Strategies for Growing the Deschutes Brand in the New Mexico Market

STRATEGIES FOR GROWING THE DESCHUTES

BRAND IN THE NEW MEXICO MARKET

Developed and Presented by: MGMT 522 – Spring 2015

Anderson Graduate School of Management University of New Mexico

APRIL 30, 2015

2 Strategies for Growing the Deschutes Brand in the NM Market


CONTENTS Executive Summary .................................................................................................................................. 5

1 The Challenge & Solution ................................................................................................................ 7

2 Situation Analysis .............................................................................................................................. 9

2.1 Company Analysis .................................................................................................................... 9

2.1.1 History, Products, Customers ......................................................................................... 9

2.1.2 Mission/Culture/Values ................................................................................................... 9

2.2 Market Analysis ....................................................................................................................... 10

2.2.1 Consumer Market Analysis ........................................................................................... 10

2.2.2 Retailer Market Analysis ................................................................................................ 20

2.2.3 Distribution Analysis ...................................................................................................... 27

2.3 SWOT Analysis......................................................................................................................... 30

2.4 Conclusions from Market Analysis/Identifying Root Problem ...................................... 30

2.4.1 Consumer/Retailer Conclusions .................................................................................. 30

2.4.2 Distribution Conclusions ............................................................................................... 32

3 Market Segmentation & Marketing Personas ............................................................................ 33

3.1 Market Segmentation ............................................................................................................. 33

3.2 Marketing Personas ................................................................................................................ 35

4 Integrated Marketing Communication ....................................................................................... 37

5 Strategies .......................................................................................................................................... 39

5.1.1 Consumer Marketing Strategies .................................................................................. 39

5.1.2 Retailer Marketing Strategies ....................................................................................... 62

5.1.3 Distribution Marketing Strategies................................................................................ 81

6 Summary/ Master Timeline ........................................................................................................... 85

7 Conclusion ........................................................................................................................................ 89

Works Cited ............................................................................................................................................. 91


EXECUTIVE SUMMARY Marketing as a whole is about values. Strictly trying to sell a product based on superior

quality alone is unlikely to motivate buyer behavior. Deschutes Brewery must make clear to

the New Mexico consumer what they value as it relates specifically to creating a quality

experience and emphasizing a shared community. Strategic emphasis on effectively

communicating values and beliefs in a way that highlights existing core competencies will

enable Deschutes to properly deliver the full extent of the Deschutes Brewery experience.

Working with the Anderson School of Management in an attempt to strategically

approach the market shows that Deschutes Brewery is willing to take the next step towards

investing in the community of the beautiful Land of Enchantment. Deschutes Brewery needs

to further pursue proactive regional investment and a desire to help the growing and dynamic

local craft beer community if it wants to grow its market share in New Mexico.

The goal of this marketing plan is to emphasize current problems as they relate to

brand presence and convert those problems into opportunities to increase brand awareness

of Deschutes Brewery. The changing competitive landscape of craft breweries in the

southwest region of the United States, particularly in New Mexico, has evolved into a scene

Deschutes must approach carefully. New Mexico craft beers have been showing up

increasingly among the winners at the Great American Beer Festival and World Beer Cup.

Many of the craft breweries in the state have earned shelf space in grocery and liquor stores.

Quality of local craft breweries, evolution of local craft culture, and the native New Mexican’s

desire for a community driven outdoor experience present both opportunities and threats to

Deschutes Brewery.

Through extensive market research and analysis the team has developed a step by

step push strategy as it relates to distribution and a pull strategy as it relates to the consumer


and retailer markets. The basis for the plan is to help Deschutes Brewery develop a synergy

between the prospective New Mexican consumer and Bend, Oregon utilizing existing core

competencies in a way that highlights a sustainable competitive advantage. It is key that

Deschutes Brewery embraces community partnerships that are based on cooperative-

competitive strategies and focus on raising the tide for all ships.

New Mexico culture welcomes everyone, at the same time however, New Mexicans

are loyal to their community. Similar to Bend, Oregon, there is no shortage of outdoor

activities such as skiing, snowboarding, golfing and hiking among others. Sponsoring or

hosting experience driven events and actively fostering positive relationships with

distributors will help consumers as well as distributors understand that Deschutes is taking a

more proactive approach towards becoming part of the New Mexico craft beer community

instead of as an adversarial threat siphoning market percentage. This experience oriented,

community building strategy will place Deschutes products into the hands of consumers and

show consumers and distributors that Deschutes Brewery is willing to invest in the quickly

growing New Mexico craft beer community.

The challenge Deschutes faces is getting New Mexicans to try Deschutes products and

continue drinking them. Deschutes needs to become a part of and associated directly with

helping to build the local New Mexican craft beer community. Deschutes as a brand has the

opportunity to deliver a superior experience to New Mexico’s currently under saturated

market. The overall objective of the team’s strategic implementation plan is to provide a

comprehensive blueprint of how Deschutes Brewery can build a loyal consumer base in the

New Mexico market by linking the region specific marketing research effort to higher level

strategies and goals.


1 THE CHALLENGE & SOLUTION Deschutes is underperforming in the New Mexico market as compared to other

markets where Deschutes products are also available. Deschutes brand beers have been

available in New Mexico for approximately three years, however, volume trends continue to

be negative. In 2014, Deschutes’ New Mexico footprint was -6.7% as compared an overall

footprint of 17.3% for all of the markets during the same time period. (Billingsley, 2014)

The Managerial Marketing class at UNM’s Anderson Graduate School of Management

was asked to define the root problem causing Deschutes underperformance in New Mexico

and offer implementation strategies for growing the Deschutes brand in the New Mexico

market. Moreover, the team was asked specifically to develop strategies for growth that

would also allow Deschutes to stay relevant in the craft beer community and true to their

mission and values.

After conducting thorough market research and analysis, the team identified the root

problem facing Deschutes in the New Mexico market. The team then developed a

comprehensive set of strategies that target and will solve the identified root problem. The

implementation plan employs simultaneous push strategies for distribution problems and pull

strategies for retail and consumer problems. This dual approach will best target all relevant

market segments in New Mexico.


2 SITUATION ANALYSIS

2.1 COMPANY ANALYSIS

2.1.1 History, Products, Customers

In 1988, Gary Fish founded a craft brewery in Bend, Oregon and named it after the

Deschutes River that flows through central Oregon. Deschutes Brewery has been family

owned and operated since it began and in 2013 the company implemented an Employee

Stock Ownership Program which allows employees to own a percentage of the company.

Deschutes operates a 435,000 barrel/year production facility as well as two public houses in

Oregon. (Frequently Asked Questions, 2014)

Deschutes has grown exponentially since its humble beginnings and is now the 6th

largest craft brewery in the United States and the 12th largest brewery overall. Deschutes

products are currently shipped to 28 states and parts of Canada. The product mix includes

year-round, seasonal and specialty brews. Deschutes uses an in-house, proprietary method

for yeast strain in the brewing process. (Billingsley, 2014)

2.1.2 Mission/Culture/Values

Deschutes’ mission is “to profitably deliver the finest beers in the world and cultivate

extraordinary experiences.”(Billingsley, 2014) Core values include, honoring customers,

delivering quality, working as a team, building a healthier society, celebrating the culture of

beer, and doing their best, and next time doing it better.

The brewery was founded with an emphasis on community. Deschutes continues that

commitment to community in two ways. First, Deschutes does not simply want to offer beer,

they want to offer an experience and specifically one that is “worth sharing.” It is Deschutes’

goal to bring people together and create communities with their beers. Second, Deschutes is

committed to preserving and improving the communities they belong to. Deschutes donates


one dollar per barrel sold to local and national charities and participates in various

fundraisers. Deschutes is also proactive in sustainability efforts. The brewery has been able

to reduce the amount of water used and the amount of waste released into the sewer system

during the brewing process by installing a water reuse system and a carbon dioxide capture

system in their production facility. (Wikipedia, 2015)

2.2 MARKET ANALYSIS

With the company’s values, mission, and goals for New Mexico in mind, the team set

the following objectives for the market research phase of the project:

Characterize New Mexico craft beer consumer.

Define characteristics of New Mexico craft beer retailers.

Identify relevant market segments.

Determine core problems facing Deschutes in New Mexico.

To best meet these objectives, five distinct groups were targeted during the market research

phase. The team determined that these five groups adequately represent the full range of the

beer market in general and would therefore provide the most complete information when

applied to New Mexico. The five groups are: 1. Off-Premise Consumer 2. On-Premise

Consumer 3. Off-Premise Retailer 4. On-Premise Retailer 5. Distributor. The research

problem, research methods and results of each group will be presented individually followed

by conclusions drawn from analysis of all of the research.

2.2.1 Consumer Market Analysis

2.2.1.1 Off premise Consumer Market Analysis

Problem Statement

To evaluate those aspects of research specific to off-premise consumer research, the

team focused on an assessment within three major spheres of focus. These include the

persona of the average craft beer consumer in New Mexico, a depiction of the circumstances


under which existing customers purchase off-premise beer and an analysis of differences

between existing and potential Deschutes consumers. Within these three spheres series of

research questions were developed as follows:

1. Persona

a. What does the existing craft beer drinker look like in New Mexico?

b. What does the existing Deschutes beer drinker look like in New Mexico?

2. Circumstance

a. Under what physical circumstances do customers in New Mexico purchase off-

premise beer?

b. Under what psychological circumstances do customers in New Mexico

purchase off-premise beer?

c. Under what physical circumstances do customers in New Mexico consume beer

purchased off -premise?

d. Under what physical circumstances do customers in New Mexico consume beer

purchased off -premise?

3. Analysis

a. What does the potential craft beer/Deschutes drinker look like in New Mexico?

b. How can Deschutes reach them better?

Research Methods

The team decided that descriptive research would be most effective in answering the

research question “what factors will contribute to increased sales of Deschutes beer to off-

premise customers?” by identifying the characteristics of pre-existing off-premise customers,

assessing how these and other beer drinkers in the greater Albuquerque area view and

consume Deschutes beer, and evaluating differences between these customers.


While both primary and secondary data was collected for off-premise consumer

research, a greater emphasis was placed on the collection of primary data as it more

accurately describes the nature of the current established and available customers. This data

was collected through the use of a thirty-five question survey that was both published

electronically and physically distributed to research participants. The questions were both

open-ended and close-ended and included questions such as “When buying beer, do you

buy in volume?” (close-ended) and “What do you enjoy eating when drinking beer?” (open-

ended). This research was conducted with a sample, a subgroup of the population that

volunteered to participate in the study.

The survey included a section that evaluated the participant’s demographics, a section

that addressed their beer drinking habits, and a section that inquired into their values and

lifestyles. By observing demographics in combination with participants’ drinking habits, the

team was able to collect statistical evidence that indicated demographic trends among both

Deschutes and non-Deschutes drinkers. Further, by asking about the participants’ lifestyle

and values, the team was able to gauge how well Deschutes’ values are aligned with existing

and potential customers.

Research Findings

The research conducted on off-premise consumers indicates several trends within

already existing consumers of Deschutes. These trends exemplify both demographic and

lifestyle significance in the off-premise purchase of Deschutes beer. For example, the

findings indicate that the majority of those sampled who regularly purchased craft beer and

recognized Deschutes were between the ages of 21 and 25, and were of lower wage brackets,

with over 50% of respondents making less than $50,000 per year. Interestingly, of these same

respondents, 100% had at least a high school diploma. The age and education demographics

may indicate that craft beer consumers are youthful customers who are approaching higher


salaries and more prestigious careers in the future. Further, many of the participants that

were surveyed said they lived active lifestyles and enjoyed playing soccer and videogames.

One of the greatest trends noted in the results of the survey was that 63% of respondents

stated they often buy their beer in bulk. In contrast to this, the majority of respondents also

claimed that they buy variety packs of beer. Further, the majority of participants were willing

to pay higher prices for higher quality beer and an overwhelming majority (76%) said that

they were more inclined to buy beer from sustainably oriented companies. With respect to

the portion of the survey that focused on participants’ beer drinking habits, the team found

that almost all of those surveyed enjoyed drinking craft beer and thought that they knew the

difference between craft and other types of beer. However, 66% of respondents did not

recognize Deschutes as a craft beer brand.

2.2.1.2 On-premise Consumer Market Analysis

Problem Statement

The objective of the on-premise consumer research was to understand both the

behavioral habits and consumer trends of beer drinkers throughout New Mexico. A primary

goal was to determine how Deschutes can improve sales in New Mexico by using data that

analyzes the New Mexican consumer trends. Another priority was to determine how

Deschutes can utilize trends to establish a better presence in the market.

The first step was to identify the typical consumer profile of beer drinkers, craft beer

drinkers, and Deschutes consumers. To better understand the consumer, it is crucial to learn

what goes through the typical consumer mind when choosing a beer in an on-premise setting.

To develop a more comprehensive understanding of consumer beer choices, it is important

to determine exactly how and why people chose a specific beer over all their other choices.


Research Methods

Two data collections methods were used: an on-premise method of observations and

interviews and an online survey. First, the team visited six bars throughout the Albuquerque

area where Deschutes products were served on tap or in bottles. When these locations were

visited, both observational and person-to-person data was collected. Through observations,

information on the persona of a typical craft beer drinker was gathered. Consumers were then

approached based on differing demographics that included age and gender. Many open-

ended questions were asked to gather more qualitative data and to further improve the

understanding of the typical craft beer drinker. The input from these on location data

collections was used to develop a more in-depth online survey that provided an increased

amount of data.

The online survey was created using the program Qualtrics and contained both open

and close-ended questions. The survey had approximately 300 respondents who were asked

a variety of personal characteristic and psychological attribute questions. Many of the

questions focused on demographic information such as age and occupation while other

questions related to a respondent’s lifestyle, motivational and attitude characteristics. The

participants covered a wide range of age, gender, ethnicity, income, and educational

demographics. Once the data was collected it was presented and interpreted via Microsoft

Excel. Tables and graphs were formed to create a visual understanding of the results of the

survey.

Research Findings

The first step in conducting the on-premise research was to investigate the different

locations where consumers can purchase Deschutes products in Albuquerque. The locations

included a variety of bars and restaurants in Albuquerque’s most popular drinking areas,

Downtown and Nob Hill. The research focused on bars that had a variety of different beers on


tap, specifically Deschutes, to get the most information per interaction. A number of informal

and personal surveys with a multitude of different consumers as well as servers, bartenders

and managers were conducted. These interviews were revealing about consumer trends,

buying habits, etc., which provided a more enhanced understanding of beer consumers.

Some of the most relevant initial findings as they relate to on-premise consumer trends and

behavior include:

Men tend to be more open to drinking and tend to be more open to trying new things.

Overall, men tend to select a few different beers/styles per visit.

Most female beer drinkers have higher brand loyalty than men and tend to select

beers that are lighter. Women that avoid craft beers appear to dislike the high calories

associated with these beverages. Many also mentioned it makes them feel “full”.

Consumers are more likely to choose Deschutes in bars that lack the presence of local

beers or when it is on “special.”

Bar managers and bartenders indicated that customers buy and consume more

beverages when they book performing acts such as live music events.

Consumers that regularly drink craft beer are more open to try Deschutes than non-

craft drinkers.

Customers are attracted to Deschutes taps in well-lit bars but cannot read them in

darker bars.

In addition to bars, data was collected in restaurants throughout the Albuquerque area

as well. One restaurant that stood out was Vinaigrette, a salad eatery that typically pairs wines

with their salad entrees. However, this restaurant also has four beers on tap, all of which are

craft brews: Oskar Blues Mama’s Little Yello Pils (CO), Anderson Valley Blood Orange Goose

Ale (CA), Deschutes Fresh Squeezed IPA (OR), and Durango Brewing Dark Lager (CO). The


manager stated that the staff has a heavy input into the restaurant’s beer selection and that

Vinaigrette only chooses beer from the same distributor to avoid complexity. The restaurant

also tries to rotate and feature local beers most of the time. The manager stated that they tend

to favor lighter beers that pair with the menu items. Overall, Vinaigrette is an example of new

restaurants that are beginning to put an emphasis on pairing menu items with beer, a

phenomenon that Deschutes could potentially take greater advantage of in the future.

Using the information gathered at these locations, a survey was constructed to address

any potential points of interest and to substantiate consumer trends. The survey was

distributed by members of the Anderson School of Management to other students, co-

workers, family, friends, and on social media, targeting only those who are of legal drinking

age and live in New Mexico. Results from the survey coincided with the information gathered

from the observations and interviews with customers and bartenders. The survey results

support the idea that men tend to be willing to try new things and generally have an open

mind towards new beers, while a higher percentage of women, compared to men, are content

with their current selections. The results indicate that men can be swayed as evidenced by

the 20% of respondents who indicated they are open to a new beer depending on specific

factors such as beers on draft, intriguing options, absence of their preferred beer, etc.

Figure 1

Do you tend to order a new or the same beer at a bar?

MEN WOMEN New 60.94% 52.63%

Same 19.53% 41.05%

Varies 19.53% 6.32%


Another survey question measured the openness of trying new beers. Women were

split on knowing what they are going to order before they walk into the bar. Men, on the other

hand, are more likely make their beverage selection after entering the bar. Menu options,

drink specials, draft selection, and recommendations likely have a heavy influence on the

decision-making process.

Figure 2

A factor that weighs heavily on taste differences between men and women is the

favorite beer style of each gender. According to survey results, women most clearly prefer

wheat style beers while men show a slight preference for IPAs. Deschutes most popular beers,

the Mirror Pond Ale and the Black Butte Porter, ranked outside the top three favorite beer

styles for both men and women. This data suggests that Deschutes is lacking in the current

New Mexican market; however, it poses as an opportunity for these two beers to become

more popular in their respective categories. Additionally, the New Mexico market may be

more receptive to Deschutes IPAs, Chainbreaker, River Ale and other beers that fit in the IPA,

Wheat, or Stout category.

Do you know what you want when walking into a bar?

MEN WOMEN No 59% 48%

Yes 41% 52%


Figure 3 An overwhelming consensus of survey respondents enjoy outdoor activities including

sports such as skiing and golfing, hiking, fishing, camping, etc. In New Mexico, there is no

shortage of outdoor activities such as skiing, snowboarding, and rock climbing, among

others. The survey results also indicate that music events tend to spur on-site alcohol sales, as

79% of respondents will purchase beer during live music events. While New Mexico does not

have any major music festivals, there are many different venues across the state that serve

alcohol. In addition, there are many bars in New Mexico that host bands and different musical

acts. Also of note, most of the survey respondents were members of one or more social media

platforms. An overwhelming majority stated they had a Facebook account, followed by

YouTube, Instagram, and Twitter in decreasing numbers.

The survey also shed some light on the craft vs.non-craft debate, as 8 out of 10 people

stated that they know what a craft beer was and 64% actually prefer craft beer to non-crafts.

Of the craft beer enthusiasts, 40% have never heard of or tasted a Deschutes beer, whereas,

Favorite Beer Styles

MEN WOMEN IPA 19.48% 14.85%

Wheat 13.08% 34.50%

Stout 13.66% 14.85% Ales (Hefeweizen, Saison, Fruit, Brown, Blonde, Black, Honey, Belgian)

12.79%

11.35%

Pilsner 11.92% 9.61%

Lager 5.81% 6.55%

Amber 5.52% 4.80%

Pale Ale 4.07% 3.93%

Light Beer 1.16% 3.06%

Red 4.94% 3.06%

Porter 3.49% 2.62%

Sours 1.74%

Cider 3.49%


of those respondents who were unsure of whether they prefer a craft beer or not, 51% have

never heard of or tasted a Deschutes beer before.

Figure 4

According to the data presented in the graph above, Deschutes appears to fail in

reaching a large percentage of the consumers surveyed. Brand presence of Deschutes in New

Mexico appears to be low. To illustrate this point, the survey had a chart of some popular

national and local beer brands alongside Deschutes’ flagship beers: Mirror Pond Ale, Black

Butte Porter, and Fresh Squeezed IPA. The Deschutes beers all ranked last on a scale of

familiarity by a significant margin. Local beers such as Marble Red, La Cumbre Elevated IPA,

and the Santa Fe Black IPA ranked ahead of Deschutes.

The team also conducted outside demographic research and discovered that in New

Mexico, there is a very large percentage of Hispanics compared to other states in the country.

According to the US Census Bureau (2015), approximately 47% of New Mexicans were of

Hispanic decent in 2010. In New Mexico, success in many ventures hinges upon the Hispanic

community. The survey results indicated that 43% of Hispanics have heard about Deschutes,

while less than 35% have tried a Deschutes beer before. In speaking to those that identified


as Hispanic during on-premise visits, a portion of older Hispanics seem to be brand loyal to

beer that they have grown up drinking or were able to afford when they first started drinking.

In addition, price may be a large factor for Hispanics to consider, since 65% of Hispanics have

a household income of under $60,000 a year, compared to just 47% for Caucasians (US Census

Bureau, 2015). The Hispanic segment of the market tends to enjoy imported beers such as a

Corona, Dos Equis, or Modelo. However, IPA’s are in the top two beer styles of choice for

Hispanic respondents. While, the beer styles offered by Deschutes may not have a lighter or

cheaper option for Hispanic drinkers, the collaboration beer, Zarabanda, may generate more

appeal for the Hispanic consumer market in the future. This beer could appeal to rural New

Mexicans and Hispanics as a saison style beer that has roots as a farmhouse ale, made to keep

farmers and ranchers in Europe refreshed in warmer climates.

2.2.2 Retailer Market Analysis

2.2.2.1 Off Premise Retail Market Analysis

Problem Statement

The objective of the off-premise retailer research was to find out why Deschutes does

not have many products in New Mexico retail stores compared with retail stores in other

states. The ratio of on-premise sales versus off-premise sales in New Mexico depicts that New

Mexico has a lower percentage of off-premise sales than other states. (Billingsley, 2014)

Deschutes would like to bring this ratio to a healthier balance. The team surveyed retailers

across Albuquerque to determine what beers are selling the best in New Mexico. In addition,

the team focused on discovering if New Mexico store employees are familiar with the

Deschutes brand, what the top beer sellers are in New Mexican stores, and which brews of

Deschutes are carried in New Mexican retail stores.


Research Methods

A ten-question survey was developed and used in the research of retail stores and one

additional question in the survey was used for Total Wine or other stores that offer beer

samples prior to purchase. A total of 25 retail stores were approached with the survey.

Questions focused on identifying where the stores place certain beers and understanding

what beers sell well in the stores. Answers to these questions will give Deschutes information

about how to position their beer in retail stores and their local competitors in the New Mexican

market.

Below is the complete list of questions that the team asked the various stores:

1. How does your store choose which beers to sell? Are there specific things you look for?

2. How do you decide where different beer brands get placed on the shelves?

3. Do you order the same beers each time or is it based on customer demand?

4. What are the top 3-5 brands or types of beer that you see being sold?

5. Do you sell more 6-packs, 12-packs, variety-packs, or singles?

6. Do you advertise certain beers? If so why?

7. How well do craft beers sell at your store?

8. How would you describe the typical purchaser of craft beers?

9. Have you heard of Deschutes or their top product Mirror Pond Ale?

10. Do people buy Deschutes in your store? If so how much?

11. Total Wine - do you taste test Deschutes?

The team also sought secondary research about general beer sales in New Mexico.

The research showed that in the US, off-premise beer channel off-premise sales are spread fairly

evenly across convenience stores, liquor stores, and supermarkets, as illustrated in Figure 1


below. With this information in mind, the team determined it would be best to research all types

of off-premise retail stores.

Figure 5

Research Findings

Brand awareness is inconsistent for many retail managers and store employees. For

example, at one Smith’s location, a manager claimed the store did not carry Deschutes beer.

However, upon visiting the store in person, the team found that Deschutes is in fact located on

the shelves. At a different location, a beverage specialist had a thorough knowledge on

alcoholic beverages including Deschutes. He recommended a technique called cross-

branding which involves placing Deschutes beers at other locations in the store creating

greater customer awareness. One example could be placing the beers close in high traffic

areas of the grocery store and/or near foods that pair well with Deschutes.

Retailer placement of beer varies from retailer to retailer. At Albertsons, Deschutes

beers are placed at eye level to make it easier for customers to see and because Albertsons

believes that Deschutes is going to be a top seller. Deschutes is not currently a top seller at

Albertsons but corporate representatives from Albertsons have confidence in the brand. In

contrast, Sprouts places the better selling beers on the lowest shelf. In Sprouts, Deschutes

sells well and is placed on a lower shelf. Jubilation, a local liquor store, places local beers on


top of the shelves which encourages local brewery sales and will be a disadvantage that

Deschutes will have to overcome. Total Wine places beer in alphabetical order according to

the different categories, such as craft beer, brand, and region. At Smith’s, each store receives

a schematic diagram for the shelves arrangement from their corporate office. An interesting

possibility with Smiths is that brands can buy shelf space. Bud Light has already purchased

some of their shelf space.

Another important observation with respect to selling beers is the price. In retail stores

like Smith’s and Sprouts, price was reported to be an important factor that could boost the

sale. The stores that carry Deschutes said that the Mirror Pond Pale Ale and Black Butte Porter

are their top sellers of Deschutes brews. Sales and strategic placement are important to this

demographic and can be used to gain new customers.

The team encountered several difficulties when gathering research data. Many stores

are not allowed to respond to survey requests without corporate approval. Information was

considered proprietary at many retailers. Additionally, some stores would not respond to

emails and did not want to answer questions in person or over the phone. They would answer

the phone and ask for the survey to be emailed to them; however, in many of these cases, the

survey was never completed and returned. Finally, a challenge with national chain retailers

is that corporate level decisions are made as to what beers are carried in store. Some stores

also referred the team to corporate managers, rather than speaking with us directly. Due to

the scope of the project being focused on New Mexico, the team decided not to pursue

communication with corporate managers. Unfortunately these difficulties created a smaller

sample size than preferred.

Figure 6 compiles the top brands of beer sold in each store. Almost every store

surveyed included Marble in their list of top brands. The Chevron gas station was the only


store that does not sell Marble as a top brand. None of the stores surveyed included Deschutes

in their list of top sellers. Figure 6 includes the results from nine different retailers and

includes data from stores with multiple locations.

Figure 6. Number of stores that have these beers in their top three to five bestsellers The research data indicates that consumers are more likely to purchase new beers if

they are able to try it first. Mintel, Beer the Consumer Report, states that, “Education drives

craft beer sales, with 53% of consumers saying they would try (or try more) craft beers if they

had more information about them. This is particularly true of younger adults, with people

younger than 34 being the biggest craft beer fans. Where permitted, both on and off-premise

operators can benefit from tasting events.” (Mintel) A sales representative from World Market

gave a similar response in the team’s survey, “We do have regular wine and beer tastings. In

my memory, we have had a tasting of Deschutes products a few years ago. I remember that it

went well. Whenever we have a tasting, the featured product usually sees an increase of sales

for that item.” This shows people will purchase a new beer if they are able to sample it first.


This is critical for success in the off-premise retail stores, where people usually cannot taste

the beer before they purchase it. Unfortunately, Total Wine and World Market are the only

stores surveyed that have regular beer tastings but they have not recently done a sampling

of Deschutes beer.

2.2.2.2 On-premise Retailer Research Findings

Problem Statement

The on-premise retailer market research focused on local bars, restaurants, casinos,

etc. in order to determine Deschutes’ overall presence and standing in the state of New

Mexico. The main goal was to create a profile for a typical Deschutes drinker in the retail

setting and to see where Deschutes stood in comparison to other craft beer companies around

the state. In turn, the team evaluated what factors contribute to the standing and success of

beer companies in New Mexico.

Research Methods

Primary data was collected from a number of on-premise retailers through interviews

and observation. For each interview, there was a general list of questions for each retailer

along with supporting questions based on the answers that were given. Questions included

information about the consumers, whether or not the bars/restaurants carried Deschutes,

whether or not they carried craft beer in general, what specials they had (if any), whether

they served more hard alcohol or beer, how they made their decision on what beers to offer,

and what beers they commonly recommended to customers. The one-on-one interviews were

conducted with a variety of Albuquerque on-premise retailers. (For a full list of surveyed

retailers, see Appendix 1). Observational data was also collected regarding drinking habits

of customers. We then categorized the retailers based on their consumers. During the


interviews, bartenders, servers, and managers were asked to describe how they would

portray a typical Deschutes drinker.

The characteristics compiled below are representative of a typical Deschutes drinker:

Male

25-35 years old

College level education

Caucasian

Focused on beer quality

Casual drinker, not drinking to “get drunk”

Research Findings

The research indicates that there are major differences in the behaviors and beverage

preferences at nightclubs versus bars and restaurants. For the most part, nightclubs do not

carry Deschutes and have often never heard of it. Bartenders at nightclubs claim their

customers, who are typically between 21-28 years of age, are looking for cheap drinks and

are drinking to get intoxicated. Restaurants and bars, on the other hand, are more likely to

carry Deschutes. Their customers vary widely in age and are generally looking for quality

products. The staff at restaurants/bars claim that beers with attractive handles and/or large

font or logos are bigger sellers than bland handles and also increase brand awareness. The

research found most of the bars and restaurants that do carry Deschutes are happy with the

product.

The surveys and interviews indicated several reasons that account for why

establishments do not carry Deschutes or do not sell high quantities of Deschutes:

Price Perception - Deschutes sells really well when it is on special. When customers

find the price of Deschutes is the same as domestic brews, the customers will opt for


Deschutes. The perception of price plays a role in purchases; customers assume

Deschutes will be expensive because it is a quality beer.

Inconsistent quality - Some of the bars and restaurants choose not to carry Deschutes

claiming that the quality of the brews is inconsistent from year to year.

Night clubs typically do not carry and have not heard of Deschutes. These locations

attract a target market different from Deschutes target market.

Overall, the team found that there is very little promotion or advertising of Deschutes

products in or by on-premise retailers. However, there were a couple of exceptions. One of

which was Kelly’s Brew Pub on Central. They offer a special for Deschutes beers on Thursday

nights, which seems to garner a lot of fans. This could present a great opportunity for

consumers that are unaware of or do not have a taste for Deschutes as it is a low financial risk

opportunity chance to try Deschutes beer and experience some of the culture attached to it.

Another exception was Vintage 423 who co-branded with Deschutes to make their own

specialized craft beer, Vintage Pale Ale by Deschutes. The handle even includes both brands,

which could promote sales.

2.2.3 Distribution Analysis

2.2.3.1 On-premise Distribution Analysis

National Distributing Company (NDC) provides on-premise distribution services for

an average of 35 beer suppliers throughout New Mexico. Each of these suppliers offer a

variety of brands increasing the total beer product portfolio for NDC to 100+ products during

any given month. According to the IBS world beer wholesaler report, demand for craft brews

that are produced by smaller breweries is on the rise. (National Beer Sales & Production Data,

2015) This demand increases the number of suppliers in NDC’s portfolio making it difficult

for Deschutes to attain brand awareness and product promotion.


Local survey of the restaurants and bars in Albuquerque reveals that bar managers

typically select the beers that their establishments will carry; however, consumer preference

(and input from distributors and suppliers) is also considered. In informal interviews, bar

managers mentioned that suppliers frequently stop by to introduce their products.

Distributors focus on products that do well; therefore, in order for Deschutes to receive

satisfactory attention by NDC sales staff, its products need to be in demand.

Communication between NDC and Deschutes needs attention, particularly in terms of

sharing local market knowledge to help strengthen Deschutes’ portfolio strength and

increase brand awareness in New Mexico. The Independent Council on 3-Tier Dynamics

identifies this area as a responsibility of the distributor. (Billingsley, 2014) NDC has not yet

provided specific market strategies for New Mexico to Deschutes. This is important in order

to target the appropriate market for Deschutes products. A comprehensive and collaborative

marketing plan is essential to the overall success for Deschutes sales in New Mexico. Upon

reviewing the on-premise sales data provided by NDC, 2014 sales of Deschutes fluctuated

throughout the year in comparison with more steady performance the prior year. NDC and

Deschutes should collaborate to investigate and address the cause of said

inconsistencies. The sales data further reveals that most New Mexico restaurants and bars

prefer the local Marble Brewery. In view of this finding, Deschutes must work to market its

products in order to remain competitive with the local breweries.

2.2.3.2 Off Premise Distribution Analysis

Deschutes is facing lost opportunities for sales in off-premise distribution because New

Mexico consumers lack awareness of its products. In retail Deschutes products are not often

stocked in refrigerated areas and a limited number of products are offered. Primary research

found that Deschutes products are often found warm, out of reach, or at floor level. Secondary

research indicates that customers typically prefer beverages served at drinking


temperature. Retail staff generally determine which products will be refrigerated in concert

with distributors.

A potential reason for poor shelf placement can be attributed to the upstream

consolidation of the largest beer producers Anheuser-Busch with InBev, and

MillerCoors. These two companies dominate the market and therefore have major price-

setting power. With no craft brewery owning a large market share, these large companies

can negotiate better contracts. Anheuser-Busch (over 200 brands) and MillerCoors (170

brands) own the majority of shelf space in most places where alcohol is sold.

Generally, distributors have their own in-house sales teams. It may be the case that

NDC’s sales team is not adequately educated on Deschutes products and/or incentivized to

push Deschutes products, or that they simply find better incentives for competitor

products. These misaligned goals could be a contributing factors to the stagnating Deschutes

sales figures in New Mexico.


2.3 SWOT ANALYSIS

A SWOT analysis was conducted based on the research findings. Understanding the

current proficiencies, deficiencies, and potential for Deschutes can yield major dividends

when constructing a strategy to more effectively spread brand awareness and penetration

within the market.

Strengths

Cultural similarities between New Mexico and Bend

Positive performance during promotional sales

On-premise popularity at Kelly's Off-premise support at Albertsons Black Butte Porter is the highest selling

craft beer porter in the country

Weaknesses

Lack of knowledge of local Albuquerque beer market

Lack of strategic market segmentation strategy

Ineffective distribution methods and communication.

Lack of dedicated resources in the NM Market

Opportunities

Growing market for craft beer in NM Openness of typical craft enthusiasts to

try new beers

Threats

Lack of brand awareness Consumer loyalty to local brews, Increasing competition between local

breweries Increasing quality of local beers Positive competitor sales Highly regulated product category

Figure 7

2.4 CONCLUSIONS FROM MARKET ANALYSIS/IDENTIFYING ROOT PROBLEM

2.4.1 Consumer/Retailer Conclusions

The market research process revealed interesting and useful trends about both

consumer and retailer behavior. The overarching conclusion that can be drawn from the

research is that at both the consumer and retail level, the root marketing problem is a lack of

brand presence. Every issue identified thus far with Deschutes in New Mexico can be traced

back to the company not having a physical or virtual presence in New Mexico. Lack of brand


presence has led to further complications such as lack of brand awareness, questionable

value proposition and mixed or confused positioning.

Brand awareness in particular has suffered greatly from Deschutes not explicitly

making their brand presence felt in New Mexico. Both on a consumer and retailer scale,

limited promotional tactics, lack of strategic consumer targeting and local consumer loyalty

to New Mexican produced beer have made brand awareness difficult to improve. To this

point, sales, successful product distribution, and establishing a connection with the local

populace in Albuquerque have also suffered largely because of a lack of knowledge about

Deschutes. Both consumers and retailers simply don’t know enough about Deschutes to

become interested in the beer from Oregon. If Deschutes had more of a defined presence in

the state, many of these issues could be remedied. In contrast, the craft beer industry in New

Mexico has shown significant growth within the past decade. As of April, 2015, a map

published by the New Mexico Brewer’s Guild shows at least 23 major breweries or tap houses

in the Albuquerque area alone. (The Official New Mexico Beer Map, 2013-15) A significant

cluster is in the Nob Hill area adjacent to the University of New Mexico, where Bosque Brewing

has joined Kelly’s and Tractor Brewing, alongside restaurants such as Il Vicino and B2B, which

are now brewing their own beer. (See Appendix 1 for a map of Albuquerque’s most popular

neighborhoods for drinking and socializing). The craft beer community is vibrant and

growing in New Mexico and the research indicates that the typical craft beer drinker in New

Mexico is nearly identical to the typical craft beer drinker nationwide. Thus, there is a lot of

potential for Deschutes to grow in New Mexico if improved brand presence can be

successfully augmented with sustained market penetration.

Another hurdle Deschutes must overcome, according to the research, is New

Mexican’s tendency to buy and consume local craft beer. The research also reveals that not


only are their similarities between craft beer drinkers in New Mexico and craft beer drinkers

in Oregon but there are also many similarities between New Mexico’s culture and values and

Deschutes’ culture and values (i.e. strong ties to community, outdoor/active lifestyle,

concerned about the environment and sustainability, etc.) Deschutes must clearly

communicate these similarities to consumers in New Mexico and also mitigate the perceived

threat to local breweries by taking a collaborative competitive approach with local breweries.

A sustained effort to educate consumers and retailers about Deschutes products is

needed to overcome the many obstacles facing Deschutes in New Mexico.

2.4.2 Distribution Conclusions

The overarching distribution problem is the weak relationship between Deschutes

Brewery and NDC. This also can be attributed to the root problem of brand presence. Missed

opportunities for education, support, incentives and communication has had a negative

impact on the relationship between Deschutes and NDC.

The lack of a strong relationship has affected Deschutes’ ability to effectively

communicate what it believes its responsibilities are as a supplier, as well as its expectations

for NDC. This lack of effective communication has contributed to an overall 7.3% decrease in

sales in New Mexico and low brand awareness. Furthermore, this poor relationship has

minimized the sense of community among Deschutes’ customer base in New

Mexico. Community and brand awareness cannot be improved without Deschutes and NDC

working together to reach out to local consumers and firms.

When products sell well, NDC is more likely to suggest that those products be carried

by retailers, driving revenues for both retailers and NDC in a cyclical nature. The lack of

brand presence has resulted in a product brand that is challenging to sell. Deschutes and

NDC both stand to benefit from increasing brand presence in New Mexico.


3 MARKET SEGMENTATION & MARKETING PERSONAS

3.1 MARKET SEGMENTATION Before determining how to increase Deschutes’ brand presence in New Mexico

through various strategies, the team had to determine who those strategies should target. The

market research and analysis revealed five logical and distinct market segments, three of

which Deschutes should target.

Market Segments to Target

1: Craft beer drinkers who do not drink Deschutes (Primary Target Market)

This segment is the one Deschutes is most likely to capture and should be their primary focus

to begin with. Market research identified this segment as being mostly made up of sociable

and active Caucasian males (21-35 years old) who enjoy the fine quality taste of a craft

beer. They are adventurous and willing to try beers that are outside of the Budweiser/Coors

mold. They are innovative and want to be ahead of the curve; the first person to talk, post, or

tweet about a great beer.

2: Non-craft beer drinkers (Secondary Target Market)

The secondary segment in terms of both ease and potential benefit in acquiring consists of the

traditional beer drinker. This person varies in age, taste preference, and motivations for

drinking, but in general is more interested in traditional beer options. For example, on-

premise interviews indicated that a large portion of Hispanics within New Mexico prefer more

traditional beer that they grew up drinking. These consumers do however have a level of

impressionability that could be utilized. The market research shows that 53% of consumers

would try craft beer if they had more information. This segment is at a tipping point. These

consumers have a taste for beer and long to be educated about what good beer tastes like.


3: Alcohol drinkers who do not drink beer (Tertiary Target Market)

This segment would be classified as tertiary as it is the most difficult group to target. This

person is attracted by factors that may be out of the control of a craft brewery. For example,

gender might have a direct influence. According to a recent study conducted by Nielsen

Spectra/Simmons, 68% of men drink beer while only 32% of women do. (Craft Beer

Consumers, 2014) This would imply that it is likely that women are the dominant demographic

of this group. As market research has shown that women generally favor lighter beers, if any,

it may be difficult to sway them towards trying the IPAs, porters, and stouts characteristic of

craft beer offerings. Non beer drinkers may simply have not been given the opportunity to

find a beer that they enjoy. Other consumers in this group may feel as though they do not fit

the stereotypical beer drinker and prefer to drink something that is more trendy or classy.

Still, others in this group simply prefer other alcoholic beverages to beer.

Target Markets to Ignore

4: Loyal Deschutes drinkers

This is the small segment of people in New Mexico who are already brand loyalists. Deschutes

should definitely not “ignore” their loyal customers, however, for the objectives of this plan

(growing the Deschutes brand in the New Mexico market), it does not make financial sense

for Deschutes to invest in directly targeting this particular segment.

Segment 5: People who cannot or choose not to drink alcohol

This segment consists of people under 21 who cannot legally drink alcohol and also those

people over 21 who choose not to drink for religious or other reasons.


3.2 MARKETING PERSONAS

The team employed the use of marketing personas in an effort to more easily and

effectively describe the typical consumer in each of the three market segments chosen to

target. Marketing personas are semi-fictional representations of a company’s consumer base

and are created using a combination of market research and real data about the customers.

The use of marketing personas has many benefits including a better understanding of

customer needs, consistency across the company, better product development and in this

case, better marketing strategies. The following personas were developed for each of the

targeted market segments:

1. Pat – craft beer drinker who does not drink Deschutes

Pat is male, Caucasian, educated, and between the ages of 25-35. He enjoys a variety of

outdoor activities such as hiking, fishing, camping, skiing, etc. He also likes to go to music

events and is frequently logged into several different social media accounts. As a result of

his consistent social media exposure, Pat is both more frequently exposed to and more

influenced by online advertisements than by commercials on television. Pat primarily

views craft beer as a casual experience than as an instrument. He values, to a greater

extent, the experience of trying new, high quality beers over having low quality beers for

intoxication purposes. Pat often finds more pleasure in trying out new beers and

experimenting rather than sticking with consistency. To this end, he is far less brand loyal

than older generations. Pat could most aptly be labeled as a contemporary “hipster”.

2. Stevie – non craft beer drinker

Stevie is Hispanic and may be male or female. Preferences vary as to the type of beer s/he

drinks but they definitely do not drink craft beer on a regular basis. Stevie is older (35+

years), loyal to the brands of beer they have been drinking for years and is more likely to


pick a beer based on brand name, price, or familiarity as opposed to taste, quality,

recommendations, etc. Stevie is somewhat impressionable, however, and may be

persuaded to try craft beers if given adequate information.

3. Tricia – alcohol drinker who does not drink beer

Tricia is female, middle to upper class, and could be any age or ethnicity. Tricia drinks

wine, cocktails, mixed drinks, etc. and rarely if ever drinks beer. Her reasons for not liking

beer include the caloric content and bitter taste of beer. Her drinking habits are either

drinking to get intoxicated (price motivated) or drinking socially (status motivated). She

is more likely to frequent nightclubs than the neighborhood bar or local craft brewpub.


4 INTEGRATED MARKETING COMMUNICATION Identifying the target markets and creating brand personas allowed the team to

successfully create targeted strategies specific to New Mexico and based on the research

findings. Before discussing those strategies, there is an important element that will act as an

overarching theme in the implantation of any or all of these strategies.

As Deschutes implements market strategies in New Mexico, it is important that they

communicate a consistent message each time they engage with a consumer, retailer, or

distributor. The message should also be consistent across all platforms, i.e. social media,

print, in-person, etc. The marketing term for this practice is Integrated Marketing

Communication (IMC). This should not be confused with a company slogan or motto and the

IMC is not meant to replace those. The IMC will be particularly useful as Deschutes grows in

a market like New Mexico where brand presence is extremely low and there is little to no (or

in some cases confused) knowledge of Deschutes and what they offer in terms of product and

value. Communicating a consistent message will not only create awareness but also

confidence in the brand.

None of the marketing strategies discussed below will be successful if Deschutes

cannot overcome the New Mexico consumer preference to buy local and do this in a way that

is not threatening. This can best be accomplished by highlighting the similarities that exist

between New Mexico and Bend, Oregon. The craft beer drinker in New Mexico is strikingly

similar to the craft beer drinker in Bend. The two locales are also similar in their commitment

to community, enjoyment of an outdoor/active lifestyle, concern for the environment and

sustainability, support of a thriving craft beer culture, etc. For Deschutes to be successful in

New Mexico, the consumer must acknowledge these similarities and also understand that

Deschutes is not trying to take over the craft beer community in New Mexico, but rather seeks


to become an active part of the community. With all of this in mind, the team decided on the

following ICM:

“Connecting like-minded communities”

Bend, Oregon Taos, New Mexico


5 STRATEGIES The strategies discussed below are divided into the same five groups the Market

Research was divided into: Off-Premise Consumer, On-Premise Consumer, Off-Premise

Retailer, On-Premise Retailer and Distribution. Within each of these five groups, there is a

discussion of recommended strategies, implementation, costs, metrics, and contingencies.

5.1.1 Consumer Marketing Strategies

5.1.1.1 Off premise Consumer Marketing Strategies

In the preliminary analysis, an approach including the traditional mix of product

branding, service and pricing was considered. This led to marketing options like running

promotions with rebates, coupons for in-store complimentary products, seasonal sales, mix-

n-match themes, displays, product inserts, beer clubs and other similarly aligned

approaches. These strategies, however, were found to be somewhat redundant when

reviewed by other strategy groups. In addition, consideration was given to Deschutes’

ongoing initiatives in marketing that address specific strategic goals with regard to product

branding. In the final analysis, we decided to pursue a comprehensive media campaign that

would be progressive in nature and allow for the tracking of key metrics selected to quantify

results. The objective of this proposed campaign is to address what has been determined to

be the root problem: Increasing both brand awareness and product differentiation.

Recommended Strategy – Media Campaign

1) News Outlet Initiative

The first stage of the media campaign would involve a press release and/or story that

would appear in both the Albuquerque Journal and The Daily Lobo. The Albuquerque Journal

has a daily circulation of 96,825 and on Sundays, 116,826. It is the largest newspaper in New

Mexico and dates back to 1880. (Wikipedia, 2015) The Daily Lobo is the University of New


Mexico’s official newspaper, and also has beginnings dating back to the latter 1800s with its

first publication in 1895. The current circulation is 9,000 copies daily. (H. Dowdy-Sue, personal

communication, April 30, 2015)

The goal is to highlight the collaboration between Deschutes and UNM, specifically the

development of a strategic marketing plan. This will create an opportunity to spotlight the

products offered by Deschutes. The news coverage will also help to create more awareness

within the community and at the same time develop a sort of synergy between the prospective

consumer and Deschutes. This platform will also be a great platform for first introducing the

IMC “Connecting likeminded communities” to the New Mexico Market. This strategy would

reach Pat, Stevie and Tricia by being printed in a generalized newsprint.

2) Sponsored Beer Festival

In addition to participating in beer festivals such as Hop Fest, Albuquerque Beer

Festival and Blues & Brews, Deschutes should also consider sponsoring one. These beer

festivals are fairly new to New Mexico, but are intended to be run annually and bring in many

craft and general beer drinkers alike. Deschutes was a brewer at both Blues & Brews and Hop

Fest last year, but gathered data suggests that this did not have a large enough effect on

creating brand awareness. Inspiration came from the fact that the Alaskan Brewing Co.,

another non-local craft brewery, actually sponsors the Blues & Brews festival. Although many

breweries are in attendance and can offer samples, attendees can only purchase beer from

Alaskan Brewing Co. Deschutes could host a festival similar to Blues & Brews. Deschutes can

also sponsor an event in New Mexico similar to the Arizona Beer Week, where the focus is not

on a variety of breweries but rather on a variety of Deschutes beers accompanied by music

and food. According to the Deschutes’ southwest regional sales manager, this event has been

successful in Arizona, so it seems logical to experiment with something designed similarly

and targeted to engage with New Mexico consumers.


3) Contest featured and promoted in social media

Another idea to pull in more brand awareness in New Mexico is to create a contest that

is targeted at beer drinkers who use social media. Ideas for such a contest include:

Gift card giveaways

A trip to the Deschutes brewery in Oregon

A Deschutes “care package”

Name the New Regional/Seasonal Beer contest

All of these contests can be held in other states as well as in New Mexico. Consumers

could fill out entries at festivals that they participate in, and/or using social media like

Facebook and the Deschutes website, to enter the contests. The most interesting of the above

contest ideas is “Name the Regional/Seasonal Beer Contest”. It would allow Deschutes to

bring something special to their whole southwestern region by stating how the beer’s

“inspiration” was taken from various aspects of each regional state (New Mexico, California,

Arizona, etc.).

The Deschutes care package can contain a variety of their beers or other Deschutes

products similar to what other beer and spirits companies give away in bars, liquor stores and

at events. These products include beer mugs, coasters, towels, sunglasses, and keychains. It

can be a simple package such as four beer mugs, a bottle opener, a pamphlet about

Deschutes beers and some coasters. It can be named a “Deschutes Beer Drinker Starter Kit”.

This in itself can be a prize, or a secondary prize in the beer naming contest or trip giveaway.

Developing a partnership with a local brewer to brew the beer featured in the Name

the New Beer Contest would help to create that sense of community and further generate

interest in the contest. The campaign should be advertised in local entertainment media as


well as online to generate buzz about the project. It holds true to the message of Deschutes

building a community with New Mexico and the surrounding states.

4) Local Lifestyle Show

The final leg of the campaign would involve an appearance on a local lifestyle show.

“Good Day New Mexico” is a popular daytime show sponsored by the local NBC station,

KOB4. The station maintains a state-wide leadership role with “Good Day New Mexico”

providing businesses and organizations exposure within communities that they would not

otherwise have. The segments are “long-form” meaning they are extended and allow for

customizable and in-depth coverage. The viewing appeals to a diverse demographic and

KOB4 allows access via television, online and mobile. “Good Day New Mexico” also engages

in social media with their Facebook page, which currently has 2,500 “likes.”

This final strategy comes with the anticipation that a successful market communication

initiative has increased the brand awareness and promoted the overall product differentiation

that Deschutes has to offer. At this stage, the goal is that the local beer community has

embraced the idea of a non-local brewer and could voluntarily identify with the culture and

mission surrounding Deschutes’ brewing and craft offerings. An appearance on a local

lifestyle show would be the climactic rollout whereby Deschutes could shine. The on-camera

interview could open up with a discussion of the UNM collaboration, then transition into a brief

talk about “beer culture,” and finally highlight what Deschutes Brewery has to offer in the way

of quality, variety and community. A cross-sectional market audience, reaching a wider range

of consumer groups, would see this TV segment, thus impacting the market segments of both

Pat and Stevie.


Implementation

The goal of this proposed strategy is to build Deschutes’ brand awareness in New

Mexico both quickly and cost-effectively. With that in mind, the following implementation

plan is proposed:

The first stage is the news outlet initiative: Press coverage in the Albuquerque Journal

and Daily Lobo of Deschutes and its recent collaboration with the Anderson UNM class. These

articles can symbolize a sort of re-invention or re-invigoration of Deschutes’ presence in New

Mexico and will exemplify Deschutes’ efforts to engage and rebuild with the New Mexico

community. Partnering with the state’s premiere university in order to understand who New

Mexicans are and what they want from Deschutes Brewery deepens their commitment.

Capitalizing on this media coverage as a launching point for a wider campaign, the

next stage for Deschutes should be to focus on targeting Stevie by increasing Deschutes’

appearance at beer festivals and soon afterwards sponsoring its own. Beginning with a focus

towards engaging the “beer but not craft” drinker segment will allow Deschutes to start with

what the company is already well-positioned to do – market the benefits of craft beer and the

craft beer culture as a whole. This heightened festival presence will incidentally bring

significant awareness to the Pat as well. However, it is recommended to wait on specifically

targeting current craft drinkers until Deschutes’ new rebranding efforts fully take hold and

also until Deschutes has more experience with representing and promoting its new

“substance matters,” and “worth sharing,” message. Once Deschutes is able to compellingly

use its new brand to clearly differentiate itself from other craft breweries, especially local

competitors, it can shift to focus directly on engaging “craft but not Deschutes” drinkers as

well.


In the third and final stage, Deschutes can expand by specifically targeting Pat through

the contest featured in the Alibi and the local lifestyle show appearance. At this point, the

focus is to grab the interest of passionate craft drinkers and turn them on to what Deschutes is

about and the unique and valuable contribution it makes to the New Mexico craft atmosphere.

This multi-staged approach will allow Deschutes to manage risk by ramping up slowly

and measuring success of initial efforts before making significant supplemental investments

of time and money in the market.

Phase 1: News outlet initiative (Timeline: Immediately)

Immediately after this marketing plan is received, Deschutes should work with the

Anderson School of Management to build media interest in running stories about this

project.

Deschutes should develop a set of ideas for press releases and interviews that

emphasize the collaborative, community-building, and pro-NM nature of their

decision to work with UNM students in understanding and engaging the New Mexico

consumer. For example, Deschutes can explain that they needed to understand what

New Mexico consumers want, and so they partnered with New Mexico consumers

themselves – UNM students – to find out. They can also explain how the partnership

linked well with their “worth sharing” and “substance matters” brand image, as a

community-focused and integrative way of responding to a business problem (rather

than the more distant and corporate-focused methods some other companies might

choose).

Phase 2: Increased beer festival attendance by Deschutes, leading to a Deschutes-sponsored

beer festival (Timeline: Starting within the next 6 months)

Continue attendance at various New Mexico beer festivals such as Blues & Brews and

Hop Fest. Also consider expanding attendance to other festivals such as Albuquerque


Beer Festival or Bike and Brew. Focus on selling the craft beer culture and engaging

non-craft beer drinkers, as well as showcasing Deschutes’ commitment to building

community with the New Mexico consumer and beer industry.

Begin the process of Deschutes eventually hosting its own festival, just as Alaskan

Brewing Co., also a non-local brewery, does with Blues & Brews. Leverage Deschutes’

experience with similar endeavors such as Street Pub and the festivals Deschutes

facilitates in Arizona. Aim to hold the first Deschutes-hosted festival within two years,

and even sooner if feasible would generate greater results.

Phase 3: Develop campaign aspects specifically focused towards getting craft but non-

Deschutes drinkers interested, specifically contest featured in the Alibi and local lifestyle

show appearance (Timeline: Starting in 6 months to 1 year)

Review effectiveness of campaign so far and use metrics to determine whether to

continue, expand, or cut back (further details under “Metrics” and “Contingency

Plans” below).

If decision is to continue, develop contest ideas. Once contest is ready, build buzz by

advertising contests through media outlets most likely to reach passionate craft

consumers, such as social media and local lifestyle media like the Alibi magazine.

Contact local lifestyle shows, such as “Good Day New Mexico,” and seek to gain a

television appearance by pointing to the interesting nature of the Deschutes’ story –

both the general events of Deschutes’ history, beginning in Oregon, and its product

quality and the story of Deschutes, to the New Mexico collaboration starting with UNM.

Then leverage these appearances as a powerful platform to further develop

Deschutes’ “Worth Sharing” brand and community-building orientation as a good fit

with the New Mexico culture and lifestyle.


Costs

Below are (very rough, considering the nature of this project) cost estimates for each

piece of the proposed media campaign. The employee salary rate of $40.87/hour is based off

an $85,000 annual rate, which was taken from online estimates of the annual salary of an inside

salesperson:

Strategy Cost

Estimate Explanation

Press Release - Abq Journal

$409 10 hours of work at $40.87/hour

Press Release - Daily Lobo

$368 9 hours of work at $40.87/hour

Sponsoring a beer festival

$4,385

40 hours of work at $40.87/hour

$1,250 estimated festival fees/logistics (based off a

festival manager’s experience)

$1,500 giveaways and product

Ad and Contest - The Alibi

$2,935

40 hours of work at $40.87/hour

$300 ad (1 per week at $75, for 4 weeks - see

http://www.nationwideadvertising.com/adinalnewme

a.html)

$1000 contest prize value

TV Appearance - Good Day New Mexico

$1,226 30 hours of work at $40.87/hour

TOTAL: $9,323

Figure 8

Metrics

Throughout implementation, Deschutes will need to evaluate and measure the success

of each piece of the strategy. In order to do this, it will need to rely upon metrics. These

metrics will be used to measure performance after each particular implementation strategy is

put into practice. Although the example metrics that follow use data from 11/30/2014, it is


advised that Deschutes use more recent quarterly data and growth data in order to better

exemplify more recent trends. Being as there are many types of potential metrics to use,

below are a few suggestions as to which to focus on.

Concerning the news outlet initiative, sponsored beer festival, and local lifestyle show

strategy aspects, two metrics are suggested. First is market share percentage. This involves

dividing Deschutes’ sales revenue in the market by the estimated total market revenue,

yielding market share percentage by revenue. According to the IRI data provided by

Deschutes, in November 2014, Deschutes’ New Mexico market share percentage was 2.2%

with $233,387 in sales out of a total of $10,595,089. Success would be measured by a growth

in the market share percentage after implementation of each strategy stage. Considering that

Shock Top and Marble Brewery, two of the top ten brewers of the most-purchased craft beers

in New Mexico, are at 4.2 and 4.3% market share respectively, success could be measured

by matching or exceeding 4.0%, or approximately $200,000 more in sales, over a four quarter

time frame.

Another method by which success could be gauged is volume and velocity numbers,

which Deschutes has previously measured after running similar campaigns. With this metric,

success would be measured by a percentage growth followed by a hold at the higher volume

outputs. Success will be more difficult to measure using this metric since volume outputs vary

from state to state. It is recommended that Deschutes see total volume sold increase and

remain at an increased level in order to deem the strategy a success.

As for measuring effectiveness of the contest featured in the Alibi, both market share

and volume and velocity numbers are recommended still, but a third metric is also suggested:

Click-through rates. Click-through rates will allow Deschutes to better understand the change


in social media usage before and after the campaign is run, such as whether or not social

media involvement increases after implementing a plan that targets social media users.

Contingencies

Contingency 1: Strategy Exceeds Expectations

The marketing strategy has been very successful in increasing awareness and interest

in trying Deschutes beers, leading to an unexpectedly high increase in demand from both on-

premise and off-premise consumers. In order to satisfy demand and keep increasing

awareness, Deschutes needs to hire a local person that will be able to manage operations in

New Mexico, thus establishing a permanent presence in the market. The benefit of having

someone local includes that they can react quickly to new opportunities in the market and also

be obtainable when necessary. A local contact may also be better suited to navigate the

unique complexities of the New Mexico culture and business environment. Furthermore, a

local Deschutes’ person can work closely with the supply chain and make sure the product is

available in many outlets and is convenient for customers to purchase.

As a longer-term plan, Deschutes could consider investing in opening a brew house in

New Mexico. There are many potentially lucrative locations for a Deschutes brew house,

including near some of New Mexico’s many ski resorts and/or golf courses. These places

attract a variety of people from both in and out of state. Deschutes could use a local brew

house to market their beers, experiment with new beer flavors and even combine their beers

with New Mexican food.

Contingency 2: Strategy Does Not Meet Expectations

If the original plan does not give the expected results, Deschutes should further narrow

the target market and pursue a niche strategy. For example, Deschutes could focus on Pat and

not Stevie. Craft beer consumers are already familiar with the craft culture and are more

willing to experiment. By pursuing a niche strategy, Deschutes will be able to expand


awareness among that group and also invest more in the consumer that drinks craft instead of

just beer.

After narrowing the target market, such as to only consumers who drink craft but not

Deschutes, the next step would be to focus on the channel that will deliver the most value.

Deschutes should focus on selective distribution and distribute to grocery stores that appeal

more to craft beer drinkers such as Trader Joe’s and Whole Foods. Deschutes would then also

need to focus on a pull strategy that would incentivize retailers to sell and promote Deschutes

beer. Another suggestion would be to develop and compare marketing plans for different

states in the region. Deschutes should focus on the long-term plans of other states where it has

been successful and then try to understand how to translate that success to the New Mexico

market.

5.1.1.2 On-premise Consumer Marketing Strategies

When evaluating on-premise consumer strategy, Deschutes’ most significant issue is

brand awareness. The market research correlates with this assertion. Of people who are

unsure whether or not they enjoy craft beer, 51% have never heard of the Deschutes Brewery.

Additionally, of the craft beer enthusiasts who were polled, 40% have never heard of the

Deschutes Brewery. These figures demonstrate a stark reality and help define a path forward.

The Deschutes Brewery slogans include “Worth Sharing”,“Bravely Done”, and

“Building Community.” These sentiments feed directly into the makeup of a typical craft beer

drinker (Pat). Someone who enjoys variety, adventure, and new experiences will be

inherently drawn to the Deschutes Brewery culture. The question becomes: how does

Deschutes convince New Mexicans to try its product, and therefore buy-in to its value

proposition? The following strategies were formed to address this issue directly.


Alternative Strategies

In pursuit of the goal, several initial ideas were rejected. These ideas included: (1)

coasters, (2) light up taps, (3) bottles only, (4) bumper stickers, and (5) stealth marketing.

These ideas are generic and cliché. Coasters get ignored, light up taps are tacky, and

bumper stickers are practically extinct - at least for this target market. As for implementing a

bottles only strategy, the market research showed that the target market is more inclined to

order a beer on tap than from a bottle. The potential gain in brand awareness does not

outweigh the loss in sales. With stealth marketing, the execution of the strategy is too

deceptive for the Deschutes brand. Deschutes is a proud company that believes in their

product; therefore, any implemented strategy must live up to that proud culture. Deschutes

needs to position themselves as a brewery that is already above these basic levels of

marketing tactics. The subsequent strategies do just that.

Recommended Strategies

1) Regional Focus

When establishing the brand, the best return on investment is to focus on where the

most craft drinkers are located so they can increase brand awareness, tell their friends about

Deschutes, and become regular Deschutes drinkers. The ideal places to find these craft

drinkers are at ski resorts and towns that thrive on outdoor activities. These New Mexico

towns include Albuquerque, Santa Fe, Taos, Angel Fire, Sipapu, Red River, Los Alamos, and

Ruidoso. With this in mind, Deschutes should focus their marketing toward these areas since

they are similar to many of the locations in Oregon for which their beers are named. Those

who visit these areas are likely to have the income to use on a craft beer experience and will

appreciate beers that are named after landmarks. This will help Deschutes distinguish their

beer from their competitors and will appeal to many craft drinkers or vacationers who are

looking for something new and different to enjoy.


Since many of these towns are seasonal, it will also be important for Deschutes to have

a place to focus their marketing plan during the summer months. This can include golf courses

that cater to both local New Mexicans and to tourists. The golf courses that Deschutes should

focus on include: The Club at Las Campanas, Paa-ko Ridge, Rainmakers, Black Mesa, Twin-

Warriors, Pinon Hills, Pueblo de Cochiti, Sierra Del Rio, and Red Hawk, as well as major golf

courses in ski towns. Deschutes should focus its attention on getting tap space in the

clubhouse of these golf courses. The Deschutes brand is more for people who want to wind

down and talk about the round, rather than for golfers who are on the course and who are less

concerned about taste.

2) Neighborhood Tap Exchange

Neighborhood taps, in which Deschutes partners with a local brewery to feature their

beers in a local brewery, are a perfect way for Deschutes to demonstrate how it is investing

in the local New Mexican community. There is a huge opportunity for Deschutes to engage in

an unofficial partnership with brewers such as Marble, La Cumbre, Red Door, etc. (a brief

overview of selected local breweries can be found in Appendix 3). The idea of exchanging

taps with other breweries shows the community that Deschutes is truly not about competition,

but about sharing the good quality that goes into craft beer. This appears to be a profitable

compromise for both parties involved because it increases each other’s market exposure.

Deschutes is not just coming in and asking for something without reciprocating the favor;

meaning, they will station a tap of a New Mexican brewer at their hometown pub house(s) as

well. It is a mutual agreement between two competing organizations for the greater good and

variety of the beer drinker.


3) Beer Enthusiasts

Market research shows that consumers are much more likely to listen to their peers

when making a beverage choice. Seventy-five percent of consumers seek advice from their

friends or strangers when making a decision about drink purchases. This is split almost

equally in half with 90 of the 236 respondents turning to a friend and 89 turning to a stranger

for drink suggestions. The remaining 25% ask their server or bartender. There are two

possible implementations for this strategy, a high cost option and a low cost option. The first

strategy is the higher cost strategy which consists of Deschutes creating a team of beer

enthusiasts. This team would be made up of people who excel at influencing the typical craft

beer persona, Pat. Based on the market research, the best type of influencer for this retail

target market would be a casual, cool, smooth talking, attractive, and educated individual

(typically male). In addition, this person is independent, self-motivated, and driven by

success. He is sociable, emotionally intelligent, and self-aware. He typically wears a casual,

cotton oxford button-up, untucked, sleeves rolled up, cotton slacks, and suede oxfords. His

face is well trimmed with a five o’clock shadow coupled with trendy eyewear. The ideal

person for this job would be an aspiring actor. Rather than posting this job opening on their

website, Deschutes should think out of the box by posting a casting call to organizations such

as the Albuquerque Theatre Guild, as well as several Santa Fe casting agents. New Mexico is

an ideal location for this type of hiring strategy, due to the booming film industry. These beer

enthusiasts would be trained about Deschutes and its products, have a passion for craft beer,

and would be seen by their peers as attractive and cool. These employees would be

responsible for going into bars and restaurants and telling consumers about the product and

its benefits. Implementing this technique, however, might prove costly because it requires

the hiring and training of a new staff.


The second beer enthusiast implementation option is less costly. Deschutes would

identify community leaders in New Mexico, attract them to Deschutes, and make them brand

evangelists. By identifying and building a relationship with leaders in the New Mexico craft

beer community, Deschutes can create brand loyalists. These brand loyalists will work hard

to promote their products. This can be done by contacting and forming partnerships with

organizations such as New Mexico Brewers Guild, ABQ Beer Geeks, and Dark Side Brew

Crew. Members of these organizations are well respected and are considered to have a great

deal of knowledge about craft beer. They also have a substantial following around the

Albuquerque and greater New Mexico area. These enthusiasts spend a great deal of time in

bars and pubs and already fit the criteria of a perfect beer enthusiast. These individuals can

use both the time they spend in actual on-premise locations as well as other mediums to

connect with consumers. For example, these enthusiasts can use social media to start

conversations with their followers about the beer. Social media sites such as Untapped,

SnapChat, Facebook, and Twitter can be leveraged to create a discussion that will help

eliminate the lack of brand awareness that Deschutes has in the New Mexican community.

4) Glass Differentiation

As a way of improving brand awareness, Deschutes must attempt to distinguish its

product on bar taps and tables at all current and future retailers. The most effective way of

doing this is by offering a unique glass to serve Deschutes beer. Market research shows that

19.5% of New Mexicans polled prefer IPA style craft beers, a near 6% percent difference from

the second closest beer type. Additionally, Deschutes market research has shown Fresh

Squeezed IPA to be the fastest growing beer in the United States. These two facts should be

leveraged to distinguish Deschutes in a bar setting.


If Deschutes offered a legacy glass, like a specialty snifter, it would offer an experience

to the drinker that boldens and enhances the taste of the beer. It is evident that New Mexicans

like IPA and with Fresh Squeezed IPA growing in popularity, it would be beneficial to

differentiate the product to consumers by offering it in a specialty glass. This would fit into

Deschutes’ goal of building communities. If Deschutes were to be served only in the specialty

glasses, people would immediately have a connection with the person across the bar who is

also enjoying a Deschutes beer. This could be a potential conversation starter and the

beginning of a new friendship or acquaintance. Another way in which Deschutes could appeal

to the distinct New Mexican culture would be to inscribe a cultural symbol that has meaning

for the people of New Mexico. These symbols could include the Zia symbol, a chili pepper, a

hot air balloon, or a natural landmark such as the Sandia or Manzano Mountians. This would

further prove their dedication to the New Mexican culture and community. This is a strategy

that could be taken to each region. This strategy has the potential to make Deschutes glasses

a collector’s item as tourists collect the Deschutes glasses from each state that they visit. By

employing this strategy, Deschutes will use subtle visual stimulation to put its beer in the

minds of on-premise consumers. The overall cost for this strategy is dependent on the

manufacturing and design of the snifter glass and the shipping expenses to bars. Purchasing

imprinted snifter glasses in bulk has relatively low costs and is a good investment that can

lead to an overall increased brand awareness for Deschutes. There is no doubt that a glass of

that caliber will stand out. Yet, Deschutes must be able to overcome two major obstacles:


making the glass cheaper to produce and convincing retailers to use it exclusively on

Deschutes’ beer. If those things happen, this strategy will be a success.

5) Event Presence

Event presence is another opportunity that Deschutes has to increase brand

awareness. Choosing specific events in the New Mexican community that highlight the

Deschutes mission and values would be a perfect way to show craft drinkers that the company

wants to become a part of the local community. It gets the product into the hands of consumers

on-premise and shows consumers that Deschutes is willing to invest in New Mexico. The

people of New Mexico are loyal to their community and to their events, so sponsoring or

hosting events will help consumers see Deschutes as a part of the New Mexico craft beer

community instead of as a competitor from out of state. The implementation for this strategy

is for Deschutes to choose events that are located in one of the key locations described earlier

and find events that are taking place in that community that benefit or support causes that fit

within Deschutes’ values and mission. Potential events include: Balloon Fiesta, Hop Fest,

Summer Fest (Nob Hill), The Great New Mexico Food Truck, ABQ Beer Week, ABQ Blues and

Brews, Bike and Brew Festival, River and Blues Brew Festival, Las Cruces Tour de Beer, and

New Mexico Brewfest.

6) Food and Beer Pairings

The best way for Deschutes to market their beer to those who drink alcohol but not

craft beer is through food pairing at restaurants. This strategy will help encourage these

consumers to see craft beer as the new sophisticated way to drink alcohol. Deschutes can

implement this strategy by going into restaurants that already carry their products and telling

them they want to promote craft beer. Deschutes will work with the restaurant to find craft

beers that can be paired with each menu item. These beers do not have to be only Deschutes


but other craft breweries should be represented as well. However, Deschutes will research

what the restaurant’s most ordered dishes are and pair those dishes with their

beer. Deschutes will incentivize the restaurants to do this by offering to pay for the cost of

reprinting their menus. This strategy will benefit Deschutes through more sales, will promote

other craft breweries, and will help the restaurants increase their sales of beer.

Implementation

The aforementioned strategies can be effective, but only if they are executed properly.

The following is a rough outline of what implementation should look like over the next two

years:

Phase 1 - Deschutes enters select regional locations and introduces snifter glasses

Deschutes first must ensure that its products are served in the locations that were

outlined in the Regional Focus section. Taos, Santa Fe, and Albuquerque should be the

primary focus. For example, Deschutes already has a presence at the ski lodge and The

Gorge Bar and Grill in Taos but should now expand in the community by having Mirror Pond,

Black Butte Porter, and Fresh Squeezed IPA carried at Aceq. Ideally, at least one select

location will serve Deschutes in each identified community within six months.

Simultaneously, Deschutes will distribute its new snifter glasses to all establishments.

The establishments will be instructed to always serve Deschutes beer in these glasses. The

snifters will create subtle but effective brand awareness through visual stimulation. The

combination of these two factors will be very powerful. Residents of New Mexico will see

Deschutes popping up in all the great outdoor towns of the state. Over time, consumers will

also recognize the snifters as Deschutes glasses and it will spark interest and much needed

brand awareness.


Phase 2 - Beer enthusiasts are released into the market

This phase will run the course of the entire two years, but will not be known to the

public until six months into the implementation. In the first six months, Deschutes will

participate in casting and hire their beer enthusiasts. Deschutes will need to reach out to A&M

Talent House, The O’Agency, and Applause, which are the three best talent agencies in New

Mexico, and they have access to the most qualified talent. Deschutes will then hire and train

twenty beer enthusiasts within six months. Next, the new employees will be sent out across

the New Mexico establishments that carry Deschutes beer to promote the product. This

includes acting as beer advocates for the brand and helping to bolster the newly gained

brand awareness.

Phase 3 - Increased event presence and second wave of beer enthusiasts

After the first six months, Deschutes will begin investing more into the New Mexican

community by sponsoring local events throughout the state. The first event that matches

perfectly with Deschutes’ likeness is the third annual Bike & Brew festival in Santa Fe (2016).

The event is attended by people who pursue an active lifestyle, and Deschutes will have no

problem building community and embracing boldness at such events. The events have to be

the right fit and this would be the perfect place to start.

Once the event schedule has been finalized, Deschutes should then reach out to

several beer groups all around New Mexico. An example of this interaction would be

Deschutes contacting the Dark Side Brew Crew and offering them five VIP passes to Bike &

Brew in exchange for being the topic of their next blog post. The Dark Side Brew Crew would

accept the invitation and be granted access behind the velvet rope. The Deschutes product

and community speak for itself and the Crew would become advocates of the Deschutes


brand. Deschutes would then track their social media activity and retweets, likes, and piggy

backs off all the free press.

Courting these groups will be a slow process, but the potential benefits are worth the

time invested. With the right amount of effort, these groups are having meetings at bars while

drinking Deschutes and posting their activity on Untapped. The effect would be similar to that

of a popular food truck. Consumers will follow these influencers and Deschutes will see an

uptick in on-premise consumer sales.

Phase 4 - Introduce neighborhood taps promotion

In the fourth month of the second year, Deschutes will implement the tap exchange

strategy. Deschutes will take the considerable momentum that has been building over the

previous fifteen months and approach a local brewery with the idea. The exchange should

start simple; one Deschutes tap in their establishment(s) for one of their taps in all Deschutes

pub houses. This can be done with multiple breweries consecutively or simultaneously. The

logistics would work because of Deschutes’ established supply chain. The benefit to sales

would be massive for Deschutes. It would have discovered a way to penetrate breweries and

convince New Mexicans that it can be trusted because it has gained the trust of local brewers.

Not only that, consumers will be impressed that Deschutes is helping local breweries expand

to new markets. Over time, this respect will help Deschutes feel like it is just like the local

brews; the neighbors from the north.

Costs

Although it is not feasible to provide a detailed budget, considering the nature of the

project, below is the proposed cost of each strategy.


Strategy Cost Estimate

Explanation

Regional Focus N/A Distributors work with restaurants/bars to offer Deschutes on tap.

Neighborhood Taps

$50 per keg Breweries exchange kegs, and sales are dependent on beer quality and marketing. Shipping costs may be incurred.

Beer Enthusiasts Option 1: $11,000 - $16,500 per employee Option 2: $5,000 per annum

O1: The budget for this should be based on company financials, but our recommendations are as follows: The compensation range should be $10.50-$16.00 per hour on a part time basis averaging 20 hours per week. O2: Access to events (VIP passes). These should be limited to one event per quarter year in order to save on cost. 50 VIP passes at $100 a piece.

Specialty Glasses $2.79/unit For bulk orders (576-1007 units) Custom Glassware offers 11.5 oz. medium snifter imprinted with name/logo heavy quality made in USA. (Cost incurred by Deschutes. Establishments will not reimburse any cost.)

Event Presence $3,000 - $5,000 per event

Pricing for event sponsoring differs. Events for 2015 include Balloon Fiesta, Hop Fest, Summerfest (Nob Hill), The Great New Mexico Food Truck, ABQ Beer Week, ABQ Blues and Brews, Bike and Brew Festival, River and Blues Brew Festival, Las Cruces Tour de Beer, and New Mexico Brewfest (not included: cost for staff/per diem/setup/kegs for sampling)

TOTAL: $42,000-$62,500

Figure 9

Metrics

Clearly defined metrics will aid in determining the success of the implementation

strategies for Deschutes. Three metrics have been identified which can be used to measure

performance after each implementation strategy is put into action: measuring current beer

sales in New Mexico in conjunction with sales post implementation, measuring the growth of


Deschutes’ social media footprint, and measuring the growth of performance compared to

local breweries in New Mexico.

The current sales of the Deschutes family of beer in New Mexico, as of November 30,

2014, is $233,387.00. Deschutes can compete with Marble and eventually Santa Fe. Marble’s

sales total $453,456 while Santa Fe’s sales total $668,384. In the first two years, Deschutes

should work toward a $55,000.00 increase in sales each year. After the third year, Deschutes’

brand awareness will be stronger and the marketing budget will not be as large. However,

sales should continue to increase by $55,000.00 per year or more.

Social media is a huge opportunity that Deschutes can leverage to build their brand

awareness. The ‘social media footprint’ is defined as a measure of the share of conversation

around a brand, product, or issue using online dialogue and conversations as the benchmark.

Analysis of a social media footprint for Deschutes will uncover trends and patterns in buyer

behavior, what beer is being talked about specifically (and by whom), where is it being talked

about (SnapChat, Facebook, Untapped, etc.), and the level of sentiment. Examining the

number of clicks, likes, and shares via social media outlets will give Deschutes a better

understanding of what customers think of their brand and opportunities for development.

Deschutes’ performance growth can also be measured against major competitors in

New Mexico. It would be important to look at Deschutes’ financial ratio information to

compare how they are performing within the New Mexico craft beer industry. This would

include quarterly income statements and a review of the balance sheet. The Profit Margin

(company earnings relative to revenues), Return on Equity (how much profits a company

generates with the money shareholders invested ), and Return on Assets (net income relative

to total assets) will be beneficial in helping Deschutes measure its performance in comparison

to local breweries like Santa Fe Brewing and Marble. Currently, Deschutes is lagging in


industry sales compared to Santa Fe Brewing ($668,384) and Mable ($453,456) but with the

proposed new strategies they are likely to see an increase in awareness and growth.

Contingencies

Contingency 1: Strategy Exceeds Expectations

If things go great with tap exchanges, it would prove that the marketing strategy has

been successful in increasing awareness and interest surrounding Deschutes beers in the

New Mexico market. As a response, Deschutes should introduce a second phase to

neighborhood taps; brewer exchange. For this phase, the participating breweries would

exchange some of their most experienced and creative brewers. The exchange would be in

the range of one to two weeks (similar to an extended business trip). If the exchange is

successful, there is great opportunity for cross branding. Perhaps Deschutes and a local New

Mexican brewery can make the next great American beer.

If things go well with beer enthusiasts, Deschutes could establish a beer club/chapter

in New Mexico where individuals can gather at local bars to drink Deschutes. This would

serve the important purpose of acting as a focus group for Deschutes. The free flow of

information would become an extremely valuable touch point for Deschutes and would also

increase interests about Deschutes within bars. When people feel involved, they take a

vested interest, further molding the idea of a beer enthusiast. When groups are building

community and having a great time in front of other people, those other people want what that

group is drinking.

If things go well with event promotion, Deschutes could create its own event,

participate in existing events, and/or set up beer stations at Albuquerque Isotopes games

(minor league baseball). One of the most unique events in New Mexico is the International

Balloon Fiesta, which is held each October. Deschutes could use this event as a way to market


its fall seasonal, Jubelale. Creating a presence at this event would help Deschutes become a

part of the New Mexican community and would also help it market its beer in other areas

because tourists come from all over the world to experience the Balloon Fiesta.

Another opportunity that Deschutes will be able to explore once it has become more

established in New Mexico could be through collaboration with Draftserv and tap the sporting

events held at Isotopes Park. Draftserv specializes in self-serve beer systems. These systems

are already being utilized in sporting arenas such as Lambeau Field and Miller Park. The low

maintenance option would give Deschutes a presence but not incur a tremendous cost. This

idea would only be successful if brand awareness is improved.

http://draftserv.com/#experience[Ma2]

Contingency 2: Strategy Does Not Meet Expectations

If things go poorly, Deschutes should scale back the amount of resorts and golf

courses, scrap the beer glasses and change from beer enthusiasts to an increased internal

presence on social media. Deschutes should also consider a differentiation strategy and

move its efforts from outdoorsy towns to college towns within New Mexico. This would focus

its efforts on Albuquerque, Las Cruces, Portales, Silver City, Las Vegas, and Santa Fe.

5.1.2 Retailer Marketing Strategies

5.1.2.1 Off premise Retailer Marketing Strategies

For the purposes of this report off premise retailers are defined as stores and shops in

which consumers purchase beer or alcohol and then take this alcohol somewhere else to

consume. In order to increase brand presence at these types of retailers, the team focused on

strategies that would increase the familiarity with the Deschutes brand, generate interest in

the consumption of Deschutes, and stay within the vision Deschutes has created for itself.


Recommended Strategies

1) Offer sales incentives

This strategy would involve Deschutes and the retailer coming to terms on milestone

goals that the retailer would agree to achieve. These milestones would focus on volume sales

within months, quarters, and annually. Once hit, the retailer would then have the benefit of a

small discount to be decided on by Deschutes management. This discount would then have to

be used the following purchase. Doing this offers several benefits to Deschutes. First, it makes

the retailer more motivated to sell Deschutes. This is the big factor needing to be fixed, as

several retail managers did not even know they were selling Deschutes. Second, the discount

will cause the retail company to purchase more in the discounted month, which will mean an

increase in revenue, and ultimately profit even with the discounted price. The market

segment this strategy directly relates to is Pat, as the increased motivation by retailers to sell

the product should lead to increased promotion by the retailers, which in turn should pull

some of these consumers to try the Deschutes line.

2) Co-branding opportunities with Supermarkets (Dinner with Deschutes)

The Dinner with Deschutes idea revolves around getting consumers to view the

product as more than just beer, but rather as something that goes along with experiences.

Consumers would purchase the product and with it receive a coupon for some type of food

product that they could then make and enjoy with their Deschutes product. This becomes a

retail strategy when the incentives for the retailers are looked at. By agreeing to an idea like

Dinner with Deschutes the retailer has the opportunity to sell two products when they may

have only sold one. The benefit to Deschutes is multiple.

First it increases the awareness, and motivation of the retailer to sell the product. This

undoubtedly manifests itself in free promotion for the Deschutes product. Following, even if


a consumer does not buy the special they did see it while looking through the list of sales and

subliminally brand awareness is being increased. Second, a promotion such as this ties in

well with the new brand identity Deschutes is looking to roll out, which focuses on substantial

moments. This changes the value proposition for the consumer from “I want to drink a beer”

to something more sustainable like “I want to make dinner for my spouse and create a

memory”. This strategy attracts all of the market segments sought after by creating an

opportunity for both Pat and Stevie to try the product based on something other than purely

the product’s benefits.

3) Variety pack, mix and match

It would be beneficial for Deschutes to inquire with retailers like Smiths, Wal-Mart and

others to implement a plan allowing customers to walk into the alcohol division, pick an empty

six-pack box, with Deschutes Labels, and select 6 single bottles of Deschutes beers in

whatever combination desired. This product would also or can check out at the same price as

a regular six-pack. It would be beneficial to compare pricing before approval, as the retail

price should be calculated beforehand. This strategy can also be done with other brands and

it would be a mix match strategy where customers can pick Deschutes along with other brands

in the six-pack combinations. This option does not make the customers restricted to buy the

same flavor or kind of beer but rather it allows customers to try all the flavors available with

Deschutes, by which they can identify with their own most beloved flavor. After a six months

trial period Deschutes can take a survey in store and see which flavor(s) most of the customers

liked. Then they can introduce six-packs of that highly liked flavor, which will increase the

sales and subsequently increase the brand image.

4) In-store Promotional Ideas

Deschutes can make arrangements with its retailers to increase promotions. It can seek

for retailers to put up advertisements in the beer section, on the shelves or some glowing


board racks. Deschutes can put up ads on the sliding doors when the customer enters the

store or near the alcohol section. It can print its brands and put up some promotional offers or

discounts on the bottom or back of the receipt given to the customers. This will increase the

brand awareness of Deschutes in New Mexico and the more people knowing about

Deschutes, the increased number of people wanting to try it. By maintaining this quality and

taste Deschutes can gain a stronger and loyal customer base.

Implementation

The purpose of this implementation plan is to serve as a guideline to Deschutes during

their execution of the aforementioned proposals and will be particularly important in

establishing timelines for implementation as well as logistic information that details steps

within the implementation process. After establishing the proposed strategies the team

surveyed retailers to assess whether retailers would find these possible strategies to be

worthwhile undertakings. Surveying the retailers on the implementation of the formulated

strategies will provide a direct avenue for retailers to advise about which strategies are most

lucrative and to provide feedback.

After dissemination of a survey questionnaire to retailers concerning the

recommended strategies, the following pointers were determined based on a small sample

size of respondents:

Promote Deschutes with a separate promotional rack at the store

Include Deschutes in variety packs (mix and match pack collection)

Co-Branding opportunities with other products or food offered by retailer Trade at

subsidized cost to retailers so that they can offer promotions and coupons to consumers

at their store

Employ initial tasting drives for retailers


Place beer in visible, convenient and proximate locations

Place any promotional material, including but not limited to print advertisements in

liquor/beer department in retail stores

These pointers were determined utilizing results from surveys which were conducted in

commercial supermarkets like Albertsons, Smiths, Whole Foods, Sprouts and Trader Joe’s. It

was extended to wine, beer & spirit specialists in the Albuquerque area such as retail outlets

like Total Wine and Jubilation. Costco, one of the biggest wholesalers in the state, was also

surveyed.

All proposed implementation strategies were reinforced as potentially useful for off-

premise strategy through qualitative survey responses. A timeline of implementation, with

phases included can be found below. This plan consists of three phases, each of which

involves feedback mechanisms in order to maintain quality and assurance of completion.

Phase 1: 3 months-6 months

Gather retailers willing to participate in potential “discounted milestone program”

Gather supermarket retailers willing to participate in Co-branding effort

Begin packaging variety packs and bulk packaging for mix and match

Begin producing extra promotional materials


Begin first round of discounted sells (increase in sales by 10-15%)

Begin tracking sales figures from Dinner with Deschutes promotion (increases from 5-

10%)

Begin selling variety pack as well as bulk single items to mix and match participators

Phase 3: 12 Months -16 Months

Review entire process and implement possible expansion or removal of implemented

strategies


Move strategies to other regions if found successful

To Summarize:

Phase 1: All tactics in this stage should be completed within the timeframe of 3-6

months. The stage involves gathering of and collaboration between the potential partners

detailed in the proposed strategic timeline above. Also occurring during this stage is the

production of both packaging for variety pack offerings and promotional materials for use in

revamped promotional strategy.

Phase 2: All tactics found in this stage should be completed within the timeframe of 5

months to one year. During this time, the first round of promotional discounts should occur.

Variety packs will first hit the shelves, and the metrics generated from the Dinner with

Deschutes promotion will be analyzed to measure and establish success of the program.

Phase 3: Occurs between the timeframe of one year and 16 months. This final stage will

look at the overall impact created by the strategies implemented. If successful the possibility

to expand to new markets may be discussed.

Metrics

Expansive follow up by Deschutes is recommended in order to gauge the success of

the strategic implementation plan. It is recommend that metrics be used to assess whether or

not results of implementation were favorable.

It is important that Deschutes first establish specific, measurable and achievable

targets against which results can be measured. By identifying high value quantitative or

qualitative outputs, Deschutes will then be able to more effectively interpret the results. This

will help Deschutes maintain an internal focus on where their resources can be most efficiently

and effectively used. Also whether or not the strategies have been successful in general.

Deschutes can choose from a variety of data to inform their decision making process.


Deschutes needs to continue reviewing statewide sales data to isolate changes in sales

and then interpret if the changes were attributable to the strategic implementation. If

Deschutes reviews their sales before, during and after the strategic implementation has

occurred they can identify the potential impact of their strategic action on sales. For example,

to measure performance of the “Dinner with Deschutes” strategy, one could look at sales of

both Deschutes products and that of the co-branded product. If sales go up simultaneously

for both, it may be safe to conclude that the co-branding strategy was effective in increasing

sales of beer. Not only is sales data relevant, it is also important to implement a mechanism

for feedback from retailers. It is crucial that Deschutes continue to build relationships with

retailers and understand what retailers see happening in their outlets.

5.1.2.2 On-premise Retailer Marketing Strategies

To create brand awareness of Deschutes in bars and restaurant establishments in New

Mexico, Deschutes needs to capitalize on their connection to the communities they serve.

Using data obtained from the market research team, the strategies proposed will allow

Deschutes Brewery to integrate into the local communities.

Recommend Strategies

Strategies Specifically for Establishments That Do Not Serve Deschutes

The main goal is to get the establishments to request Deschutes from their distributor.

Asking customers to request Deschutes from the establishments has a couple of

complications: Craft beer consumers are a large group of people, and significant effort is

needed to get them to ask for Deschutes in particular. Even if consumers really want

Deschutes, it does not guarantee their requests are going to reach the decision maker of the

establishment. For establishments that do not know Deschutes, or that do not already have a

negative impression of Deschutes, prove that people who already drink Deschutes prefer it


to other beers. For establishments that have a negative impression of Deschutes, demonstrate

that Deschutes quality is consistent.

1) Reach out to the bar/restaurant owners and managers

This should not be a significant investment since, compared to consumers as a whole,

they are a smaller group of people. It is important to reach the decision makers since they

hold all the retail purchasing power and contribute greatly to public awareness in the craft

beer industry. Host events and invite Bar/Restaurant Owners and Managers

2) Have them try out Deschutes and give them some background about the company.

Create and sponsor events with topics that are interesting to that group of people

Some examples could be, “increasing sales in your restaurant/bar” or “how to prevent

underage drinking in your restaurant/bar”. Having a guest speaker that is an expert in the

field could be educational and impactful. Deschutes should be the sponsor of the event and

there should be beer tasting. The guest speaker should briefly introduce the company at the

end of the presentation and encourage the beer tasting. The goal of these events is to is to

raise awareness.

3) Events promoting Deschutes only

This could include a presentation on the company and a beer tasting. The ultimate goal

would be to create an affection between Deschutes and the bar/restaurant owners and

managers by showing the similarities with New Mexico.

4) Provide flyers with coupons for free packs of Deschutes at least 3 times a year

This should not be directly related to how much they buy from Deschutes but rather a

real consumer Deschutes experience rather than thinking that it is just for business.

Encourage them to be Deschutes loyal customers themselves by drinking the beer so they do

not hesitate having it in their Bars/Restaurants.


Implementation for Establishments that do not Serve Deschutes

Implementation for this part is focused on getting new establishments to request and

serve Deschutes. It is based in the three implementation strategies suggested for this part that

are an extension of the Promotion “P” of the Marketing Mix. It is explained in more detail

below. This implementation is separate from the one that is focused in the establishments that

already serve Deschutes because they are two different approaches. Here, the main focus is

the bar/restaurant owners and managers.

Phase 1: Present - 3 months

Creating and sponsoring events with topics that are interesting on-premise retailers


Creating and sponsoring events for on-premise retailers that promote Deschutes only

Phase 3: 6+ Months

Provide flyers to on-premise retailers with coupons for free packs of Deschutes at least 3 times a year

Costs for Establishments that do not Serve Deschutes

Strategy Cost Estimate

Explanation

Sponsored events for on-premise retailers

~$5,000

Invitations, renting a venue, hiring a guest speaker and having a free tasting bar

Sponsored events for on-premise retailers that promote Deschutes only

~$5,000+

Same costs incurred in Phase 1

Flyers with coupons for free packs of Deschutes

~$1,000 (x 3)

for free beer giveaways, shipping and handling

TOTAL: ~$13,0000

Figure 10


Strategies for Target Market Segments in Establishments that Serve Deschutes

1) Product

Menu Pairing

In order to increase brand awareness in an on-premise retail setting, it is important to

explore options for menu pairing. Deschutes is meant to be consumed in a manner of

community, and nothing brings people together like gathering over good food and good

beer. Not only does food pairing exemplify the experience Deschutes tries to bring through

its products, it also allows the company to integrate into the local community. Most of the styles

of beers made by Deschutes, pair well with spicy foods, according to craft beer.com. This is

important to consider because New Mexico is known for its green chile. If Deschutes were

able to come to an agreement with an on-premise retailer to pair its Mirror Pond with a green

chile burger on the menu, it would not only increase sales but it would also help the company

to take part in a large part of the local restaurant culture. Menu pairing has the ability to link

Deschutes to local cuisine, while still leaving room for other local breweries to do the same.

Ingredient Pairings

Pale Ale- Wide range of foods, burgers (i.e. green chile burgers)

IPA- Strong, spicy, bold foods

Barleywine- Easily overpowers dishes, recommended with strong cheese (i.e.

enchilada plates)

Stout- Hearty, rich, spicy foods

Non-traditional Food Pairings

Deschutes is not unaware of the kinds of ingredients that typically pair well with craft

beers. The company should partner with a local retailer that it might not have previously

considered. As craft beer is becoming more popular, there have been recent co-branding


strategies implemented by craft beer brewers and their partners. Recently, New Belgium

paired up with Ben and Jerry’s ice cream to advertise, via social media, a “happy hour pairing,

“suggesting certain beers that pair well with certain flavors of ice cream. Deschutes could

implement a similar strategy with a local frozen yogurt company.

‘Olo’ is owned and operated by UNM alumni, and it is a well-known local

establishment. The shop changes the flavors “on tap” every few weeks but the many different

flavors offered are constantly rotating. The proposed strategy is for Deschutes to make a non-

alcoholic seasonal craft beer frozen yogurt flavor. The names of the yogurts offered at Olo

typically have New Mexican themed names. Similar to the rebranding done at on-premise

locations, Olo and Deschutes could co-brand the name of the Deschutes beer flavored frozen

yogurt while still providing name and brand recognition to Deschutes.

This strategy is beneficial to Deschutes in three distinct ways. It offers name

recognition in a non-traditional way, and provides the chance for craft beer drinkers, as well

as others, to become aware and curious of the beer products Deschutes offers. It also allows

Deschutes to partner with a local establishment in a unique way. Craft beer is expected in

bars and restaurants, but a Deschutes flavored frozen yogurt is a way to reach markets that

might not consider trying Deschutes in a typical retail location. This partnership would not

exclude local breweries from following Deschutes’ lead. Deschutes might reach an

agreement where their flavor is offered seasonally, and this would allow other local breweries

to engage in this kind of agreement with Olo as well.

2) Price

Specials

What is interesting about the growth of the craft brewing industry is its connection to

changing consumer culture. Beer advocates have become more environmentally and health

conscious. Craft breweries such as Deschutes can charge more for their product because their


consumers expect to pay more for luxury goods. This heightened sense of consciousness

about how beer is made is what is driving the demand for craft beer. However, not everyone

drinks craft beer so they aren’t willing to pay the extra price for quality as opposed to quantity.

The following are strategies for Deschutes Brewery to obtain the most profit and repeat

business with their beers sales at restaurants and bars in New Mexico:

Beer Flights

Many craft beer-focused bars and restaurants offer beer-tasting flights--a lineup of

smaller glasses of different flavors of beer. Beer flights are a great way to experience a variety

of different beers and discover new favorites. Deschutes should consider implementing beer

flights into restaurants and bars in New Mexico, as it is a cost-effective way to train the palate

to recognize the differences between similar brews as well as sample or enjoy a variety of

beers all at once. For example, a beer flight of a variety of 5, 10 ounces. Beers generally costs

$9.99 while a 1 pint size glass is priced from $5-$8.

Sales Props

Sales props are tools servers and bartenders can use to reinforce their menu

suggestions. Examples include promotional posters advertising Deschutes beer specials,

flashy menus, or display bottles or glasses with the Deschutes logo on them. If guests have

something appealing to look at as a drink item is described, they may be more likely to buy

it. Deschutes Brewery needs to implement sales props into all New Mexico restaurants and

bars to pursue boosts in their craft beer sales.

Although Deschutes craft beer is slightly more expensive than other beer, Deschutes

brews feature fresh ingredients, many of which are sourced from local farmers, foragers, and

ranchers in Oregon. Advertising this information on easily readable posters may assist with

proliferating Deschutes sales to craft or non-craft beer devotees. Furthermore, advertising


the quality of the product combined with the price will give consumers better understanding

of why the beer is so exclusive and worthy of sampling.

Beer & Liquor Pairing

It is not about slamming the beer or liquor down; it is about enjoying a taste of both.

Most beer connoisseurs are willing to explore supplements such as shots of liquor that will

heighten their taste buds and allow them experience the best of both worlds. Most prominent

bars are regularly offering drink specials for “craft beer and shot” combos, as it is a

resourceful way to upsell beer and liquor. Deschutes Brewery should examine pairing their

most favored beers with liquor in New Mexico bars. An important aspect of beer and liquor

pairing is that it is very profitable. While a regular priced craft beer costs approximately $5

and a shot of liquor is priced at $6, a beer and shot of liquor combo costs $8, which is a $3

discount for the consumer. Furthermore, pairing Deschutes beer with a shot of liquor may

intrigue a curious consumer to try Deschutes and experiment its flavor paired with their

favorite liquor.

Many bars provide unique beer and liquor combinations on their menus. Popular

examples of combinations include:

● Pilsners with Bols Genever

● Lagers with WhistlePig Rye

● Red Ales with Zaya Rum

● Porters with Buffalo Trace Bourbon

3) Place

Service Staff Education: Delivery

It is imperative for staff members at bars and restaurant to have a knowledge base of

not only Deschutes products, but also craft beer in general. In order for them to sell Deschutes

products to beers drinkers, craft drinkers, and non-beer drinkers, it is essential for them to


be able to answer the question, “What beer do you suggest?” with confidence and solid

reasoning. The first step in accomplishing the component of bartender and server education,

would be for Deschutes to conduct education courses semi-annually at its top bars and

restaurants in the greater Albuquerque area, similar to the ones they conduct for distributors.

These courses could consist of a Deschutes representative explaining to bartenders and

servers the components that make up a craft beer, i.e., hops, wheat, malt, and fruit flavoring.

Next they should enable bartenders and servers with the ability to be able to explain the

difference between ales and lagers. From there, the course should arm bartenders and

servers with specific knowledge about Deschutes. Within the course, they could convey how

Deschutes uses natural ingredients in producing their craft beers, as well as how they place

a substantial importance on providing a top quality beer and creating a healthier society.

Educating bartenders and servers is such an impactful element because they have direct

contact with consumers, and they have the ability to influence purchase decisions. They also

have the opportunity to generate a buzz regarding Deschutes and increase brand awareness.

Education is a link that could bring the knowledge of Deschutes in the greater Albuquerque

area to the next level and the best way to accomplish it is through Deschutes’ employees

interacting with those individuals who are on the front line selling their products first hand.

4) Promotion

This implementation strategy consists of methods to get the marketing message to the

target market in on-premise retail establishments.

In-House Advertising

Placing advertisements throughout the retail establishment will help increase

awareness among patrons. The inclusion of social media gateways on the ads could

automatically, through the use of smartphones or tablets, bring the consumer to a Deschutes


landing page or social media page where the company can further educate the consumer,

and perhaps provide incentives for spreading awareness of the Deschutes brand. These

gateways could be Quick Response (QR) Codes that are embedded onto a beer coaster,

poster, or table tent. The ads should also include the data from the targeted metrics that are

listed above. This would help educate consumers on the positive aspects that Deschutes

possesses while highlighting the targeted data that increases value to the New Mexico

consumer.

Specifically, because the following metrics have been identified by the research teams

to be important to beer drinkers in New Mexico, Deschutes should include with their in-house

ads information highlighting:

● The superior flavor of Deschutes craft beer

● The enhanced quality resulting from only choosing select natural ingredients

● The variety offered by Deschutes

● The elevated status Deschutes provides non-craft beer drinkers

● The sustainability efforts by Deschutes

● The Deschutes mission, “to... deliver the finest beers in the world and cultivate

extraordinary experiences”

New Mexico Local

Another significant factor that New Mexican drinkers choose is the specific craft beer’s

origin. Researchers found that the typical craft drinker in New Mexico prefers to purchase a

product that is made in New Mexico. Therefore, Deschutes should consider partnering with a

New Mexico business (i.e., brewery, restaurant, company, or artist) and release a product

that is part New Mexico and part Bend, Oregon. The Vintage 423 co-branding is suggested to

promote sales for both Vintage 423 and Deschutes. However, one handle at one establishment

is limiting the exposure Deschutes could be receiving from co-branding. Deschutes should


partner with a New Mexico artist in order to produce artwork depicting an iconic New

Mexican landmark or cultural event. This has a dual benefit of appealing to New Mexicans and

Latinos nationwide if the artwork is associated with a Spanish influenced aspect of New Mexico

(i.e., Santa Fe-style architecture, chile ristras, or Matachines Dancers). One possible outcome

of this partnership could be a Green Chile IPA--IPA, being the biggest craft beer seller and

green chile being typical of New Mexico culture. This should not be too different than

Deschutes’ Zarabanda Saison craft beer. This strategy will also help bring awareness to New

Mexican drinkers and increase the chances of consumers purchasing a Deschutes product.

Implementation and Costs

The following implementation is focused on establishing a strong identity for

Deschutes Brewery in New Mexico. All tactics and strategies for this implementation are

directed toward the 4P’s; Product, Price, Place, and Promotion.

Timeline Cost Estimate

Explanation

Present to

3 Months

~25% Profit Margin per Pairing/Beer Flight + ~$15,000+ for NM Local +

(Price) Beer and Liquor Pairing: This strategy should increase sales by offering lower prices for pairing Deschutes with a variety of liquor. Assuming a profit margin of 50%, Deschutes would receive 20% less through this implementation, however utilizing this strategy would help upsell Deschutes beer and create brand awareness. Beer Flights: Assuming the profit margin is 50%; by offering a beer flight half off from it’s normal price, Deschutes would lose 25% profit, but as mentioned previously, the goal is to create brand awareness and get New Mexicans to purchase Deschutes beer. (Promotion) New Mexico Local: A distinct New Mexico product will assuredly win over local consumers and increase sales statewide. Startup costs for this implementation will be high, but payoff will be significantly higher. Conservative estimates of research & development may be ~$15,000 and higher.


$2,500 for Education ~$2,000 for Menu Pairing Research & Coordination _________________ ~25% Profit Margin on Specials + ~$19,500 for first 3 Months

(Place) Education of Bartenders & Servers: Increasing bartender and server knowledge about craft beer, will not only benefit Deschutes sales volume but will also increase their brand awareness within the New Mexican community. In order for Deschutes to implement an education element, they will have to cover the cost of the Deschutes team member coming to NM, their lodging, meals, and any material they choose to leave behind. The top selling seven bars or restaurants of Deschutes should receive this training semi annually. It would be most cost effective if Deschutes were able to schedule multiple visits in one trip. A Deschutes rep should also go to the bar or restaurant during their down time/staff meeting to give the presentation, which should last no longer than thirty minutes. Other bars and restaurants should receive an initial training, after the top ones have been completed and Deschutes is able to see an increase in sales volume. In order to start this element, it is estimated that it will cost $2,500, which will cover all travel expenses and materials. (Product) Menu pairing: This strategy is easy to implement, but it will take research and coordination with interested retailers. In the first three months, Deschutes will need to identify interested retailers and menu items that will pair well with Deschutes beers. This is estimated to cost ~$2,000.

3 Months to

6 Months

~$2,000 for In-House Advertising + Costs combined with In-House Advertising; could increase due to individual development and creation of advertisements per retailer ________________ ~$2,000+ for 3 Months to 6 Months

(Promotion) In-House Advertising: The implementation of increased ads and embedded QR Codes should increase awareness, and subsequently sales. A conservative rollout to strategic establishments with target market traffic could cost ~$2,000. This cost could increase if further development of web pages is necessary. (Product) Menu Pairing: In the three- six month time, Deschutes will have to create the promotion materials that will be distributed to the individual retailers. Posters or table tents could be individualized to promote a certain Deschutes beer with a particular menu item. This particular phase might be executed with the In House Advertising suggested in the promotion implementation. Deschutes could create the in house advertising to include the menu pairing suggestions for individual retailers.

6 Months to

1 Year

~$1,000 for In-House Advertising

(Promotion) In-House Advertising: A scaled-back rollout could be possible, but continued implementation should ensure full engagement and give the strategy a chance for success. Costs should be significantly


Figure 11

+ ~$5,000+ for NM Local + $2,000 for second phase of education element. _________________ ~$8,000+ for 6 Months to 1 Year

lower at ~$1,000. New Mexico Local: Startup costs for this implementation have waned and a widespread rollout could ensue at the +6 months milestone. Rollout costs could be ~$5,000 and higher, which would include a product awareness campaign. (Place) Education of Bartenders & Servers: The second training for top earning bars and restaurant should occur now. This should be a refresher course for current employees and be able to bring new ones up to speed. It should also include more information about craft beer and any updates or information about changes within Deschutes. At this stage, educating other bars and restaurants can begin as well. Now that an established program has been implemented, Deschutes can begin to bring it to other establishments within the community. The impact of this education element, will be an important factor in increasing Deschutes’ brand awareness and sales

1 Year + ~$500 for In-House Advertising + ~$1,000 for contract negotiations + ~$5,000 for product research and development + ~$500 for advertising costs _________________ ~$7,000+ for 1 year+

(Promotion) In-House Advertising: A significantly scaled-back rollout could keep consumers aware of the Deschutes brand. Costs should be significantly lower at ~$500. (Product) Non- traditional Food Pairings: This strategy could be implemented only after Deschutes has seen considerable success in the New Mexico market and would like to saturate it through a new means. It would increase brand awareness to markets that are already not being successfully reached through other strategies. It would take Deschutes approaching the company and coming to an agreement on the terms of the partnership. Specifics such as flavor, name, and duration of the flavor, and cost must be defined by the parties involved. After negotiations, research and development would be the most costly phase. A Deschutes representative would have to meet in NM with an Olo “flavor creator” on several occasions to develop a product that will be beneficial to both sides. After an agreement is reached and a flavor is developed, Deschutes and Olo will have to promote the flavor. After a few “cycles” of the flavor, Deschutes will evaluate the success of the partnership, and if it would like to continue with the pairing past the terms of the agreement.


Metrics and Contingency Plan

Overall, this strategic marketing plan is designed to help Deschutes Brewery establish

and maintain a dominant market position in New Mexico.

To budget for this implementation strategy Deschutes could utilize Marketing Plan

Objectives. This budgeting method is often considered the most effective because it uses the

objectives in the marketing plan to determine the marketing budget. The goal to increase

awareness of the Deschutes brand in New Mexico is the main focus when estimating the

expenditures needed to achieve the objective. Using this marketing budget objective

effectively however requires Deschutes to monitor the available marketing budget to the

desired Marketing Plan Objective.

The effectiveness of this implementation should be evident when sales have increased

at a steady rate (3 consecutive months and up) in New Mexico. As consumers become aware

of the Deschutes brand, and the many beneficial attributes of their craft beer, word-of-mouth

will spread and help to further increase sales. This success should be the milestone in which

the Marketing Plan Objectives strategy has reached its pinnacle, and then the marketing

budget could be scaled back. This milestone should occur no later than one year from

inception, otherwise a recommendation to scale back marketing efforts would be prudent.

Contingency plans in the case of failure would be to revert back to the Pre-Marketing Plan

Objectives strategy. This contingency will minimize losses, from the marketing budget

perspective, and gives Deschutes the opportunity to redistribute marketing budget dollars

elsewhere.

Below are examples of current Deschutes in-house retail promotional ads with QR

Codes embedded, as well as artwork related to New Mexico culture.


5.1.3 Distribution Marketing Strategies

Based on the primary and secondary research, Deschutes should implement a push

strategy to improve their relationship with NDC. A push strategy requires the supplier,

Deschutes, to actively promote and incentivize downward through the channel of distribution

to NDC. Deschutes needs a dedicated New Mexico presence to both strengthen the

relationship between Deschutes and NDC and facilitate/strengthen the relationships between

NDC and individual retailers on Deschutes’ behalf. This can best accomplished by hiring an

assistant brand manager to oversee the state of New Mexico. The team realizes this may not

be feasible but as consultants still need to offer this potential solution.

1) Reestablish a positive relationship with the beer manager at NDC, David Smith.

The team tried several times to contact David during the course of the project and did

not receive a reply. National is the largest distributor in New Mexico with over 100 brands

making David very busy and difficult to reach. It is critical that Deschutes establish contact

with NDC and together go over each party's responsibilities according to the Independent

Council on three tier dynamics written for the Brewers Association.

Research pertaining to the ineffective relationship revealed that NDC has yet to share

local market knowledge to help strengthen Deschutes’ portfolio. According to the

Independent Council, it is the responsibility of the distributor to provide local market


knowledge to help strengthen the supplier’s portfolio strategy. It is the supplier’s

responsibility, Deschutes, to maintain communication with NDC and see how their portfolio

fits into NDC’s overall portfolio and expect an adequate amount of attention and support. Both

parties have been loosely following the responsibilities laid out by the Independent Council

which is why they must review and address supplier’s and distributor’s responsibilities to

coordinate more effective market strategies.

2) Hire an assistant brand manager for New Mexico

New Mexico has received little attention from Deschutes because the southwest

regional distribution manager oversees the states of Utah, Colorado, Arizona, and New

Mexico making it difficult to address problems within one state. A dedicated a resource to

New Mexico will better improve communication with the distributor once an effective

relationship has been reestablished.

An assistant brand manager for New Mexico will allow Deschutes to more actively

fulfill its responsibilities as a supplier such as: 1) educating NDC about the brand, 2) building

a successful portfolio per account, 3) bringing in new accounts, 4) developing a strategy to

win new accounts, with a monthly goal in place, 5) identifying lighthouse accounts and making

sure these are kept happy and growing (to reduce customer loss as seen with Seasons Bar &

Grill, a high profile customer) and 6) establishing goals for new business and locations within

New Mexico. In taking an active approach Deschutes will not have to rely as heavily on NDC

in promoting their brand and will be able to foster relationships at both the on and off premise

level helping to increase brand awareness and build community. NDC has yet to provide

Deschutes with a specific marketing strategy for New Mexico; this is an opportunity for the

Deschutes to be very involved in creating a strategy to target its core customers.

The assistant brand manager, if hired, should start by reviewing current accounts. For

example, primary research obtained from NDC revealed that on-premise sales have


fluctuated throughout the year compared to the prior year, 2013. The assistant brand

manager’s role would be to collaboratively go over the inconsistencies with NDC to

determine the problem. Once current accounts have been analyzed Deschutes, together with

NDC, can begin creating and implementing a market strategy for New Mexico. Examples of

potential marketing strategies to focus on specific on or off premise distribution can be seen

under the implementation part in the distribution section.

Another goal of the representative will be to identify which current accounts have been

doing well and have maintained loyalty to Deschutes and reward them for their service. For

example, Billy’s Long Bar always maintains a high number of Deschutes beers on tap. They

could be rewarded for their brand loyalty with a special keg or future discount. This keeps

current accounts happy and, if communicated to other retailers, provides incentives for those

retailers to also become loyal Deschutes customers.

3) Expand the “Re-Launch” to educate the sales reps on a monthly basis.

Re-Launch, from what the team understands, will educate the sales reps about

Deschutes as if they have never heard of it before giving them a fresh look at the brand.

Deschutes needs to first focus on educating the sales reps on the quality of their product.

Citing awards Deschutes has won on a national level is one way to convey the high quality of

their products. If allowed, offer tasting to the sales reps and let them see for themselves the

quality of Deschutes beer. Other examples of what to include in the program include

discussing the process Deschutes uses to brew their beer, focusing on the natural ingredients

and fresh clean water used when brewing, emphasizing the fact that the slightest change in

flavor will result in the beer being thrown out and that Deschutes requires perfection in every

stage of the process. In educating the sales reps on the high quality of the beer Deschutes has


a chance to stand out among NDC’s other brands because not many other brands can say they

put the same amount of specialization in their beer.

Furthermore, Deschutes needs to also focus on educating NDC’s sales reps on their

core values and mission. “Re-launch” in giving people a fresh look at the brand has an

opportunity to further educate sales reps on why Deschutes cares about their customers.

Emphasize the mission of building and sharing community citing examples that show

Deschutes cares about the places they do business, such as: community events, charity

events, and trip giveaways. To get NDC’s sales reps to care about Deschutes, Deschutes

needs to show that they care about people. This will help the brand to stand out and make it

easier for sales reps to sell because they will understand Deschutes’ core values and will be

able to say in confidence that Deschutes beer is worth sharing.


6 SUMMARY/ MASTER TIMELINE The strategies in the strategy sections above can alternatively be divided into the

following categories.

1. Media Presence (Print, Social Media, etc.)

2. Retail Promotions (food pairings, contests, street team, etc.)

3. Collaborative Partnerships (tap exchange, co-brew)

4. Targeted Events (New Mexico Ski Challenge, Balloon Fiesta, craft beer festivals)

5. Distribution Strategies

This grouping provides a big picture view of how all of the individual suggested strategies

can come together as a strategic marketing plan to increase Deschutes’ brand presence in

New Mexico. The following timeline further suggest how these strategies fit together into a

linear and scalable marketing strategy. These strategies should be pursued aggressively

over the next two years.

Present – 3 Mos.

Consumer:

o Begin planning targeted outdoor events (skiing, hiking, golf courses) and environmental awareness events (bees+hops, clean water, glass recycling). Also, presence at the ABQ Balloon Fiesta, and other craft beer events is a must.

o Seek out a NM partner (or more) for a ‘Tap Exchange’ which would bring NM beers to Bend, OR. and feature Deschutes in New Mexico bars.

o Partner with OR and NM artists to begin developing a specialty glass.

o Promote social media presence to capitalize on outreach programs.

Retail:

o Partner with restaurants to offer a flight of small 6-8oz samples to recruit women drinkers.

o Work with restaurants in NM which serve Deschutes to create menu pairing discounts and specials that mix Deschutes with green chile.

o Include food and liquor paring suggestions on print media such as menus and Deschutes coasters.


o Begin developing ad campaign for supermarkets and liquor stores.

Distribution:

o Reestablish contact with the beer manager at NDC, David Smith.

o Develop and create a job description for NM assistant brand manager.

o Maintain an active approach in communicating with NDC.

o Finalize position description and responsibilities and begin the hiring process.

3 Mos. – 6 Mos.

Consumer:

o Implement event strategy through targeted events highlighting outdoor pursuits and environmental awareness. Outdoor challenges such as ski & snowboard races, and golf tournaments would be ideal for product placement.

o If a partner for a ‘Tap Exchange’ has been found, begin promotion of the partnership with an ‘Artist Exchange’, swapping OR and NM artists and musicians for a media event. If this strategy is fun and works, increase ‘Artist Exchange’ frequency to every 2-3 months.

Retail:

o Work with restaurant partners to create a Deschutes-themed event highlighting Deschutes/green chile pairing.

o Connect with Albuquerque Isotopes to promote OR and NM breweries.

Distribution:

o Select a viable candidate that fits Deschutes’ needs for the assistant brand manager position.

o Once in the position, this person will implement push strategy by maintaining a positive relationship with NDC and partner with NDC to create a plan to review current accounts. Review accounts on a quarterly basis.

6 Mos. – 1 Yr.

Consumer:

o Once brand awareness is catching on, establish street team and provide incentives for them to go out into the community to serve as brand evangelists.

Retail: o Seek a partner restaurant for a “Dinner with Deschutes” campaign.

Distribution:

o Maintain an active presence with NDC and collaborate to create a marketing strategy for NM that uses long term sales incentives for NDC sales reps.

o Hold monthly meetings with NDC sales reps to educate and promote Deschutes’ portfolio.


o Offer strong marketing and sales support from Deschutes.

1 Yr. – Beyond

Consumer:

o Ensure that Deschutes’ “Street Pub” travelling taproom is in ABQ during the 2016 Balloon Fiesta: international exposure. (October 1-9, 2016).

Distribution:

o Continue taking an active approach in communicating with NDC in promoting Deschutes’ portfolio down the distribution channel.

o Begin co-visiting current accounts at both on and off premise locations, first by visiting strong accounts and begin to foster relationships with the bar/beer managers to build community.

o Actively promote Deschutes down through the distribution channel combining long term sales incentives and educating NDC’s sales reps on the Deschutes brand.


7 CONCLUSION

Deschutes Brewery is a successful, innovative, growing company and there is no

reason that Deschutes cannot be successful in the New Mexico market, with the right

approach. Through extensive market research of the New Mexico market, the team was able

to identify a root problem of lack of Deschutes brand presence in New Mexico. This root

problem stems from a lack of physical and/or virtual brand presence in the market and led to

many other issues such as little brand awareness in the state, confused positioning and a poor

relationship with the distributor, NDC. These factors, combined with the already thriving local

craft beer community and consumer preference for buying local brews, have resulted in

declining sales for Deschutes in New Mexico over the past several years.

After analyzing the market research, the team developed a strategic plan to raise the

brand presence of Deschutes in New Mexico. The plan targets consumers (both on and off

premise), retailers (on and off premise) and the distributor and includes a multitude of

detailed strategies, implantation processes, cost estimates, metrics and contingencies. The

strategies can be grouped into five areas of concentration: Media Presence, Retail

Promotions, Collaborative Partnerships, Targeted Events, and Distribution Strategies.

Vital to the success of this plan is Deschutes’ understanding of the three Marketing

Personas chosen to target with this plan: Pat (craft beer drinker), Stevie (non-craft beer

drinker) and Tricia (non-beer drinker). Also important is that Deschutes communicate a

consistent message each time they engage with consumers, retailers and the distributor via

the IMC “connecting like-minded communities.”

Deschutes must take an active, collaborative-oriented approach to New Mexico. By

using the strategies presented above, Deschutes can begin to develop a strong brand

presence in the unique market New Mexico provides.


WORKS CITED Billingsley, Jeff. (2014). Deschutes Brewery Introduction [PDF Document]. Retrieved from UNM Learn: https://learn.unm.edu/ Billingsley, Jeff. (2014). UNM Distribution Deck [PDF Document]. Retrieved from UNM Learn: https://learn.unm.edu/ Craft Beer Consumers: Who are They, Where are They, and What About the Future? (2014, November 21). Retrieved April 30, 2015, from http://www.brewersassociation.org/wp-content/uploads/2014/11/Nielsen-BA-Power-Hour_Craft-Beer-Consumer_2014.pdf Frequently Asked Questions. (2014). Retrieved April 30, 2015, from http://www.deschutesbrewery.com/faq Mintel. https://outlook.office365.com/owa/service.svc/s/GetFileAttachment?id=AAMkADI1ZGM1NTVmLTM1MjktNGI5Zi05Njc5LWQ1ZTUxMjM3ZjU1MgBGAAAAAAC2ntGbCOAjQYZIQWnVGig%2BBwD2DHvFT6UsS5LdF5wuXoSzAAAASDo2AAAMP5JX%2FOrPTrPSFVvPPi9gAAGA3kSGAAABEgAQAK%2Ft2t2P2D5DvIYmrB1lD%2Bg%3D&X-OWA-CANARY=9ULFvhB9jkW-NjnXyKMzQMDScWtjTtII02kWLWmfkziakbXxBKBx4gsruMc1fO5WKfJF6RDL27s National Beer Sales & Production Data - Brewers Association. (2015). Retrieved April 30, 2015, from https://www.brewersassociation.org/statistics/national-beer-sales-production-data/ The Official New Mexico Beer Map. (2013-2015). Retrieved April 30, 2015, from http://nmbeer.org/maps/NBG035 Map Brchre Update F_lw.pd Wikipedia. Albuquerque Jounal. (2015, February 4). Retrieved April 30, 2015, from http://en.wikipedia.org/wiki/Albuquerque_Journal Wikipedia. Deschutes Brewery. (2015, April 20). Retrieved April 30, 2015, from http://en.wikipedia.org/wiki/Deschutes_Brewery United States Census Bureau. (2015, March 31). Retrieved April 9, 2015.


Appendix 1: Albuquerque Map & Targeted Areas for Market Research

DOWNTOWN

UPTOWN

NOB HILL

NE HEIGHTS

WESTSIDE

UNM


Appendix 2: On-Premise Retailers Surveyed for Market Research

Adieux Cafe Anodyne Bar & Pool Lounge Back Alley Draft House The Barley Room Downtown Distillery The Downs Casino Gecko’s Bar & Tapas Horse and Angel Tavern Ibiza Rooftop Bar Imbibe Bar & Lounge Kellys Brew Pub Library Bar & Grill New York Pizza Depot O’Neill’s Restaurant & Bar Posh Nightclub Red Robin Route 66 Casino Sandia Resort & Casino Sidelines Sports Grille & Bar Sister Bar Vintage 423 Restaurant & Bar


Appendix 3: New Mexico Breweries Collaborative Analysis

A short list of public information from New Mexico breweries and an evaluation of their cooperative potential. The ‘Collaborative Index’ should indicate likelihood of a partnership using a 3-point estimation scale: Low, Medium, and High.

Brewery Availability Info Index

Bistronomy B2B

http://bistronomyb2b.com/

Only available in restaurant/bar: 3118 Central Ave SE Albuquerque, NM 87106

B2B are supporters of local breweries and have introduced a unique approach to product options. Hosting a variety of different craft brew flavors which include their “peanut butter and jelly stout” and “berry cider.” An article in the Alibi referred to their beer as “closer to soda pop than a beer” but “damn good.” B2B sponsors “Giving Back Sundays” whereby each week they team up with local non-profits to host a fundraising event at their location

Low

Nexus Brewery

http://nexusbrewery.com/

Only available in store: 4730 Pan American Freeway East NE, Suite D Albuquerque, NM 87104

Nexus Brewery was founded in 2011 by former bank president Ken Carson. Nexus has a food menu that is focused on New Mexico soul food. Nexus offers a variety of award-winning brews and offers a line of seasonal beers; all beers are brewed on site. The Imperial Cream won a silver world cup award. The brewery features a patio for outdoor seating. Marble Brewing Company was the inspiration to open Nexus Brewery.

Medium to Low

Kellys Brewery

http://www.kellysbrewpub.com

Kellys Restaurant/ Brewpub: 3222 Central Ave SE Albuquerque, NM 87106 In stores statewide

Kellys Brewery was established in 1995 by Dennis Bonfantine. Kellys Brew Pub is a favorite hot spot in Albuquerque. Southwest Airline Spirit Magazine has recognized Kellys in its “Best Brew Pubs in America” section, and its beer and food have consistently been voted Best in the City. Kellys has been canning its beer since March 2014 with technology that can produce high quality professional consumer packaging. Kellys has been making efforts for sustainability since its establishment. They are researching and developing a “First in the World” solar energy project that allows them to brew beer with solar energy.

High


Kaktus Brewing Company

http://www.kaktusbrewery.com/

Only available in restaurant 471 South Hill Dr. Bernalillo, N.M. 87004

Kaktus Brewing Company Inc. is New Mexico culture authentically crafted into a brew-restaurant. Kaktus is a nano-brewery that produces a selected 500 barrels yearly and works hard to maintain 8 beers on tap at all times. They value factors like self-discovery and being a public Buddha with the knowledge gained in their craft. They recently won a BRAVO award from TripAdvisor on having 1,234 guests rate them as excellent in a consecutive row and was showcased in ABQ the Magazine. With no off-premise sales, this contender is focused on crafting a limited beer quantity that exudes a maximum of culturally infused flavor.

Low

Canteen Brewhouse

http://brewery.ilvicino.com/

Canteen Brewhouse: 2381 Aztec NE Albuquerque, NM 87107

Il Vicino Brewing Company was founded in in 1994. In 2014, they celebrated 20 years of great beer by updating the name to Canteen Brewhouse. Canteen Brewhouse boasts an exceptional food menu while remaining a true brewery taproom: unpretentious, exciting and innovative. Il Vicino has won over 115 local, national and international awards including several awards at The Great American brew festival for the past 3 years. The Brewery’s trademark Exodus IPA earned accolades at National and New Mexico IPA challenges.

High

Tractor Brewing Company

http://getplowed.com/site/

3 locations: 1800 4th St. NW Albuquerque, NM 87102 118 Tulane Dr. SE Albuquerque, NM 87106 120 Nelson Ln Los Lunas, NM 87031 In stores statewide

Tractor Brewing Company strives to create a warm, friendly, comfortable and familiar environment where patrons can enjoy a quality craft beer, experience amazing customer service and socialize with fellow patrons. Tractor Brewery has a program called “Beer For A Better Burque” which is a pay-it-forward type of program that looks to help the greater Albuquerque community. Tractor has expanded its operation earlier with the opening of a new location and moving its brewery operation from a 2,000-square-foot facility in Los Lunas to the 10,000-square-foot facility on Fourth Street.

High


Abbey Brewing Company

http://christdesert.org/Abbey_Beverage_Company/

Tasting Room: Bode’s Store 21196 US-84 Abiquiu, NM 87510 9 state distribution

Abbey Brewing Co. bases its operations on the grounds of the Monastery of Christ in the Desert in Abiquiu, NM. The Abbey Brewery is one of the several business ventures taken on by the Benedictine monks who live there. Abbey Brewing began producing beer in 2006 and is now able to produce up to 2,900 barrels per year. Their beers are a unique blend of the 1400 year old monastic tradition of brewing and the American Craft Tradition. Another unique feature is that the monks grow and use several varieties of native New Mexican hops in their beers. Abbey Brewing Co has plans to expand their brewery as more hops become available.

Low

Bosque Brewing Company

http://www.bosquebrewing.com

3 locations: 8900 San Mateo Blvd NE, Ste I Albuquerque, NM 87113 901 E. University Ave., Bldg. 985, Ste. 1B, Las Cruces, NM 88001 106 Girard Blvd. SE, Ste. B, Albuquerque, NM 87106 In stores statewide

Bosque Brewing Company places a large emphasis on quality over quantity. The company began when a group of college friends put their entrepreneurial talents together to create something unique and driven by their desire to offer New Mexicans “real” beer, not the beer that had been commercialized. Bosque Brewing Company aspires to continue to grow, while keeping their small business mannerisms and helping the local economy. “A commitment to the artisanship of craft beer in Albuquerque. A passion for serving our customers and our community. A heart for strengthening families and parents, including the support of child adoptions domestically and internationally.”

High

La Cumbre

http://www.lacumbrebrewing.com/

Taphouse: 3313 Girard Blvd NE Albuquerque, NM 87107 In stores statewide

La Cumbre Brewery is located in a large industrial district. Founded in 2010 by former Chama River Brewing Company employee Jeff Erway, La Cumbre has found success at competitions such as the World Beer Cup, the Great American Beer Fest, and the Great British Beer Festival. Award winning beers include the Elevated IPA, Malpais Stout, and Project Dank. Currently, the brewery is spending $1.6 million on facility renovations that include moving from a 15-barrel system to a 30-barrel system and adding fermenters. As a result, production capacity is expected to nearly double, paving the way for potential future expansions outside of New Mexico.

High


Marble Brewery

http://www.marblebrewery.com/

3 Locations: 111 Marble Ave NW Albuquerque, NM 87102 5740 Night Whisper Rd NW Albuquerque, NM 87114 505 Cerrillos Rd. Suite A105, Santa Fe, NM 87501 In stores statewide

Marble Brewery was founded in 2008 aby John Gozigian and Ted Rice. Marble has recently been awarded a host of honors at the 2014 Great American Beer Fest including Small Brewery and Brewmaster of the Year. Award winning beers include the Belgian style Double White and the American Red Ale. The brewery is also invested in local economic development endeavors, such as offering a venue for community events, fundraisers, live music, and food vendors. Donations of merchandise and other products to non-profits to assist in fundraising efforts are also made. Major local partners include the Downtown Growers Market, the Albuquerque Mountain Rescue Council, and the Harwood Art Center.

Medium to Low

De La Vega’s Pecan Grill &

Brewery

http://www.pecangrill.com/index.html

Restaurant/Bar: 500 S. Telshor Blvd. Las Cruces, NM 88011 In stores statewide

De La Vega’s Pecan Grill and Brewery is family owned and operated since opening in December 2009. Known for their dining options, New Mexico’s food culture is celebrated with an infusion of Southwest flavors, green chile and pecans in both food and beverage emphasizing fresh, local ingredient. De La Vega’s is famous for their Pecan Beer and also produce a gluten-free beer. The beer is brewed at the Sierra Blanca Brewing Company in Moriarty, N.M., which formulates signature beers especially for them. De La Vega’s also gives back to the community participating in local events and partnering with area organizations.

Medium

Santa Fe Brewing Company

https://www.santafebrewing.com/

Tasting Room: 35 Fire Place Santa Fe, NM 87508 9 state distribution

Santa Fe Brewing Co. is located under the shadow of the former State Penitentiary. Current ownership began in 1996 under President Brian Locke, and several partners including Ty Levis, brewmaster. Brian Locke is a native of Portland and according to Blues and Brews, he spent much of the 80’s and 90’s working for small breweries in the Portland area. Currently, Santa Fe Brewing Co is not distributed in Oregon. Santa Fe Brewing has already shown a willingness to work with outdoor companies such as Sipapu Ski Resort to support industry days and special events.

High


Appendix 4: Additional Ideas for Targeting the Marketing Personas

1) Craft Beer Drinkers Brew Quality Beer quality is what sets craft beer apart. In order to appeal to craft drinkers, it is important to convey the exceptional quality of Deschutes products. Brand Recognition Craft beer drinkers are likely to drink beers that are familiar. The name “Deschutes” needs to portray a distinguished meaning to craft beer consumers. Natural Ingredients Consumers of craft beer prefer quality beer in part because of the ingredients that are used to make it. Increasing awareness of the products Deschutes uses and takes so much pride in must also be conveyed to consumers. Mission Based Craft beer drinkers drink socially. This is largely part of the mission of Deschutes. Consumers are more likely to consider purchasing a product if they can resonate with the purpose of the company. 2) Non-Craft Beer Drinkers

Flavor Deschutes offers better and more robust flavor compared to top-sellers such as Bud Light, Coors Light, and Budweiser. Research has shown that drinkers prefer craft beer due to its superior flavor. Deschutes can capitalize on this by marketing the enhanced flavor that Deschutes craft beer offers.

Quality Quality ingredients contribute to better taste. This is important as consumers, now more than ever, are concerned with the products and ingredients they consume. Deschutes values the quality ingredients that go into their craft beer, and this pride and attention to detail could communicate to consumers that Deschutes is the better choice for the conscientious. Variety Researchers found that people who drink craft beer do so for the wealth in flavor choices. If a customer does not require a water substitute (e.g., Bud Light) they could choose from Deschutes offerings in IPA, White IPA, Pale Ale, Porter, Stout & Seasonal craft beers. Elevated Status Beer drinkers who do not drink craft beer may be interested in portraying themselves as a more sophisticated drinker, and they can do this by choosing the quality and more distinguished choice that Deschutes offers. According to one craft beer drinker, “You feel more grown up and sophisticated when you’re drinking a craft beer.” (Source: DB Ad Agency TDA Initial Market Research From Los Angeles, Portland, and Denver)


Sustainability/Environmentally Conscious Deschutes is the first craft brewery to Implement Global Reporting Initiative (GRI) guidelines. GRI guidelines promote the use of sustainability reporting as a way for organizations to become more sustainable and contribute to sustainable development. This may be an important metric for drinkers in environmentally conscious locales, such as Santa Fe and Taos. These markets put a higher value on sustainability, as evidenced by Santa Fe’s ban on “the distribution of most single-use plastic carry-out bags” (http://www.santafenm.gov/reusable_bag_ordinance), and Taos’ sustainable Earthships and luxury eco-resort (http://www.travelandleisure.com/articles/sacred-space). Local & Culture Deschutes would likely benefit from partnering with a New Mexico owned brewery or establishment (e.g., Vintage 423 Pale Ale by Deschutes) or perhaps work with a New Mexico artist in order to appeal to New Mexico residents’ support for products made locally. This will ultimately increase value for New Mexico’s economy and Deschutes through increased sales.

3) Wine & Spirits Drinkers Not every craft-beer drinker is a middle class, white male in his 20s or 30s. Most beer brands have little understanding of their female customer base; however, women are well integrated into almost all aspects of the beer scene. A major question that perplexes many is whether women will drink beer and if they actually like it. While some women just simply will not drink beer no matter what, most women will drink beer and Deschutes Brewery provides many choices of craft-beer that will cater to women. How can bartenders in New Mexico get women who primarily only drink wine or spirits to sample/drink Deschutes craft-beer? First-time (Female) Beer Drinkers Deschutes offers a variety of exceptionally well-crafted beer such as IPA’s/Ales, Porters, Stouts, and Pilsners. Instead of offering rich, hoppy beers to first-time beer drinkers, introduce lighter or flavored beers that would appeal to women--not too sweet or too heavy, natural and refreshing is most preferred. Women may find Deschutes Fresh-Squeezed IPA to their liking, as it is a lighter beer with a strong citrus flavor reminiscent of fresh grapefruit. The Chainbreaker White IPA brewed with wheat and pilsner malt is also a recommended beer for women as it displays citrus aromas from Cascade and Citra hops. Women prefer drinks that pack a lot of taste and often have a fruity base to them. Offer women a Deschutes Beer that would make them feel lively or excited Make Deschutes beer sound enticing at your local retailer. Whether it is portrayed by the menu or by the server, using key words to lure consumers into wanting to sample Deschutes beer is crucial for brand awareness. Examples of descriptive words may include ingredients or nutritional information as well as intriguing words such as light, refreshing, bubbly, delicious, or sweet. Ask women what flavors or ingredients they prefer most in alcoholic beverages. Relate these preferences to Deschutes Beers. If a variety of women mention they enjoy hard liquor such as dark colored whiskeys or rum, at this point the bartender could offer them a Deschutes Black Butte Porter as it shares the same astringency.


White and wheat beers are often served with an orange. Bartenders should consider pairing fresh fruit such as an orange with a Chain-Breaker or a Fresh-Squeezed IPA as women may find this more appealing and captivating. It is important to educate bartenders on how Deschutes would prefer their beers to be served and presented. The best bet before serving a woman craft-beer is to ask them what their drink preferences are, however, if the bartender is unable to get a read on what their likes are they will be safe based on the recommendations presented above. Beer-Cocktails With the craft beer boom that is happening around the world at the moment, we are seeing many strange ingredients being used in brewing beer. The boom has also seen a lot of other ingredients such as fruit and spirits used in the brewing process. This shows that beer can be used with many different ingredients. Using Deschutes craft-beer in cocktails appears to be a logical step. Get creative with your craft beer and make something that has the consistency of a light cocktail with a tasty twist of a Deschutes brew. Create mixed drinks that incorporate Deschutes beer. For example, start with 5 ounces of Deschutes Obsidian Stout. The Obsidian Stout’s distinct notes of espresso, chocolate, roasted malt, and black barley would pair exceptionally well with a sparkling-carbonated beverage. Combining approximately 5 ounces of deep or robust beers with 5 ounces of champagne makes an appetizing concoction known as the “Black Velvet”. Another delectable option for a beer-cocktail is the “Captains Keg”. Combining spiced rum, guava nectar, with a type of red ale such as the Deschutes Cinder Cone makes for a savory and stimulating beer-cocktail.


Appendix 5: 2015 New Mexico Legislative Summary

Recent legislation during the 2015 New Mexico Legislative Session indicates the

growing craft beer industry in New Mexico and the State’s support of the industry. The House

of Representatives and the Senate declared February 5, 2015 “Growler Day” in the

Legislature. House Memorial 541 and Senate Memorial 502 proclaimed that “New Mexico's

craft breweries are an important, growing and deliciously refreshing part of the state's

economy[.]”

Additionally two bills that passed the Legislature and are awaiting signature by the

Governor indicate an opportunity and a threat for Deschutes. The first, Senate Bill 503,3 titled

Beer and Wine Delivery Licenses, allows for the State to issue delivery licenses to restaurants

or food delivery companies to deliver beer and wine to customers’ homes. The delivery of

beer or wine would be in conjunction with the delivery of prepared foods. The bill allows the

delivery of two six-packs of beer and two bottles of wine to an adult buyer. To qualify for this

license type, an applicant must have a valid food service establishment permit with a

restaurant beer and wine license, a current business license and contracts to deliver prepared

food for at least six permitted food service establishments, a valid food establishment permit

with a full dispenser’s license, or a valid food establishment permit and a full retailer license.

Senate Bill 503 also requires that the primary source of revenue from the operation of the

restaurant or the delivery company be derived from meals. S.B. 503 was sponsored by

1 Growler Day, H.M. 54 (52nd Legislature 2015) available at http://www.nmlegis.gov/lcs/legislation.aspx?chamber=H&legtype=M&legno=%20%2054&year=15. 2 Growler Day, S.M. 50 (52nd Legislature 2015) available at http://www.nmlegis.gov/lcs/legislation.aspx?chamber=S&legtype=M&legno=%20%2050&year=15 3 Beer and Wine Licenses, S.B. 503 (52nd Legislature 2015) available at http://www.nmlegis.gov/lcs/legislation.aspx?Chamber=S&LegType=B&LegNo=503&year=15; see also http://www.abqjournal.com/548804/politics/senate-oks-beer-wine-delivery-licenses.html.


Senator Jerry Ortiz y Pino, a democrat from Albuquerque, and Representative James Smith, a

Republican Albuquerque. The bill passed both the House of Representatives and the Senate.

While S.B. 503 presents an opportunity for Deschutes to work in conjunction with a

restaurant or food delivery service to promote Deschutes’ products. It is unclear exactly how

the legislation would work in practice. Deschutes may still have to work through National to

create a relationship with and distribute beer to the restaurant or food service establishment

who will ultimately deliver the food and beer.

The second bill, Senate Bill 238,4 titled Craft Brewer Licenses, would allow a licensed

New Mexico small brewer or winegrower that also holds a dispenser or restaurant license to

additionally hold a Small Brewer and Winegrowers Limited Wholesaler License. Most of New

Mexico’s license holders have limits on the types of licenses they may hold. A

wholesaler/distributer may not also be the manufacturer nor may he be the retailer. All

manufacturers, except for those carved out in the small brewer, winegrower and craft distiller

license types, are prohibited from being wholesalers or retailers. S.B 238 creates a new type

of license specifically for licensed Small Brewers and Winegrowers so that they may sell or

ship, at wholesale, the beer or wine they produce (unlike wholesalers who carry and

distribute alcoholic beverages from a variety of manufacturers). They already have the rights

to sell and ship their products at retail. S.B. 238 was sponsored by Senator Sue Wilson Beffort,

a republican from Albuquerque. The bill passed both the House of Representatives and the

Senate.

Local craft breweries that are able to sell beer wholesale increases the amount of

competing local craft beer products in the State. While Deschutes is already a competitor to

4 Craft Brewer Licenses, S.B. 238 (52nd Legislature 2015) available at http://www.nmlegis.gov/lcs/legislation.aspx?chamber=S&legtype=B&legno=%20238&year=15


local craft breweries, having consumers able to buy beer directly from the brewery may

impact craft beer sales at retailers.

While both S.B. 503 and S.B. 238 passed the Legislature, only S.B. 238 was signed into

law by the Governor before the April 10 deadline for pending legislation.


Appendix 6: Managerial Marketing Class Team Members

Exective Team Copy Team Daniel Sullivan Moore Dominic Chavez Andrew Salazar Daniel John Miles Hall Susan Larranaga Ben Clinger Drew Lovelace Erin Garcia Jacqueline Tran Off-Premise Consumer Market Research Team Off Premise Consumer Strategy Team Mark Blount Joseph Drake Liz Champion Isaac Emmanuel Madison Jones Patricia Horneffer Bree Lopez Ana Shalesi Van Nguyen Suli Torres-Reyes On-Premise Consumer Market Research Team On-Premise Consumer Strategy Team Mark Miller Nando Betancur Madeline Muraida Gabby Garcia Patrick Partridge David Marquez Umrah Patel Rebecca Perko Juho-Pekka Penttinen Adrian Salazar Off-Premise Retailer Market Research Team Off-Premise Retailer Strategy Team Tori Dieruf-Caldwell Martin Dalton Rachel Hurd Prithvi Chippada Tyler Jeppesen Ashley Gonzalez Strahinja Savic Raghunath Srinivasagan Sue Thanikkatt On-Premise Retailer Market Research Team On-Premise Retailer Strategy Team Raiff Arviso Rodrigo Arias Mikel Garrett Frances Heinlein Sam Iftikhar Renee Schuessler Ciera Jones Krissy Vaio Enrique Valdez On-Premise Distribution Team Off-Premise Distribution Team Christian Campuzano Allison Block Chavez Effie Edsitty Cassie Gale Peter Le Alexis Robinson Jacqueline Perez Radoslava Simeonova Jessica Stephens

Strategies for Growing the Deschutes Brand in the New Mexico Market

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