Diageo Beer Co. is leaning on the learnings of Daft Punk in fiscal year 2023 to be “better, faster [and] stronger” across all its bev-alc brands, including Lone River Ranch Water, Smirnoff, and Guinness.
Diageo gathered in-person with its distributors for the first time in three years last month for its annual Golden Bars Awards and Leadership Summit in Chicago. At the event, the bev-alc giant gave a peek at its 2023 plans, including expanded Lone River distribution and a brand-wide Smirnoff Ice relaunch.
Diageo is now 10 weeks into its FY23 and has gained share every week, according to Diageo CMO and SVP RTD category leader Jay Sethi. The performance so far means the company is on track for its seventh consecutive year of depletions growth, projecting to gain seven basis points of share (bps) growth by the end of the fiscal year.
Lone River Sees Large Distribution Runway; Will Launch Margarita-Inspired Variety Pack
This was the first year Far West Spirits – the maker of Lone River Ranch Water – was able to attend Diageo’s annual distributor and leadership meetup since it was acquired by Diageo in 2021. The event marked the first time Lone River could meet all of its distributors in-person, and was the first time the company felt “fully integrated and a part of the bigger Diageo team,” Lone River founder and CEO Katie Beal Brown told Brewbound.
Lone River sales have sky-rocketed since its founding in 2019. Its Ranch Water hard seltzers, inspired by the West Texas tequila-based cocktail, are now the No. 8 hard seltzer brand in the nation, and the fastest growing brand among the top 10 hard seltzer brands, according to Brown. About 42% of the bev-alc dollar share Lone River has gained so far has been directly from wine and spirits, she added.
“In only two years, our small brand has pioneered a new category with agave-style seltzer,” Brown said. “And it’s been amazing to see that that category is now delivering 100% of the growth to hard seltzer.”
Distributors expect hard seltzer sales to decline about -6% in 2022 and -4% in 2023, should current consumer trends continue, according to a recent distributor survey by Goldman Sachs. In the last 13 weeks, hard seltzer dollar sales dropped -12.7% in NielsenIQ-tracked off-premise channels, as flavored-malt-beverages (FMBs), ready-to-drink cocktails (RTDs) and imports continue to record growth, according to the consulting firm 3 Tier Beverages in its latest 3 Up, 3 Down report on Brewbound.
Lone River released its first answer to the RTD trend in 2022 with the release of Ranch Rita, a margarita-inspired 6% ABV flavored-malt-beverage (FMB). The offering launched in April with a single-flavor 12 oz. can 6-pack, and was the No. 1 New FMB innovation 6-pack in the last 26 weeks (ending September 17) in NielsenIQ-tracked off-premise channels, according to Brown.
“We don’t even think that we’ve gotten to the tip of the iceberg there,” Brown said.
Next year, Lone River will expand the Ranch Rita line with a variety 12-pack featuring the original flavor, as well as three new flavors: Mango, Blood Orange and Spicy.
Recruiting new consumers through innovations such as Ranch Rita is one of three core strategies for Lone River next year. As for entering the spirits-based RTD realm, Brown said there is still “so much room for growth” in the hard seltzer segment and as “a challenger brand,” that “it wouldn’t be true to form” for Lone River to avoid looking at future opportunities in innovation.
The company also plans to continue deepening its distribution network in 2023, supported by a tour of local roadshows.
Lone River increased its distribution by 40 points in 2022, and is now nationally distributed, but it is still 20 points below the top 10 hard seltzer brands, according to Brown. The convenience store channel will be a focus this year for the company, supported by a planned packaging expansion for both Ranch Water and Ranch Rita into 16 oz. and 23.5 oz. single-serve cans.
Lone River also plans to continue its “cultural partnerships” in 2023, expanding on its partnership with Yellowstone actor Ryan Bingham and partnering with actress and country music artist Lainey Wilson. The company also announced a partnership with Texas-native and Grammy-award-winner Miranda Lambert.
Smirnoff Ice to Receive Brand Refresh
Diageo’s FMB offering Smirnoff Ice is now of legal drinking age, celebrating its 21st birthday this year. To mark the occasion, like many early twenty-somethings trying to leave its teenage years behind, the brand is entering this next year with a fresh look and total brand refresh.
Smirnoff Ice will unveil its revamped look in the spring, beginning with its core offerings, rolling out a fresh look across all SKUs later in the summer.
“I’ve done, over the course of my career, a lot of packaging relaunches and I’ve never seen something this successful,” Sethi told Brewbound. “It’s modern, it’s dynamic, it totally appeals to the consumers we have, but also to these consumers that we want to recruit, that the beer category needs to get.”
Smirnoff recorded more than $393.5 million in off-premise FMB sales YTD through September 17, a +7.5% increase year-over-year (YoY), according to NielsenIQ data shared by Bump Williams Consulting (BWC). The brand accounted for the third-most FMB dollar sales after Boston Beer Company’s Twisted Tea and Mark Anthony Brands’ Mike’s Hard Lemonade, and 7% of total FMB YoY growth.
The Smirnoff Ice liquid will remain the same with the rebrand, with the exception of minor formulation tweaks to Pink Lemonade and Red, White and Blue, according to a Diageo spokesperson. As for Smirnoff vodka, there are no plans for a branding redesign at this time.
Diego also announced a revamped Smirnoff Ice Zero Sugar for its core SKUs, with an equally dynamic packaging refresh. Packaged in cans, the new line will be available with two variety pack options, as well as two single-serve sizes, again with the intent to capitalize on the convenience channel.
“Zero sugar is a huge benefit space across many categories in the U.S., and as a category leader, it was important for us to really offer consumers this benefit across our core Ice SKUs,” Sethi said.
Smirnoff Ice has released zero sugar offerings in the past, to “varying levels of success.”
“We’ve learned that even in the design in the past, that was done really in the wrong way,” Sethi said. “This is not about actually making it look less flavorful. And consumers actually want to make sure they’re getting the same flavor experience, so we’re really proud of the redesign work and we know this is going to appeal to the consumers.”
Additionally, Smirnoff Ice Neon Lemonades will be a partial driver in the brand’s convenience channel growth, with the addition of a new Blue Raspberry single-serve offering. Diageo has been “blown away” by the recent growth of the lemonade line as “lemonade is having a moment again,” Sethi said.
Guinness 0.0 Expanding Nationwide; Chicago Taproom on Track for Spring 2023
U.S. consumers who have patiently waited to get their hands on Guinness 0.0 will finally get their chance to buy the non-alcoholic stout next year.
The non-alc offering was first launched in October 2020, but only in Great Britain and Ireland. The product was slated to come to the U.S. in 2021, but was delayed after the product was recalled just a month after its U.K. release due to “microbiological contamination.” Diageo later soft launched Guinness 0.0 in select U.S. markets earlier this year, but will fully launch the offering nationwide in spring 2023.
“We learned really quickly that this is something that has wide appeal,” Sethi said. “It’s enabling us to offer something to our existing consumers who wanted it for a new occasion, but also to recruit new consumers who maybe haven’t tried Guinness before.”
Non-alcoholic beer dollar sales through September 25 increased +18.2% YoY, to $5,467,785, in multi-outlet plus convenience channels, according to IRI. The segment recorded the second largest percentage increase just behind domestic super premiums, which increased dollar sales +18.6% YoY in the same period.
Former Diageo president Nuno Teles told Brewbound at the time of the 2020 Guinness 0.0 launch that non-alcoholic beer had the ability to become as much as 5% of Guinness’ business in the future.
Guinness will also expand its U.S. presence in 2023 with the opening of its new U.S. taproom, Open Gate Chicago, slated for spring.
Guinness announced plans for the taproom in late 2021, signing a multi-year lease on a 15,000 sq. ft. facility in Chicago’s West Loop neighborhood. The location will feature a 10-barrel brewing system for small-batch and taproom-exclusive offerings, as well as a bakery.
The location will be Guinness’ second U.S. brewing facility and taproom. The company’s Guinness Open Gate Brewery opened in Baltimore, Maryland, in 2018. In 2020, Nunes told Brewbound the company was exploring as many as three additional taproom locations in the states.
Additionally, Diego is expanding its charitable efforts with Guinness in 2023, launching the Guinness Gives Back campaign – a nationwide program to give back with monetary donations and community service. The company is pledging $1 million in charitable donations in 2023, as well as 1 million in community service.
“Guinness for us is not just a brand that we count on for growth, but a brand that’s very much at the heart of our values as our company,” Sethi said. “Since really the beginning of COVID, it’s been a guiding light to us.”
As part of the campaign, Guinness is partnering with NFL quarterback Joe Burrow to fight hunger and food insecurity.