Note From CAS President, Sam Holloway: It is my pleasure to introduce our latest Guest Expert Blogger, Dr. Andre Sammartino. I’ve had the pleasure of working with Andre on an international research project that investigates the business motivations behind collaboration brews. I am flattered Dr. Sammartino has joined the CAS learning community as a Guest Expert, and our hope is to grow this community in Australia and New Zealand by featuring an expert strategist from down under, who also loves craft beer and the entrepreneurs who make this industry a global force. Welcome, Dr. Sammartino! {Note: This initial blog post is publicly available. Future posts will be for CAS Members only}

Andre Sammartino, Ph.D. - Guest Expert, International Business Academic

Welcome to my first blog post. Let me introduce myself (briefly). Like Sam Holloway, I am a strategy professor, although, as I come from a small, open economy (Australia), much of my research looks at multinational businesses and international engagement. Like everyone around here, I have a passion for good beer. I am fascinated by what makes the craft beer industry tick, and how a moribund mature sector has been revitalized by the new wave of brewers. For years, I’d been pondering a research project that would get me talking to craft brewers in a more formal setting. While on a research sabbatical in Italy last year, I kicked off a project with a colleague in Denmark and Sam, looking at the nature of craft beer collaborations.

Inter-brewery collaborations - brewers getting together to co-create some new beer - are interesting because they’re so common in the craft beer scene, yet so unusual in the broader business world. It is not typical to see notional competitors sharing their core intellectual property and know-how so willingly, and pushing out co-branded products.

Collaborations are certainly flavor of the month across the more developed beer scenes. Here in Australia there are loads of domestic collabs between brewers of all sizes, and local craft brewers have brewed with folks from Norway, Italy, Denmark, the UK, New Zealand and numerous US counterparts.

We kicked off with a series of interviews within Europe. We spoke with breweries from Italy, Denmark (two), the UK (two), Spain and Norway.  I got to see one collaboration in action. These brewers differed considerably in size. Three of them ranked in the top 3-4 craft brewers by volume within their home country. Four have been ranked among the 100 best breweries in the world by Ratebeer. Two others have featured in the Ratebeer top 10 new breweries lists in recent years. Most exported some portion of their output, and all had collaborated at least five times. All but one had engaged in international collaborations.  

We were concerned with various aspects of these collaborations: (i) the motivations (Why collaborate?); (ii) the mechanics (How do brewers hook up? How do they decide a recipe? How do they distribute?); (iii) the outcomes (Do the beers become core products? How widely are they distributed?); and (iv) the pitfalls (What risks are there?)

In terms of motivation, most brewers spoke about the opportunity to learn new brewing techniques, to see different brewery setups, and to experiment with different styles and ingredients. Some collaborated to expose their brand to new drinkers, especially in foreign markets, and/or because their distributor suggested a prospective collaborator. But by far the most common motivation was simply “fun”. This partially connected to part of the mechanics – namely how brewers hook up. Most collabs sprung from friendships, from chance encounters at festivals, and a small amount of matchmaking by distributors (and sometimes festival organizers). Several brewers described collabs as a chance to hang out, to relax, and that collabs are like ‘having friends over for a party’. There was some hint of altruism by one brewer who felt collabs were a good way to give new emerging brewers greater exposure through his networks. Several collaborations had also been designed to collectively promote an event, or to celebrate the successful growth in a community (e.g. annual collective brews).  This speaks to an admirable and, again, unusual characteristic of the craft beer scene – community.  Most brewers we spoke to saw collaboration as a natural extension of a common desire to promote craft beer as artisanal, experimental and celebratory. This dynamic flows through to the collaboration process itself.

The mechanics of the process were typically pretty haphazard, informal and unplanned.  Recipes often came about via some email exchanges, through late night, alcohol-fuelled brainstorming, and/or via out-and-out improvisation. Typically the host brewery bore all the costs of production and the label more closely resembled the host brewery’s livery (but still prominently acknowledged the collaborator’s brand). Most brews were single-batch, and often only available in kegs, sometimes at special events. Visiting brewers were often given ‘first right’ to some portion of the output for distribution, at a discounted price. There was no attempt to ‘contract’ around intellectual property in any formal way, and almost no instances of royalty payments. It was assumed that the recipe might be used by any of the parties at a future time. All aspects of the collaboration appeared to be based on trust.

A small proportion of the collabs resulted in beers that joined a brewery’s core line of products. This was more common for breweries collaborating at an early stage in their growth (i.e. when product lines were being established), and for collaborations that were international. Most brewers saw such outcomes as unlikely due to the experimental and often uneconomic nature of the beers they produced as collabs. The beers were often seen as a bit too ‘marginal’ or ‘high risk’ to consider brewing regularly. On a more positive side, several brewers noted that the novelty factor meant they’d often presold the output to their distributors before the collaboration so there was no real financial risks in the exercise. One further outcome reported was that this rarity factor often fuelled positive attention from beer geeks on rating sites, leading to some reputational gains.

As a cynical professor, I had assumed there might be problems with opportunistic behavior between collaborators and some concerns about risk exposure.  There was very little evidence of such fears among the brewers we spoke to. As noted, no formal contracting or negotiation was entered into. No one reported concerns about loss of trade secrets or damage to their brand. Partner selection may be part of the explanation, as brewers rarely collaborated with parties they didn’t already know, and several spoke about the importance of good reputations (and, simply, that a partner was a ‘nice guy’).  The only concern that did pop up was whether there might be diminishing returns from frequent collaborations and whether some newer collabs might be motivated by more cynical marketing agendas and/or a compulsion to do it because it is the ‘trendy thing to do’.

Overall, this mini-research project has confirmed that the craft beer scene is highly communal and cooperative without much of the cynical, individualistic behavior one often sees in business dealings. Collaborations can certainly result in fun beers, and in fun times for brewers, and there can be some positive brand building. They don’t seem to be core to anyone’s business model, but they certainly can lead to new lessons and new products.

CAS Members, share your experiences with collaboration brews on our forum thread:

[What have your experiences been? Have you collaborated?  Why did you do it? Would you do it again? Did it help your business? Was it fun?]