A Peek at a ZX Pilot: Saturday Session Wine
Jorge Paulo Lemann, the billionaire co-founder of 3G Capital, famously copped last year to being a “terrified dinosaur” in the face of so much disruption in consumer goods.
Of course, 3G has shareholders in common with ABI. But before one dismisses $55 billion ABI as another giant, bumbling reptile shadowing the seeds of change, take a look at what they’re doing with ZX.
Brito said on their earnings call last week that ZX, the company’s “disruptor,” contributed 10% to the brewer’s global revenue growth. That’s pretty impressive for a company as large as ABI, considering the nimble way ZX operates.
We recently got a peek behind the curtain as to how the division actually plants its seeds. Somewhat by happenstance: We’d referred to a “Saturday Night Wine” some A-B distributors had been coveting. Louis Aronne reached out shortly thereafter, offering to shed some light on his Saturday Session brand.
Louis identifies himself as Saturday Session’s founder. But actually, this brand is lab grown. It’s ZX’s answer to a theoretical consumer question. That’s what they do.
ZX’s accelerator program gave birth to Saturday Session in 2017 in the natural course of its practice: Basically, reverse-engineering brands. As Louis describes it, “we take all sorts of consumer problems from teams around the world. … Some of them evolve into businesses, others are kinda shelved.”
Saturday Session was the answer to the problem of wine not fitting into enough outdoorsy, day-drinking sort of occasions (you know, the times where beer is perfect).
Not that there aren’t any canned wines in the market. That’s a roughly $45 million category, growing at 43%.
And A-B already has such a brand under its wing: Babe, which has a few canned, sparkling wine offerings, all with bubbles. But that one clocks in at 160 calories and 12% ABV per 8.4 oz serving. It’s more of a day rager: The website boasts that three cans equal about a bottle of wine, so “you’re definitely going to make some questionable decisions.”
Meanwhile, the problem that the Saturday Session brand answers are those “social, day occasions (where beer reigns).” Here, “it was just pretty obvious that wine was high in alcohol, sweetness, sugar and calories — kinda like a mismatch of drinking something outta a can,” which should be “about sessionability and refreshment,” says Louis.
“We’re able to solve that problem, with great tasting, sessionable wines.”
Indeed, Saturday Session hits right at light beer stats: it’s 90 calories per can, at a reasonable 5.5% ABV, and 4g sugar per 8.4 oz. can. So far they have a Sauvignon Blanc and a rose.
They’re growing it slowly. We’ve heard some A-B wholesalers in the Northeast clamor for it already. And Louis confirms that they’ve been talking with other A-B wholesalers. But so far, they’ve really only gone deep in DC with Capital Eagle, and their affiliate, Katcef Brothers, in Annapolis. They launched the brand last June in independent wine shops. By now they’re selling in the on-premise, liquor stores, and grocery (including Whole Foods and Harris Teeter), with a suggested retail price of $11.99 in the off trade. They’re interested in the c-store channel for future markets, but DC c-store chains don’t sell alcohol.
Louis promises some “other exciting things in the works that’ll come to fruition over coming weeks.”
He confirmed they are “in active conversations about an expansion in 2019.”
“We’re trying to go deep, and be focused in certain markets; learn as much as we can, and see how much we can grow in single markets before expanding much further.”
In light of recent comments A-B chief Michel Doukeris has made about going bigger or killing innovations inside of 6 months [see BBD 11-06-2018], we wouldn’t be surprised to see this brand get more ubiquitous, quickly.
BUT… A WINE BRAND? FROM A-B? Considering its inception, asking Louis why this wine brand belongs with A-B and its distributors is kinda like asking a new mother why she’s taking her baby home from the hospital.
Still, we asked: Why be with a beer company rather than a wine and spirits company?
“A-B in particular is amazing at marketing to and providing the right experience for those beer occasions,” says Louis. And they’re adept at “selling into the right channels where people are buying for those occasions, both on the retailer and wholesale side.
“For us, that’s super critical. Because we show up as a wine in those beer occasions. And we’re accessing wine drinkers, where they haven’t been able to get a great product like ours previously.”
And naturally, A-B distribs are adept at selling things in cans, even beyond beer. Most of last year’s almost 30 million seltzer cases were likely distributed by beer wholesalers. Indeed, Louis says they expect their segment to “develop similar to the seltzers,'” especially given their low sugar.
And of course, A-B has seemingly limitless resources. In fact, the wine brand’s first runs started at an experimental A-B facility in Belgium. (They source all their wine out of France.)
Now they’re moving to a co-packer, “so that we have more flexibility to grow. … because A-B is obviously not a wine company,” Louis says.
“While we’re moving to an external facility, we’re lucky that we still work with AB’s production and quality teams to ensure that we are meeting A-B’s high standards for product and process,” he told BBD.
AMAZON OPENING “DOZENS” MORE GROCERY OUTLETS — NOT WHOLE FOODS
While big grocers are focusing their efforts on building out e-commerce and delivery, Amazon is focused on strengthening its physical presence.
The retailer plans to open “dozens” of new grocery stores in several major US cities, sources familiar with the matter told the WSJ. No word on what the new business will be called or if it will carry the Amazon name, but they definitely won’t have Whole Foods in the name.
The new concept will reportedly cater to a different consumer with a variety of products at a lower price point.
The stores will also be a smaller format than typical grocery stores, at about 35,000 square feet. It’s unclear whether or not the stores will be cashier less like Amazon Go, but they will be “heavily tilted to customer service and pickup capabilities,” according to WSJ.
Amazon is planning to open the first of these new stores by the end of the year in Los Angeles, and they’ve also signed leases for at least two other locations in different cities, with plans to open in early 2020.
Though WSJ notes that just because Amazon has signed a lease, doesn’t guarantee they’ll be opening a store as “retailers sign contracts and then pull out or delay store openings if certain conditions aren’t met.”
Other cities they’re currently targeting for these new stores include San Francisco, Seattle, Chicago, D.C. and Philadelphia.
Moreover, the retailer is also looking into acquiring regional grocery chains, which could be used to strengthen the new business, according to one of the sources.
Harry, Jenn, and Jordan
“The time to relax is — when you don’t have time for it.”
- Sidney J. Harris
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