Spirits giant Sazerac manages approximately 500 brands across beer, wine and spirits, yet president and CEO Jake Wenz insists the company is still “focused.”
Wenz spoke at Beer Marketer’s Insights’ annual fall seminar last week in New York City.
“I like to joke [that] my predecessor [Mark Brown] is a kleptomaniac for assets, so I don’t think we’ve ever discontinued anything,” Wenz said. “I also apologize to all the distributors out there that are carrying maybe one too many brands, but we don’t like to give up.
“Some people might look at that and say we’re not focused,” he continued. “We think we are. We know our lane – we are a spirits company.”
Sazerac is the second largest spirits company in Circana-tracked off-premise channels, and recorded the second largest dollar sales growth among the top 10 spirits companies in the week ending November 3, with dollar sales increasing +12.2% and volume +6.9% year-over-year. No. 3 Gallo was the only top 10 spirits supplier to outpace the company, with dollar sales increasing +19.9% and volume +27.2%.
The key to the company continuing to find growth while managing such a robust portfolio is brand strength, Wenz said.
“I’d be lying if I said it’s easy out there right now, but you’ve got brands that are setting new highs every week, so what it ultimately comes down to is brand building still matters,” Wenz said. “It matters when the category is strong, it probably matters even more when the category’s not feeling the same tailwinds as it did a couple years ago.”
Sazerac also has the benefit of being a privately owned company, something that gives it the time and space to wait a brand out until it starts to connect with consumers, according to Wenz, recalling the journey of Fireball Whisky.
Fireball was practically dumped on Sazerac’s doorstep. In the late 1980s, Fireball-maker Seagram’s offered the brand rights for spirits brand Dr. McGillicuddy’s in Canada to then-Sazerac CEO Mark Brown. The catch: Brown also had to take on 30,000 cases of the brand’s cinnamon-flavored whisky, according to Wenz. The offering, characterized by Wenz as a “piece of shit” brand, was rebranded as Fireball in 2007, and had a slow burn, connecting with college kids in Vancouver, before expanding to Washington and then later Nashville, a “relatively random” move that led to Fireball taking off.
Now, Fireball is a top-five spirits brand, with Sazerac also rising in the ranks as a top beer category vendor, thanks to a malt-based version of the cinnamon flavored spirit.
The growth of Fireball would not be possible if Sazerac was a publicly traded company, Wenz said.
“It’d be very difficult to replicate our model if you try to do it as a public company,” he said. “It’s maybe a little tougher to stick with things that might take longer, like Fireball, [or privately owned] Tito’s.”
Among Sazerac’s 500 brands, its bourbon brand Buffalo Trace remains the company’s “crown jewel,” Wenz said. Sazerac is constantly investing in the brand and its Kentucky distillery, including a $600 million expansion in 2022.
“I’ve been with the company for 10 years, [and] there hasn’t been a day, not a single day, where I’ve been at the distillery where there’s not a contractor,” Wenz said.
“There’s a saying in our industry that the fastest way to become a millionaire is to start with a billion and then build a distillery,” he added. “So, it’s not for the faint of heart.”
Sazerac also continues to add to its bursting portfolio, with more than 70 deals closed in the last decade, according to Wenz.
Sazerac’s most recent deal was the acquisition of BuzzBallz, a wine-, spirit- and malt-based ready-to-drink cocktail (RTD) brand, and the rest of the Southern Champion portfolio earlier this year. The transaction was “close to” Sazerac’s largest deal to date, Wenz said, noting that he initially wanted to acquire the brand four-to-five years ago, and “probably ended up paying a little bit more than we would have,” if the company had pulled the trigger back then.
BuzzBallz, which packages its RTDs in patented spherical containers, was founded in 2009 and has grown to be a more than $1 billion company, with distribution in 50 states and more than 24 countries, founder Merilee Kick told Brewbound prior to the Sazerac acquisition. And there is “still enormous distribution runway” for the brand, Wenz said.
Sazerac was attracted to the “slow” and “steady” distribution footprint Kick had built, along with BuzzBallz’s rate of sale, which is “going up every year,” despite “still relatively low” brand awareness and household penetration, Wenz said.
“For our profile, that’s not the typical deal that we do,” he added. “Most would say we collect unloved assets and try to resuscitate them, so this is a little bit outside of our wheelhouse.”
Year-to-date through November 2, BuzzBallz dollar sales have increased +1,804.9% and volume +1,803.7% in NIQ-tracked off-premise channels, according to data shared by 3 Tier Beverages. Its spirits-based offerings have made the brand the fourth largest spirits-based RTD brand in NIQ-tracked channels in the last 52 weeks, behind Gallo’s High Noon Sun Sips, Anheuser-Busch InBev’s Cutwater and Atomic Brands’ Monaco Cocktails.
Sazerac also sees significant opportunity for BuzzBallz internationally, as the brand is “doing quite well everywhere it’s placed, even without the same tender loving care” as it gets stateside, Wenz said. He would not share how much of Sazerac’s business is international, but said “we’ve got a lot of work to do.”
For some time, Sazerac didn’t believe it should participate in the RTD space, Wenz said. However, the company “had great relationships in c-stores,” “spirits brands that turned at the same speed as single-serve beer” and had a distribution network that could support the segment, he continued.
That distribution network is different from many other spirits companies’ networks, with Sazerac using beer distributors along with its wine and spirits partners. The network was built “quietly” and was distributor-driven, with beer wholesalers encouraging Sazerac to explore the convenience channel.
“People look at us as if we’ve done something like a unicorn, and we don’t see it that way,” Wenz said.
“And it wasn’t Machiavellian, it wasn’t some grand strategy,” he continued. “We said, ‘Look, we think there’s a place for small sizes, maybe a little bit higher proof, high flavor in this channel,’ and several beer distributors across the country said, “We’ll give it a shot.’”
Sazerac also sometimes uses multiple distributors in the same markets, with Wenz acknowledging that there are “always pet accounts for distributors,” and it’s the supplier’s job to pick the “best athlete” for each brand.
“If we’re going to be a competitor for the well, we can give everybody equal opportunity and let the best distributor win in a given state,” he said.