By Brie Abramowicz, Foodable Contributor
An Unlikely Partnership
Those who have been to Minneapolis before probably know of Fulton Brewery. For residents, even if you have lived in Minneapolis for all but a few months, you would be hard-pressed to dine out in the city without coming across a Fulton brew (or two) on the tap menu. The craft brewery seems to have a relationship with nearly every pub, fast-casual establishment, and restaurant in town. It is abundantly clear that Minneapolites love them some Fulton beer.
So, when General Mills publicly announced in August that it would be partnering with Fulton Brewery to launch a limited edition hefeweizen, aptly named HefeWheaties, it was not all that surprising.
Part water, part malted wheat and barley, part internationally sourced hops, and part yeast strain, the famed HefeWheaties brew was made available for public consumption at scheduled tasting events in the Fulton Brewery taproom beginning August 26th. There was also the option for consumption at home; interested guests just needed to swing by the Twin Cities Market to pick up a few 16 oz. tallboys for the fridge.
Nearly a month following the product launch, Fulton’s founders remain close-lipped about any future plans with Mills. Will Fulton launch other limited edition brews like HefeWheaties? While the answer to that question is not entirely clear, the Fulton founders have admitted that they are closely monitoring the program, the outcome of which will surely inform the decision to launch similar partnerships in the future. In other words, it’s too soon to say “yes” or “no.” They haven’t completely walked away from the idea, though.
If you are a brewmaster or brewery CEO, the news of this JV over the past month should have piqued your interest. Although both companies hail from Minneapolis, they are an unlikely pair. Fulton’s indecision about future partnerships should have captured your attention as well. After giving this deal pause for consideration, it is clear that this venture is about much more than a brewery and packaged goods company partnering for a one-time launch. This was a pilot of sorts.
Which begs the question: Is a foray into the beer business a logical next step for CPGs on the hunt for new high growth markets? Can these types of partnerships fuel greater innovation in the taproom? Finally, what does it mean for your business?
We believe the answer to the first two questions is yes. Here’s why:
“Big Food” Is Getting a Big Wake-Up Call
According to a recent Fortune magazine report, the “major packaged-food companies lost $4 billion in market share alone last year.” “Big” has become synonymous with “bad,” the article goes on to say. This decline in sales is primarily driven by mass market retailers’ reaction to shifting consumer tastes and preferences. They’re busy beefing up private label portfolios and adjusting sales mix, making room for a greater number of small, locally relevant brands. All the while, pressure mounts for “Big Food.”
Sure, that reality is a hard pill to swallow, but packaged goods companies like General Mills aren’t in denial about the change looming on the horizon. On the contrary, the best-known “Big Food” brands are attempting to “expedite their evolution” by buying up smaller food and beverage businesses that resonate well with millennials. Take Campbell’s purchase of Bolthouse Farms or General Mills’ acquisition of Annie’s. For more extreme white-space opportunities, one could argue – “HefeWheaties,” a partnership is in order.
The Appeal to This Form of Public, Private Partnership
The key to this type of relationship succeeding, as Fortune’s article underlines, is that “foodpreneurs” remain empowered following the acquisition. In order to elevate the imperative for quick and continuous innovation and stave millennials’ distrust of big brands, “Big Food” must operate independently of “Lil Food.” Campbell’s is probably the most progressive packaged goods company where this is concerned. In anticipation of these headwinds, Campbell’s current CEO Denise Morrison made the decision to keep the Pepperidge Farms and Bolthouse businesses wholly separate from the soup company.
It’s a win-win situation. Big Food recaptures market share without having to invest in its own innovation pipeline, and Lil Food/Beverage receives an injection of cash to fuel growth, all the while operating independent of the funding company’s culture.
Which brings us back to beer. If the Campbell’s, Coke’s, and General Mills’ of the world are willing to place such big bets on small but growing food and beverage companies, why wouldn’t they humor the idea of entering the beer market? Beer is, after all, just another consumer product. Packaged goods companies can stick to what they do best — marketing, packaging, and manufacturing product — while allowing breweries to do what they do best — delivering a locally relevant service experience.
In closing, don’t expect “Big Food” to go away anytime soon, especially if your brewery business is doing well. Who knows, you could possibly be approached for a joint venture akin to “HefeWheaties.”