After a two-year absence due to the pandemic, Beer Business Daily’s Beer Industry Summit returned to San Diego for discussions with leaders from across the industry.
Here’s a recap from the two-day business conference.
A-B CEO Previews Bud Light Next
Anheuser-Busch InBev North American zone CEO Brendan Whitworth shared updates from across the company’s portfolio, distribution network and e-commerce platforms.
On Bud Light Next: The company’s new zero-carb, 4% ABV, 80-calorie offering will be priced higher than Bud Light, Whitworth shared. Consumer testing of the beer, which had been in development for more than a decade, revealed that drinkers preferred it as a Bud Light product, rather than something under the Michelob Ultra brand. A-B does not expect Next to cannibalize sales of Michelob Ultra because it will attract different drinkers, he added.
On attracting wine and spirits consumers: The majority (70%) of consumers of A-B’s spirits-based, ready-to-drink offerings such as Cutwater Spirits are coming from wine and spirits, which “screams incrementality for us,” Whitworth said. He added that the world’s largest beer manufacturer has become “agnostic” about the products it develops.
On using AB ONE as a testing ground for new products: AB ONE, the company’s wholly owned distributors, accounts for about 7% of A-B’s volume, and has become a proving ground for new products. “If we’re gonna see if something works or doesn’t work, we’d rather break it inside AB ONE before bringing it to our wholesalers,” Whitworth said.
On e-commerce: A-B is testing Drink Runner, a three-tier compliant e-commerce platform in Texas that the company views as an extension of its relationship with brick-and-mortar retailers. Globally, A-B employs 1,200 developers who work on BEES, its business-to-business e-commerce platform.
On A-B’s craft brands: There are no plans to divest from any of the nearly 20 craft brands within A-B’s Brewers Collective division, Whitworth said. He pointed to the vast majority of those brands’ founders choosing to stay. (The only exception is Elysian Brewing co-founder Dick Cantwell, who resigned shortly after A-B’s acquisition of the Seattle-based craft brewery.) “Every other founder is still in place,” Whitworth said. “Every other founder is continuing to drive their business.”
Digital Marketing Opportunities on Facebook, Instagram
Pablo Merheb, Meta industry lead for global marketing solutions, discussed Facebook’s parent company’s digital marketing options for beverage-alcohol companies.
- A majority (54%) of American consumers discover new alcohol brands online, Merheb said.
- Meta has more than 200 million businesses using its platforms – which include Facebook, Instagram, Messenger and What’s App – and more than 10 million advertising on them.
- Each month, 231 million Americans use Meta apps; 178 million of them are daily users. “You can reach Super Bowl-size audiences every single day on Facebook and Instagram,” he said.
- Merheb pointed to a Bud Light ad driving consumers to e-commerce marketplace Drizly to order its beer that generated a 23% lift in purchase conversions, and a 54% lift in ad recall for a variety of other A-B offerings, including Budweiser, Bud Light, Stella Artois and Michelob Ultra.
- Ads and paid content with video have greater potential to stop users while they scroll through feeds and capture attention, Merheb said.
- Meta has not taken on any cannabis advertisers yet, but Merheb sees “growth potential” for the industry.
With Diageo’s Backing, Lone River Ranch Water Reaches Nationwide Status
Nearly a year after Diageo’s acquisition of Far West Spirits LLC, the maker of Lone River Ranch Water, Diageo Beer Company president Nuno Teles and Lone River founder and CEO Katie Beal Brown discussed the brand’s growth under the spirits giant’s guidance.
“It’s been an entrepreneurial dream to be fulfilling the vision for Lone River but with a world-class partner by our side,” Beal Brown said.
On Lone River’s growth: Diageo has launched Lone River in all 50 states. As expected, the brand has performed well in its home market of Texas and adjacent states, but has also achieved a rate of sale among the top five hard seltzers farther afield. In particular, Beal Brown called out Montana, Oregon, Maryland and Michigan as states where Lone River has outperformed expectations.
About 30% of the volume Lone River Ranch Water has brought to the hard seltzer segment has been incremental, so the brand is “increasing the size of the pie, rather than just taking a slice,” Teles said.
Malt-based vs. spirits-based ranch waters: Malt- and sugar-based ranch waters have been growing “much faster” than spirits-based versions, Beal Brown said. Spirits-based ranch waters are “still a very small percentage” of overall ranch water.
Being sugar-based, Lone River has the same market access as beer, which is one of its “clear advantages” in several “critical battleground states,” Beal Brown said.
Developing a spirits-based version “would be a natural premiumization play” for Lone River, Beal Brown said. She added that a strong enough brand can trade up consumers regardless of its alcohol base.
“I do think, in creating a badge brand, you can premiumize on both sides, not just by introducing the spirits-based product,” she said.
Ranch water innovation: Further trading on its West Texas roots, Lone River is working on a margarita-style offering with a higher ABV than its 4% core line
“It’s one of the top selling cocktails in America,” Beal Brown said. “It also happens to have been invented in Far West Texas in El Paso, so there’s a story there for us to tell.”
On being a strong brand: Lone River’s brand and connection to Texas remains its “biggest competitive advantage,” Beal Brown said. She pointed to the popularity of western-inspired shows such as Yellowstone as evidence that “this lifestyle is more relevant than it’s ever been.”
“I think people have underestimated how powerful that would be with consumers across the country,” she said.
Molson Coors’ Topo Chico Hard Seltzer Makes Headway
Topo Chico Hard Seltzer finished 2021 as the fifth-largest hard seltzer brand, Molson Coors chief marketing officer Michelle St. Jacques said.
The brand, which is the product of a joint venture between Molson Coors and Coca-Cola, rolled out nationwide in early January. Since then, it has accelerated to become the fourth-largest hard seltzer, St. Jacques said.
In 2022, Molson Coors will introduce a margarita-style Topo Chico variety pack nationwide, and a ranch water version in select regions. Non-alcoholic Topo Chico’s association with ranch water cocktails gives the hard seltzer brand an “authentic right to play,” St. Jacques said.
On Simply Spiked: Last week, Molson Coors announced Simply Spiked, a hard juice version of the popular Simply line, its second partnership with Coca-Cola. Reception for the next product has been “off the hook,” St. Jacques said.
Gopuff Set to Launch Bev-Alc Sales in New York City
Gopuff senior director of beverages Randy Ornstein discussed the on-demand convenience retailer’s business model, which offers delivery of drinks, snacks and personal care and pet items in 30 minutes or fewer.
- Gopuff will begin sales of alcohol in New York City this week, where it will be able to deliver beer 24/7, except for 3-8 a.m. on Sundays.
- After launching its bev-alc business in 2016, Gopuff is “on track to become one of the largest sellers of alcohol online, one of the largest alcohol sellers in the universe, one of the largest alcohol license holders out there,” Ornstein said.
- The company, which operates 600 micro fulfillment centers in 1,000 cities, typically applies for 15 new liquor licenses each month.
- Of the 42 states Gopuff serves, it sells alcohol in 28, and the company’s government affairs team is “working tirelessly” to obtain more licenses.
- Because it doesn’t offer an in-person shopping experience for consumers, Gopuff is not beholden to the reset periods or display planning that other retailers face. “We have virtual shelves, and hence, we have no planograms and we don’t do resets. We literally could launch new items every single day. We could delete items every single day. And that’s why we love it, because we want to move so fast,” Ornstein said.
Constellation Brands CEO Discusses Fresca Mixed, Mexican Imports
Constellation Brands CEO Bill Newlands offered updates on the company’s Mexican import beer portfolio, upcoming licensing deal with Coca-Cola on Fresca Mixed and the future of Corona Hard Seltzer.
On out-of-stocks: Constellation Brands has found itself in a “much better position” with regard to the out-of-stock issues that plagued it in 2021, Newlands said. The ice storms that crippled Texas’ infrastructure in February 2021 delivered a blow that Constellation “really never caught up from,” he said.
On Fresca Mixed: Constellation and Coca-Cola were in talks for nearly 10 months before the announcement of spirits-based RTD Fresca Mixed in early January. Fresca Mixed will flow primarily through Constellation’s beer wholesaler network, except in the few states where it must be sold through spirits wholesalers. Newlands did not specify which spirits Fresca Mixed would include, but noted that he was a fan of mixing the soft drink with tequila.
On California terminations: On the heels of reports of Constellation terminating relationships with Anheuser-Busch InBev wholesalers in California, Newlands said the company is “very focused on aligning with groups that are going to invest behind our business and are going to be long-term partners for us.”
On the Mexican import portfolio: The brand families in Constellation’s Mexican import portfolio – Corona, Modelo and Pacifico – play distinct roles in meeting consumer demand. The Corona family targets a general market with aspirational, beach-driven creative, while drinkers of the Modelo family skew more Hispanic at about 55%.
Modelo, the second-best-selling beer brand family in the country according to market research firm IRI, has reached only 60% of the number of points of distribution that Bud Light has. The brand has “grown double-digits for most of the last 30 years,” and Newlands predicted it still has plenty of runway ahead of it.
“We’re just getting warmed up in many respects, and we really haven’t done any serious innovation,” he said.
Pacifico drinkers are younger; far more of them belong to Generation Z than either Corona or Modelo. The brand is the seventh-largest beer in California, Newlands said.
On Corona Hard Seltzer: Constellation remains “pretty committed” to Corona Hard Seltzer, though Newlands admitted the company was “a little bit too ‘me too’ in the beginning.” The company has reformulated Corona Hard Seltzer, updated its packaging and will be introducing a margarita-style offering “in short order.”
“We still believe that this is an important sector of the beer market, and we still want to make sure that we get our fair share of that,” Newlands said.