One of the coolest and most surprising (even refreshing!) extensions of the theory last year was to alcohol. First Anheuser-Busch created a division, called Long Tail Libations, to market niche liqueur products. Then all sorts of beer experts (and the WSJ) started writing fascinating articles about how the model applied to microbrews, regional beers and "craft beer".
Earlier this month I got in touch with Anheuser-Busch to hear from the Clydesdale's mouth why the shift from hits to niches was coming to suds, too. I mean, I get how the Internet lowers the costs of distribution in many markets to allow for more choice (the "infinite shelf space" effect), but how does that apply to real 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 have its own distribution network (the others go through third-party distributors, who are hard to sell on micromarkets) and is thus able to experiment with far more products aimed at niche consumers. It can take local microbrews and distribute them nationally or find regional markets for drinks targeted at certain demographics.
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)
Visually, the growth of its portfolio looks like this:
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 artisinal, beyond even the local. It has now discovered the non-allergenic beer market.
If you want to read more about Anheuser-Busch's dive into Long Tail marketing, check out this story about their Bud.TV viral video project in this weekend's New York Times magazine.