The Long Tail Of Beer

One of the coolest and most surprising (even refreshing!) extensions of the theory last year was to alcohol. Anheuser-Busch, America’s leading distiller, created a division called Long Tail Libations to market niche liqueur products, from ‘craft beer’ to regional brands.

I got in touch with Anheuser-Busch to find out why the shift from hits to niches was coming to drinks, too. I understand how the Internet lowers the costs of distribution in many markets to allow for more choice (infinite ‘shelf space’), but how does that apply to bottles on real shelves?
Pat McGauley, vice president of Long Tail Libations, explained: Anheuser-Busch's embrace of niche beers is not driven by a radical change in the economics of distribution, but rather reflects a broader trend toward niches across our culture.

Anheuser-Busch happens to be unique among brewers in that it's large enough to control its own distribution network (the others go through third-party distributors, who are hard to sell on the virtues of micromarkets) and is thus able to experiment with far more products aimed at niche consumers.

Over the last ten years, the company has hugely expanded the number of beers, coolers and other alcoholic drinks it offers, from 26 brands in 1997 to 80 brands in 2007. Today it makes organic beers, drinks for women, and a host of microbrews such as Bare Knuckle Stout and ZiegenBock (available only in Texas).

But the thing that really blew me away was its latest beer. In its quest to find ever more finely-grained brew niches, it has now moved beyond the organic, beyond the artisanal, beyond even the local. It has now discovered the non-allergenic beer market. In late 2006 it announced a gluten-free beer called Redbridge, which is made from sorghum, not wheat or barley.

In retrospect it makes perfect sense—there’s a market for gluten-free food of all sorts, so why not beer, too? Indeed, the market for non-allergenic products of all sorts is a classic Long Tail opportunity, something I discovered when I learned that the market for niche vacuum cleaners extends beyond robots (Roomba) and high-end Dysons to machines with special filters to cut down on pollen and animal dander.