The May 1 launch of a line of hard seltzers branded with fast-food chain Sonic’s name and proprietary beverage flavors has the potential to make Oklahoma City craft brewery COOP Ale Works a player in the $4 billion hard seltzer segment, president Sean Mossman told Brewbound.
Mossman’s definition of “a player” is a top five brand among the likes of market leaders White Claw (Mark Anthony Brands), Truly Hard Seltzer (Boston Beer Company), Bud Light Seltzer (Anheuser-Busch), Corona Hard Seltzer (Constellation Brands) and Smirnoff Spiked Sparkling Seltzer (Diageo).
“Even scraps from the two big guys will significantly impact the future of this company,” he said. “We don’t think we’re going to be a scrap player; we think we’re going to be a player-player. But we’re going to be a player-player in a category that is going to double, and double again.”
Becoming a contender at that level would transform COOP Ale Works’ business. In 2020, the company produced 20,000 barrels of product, up 21% compared to 2019.
The journey starts in May with the launch of a pair of variety 12-packs. The “Citrus” pack features Cherry Limeade, Original Limeade, Classic Lemonade and Lemon Berry, while the “Tropical” pack includes Original Pineapple, Mango Guava, Ocean Water and Melon Medley.
Cherry Limeade and Ocean Water — arguably Sonic’s most popular flavors — will also be sold in single-flavor 12-packs and 19.2 oz. single-serve cans.
In Year One, Sonic Hard Seltzer will be sold in six states — Oklahoma (RNDC), Kansas (Standard Beverage), Nebraska (RNDC), Missouri (A-B network), Texas (Molson Coors and A-B wholesalers) and Arkansas (Glazer’s Beer and Beverage) — and possibly Shreveport, Louisiana. And those wholesalers won’t just be taking hard seltzer from COOP.
“The Sonic opportunity in most cases is going to lever in the beer products,” he said. “And so we’re gonna see massive increases out of F5 [IPA] and some of our other brands associated with that.”
Those six states — which Mossman said account for around 50% of the Sonic locations in the U.S. — will be the only ones to receive the seltzer in 2021. But COOP plans to ramp up the roll out a year from now during the spring resets with the addition of more than 20 states.
“We entered into this agreement with Sonic with our eyes wide open,” he said. “We know what we’ve got is a partner that has instant brand equity in retail, and that instant brand equity is going to help us really leap past a lot of that brand building effort that a lot of new brands have, and there’s going to be instant credibility on the shelf.”
Mossman said the idea for a partnership struck him last September while the brew team was developing a hard seltzer for the company’s Will & Wiley line that recreated Ocean Water, Sonic’s proprietary, bright blue, coconut-flavored soft drink.
After seeing Harpoon Brewery’s partnership with Dunkin’, Mossman decided to contact Sonic to see if they’d sign off on a line of hard seltzers inspired by the drive-in burger chain. However, Sonic execs wanted a bigger partnership and came back with the idea of COOP licensing the brand name for a standalone hard seltzer line. The companies reached an agreement on December 28, and Mossman believes that COOP has since dialed in the liquid with the help of the Sonic team.
“We worked behind the scenes for hours with the culinary team at Sonic on really mimicking Ocean Water flavor and that Ocean Water experience in the seltzer can,” he said. “And that’s been a really fulfilling process for everybody to have the support from to make sure that we were really delivering for the customer what their expectation was from a Sonic branded beverage.”
COOP and Sonic’s partnership will join other hard seltzer marriages between breweries and soft drink producers. Coca-Cola and Molson Coors have teamed up to produce Topo Chico Hard Seltzer, which is rolling out this month. Heineken USA and AriZona Iced Tea partnered on the upcoming Sun Rise Hard Seltzer. And Mass. Bay Brewing, Harpoon’s parent company, has produced its Arctic Chill Hard Seltzer in cooperation with Polar Seltzer since early 2019.
Mossman described a flurry of interest from wholesalers and retailers after 405 Magazine senior writer Greg Horton broke news of the partnership in a Twitter post in late February. Walmart, QuikTrip, OnCue, HEB, Kroger and other retailers have told Mossman their consumer bases overlap with Sonic’s, so they’re confident in the product and will be giving it space within their stores. That’s led Mossman and COOP to believe that their initial forecasts are more conservative than the opportunity in front of them.
“You’re initially planning for a couple 100,000 CEs of growth, and then the conversation is what if it’s a half a million because that’s really a very likely scenario for Year One,” he said.
To get to that level, Mossman knows COOP will have to make “significant capital expenditures” to its operations to increase capacity. Those projects include additional tanks and a new brewing system dedicated to producing hard seltzer, as well as a dedicated canning line that are on order now. Although initial production of the product has been in-house, COOP is exploring co-packing opportunities with third-party breweries.
“Half of our focus is developing the marketplace for the product,” he said. “And the other half of our resources is really on making sure that we have the capabilities to meet that demand as we grow into these new territories in 2022 and 2023.”
For Mossman, he believes the floor for volume growth is 3x over the next two to three years.
“But it can be in the 10-plus range as far as multiples and growth,” he added. “And that’s gonna invite some growing pains along the way. We’re just gonna have to fight through them. It’s gonna be a quantum leap but others have done it before, and we’re taking a lot of cues from businesses that have scaled fast.”
COOP and its wholesaler partners will be responsible for sales and marketing of the brand. The brewery has committed to spend a minimum of 10% of gross sales on marketing Sonic Hard Seltzer, with its wholesalers sharing some of the costs.
“We’re gonna spend significantly more than 10%,” Mossman said. “What Sonic is really going to do is they’re going to really support us on the earned media side more than the paid media side on promoting the brand.”
As for COOP Ale Works’ existing hard seltzer brand Will & Wiley, the company will continue producing it for the Oklahoma market, where the brand holds a 3% share of the market.