Midway through 2018, Lagunitas Brewing Company is the only top five U.S. craft beer brand gaining dollar share, according to CEO Maria Stipp.
Speaking to Brewbound, Stipp shared the company’s results through the first half of 2018, noting that Lagunitas ranks fourth in dollar share (up 4 percent) and sixth in volume (up 5 percent) through July 14, according to data from market research firm Nielsen, which tracks off-premise scan data at grocery stores, drugstores, convenience stores and mass market retailers.
Stipp also pointed out that Lagunitas, which last year was wholly acquired by Heineken International, carries an average off-premise case price of $38.37, the seventh-highest of nationally available craft portfolios and better than stalwart offerings from companies like Sierra Nevada, New Belgium, Boston Beer (Samuel Adams), and MillerCoors (Blue Moon and Leinenkugels).
“We like to play in the low end of the high range to be accessible, but we also don’t want to be diminishing the value of the brand,” she said.
In Lagunitas’ home state of California, the Petaluma-based company ranks as the the No. 1 craft brand by dollar share (up 3 percent) and volume (up 3 percent), according to Nielsen. Lagunitas grew beer production 7 percent, to 984,000 barrels in 2017, according Brewers Association data. It currently holds 16 percent share of volume share and dollar share in California with an average case price of $37.60.
Helping to drive dollar share growth for Lagunitas are new package formats for its 12th of Never and Sumpin’ Easy ales, including 12-pack and 19.2 oz. single-serve cans, Stipp said. She added that both brands are now ranked among Nielsen’s top 10 craft 12-pack packages. They are also among the top three best-selling 19.2 oz. cans in the U.S., showing “strong growth” in convenience stores.
To build on the momentum of 12th of Never, Lagunitas is slated to release the brand in 6-pack can packages starting in September. The company hopes to gain shelf placements at retail locations that lack space for 12-packs, Stipp said.
“We’ve had great opportunities in placing that package,” she said. “So we’re looking more into 6-pack cans in the future.”
Among the brands set for future 6-pack can releases is Supercluster, a double IPA that was initially launched as a seasonal bottled 12-pack.
In addition to adding SKUs and growing sales of newer portfolio offerings, Lagunitas remains focused on expanding distribution of its flagship IPA, which continues to rank as the No. 1 IPA in the U.S., as well as Little Sumpin’ Sumpin’, Stipp said. However, dollar sales of Lagunitas IPA declined 0.7 percent through July 15, according to off-premise sales data from market research firm IRI Worldwide.
“We’ve been working really hard to fill out our national account distribution on those brands,” she said.
According to Stipp, the biggest market share growth opportunities for the company exist in the Southeast and Texas.
“We do a lot of volume still in California, so building out all of the other markets is critical for us,” she said. “The nice thing is when we have chain distribution at places like Walmart or Publix or HEB … we do very, very well with rate of sale.”
Lagunitas is also working on expanding beyond beer and into other beverage segments including, plans to expand cannabis-infused drinks and non-alcoholic beverages.
In late July, the company, in a partnership with CannaCraft, launched Hi-Fi Hops, a pair of zero-calorie, zero-carbohydrate, IPA-inspired non-alcoholic sparkling waters. One of the drinks contains 5 mg of THC (tetrahydrocannabinol) and 5 mg of CBD (Cannabidiol) while the other contains 10 mg of THC. Since launching, Stipp said the company has been challenged to meet demand for the product, which retails for $8 a can.
“So far from what Cannacraft tells us everything that we’ve put into the marketplace has sold through very fast,” she said.
Stipp declined to share internal shipment data for the product but said it would be available in more than 300 California dispensaries before the end of the year.
And recently, Lagunitas launched Hop Water, a non-alcoholic, zero-calorie, zero-carbohydrate, water made with Citra, Equinox and Centennial hops as well as “a pinch” of brewer’s yeast. The product, according to Lagunitas, tastes like an IPA. On its website, the company described the water as for someone who wants an IPA at 9:30 a.m.
With support from Heineken, Lagunitas has also turned some of its attention to global markets. The company is actively working to begin brewing operations at Heineken-owned Brand Brouwerij in Holland, Stipp said.
By moving its production from its Chicago brewery to overseas, Stipp said Lagunitas would be able to put fresher beer in the marketplace at “a better price.” However, she said the company is still “fine tuning the brewing process,” but she hopes to be brewing there in 2019.
And while Lagunitas isn’t currently considering opening more taprooms in the U.S. — beyond the three it already operates in Chicago, Seattle and Petaluma — the company is considering expansion in places such as Amsterdam and Paris, Stipp said.