Hard seltzer’s sales may have peaked in 2020 at $4.1 billion, but Happy Dad CEO Sam Shahidi believes there’s still a mountain to climb for his company.
Speaking to Brewbound earlier this year, Shahidi laid out a three-year vision for challenging White Claw as the top-selling hard seltzer brand.
“We really want to pass Topo Chico in sales this year, and then next year, we want to pass Truly,” he said. “And then, 2027 is where us and White Claw are going to compete.”
Happy Dad has charted an upward trajectory in a segment that has shed around $1 billion in sales since its peak five years ago. Shahidi founded Happy Dad in June 2021 with his brother John Shahidi and Kyle Forgeard, a co-founder of the Canadian-American YouTube channel, Nelk. Although they missed hard seltzer’s apex sales year, Shahidi explained why he believes Happy Dad has succeeded while brands that traded on the equity of popular beers have failed.
“We made the Shake Shack of seltzers while everybody else was trying to copy freaking Carl’s Jr. or Burger King,” he said.
The association with Nelk helped open doors with retailers initially, and exposed the brand to an audience of mostly young men. That exposure continues on the Nelk channel, with Forgeard and others wearing Happy Dad branded gear in videos, which sometimes include controversial celebrity guests, including President Donald Trump, self-professed “misogynist” Andrew Tate and former UFC champion Conor McGregor.
Shahidi believes the Happy Dad brand has transcended its celebrity association and spread to a more mainstream consumer.
“The Happy Dad logo is so big and popular now that we actually don’t have to rely on them to do any marketing at all,” he said. “The marketing just does itself on its own because we did such a great job of making sure that our fan base had a great liquid and great product.”
The Happy Dad consumer at this point is a 38-year-old dad and mom, living in the suburbs with a young kid with soccer practice, Shahidi said.
“They’re not watching the Instagram videos or YouTube videos or anything,” he said.
Year-to-date (YTD) through March 23, Happy Dad is the 24th largest beer category vendor in food/grocery stores and 25th largest beer vendor in the convenience channel, according to market research firm Circana. The brand has generated more than $4.8 million (+17%) in off-premise dollar sales in grocery and has grown volume 16.2%.
In c-stores, Happy Dad has recorded more than $5.977 million in sales (+36.7% YoY), and grown volume 38.9%.
Although grocery trends have moderated in the last four-week period (+6.2% dollars, +4.2% volume), convenience has accelerated (+37.6% dollars, +40.2%).
Shahidi cautioned against reading too much into early year scan trends as Happy Dad is in the process of moving its distribution from 76 wine and spirits distributors to 252 beer distributors. Happy Dad is the latest brand to exit RNDC, following Gallo/High Noon, Sazerac and Brown-Forman, with a shift to a network of mostly Anheuser-Busch houses and Breakthru Beverage distributors.
Shahidi estimated that he has negotiated more than 152 new distributor contracts to make the move. He pointed to the execution of the A-B network in North Carolina, where Happy Dad is already in-network. At present, the Tar Heel state outsells Florida.
“These guys own their backyard,” Shahidi said of A-B distributors. “Every volume counts for us. That’s how you turn into a machine like a White Claw.”
The move is part of Happy Dad’s strategy to “win every county in America,” Shahidi said, adding that he means all 3,144 counties in the U.S. However, Happy Dad’s ambitions extend north of the border.
“We absolutely crush in Canada,” Shahidi said.
Around 85% of Happy Dad’s Canadian sales are through the government-owned retail stores, with the brand holding the top-selling single-serve SKU in “almost all the provinces,” including Ontario, Shahidi said.
“We’re a North American company, we’re not just a U.S. company,” he said. “The reason why our success in Canada was so great is because we never treated Canada as a stepchild. We treat it as one unit. North America is just one big business for us.”
Venture Capital Firm Invests in Happy Dad
Earlier this month, Sean Kelly, general partner of The Family Fund & Founder Community, announced that his venture capital firm had invested in Happy Dad.
In a LinkedIn post, Kelly explained that the firm believes “in the people behind the brand” and “we love the product.”
The “key call-outs” Kelly listed for the investment included:
- Happy Dad’s growth trajectory, pacing toward “$100 million+ in topline this year;”
- Being “No. 1 in sell-through growth in hard seltzer last year across legacy and upstart brands;”
- And “untapped distribution” with placement in “only 27% of all relevant doors.”
The Family Fund “put together a highly strategic syndicate to add value to the company,” creating a special purpose vehicle (SPV) to bring on additional investors behind the fund’s investment, Kelly wrote.
“As a collaborative fund, we love this – the more great people around the table the better,” he added. “This also helped us get an attractive valuation.”
A Form D SEC filing for “Family Fund Happy Dad SPV” lists an offering amount of more than $3.856 million, which sold out.
“There are products and there are category-defining brands,” Kelly wrote. “We like to invest in the latter.”