Finding Meaning in "Premium" Lager

The term Premium has been put in front of Lager for decades now, but it’s been getting new eyeballs as craft breweries continue entering this highly contested field. With the economy trying to figure out whether it’s heading toward a soft landing or hard, diversifying into a value-driven option helps customers who have experienced a decline in spending power, not to mention all the other occasions for this familiar style. Craft breweries love extensions of beer style names, so Premium Lager is a natural fit. While often synonymous with American Lager or just plain Lager, the term helps small independent breweries address the higher price due their lack of economies of scale. But its meaning must go beyond “we’re not as efficient”, right?

Assume the Position

In marketing, the term positioning refers to how breweries or specific brands set out to be perceived by their target audience. Factors such as the beer’s ingredients, brand feel & packaging, target occasions, and pedigree can each contribute to its positioning, but when it comes to premium lagers there’s no bigger determinant than price. Price positioning typically follows one of three primary strategies:

• Value: A low price is deployed to emphasize affordability and value over the majority of the broader category and to target budget-conscious drinkers.

• Competitive: A price that is similar to or slightly lower than the prices of competing brands is used to attract price-sensitive consumers or compete in a crowded market.

• Premium: A high price for a beer will emphasize its quality and exclusivity in an effort to target higher-income consumers or surround the brand with a sense of prestige.

Terms like premium don’t face any scrutiny from regulatory agencies like the TTB. It’s up to the consumer to determine whether a beer deeming itself premium is worthy of that classification and up to marketers to convince them so. With no sheriff in town, “premium” winds up being stretched across a wide spectrum of price points and quality.

Market Research Data

When it comes to market research data (IRI, Nielsen, etc.) relied on by the beer industry to evaluate the competitive landscape, there are guardrails in place over premium. Macro lagers are broken out into four price-driven tiers: Sub-Premium, Premium, Super-Premium, and Import. The top five for each are as follows:

Scan data, as it’s referred to, is able to use average price per case to properly delineate between brands but mainly for use by analysts and leaders behind the scenes. These classifications don’t reach the consumer conscious, but it still begs the question of strategy for craft breweries. Is it advantageous to refer to your new brand as a Premium Lager, the same category as Bud, Miller, Coors technically? I believe it comes down to how a brewery backs up the claim.

Credit: Golden Age Beer Co. (Homestead, PA)

Crafting a Definition

With small, independent breweries aggressively entering this “value” lager space, at least by their normal pricing standards, varying degrees of thought are likely going into the term premium before putting it into play. While some may name it so to simply mimic their favorite throw-back brand, others want to ensure they’re able to explain what makes this beer so premium.

When planning to talk about a singular brand for years to come without craft beer’s usual reliance on rotation to keep things fresh, breweries will want to weaponize any unique attributes that make it more premium than the competition. When thinking about the selling story, social media, signage, etc. it’s important to give the brand a deep enough fundamental backstory that unique campaigns can be built off it down the road. In this type of category, cool-factor and advertising are a must if the goal is for this brand to rise to the top of the ranks in a brewery’s portfolio.

For me there’s two main options for craft breweries to meaningfully back-up their premium claim:

• Ingredients - In addition to sheer scale, substituting malt for corn or rice is one of the key reasons that Bud, Miller, Coors, Pabst, etc. are able go so low on price. Craft breweries have the opportunity to distinguish their higher priced lagers by emphasizing an all-malt recipe, or even take it a step further with more high-end, specialty malts that are local to their region.

• Tank Time - While lagers separate themselves from ales with their lengthier fermentation time, shortcuts can still be taken to minimize the time in tank. Treating a commitment to proper tank time as a quality statement highlighting the resulting improvements such as improved dryness, increased clarity, enhanced flavor, and improved shelf-life are all on the table.

These aren’t the only qualifiers that can be used in the positioning of a Premium Lager, but to me they are the most tangible. Earlier in the year, I wrote about ways to elevate the category which included other brand attributes such as leaning into 1) local heritage + exclusivity, 2) independence (ownership), and later wish I’d included 3) the brewery’s pedigree (ie Since 1851).

Finding Meaning

After all this, the question still remains of whether premium actually means anything. One could argue that if brands like Milwaukee’s Best, Stella Artois, and countless small independent breweries all use it, that it’s pretty much meaningless. But with the term being so iconic, one could also argue that craft breweries have a chance to raise the bar by surrounding premium with meaning. Taking the time to define premium before slapping it onto one’s lager could wind up being the difference between success and failure. This exercise will ensure that the brand has deep roots from the beginning for future education and marketing campaigns to grow off.

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Note: This post wasn’t trying to cover every aspect of the American Lager / Premium Lager space of course, but I hope to keep diving into sub-topics like this one. If you work for a brewery who went through the exercise of defining “Premium” and are willing to share, I’d love to include in a future follow-up post. As always thanks for reading and sharing my posts. The more subscribers I get, the more motivation I have to keep writing 🍻 🍻