In bringing together two of the biggest names in beverage – Jack Daniel’s and Coca-Cola – for a ready-to-drink (RTD) cocktail, Dallas Cheatham, Brown-Forman’s ready-to-drink portfolio director, knew the consumer buy-in was there. But key to creating the partnership was understanding each side’s respective long-term goals.
“For Jack Daniel’s it’s a fabulous way for us to recruit and talk to new consumers,” she said. “Many RTD drinkers only drink RTDs, so it’s really a whole new group of people that we get to talk to, and hopefully they turn into Jack Daniel’s Single Barrel drinkers as well for special occasions.”
While Cheatham preferred not to speak for Coca-Cola, the new product marks the soft drink’s first time lending its iconic brand name to an alcoholic beverage, but is part of a larger movement by the company to reorient some of its other brands, like Topo Chico, Simply, and Fresca, into beverage-alcohol. Cheatham did say that her team does work with soft drink giant’s new alcoholic beverage subsidiary, Red Tree Beverages, but declined to offer more details.
With less than a year on the shelves it may be too early to tell if the spirit company’s newest addition is bringing a new audience to its mother spirit. But it certainly marks the next evolution of the 30-year-old RTD portfolio that continues to build off its flagship whiskey’s brand equity and partnerships with other major beverage companies.
High Velocity Learnings
The new RTD is the company’s biggest splash in prepared cocktails lately: after debuting in Mexico last fall, canned Jack & Coke rolled out in the U.S. in March, and has since driven the portfolio’s sales growth to 11% in fiscal year 2023. The company offers other RTDs: Jack Daniel’s spirits-based cocktails expanded nationwide this year after debuting in 2020, and grew its dollar share of RTDs by 0.6 points to 1.6% dollar share off-premise in the last 52 weeks ending July 15 according to NIQ data provided by 3 Tier.
The collaboration with Coca-Cola is the second partnership with another major beverage company. The whiskey maker tapped Pabst Brewing Company three years ago to produce, sell and distribute Country Cocktails, a malt-based cocktail which debuted in 1992. The brand has benefitted from Pabst production capabilities, enabling the introduction of new innovations, like a variety pack last year, said Cheatham. Sales have grown 10% in the last 52 weeks off-premise ending July 15.
“Country Cocktails has gone through huge swings: from very, very popular, and then we saw it straight-line for a long time,” she said. “And then we got back into this RTD world where people wanted one singular package to take with them.”
Cheatham began her role in 2020, just as the RTD boom began. But the company’s long history with Country Cocktails gave her team a lot of opportunity to think like a high velocity beverage company, she said.
“We also have brands that are a little bit slower and they’re more expensive for the consumer, and so getting into headspace of fast-term in the cold box is a different way of thinking,” she said.
Data shows that RTDs are often consumed within four hours of purchase, according to Cheatham, which means that the consumers who want to mix their own Coca-Cola and whiskey are in a separate part of the store than the cold-box. That removes concerns of cannibalization, and frees Jack & Coke to target its priority: convenience occasions.
As of now, “all channels are really important to us,” said Cheatham, but the director did refer to grocery as an important outlet for RTDs. Legislative efforts have been underway to provide spirits-based RTDs with access to more of the convenience and grocery channels, which in some states restrict spirits or high ABV products. As laws shift, the SKU rationalization process could change overnight, impacting C-stores and grocery the most, where a soft drink giant like Coca-Cola already has major inroads.
“Making sure that we have the right package in the right place at the right time in the right part of the store is how we think through where we want to be and where we want to focus as a company,” she said.
Building on Brand Equity
The decision to build on an existing spirit brand’s equity or launch a new label is a frequent conversation topic at Brown-Forman, said Cheatham. But with “good distribution” being a priority, the company has clearly partnered with RTD collaborators of equal muscle and footprint. Building awareness also comes much easier when relying on an existing brand.
Cheatham believes it is possible for an RTD to build its own equity with a new brand name, but that it takes a larger media investment to gain trial. Other major spirits companies have tried to get in on RTDs using both strategies: Beam-Suntory has prioritized a premium take on the category with The House of Delola and On The Rocks, while Bacardi and Diageo have extended several of their spirit lines into canned formats.
But with the two big names on the can providing the buy-in incentive for retailers, the company has an immediate advantage, according to Cheatham. As RTD UPC proliferation nears 7,000 items in the last 52 weeks according to NIQ and distribution remains fragmented, Cheatham argues that retailers see a benefit to having two recognizable trademarks at eye-level in the coldbox.
“To have the power of the Jack Daniels and Coca-Cola trademarks on the RTD package has been a real opportunity for us to kind of anchor some of those RTD shelf sets that have gotten a little bit confusing and chaotic for shoppers to navigate,” she said.
Thinking through the potential impact on both marks was an important part of setting the standard for a partnership, said Cheatham.
“I think the benefit of building off current brand equity, like a Jack Daniels, is that consumers are already going to expect a level of quality,” she said, adding ““If the liquid is not good, they’re not coming back.”
Innovation Quick Wins
Despite the potential cherry and vanilla flavors waiting in the wings, for now innovation will center around quick wins in packaging. The other focus is the Coke Zero edition, which was released shortly after the flagship RTD.
“I think we knew Jack and Coke was going to be a huge success but we’re seeing this great opportunity and consumer takeaway and engagement with Zero,” said Cheatham. “We’re all thinking next about making sure that that distribution is on par with our Jack & Coke RTD.”
Before diving into more flavor opportunities, Cheatham wants to keep her eye on the opportunity in front of her. The company has added a 12-pack in addition to its starting 4-pack option.
“Thinking through some of those really quick wins from a packaging perspective is the first and foremost thing for us to get right,” she said.