Sonic Hard Seltzer is cruising into 21 additional states — including many of the namesake fast-food chain’s strongest markets.
With the spring resets in March, Sonic Hard Seltzer’s two variety packs, produced by Oklahoma City-headquartered COOP Ale Works as part of a licensing deal, will be available in Alabama, Colorado, Connecticut, Georgia, Iowa, Idaho, Illinois, Indiana, Kentucky, Louisiana, Massachusetts, Michigan, Mississippi, Montana, North Carolina, New Mexico, Nevada, Ohio, Tennessee, Virginia, and West Virginia. The expansion will also take the brand to St. Louis.
Those 21 markets represent new ground for COOP and join a primarily Midwestern footprint of Oklahoma, Missouri, Kansas, Arkansas, Texas, Nebraska and Arizona where the Sonic seltzer brand has carved a niche within the $4.5 billion segment.
Sean Mossman, president of COOP Ale Works, told Brewbound that in the seltzer brand’s early markets, it has captured anywhere from a 4.8% share to a 9.4% share. The high end of that range is COOP’s home state of Oklahoma, with a 9.4% share of seltzer, while capturing high-single digit share in major Texas markets such as San Antonio (8.9%) Dallas (8.6%) and Austin (8.5%).
“Our expectation as we move into these new markets is that we’re going to be in the 5% to 10% range in the first 60 days of each market,” Mossman said. “Sometimes on the low end, sometimes on the high end, depending on how popular Sonic is.”
In those early markets, Sonic seltzer (5% ABV, 100 calories with one gram of sugar per 12 oz. can) has found itself competing for the No. 3 or No. 4 spot in seltzer, Mossman said.
“We’re usually three or four in total volume, and we’re definitely consistently No. 3 in velocity,” he said. “Our dollars per point of distribution are right behind Truly and White Claw in these new markets for us.”
Expansion Strategy: Go to Sonic Strongholds
Mossman told Brewbound that the No. 1 factor in picking expansion states was choosing markets with a heavy saturation of the drive-in, fast-food chain. Nationwide, there are 3,552 Sonic Drive-Ins in 46 states.
Mossman pointed to Tennessee, which boasts the third highest number of Sonic locations per capita and 226 stores overall as an example of the strategy playing out. Once a strong Sonic territory was identified, Mossman said the company reached out to the largest wholesalers in heavily populated areas in those states. With either Anheuser-Busch (red) or Molson Coors (blue) wholesalers signed on, the company rounded out the rest of the state in that network, whenever possible.
“We’ve chosen to work with the largest ones first and get critical mass, and then move into piecing together some of the relatively smaller ones,” Mossman said.
Among the Sonic brand’s new wholesalers are several Anheuser-Busch houses, including Lakeshore Beverage in Chicago; Eagle Rock in Colorado and Georgia; R.H. Barringer in North Carolina; Virginia Eagle (A-B) in the suburbs of Washington, D.C;, Atlanta Beverage; Fabiano Brothers and West Side Beer Distributing in Michigan.
Mossman said the company has executed 164 new distribution agreements over the last four months.
“That’s a lot of work by our team – that is a significant amount of heavy lifting,” he said. “And that only gets us about half the country.”
In those 21 new states, Sonic seltzer’s two variety packs are receiving retail placements in major grocery and big box chains such as Kroger, Walmart, Target, and Albertsons, among others. The two themed variety packs are tropical (Melon Medley, Mango Guava, Orange Pineapple and Sonic’s signature Ocean Water) and citrus (Cherry Limeade, original Limeade, Classic Lemonade and Lemon Berry).
Additionally, Sonic seltzer is further pushing in convenience stores, with the addition of 19.2 oz single-serve cans of Ocean Water and Cherry Limeade in March.
In May, the company will add variety 24-packs for club stores featuring Cherry Limeade, Ocean Water, and Lemon Berry.
With around half of the U.S. to go, Mossman sees an opportunity for additional growth.
Non-COOP Products to Make up 90% of Company’s Biz in 2022
In less than a year, Sonic Hard Seltzer now accounts for around 40% of COOP’s overall business, Mossman said. And he expects that number to more than double this year.
“It’s our expectation for the upcoming year that it accounts for probably 85% to 90% of our total business will be in the non-COOP Ale side [of the business],” Mossman said.
The shift in business takes COOP from a branded house model that ties everything back to the mother brand, and moves it to a house of brands model, similar to New Belgium and Boston Beer. COOP’s beer business is “fire walled” from the company’s push into fourth category offerings and licensing deals with other brands, Mossman said. And more licensing deals and partnerships may be in the offing.
“We are actively looking for additional deals,” Mossman said.
Mossman envisions those new products funneling through the distribution network that the company has crafted for Sonic Hard Seltzer.
The early success of the Sonic brand coupled with the growth of the distribution network has made COOP “an attractive target for additional partnerships,” Mossman said.
“We expect in the next year or so to be making announcements about other brands that we want to introduce into the distribution network,” he said.