Waterbird Spirits believes two container sizes will take the brand to the next stratosphere of growth: 24 oz. single-serve cans and half-barrel kegs, according to founder Wilson Craig.
The Charlottesville, Virginia-headquartered spirits maker, which specializes in canned ready-to-drink (RTD) cocktails, is the first beverage-alcohol brand in the country to use resealable lids on 24 oz. single-serve cans, effectively opening up the convenience store channel more widely to spirits-based RTDs.
“This is true innovation – this isn’t just a cliche word,” Craig said. “This is solving a problem, which is the No. 1 ask from our wholesalers is getting into c-stores.”
The U.S. Department of Treasury’s Alcohol and Tobacco Tax and Trade Bureau (TTB) updated its standards of fill for distilled spirits in early 2021 to include 700 mL containers, roughly 23.6 oz. However, 700 mL packages must be resealable, so Waterbird enlisted the help of Xolution (XO), a German company specializing in resealable lids for aluminum beverage cans. Before Waterbird’s adoption of the product, resealable XO can lids had never been used for an alcoholic beverage. Notably, they were used on large format Mountain Dew cans in the U.S. as part of the brand’s outreach to gamers.
“When you’re going up against our competitive set, which is in singles – White Claw, Twisted [Tea], Corona, Modelo – we’ve got to have a 24 oz. option and so the only way to do that is with the resealable top,” Craig said.
Waterbird is launching 700 mL resealable cans of Vodka Citrus Squeeze, a 5% ABV cocktail featuring vodka, sparkling water and orange flavoring. The SKU is rolling out to wholesalers this month and will be at retailers next month. Waterbird is working with City Brewing’s Irwindale Brew Yard to produce them.
The cans will be priced at two for $6 to compete with higher-end beer category single-serve cans, such as Corona and Modelo. Waterbird hopes to expand the package to its tequila-based ranch water and vodka-based transfusion later this year.
“It’s our big bet for this year, 100%,” Craig said.
While the resealable cans’ primary retail target is c-stores, Waterbird also has its sights on grocery stores, event venues and sports arenas.
“A lot of the big grocery chains are really, really on board because of the resealability aspect, which is really interesting, and we didn’t think about that coming in,” Craig said.
Nationwide, dollar sales of spirits-based RTDs in the convenience channel increased +74%, to $158.6 million in the 52 weeks ending March 26, according to NielsenIQ data shared by 3 Tier Beverages. The segment’s rate of sale will likely grow in the channel as more consumers become familiar with it. An estimated 50% of Americans visit a c-store daily, Craig said.
The top five RTD brands in c-stores are Atomic Brands’ Monaco Cocktail, E. & J. Gallo’s High Noon Sun Sips, Buzzballz, Anheuser-Busch InBev’s Cutwater Spirits and Diageo’s Crown Royal, 3 Tier Beverages said.
Waterbird climbed from the 104th largest brand last year to become a top 30 player in the spirits-based RTD segment and is poised for further growth through both velocity and distribution expansion.
The company prefers to sign with beer distributors, which Craig described as Waterbird’s “competitive edge.” Nearly 99% of Waterbird’s volume flows through beer wholesalers.
“Our vision is to take canned cocktails and, really, distilled spirits through the beer network, which we think is far superior to the spirits network,” he said. “We think our beer distributors not only master small format, but they also master on-premise. And when we come out with kegs, they’re going to be changing tap handles. It’s going to be wild to see.”
Kegs are not federally cleared as serving vessels for distilled spirits under the TTB’s standards of fill, which go up to 1.8 L (60.8 oz.), according to law firm Dickenson Peatman & Fogarty. However, Craig believes kegs are inevitable.
“It’s truly where the customer is going,” he said. “From our point of view, the customer wants it and the distributor wants it, so we’re going to deliver.”
In addition to Ranch Water, Transfusion and Vodka Citrus Squeeze, Waterbird’s portfolio includes vodka-based cocktails such as Vodka Cucumber Mint and Vodka Watermelon & Basil and tequila-based cocktails including Tequila Margarita and Hardbody, which features blanco tequila, sparkling water and grapefruit juice.
“With our growth, we’re having our proprietary names and building brands,” Craig said. “Hardbody right now at college bars [among drinkers aged] 21-25 is the No. 1 call in the mid-Atlantic, in Virginia and Maryland.”
Appropriately, Craig described Ranch Water as “our horse.”
“It was 75% of our growth last year,” he said, adding that the company plans to launch a tequila-centric variety pack with Ranch Water, Tequila Margarita and Hardbody.
Since its 2019 founding, Waterbird has entered 32 states, which will grow to 40 by the end of May and 47 by the end of the year. By 2023, the only states the brand won’t be in are Utah, Alabama and North Carolina.
Waterbird relies on a network of co-packers that could grow to as many as 10 by the end of the year. The company’s output has outgrown its home facility in Charlottesville, which has morphed into Waterbird’s sample production facility and produces only 1% of total volume. Craig credits the company’s production partners with Waterbird’s success.
“We grew 600% last year; we’re on track for 700% this year and we haven’t run into one inventory issue,” he said. “That’s the first thing I tell our distributors, that I take it personally that we don’t run out of any product.
“This isn’t rocket science,” he continued. “We’re gonna show up to play. You should feel comfortable that I’m not going to be the one that your sales team is like, ‘Hey, we missed this quarter because Waterbird didn’t have inventory.’ It’s something I feel really passionate about so we’re all over it.”
Waterbird’s 2022 growth strategy revolves around chain placement in stores such as Walmart, Kroger, Harris Teeter, Wegmans, Wawa and Circle K. To further its chain growth, Waterbird has tapped Amanda Parrish, formerly of non-alcoholic craft brewer Athletic Brewing, as its VP of national accounts.
“Amanda comes to our team with extensive experience working directly with national chain retailers,” Craig said. “We are very excited for Amanda’s energy and passion. Amanda’s focus will be continuing to communicate our fantastic selling story and growing our presence in chain retail.”
Waterbird continues to build out its sales force by adding Jim DeTulleo as its VP of sales. DeTulleo joins the company from Boston Beer, where he most recently was the senior director of on-premise national accounts and previously served as senior sales director of the company’s Mid-America division. Before DeTulleo joined Boston Beer in 2009, he spent nearly seven years at Heineken.
“Jim’s primary focus will be working with our world-class wholesalers to win the $800 million-plus – and rapidly growing – spirits-based RTD category,” Craig said.
DeTulleo and Parish’s first day at Waterbird was Monday. They join a team of about 20 employees, which is growing by about two new employees each week, Craig said. Most team members work remotely.
“Not only do Jim and Amanda have excellent experience in the alcohol industry but they also both bring an energy and passion to Waterbird,” Craig added.