NBWA Annual Convention: White Claw Maker Investing $250 Million to Increase Production and Meet Demand

Starbucks, Apple, Tesla … and White Claw?Anthony von Mandl, the founder of White Claw parent company Mark Anthony Brands, told thousands of beer wholesalers Tuesday during the National Beer Wholesalers Association’s Annual Convention that his company is a disruptor in the vein of those iconic brands.

According to von Mandl, White Claw’s disruption is “growing beer and unlocking substantial incremental profits and sales growth” for its beer wholesalers and retailers. He expressed confidence that White Claw will be “an enduring brand” that will be “connected to consumers for decades to come” with “the potential to deliver billions of dollars of profit” to its partners.

“We are building an iconic global brand just as Starbucks did,” he proclaimed.

As such, von Mandl also cautioned against undercutting White Claw — which commands more than $33 a case — with value seltzer brands. He warned the industry against making “a fundamental mistake” by taking mainstream beer brands such as Bud Light and Corona and “slapping seltzer on them,” which he said “won’t work” and could “damage” those brands.

“The consumers flocking to White Claw today are not going to magically return to the mega beer brands of yesterday, despite whatever last gasps, line extensions or nostalgic marketing they launch,” he said. “With White Claw and our entire brand portfolio, it’s not just about volume, but about profit.”

As to the volume question, however, White Claw is looking to step up production, with promises to invest $250 million in new and existing facilities. With so many recent headlines about consumers searching for White Claw, that had to offer reassurance to some wholesalers.

The flip side to the search is locating the item in the store — something that addresses that profit question. Von Mandl implored wholesalers to give additional shelf space to White Claw and Mark Anthony’s other brands, Mike’s Hard Lemonade, Cayman Jack and MXD, among others. He pointed to the growth of each of those brands, and Mark Anthony’s overall acceleration over the last seven years, buoyed by a case price of more than $33.

“This September alone, to date, our company’s depletions are plus-150%,” he said. “By the end of the year, we only expect to be behind publicly traded goliaths ABI, Molson Coors and Constellation in sales and profits.”

Von Mandl also noted that Mike’s Hard Lemonade has sold 400 million cases — 75 million in 2019 alone — and delivered $3 billion in profit to its wholesalers and another $3 billion in gross profit to retailers over the last 20 years.

“The most exciting news is what we’ve done and delivered over the last 20 years could all happen again in just the next 24 months,” he said.

Von Mandl also didn’t pull the punches he threw at the largest brewers, Anheuser-Busch and MillerCoors, which combined to shed more than 500 million cases in sales over the last decade, while increasing their profits by $2 billion during the same time period.

“How much did your profits grow with either of these two brewers in the last 10 years?’ he asked.

“Despite 500 million less in sales, they continue to mandate to you significantly disproportionate shelf and display space relative to their sales,” he continued. “Space they do not deserve. Space that is costing you and retailers significant lost profits.”

Despite a flood of new entrants into the hard seltzer category — von Mandl said there are more than 70 hard seltzer brands on the market now — White Claw has maintained 60% of the market share, and combined with Boston Beer Company’s Truly Hard Seltzer, commands about 75% of the market.

“I’m convinced that hard seltzer long-term will be no different” than energy drinks (Red Bull and Monster) or soda (Coca-Cola and Pepsi),” he said. “There will be two major brands that control 85%, maybe 90%, maybe 95% of the business market.”

According to von Mandl, White Claw has struck a chord with consumers because it meets their desire for convenience, flavor and moderation, while also hitting on health and wellness trends.

So where is White Claw’s volume coming from? Mike’s Hard Lemonade VP of marketing Sanjiv Gajiwala told Brewbound that hard seltzer is sourcing 55% of its drinkers from beer, 37% from wine and spirits, and 8% from FMBs and cider. Within beer, about 15% are coming from craft. And just 1.5% of White Claw drinkers are coming from Mike’s.

“Within beer, 85% of that is premiumizing, so they’re moving from sub-premium, domestic lights and regular above premium lagers and imports and moving into more premium price points and products,” he said.

To meet consumer demand for White Claw, Mark Anthony Brands is investing $250 million to build a pair of production facilities on both coasts, as well as doubling its capacity at the Cold Spring contract brewery in Minnesota, Gajiwala said.

In New Jersey, the company plans to build a brownfield production brewery from the ground up that is capable of producing 50 million cases of White Claw annually, Gajiwala said. That facility is expected to be operational by April 2020.

Meanwhile, the company is still in the process of site selection for a potential West Coast brewery. Those three facilities, along with the company’s co-packer in Tennessee, will give it as much as 200 million cases of capacity in 2020, and 250 million cases in 2021, Gajiwala said.

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