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SUBMITTED BY cas_admin ON Sun, 01/05/2020 - 16:14

A Conversation with Tomme Arthur

Co-Founder and COO, The Lost Abbey

In late November 2019, Tomme Arthur reached out to Sam Holloway at Crafting A Strategy and asked a few questions about innovation in craft beer, hard seltzer, and strategies for small and independent craft breweries in 2020 and beyond. Tomme was preparing for a speech to kick off Brewbound Live in December 2019, and if you haven’t had a chance to watch that speech, he absolutely nailed it. We found working with Tomme to be extremely helpful in our own thinking, and we asked Tomme if we could create this blog so other people could benefit from the process we went through to decide how craft breweries should view innovation in 2020 and beyond.


This blog will take you through the thought process Sam Holloway (CAS President), Mark Meckler (CAS V.P. of Strategy & Curriculum) and CAS Member Expert, Jeff Althouse (Oakshire Brewing, Eugene, OR) used to craft a response to Tomme’s innovation questions. We think it will be useful to any craft brewery owner, brewer, or beer industry stakeholder who is worried about innovation and wondering if we’ve reached the limits of innovation when it comes to beer flavors.


Here were Tomme’s initial questions (sent via email, in italics below):

  1. Role of Innovation in beer flavors:
    1. I have this sense that true innovation of flavors may no longer be the driver in a crowded marketplace as it would appear right now that almost every flavor permutation under the sun has been attempted.  In this way, it feels that brewers might not be in a position to create differentiation needed to set their business apart.  So in a sea of imitation, what are the expectations (both for the consumer and producer)?
  2. Strategic threat from hard seltzer
    1. Do you see hard seltzer as a true disruptor/radical innovation?
    2. If seltzer isn’t a disruptor, is it more like a 4th category (wine, beer, spirits + seltzer)?


In short, our answers were:

  1. Yes. If you only innovate within the standard beer product parameters, yes we are reaching the limits of innovation. However, only focusing on product innovations and ignoring component innovation and architectural innovation is limiting your brewery's ability to survive.
  2. No. Hard seltzer is not a true disruptor, it is an architectural innovation.
  3. Yes, hard seltzer is more like a 4th category. And, somewhat concerning to us, seltzer is more scalable because it can be a component of other innovations (like when you add gin to tonic, champagne to orange juice, or vodka to tomato juice and tabasco). Craft beers and their dominant flavor profiles have always hindered their ability to be combined with other components where wine and spirits have found ways around this limitation.


What follows is a look at innovation theory (Henderson and Clark 1990) to support our answers to Tomme’s questions. We use pictures and tables to define, develop, and apply the different types of innovation to the craft beer industry of today and the future of beer/flavor innovation. The first two tables define the concepts. The third table introduces examples of each concept from the perspective of craft beer flavor and style innovations. The last table offers strategic advice for breweries to consider.


If you have additional questions, send us an email or visit our website. We also offer a free newsletter each week that discusses how to run a better beer business. If you like what you see, you can join hundreds of craft brewing entrepreneurs in 19 countries who belong to our online community. At only $99/year, we feel it is the best value available in craft beer business education.


Four Main Types of Innovation

Adapted from Henderson and Clark (1990)


There are four main types of innovation and they vary based on whether you are changing the components of a product or process (new/different equipment or processes) or whether you are changing the way your existing processes "talk to each other." At Crafting A Strategy, we believe strongly that most craft brewers only innovate beer flavors & beer products in one fashion - incremental innovations (lower left quadrant of the 2X2 below). If craft brewers want to continue to benefit from innovation, they need to think more broadly about their whole production process (the other 3 quadrants in the 2X2), and not simply the hops/yeast/barley or incremental input changes.


Table 1 - Generic Model of Types of Innovation



Table 2 - Definitions of Each Type of Innovation



Table 3 - Craft Beer Example Innovations for Each Type



Table 4 - Strategic Implications for Craft Breweries