The CANarchy Craft Brewery Collective is leaning even harder into the seltzer space with two new mixed packs hitting retailers this fall, while also cashing in on the equity of its popular Jai Alai IPA with a low-calorie line extension called Jai Low.
CANarchy’s plans for fall resets include the launch of Cigar City Jai Low, a 100-calorie, 4% ABV IPA in 12-pack cans, starting in Florida and other southeastern markets before going national in the fourth quarter.
In addition to Jai Low, CANarchy plans to launch a Cigar City branded hard seltzer that will be focused primarily on Florida and the southeast, and a Wild Basin “cocktail-inspired” variety 12-pack nationally.
The introduction of a Cigar City seltzer brand shows how focused CANarchy is on the hard seltzer space. CANarchy was among the first craft breweries to enter the segment, launching Wild Basin Boozy Sparkling Water in late 2018, and is now the seventh largest hard seltzer supplier in a market largely dominated by two players, Mark Anthony Brands’ White Claw and Boston Beer Company’s Truly Hard Seltzer.
“We think Wild Basin has got the potential to be a top five seltzer over time,” CANarchy president and chief operating officer Matt Fraser told Brewbound. “We’re in the seventh spot right now and taking share, and I’m excited about what that brand can do and what the other seltzer brands in our portfolio can do.”
“We’ve still got relatively tiny share compared to the big players, but it’s a lot of volume for us, and it’s continuing to grow from a share standpoint,” chief commercial officer Chris Russell added.
Year-to-date through mid-June, Wild Basin has racked up $6 million in sales. A little more than a quarter of those sales (27%) are coming from the brand’s home states of Colorado, North Carolina and Texas.
By the end of 2020, CANarchy expects to ship around 100,000 barrels of hard seltzer, with Wild Basin making up more than 90% of that volume. Wild Basin is the second largest hard seltzer brand produced by a Brewers Association member, trailing Truly.
Cigar City Seltzer Focused on Florida
The strategy of launching a Cigar City branded hard seltzer deviated from CANarchy’s previous playbook of launching hard seltzers that weren’t tied in name to their parent breweries — Wild Basin (Oskar Blues), Clear Coast (Perrin), Grandeur Peak (Squatters), Blind Lemon (Deep Ellum).
Russell told Brewbound that the company wanted to capitalize on Florida consumers’ familiarity with the Cigar City brand.
Cigar City Seltzer (100 calories, 5% ABV) variety 12-packs will feature four flavors: Meyer Lemonade, Key Lime, Florida Orange and Ruby Red Grapefruit.
“It’s focused on citrus flavors because of the Florida citrus play,” Russell said.
Wild Basin’s New Variety Pack and Out of Stock Issues
In order to help stoke growth of the Wild Basin brand, CANarchy will release a “cocktail-inspired” variety 12-pack, featuring four flavors — Habanero Pina Colada, Fruity Sangria, Bitter Citrus Spritz and Mango Mai Tai. Each offering checks in at 100 calories and 5% ABV.
The cocktail-inspired mixed-pack has already secured distribution in King Soopers for September, and CANarchy plans to take it national in October.
That pack comes on the heels of a “Berry Mix Pack” — featuring Black Raspberry, Yumberry, Blueberry Mango and Strawberry Coconut — in mid-January.
Dollar sales of its original Wild Basin mixed 12-pack are up 527% in off-premise retailers tracked by IRI, and the brand family, including the Berry Mix Pack, has increased its market share by 22% since the start of 2020.
All of that demand has led to out of stock issues for CANarchy.
“We’ve got significantly more seltzer on order than we can make,” Fraser said. “And we’re doing everything possible to fix that. Unfortunately, to put additional capacity online, it takes between four and six months. So we’re working on plans right now that will take our production up about 60 to 70% for next year.”
Although CANarchy isn’t currently allocating its seltzer, the company is working with each of its wholesalers to manage days of inventory on hand to minimize out of stocks, Russell said.
“The way that rate of sale has accelerated in the last 60 days or so, it’s been a daily effort to try to manage all that, but we have not started allocating,” he said.
A shortage of slim cans, however, has not affected CANarchy. Fraser said Ball, which the company works closely with, has helped keep the company supplied with the cans needed for the seltzer and beer portfolios. Nevertheless, the company did have issues with new equipment and tanks that were supposed to go online in the first quarter of this year due to travel bans and have put capacity constraints on the business.
“We are feeling it much more on the paperboard side and actively picking out which SKUs we can produce because our supplier is struggling with capacity,” Fraser said.
Year-to-date, Oskar Blues trends, including Wild Basin, are up 58.6%, and those trends have accelerated over the last month to +80.4%. While Wild Basin is a big part of that, Can-O-Bliss 6-packs are up 110% and CANundrum packs are up 55% year-to-date, the company said, citing IRI data.
High Hopes for Jai Low
In launching Jai Low, CANarchy is finally cashing in on the brand equity built by Jai Alai IPA, which is now the fourth-largest craft can brand nationally and the second-best selling 6-pack can offering in off-premise channels tracked by IRI. In Cigar City’s home market of Florida, Jai Alai 12-packs are the fastest growing craft 12-packs, with $1.1 million in dollar sales year-to-date.
“The strength of the Jai Alai brand is pretty massive and still has tons of growth upside there,” Russell said. “But to have another lower ABV partner, so to speak, to go along with it and low calorie as well, it ended up coming in at 100 calories, I feel like there’s a lot of opportunity with that one.”
Jai Low is slated to hit southeastern markets in September, before going nationally in the fourth quarter. The new offering is already generating “buzz” with CANarchy’s wholesalers and has already secured nearly 5,000 points of distribution for the brand, Russell said.
“That’s only on the chain side of the business and we expect to see solid gains in the independent classes of trade as well,” he added.
As for Jai Alai, the brand is inching closer to a national distribution footprint, with availability now in 47 states.
Off-Premise Sales +33% Through Mid-June
Portfolio-wide dollar sales of CANarchy products in off-premise multi-outlet and convenience retailers are up 33.7% year-to-date through mid-June, according to market research firm IRI. Those trends have accelerated over the last month, increasing 43.3%. Fraser noted that across the CANarchy portfolio, variety or mixed pack volume sales are up 150% year over year.
Before the COVID-19 pandemic, on-premise sales accounted for 30% of CANarchy’s mix, Russell said. Overall, CANarchy’s business is trending in the mid-single digits through June, with sales accelerating following the July 4 holiday, Fraser said.
Still, Russell said CANarchy isn’t expecting the on-premise to get more than 10% of its volume mix before the end of the year, and a lot of that is still depending on what happens in the market with COVID-19.
As far as CANarchy’s taproom locations, Fraser said the company is continuing to take a conservative approach to reopening, with closures in California and Texas. CANarchy has also permanently closed its Deep Ellum taproom in Fort Worth and the company is exploring its options on its “Collaboratory” taproom in Asheville, North Carolina, Fraser added. That space first opened in June 2019.
Non-Alc Partnership in the Offing
Details are still slim, but Fraser teased that CANarchy will be announcing a new non-alc partnership in the next 90 days.
In other news, Fraser was recently named to the board of directors of Slang Worldwide, a cannabis CPG company.