A Brew Apart

A look at a start-up brewery that is banking on an affinity-group marketing plan.

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When it works, affinity-group marketing promises unique distribution channels, dependable customers, and -- the makers of Black Sheep Light Lager are betting -- a base to expand from

Fans of Saturday Night Live a few seasons back might recall a mock commercial about a gay beer. It was a table-turning send-up of the typical cheesecake beer spot, with comedians Chris Farley and Adam Sandler cavorting around a pool with a bunch of muscular dudes in skimpy bathing suits. A joke, right? Seriously, why would anyone want to brew a gay beer?

No joke; someone does, although it's not the beer that's gay but rather its target market. David Verzello and Mark Goodwin of the David & Mark Brewing Co. have good reasons to pitch their new light microbrew, Black Sheep Light Lager, to gay drinkers in Atlanta. Market research reveals that gay men and lesbians drink about 30% more beer than average and that they're nearly twice as likely to choose a light beer. Furthermore, they do much of their drinking in easily identifiable bars, patronized primarily by other gays and lesbians. Which means that to neophyte brewers Verzello and Goodwin, Atlanta's gay-and-lesbian-bar population is the kind of easily reached, thirsty market that their start-up venture needs.

It also doesn't hurt that the founders are themselves a gay couple living in Atlanta, which makes theirs the local brew and gives Black Sheep Light Lager an extra dimension of appeal to their first-round target customers.

But the founders' ambition goes beyond Atlanta and the gay market. They think they can grow Black Sheep into a national brand as mainstream as Anchor Steam or Sam Adams. The issue, of course, is whether success with Atlanta's -- and other cities' -- gay beer drinkers will impart enough momentum to carry the brew into mainstream venues, or just build a market-limiting image of Black Sheep as the "gay" beer.

In this joint venture, each founder plays a distinct role. Verzello, lanky, energetic, and 31, is the president and chief marketer. He is not, as he admits, much of a numbers person, so he's happy to leave the financial responsibilities to his business and life partner. Goodwin, 33, is the treasurer and has a type B personality that balances Verzello's type A. "I'm the risk taker," Verzello says. "Mark is the realist. I'm the balloon, and he's the guy holding the string."

When Verzello and Goodwin met, in 1992, neither had beer-business experience. Goodwin had brewed the stuff at home for five years, and Verzello, fascinated with the brewing process, had taken some college courses to learn more. Verzello learned that sales of "specialty beers" -- those from microbreweries and brew pubs -- had been growing at a compound annual rate of 47% since 1985, while overall beer sales had gone flat at about $50 billion a year. Goodwin and Verzello smelled opportunity here, but with more specialty beers appearing in 1994 than in the previous 12 years combined, they weren't the only would-be brewers to catch its scent. Besides having a great-tasting beer, Verzello and Goodwin decided, they needed another competitive edge. That's where the gay part came in.

The gay market is currently in vogue. Big-name companies such as AT&T and American Express court the gay dollar through ads, run in national gay publications, that depict same-sex couples. Beer and liquor companies -- for instance, Seagram, which markets Absolut Vodka, and Coors Brewing Co. -- stop short of crafting overtly gay ads but spend considerable cash advertising in gay publications and hosting on-site marketing events. In fact, it's hard to find a national gay glossy without an Absolut ad on its back cover.

Verzello had heard industry insiders say that they prized and targeted the gay market. To get his own sense of its size, he surveyed Atlanta's gay bars and learned that they sell about 30,000 cases of beer a month. "The big brands make up 80% of the volume in a bar," he explains. "So you're talking about dividing up the other 20%. We figured that potentially we could capture a quarter of that" -- which comes to 5%, or 1,500 cases a month in Atlanta, worth about $21,000 in monthly sales. To estimate the total sales of beer at gay bars nationwide, the partners assigned each major urban area a multiple based on the number of gay bars and the city's population compared with Atlanta. Thus, New York City, with about three times as many bars and more than triple Atlanta's population density, got a multiple of three. Using that admittedly rough method, Verzello and Goodwin estimated the size of the national gay market to be about $240 million. Their 5% would be $12 million. And when they added the beer that gays and lesbians purchase at restaurants and retail stores, the total U.S. market looked to be about $1 billion, of which 5% is a very big number. While the partners weren't out to make Black Sheep the gay beer, the gay market sure looked to them like a good place to start.

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