Lagunitas’ major innovation play for 2022 is not a new IPA — or a beer at all — but a hard sparkling tea, leaders of the Heineken-owned craft brewery announced today.
Disorderly TeaHouse will launch in January ahead of March off-premise resets, Lagunitas chief marketing officer Paige Guzman told Brewbound.
“It’s adjacent to categories that are getting over-developed,” she said. “It’s an opportunity to bring in both new consumers and existing consumers into the fold for the Lagunitas family, so we’re betting big on this.”
The Petaluma, California-based craft brewery will invest $4 million in digital media, e-commerce activation, sampling and experiential marketing to support Disorderly TeaHouse. The spiked, sparkling tea checks in at 5% ABV and about 100 calories, and will be available in two flavors to start: Yuzu Lemon Squeeze and Mixed Up Berries.
Disorderly TeaHouse’s base is guayusa tea, a popular beverage among Lagunitas’ brewers, Guzman said. The team began experimenting with ways to replicate the flavor in an alcoholic beverage, which dovetailed with the premiumization consumers have been seeking in recent years.
“Consumers are looking for ingredient-driven products that speak to a higher taste profile or products that there’s a story behind,” she said. “We’re really well positioned with our history in craft to look at new product categories where we can play, and we felt really strongly about tea.”
To produce Disorderly TeaHouse, Lagunitas first brews tea with guayusa tea, which it acquires from 90 indigenous farming families in Ecuador, Guzman said. Brewing the tea first is an important step, she explained.
“In brewing and winemaking and a lot of products, you can make anything taste like anything with additives,” Guzman said. “To take the trouble to actually brew the tea versus just insert some dust into sugar brew is a huge competitive advantage for us. It is more expensive and more timely to produce, but similar to craft beer, it just tastes better, so it’s worth it.”
The brand takes its name from Lagunitas lore when the brewery was served a citation for keeping a “disorderly house” by the California Department of Alcoholic Beverage Control in 2005. ABC agents visited the brewery to follow up on a tip that staff members were selling cannabis, but instead found they were giving it away. Disorderly TeaHouse reflects the combination of the charge and a traditional tea house.
“We’re really that rebellious bucking convention-type brewery and wanted to come out with something that’s a little bit more elevated than what we’re seeing in the marketplace right now,” Guzman said.
Disorderly TeaHouse, which will carry a premium price, will be available in 19.2 oz. single-serve cans and single-flavor 6-packs of 12 oz cans and merchandised with other beyond beer products at off-premise retailers.
“It’s going to fit in between that growing kombucha, seltzer territory,” head of sales Tony Amaral said. “We feel like there’s going to be some seltzer shake up as we get into spring for sure as brands come and go. We feel there’s an opportunity to put this brand in that section and create a buy up, trade up opportunity for retailers to come out of the commoditized priced 12-pack of seltzer and try something new that’s a little bit higher priced on the shelf.”
Lagunitas hopes its current drinkers will add Disorderly TeaHouse to their fridges, but sees more upside for the new beyond beer offering to introduce the brand to those it currently doesn’t reach.
“The larger opportunity for us is for people who currently don’t drink craft beer, or maybe don’t think that they like the flavor profile of IPA that are looking for a refreshing, lower-calorie product,” Guzman said.
Hard tea’s popularity has soared in recent years; the segment topped $582 million in off-premise dollar sales in 2020, according to data from market research firm NielsenIQ shared by on-demand alcohol e-commerce marketplace Drizly. Drizly’s own sales of hard tea increased 462% year-over-year in 2020, the company’s BevAlc Insights team reported.
The hard tea segment is dominated by Boston Beer Company’s Twisted Tea, the No. 13 brand family in the beer category with off-premise dollar sales of $282.1 million year-to-date through June 13, according to market research firm IRI. In 2021, the country’s top three hard seltzer brands (Mark Anthony Brands’ White Claw, Boston Beer’s Truly Hard Seltzer and Anheuser-Busch InBev’s Bud Light Seltzer) have all launched tea-based hard seltzers.
Lagunitas Cuts Craft Beer Portfolio to Just IPAs, Non-Alc Beer
While adding to its portfolio with future innovation efforts, the rest of Lagunitas line up is shrinking. Other than its non-alcoholic and beyond beer offerings, Lagunitas is producing only IPAs, after sunsetting several brands in late 2020, including Sumpin’ Easy, 12th of Never, and Pils.
Amaral told Brewbound he expects $1 out of every $10 spent on beer will be on IPAs by 2025. IPAs currently make up 41.6% of craft dollar sales, according to IRI.
The segment’s continued growth has allowed it to morph into what Amaral defines as six subsegments: premium, hazy, session, double, high octane, and non-alcoholic. Lagunitas’ goal is to possess the No. 1 or No. 2 brand in each subsegment with its offerings: Lagunitas IPA, Little Sumpin’, Hazy Wonder, Maximus, DayTime, Super Cluster, Hazy Memory, and IPNA.
“We’re really trying to give an offering to everybody, so an IPA for anyone at any time,” Amaral said.
The company’s brands have already seen growth with this renewed focus. Its Hazy Wonder moved from the No. 7 hazy IPA to No. 4 from March to July of this year. In the same time, its Maximus high octane IPA moved from No. 5 to No. 3 in the subsegment following a rebrand and recipe tweak.
“It was certainly something that we were on pins and needles to do because it is a big departure,” Guzman said of the portfolio cuts. “Instead of coming out with 30 new products a year, we are doubling down on fewer, bigger and better and [Disorderly TeaHouse] is a result of that strategy.”
The move has been in the works since 2019, following the appointment of Dennis Peek as CEO.
Pandemic-related industry changes also helped accelerate the process. A focus on fewer products allowed Lagunitas to avoid out-of-stocks as consumers were driven to off-premise outlets, Guzman said.
“We’re really proud of our supply chain continuity that we’ve been able to provide our distributors and our retailers by skinny-ing down the portfolio and focusing on these products,” she added.
IPNA Gets $2 Million Marketing Investment in Year 2
Lagunitas’ non-alcoholic offerings continue to grow. Its IPNA — which launched last December — is the second best-selling NA craft brand, and was ranked the fifth best NA beer by Men’s Health. Along with retail activation plans, Guzman said the company is investing $2 million in media marketing for IPNA in its sophomore year.
Lagunitas’ Hoppy Refresher, a NA sparkling hop water, doubled its sales in 2020, and is on track to double again in 2021, according to Amaral.
“It just shows what a categorical shift is happening here,” Guzman said.
“For us, this is not just a Q1, everyone’s going dry for January,” she continued. “For 2022, it’s a year-round IPNA focus.”