The CANarchy Craft Brewery Collective is making an aggressive bet on its portfolio of hard seltzers in 2021, with a goal of producing 150,000 barrels this year, chief commercial officer Chris Russell told Brewbound.
Hard seltzers grew from 7% of CANarchy’s mix in 2019 to 17% in 2020, according to Russell. He believes those offerings could account for a quarter of the company’s mix this year and as much as a third of its business within the next three to five years.
CANarchy’s breweries — Oskar Blues, Cigar City, Three Weavers, Deep Ellum, Perrin, Squatters and Wasatch — combined to ship 490,000 barrels of product in 2020, a 2% increase over 2019. The company’s depletions outpaced sales to wholesalers, increasing 5%, which the company said showed “velocity at retail was strong.”
CANarchy, citing off-premise scan data from market research firm IRI (multi-outlet and convenience), reported that its beer portfolio increased sales 18%, and performed even better with its hard seltzer brands factored in, increasing sales 33%.
The growth of CANarchy’s hard seltzer business helped offset the loss of its on-premise business, which was about 40% of the company’s revenue when the pandemic shut down much of the country in mid-March. In fact, the company said each of its craft breweries ended 2020 in the black compared to 2019, including Cigar City (+27%), Oskar Blues and Wild Basin (+53%), and Three Weavers (+67%).
Last year, CANarchy shipped 87,000 barrels of hard seltzer, slightly lower than its 100,000 barrel goal due to a limited supply of sleek cans and capacity constraints.
“It was pretty crazy the ramp up from May in terms of the orders coming from wholesalers,” Russell said. “We were kind of blown away every month by how much they were getting. At the time, we could do about 12,000 barrels a month in output.”
The orders from June through September were as much as 25,000 barrels in a given month, he added.
In order to meet that demand, CANarchy has increased hard seltzer capacity at Oskar Blues’ Longmont, Colorado-based facility to more than 200,000 barrels annually. That facility currently can produce hard seltzer at a rate of about 15,000 barrels a month, with the expectation of being able to ramp up to 18,000 barrels a month by April, Russell said.
The company has also added fermentation tanks at its breweries in Salt Lake City, Los Angeles and Grand Rapids, Michigan. And it has added mix pack capabilities in Austin, Texas; Brevard, North Carolina; Tampa, Florida; and Los Angeles.
Since CANarchy entered the hard seltzer segment in late 2018, the company has invested about $8 million to build out its capabilities, Russell said. He added that the company has invested about $2 million more to increase beer capacity at its other facilities in order to add seltzer capacity in Longmont.
The majority of CANarchy’s hard seltzer volume comes from Wild Basin, and plans to grow its volume by 50% this year. In 2020, Wild Basin increased off-premise dollar sales 334% in IRI tracked retailers. The brand also increased its share of total seltzer by 44% year-over-year.
Wild Basin’s Berry mixed pack was the ninth best selling new variety 12-pack in 2020, and the company has high hopes for the Wild Basin cocktail mix pack, which launched in October, Russell said
In an effort to maintain Wild Basin’s momentum, CANarchy plans to roll out a brand refresh in Q2 that features a new font inspired by national park signs but maintains the brand’s colorful look.
With Wild Basin established as CANarchy’s national hard seltzer play, the company is surrounding it with regional offerings, including:
- Cigar City Seltzer began shipping in January in the southeast with plans to expand on the East Coast in the spring;
- Deep Ellum’s Blind Lemon Seltzer, which grew sales 694% in 2020 and ranked as the No. 5 hard seltzer in IRI-tracked Texas multi-outlet and convenience stores;
- Three Weavers’ Surfwood Clean Hard Seltzer, which is now available in its Inglewood taproom.
- Squatters’ Grandeur Peak, which grew sales 32% in 2020, is the second best selling local hard seltzer brand in Utah’s off-premise retailers.
- And Perrin Brewing’s Clear Coast seltzer, which is the second best-selling local hard seltzer brand in Michigan grocery stores.
CANarchy will also launch a 16 oz. single-serve 7% ABV hard seltzer called VII by CANarchy, aimed at attracting new consumers in convenience stores nationwide. VII will be seeded with independent retailers in the summer with a push into chain sets in the fall. The single-serve cans are expected to be priced in the $2.49 range to compete with market leaders White Claw and Truly, Russell said.
Even as hard seltzer becomes a bigger focus for CANarchy, Cigar City’s Jai Alai IPA remains the brewery roll up’s flagship offering, Russell said. Jai Alai increased dollar sales 20.6%, to $41.2 million, according to IRI. Despite being “a massive on-premise brand in markets like Florida and the southeast” the brand was able to offset those losses with the shift in purchasing to chain retailers, Russell said.
“12-packs are still just flying for us,” he said.
CANarchy recently kicked off a program to accelerate Jai Alai in key markets and expand its distribution, Russell said.
Jai Low IPA, a Jai Alai line extension launched last fall, ended 2020 as one of the most successful year-round craft launches, Russell said. Cigar City’s Florida Man Double IPA was also the second best new double/imperial IPA launch of the year.
As consumers reached for larger pack sizes last year, CANarchy’s mixed packs were also a bright spot for the company.
- The CANarchy mix pack led variety packs in dollar sales growth year-over-year.
- Oskar Blues’ CANundrum mix pack and Cigar City’s mix pack both ranked among the top 20 variety packs in 2020.
- The Deep Ellum MixTape mix pack, increased sales 39%, and was within the top 20 variety 12-packs in Texas (MULC) retailers.
- Wasatch Party In a Box and Squatters Session Sampler packs ranked No. 2 and No.3, respectively, among variety 12-packs sold in Utah off-premise retailers.
New hazy IPAs performed well for the company.
- Oskar Blues’ Thick Haze IPA was the fifth best selling new hazy IPA in Colorado off-premise retailers in 2020;
- Three Weavers’ Cloud City Hazy IPA was among the top 10 best selling hazy IPAs in LA’s food stores;
- Perrin’s Call Me Hazy IPA was the top selling new hazy IPA in Michigan food stores.
Looking to capitalize on the success of its hazies, CANarchy will swap out its existing IPA mix pack for a hazy IPA mix pack in late April. The new pack will feature Cigar City Fancy Papers, Deep Ellum Manic Confidence, Oskar Blues Thick Haze and Three Weavers Cloud City.
Meanwhile, CANarchy’s most recent acquisition, Revitalyte, the adult recovery beverage (hangover cure), surpassed expectations in its initial distribution build and pull through velocity, the company said. CANarchy expects Revitalyte to be available throughout its distribution footprint by the end of the second quarter.
On future innovation into segments such as ready-to-drink canned cocktails and non-alcoholic beer, Russell said the company is “looking at both of those pretty seriously.” He called RTD canned cocktails “really intriguing,” as CANarchy could plug those products into its wholesaler network in several markets.
“We would need to either acquire another partner or invest on the capital side,” he said of a potential foray into RTD canned cocktails. “So we’re looking at that, just doing our research right now.”
One possibility is linking those products to Cigar City, including mojito or margarita type drinks, Russell said.
On non-alcoholic beer, the company did some test batches and consumer tests within its Cigar City taproom, Russell said.
“We’re not completely happy with where we landed from an overall flavors standpoint, but as we look at the data and see what the buzz is there in that space, we think there’s potentially an opportunity,” he said. “But we haven’t jumped into it yet because it just represents such a small percentage of the category now.”