin lineup includes its line of Artisanal Reserve, classic and barrel-aged hard ciders as well as organic, boxed and imported offerings. Likewise, the Fox Barrel lineup includes Cidery Reserve, black label and limited-release hard ciders as well as organic, boxed and imported offerings.

“We’ve got different ciders that are barrel aged; we’ve got ciders that utilize different types of beer yeast versus traditional yeast used in fermenting fruit; we’ve got ciders that are infused with molasses,” Cardella says. “The cider world in itself, even though it’s small, has the opportunity to actually mirror the evolution that you see in the craft beer world in regard to a lot of different liquid profiles and styles and flavors.”

It’s also mirroring the beer industry in terms of distribution. By the end of this year, Tenth and Blake plans to use MillerCoors’ ordering and logistics platforms to distribute its hard ciders, Cardella says. Currently, its hard ciders are being shipped from the manufacturing facility in Colfax, Calif., to various distributors across the country, which can be quite costly. Once the ciders are incorporated into the MillerCoors platform, Tenth and Blake can use its breweries for warehouse staging so that its cider orders can be intermingled on trucks with distributors’ beer orders, Cardella explains.

Product placement

Merchandising is another area where Tenth and Blake is able to capitalize on the strength of its parent company, MillerCoors.

“As a consumer just coming into the craft world, it’s fairly intimidating,” Cardella says. “You’ll walk into the store and you’ll see a 20-foot section of 22-ounce bottles and have no idea; there’s not a lot of strong, tight merchandising principles that are consistently employed.”

As a result, Tenth and Blake feels it’s important to take its educational focus and put it into its merchandising strategy. Its invitation, exploration and experimentation structure comes into play here to help consumers understand what kind of consumption experience they can expect. The company also provides sampling opportunities for both on- and off-premise locations.

Additionally, it recently announced a new program called Pints and Plates that brings beer education and pairing to the point of purchase, Cardella explains. The concept ties in with large grocery retailers and enables shoppers to view 140 different meal recipes with suggested beer pairings digitally. For instance, one of the recipes could be a salad with mandarin oranges, which would pair well with Blue Moon Belgian White, Cardella says. To showcase this pairing, the retailer could place a Blue Moon Belgian White display in the produce section with the rest of the ingredients needed for the salad.

“This is giving [the shopper] not only ideas for her dinner parties … but also it’s making her think differently about how beer can be used within that meal solution,” he says.  

When it comes to sales and marketing, Tenth and Blake operates independently in order to keep a special focus on its brands and the equity behind them, Cardella says.

 “The creation of Tenth and Blake has allowed us to maximize the growth and potential of our family of craft breweries, including Jacob Leinenkugel Brewing Co., Blue Moon Brewing Co. and Crispin Cider Co.,” Cardella says. “We’ve also been able to develop partnerships and relationships that have broadened our offerings and accelerated above-premium growth for the company. It’s an exciting time to be a brewer and beer drinker. We’re proud to be a part of the craft community, and we’re excited to play a role in this beer renaissance.”