The focus of Bump Williams Consulting’s February report zeroed in on the number of joint ventures (JVs), partnerships and alliances between large non-alcoholic beverage producers, beer manufacturers and even spirits companies.
“The sheer number of noteworthy JVs, alliances and partnerships in the last few years alone really hammers home the importance of remaining open to new opportunities,” the firm reported. “Not only that, but it also highlights the hyper-competitive environment that is starting to emerge for beer. Just when you think you have a grasp on the competitive set, there are major shakeups in the hierarchy coming from unexpected suppliers with the ability to carry major weight.”
Although those partnerships might not be “a necessity” for survival, producers’ focus is moving past traditional offerings to “a slew of familiar faces from other aisles” who are moving into beer shelf sets, Williams wrote.
Those partnerships were broken out into four tiers by Williams:
- “Non-alcoholic brands going hard;”
- “Help-me, help-you” partnerships between established beer companies;
- “Not if, but when,” producers exploring cannabis ahead of legalization;
- “Same name, new look” products from spirits producers changing the base.
Non-alcoholic brands going hard is highlighted by energy drink maker Monster’s planned acquisition of the CANarchy Craft Brewery Collective, giving it instant infrastructure in the bev-alc space. Although Monster’s leadership are opposed to releasing a Monster-branded alcoholic beverage, Williams wrote that the company has several ways to both grow CANarchy’s craft beer portfolio while also innovating and expanding into beverage-alcohol. During an investor call following the acquisition announcement, Monster leaders shared that the company is close to launching a new hard seltzer.
Others within this bucket include Constellation Brands and Coca-Cola (Fresca Mixed); Molson Coors with Coca-Cola (Topo Chico Hard Seltzer, Simply Spiked), La Colombe, Zoa and AriZona (Arnold Palmer Spiked); Heineken USA and AriZona (Sun Rise Hard Seltzer); Boston Beer Company and PepsiCo (Hard Mtn Dew); and Mass Bay Brewing Co. and Polar (Arctic Chill).
“While not a completely new phenomenon, the recent flurry of announcements (see Topo Chico, Mountain Dew, Simply Lemonade and Fresca) could signal the beginning of a larger influx should these brands demonstrate sustained success beyond the initial launch,” the firm added.
Meanwhile, the “help-me, help-you” tier is made up of existing manufacturers who “have found creative ways to expand the production and/or distribution of their products.” Prime examples include Molson Coors’ joint venture with D.G. Yuengling & Son for its western expansion, including Texas last year; BrewDog’s deal with Asahi for distribution in Japan; and the formation of the IndieBrew platform with Atlanta’s Scofflaw and Nashville’s Bearded Iris.
The “not if, but when” tier of brands looking ahead to recreational cannabis legalization includes Constellation Brands and Canopy Growth; Tilray with its craft brewery acquisitions of SweetWater, Green Flash and Alpine, as well as Breckenridge Distillery; Molson Coors and Hexo’s Truss joint venture; and companies such as Ceria, Two Roots and Lagunitas.
“While right now the available retail outlets for these types of beverages is extremely limited, especially for THC-infused drinks, the investments taking place behind the scenes is positioning the active players for a leg up on any other interested parties currently in a ‘look but don’t touch’ mode,” Williams wrote.
The last tier of “same name, new look” includes “cross-category plays from established spirits brands entering into either the malt-based or RTD space,” including Sazerac and Anheuser-Busch, with Fireball and Southern Comfort malt variants; Beam Suntory and Boston Beer, with Sauza RTDs and Truly Vodka; Whistle Pig and Mass Bay, with Piggyback RTDs; and Beam, with its recent investment in hard kombucha and hard seltzer maker Flying Embers.
“With a notable gap between beer and spirits in terms of available outlets due to laws and regulations across the U.S., this recent foray into malt-based variants opens up thousands of new doors for these brands to be sold at retail, literally,” the firm noted. “These brands are then able to (hopefully) leverage their existing awareness to deliver their signature taste in an alternative, and more widely accessible, format.”
In Williams’ estimation, these types of arrangements are just the beginning and “we ain’t seen nothing yet!”