White Claw maker Mark Anthony Brands plans to spend $385 million — $135 million more than the previously projected $250 million — to build production facilities in New Jersey and at a still-undisclosed location in the western United States, founder and CEO Anthony von Mandl shared during the Beer Insights Seminar conference in New York on Monday.
“We could sell and ship today 20 million cases we don’t have, out the door,” von Mandl told Benj Steinman, the president of subscription newsletter Beer Marketer’s Insights. “That’s how short we are in the system.”
Mike’s Hard Lemonade president Phil Rosse added that White Claw could have sold an additional 10 million cases this year but the company couldn’t keep up with demand.
It’s part of the category’s crazy growth: White Claw sales will top $1.5 billion in 2019, with total hard seltzer category sales nearing $2.5 billion, Mike’s Hard Lemonade senior VP of marketing Sanjiv Gajiwala said during a recent CNN Business panel discussion.
The investment, von Mandl believes, is the largest made in the U.S. beer industry in new production facilities in the last 30 years.
“These are very major plants,” he said, adding that the company is about to break ground on a more than 900,000 sq. ft. brewery, packaging and distribution facility in the western U.S.
The goal is to build those facilities in seven months or less, with the company deploying heavy-lift Russian aircraft to move “hundreds of tons of equipment” to speed up the timeline by six weeks, von Mandl said.
Once those facilities are complete, von Mandl said about half of Mark Anthony’s production will come in-house in 2020. He added that the company has two additional production sites selected (also in undisclosed locations), and the company is prepared to invest another half a billion dollars to build them.
Rosse and von Mandl shared that half of White Claw’s volume is being purchased by a coveted cohort of 21- to 29-year-old consumers, with an even split of men and women buying the product.
“Beer is only sourcing 9% of its volume from 21- to 29-year-old males,” Rosse said. “A lot of the missed generation is obviously coming back through White Claw.”
“And coming back from spirits,” von Mandl added.
Although lager beers currently make up 72% of the beer market, Rosse said he believes more flavorful beverages will eventually cut that share to an even 50-50 split, with hard seltzers accounting for much of the share gains.
Despite the success of White Claw, Rosse said the mindset at Mark Anthony Brands is that the “the biggest brand is yet to come.” Still, their goal remains to build White Claw into a global brand, with plans to launch in Canada in early 2020.
Despite its long-term global intentions, Mark Anthony’s objective moving forward is to capture a 10 share of beer dollar sales in the U.S. “as fast as possible.”
Other notes from the meeting:
Boston Beer-Dogfish Head Wholesaler Alignment Moving Slowly
Boston Beer Company founder Jim Koch and Dogfish Head co-founder Sam Calagione discussed their companies’ merger, with Calagione likening his brand to a mutant living in the woods, joining the X-Men and Professor X (Koch).
“For us, we’re very committed to craft or we wouldn’t have done this,” Koch said.
On the ongoing alignment of those two brands into one wholesaler network, Koch said the process is moving slower than hoped. He cited deals in Georgia and Ohio but said there was work to do in other states to get Dogfish Head into Boston Beer’s wholesaler network.
“That’s where the brand needs to go,” Koch said.
Constellation Brands Will Line Extend Modelo; Was Wrong About Craft
Constellation Brands chief marketing officer Jim Sabia touted the growth of Modelo Especial, which is now the fourth best selling beer in the U.S., with dollar sales up 19% year-to-date in off-premise retailers tracked by market research firm IRI and growing double digits in 36 states.
The strategy moving forward is to grow Modelo Especial’s draft presence in on-premise accounts, and also introduce packages of 7 oz. bottles of the brand, similar to Corona Extra’s “Coronita” packages. Line extensions are also in Modelo’s future, but the company will be careful with the franchise.
“We have to innovate, and we will innovate,” he said.
Sabia also briefly touched on Constellation Brands’ craft brewery investments — Ballast Point, Funky Buddha and Four Corners — admitting that the company’s “hypothesis was wrong.” Constellation believed there would be a couple of big players in craft, but the segment turned “really local.”
Anheuser-Busch Promotes Drinkworks Cocktail Pods
Anheuser-Busch CMO Marcel Marcondes showed a video hyping a Drinkworks Home Bar System that makes “bar-quality cocktails” from pods.
“Believe me, this is amazing,” he said.
In 2017, A-B formed the Drinkworks joint venture with Keurig Green Mountain (now Keurig Dr Pepper) in 2017 to create in-home alcoholic drink systems.
On Monday, Drinkworks announced a partnership with Brown-Forman to develop co-branded cocktail pods from well-known brands such as Jack Daniel’s, Gentleman Jack, Chambord, and Herradura to make various cocktails, including margaritas, manhattans and French martinis.
Molson Coors CEO on Non-Alc Investment
Molson Coors CEO Gavin Hattersley announced a multi-year partnership and “non-controlling equity investment” in L.A. Libations, an incubator and creator of non-alcoholic beverages. Hattersley declined to disclose how much Molson Coors invested in L.A. Libations, but called it a “significant minority stake.” He added that the partnership “essentially adds and M&A pipeline” for Molson Coors.