Two Roads Leans on Core for Growth

As Two Roads prepares to launch Guy Fieri-backed flavored malt beverage Flavortown Spiked, the Stratford, Connecticut-based craft brewery is taking a more conservative approach to the rest of its portfolio, focusing on what works, forgetting the rest.

Co-founder, president and CEO Brad Hittle told Brewbound that Two Roads’ 2023 output is projected to decline about -5% compared to 2022, about half of its decline last year.

“Even though we’re going to come in negative, the focused part of our portfolio – which is all of our core brands and core seasonals, plus the innovations we’ve done like the Juicy Box – [are] up +3%, and that’s about 85% of our mix,” Hittle said. “That’s a really positive development.

“The other 15% of our mix we deliberately have walked away from, so that’s accounting for the largest part of our decline,” he continued.

This doesn’t mean Two Roads has taken a hatchet to its portfolio.

“Walking away means de-emphasizing and not necessarily terminating,” Hittle clarified. “In some cases, we will continue to sell in our home Connecticut market and others will be brewery-only. It’s part of our strategy to be highly selective with regard to our portfolio and putting more resources toward our top-performing brands.”

The shift in product mix is part of a two- to three-year strategy, and “our distributors are beginning to take notice,” Hittle said, adding that the brewery has “a lot of green on the board outside of Connecticut.”

“You have to come to [wholesalers] with a compelling story,” he said. “When you have growth on a brand like Road 2 Ruin, you have your core growth, so we’re not asking them to take on 25 different flavors, just a select group.”

Two Roads’ sales are concentrated on the East Coast, from Maine to Virginia, mostly in Molson Coors-aligned wholesalers. The launch of Flavortown Spiked is expected to open opportunities in the Carolinas, Georgia and Florida.

Flavortown Spiked is just one product of what Hittle called “Two Roads 2.0,” the second incarnation of the brewery as it enters its 14th year.

“This was really the reimagination of Two Roads that was necessary coming out of COVID with all the factors there, plus the slowdown in the craft beer segment, the continuing onslaught of new breweries coming on stream,” he said. “We needed to reimagine ourselves and much of that has to do with portfolio strategy, it had to do with geographic spending strategies that had to do with upgrading and refreshing our package graphics.

“Part of that was innovation, and not just spaghetti-against-the-wall innovation, but real well-thought-out strategic innovation,” Hittle continued.

That innovation stretched to Two Roads’ seasonal series, which the brewery reinvigorated with two new offerings: Rocket 2 Ruin imperial cold IPA for Q1 and Summer Heaven tropical IPA to follow. Rocket 2 Ruin (10% ABV) is “a sort of line extension” of Two Roads’ flagship Road 2 Ruin double IPA (8% ABV).

“The core seasonals are up +29% through August in depletions,” Hittle said. “A lot of this is innovation – we stopped selling the same old seasonals.”

However, Two Roads kept its fall and winter seasonals, Roadsmary’s Baby pumpkin ale (“We didn’t redo that one because it’s a winner”) and Holiday Ale Biere de Noel. A biere de garde by style, Holiday Ale sits firmly within brewmaster Phil Markowski’s wheelhouse of Belgian-style farmhouse ales.

In the last 90 days, Road 2 Ruin dollar sales have increased +5.2%. Two Roads’ IPA variety pack has “steadily” been “really, really growing,” Hittle said. Year-to-date, its depletions have increased +50%, which decelerated slightly in the last 26 weeks to +44% as it laps a successful period last year.

“The base is that much bigger and we’re still up that much,” Hittle said.

Two Roads’ spirits-based, ready-to-drink (RTD) canned cocktails are growing off a small base and have increased dollar sales +35.8% through October 25, Hittle said.

The Daybreaker line includes blood orange vodka, tropical vodka punch, vodka lemonade and a pineapple vodka mule, and Nightshaker espresso martini rounds out the brand family. Two Roads distills its own vodka for the RTDs, Markowski told Brewbound in 2021 when the product launched.

“Consumer feedback has been extremely strong for the full suite of RTDs,” Hittle said. “Our distributor partners recognize that quality is the key for long-term growth among so many alternatives.”

Daybreaker was Two Roads’ second foray into the beyond beer space. It launched H2Roads hard seltzer in 2019, which has narrowed its footprint “to be sold in select markets where it is thriving,” Hittle said.

“It has a significant product point of difference, real fruit, that still resonates with a core audience of consumers and retailers,” he added.

Last year, Two Roads’ production declined -1%, to 104,025 barrels of beer, which includes the company’s contract brewing output, according to the May/June issue of the Brewers Association’s New Brewer.

In the last 52 weeks (ending September 9), Two Roads’ dollar sales have declined -6.9% and volume -11.4% in NIQ-tracked off-premise channels, according to data shared by 3 Tier Beverages. Volume trends improved significantly in the last 13 weeks, down -2.1% year-over-year, while dollar sales were down -6.1%.