Reference no: EM131304063

New Belgium Brewing Company

The idea for New Belgium Brewing Company (NBB) began with a bicycling trip through Belgium, where some of the world's finest ales have been brewed for centuries. As Jeff Lebesch, a U.S. electrical engineer, cruised around the country on a fattired mountain bike, he wondered if he could produce such high-quality ales in his home state of Colorado.

After returning home, Lebesch began to experiment in his Fort Collins basement. When his home-brewed experiments earned rave reviews from friends, Lebesch and his wife, Kim Jordan, decided to open the New Belgium Brewing Company in 1991. They named their first brew Fat Tire Amber Ale in honor of Lebesch's Belgian biking adventure. Today, New Belgium markets a variety of permanent and seasonal ales and pilsners. The standard line includes Sunshine Wheat, Blue Paddle Pilsner, Abbey Ale, Trippel Ale, and 1554 Black Ale, as well as the firm's number one seller, the original Fat Tire Amber Ale.

NBB also markets seasonal beers, such as Frambozen and Abbey Grand Cru, released at Thanksgiving, and Christmas and Farmhouse Ale, sold during the early fall months. The firm also occasionally offers one-time-only brews-such as 2° Below, a winter ale-that are sold only until the batch runs out. Bottle label designs employ "good ol' days" nostalgia. The Fat Tire label, for example, features an old-style cruiser bike with wide tires, a padded seat, and a basket hanging from the handlebars.

All the label and packaging designs were created by the same watercolor artist, Jeff Lebesch's next-door neighbor. New Belgium beers are priced to reflect their quality at about $7 per six-pack. This pricing strategy conveys the message that the products are special and of consistently higher quality than macrobrews, such as Budweiser and Coors, but also keeps them competitive with other microbrews, such as Pete's Wicked Ale, Pyramid Pale Ale, and Sierra Nevada.

To demonstrate its appreciation for its retailers and business partners, New Belgium does not sell beer to consumers on-site at the brewhouse for less than the retailers charge. Although Fat Tire was sold initially only in Fort Collins, distribution quickly expanded throughout the rest of Colorado. Customers now can find Fat Tire and other New Belgium offerings in 16 western states, including Washington, Montana, Texas, New Mexico, and Arizona. The brewery regularly receives e-mails and telephone inquiries as to when New Belgium beers will be available elsewhere. Since its founding, NBB's most effective promotion has been via word-of-mouth advertising by customers devoted to the brand.

The company initially avoided mass advertising, relying instead on small-scale, local promotions, such as print advertisements in alternative magazines, participation in local festivals, and sponsorship of alternative sports events. Through event sponsorships, such as the Tour de Fat and Ride the Rockies, NBB has raised thousands of dollars for various environmental, social, and cycling nonprofit organizations. With expanding distribution, however, the brewery recognized a need to increase its opportunities for reaching its far-flung customers. It consulted with Dr. David Holt, an Oxford professor and branding expert.

After studying the young company, Holt, together with Marketing Director Greg Owsley, drafted a 70-page "manifesto" describing the brand's attributes, character, cultural relevancy, and promise. In particular, Holt identified in New Belgium an ethos of pursuing creative activities simply for the joy of doing them well and in harmony with the natural environment. With the brand thus defined, New Belgium went in search of an advertising agency to help communicate that brand identity; it soon found Amalgamated, an equally young, independent New York advertising agency. Amalgamated created a $10 million advertising campaign for New Belgium that targets high-end beer drinkers, men ages 25 to 44, and highlights the brewery's image as being down to earth. The grainy ads focus on a man rebuilding a cruiser bike out of used parts and then riding it along pastoral country roads.

The product appears in just five seconds of each ad between the tag lines, "Follow Your Folly . . . Ours Is Beer." The ads helped to position the growing brand as whimsical, thoughtful, and reflective. In addition to the ad campaign, the company maintained its strategy of promotion through event sponsorships. NBB's marketing strategy has always involved pairing the brand with a concern for how the company's activities affect the natural environment. The brewery looks for cost-efficient, energy-saving alternatives to conducting business and reducing its impact on the environment.

Thus the company's employee-owners unanimously agreed to invest in a wind turbine, making NBB the first fully wind-powered brewery in the United States. The company further reduces its energy use with a steam condenser that captures and reuses the hot water from boiling the barley and hops in the production process to start the next brew; the steam is redirected to heat the floor tiles and deice the loading docks in cold weather. NBB also strives to recycle as many supplies as possible, including cardboard boxes, keg caps, office materials, and the amber glass used in bottling. The brewery stores spent barley and hop grains in an onpremise silo and invites local farmers to pick up the grains, free of charge, to feed their pigs. Another way NBB conserves energy is through the use of "sun tubes," which provide natural daytime lighting throughout the brew house all year long. NBB also encourages employees to reduce air pollution through alternative transportation.

As an incentive, NBB gives each employee a "cruiser bike"-just like the one on the Fat Tire Amber Ale label and in the television ads-after one year of employment to encourage biking to work. Beyond its use of environment-friendly technologies and innovations, New Belgium Brewing Company strives to improve communities and enhance lives through corporate giving, event sponsorship, and philanthropic involvement. The company donates $1 per barrel of beer sold to various cultural, social, environmental, and drug and alcohol awareness programs across the 15 western states in which it distributes beer. Typical grants range from $2,500 to $5,000. Involvement is spread equally among the 15 states, unless a special need requires greater participation or funding. The brew house also maintains a community board where organizations can post community involvement activities and proposals. This board allows tourists and employees to see opportunities to help out the community and provides nonprofit organizations with a forum for making their needs known.

Organizations also can apply for grants through the New Belgium Brewing Company website, which has a link designated for this purpose. New Belgium's commitment to quality, the environment, and its employees and customers is clearly expressed in its stated purpose: "To operate a profitable brewery which makes our love and talent manifest." This dedication has been well rewarded with loyal customers and industry awards. From cutting-edge environmental programs and high-tech industry advancements to employee-ownership programs and a strong belief in giving back to the community, New Belgium demonstrates its desire to create a living, learning community.

According to David Edgar, director of the Institute for Brewing Studies, "They've created a very positive image for their company in the beer-consuming public with smart decision making." Although some members of society do not believe a brewery can be socially responsible, New Belgium has set out to prove that for those who make the choice to drink responsibly, the company can do everything possible to contribute to society.47

Questions for Discussion
1. How does New Belgium Brewing Company's social responsibility initiatives help to build its brand?

2. Describe New Belgium's branding policy. How does it use packaging to further its brand image?

3. Assess New Belgium's brand equity.