107 - Small Beer, big opportunity?

We had a brewery send us beer, one does, it's back back in 2016-17. And they just threw it in a box, it's a client of ours, I'm not going to call about it, but I'll flame it privately over text. They just like wrapped the beer cans in t-shirts. [laughs] It went in the f***ing box show. [laughs] There was one full can in there, and like three very sodden t-shirts. [music] Hey Cody, what's up? Not the whole lot, Isaac. How are you doing today? Cody, I'm phenomenal. Hey, today we are discussing the first of Kodo's 2026 beer branding trends review exclusive topics, which is mid-strength beer. Well, we're on the topic, I don't really like that term. I don't either, but hold your horses, we're going to get to that shortly. Before we dive in, as we're going to spend a quite a deal of time talking about that actually, before diving in as a reminder, this is part of our so Kodo Design's annual 2026 Beer Brandy Trends Review. This is a comprehensive, I think all then we're 25 to 27,000 words, if you count the newsletter's report on what we're seeing shaping the beer and bevalk industry today from our perspective as a branding partner with some of the most exciting brands in the game. This report has eight topics pulled out, including this one today, that are reserved exclusively for our beer branding trends newsletter readers. So you're going to want to head over there to beerbrandingtrends.com. Sign up to read along or just listen to these because we're going to also record companion episodes. So I just need to come out and say right off the top here that this is probably my favorite thing we cover in the entire report. And I have been excited about this segment for since you and I first kind of discovered it three years ago. I agree. And we've seen a deluge of breweries bringing small beers to market as well. A veritable flood. A booming wave. No, we've started noticing more small beers like true small beers popping up in tap rooms all over the market all over the country. Not session IPAs, not watered down macro loggers, but specifically clean intentional sub four percent ABV beers that still managed to bring full flavor and a sense of craft. I love it. Yeah. Me too. It's what I've wanted for many years now. Some are check inspired. Others are hopped like a West Coast Pale Ale. A lot lean into being beer flavored beer, only smaller. In any case, the pitch for this category is really clear. Right. It's more crushable means you can drink one and not really feel bad about it or drink more in one sitting, which is the most important value prop. Obviously, less alcohol means a less and risk of a severe hangover. I'm not I'm no scientist, but I think you can do the math there. Lower calories, presumably in most cases, it's going to be less onerous on your health. You find a more well rounded flavor than in a beer just pretty much across the board, in almost every instance. These have a lower cost to produce, so there's a benefit there for the brewery side and just to kind of summarize their tailor made for day drinking and moderation, which just opens up more occasions to enjoy this stuff. So whatever your preferred benefit is here, we think there's something really special going on and we expect to see the segment grow. Right. And as the beer category continues to stretch kind of in these two directions, high gravity bombs in one end and then kind of fully non-alcohol. And I want to make it seem that that black and white, but we definitely are seeing that kind of in trend numbers anyway. Non-alcohol offerings on the other end. This low but not zero middle ground is a really interesting place to play, not just for consumers, but as you mentioned for brewers who are looking to stretch their brand, sharpen their position or just some more beer to folks that are, you know, want to hang out a little longer and drink a little more. So before we go any further, let's define what we're actually talking about for anyone who might not have heard of this. So we colloquially internally at Cotto call these small beers. There is a brand, there's actually a few brands I think called small beers, so I don't mean to be confusing there, but we like calling them small beers intentionally not to define the style, but specifically to capture this idea of a flavorful craft beer that is, it's really just below 4%. Right. I mean, that's kind of our internal cutoff. I think so. Yeah. Generally speaking across the board, yes. And we're seeing that in our client work too. So like if we can borrow a term from abroad, our Aussie friends and clients call them mid-strength beers, they typically clock in 3 to 4-ish percent, maybe 4.5, but I wouldn't really count that. That's roughly the zone we're talking here. And for what it's worth, I've asked a handful of people in my life what they thought mid-strength meant just very anecdotally, including a lot of craft beer drinking people. And they actually said 5%. So maybe that's just because we're like on a, you know, based 10. Yeah. Yeah. So these people, so they like mid is 5. But take that anecdote is what you will. My point is that I don't know that the mid-strength term matters. We'll get into that more more in depth here in a bit. But so defining the term loosely as being not 4%, but sub 4%. Sometimes even coming in below 3%. Still full flavored or full or flavored compared to, you know, kind of more macro or industrial loggers and in a beer designed with intention. So it's not low alcohol as an afterthought. It's actually the brands that we're building right now in this space with people are built to hit this ABV mark. Intentionally, you mentioned already lower calorie count as an outcome of all that. And again, built expressly for moderation. So these are not in a beers. They're not supposed to be. And they're not what most people think of when they hear session. You know, that's a term that we should probably retire. Again, we'll get into that here in a moment. Instead, small beers offer kind of a third lane, which is enough alcohol to feel and taste like a real beer, but low enough to where you can really, I mean, I'm not going to say you can drink a ton of them, but you can drink a lot of it and keep your wits about you. You can you can drink two or three or four and still drive home. That's not legal advice. You can even have one on your lunch break and make it through that 3 p.m. meeting. Cody, why is this an interesting value prop right now? Yeah. And to be fair, the small beer middle ground might not be commanding headlines just yet, but very quietly solving a set of problems that we've kind of seen crop up lately. You know, for drinkers and breweries alike. So supports longer, more social drinking occasions. So backyard hangouts, tap room visits, patio days, festivals, casual walking around beers. People want options that let them pace themselves. You know, these aren't hypey releases. They're fridge stockers. They're kind of just a common commodity that can be used a lot more flexibly than some of the higher gravity stuff we've seen in the past. These work really well in a tap room. They allow people to drink more on premise and for longer. And it might be another pace or option, you know, similar to how we've talked about hop water in the past. There's obviously some alcohol. So the analog isn't like completely 100%. However, you're not getting wrecked quickly on these things. As an industry, we need to be careful with the messaging here, because it's really easy to then, you know, look, just kind of take a peek right around the corner at the other side of the coin. But there is a very important or I won't say important. There's a compelling social responsibility angle to having low ABB options, especially like on premise as well, because people can, you know, responsibly drive. It's one of the biggest blind spots in our whole industry, right? It's like driving to a place, drinking, and then having to drive home. Again, you got to be careful with how you position that messaging or how you message around it. But that is a compelling value prop there as well. Go ahead. Sorry. I cut you off. It's easy to understand the positioning. I think there's a really accessible positioning here for these, you know, they're not wellness beers. No, they're not functional. You don't need to run a marathon to drink these. However, they do signal moderation, and they do it without being fussy and without making a big deal out of it, which is a big strength. And I think probably positioning off of some of those more active functional lifestyle products that we've seen explode late within the last few years. Let's give you some brand-building latitude. You know, a small beer can round out your flagship portfolio. But you could also consider building more of a standalone brand with a product like this, you know, assuming your brand architecture calls for it, there is that opportunity there. And then maybe most importantly, these beers invite new drinkers in, you know, not everyone wants a seven, eight, nine percent IPA of flavorful, approachable, you know, 3.5, 3.7 percent pale or logger can really help expand your audience, especially for people looking to moderate without giving up beer entirely. A note here, you know, most of those drinkers aren't fully sober. They're moderating. You know, the vast majority of NA drinkers still consume alcohol from time to time. And we've seen numbers up to 94%, which is shocking to me, but then maybe not so much. Not shocking to me at all. I mean, when you think just again, interrupt you, when you think about how expensive NA beer is, it's definitely a thing that like, it's not causal. It might be corollary, but I feel like the type of person that would be buying NA beer has the type of money to spend on something, I won't say frivolous, but they're buying it specifically. And it seems like that type of person would [BLANK_AUDIO] they'll be drinking beer. I don't know if that made sense at all. That just, you hear those numbers, you see it in NICU and then you see like Bill Schufel over at Athletic, kind of cite those numbers often is when they're talking about their drinking set and their customers, it just makes a lot of sense to me. I think that people use it specifically to buy moderation as an aside. Sorry, I will try to stop interrupting you from here on out. Yeah, I mean, the point is even if you are drinking non-alcoholic beer as part of your rotation, you're not necessarily opting out entirely, just opting for more balance. Small beer gives you a way to do that without leaving beer behind. It's nice. It is nice, I like that. All right, so where are we? This is not a binary situation. And I bet that the, again, I think those numbers are probably even higher. You can never really trust those surveys. But if you're genuinely, you know, an alcoholic and working on not drinking, you're probably not drinking in a beer. I think that's something that maybe another kind of point and the very confusing thing that I tried to, the point I tried to make a moment ago. Again, no proof there. I just don't think that would be wise. But anyway, we've handled, I'll say maybe like five or six of these dedicated right now. We got a lot of case studies coming out soon. A few active ones right now. Let's talk about what we've learned are what we're hearing and what we think about the segment thus far. So looking at our very rigorous outline here, point one is positioning pitfalls. Now we get to talk about it. Do not call it session. Yeah, and session is a term. It's something that may still resonate with a few burrs, but most drinkers either don't know what it means or they associate it with sort of forgettable beer. Beer that's easy to overlook. I think it's got a ton of baggage. Yeah, it's a term that had its moment, circa 2015, 2016. It's definitely on the downslide for a variety of reasons. And I think primarily, it's overused and underdefined. So it was something that we saw originally applied to low ABV British hails. Then it was co-opted by Americans to cover anything roughly under 5%. But that number has been fudge so much that now it's pretty much meaningless. You can't bet on a certain ABV anymore with the word session. It just depends from case to case. I've seen sessions that are probably over 5. Yeah, it doesn't really mean much. It's really more subjective. It's about what the usually, like the ones we've seen would be like a line extension off of your kind of horse brand. So it's like a session IPA or something. And it's just like, if that's 7, 5, this one's like 6. All right, I got it. Yeah, that's a question. It's not a big enough difference to move the needle. And I think what we've found and seen is that it's not. And it just comes to, or rather, serves to further erode the definition of this term toward meaninglessness. Other issues. It didn't deliver. And I'm painting with a broad brush here. But it's a term that promises full flavor just lighter. But session beers tend to taste thinner or taste like a compromised version of another beer that a brewery is making. And I think it's hard to make the argument to go for that when the differences aren't extreme enough to justify it. Hot take and true. Yeah. It's a true. It's a true hot take. I think also-- and maybe this is the most important thing here-- it's just been outclassed or outstripped by more current terms. So what sounds more appealing to you? A session pale or a light crisp, crushable, easy one. I think there are other things that have sprung up in the market in the meantime that do a better job of defining what someone would be looking for in this kind of mode of beer that don't have all the baggage. We're going to talk about the kind of evolving role of style names in our next episode. But easy that you said there has kind of come out of nowhere. And it showed up in our work constant. I think easy might be not the de facto replacement, but it's definitely a contender here. And I like it. So anyway, so what do we call these? Let's try to figure that out. Not that you and I have any sway or credibility here. We're obviously the arbiters of this. I think, well, here-- and again, I just will not stop. The industry needs to decide what we call these. Because there's an educational thing that we'll get to later, which is this is very new. No one knows what it is. But we got to decide kind of as a team what we call these. Go ahead. I'm going to mute myself. How about that? Yeah. Yeah. Let's run through some potential terms for this stuff. So let's start with small beer. Small beer has a lot of charm. It will take some segment building to work. It's already happening from a handful of early movers. This is our internal short hand for this segment. Let me see some obvious downsides with this one too, but we can talk about that if we get there. And again, there are a few actual brand names called Small Beer, which kind of muddies it, but that's good on them. Just like pop water, just like clean acts. Smart move on their part to get there first. Light. Let's talk about light. Light is tricky. It comes with decades of baggage, million dollar ad campaigns, especially in craft circles. We're already associating this with domestic macros, not full-flavored craft-brewed moderation. And besides, these aren't light beers. They're lighter than light, which makes positioning even more nuanced. You have to explain that this isn't just a lighter version of something else. We're running into that problem that session has now at this point. It's meant to be its own thing with its own use case. And light doesn't necessarily get it there. Yeah, I mean, light is a thing. But we can't co-op to that. I don't think that's the right move. Low ABV. So low ABV is clear, but maybe too technical. Without more context, will the average person see 3.7% alcohol by volume on a beer and know that that's a value proposition and know that that's something they should be buying? Or do they need a little bit more of a push than that? It's also way too mechanical and frankly boring. A small beer is evocative. Something that talks about more of the value proper what you get out of it. We're markets here and brand people and brand builders. And calling it low ABV just is uninspired. True, but uninspired. And yeah, right. It's also subjective and requires some knowledge on the purchasers drinkers behalf, I guess. Boring. That's boring. I don't like that. Next. What else you got? Mid-strength. Mid-strength. It does not have an intuitive meeting here in the US. We mentioned it being used in the Australian market, for example. We're not convinced that this is the term, but we do believe it's a contender. We're starting to see early adopters, like Sarah Nack leaned into it explicitly. And this kind of move can help shape consumer understanding over time, just maybe not there yet. It's like mid-strength in relation to what? Mid-strength in relation to like 9% double IPA or mid-strength in relation to what? So little muddy, but could emerge over time. All this said, unrelated to any of these terms, a clever lifestyle oriented name and clear ABV call out really might be your best bet. Define this thing yourself. Create a name that gives someone an impression of when and where and why they should buy and enjoy this product and attach that to the idea of the flavor and the alcohol volume and make that a package and sell that in a smart way. Wherever you land here, this isn't something you want to market with brewera, esoterica, three sea hops, specific e-strains, et cetera. This is something that needs to be inviting, think mass audience, make itself explanatory and give people a really clear reason for why they need to buy your small beer. I'm going to put out a survey. I'm going to amend if I can remember this exclusive newsletter issue to see what people like the most. Because that last point you made there is very important and that's for individual brewery brand building. If you are trying to name and position this product, it should be centered around a lifestyle, it should be centered around what you get from drinking it, it should be centered around value props and stuff like that. But more collectively as a segment, what do we call this thing? I still don't know that we have a clear answer. I don't think mid-strength is it, even though that's probably just going to be forced down our throats by larger breweries. But yeah, I don't know. Anyway, let's move on and talk about brand architecture and portfolio of it. So small beers might not carry the same weight they very likely will not. It's your core IPA, your lockers. But this is what makes them interesting from an architecture standpoint. These beers can live in your main portfolio as a very, very low ABB option or be positioned, as you mentioned earlier, more on their own as a specific lifestyle play. Either path can work here if you approach it with intent. A few strategic considerations here would be, can this be a flagship or should it be a sub or indoor brand? So it really just depends on your goals and what you want to build and your portfolio and your audience and your capacity, all things. But a small beer can certainly live under your parent brand as a flagship, provided your overall positioning supports that you might also consider the benefits of a targeted sub or endorse brand if you see a compelling reason for doing so. I got a plug or beverage extension assessment tool here. We'll link to that in the show notes. That is your kind of one-stop click guide. God, that's corny. for, you know, just like quickly kind of, very roughly back of the envelope way of seeing how you should name and position and brand and bring to market a new brand. So check that out to see kind of where this could live within your portfolio. And then a few other points here and I'll throw it back to you. Can you name and position this in a way that embraces a new low ABV lifestyle we've already hit on this, but just to call out some examples. Our favorite brands in this space are already doing this really well. Dad strength, small beer, which is kind of like the hot water of this segment, HOP WTR, that is solo. I think there's really an opportunity to own an occasion as well. Sunday beer, wreckly afternoon delight, brunch. I'm reading a few brand names and kind of time and places here. Consider how this beer can fit into someone's life and unlock new parts of the day for them and give you more opportunities to sell beer incrementally or otherwise. Final point, go beyond the value prop building on that last idea. Small beers aren't just about selling less alcohol or at least they shouldn't be. They offer something easy and sociable and just to really be blunt, imminently drinkable. We joked about it earlier, but you can drink a lot. I mean, we should have just backed up. I mean, the first time that you and I real, I mean, we've we've drank, you know, radlers and we've drank English beers, we like me low ABV stuff for years, but I think we were in Vermont. And the first real brand that I encountered that like dedicated did this in a way and this was there early is a mclighties. Do you remember that Cody? Oh, yeah. Yeah. I drink seven or eight, I should say that. Well, I drank a lot of those one night and then I woke up the next day and I was I was chipper. I was fine. And those are like three, five, three, two percent. I should have been fucked and I felt great. So I think there's a huge value prop there. Not that you want to, you know, say that, but there's a wonderful value prop there. You know, I think the kind of great taste less filling idea or if you if you kind of go back into beer branding history and think about how miller light kind of switched what at the time? This was the 70s, I think. What at the time? A light beer was like a lady thing and all you can't drink that because ladies drink that and they got these big burly men to drink it because no, it's like you can drink more of them because it's light, you know, like that sort of dumb. I think there's something there here that we can do in a way that is like maybe more fitting and not not not reductive and embarrassing in 2026. But revisit, you know, maybe one other way to kind of think about stacking value props and being more additive and going beyond the value prop would be I'm going to take kind of an aside here, but our work with comma. Is a great example of a brand that kind of transcends being a product and offers kind of agency in its own kind of built in occasion. If that makes sense, I don't know if anything I just fucking made sense or just said makes sense, but anything to add there, did that did any of that even land? I feel like I just rambled for nine minutes. Yeah, no, it makes sense. I think we can roll into the next section. I think we're good. Okay. All right. What is where are we? What is our next section? Segment challenges and considerations. Cody, why don't you why don't you take this? Tell me about this. Sure. So as promising as the space is and we clearly see an opportunity here, there are also a few potential hurdles to keep in mind. So I'll start with perceived value, you know, less or no alcohol can sometimes translate to some customers as it's less worth it, you know. So for example, why is this six pack the same price as your flagship IPA? So your pricing and messaging and overall brand presentation have to work really hard here. I do still think that this is an easier sell than in a beer. Both of them could have that same issue, but in a beer, hop water especially like that's the number one critique we see out in the wild of hop water is, you know, it's going to be pretty closely priced to your your mainline beers. This is still a beer. So, but yes, to your point, if anyone is doing math at the shelf, which I still don't know that people do, but yeah, this is an issue potentially perceive value. And we've already kind of touched on it. It's something that will require category building. Yeah. You know, I think small beers value proposition is clear enough, but this is still a new segment and much like cannabis beverages a few years ago. It will require time, energy, capital, just people's attention and being a topic to build the category alongside your brand. We were listening to the all about beer podcast a while back and John Hall was talking about selling longer today. And you know, this is anecdotal, but he had a panel of brewers and even a retailer, I think. And several of them mentioned that, you know, this is a hard ABV to sell anything 4% plus or in a makes sense to consumers. But the pricing is a hurdle and it's in a weird gray zone when you're in that sort of no man's land between those two extremes. You're willing to pay more for an in a beer because you're buying moderation there and you're obviously ready to spend whatever market price to drink traditional beer. But this space might make folks folks stop and wonder, you know, is it actually worth a spend? Is this the fabled bang for your buck idea that consumers will do algebra when looking at the planogram to determine the cash to ABV value? I think it may be. It might be. And again, if you're if if the listener you, I'll talk I'm talking directly into your ears now. If you're not picking it up, we, we all speak for me, but I know you are too Cody. Kind of weary of that idea. We've discussed that at length with distributors. We've discussed the link with retailers. We've discussed that at length with Bump Williams team and other folks, other consultants in the industry. I just don't know that people really do it. They might do it more at a like a case level when you're just buying for volume. But even then, I think it's just like a amount of beer, two dollars, not ABV. But I don't have any data to back that up. So I think really what this means is that anyone entering the space needs to have similar to cannabis infused beverages. Kind of a build the category mindset while also knowing that they have to build their brand because we don't we haven't really had what we're missing right now. We've mentioned dad strength. We've mentioned small beer. You kind of need someone big to cut the ice, right? Like you need sure like like Boston. It's really weird seeing people in our industry kind of torch Boston beer for throwing out stuff that doesn't work. Like that's the that's what their job is like their job is to kind of throw stuff out and see what works and you need someone big to cut the ice and kind of let people know what what this segment is. We don't really have it yet. We have a lot of smaller entrance doing it. So it's going to be tough. Yeah. You know, education being a key element here. We do think it's worth exploring now. Like it's the time to figure this out. Yeah. Agreed. And then just to kind of start wrapping us up here. How big of an opportunity is this segment actually and our answer is that it's hard to say. Not to not. Yeah. And just to actually like put a more specific marker on that, we don't see small beers on seating IPA as a de facto craft beer style. I do not necessarily see it making a noticeable dent in athletics. Incredible momentum in the in a space, for example. But this category does speak to something real. A growing number of drinkers want to pace themselves and drink casually without waking up feeling wrecked the next day. And they want to do this without sacrificing flavor or feeling like they're opting out or or doing anything different than they used to. Really? Yeah. In a way, it's not functional in the way that we all know the term functional, but it's kind of function without all the the pseudoscience baggage. It's like flavorful. It's it's not BRE. It is a beer, but you can just drink more of it. I love it. I I I wish this were I wish I could just buy this every single day for the rest of my life. I mean, this where I'd go. It's great. That's really what the opportunity is here. You're expanding the way people engage with what you're doing, your brand, your products. It's about offering a new kind of utility. Yeah. A beer that fits more lifestyles and occasions and it is just kind of caught up with where everyone else is at. So our long term bet, co-ion Isaac, is not on the death of Bevelk. Obviously, we would be dramatically repositioning ourselves and the show if that were the case. It's probably not a return to its former glory either. I think that our long term bet really is on moderation. It is a steady state future where people are drinking less, but better where flavor and intention and pacing and responsibility went out over kind of like ABV arms race. I think this is for I think this spans generations. I think this certainly makes a lot of sense for us millennials and older, but also younger consumers who may or may not be drinking. You can literally find 100% truthful data to support either case. But I think young consumers who maybe never develop the same alcohol habits certainly as as their older cohorts like your boys here who want to maybe keep enjoying beer just on their own terms. So no one's asking for a session beer, but they are looking for lower ABV options and small beers if positioned well from your brewery or as an overall segment as an overall industry, really answer that ask beautifully. Please make more small beers and send them to Cotto Design, we're at 1532. What's our address? Southeast street in inapolis, Indiana. So them to our office, please. Overnight them post taste, make sure you pack them really well. Okay, we don't want to be open up broken beer. That's rude for you to send us free beer or have it. - You shouldn't make sure it come correct when you send us free beer. - Hmm. - Let's broken, send it back. - We had a brewery, send us beer, one to this is back back in 2016-17. And they just threw it in a box, it's a client of ours, I'm not gonna call about, but I'll flame it privately over text. They just like wrapped the beer cans and t-shirts. (laughing) - When the fuck you box showed up. (laughing) - There was one full can in there, and like three very sodden t-shirts. - Just wet cloth. - And that is (beep) - I watched Isaac ring t-shirts out into his mouth. - Into my mouth, yeah. - Look, I was going through it back in 2016. I would still do that today, but not in a desperate way. So yeah, yeah, I love small beer, make small beers, that's the conclusion here. Definitely keep your eye out for case studies. We can't talk about (beep) so we're gonna have to hard-bleep them, but man, we've got a fun case study coming out with them out of Toronto. Is that it? I think so. - That's a hell of a way to end it. All right, we're gonna be back in our next episode, exclusive issue number two, episode two. And what is that one on? That is on, oh, we already talked about this. The evolving role of style names in brand positioning, another very important topic for your brewery to keep in mind. So we'll be back up, we'll catch back up with you soon. - Thanks, Banner. - Bye. (laughs) Later skaters. Thanks for listening to Beer Branding Trends. If you like what we're doing here, if you find this valuable, please rate and review us over on iTunes. And head over to beerbrandingtrends.com to join more than 5,000 subscribers who receive our monthly email newsletter covering strategy, currents, and actionable advice from Cotto Design, a branding firm on the front lines of Beer and Beverage Branding. Take care, we'll catch back up with you soon. (upbeat music) (gentle piano music)