Dear Client:

Remember in the old days when a big brewer (or any big CPG company) would survey the land from on high in their oak-panelled offices in St. Louis/Milwaukee/Golden — or more likely in sleek glass conference rooms on Madison Avenue — and come up with a new product idea based on market research, then run focus groups to prove the brilliance of the concept, then maybe test it in Austin or Charlotte, then spend $50+ million upfront using mass media to build brand awareness and “360 degree” integrated sales and marketing programs to get chain authorizations while flooding accounts nationwide with product? And then pray for repeat buys, and blame distributors when that didn’t happen, because the extensive consumer research conducted by the MBAs at OgilvyOmnicomPublicis VaynerFishheadDeutschBag & Sons said it should’ve happened? Remember that?

Sometimes it works: Mich Ultra, Bud Light Lime, Smirnoff Ice — and even one-offs like Redd’s Apple Ale and Icehouse (still fairly large brands). More often it doesn’t (Miller Chill, Tequiza, Aspen Edge, Doc Otis, and scores more). 

SIDEBAR:  The most egregious abuse in my opinion of this system was the creation in the late-1990s of Miller Red, the brainchild of Miller Brewing Co. chief Jack McDonough, who believed that while MBCo. had Miller Lite and Miller High Life, it lacked a true flagship brand at the top (with a red label), like A-B had with Budweiser.  It was focus-grouped to death and distributors were assured it would be a tremendous hit because it filled a gaping hole in Miller’s portfolio. Apparently nobody thought of why the average consumer would give a shit whether MBCo. had a flagship brand or even what the hell a flagship is. It failed naturally and Jack was fired soon thereafter (and several conspiracy-minded distributors to this day maintain that — since Jack came from A-B — that he was planted at MBCo. as a secret spy, although there is zero evidence of that. Still, it’s fun to conjecture).  

The point is it was largely a crap shoot ….  and a way for agencies to justify their fees. But that didn’t stop brewers from forcing us to sit through hours of endless PowerPoint decks depicting matrices of consumers segmented into specific quadrants with ridiculous names: Barflies, Health Gurus, Homebodies, Wild Childs, Sports Bros, Surfer Dudes, Dapper Dans, Screen Nerds, and then of course, added on as an afterthought, Girls and Hispanics (but never Hispanic girls). I’m only slightly exaggerating, sadly.

THOSE DAYS OVER. There’s a new marketing trend among CPG brands in general, and specifically among new beverage introductions, as mass media has fragmented and consumers themselves are more diverse — apparently there are Hispanic women who also surf and love sports and code for a living.

However, what has never changed, and is in fact even more pronounced now, is how consumers continue to congregate around their special interests, no matter how broad or how arcane. But importantly today people can pursue their interests more intensely. Enabled by social media and the breaking down of prohibitive social morays, I would submit people can and do pursue their favored subcultures in a deeper and more meaningful way. Especially younger people.

ASS BACKWARDS. Instead of creating a new brand and searching for the audience, the “New Way” is to find an already cohesive and rabid audience, and then build a brand in an authentic way around those followers, usually partnering with a leader of that subculture (Fat Tire was an early adopter of this method). A recent case in point is the success of rapper Travis Scott’s CACTI by A-B, and the future release of The Rock’s ZOA by Molson Coors. Another is Topo-Chico Seltzer, which already enjoys a rabid fan base for their NA seltzer, and is flying off shelves. A built-in fan base is the key. Start with the consumer and work backwards.  Read on…

A TALE OF TWO NEW SELTZERS

Two years ago we had the top marketing guy, Joe Staffel, from Black Rifle Coffee speak at our Beer Summit.  Black Rifle is a company started by  retired green beret Evan Hafer, which spends the vast majority of its marketing budget on creating original video content on social media (FB, Youtube, IG, Twitter, Podcasts, TikTok, website, Twitch, etc.) which collectively get millions of super-targeted views that you couldn’t even buy on a cable network. They employ cinematographers, writers, lighting people, and acting talent (mostly vets) for their vids, which have pretty dang elaborate production values. I’ve visited their offices and their sets: They are a full-fledged production studio. 

Here’s why they go through the trouble and expense:  Their fans choose to click and watch their content — even look forward to it — and the product shots of the coffee and merch are an afterthought if shown at all. 

Their customers are mostly veterans and active military who share their conservative gun-toting values and silly-yet-dark humor, and it has grown into a multimillion dollar coffee subscription service, along with retail stores and canned RTDs sold through distributors in military towns. Their RTD sales are up triple digits. As Joe put it at our Summit:  “We are a media company that happens to sell coffee, not the other way around.” 

In fact, one of BRCC’s media spinoffs, a popular podcast series called Drinkin’ Bros, announced recently that they are creating — what else? — a new hard seltzer for their fans. Formulated and brewed by Tactical Brewing in Orlando (also veteran owned), the 7% ABV seltzer will hit the market later this summer.  Stay tuned on that …

LOVERBOY QUIETLY TAKING NORTHEAST BY STORM

Another example of having a built-in fan base ready and eager to buy products — and it’s a completely different kind of audience than BRCC’s — is Kyle Cooke from the popular reality show on Bravo, Summer House.  

SIDEBAR:  Recall that FIFCO USA partnered with Cynthia Bailey from the Real Housewives of Atlanta, also a Bravo show, to create Seagram’s Escapes Peach Bellini.  And listen, belli-me me when I say I want a belli-ni (old dad joke, still funny).

It turns out that while Kyle is def a weekend partier on the show, he also has an MBA and was keen on not wasting the built-in audience. At the time the show started he had a nutrition coaching app he was peddling, but “there’s nothing sexy about that, at least that translates well to TV,” he tells BBD. “I was like, man, this isn’t the kind of consumer awareness vehicle I thought it could be, but maybe it’s just because I’m doing the wrong startup. And at that time, I mean, we had Whispering Angel Rose sending us unlimited product, we had Boston Beer sending us unlimited product. We were in a position of influence. And as the third season rolled around, this was summer of 2018, White Claw and Truly had been out for two years and we were drinking a lot of them. I’m just like, man, I know from my nutrition background that the average adult consumes 20% of their calories from alcohol. I’m like, on a given weekend on our show, it’s maybe 50%.” (Note: that sounds really high to us.)

KYLE ON CHOOSING THE HARD TEA MARKET.  Kyle thought there was room for a more flavorful hard seltzer that he could drink with his friends on the show. “[The current seltzers] leave something to be desired from a taste and flavor standpoint, and quite frankly, the branding was about as boring as can be,” says Kyle. “I thought, how do I kick it up a notch? How do I build a premium brand?….. So I just was like, why not a hard tea? I’m from New Hampshire. The second Twisted Tea came out, I was drinking it. Lo and behold, the brand was just quietly growing at 20%, year over year for 20 years, up until last year was 40%. And I was like, there’s no competition. And then since I had built a relationship with Boston Beer, I realized that they internally discuss it as a blue collar drink. And I’m like, well, outside of alcohol, tea is the number one consumed beverage. It’s often associated with its health benefits, and there’s certainly a lot of non blue collar people drinking tea. So I just saw this as a huge opportunity to be like, hey, let’s build a premium hard seltzer, but make it a sparkling hard tea.”

And that’s how Loverboy was born. The show itself has the highest ratings in the Northeast and that’s where they have seen the most sales (they are in about 10 states). Kyle has chosen to go it alone, without a bev-alc partner. He’s learned the industry from the ground up, and decided early to go mostly with beer distributors rather than wine & spirits distributors, even though the latter have such larger territories.  (Recall Loverboy already has some distribution exit issues in Massachusetts, one of their largest markets.   See BBD 03-19-2021)

“It was tempting to go the wine and spirits distribution route. I’m so glad I didn’t because when we started seeing some traction with just a couple of our initial distributors, it was like, ‘Oh boy, I think we’re on a rocket ship.’ And we want the best distributors in the best markets until we can actually go nationwide.”

Rocket ship indeed. Looking at trends prior to this year’s COVID comps, we see that Loverboy (albeit on a small base) was up about 6,000% in dollars and over 5,000% in volume for the 26 weeks ending February 20, 2021, per Nielsen all outlet scans. Drizly has also highlighted the brand as the number two hard tea player on its platform, behind Boston Beer’s Twisted Tea.

ON THE COLORFUL LABEL.  “I’m an extrovert,” says Kyle. No shit.
“I don’t like to blend in. If I was going to make this an extension of my personality, it needed to be colorful and playful and flirty and all the above. But then when I lifted up the hood to the industry, I’m like, ‘This is an industry that 80% of executives are men, and 70% of off-premise purchases are made by women.'”

HOW TO SELL TO ACCOUNTS WHO HAVE NEVER SEEN THE SHOW?  “Harry, funny you ask,” says Kyle. “This just actually came up this morning on my sales update internally. So we just got authorized in 7-Eleven in New York. But as you know, it’s a franchise chain, so the distributor does a little selling into the accounts that don’t just immediately click buy. We got one guy who gave a little pushback and the sales rep made a bet. He was like, ‘Listen, text your wife or your daughter if they’ve heard of Summer House or if they’ve heard of Loverboy. And if they have, then you have to take it in. And of course, the daughter was ecstatic and she’s like, oh my God, we have to take Loverboy. So he was just like, okay, I’m sold.” 

LAST WORD.  “I’m literally building this from the ground up,” says Kyle. “And I think one of the reasons why we have such a loyal fan base is I’m not just white labeling a wine. I’m not just slapping my name on something. I’m slugging it out, blood, sweat, and tears.”

And connecting with a built-in audience.  Which is what this article was all about, and should be taught in an MBA class at Warton. Start with the consumer and work backwards. 

BOTTOM LINE.  Celebrity endorsements aren’t new. And I don’t mean to dog ad agencies, as we need them to curate creative people upon which brand marketers can draw upon.  But increasingly, the cohesive audience, however niche, comes first. Then the product can enter, authentically. 

(Disclaimer:  Black Rifle Coffee is also based in San Antonio, and by coincidence they rent some rural property outside of town from my family to film some of their outdoor content, although they won’t allow me back on set because I supposedly “make too much noise”.  So sorry I have allergies and chronic irritable bowel syndrome, and um, yes I’m sometimes compelled to offer loud unsolicited advice to the director and actors during the shoots, most of whom are seasoned Marines, Green Berets, Army Rangers, Navy Seals, Aviators, etc.  Some folks just can’t take constructive criticism from a pudgy pale yet aging beer writer I suppose, even though I have over 250 views on my last YouTube video. Don’t mean to flex. 

They actually have no idea I work in the beer and beverage business, and yet they sell an RTD can coffee through beer distributors. I bet they’d let me pass gas and give advice on the set if they knew I’m in the biz).  

 Now, we wait for supply. Yes, the actual product. 

BEER CAN’T KEEP UP WITH DEMAND.  Sadly, most of the major brewers and importers continue to have trouble even providing basic supply. Is it a surprise that Topo Chico Hard Seltzer is seeing out-of-stocks in Texas already?  Or that Cacti struggled to keep up with demand upon launch? And is it a surprise that Constellation cannot keep up with demand? (Corona 12 packs OOS with one distributor — many others complaining.) 

I don’t mean to pick on these particular companies, because many more are also experiencing shortages. From what I have come to understand, from various sources: They can make the beer in tanks, but packaging it is the literal bottleneck. Or can-neck. Too many SKUs, not enough canning lines.  Or cans, or cardboard, or pallets or etc. etc.  

For the past two years, the beer industry has performed better than it had in over ten years, (relative to wine and spirits), due mainly to hard seltzers, Mexican imports —  mostly Constellation — and some craft.  People want these products, but the industry largely has shorted the market – starving demand a bit. Sometimes that works. I’m not totally against starving the people of popular brands; it worked for Corona in the 80s.  

But today that shit doesn’t fly as much.  Young people, me included, don’t care about production issues.  They want the product when they want it where they want it. And if it’s not there, then they’ll move on.

Point is, scarcity of physical distribution today isn’t as cool as it used to be. It means the consumer just picks up an adjacent product, or leaves the store disappointed.  

A PLEA TO THE BREWERS.  As somebody who has covered this industry for over 20 years and loves it deep into my bones, please, brewers, make and package the beer/seltzers people want, 24/7. Because these out-of-stocks, if they continue much longer, will drive consumers to alternatives if they haven’t already.  It may be too late. Because you didn’t invest in can packaging line capacity, logistics, and cyber security, there are empty shelves on the fastest growing segment of the beer industry we’ve seen since the invention of Miller Lite.  And so many suppliers are blowing it. 

Let me put it this way, in cruel terms:  If Miller Lite were introduced this year and it took off and the Milwaukee brewery couldn’t keep up with demand, Philip Morris would’ve moved heaven and earth to brew and package the beer, and they did.  

BOTTOM LINE: Brew it. Package it. Sell it. 

If it’s rocket science, then hire rocket scientists — you ain’t broke. 

All the top brewers:  AB, MolsonCoors, Constellation, Mikes, Boston — if you put it in a can, they will buy it.  And if you send it to a distributor, they will pay you. Money.  So you can do it again.  That’s how business works. But you have to brew and package the product first. And ship it. 

Let me put it this way: If I were running a brewery that was behind on production, I’d put a mattress on the production floor like Elon Musk and refuse to leave until it was packaged and shipped. This shortage of canned beer is a damn shame and frankly inexcusable.  

Until tomorrow,

Harry, Jenn, and Jordan

“If you live to be one hundred, you’ve got it made. Very few people die past that age.” – George Burns

———- Sell Day Calendar ———-

Today’s Sell Day: 10

Sell days this month: 22

Sell days this month last year: 22

This month ends on a: Fri.

This month last year ended on a: Thurs.

YTD sell days Over/Under: -1