From Everything Everywhere all at Once to K-Pop to Joy Ride, Asian and Asian-American pop culture has been rising within the broader American cultural landscape for years, establishing a new wave of mainstream awareness – and influence – for AAPI creators and communities. In the CPG industry, that wave has also begun to make an impact on grocery shelves, as first generation AAPI founders have introduced new brands and products that celebrate their heritage and expand well outside of the international aisle.
As AAPI Gen Z and millennial-owned startup brands like Sanzo, Nguyen Coffee Supply, Omsom, Fly By Jing and many others have brought fresh perspectives to food and non-alcoholic beverage categories, there’s also been a quiet revolution brewing in the alcoholic sector as well.
A number of Asian-American founders are now looking to both reconnect with their cultures and to shake up the canned cocktail category by creating their own takes on traditional alcoholic drinks from the continent, or by introducing hard seltzers featuring Asian flavor profiles like yuzu, lychee and pomelo. Many of these brands are finding success by first tapping into the Asian-American community – launching into specialty grocers and regions with large AAPI populations – before driving momentum into more mainstream channels.
The Hard Seltzer Dilemma
Bringing traditional beverages from Asia has proven to be an effective way to target first or second generation Asian-American consumers who have trouble finding similar products in the U.S., but providing a bridge for non-Asian American consumers unfamiliar with Asian alcoholic beverages is a much larger challenge. For some Asian-American founders, they not only have to build a brand, they need to build a category.
Steven Tang’s situation illustrates the dilemma. He got into the business behind a hard seltzer, Drunk Fruit, but found that while he had gained momentum for his brand in a growing category, it wasn’t offering the opportunity that a unique product could provide. Hence, he went back to Asia for yogurt drinks. Launched last September, YoJu, a yogurt-based RTD cocktail, plays on Asian-Americans familiarity with yogurt drinks. Although American consumers have become more familiar with some of them – thanks to the emergence of kefir – a yogurt-based alcoholic beverage is still relatively unheard of in the U.S.
YoJu is already showing promise with interest from buyers in Whole Foods, and its sales project a larger opportunity than the company’s hard seltzer predecessor. Its branding has leaned into a younger, Asian-American demographic with Asian-inspired illustrations and social posts leaning into a Gen-Z and millennial customer base.
For now, Drunk Fruit is still the larger of the two brands, but hard seltzer can be limiting and through a long term viewpoint the white space might be a unique RTD cocktail that brings something totally new to the table, Tang said.
“The comparison that I draw is with tequila. It’s a Mexican drink, but it’s grown to be something that is drunk by literally everyone,” he said. “But that process took time, that process took a lot of education and a lot of championing within the immigrant community first before it got such widespread appeal.”
Similar to tequila’s presence in the spirits aisle 20 years ago, Tang hopes that traditional alcoholic drinks might resonate with consumers who are beginning to actively search for more Asian-inspired drinks.
Bucking The Trend With The Unfamiliar
Two years ago, hard seltzer was a bridge into RTDs for non-beer drinkers. Yet, the category has hit a “plateau” in new consumer adoption, said Joe Sepka, co-founder of alcohol industry data analytics company 3 Tier Beverages.
“I could have the best product in the world that might even hit a niche for whatever reason, but what do I say to a retailer? What am I going to do to convince this retailer that they need another hard seltzer on the shelf?”
Over-saturation is one problem for the hard seltzer category but, more importantly, the continued growth and success of industry leaders like White Claw makes competing in the category at times seem untenable. As a whole, the hard seltzer category is down -13.5% in sales in the 52-week period ending June 17, according to NielsenIQ data. Yet, White Claw is up over 2% year-over-year seeing particular growth in its Surf and Surge innovation lines. For startups, even brands with unique flavors and positioning that White Claw doesn’t provide, that’s a tall hurdle to clear.
But, as Sanzo has shown in the non-alc sparkling water set with flavors like Lychee and Calamansi, putting something unique on store shelves can help engage the AAPI community while offering a different version of a familiar favorite to mainstream consumers.
Carol Pak started her Queens, New York-based beverage company Sool (the general Korean term for alcoholic drinks) in order to reach Asian-Americans who wanted a drink that reminded them of their cultural heritage but wasn’t quite so hard on the palate. She launched Màkku in 2017 as a contemporary approach to Korea’s traditional fermented rice beer, makgeolli (often anglicized to makkoli), which tends to be creamier and less alcoholic tasting than a distilled cocktail. The drinks are available in four flavors: Original, Blueberry, Mango, and Passion Fruit, and this year the brand released a limited-time Coffee flavor.
“If you look at the history of hard cider, it’s very similar to makkoli,” Pak said. “It’s for the farmers, the working class. Just a very simple, humble drink that everyone drinks.”
Sool launched a second brand in 2022, a sparkling soju-based RTD called Soku that mixes distilled rice spirit (soju) into a 6% ABV spritz. Soku derived out of a need to diversify the company’s portfolio when the pandemic challenged supply chains; Màkku is produced in South Korea whereas Soku is produced in Ventura, California.
The company began distributing throughout the country in January 2020, finding initial success with distributors who serviced Asian specialty markets and/or stores that had a strong business importing and moving Asian products. Sool’s products are now in about 1,400 retail doors across 22 states, but the brand’s best velocities are in regions with higher Asian-American communities like California, New York and the Washington D.C. area.
At this point, Màkku is the “hero product” for the company, resonating with drinkers who don’t particularly like the taste of alcohol and prefer a creamier, sweeter RTD similar to unfiltered, Nigori sake, Pak said.
Regardless, Pak is moving slowly, trying to allow her brands to gain traction among Asian-American and non-Asian American consumers alike.
“Soku is moving on its own, but we’re lying low when it comes to marketing spend, just because we don’t want to compete dollar-for-dollar with all of the other large brands that are launching their own RTDs,” she said.
“You almost have to take this more specific route to marketing these products,” said Caleb Bryant, associate director of Food & Drink Reports at Mintel. “Marketing to specific consumer types, leveraging unique flavors, and, in the case of a lot of these beverages, just having that different voice in the market, considering the more established brands are now kind of dominating the conversation.”
Beam Suntory wants to join that conversation. The distilling giant recently brought one of its more successful Japanese RTD brands, -196, to the U.S. to capitalize on the growing interest in Asian-positioned canned cocktails and hard seltzers.
Despite the oversaturation of hard seltzers, there are “positive indicators” that a new generation of younger Asian-American founders can tap into consumer demand, Bryant said, by updating lesser-known, traditional drinks and something unique.
Creating Pull Marketing In Asian Hard Seltzer
The opportunity in RTD alcohol is the prepared cocktail category because it is “still in growth mode,” Sepka said. “Honestly, if you were to ask me what I would launch right now or bring into the United States, it probably would not be a hard seltzer.”
Despite hard seltzer’s category decline, some Asian hard seltzer brands are bucking the trend and showing fast growth, especially in regions with large Asian-American populations.
In the last 52-weeks, New York City-based brand Lunar was up 710% in sales growth, albeit with volumes well below industry leaders. Los Angeles-based brand Nectar has more sales volume and posted a robust 325% growth.
Nectar has developed a unique marketing strategy using social media platforms like TikTok to drive consumer demand through pop-up sales, video blogging, hosting parties and a YouTube podcast called Under the Influence to engage with its community. The brand communicates directly with its customers sometimes through personal text messages building interest and recently launched a metaverse marketplace called The Nectarverse.
“There’s nothing magical about what we’re doing except we just talk to our customers. And we do exactly what they asked,” said Jeremy Kim, Nectar CEO and co-founder.
When the brand is ready to launch in a new market or geographic area, they keep a tight inventory with only a small number of retail partners. By directing its community to go to pop-up sales events at local grocery stores, Nectar brings huge crowds to quickly move product, providing a proving ground for consumer demand. Kim then uses these high sales velocity metrics to lock in long-term retail partnerships.
Most emerging alcohol brands rely on push marketing, putting new products in front of as many customers as possible. Nectar has “essentially jumped over push marketing to create pull marketing,” said Carlton Fowler, founder of Goat Rodeo Capital, which has invested in the brand.
“Their superpower is, in any given region, they know they can make a sizable amount of people buy Nectar,” Fowler said. “Most people would take that superpower and try to cram Nectar in as many places as possible. And then they water down the velocity.”
The discipline is allowing velocities to run at such high rates that they can compare to category leaders like White Claw or Truly.
It isn’t just good marketing and distribution strategy that is driving the brand’s growth though, Kim said. It is the broader interest and understanding of Asian culture that allows the brand to connect with a younger generation.
“Where CPG brands miss is they focus so much on product but the world that you bring people into is just as important,” he said.
The brand’s social presence and podcast have evolved to bring followers into the experiences of being a young Asian-American who is “a little rough around the edges,” Kim said. Between Kim and his three co-hosts, the group has interviewed pornstars, reminisced over embarrassing together and individually but most importantly attempted to show that all Asian-Americans don’t fit into a “buttoned-up, model minority” archetype that American culture has branded it to be.
And it’s working.
The strategy started with just being “as loud as possible just because we wanted to be heard,” he added. “And now, we realize that what we’re saying has a lot of impact on people and we want to figure out how we can deliver that message.”