Five years into business, JuneShine – a Southern California-based hard kombucha and canned cocktail maker – is eying its next chapter, focused on being not just a leader in the segments it participates in, but a competitor in the total bev-alc space.
JuneShine founders Greg Serrao and Forrest Dein spoke to Brewbound about their vision for the company, including looking at the business as “two businesses,” addressing “different occasions.”
Hard Kombucha Shakeout Coming; Focusing on Variety Packs
Hard Kombucha continues to be the majority of JuneShine’s business (about 80-85%), and is still growing, with JuneShine increasing its share of the hard kombucha segment +5% in the last year, to 36% share, Serrao said.
That share is expected to keep going, with Serrao anticipating a segment “shakeout,” with “some players that never really got traction with the rate of sale (ROS), but got some distribution” pulling out and making more room for the players that resonated with consumers. With that shakeout, JuneShine anticipates marketing its hard kombucha as an “omnipresent product” in the total bev-alc category, similar to Mike’s Hard Lemonade or Twisted Tea, Serrao said.
“One of the things that we’ve been trying to do is look a little bit less [at] how our SKUs compare to other hard kombucha SKUs, and more on how they compare to other things on the shelf,” Serrao said. “At the end of the day, category or not, retailers are looking at which SKUs pay the most rent and we need to be a little bit more critical of how does our product compare to some of the other products I mentioned that are in other categories.”
To help achieve that vision, JuneShine is altering its hard kombucha approach and leaning heavier into variety packs. The company launched its first hard kombucha variety pack, the Sunset Pack, this year, which has exceeded ROS expectations. The variety 8-pack was the company’s No. 1 SKU in the last 90-day period and has the same dollar rate per ACV [all commodity volume] as other leading innovations in the beyond beer space, such as Molson Coors’ Simply Spiked and Monster’s Beast Unleashed, Serrao said.
JuneShine plans to transition its hard kombucha portfolio over the next year to include three core variety 8-packs and three-to-four 6-packs. That transition has already started, with the company admittedly “cannibalizing ourselves a little bit, which is causing some short-term pain,” Serrao said.
“Some of the bigger businesses are really incredible how fast they can swap a SKU,” Serrao said. “Especially in Southern California, we’re actually fairly large now, and we need to grow up a little bit when it comes to things like that.”
The company is also refreshing some of its original hard kombucha recipes.
“Five years in of R&D, our ability to make delicious refreshing hard kombucha flavors is just night and day,” Dein said.
Canned Cocktails Nearly 20% of Total Business; Segment ‘Crowded’
JuneShine launched its spirits-based ready-to-drink canned cocktails (RTDs) in March 2022 with three 8-10% ABV offerings. RTDs are now expected to make up 20% of the company’s total business by the end of 2023.
JuneShine has since released two variety RTD packs – a margarita pack and a mixed-spirits pack – and now distributes its RTDs in 14 markets, with Connecticut (No. 15) launching later this year.
JuneShine has found “pockets of big success” in various markets – including Boston, Vermont, Denver, Hawaii and Seattle – with some markets recording 500-600% growth year-over-year, outpacing the company’s early hard kombucha growth, Dein said. In its home market of Southern California, JuneShine is the No. 3 canned cocktail brand, behind Anheuser-Busch InBev’s Cutwater Spirits and E. & J. Gallo’s High Noon Sun Sips, while having only 10% ACV, Serrao said.
“We won’t be able to outspend Gallo and A-B in SoCal, so we get pretty creative,” Dein said, adding that the company has focused on sponsoring events such as music festivals and continues to do tasting demos in stores.
The company will also launch a JuneShine Jackpot campaign and sweepstakes this year to give money back to consumers, while also taking a dig at the sugar content in some of its biggest competitors’ products (more details to come later this year).
Similar to its hard kombucha strategy, JuneShine plans to offer three variety 8-packs of its RTDs in market and three-to-four 4-packs.
Serrao admitted that the RTD market has more “pain points” than hard kombucha, especially as the segment has become “too crowded.” He noted that many retailers have prioritized shelf space for large spirits producers who have put out RTDs, rather than smaller producers who may have a higher ROS.
“It’s challenging when you’re trying to get shelf space in the beginning of the year,” Serrao said. “Those companies, they have sold so much liquor to these stores that they deserve to have gotten a shot at the cocktail category.
“My hope is that people will start looking at the numbers saying ‘OK, they’re really good at a bottled spirit, but maybe that didn’t transition to a can,’” he continued. “That will open up shelf space for us and we need that.”
JuneShine has also found some success with its RTDs in the on-premise, particularly at high-volume accounts, such as music and party venues in New York. The company is eyeing Denver as the next target market to increase its on-premise investment.
Transition to Stone Distributing ‘As Good As It Can Be’
Serrao and Dein also provided more color on its transition from Scout Distribution to Stone Distributing in its home market earlier this year. Serrao admitted that wholesaler changes are “painful,” but the transition to Stone was “way easier” than the small handful of changes the company has made in the past.
“Scout was super, super professional, and they don’t have to be,” Serrao said. “The reality of alcohol is the wholesaler kind of holds the key,s and they could have really made a fucking mess for us, and I was really scared about that, and they were super professional.”
JuneShine was a large player in Scout’s portfolio and the transition triggered a deal in which Classic Beverage will take over Scout’s 1-million case San Diego business, expected to close August 11.
“Losing JuneShine was unexpected and was a material amount of our business in San Diego,” Jeff Hansson, CEO of Scout’s parent company Ocotillo Holdings, told Brewbound last month.
JuneShine was also asked about the impact of other distributor deals, such as Sheehan selling a handful of distributors in the past year.
“It sucks for us when Sheehan sells one of their distributors, just to be super blunt,” Serrao said. “However, they’ve been a really good partner and where we are with them, things are going really well. So, we just have to control the controllables.”