As part of the second wave of American craft breweries, Founders Brewing Co. leaned on its innovation to help fuel the industry’s surging popularity over the last decade.
Now, with a new CEO at the helm, the Grand Rapids-based brewery is striving to stay in front of the pack in the race for innovation.
“I want (Founders) to be in a leadership position where we’re coming to the market with bigger innovations,” said Elton Andres Knight, who was named the CEO of Founders on Feb. 1, replacing co-founder Mike Stevens, who stepped down from the position.
“It feels like we’ve done small, incremental innovations and we need something that is category-defining,” Knight said.
Knight is transitioning into the head leadership position at Founders while also serving as CEO of Boulder, Colo.-based Avery Brewing Co. Between 2017 and 2019, Founders and parent company Mahou-San Miguel Group acquired a 70-percent stake in Avery Brewing.
Right now, Knight routinely travels to Grand Rapids to work with the Founders team for a few uninterrupted days a week and is planning to move to West Michigan soon. Knight, who carries experience in both marketing and sales, made clear some of his objectives as the new leader of Founders, such as gaining market share in the United States through transformational innovation.
Knight highlighted the blurring of lines between craft beer, seltzers and ready-to-drink cocktails, suggesting that these could create opportunity for the beer maker.
“I don’t have the solution yet, we’re going to be working on it,” Knight said. “But, versus coming out with a new IPA or adding a different hop, I believe the blurring borders of different categories is something that can be pretty big and pretty transformational. … We need to have thoughtful innovation and really try to understand how this is an opportunity for the brewery and the distributors.”
Knight pointed out that consumers are generally including craft beer, seltzers and ready-to-drink cocktails within the same drinking occasions, making it prudent for Founders to become less product-driven and more brand-driven as it susses out opportunities in other categories.
Dabbling in these adjacent categories can come in many forms, too, meaning that Founders may not need to shoulder all of the production legwork. Other ways of leveraging opportunities within these categories include collaborations or co-branding with other craft beverage makers.
Founders already has a foothold in the seltzer category after the 2020 introduction of the Mas Agave line of premium hard seltzer, which is available in strawberry, lime and grapefruit flavors.
At the same time, Knight says Founders isn’t getting away from the type of innovation that helped propel it to become the 12th largest brewery in the country.
“We still have to do two things — crazy innovation that is true to our DNA,” Knight said. “That’s the fun stuff that brewers get excited about and the beer enthusiasts love, but also doing much more transformational and incremental innovation that, in its core, is intended to grow the top line of the business. Doing those two at the same time is growing our market share, which is one of the reasons I’m here. But at the same time, not doing that at the expense of what’s true to Founders.”
Under the ownership of Mahou-San Miguel, Founders has a fuller arsenal of resources it can leverage through the family-owned beer maker, which has been in business since 1890. One example of this synergy is the fact that Founders is able to brew its marquee brand All Day IPA at both Avery Brewing Co. in Colorado and in Madrid, Spain through Mahou.
The end result is lower logistical costs and fresher beer for clients in those areas. Knight acknowledged that the model works well in some situations, but it’s really a case-by-case basis.
“It depends on the footprint of the two companies, which are quite different,” he said. “With Avery, 60 percent of its volume is in Colorado and the rest of the brands are west heavy. For us to brew and pack (Avery beer in Grand Rapids), it might not make as much sense. For the future, I think it’s an awesome idea. Maybe even bringing in some of the Mahou brands from the parent company, which are sold here.”
With Mahou’s robust international presence, and Knight bringing international perspective to the CEO chair, Founders may encounter opportunities abroad. Knight estimated that only around 2 percent of Founders beer is exported out of the United States to 20 different countries, mostly in Europe. Founders could potentially pick up market share internationally through this existing infrastructure.
“With our parent company based out of Madrid, it has a very good distribution muscle and not just in Spain but through partners and distributors in Europe,” Knight said. “I feel like, as we move forward and (the) craft (beverage market) stabilizes in these markets, that there will be an opportunity to increase sales there.”
Still, he added that growing in the United States takes priority over international growth.
As for distributors both on home soil and abroad, Knight said he has found success with Avery Brewing by treating distributors as partners rather than simply the vessel in which product is disbursed.
“They have a pulse on the market that we don’t have at the brewery, and likewise, we are experimenting and coming up with new beers that they don’t know about, so there is definitely mutual benefit,” Knight said.
As of 2020, the U.S. brewery count hit 8,884, according to data from Boulder, Colo.-based Brewers Association trade organization.
The association also reported that Founders produced 592,000 barrels of beer in 2020, a 2-percent increase from the year before. Adjusting to the industry’s dramatic shifts throughout the COVID pandemic, off-premise sales of Founders’ portfolio declined by 9.9 percent in 2021 compared to 2020, according to Chicago-based market research firm IRI.
“With 9,000 breweries, the market is cluttered and it’s so difficult to stick your head out versus when this started decades ago and there were only a few hundred breweries,” Knight said. “This journey is only going to put more demands on the components of thoughtful innovation, compelling brand building and moving in that direction. But Founders, I feel, has the moral obligation.”
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