Five years ago, Wachusett Brewing co-founder Ned LaFortune examined his Westminster, Mass.-based brewery business and realized that in order to keep growing, he needed to get creative.
Amid increasing local competition and with 98 percent of his sales concentrated in New England, LaFortune knew that long-term growth couldn’t just hinge on the Wachusett brand.
In 2012, the company installed a high-speed canning line and began offering contract brewing services to craft brands in search of space and packaging capabilities. In doing so, Wachusett spent about $5 million in five years improving its brewing infrastructure and installed a fully automated 50-barrel brewhouse.
“For many brewers, there is an opportunity to continually expand market areas, offer more diverse beers and there are great opportunities for growth,” he told Brewbound. “But for us, we need to stay focused on being a strong, regional brewery and the Wachusett brand is not going to move beyond our current footprint.”
So how do you continue growing when you’ve already built guardrails that restrict how big your distribution footprint can get? You diversify.
In March, Wachusett – via its newly established Craft Cocktail Company DBA — will introduce a line of hard seltzer products under the “Nauti Seltzer” brand identity.
Positioning it as a “healthy alternative in the hard soda category,” the 110 calorie, five percent ABV Nauti (pronounced naughty) offerings – which will come in raspberry, lemon-lime, grapefruit and cranberry flavors — will have a national focus from the onset and are aimed at health-conscious consumers looking for an alternative to traditional beer.
“Our greatest asset is our ability to make alcoholic beverages,” LaFortune said. “We did consider entering the hard soda market, but I wasn’t excited about making something that had over 300 calories and had one pound of sugar per gallon of liquid.”
Flavored malt beverage products like Pabst’s Not Your Father’s Root Beer, Boston Beer’s Coney Island Hard Soda and offerings from MillerCoors, Anheuser-Busch and North American Breweries, among others, surged in the later half of last year. After launching nationwide in June, Not Your Father’s Root Beer generated more than $104 million in off-premise retail sales in 2015, according to market research firm IRI Worldwide.
Those products seem to buck broader downward trends for their non-alcoholic counterparts – volume sales of carbonated soft drinks declined 2.9 percent over the 12-week period ending January 23, according to research firm Nielsen.
While it’s unclear how long hard soda will continue to grow, LaFortune is betting that consumers will eventually gravitate toward more sessionable seltzers. And he’s got some pretty good data to support the idea: sales of lower calorie, non-alcoholic sparkling seltzers and mineral waters are up and consumers are spending more for them. Over the 52-week period ending November 29, 2015, unit sales grew more than 9 percent and dollar sales grew 15 percent, according to IRI.
“Maybe seltzer doesn’t have the same opportunity as a true soda,” he said. “That doesn’t matter to me. This is where we want to go. We want to hit where seltzers are strong and where people are looking for something different or something healthier.”
And he’s not the only one. Connecticut-based Boathouse Beverage LLC, which produces the gluten-free SpikedSeltzer brand made with alcohol from cold-brewed sugar and fructose, launched in 2013 and has been on the upswing ever since.
For its part, Wachusett has created a product with a neutral malt base that is lower in calories but not gluten-free. It takes just seven days to brew, ferment and package Nauti Seltzer and Wachusett purchased eight fermentation vessels specifically for its production, LaFortune said. The brewery is already set up to produce upwards of 4 million cases annually, he added.
The company has also inked an agreement with St. Killian Importing, a Sheehan Family Companies subsidiary, which will act as a brand agent and help Wachusett sell the new product via their nationwide network of regional sales reps. St. Killian will also help open the doors to about 185 wholesalers throughout the country, LaFortune said.
Six-packs of cans will launch in Massachusetts next month and have a suggested retail price of $9.99. Broader east coast distribution will begin in April, LaFortune added.