Dear Client:
Tilray brass shared some news about big, new-to-world innovation on the Beernet Radio podcast, after the company reported Q2 results last week.
Notably, they’re launching a hard tea extension of their recent A-B acquisition, Shock Top, in the next month or so. New Shock Top “Lit” is a non-carbonated hard tea at 9% ABV, which Tilray believes represents white space is the crowded category.
U.S. beer chief Ty Gilmore says the product is launching “within the next 30 to 45 days.”
“It may even show up in a glass bottle or 8 oz. can.”
NEW WATER, NEW FMB BRAND. That’s not the only new play they’ll bring to market soon. They’re bringing a water to market, “Liquid Love,” steeped in cause marketing (“Love for the planet, love for life, love for what we do,” says Ty).
They’re also bringing a brand new FMB play, “Pub Ice,” in 6-pack glass bottles, in Original, Screwdriver and Fruit Punch.
“We’re going to compete in the FMB space,” he says. “We think this has national appeal overnight, which is going to be exciting.”
TARGETING GEN Z AND FEMALES WITH NOVEL PACKAGING. Tilray is trying to figure out how to recruit more Gen Z and female drinkers into the bev alc space. They’ve done a lot of work with Boston Consulting Group on just that subject.
Diversified packaging is one way they expect to get there.
Says Tilray chief Irwin Simon: “We’re looking to bring bottles back. We’re looking to do different sizes in cans. So there’s a lot we’re looking to do from a packaging size standpoint. And if we do mini cans, which we’re looking at … how does that become a bigger pack for us in Costcos and club stores. Do we do 36 packs? Perhaps consisting of Blue Point Montauk SweetWater.
Indeed, they are also working on multi-brewer variety packs, which Irwin likens to a beer version of the Frito Lay “snack pack” carrying Lay’s, Doritos, Fritos, etc. He thinks the pack will be a “big hit,” though perhaps a logistical “nightmare” to execute, with their multi-regional brewery footprint (he says they’ve found a way; we hope it isn’t a margin drag).
Ty also thinks that “vessel types are so important, as we think about recruiting new consumers.”
For example, he believes an 8 oz. can or glass bottle would resonate with some female drinkers. “So we’re going to do that,” he said.
In fact, they just launched Montauk glass bottles, and are launching Blue Point in glass bottles also.
INTRODUCING PUB ICE. And: “We’re launching a new brand, Pub Ice, in 6-pack glass bottles. We’re going to go compete in the FMB space. We think this has national appeal overnight, which is going to be exciting.”
WHAT DROVE THAT 10% ORGANIC GROWTH. But outside of all those innovation pivots, another point of interest is what drove that 10% legacy brand growth they claimed in the quarter.
“[SweetWater] Gummies had a huge play in the growth in Q2, and the brand’s not even five months old,” Ty said (noting that the brewer is up “a couple of points” organically). They’re seeing repeats on Gummies, and are up to almost 30,000 points of distribution, while also seeing green shoots with lower ABV “Half-a-Gummie” on-premise. They’ve also gotten their “SKU optimization right” on Alpine and Green Flash. And with Montauk doing “well” in the Northeast, that’s how you get to that 10% organic growth.
Speaking of Montauk; it just expanded to Georgia and Florida, and Ty even teased Chicago as a possible future market for that brand.
But it’s Shock Top that seems the no. 1 priority for national expansion.
SHOCK TOP THE NATIONAL PRIORITY. Indeed, Shock Top seems to be a primary focus of the group.
When we asked how quickly Montauk would go national, Irwin answered that they’ve been working with Boston Consulting Group on what brands should be regional, and “what should we invest our money on nationally.”
“We believe Shock Top is a national brand, and spending against that is important for us,” said Irwin, in terms of getting it into further distribution, as well as advertising.
“That, foremost, is something we should be going national with,” he said. While it’s in all 50 states, its effective distribution isn’t great everywhere. It has previously been roughly five or six times the size it is today.
Tilray hasn’t divulged the exact marketing investment number for Shock Top and their other beverage brands, but Irwin says it will break their record.
“We have not shared total dollars yet, but it’s bigger than anything we’ve ever spent within Tilray today,” he said, noting that dollars will go toward advertising of course, as well as partnerships at stadiums (they’re going into year two with the Montauk Mets and CitiField sponsorship, for example) and universities (they’re about to announce a Shock Top deal with the Florida Gators), as they try to recruit younger legal drinking age consumers.
WHAT ABOUT RESCHEDULING CANNABIS? WHAT IF DESCHEDULING HAPPENS? Finally: We wondered what marijuana rescheduling might mean for how quickly, if they even wanted to,Tilray might try to parlay their beverage brands into the marijuana space.
(It was a timely question, considering that over the weekend, it was revealed that the HHS actually recommended that marijuana be rescheduled to schedule 3, basically suitable for medical use.)
“If tomorrow, if Ty could produce and we could sell a product that was infused with THC,” which could be sold in the U.S. … “I couldn’t project the sales volume that could be done out there,” said Irwin.
He pointed to their Canadian THC-infused drinks, which sell for $6, $7 a can. “They’re only sold in cannabis stores,” said Irwin. “And it’s grown into a nice business for us, in a country with a population of about 40 million people, and at least half the population is underage, so they can’t use it.”
In the U.S., he seemed to think that medical or medical-like cannabis beverages might be the more obvious play, pending rescheduling.
“So just think if we ever could introduce drinks into the marketplace,” like “health drinks,” or those that “could help with sleep,” or relaxation.
Or, “help give you a good lift or a buzz, what that could do and how big the volume could be there. So again, from a rescheduling standpoint, that would be big for Tilray beverages.”
As for which brands they’d use?
“I would look at different brands,” said Irwin. “I’m not sure I wouldn’t take some of our Canadian brands and bring ’em here and stuff like that.
But what about hemp-derived Delta-9 plays?
Irwain said he’s “absolutely” following that market, especially with Tilray brand Manitoba Harvest being one of the largest hemp-infused foods brand out there.
But with their size and position, Irwin reiterated:
“We just will never sell a cannabis product in the U.S. today because they’re not federally legal,” he said. “And we will not sell CBD products into markets today where it’s not legal from the FDA or whatever. So we are very strict on that.”
AB DEAL IN INDIANAPOLIS: ZINK BUYING GREENFIELD, TAKING ZINK TO NORTH OF 4.5M CEs
The A-B distributor deals are starting to roll in the New Year.
BBD learned Friday that Zink Distributing, a Red house in Indianapolis, has cut a deal to acquire fellow A-B wholesaler in the state, Greenfield Beverage.
Recall, this deal follows an A-B distribution deal in California earlier this month, wherein Matagrano purchased Bottomley Distributing [see BBD 01-02-2024].
OMAC advised the buyers in both deals, and both are expected to close in February, pending supplier approvals.
This latest deal is worth around 300,000 cases, BBD understands, bringing Zink to north of 4.5 million cases, post-closing.
BEER BRIEF:
ABI’S CORONA CERO TO BE GLOBAL BEER SPONSOR OF THE OLYMPICS. On Friday, BBD brought you some of the stateside details surrounding ABI’s coming plans for the Olympics, but there’s a bit of global news worth noting on this front too: ABI’s plan to lead this global score with its zero-alcohol Corona brand, Corona Cero. Yep, as the International Olympic Committee announced plans for ABI to become a Worldwide Olympic Partner through 2028 on Friday, the same announcement also shared that Corona Cero will be the global beer sponsor of the Olympic Games. ABI chief Michel Doukeris shared in the announcement that “Beer is the beverage of moderation and choice, and so it’s only fitting to lead with our fast-growing zero-alcohol beer, Corona Cero, for this occasion.” While ABI CMO Marcel Marcondes added, “Corona is one of our fastest-growing global brands, reaching consumers across 180 countries, and through this partnership, we expect Corona Cero to accelerate no-alcohol beer growth and moderation for fans all over the world.”
Until tomorrow,
Harry, Jenn, Jordan, and Bianca
“This time, like all times, is a very good one, if we but know what to do with it.” – Ralph Waldo Emerson
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