Dear Client:
After seven straight years of incredible growth — each year growing faster than the other, and capping off with a down-right ridiculous 74% growth rate in 2019 — Mike’s feels it’s about time they receive a share of mind from distributors/retailers that reflects their growth trajectory.
Mike’s execs repeatedly emphasized at their distrib meeting last week how their whole portfolio is growing, not just White Claw, yet they’re still losing space/displays on some of these growing brands.
“IT’S TIME” TO PUSH OTHER PORTFOLIO BRANDS, TOO. Along those same lines, Mike’s thanked their distribs for their attention and focus on White Claw, but not so subtly asked them to show a similar level of detail to the rest of the portfolio.
They didn’t necessarily demand that distributors run through a wall for some of these brands, but did say “it’s time” for some of these brands that fall in the shadows to get the respect they deserve.
One big one was Cayman Jack. As Mike’s chief marketer Sanjiv Gajiwala put it, Cayman Jack is like that kid at Thanksgiving that for whatever reason has had trouble graduating from the minor diner up to the adult table. It’s a funny analogy, but fitting. The Cayman Jack brand is the 9th largest FMB brand in food, and Cayman Jack Margarita is the 10th largest FMB SKU in food, yet its CWD (category weighted distribution) is only 34%.
Indeed, Mike’s brass seemed legitimately confused as to why distributors aren’t running with it.
The brand launched in 2012/2013 and “all it’s done is try to get people’s time and attention,” Mike’s president Phil Rosse said. It holds an 18% 5-year CAGR, and its “best growth year ever” was this year, up 42% YTD.
“This has to live in everyone’s houses and everyone’s plans,” said Phil. “I’m not going to show you all the brands, especially all the innovation from the big brewers that isn’t nearly the size of this brand to try and get your time and attention on it,” but he did say that it is now their expectation that Cayman Jack should exist everywhere next year.
Indeed, they’re asking distributors to drive the brand nationally next year, and throwing in some innovation to boot with this distribution push, a new Moscow Mule flavor, and 19.2-oz. cans (one for the original Margarita flavor and one for the new Moscow Mule variant).
The other brand that they feel deserves a little more love? MXD, their high ABV (12%) single-serve, which is “only up 166% this year,” Phil said in a sarcastic manner. Yet again the brand is only sitting at 23% CWD.
They struck a pretty significant partnership for MXD with WWE next year, “because what is more flavorful than Monday Night Raw?,” Sanjiv joked. And they expect the brand to grow triple digits yet again in 2020.
If Mike’s continues to prop up the beer category and their distributor partners like they did this year, I suspect we’ll see these two brands in a whole lot more places next year.
LEANING OUT OF YESTERDAY. Another observation on Mike’s asking more of their distributors. At times the show was reminiscent of Constellation distributor meetings, in which they plead with distributors to get out of their old ways, take a good look at what some of the big brewers have done for them lately and evaluate their future plans based off that.
To paraphrase a chart from Phil: How can four brands – Bud Light, Coors Light, Miller Lite, and Budweiser – have significantly more displays and floor space than they deserve in 2019, and the numbers haven’t changed since 2015?
“It’s the definition of insanity,” Phil said.
“I know it’s hard to change the shelf, we have to do that collectively, we know it’s a challenge. But the displays on the floor – they simply have not earned the space they continue to get,” he said.
“We’re not going to continue to drive this industry back to growth without us fundamentally changing the floor space these four brands get as they continue to perform the way they have.”
Also, they don’t appear too worried about the big dogs coming after them. They’re used to it, Phil said, they’ve been chasing after Mark Anthony owner Anthony von Mandl everyday for forty-plus years now.
They stressed throughout the meeting that slapping a line extension on a powerful name like Bud Light is not a strategy that has proven fruitful for A-B, and can’t see how Bud Light Seltzer will be any different.
As far as pricing, and some competitors trying to torpedo the seltzer category with low priced entrants, they don’t imagine that has much legs either.
“Every generation is premiumizing,” millennials and Gen Z, in particular, have shown they want to spend their disposable income on premium experiences, said Sanjiv. He added that sub-premium value beer has been declining for a while now, “so why do we think that a declining segment price strategy is going to work in a category that’s dealing with the next generation of consumers, who have demonstrated they want to spend more of their income on premium experiences?”
One final takeaway, which isn’t so much about Mike’s flexing, but something fascinating for a brewer of their size: We know that sometimes these distributor meetings for the big dogs can be a never-ending reel of coming creative. But Mike’s showed one spot the entire show (we’ll divulge more information on that spot when we get the green light), but a single spot, that’s it.
SPENDING MORE THAN TOP BREWERS ON HARD SELTZER MEDIA.That’s not an indication of them being frugal though. Mike’s actually spent more media dollars on White Claw ($12.8 million) than Bon & Viv who had a Super Bowl spot, as well as Henry’s Hard Sparkling and Smirnoff Spiked Sparkling.
But clearly TV spots don’t make or break their brands or distributor meeting. They’re tackling marketing in a different way.
For instance, 2020 marks Mike’s 21st anniversary, and to celebrate that occasion, Mike’s plans to launch a yearlong campaign for the Mike’s Hard Lemonade brand, dubbed “Party Like It’s 1999.” It’s a complete throwback to the year Mike’s was born with old spots, old music, old movies, tv shows, and more.
PLUS: YELLOW ALBUM??!?! The cherry on top is the “Yellow Album,” an actual album in which Mike’s has hooked up with some of the hottest singers of today do covers of popular songs from 1999. Stay tuned on that….
FULL LABOR DAY READ: BEER DOLLARS UP 7.6%, THANKS TO $1 BILLION SELTZER CATEGORY
A couple of weeks ago, we delivered you a very preliminary read on Labor Day via IRI, one which didn’t actually have Labor Day Monday (or that week of) in the read.
Nonetheless, it was good news: We proclaimed that “Beer is Back!” for that early and incomplete read, even though, OK, really it was mostly FMB’s 55% growth and not pure “beer” that drove beer dollar trends to up 7.1% for the week ended 9/1 . FMBs had gained almost 4 share points vs. the prior year in that week alone. (Premiums meanwhile lost 3.2 share points, sub premium lost 0.6 share points, and craft lost 0.6 share points.)
And then just this past weekend, the folks at IRI updated us on the full two-week holiday read, ended Sept. 8 (so, the weeks that sandwich the holiday). It looks even better than the shorter period (to 9/1) we’d previously reported.
Beer dollars were up 7.6%, while volumes were up 4%. Again, a lot of that momentum was attributable to FMBs/hard seltzers.
Over that two-week period, “hard seltzers captured nearly 6 share of beer, up +4.1 share,” per chief client insights Patrick Livingston. He shared that the hard seltzer category has sold $1 billion over the 52 weeks ending 9/8.
That’s helped beer’s summer trends. Consider:
-“Every single week from Fourth of July through Labor Day showed positive beer dollar trends above 5%,” per Patrick; that’s only happened for 12 of the prior 100 weeks.
-More impressively is that beer is driving more sales with less merch, as “merchandising activity was down for most beer segments” in this holiday period.
AS FOR OTHER BEV ALC CATEGORIES: Wine was up barely in dollars (2%) for the holiday period, but slightly down in volume.
But it likely won’t surprise the attentive reader that spirits were up 7.6% in dollars and 5.1% in volume, driven by whiskey and premixed cocktails — the latter of which play in the same pool as many of these seltzer drinks.
EDITOR’S NOTE: Hope to run into many of our readers at the NBWA 82nd Annual Convention in Las Vegas this week. We’ve got a big crew from Beer Business Daily and Craft Business Daily here this year: Jenn, Jordan, Stephen, Millicent, and myself. This will be my 22nd straight year at this convention, and I remember the days of covering it for several of those early years by myself. I’m very fortunate to have some help from some very talented journalists, particularly as I get older.
I encourage you to download the NBWA Events App on your phone. It’s got some cool features.
Until tomorrow,
Harry, Jenn, and Jordan
“Things are more like they are now than they have ever been.”
– Gerald R. Ford
———- Sell Day Calendar ———-
Today’s Sell Day: 16
Sell days this month: 21
Sell days this month last year: 20
This month ends on a: Mon.
This month last year ended on a: Fri.
YTD sell days Over/Under: 0
