Even with up to 500,000 barrels of beyond beer capacity coming online next year, Sierra Nevada’s priorities heading into 2023 are continuing to fuel the growth of Hazy Little Thing and strengthening the iconic Pale Ale brand, company leaders recently shared with Brewbound.
“Really, our year will be made by Hazy and Pale Ale, so that’s where we want the focus to be,” Sierra Nevada brand director Kyle Ingram said.
“That’s where the volume is coming from and it’ll continue to,” he continued. “We’re fortunate enough to have two top five brands in craft – the only supplier who can say that – and so we need to ride those horses and really lean into them to make sure that they are the focus of most of everything that we do.”
Sierra Nevada’s goal is to grow its core volume +4% in 2023, Sierra Nevada VP of sales Ellie Preslar said.
For 2022, Sierra Nevada is tracking “relatively flat and down just slightly from a volume perspective,” Preslar added.
“We’re ahead of where the industry trends are and where craft are, obviously not to where our ambition is,” she said. “But we’re seeing positive momentum over the last couple of months.”
Year-to-date through September 4, portfolio-wide, off-premise dollar sales of Sierra Nevada offerings have declined -1%, to more than $220 million, in multi-outlet and convenience stores tracked by market research firm IRI. The company is the 12th largest off-premise vendor, holding a 0.71% share of the overall beer category.
Hazy Little Thing is the No. 3 craft brand overall, increasing dollar sales +4.2%, to more than $74.4 million, through the first eight months of 2022, according to IRI. Hazy Little Thing, the top-selling hazy IPA, holds a 2.27% share of craft beer dollar sales.
Preslar noted that Hazy Little Thing is on its fifth year of growth and eclipsed Pale Ale in August as the company’s largest brand.
Pale Ale’s off-premise dollar sales have declined -11.1%, to nearly $62.9 million, through September 4, IRI reported. Pale Ale has lost -0.11% share, to 1.92% of the craft beer market.
In 2023, the company will boost the Pale Ale brand with the new “Still the One” campaign that zeroes in on the brand “as the craft icon that’s built to last,” Ingram said. More than previous Pale Ale campaigns, Still the One will be about beer rather than the parent company.
“It’s still the brand that changed the craft landscape 40 years ago, that introduced a whole new generation of drinkers to hops,” Ingram said. “We’re not going to change the beer, we’re not going to change the packaging because we believe it’s still just as good and just[as relevant today as it always has been. We just need to get it back on people’s radar and remind them about how good it is.”
Meanwhile, Hazy’s growth has continued as the Little Things family has expanded. Wild Little Thing is the No. 1 selling sour beer and Sunny Little Thing wheat ale “continues to build week-on-week,” Preslar said. Big Little Thing is posting “significant growth” in Year Two, she added.
“We just really feel like there’s such a runway for the Little Things family,” Preslar said. “It’s just this really approachable way for folks to enter [craft beer] and try different styles of really great craft beer.”
“We wanted to build that foundation as the most approachable and fun and inclusive family in craft, which we believe the Little Things are,” Ingram added.
As part of that push, Sierra Nevada launched a Little Things “Party Pack” variety 12-pack with each of the offerings, aimed at bringing new drinkers into the Little Things franchise and the craft beer segment, Ingram said.
“That pack will continue to be our beacon for approachability, but we also can’t forget that we have the No. 1 hazy IPA in the country by a significant margin,” he added. “We’re the dominant category leader, but there’s still a lot of markets and a lot of drinkers out there that are not purchasing Hazy Little Thing to the tune of about 60% of hazy category buyers have not purchased Hazy Little Thing in the last year. To us, that’s a huge, huge opportunity.”
The plan is to put “a significant investment” into media behind the Little Things brand family, with an increased focus on Hazy Little Thing in 2023, Ingram said.
Asked if Sierra Nevada will expand the Little Things family in 2023, Ingram said the company is exploring “every category” and projecting where future growth will come from. That may take the Little Things family beyond beer.
“We think the brand family has that kind of potential to expand even outside of craft,” he said.
Sierra Nevada’s Beyond Beer Aspirations
Sierra Nevada chief financial officer Paul Janicki spoke about the Chico, California-headquartered craft brewery’s investments in beyond beer, including an 85,000 sq. ft. under-construction production facility, during a webinar with financial services firm Jefferies last week.
In a recap, Jefferies analyst Kevin Grundy wrote that Sierra Nevada plans to double the size of its beyond beer business over the next five years via the facility, expected to open in the spring in Chico.
Sierra Nevada’s “Can Do Innovation Center,” with up to 500,000 barrels of annual capacity, will be dedicated to beyond beer, while attempting to avoid so-called “me too” offerings such as hard seltzers, Janicki told Jefferies. Those products will include non-alcoholic versions of existing alcoholic beverages, including non-alcoholic beer, and alcoholic beverages such as hard kombucha and hard tea, which the company already produces with Strainge Beast hard kombucha and Tea West hard tea.
With the addition of the facility, Sierra Nevada’s business will fall into three buckets: craft beer; alcoholic and non-alcoholic offerings outside of traditional beer; and co-packing.
Janicki told Jefferies that the “dynamics informing Sierra Nevada’s pivot into RTDs” are:
- Digital advertising becoming increasingly “critical in engaging consumers,” with a fewer opportunities for trial in the on-premise channel;
- E-commerce becoming “a more mainstream alcohol channel,” with Janicki noting that 40% of consumers are unaware that they can buy alcohol online;
- And consumer education on the attributes of the products, such as lower calories, being “essential for emerging category growth.”
Before the facility comes online, Sierra Nevada will continue to explore those beyond beer spaces with Tea West and Strainge Beast.
Under the Strainge Beast brand, Sierra Nevada will launch a fermented cocktail mimosa in the spring.
Asked if the move to a cocktail adjacent offering signaled a shift away from hard kombucha for Strainge Beast, Ingram told Brewbound the company believes the brand “has a lot of viability, even beyond hard kombucha.”
“We’re not walking away from hard kombucha by any means,” Ingram said. “It’s just the consumer taking a little bit longer to get there than maybe we thought or the industry thought. So we want to see where else that brand can play.”
As for Tea West, Ingram said the company is pleased with how the brand has performed in the 12 states where it is distributed.
“It’s showing really healthy velocity and rebuy rate, so we’re going to continue to build that brand over time,” he said.
Sierra Nevada is also high on Hop Splash, its non-alcoholic sparkling hop water, which is rolling out this fall. Sierra Nevada will “drive it hard through the spring,” Preslar said.
Torpedo Extra IPA Gets a Brand Refresh
Torpedo Extra IPA dollar sales in off-premise retailers are down nearly -23%, to more than $21 million, year-to-date through September 4, according to IRI.
Despite the struggles, Torpedo remains “a significant leading IPA in the category and frankly over-indexes with millennial drinkers,” Preslar said.
“I think a little bit of refreshed brand positioning will re-energize its appearance in the market,” she added.