Los Angeles-based Nectar hard seltzer almost failed before it launched.
In 2019, friends Jeremy Kim, John Dalsey, and Brando (full name) began creating Nectar — a hard seltzer brand with Asian-inspired flavors that they hoped would bring something new to what they believed was a “boring” segment dominated by large brands with “repetitive” flavors and packaging. They created a variety 12-pack featuring four flavors: Asian Pear, Mandarine, Yuzu, and Lychee.
By November 2020, after COVID-19-related delays, a lack of retail partnerships, a failed first packaging attempt and the loss of all of their savings (about $20,000), the co-founders were losing hope.
In a last-ditch effort to see if Nectar would appeal to consumers even wanted to see Nectar come to fruition, Kim took to an unexpected platform for an alcohol company: TikTok.
Kim posted a less-than-a-minute-long video on the social media platform showing the ups and downs of the company’s production process, and ended the video with the message “TEXT US! 310-388-6729.” The number — provided through Santa Monica-based marketing and communications channel Community — connected consumers directly with the Nectar team, allowing viewers to ask the trio questions about their product.
Within three days, the TikTok generated 300,000 views and text messages flooded in, according to Kim.
“That changed everything overnight for us,” he told Brewbound. “That video went viral. We were getting hundreds of texts from people all over the country being like, ‘Yo, Where can I buy this drink? Where can I buy this drink?’”
With proof of interest, the team went to two local Los Angeles liquor stores and convinced them each to take on 150 variety packs. They then texted every number that had reached out from the TikTok and told them about the launch. Within an hour, Nectar inventory sold out at both stores.
Nectar repeated the process, promoting mini-launches in Orange and San Diegos through TikTok. The company began producing an average of 1,800 cases a week. Nectar’s variety packs can now be found in 120 stores after partnerships with BevMo and Gopuff, as well as via self-distribution in California and a partnership with New York-based e-commerce alcohol delivery site TapRm.
The company has promised to hand deliver Nectar products to any city that gets 300 people to text the Community number, most recently fulfilling that promise in Seattle. Consumers can track the progress of their cities on the site QuitTheClaw.com, a poke at top-selling hard seltzer brand White Claw. The website tallies and organizes texts by city and county — also allowing Nectar to prepare licenses for the markets where it is gaining traction.
“We can go to one store [and] show that we can actually have people interested in our product. And I think that is what got [retailers] to really buy into us as a brand and trust us,” Dalsey — who previously worked at New Jersey-based Double Nickel Brewing Co — told Brewbound.
Nectar’s marketing strategy is also much more personal. The brand’s TikTok — which boasts 39.3K followers and 600.8K likes — features the Nectar team donning colorful wigs (inspired by Tyler the Creator) and participating in TikTok trends, as well as showing behind-the-scenes footage of production and distribution expansion.
“With TikTok, it’s very much you have to be a personal face to your brand,” Kim said. “I think that every company is going to have to get more personable with their consumer.
“Instagram has become this thing where it’s all about the most extravagant version of you. It’s all doctored. It’s fake. It’s whatever,” he continued. “And TikTok on the other hand [is] very raw.”
TikTok’s popularity has exploded since becoming available in the U.S. in 2017. The app has more than 200 million downloads in the U.S., and grew from 680 million global active users in 2018 to more than 1 billion as of June 2021, according to Wallaroo. In 2019, the platform made $200 million to $300 million in ad revenue worldwide, and in 2020, technology publication The Information predicted the platform would make at least $500 million from solely the U.S. market.
TikTok’s algorithm — the system that determines which videos to recommend to each user — is known for targeting users more specifically than other social media platforms. It suggests content for viewers based on “interactions with the app” such as “posting a comment or following an account” as well as “whether a user finishes watching a longer video,” according to a June 2020 TikTok blog post.
“I can assure you, there’s nothing quite like the TikTok algorithm,” Molly McGlew, an independent social media strategist and “TikTok expert,” told Brewbound. “That will benefit advertisers. I already know I prefer TikTok ads to [Instagram] personally.”
Despite such targeted content having great marketing potential, alcohol companies are noticeably absent on the app. That’s due in-part to TikTok’s advertising guidelines, which vary country-to-country.
“Ads promoting alcoholic beverages (wine, beer, spirits, etc.) alcohol clubs/subscription services, alcohol making kits, or alcohol sponsored events” are prohibited in more than 40 countries, including the US, Canada, Italy, Russia, Spain and the United Kingdom, according to the guidelines. Any advertising for “low-alcohol, alcohol-free, 0% alcohol beverages, and soft drinks presented as no-alcohol alternatives” are also prohibited in several countries, including Belgium, France, Germany and Ireland.
Additionally, users are restricted on the content they can post that involves or features alcohol. TikTok’s community guidelines prohibit “content that offers the purchase, sale, trade, or solicitation of drugs or other controlled substances, alcohol or tobacco products,” as well as “content that depicts or promotes the misuse of legal substances, or instruction on how to make homemade substances, in an effort to become intoxicated.”
This second set of guidelines creates a gray area for alcoholic beverage producers. While they cannot create traditional advertisements or sponsored content, alcohol companies like Nectar (in theory) are still able to follow guidelines if they have company TikTok accounts that create original content, as long as that content doesn’t depict binge-drinking or explicitly tell users to “go, buy our products.”
Kim said TikTok’s team has been extremely communicative. Although the platform’s A.I. — which automatically flags or takes down videos that it registers as violating guidelines — sometimes pulls down “random things” from Nectar’s account, including a video that attempted to raise money for charity, Kim said TikTok is better than other platforms he’s used in the past at responding to Nectar’s disputes.
“There’s a lot of opportunities here for influencer partnerships, product placements, and good old fashioned community management for TikTok visibility the organic content way,” McGlew said. “Even comments can help you advertise. Look at Trojan Condoms’ comments on other TikTokers content, for example. Or Lyft. Always check the comments, that’s another sneaky way to see how to participate without the fear of posting your own TikTok content.”
Through this apparent loophole, a few other companies have joined Nectar on the platform. New Belgium’s Fat Tire brand has an account which shares videos with its 50 followers of people doing outdoor activities with the amber ale. Happy Dad — the hard seltzer brand started by YouTubers the Nelk Boys — operates a TikTok account with 125.7K followers and 594.5K likes, which is active despite featuring videos of its founders shotgunning Happy Dad products. And Burnley Brewing in Australia creates skit-style videos poking fun at what brewers have to deal with on a daily basis for its 1,379 followers.
Each account has a disclaimer in their bios notifying users they must be 21 or older to follow or share content (18 or older in Burnley’s case).
So if these companies can exist on TikTok, why aren’t more joining them? It’s most likely because companies are scared of reaching consumers under the legal drinking age (LDA), according to a source familiar with alcoholic beverage advertising.
“[Alcohol companies] like to go in knowing that their advertising dollars are well spent,” the source told Brewbound. “You want to hit the right audience, you don’t want to hit the wrong audience.”
Whenever a new social media platform gains traction, it is oftentimes first popularized by younger users. TikTok has gained a reputation of being “an app for teenagers,” featuring young internet stars such as Charli D’Amelio (17), Addison Rae (20), and Loren Gray (19). In July 2020, more than a third of TikTok’s then-49 million U.S. users were 14 years old or younger, according to “internal company data and documents,” reported the New York Times.
But TikTok may no longer skew as young as it once did. A March 2021 study published by Statistica pointed to an older audience: 25% of users aged 10-19 years old, 22.4% 20-29 years old, 21.7% 30-39 years old, 20.3% 40-49 years old, and 11% 50 or older.
“What I find is that a lot of people generalize and when they generalize, they get it wrong,” the source said. “It used to be just a couple of years ago that I was hearing that the internet itself was for 13 year olds, and that all of these different platforms — Instagram and so forth — were skewing young. I’m not sure that is true.”
Still, TikTok must assure a company that its content is going to reach LDA consumers, the source added. At least 71.6% of viewers consuming content by alcohol beverage companies must be of LDA, according to the Beer Institute and the Distilled Spirits Council of the U.S. (DISCUS), both industry trade associations.
“This is a system that is entirely self-regulated,” the source added. “We don’t want the government coming in and saying [it’s] concerned about alcohol advertisements being seen by underage people, so [it’s] going to ban it altogether.”
The solution is in TikTok’s hands. The platform has to establish tools and guidelines that give companies enough confidence that its content will reach that 71.6% minimum threshold.
Kim argues that TikTok already does this.
“There’s literally every age on TikTok,” he said, emphasizing that the platform’s users are not just teenagers. “And once [TikTok’s algorithm] understands your content, it’ll always serve you to the appropriate niche.”
TikTok has also addressed concerns about inappropriate content reaching younger viewers.
“Our recommendation system is also designed with safety as a consideration,” TikTok wrote in a June 2020 blog post. Content found with “legal consumption of regulated goods” such as alcohol, “may not be eligible for recommendation.”
TikTok may also have the ability to gauge a user’s age based on how they interact with the app. Regardless of users self-reported dates of birth, TikTok “estimates their ages using other methods, including facial recognition algorithms that scrutinize profile pictures and videos,” as well as by “comparing their activity and social connections in the app against those of users whose ages have already been estimated,” reported the New York Times, citing two former and one current TikTok employee.
Although it remains unclear whether the social media platform or alcoholic beverage companies will make the first move toward integration of alcoholic beverage content on TikTok, McGlew encourages companies to start making moves.
“It would be ludicrous not to,” she said.
What is certain: Nectar isn’t changing its strategy.