How Bauhaus is Making Margins in NA Beer Segment Profitable

​The rise of non-alcoholic beer is continuing and with the technology available so close to home Bauhaus Brew Labs leaped at the opportunity to innovate and explore new markets.

The Minneapolis brewery recently announced the release of its second NA beer, an Amber Lager, in the “Nah” series. Plans for a third product is slated as a seasonal in 2021.

ABV Technology ​— also located in the Twin Cities​ —​ initially approached Bauhaus in September of 2018 about doing a test run of NA beer​, explained co-founder and Head Brewer, Matt Schwandt.

​”​We decided that our Homeguys Helles was a really good base beer to use for NA testing because of its relatively mild profile​,” he said. ​”​It turned out really amazing on the first go around, and we haven’t really changed the base recipe at all since that first run of “Nah” Helles.​”

​Bauhaus hasn’t actually written a recipe for the sole purpose of creating an NA beer end-product.

​”​Instead, we evaluate which of our base beers might translate well to an NA beer, and we have ABV run a small test volume through their machine for sensory evaluation​,” Schwandt said. ​”What we’ve observed in the past year is that mid-to-low ABV beers that are more on the malty side tend to result in a better NA beer than higher ABV or hoppy beers.​”

​Nah Amber ​was run as a test batch and only sold it in the taproom​ initially​.

​”​It did really well, and we knew we wanted to brew a production size batch at some point​,” Schwandt said​. ​”​It made sense to release Nah Amber alongside our ​Bock (the latter of which is included in our current seasonal mix pack called Freezebox), as the ​Bock is the base beer for Nah Amber.​”​

As far as determining whether NA was a category worth pursuing, there were two factors involved:

  • ​ABV ​being located in the Twin Cities made it possible for ​Bauhaus to not have to make a huge capital expenditure in dealcoholizing equipment
  • ​”Our brand is one based on a spirit of innovation and celebration​,” Schwandt said. “There are some really exciting innovations happening in NA in craft beer right now, and we wanted to be among the first movers in this space (in our region) as a craft brewery.​”​

The margins on NA are really tight for Bauhaus because Schwandt explained that they have to brew a full-strength base beer (Helles and Bock at the moment) and then pay for ABV for the dealcoholization processing on top of the ordinary production costs.

So Bauhaus had to determine how to sell the NA product and be profitable. That meant finding a good volume of sales in the taproom, where margins are much more favorable than distribution. And it has opened a new direct-to-customer product via the brewery’s new online ordering system.

“The fact that Nah is an NA product means we’re not constrained by alcohol regulation, so we can sell via traditional retail channels as well as through the three-tier system,” Schwandt said.

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