Virtual Shopping case: Deschutes Brewery

BA 663 – ASSIGNMENT 7.2Bellevue University

Jamie AngovePrepared for Dr. Okash

BA 663 – Assignment 7.2: Virtual Shopping Case – Deschutes Brewery 1

The one key measurement of any brand’s success is whether or not the product sells.

Research has shown that most purchase decisions are made based on how the product is viewed

on the shelf (Decision Insight, 2009). Even with purchase behaviors shifting towards more

online shopping, a brand needs to stand out and cut through the clutter to grab a consumer’s

attention. Appealing packaging is crucial in consumer purchase decisions (Decision Insight,

2009), and this paper will explore Deschutes Brewery’s sales prospects and competence from the

perspective of visual appeal, shelf presence and brand equity.

Deschutes Brewery is a family and employee owned company, founded in 1988 in Bend,

Oregon and focused on community, experimentation in brewing, and ingenuity (Deschutes

Brewery, n.d.). The insurgence of the craft beer market over the last ten years expanded the

brand’s reach, leading to the distribution of Deschutes beers in bars, restaurants, and stores

across most of the United States and a couple of provinces in Canada. The product line is broken

into several categories: year-round offerings including pale ales, India Pale Ales, a porter and a

stout, seasonal beers, the Bond Street Series named after the original brewery location, a Reserve

Series, and two collaboration brews (Deschutes Brewery, n.d.). Loyal customers to the brand

appreciate the wide variety of brews and the notoriety of the well-established Pacific

Northwestern brand: still a craft brewer, but no longer microbrewing.

Sales

At the end of 2014, Deschutes Brewery grown to be the seventh largest craft brewer in

the United States and twelfth largest brewer overall (Ditzler, 2015). Competing against

macrobreweries and securing a position this high in sales is no accident. The company produced

over 337,000 barrels of beer in 2014 which was an increase of 50,000 barrels over 2013 (Ditzler,

2015). Deschutes attributes growth to implementing a new bottling line, improving product

BA 663 – Assignment 7.2: Virtual Shopping Case – Deschutes Brewery 2

development, and improving the taste of its beer (Ditzler, 2015). Additionally, Deschutes plans

to open a new brewing and shipping facility on the East coast by 2019, further planning for

increased growth and sales.

Deschutes also continues to improve sales by creating customer loyalty. It considers

every aspect of the customer’s experience in order to make it extraordinary, creating a positive

impression of the brand for consumers (Morgan, 2013). In-store marketing of the product must

reflect the pub experience that consumers get which connects them to the brand. The image that

pub patrons get of fresh, local beer paired with locally sourced food and upcycled spent grain

must be imposed onto supermarket shoppers through packaging and product placement.

Shelf Presence

For this study, Deschutes beer placement was evaluated within a Hy-Vee grocery store.

Hy-Vee is a large chain grocery store, primarily located in the Midwest. Many of the Hy-Vee

stores have a Wine and Spirits section with beer, wine and liquor heavily stocked and set-off

from the rest of the store, but this particular store simply had a single aisle between produce and

canned goods designated for alcoholic beverages. Based on the smaller size of the store and

scaled down alcohol selection, only three Deschutes beers were stocked: Fresh Squeezed IPA,

Black Butte Porter, and Red Chair NWPA.

Comparing Deschutes offerings to competition, there were roughly the same number of

selections available for Deschutes as for other breweries. One exception was a Midwestern

brand, Goose Island, which had six varieties available. Although Deschutes has a much wider

line of products, the small scale of the store and competing against more local brands make the

limited product offerings justifiable. Interestingly, shelf-scarcity of a product may actually

improve consumer demand. Provided that consumers believe scarcity is caused by high demand

BA 663 – Assignment 7.2: Virtual Shopping Case – Deschutes Brewery 3

and popularity of the product by other consumers, may cause customers to choose the scarcer

product (Parker & Lehmann, 2011). In addition to few product offerings, each of the three

available beers were limited to about two to three six-packs on the shelf, potentially increasing

consumer demand by scarcity.

The Deschutes beers were all found directly in the middle of the beer aisle. Each style

was stocked on its own shelf, only one facing for each, with the Fresh Squeezed IPA nearest the

top, the porter in the middle, and NWPA at the bottom. There were two shelves above this

placement and one shelf below stocked with beers from other breweries. Essentially, they were

in a vertical line directly in the middle of the beer section. Research has shown that buyers

respond best to products positioned on middle shelves, often called the bull’s-eye zone (Kosek,

2014). Since Deschutes is a well-established and recognized brand, it has been able to maintain

this prime shelf position and improve potential sales.

Key Message Communication and Brand Equity

Deschutes Brewery coasted by for the first six to eight years of its existence without

having to intentionally sell any beer (“Deschutes rides a swift current,” 2008). The brewery

operated in a pub, was easily accessible to locals, and was a product that supported the local

economy, a culture that the Pacific Northwest is passionate about (“Deschutes rides a swift

current,” 2008). Even with 90 breweries operating in Oregon in 2008, market saturation still has

not proven to be a problem for sales (“Deschutes rides a swift current,” 2008).

As the craft beer market continued to grow, Deschutes discovered that it did have to

begin working at selling its beer. In 2014, craft beer sales represented eleven percent of the

overall beer market share, a number which is expected to grow to 20 percent by 2020

(Goldschmidt, 2015). The competition was growing. Deschutes traditionally preferred to

BA 663 – Assignment 7.2: Virtual Shopping Case – Deschutes Brewery 4

connect with consumers through an authentic experience, but realized that key message could not

be communicated beyond its hometown customers that were actually able to visit the brewpub

(“Deschutes’ beer barrel,” 2007). Deschutes debuted “Woody” the “Big Ass Barrel” in 2007 as

a form of experience marketing: a truck built to look like a beer barrel with sides that open as

windows where bartenders pour and serve Deschutes beer (“Deschutes’ beer barrel,” 2007). The

experience effectively increased sales in Seattle retail stores to over 24 percent, compared to only

8 percent in the rest of the Deschutes markets (“Deschutes’ beer barrel,” 2007). Additionally,

Woody generated the equivalent of five million ad impressions from Seattle media (“Deschutes’

beer barrel,” 2007).

Traditional advertising for Deschutes is still limited, partially due to restrictions on

advertisements for alcoholic beverages. Woody, however, now makes trips to festivals across

the United States, with two coming to Missouri in the next month. Social media and word of

mouth help boost the image and reach of Deschutes to more and more consumers.

Brand equity in craft beer is somewhat unique: the emotional connection and resulting

attitudes formed towards a brand left by an experience are typically strong enough to win

consumer loyalty following that single incident. Many breweries offer brewery tours and free

tastings, knowing that the connection that craft beer drinkers make to a brand through this

experience will drive future sales. Deschutes Brewery has positioned itself as a premier craft

beer brand out of the Pacific Northwest, offering quality beer with experimental flavors, thus

establishing a strong connection to consumers.

BA 663 – Assignment 7.2: Virtual Shopping Case – Deschutes Brewery 5

Aesthetic Appeal

The overall look of Deschutes packaging is a somewhat

folky, though the recently redesigned labels are slightly more

contemporary. Each six-pack is packaged in a cardboard

carrier with a bright background, a solid-colored bar at the top

with the brewery’s name printed in a blocky font, and an image

reflecting something about the individual product. Fresh

Squeezed IPA has a painting of a bright green hop, squeezed

until the presumed beer flavor

drips out. Red Chair NWPA features a red background with a ski

lift on the package. This reinforces the brand’s image of being an

outdoorsy company, based in Oregon in an area known for prime

skiing. Black Butte Porter features a fitting black background

with an image of the famous strato-

volcano, its namesake, found in

Oregon’s Deschutes National Forest. This porter is one of Deschutes’

year-round offerings, and the packaging closely represents the smooth,

creamy flavor of this coffee and chocolate-noted beer.

Each of Deschutes’ labels is strategically designed to fit into

an overall brand scheme, using the same blocky font at the top of the

six-pack cardboard carrier, a square painting representing the brew on the left-hand side of the

carrier, and the same circular logo depicting an Oregonian stream and mountain found on the

BA 663 – Assignment 7.2: Virtual Shopping Case – Deschutes Brewery 6

neck of each bottle. It is easy for consumers to quickly identify Deschutes’ products, a feature

preferred for brand recognition and driving repeat purchases. The designs are also all very

relevant, current and visually appealing to millennials, craft beer’s largest target market.

Conclusion

With its rugged, Pacific Northwestern image of a craft brewpub featuring the mantra

“Bravely Done,” Deschutes Brewery has established a loyal customer base. Setting up shop in a

smaller town attracted early adopters to the brand, but expanding into supermarket distribution

required careful planning to ensure the product would be aptly presented to attract new and

recapture existing consumers outside of the Oregon market. Through bull’s-eye shelf placement

and bright, eye-catching product packaging, Deschutes Brewery continues quickly growing and

furthering their brand equity with new and existing customers.

BA 663 – Assignment 7.2: Virtual Shopping Case – Deschutes Brewery 7

References

Anonymous. (2008). Deschutes rides a swift current. Oregon Business Magazine, 31(10).

Decision Insight. (2009). Kellogg’s goes virtual to test real life packaging. Retrieved on April 27,

2016 from https://cyberactive.bellevue.edu/courses/1/BA463CL-T301_2165_1/content/

_7929516_1/ Virtual_Shopping_Case_Study-_Kellogg%27s_Packaging_copyright_

2009_opt.pdf

Deschutes Brewery. (n.d.). All about Deschutes. Retrieved on April 27, 2016 from

https://www.deschutesbrewery.com/discover-deschutes/

Ditzler, J. (2015, April 2). Deschutes ranks as 7th largest craft brewer. The Bulletin. Retrieved on

April 27, 2016 from http://www.bendbulletin.com/business/3030452-151/story.html#

Goldschmidt, B. (2015). The art of craft. Progressive Grocer, 94(5).

Kosek, J. (2014, July 7). How shelf placement impacts retail buyers, shoppers. Chain Drug

Review, 36(11), 14.

Morgan, J. (2013, August 6). Brewpub files: Deschutes Brewery combines craft brews with local

flavor. Craft Brewing Business. Retrieved on April 27, 2016 from

http://www.craftbrewingbusiness.com/business-marketing/brewpub-files-deschutes-

brewery-combines-craft-brews-with-local-flavor/

Parker, J., & Lehmann, D. (2011). When shelf-based scarcity impacts consume preferences.

Journal of Retailing, 87(2), 142-155.