Brewbound Podcast: Meet Brewbound’s 2024 Craft Brewery, Large Brewery and Beyond Beer Company of the Year

[00:00:00] Justin Kendall: Heading to CBC? Kick things off the day before at Brewbound's meetup at Love City Brewing in Philly, Sunday, April 19th from 5 to 7 p.m. Connect with beer industry leaders, grab a drink, and catch up with the Brewbound Live. It's free to attend and walking distance from the convention center. Head to Brewbound.com slash lovecity.rsvp. And don't forget to catch the Brewbound Live at booth 956 during CBC. Next on the Brewbound Podcast, interviews with three of our 2024 Brewbound Award winners. Hello, and welcome to the Brewbound Podcast. I'm Justin Kendall, editor of Brewbound. And if you're listening to this right now, Jess, Zoe, and I are in Marina del Rey, California at the Brewbound Live Business Conference. This week, we're bringing you interviews with three of our 2024 award winners. You'll hear from the Craft Brewery of the Year, Coronado Brewing Company, the Large Brewery of the Year, Narragansett Beer, and the Beyond Beer Company of the Year, Surfside. You'll hear from Rick Chapman, the co-founder of Coronado Brewing Company. And then we'll bring you an interview with Mark Hellendrung, the owner of Narragansett. And we will wrap up with an interview with Clem Pappas, the co-founder And Surfside. So let's get to those interviews now. Our next award winner is our 2024 Craft Brewery of the Year. That is Coronado Brewing in San Diego. Joining me now is Rick Chapman, co-founder of Coronado Brewing. Hey, Rick, congratulations.

[00:01:54] Rick Chapman: Hey, thanks, Justin. Honored.

[00:01:57] Justin Kendall: We're honored. So I'm so stoked that you're joining us. And we got a great view from, I believe, your boat.

[00:02:04] Rick Chapman: Yeah. Yeah, there's a little bit of helicopter noise. The Navy's doing their stuff in the background there, so hopefully that doesn't interfere too much.

[00:02:13] Justin Kendall: Coronado is 29 years old and you all are crushing it in the last couple of years, posting double digit growth led by Weekend Vibes IPA and Big Weekend Double IPA. You've also launched a cider brand that's performing very well in SoCal. When you look back on Weekend Vibes 2019 launch, Is that sort of a catalyst or a turning point that you see for the brand?

[00:02:41] Rick Chapman: Yeah, it really was. We re-looked at our portfolio back in 2016, 17, and it took a couple of years to develop the new beer, Weekend Vibes, to get it where we wanted it. Yeah, that's really what launched us on the path that we're on today, growing for the past five years straight.

[00:03:03] Justin Kendall: What is it about that brand that's really resonated so well with consumers?

[00:03:09] Rick Chapman: The liquid is insane. Our production team, laboratory, everybody over at the mothership, they just do a phenomenal job and the liquid's incredible. The name that we chose, Weekend Vibes, resonates with our consumers. San Diego, everything's about the beach and ocean lifestyle. We've got the mountains close to us as well, so everybody wants to live for the weekend, so we launched Weekend Vibes.

[00:03:40] Justin Kendall: It's such a perfect name. And it's, it's one that you can really build off of. And you've done that with big weekend. It's a double IPA rolled out last year. It's appealing to that higher ABV seeking consumer and big weekend was among the top Craft Brewery launches of last year. And those trends seem to be holding up in year two. What is the opportunity that you see with big weekend?

[00:04:05] Rick Chapman: It's massive. Never Better was our double IPA before, and it was doing okay. It just wasn't growing the way we wanted, so we decided we're going to tap in with the Weekend Vibes brand and really lean on that and its workforce. Yeah, it's a phenomenal beer and just does fantastic out in the market for us. Our wholesalers are on board with it, the retailers and ultimately the consumers.

[00:04:37] Justin Kendall: You've really got a foundation for a family here. Are there any new weekend family members coming along in 2025 or very soon after?

[00:04:45] Rick Chapman: Possibly soon after. Yeah, there's discussions on other beers to put into that portfolio.

[00:04:55] Justin Kendall: I mentioned cider at the top of our conversation here, and you launched that a couple years ago, and that bet has paid off. Why was cider the right fit for Coronado?

[00:05:07] Rick Chapman: We were in the seltzer game too, and we wanted to do something else. Our You know, a lot of our brewers and staff, they drink ciders and, you know, we sell ciders at our pubs. And so, we started exploring it and just said, hey, we think we could do this well as well. So, and at that time, that's when the licensing in California opened up where you could do cider or wine spirits and beer in one location. So that's what we went after, the cider category. We're the number one independent cider company in Southern California right now and growing.

[00:05:44] Justin Kendall: What do you see as the opportunity to build on that momentum that you have there in SoCal?

[00:05:51] Rick Chapman: Uh, just, you know, we have so much work to continue to do in California for our beer and cider. It's, you know, we just launched the cider brands in San Diego to start. And then we went to Southern California and now it's all of California and some of our outside states as well. People are begging for it. So there's a lot of opportunity. Um, yeah, we're just, you know, we really focus on. from our core here in San Diego and go outward from there. But there's a huge opportunity. A lot of other people are getting into ciders as well, other breweries in the area. So we're lucky that we started before most of them. And yeah, we're just capitalizing on it.

[00:06:35] Justin Kendall: Well, Coronado also has a longstanding partnership with lifestyle brand Salty Crew. These guys? With Salty Crew Blonde, yeah, which you're tipping back there. What has that partnership unlocked for Coronado?

[00:06:50] Rick Chapman: Yeah, it's insane. The Salty Crew guys, the Lanes, Jared and Hayden Lane and their partners, they came to us years ago and wanted to do a movie at our location. And then second movie we launched, they wanted to have a beer, so we created a beer on draft. And then after the movie, we're like, hey, I think we could have about 500 people, 1,500 people showed up. So we had to turn people away for that event. But yeah, we just started discussing, hey, what would it look like if we did a beer for Salty Crew? And they were very involved in it. You know, they're a lifestyle brand that is very authentic to themselves. And, you know, they're dear friends of ours. Our friendship's grown over the years of our partnership. But, yeah, so we created that beer with them. You know, tried a bunch of different beers and, you know, came down to they wanted to do a boat beer, which fits their brand. And so we developed that with them, came out with Salty Crew Blonde. And, uh, yeah, it's, it's been a rocket ship for us. It's, it's exceeded our expectations. It's about a third of our portfolio now, the salty crew. And that was just with one six pack until last year when we did started the 12 packs. And now we have the 19 twos as well.

[00:08:14] Justin Kendall: You got the full suite going on then.

[00:08:17] Rick Chapman: Yeah. Okay. Yep.

[00:08:19] Justin Kendall: That's awesome. And you've got the, at the brewery business as well. How is that going this year?

[00:08:26] Rick Chapman: Uh, our pubs. Yeah. So the original brew pub, it's, you know, that's been the golden goose for 29 years now. It's, it's still cranking along, you know, um, we just do beer and wine there and it's, yeah, it's a great establishment. I think you've been there before.

[00:08:41] Justin Kendall: Oh yeah.

[00:08:43] Rick Chapman: Yeah. Um, yeah. Yeah. And at our, uh, production facility, we have a nice tasting room, a kitchen and yeah, those, they're both growing, you know, not, not, Not that much. COVID was gnarly on retail business, so we came out of that regrouped and we're doing fine. Both locations are doing well.

[00:09:05] Justin Kendall: Well, not a lot of people can say that in 2024. So when you're looking ahead to 2025, what do you see as the biggest opportunity ahead for Coronado?

[00:09:17] Rick Chapman: just continue to focus on what we're doing. Like I said earlier, there's so much opportunity still in California, so we have a lot of work to continue to do here. We are in about 13 states, but 85% of our business is California, and we still see a lot of room for growth in our home state.

[00:09:41] Justin Kendall: I mean, it's essentially three to four states when you look at that compared to the rest of the map.

[00:09:48] Rick Chapman: Yeah, and it's interesting looking at numbers and that, you know, the other states that are surrounding us, you know, Arizona, Nevada. Colorado, Hawaii, those states are growing more than California. That's about 10% of our sales, those four states. But yeah, we're growing at about, I think, 14% on those states and about 12% this year in California.

[00:10:17] Justin Kendall: I love to hear that. So Rick, I'm so excited for you all. Congratulations again.

[00:10:25] Rick Chapman: Thank you, Justin, and all the crew at Brewbound Live appreciate the partnership with you guys, and we're so honored. My whole team is being very quiet about it, but they're excited, and we appreciate it. We appreciate the partnership with you all.

[00:10:42] Brewbound Live: This episode is brought to you by the Craft Brewery Conference, where big ideas, bold beers, and brutally honest shop talk collide. Join thousands of industry pros leveling up their game. Don't miss it. Register now at CraftBrewersConference.com.

[00:11:02] Brewbound Podcast: Our Large Brewery of the year is someone who everybody should know at this point. It's been 134 years. It's Narragansett Beer out of Rhode Island. And here to chat all about it is Mark Hellendrung. Welcome, Mark. Let's talk about Narragansett.

[00:11:19] Craft Brewery: Hi, Debra. I don't feel that old.

[00:11:22] Brewbound Podcast: I don't think you're quite that old, but you are in charge of this brand that is 134 years. That's a very long time.

[00:11:30] Craft Brewery: Yeah, we keep chugging along, keep creeping up on the top of the pack. So, yes.

[00:11:36] Brewbound Podcast: You guys are our Large Brewery of this year because you, even after all this time, are still finding growth in beer, have such a beer-focused portfolio. And so we're going to talk about how you're doing this and how Narragansett Beer come to be where it is now. And I want to start with, Narragansett Beer had a pretty extensive and sometimes complicated history of just ownership and where it's even produced and all those fun things whenever we talk about Craft Brewery. You took over in 2005. It was quite a change, I think, for you a little bit. You had some beer experience, but you also were in other forms of CBG. Why did you want to take on this big juggernaut that is Narragansett?

[00:12:23] Craft Brewery: Well, first, this is such an honor, and thank you. This is incredible. And I don't think it was such a juggernaut. I think when I got Narragansett Beer Pabst, it was doing about 500 barrels a year, and it was pretty close to dead. And really, the short story is I was in transition. I was consulting with Magic Hat at the time. I had finished up my time at Nantucket Nectars, and Really looking for that next journey in my professional career. I love beer and I fell in love with the people who remembered the brand. I was sitting in a bar, Cappy's in Newport, Rhode Island. You got to remember this was like 2003 and so Craft Brewery was like basically just Sierra and Boston beer, Sam Adams and Bass Ale was still on tap and I'd had all that and I asked for if there was anything else and this old timer at the end of the bar said, give the kid a Gansett. And it was amazing. The next thing you know, the whole bar is just talking about Kirk Gowdy and Red Sox baseball and Goodwill guys and just everything that was just so awesome about Narragansett Beer Rhode Island and the brand. And I just, I felt like it deserved a fate a little bit better than what it was experiencing at the time.

[00:13:48] Brewbound Podcast: I remember Narragansett Beer one of the first Craft Brewery I was drinking in like college because South Street Diner always had, you could get Narragansett Beer, it was probably like the cheapest beer on the menu, but also like the best quality beer you could get at this diner that's open 24 hours a day. And so that was a common choice for us in college. So it has a fond place in my heart for sure.

[00:14:13] Craft Brewery: That's awesome.

[00:14:14] Brewbound Podcast: When you took on this brand, uh, it wasn't, they weren't producing it in Rhode Island at that time. That was something that you kind of made it a mission later on to do. And as of just a few years ago, now you do have that location back in Rhode Island again. Why was that something that was important for you?

[00:14:34] Craft Brewery: You know, the brewery in Rhode Island was so important because I, I think, um, listen, I'm not a marketing major, but. The best definition of a brand that I've heard is just a promise kept. And when Falstaff bought Narragansett Beer in the day, it just started breaking promises, right? Where it ended the Red Sox sponsorship, it started laying off people, it moved the brewery to Fort Wayne, Indiana. And I thought if we were gonna be completely true to the brand's history and roots and heritage, and now 134 years, we would have to brew it. or at least have Craft Brewery in Rhode Island again, just to really solidify everything and keep that ultimate promise. And it's been great. We opened up just after COVID, and gosh, we had over 100,000 people in there a year. And it's just an awesome place to just interact with all our fans.

[00:15:28] Brewbound Podcast: Narragansett, and particularly your flagship, the Narragansett Beer, has a pretty big legacy, at least, especially here in New England. You know what that can looks like. You see it everywhere. It has a pretty passionate support base, I guess you could say. Long-time fans, how are you balancing, making sure you're keeping up with those long-time consumers, but also staying fresh and staying relevant with folks?

[00:15:59] Craft Brewery: Yeah, I think I've got the easiest job and the hardest job in the world at the same time in a weird sort of way in that the easy part is you've got all this great rich history to draw on, right? And when I got the brand back and we redesigned the packaging, it was just this beautiful collection of different pieces from 1905 and 1965. And it just came together beautifully. So there's all that to lean into, but at the same time, we have to really honor the history and heritage. And so like a hazy IPA under the Narragansett Beer doesn't necessarily make a lot of sense to most people. So it's really honoring the past, thinking about where the beer drinker is going and kind of meeting them in that space where the past meets the present meets the future. And all of that is really just grounded in stories, right? I think that's what makes this brand so special is everyone has a unique story about it. I was just flying to Atlanta a couple weeks ago, and you mentioned your college experience. The airline stewardess, she was like, I love Narragansett Beer. I drink it all the time. And I'm like, are you Atlanta based? And she's like, Well, yeah, I am. I buy it in Publix all the time. I was like, well, how did you discover Narragansett? And similar story. She went to college in Boston, and she just took that with her to Atlanta when she moved. It was amazing.

[00:17:29] Brewbound Podcast: You still, I mean, like you just said, hazy IPA, maybe not in the future, but you still have some innovation going on in your setup. There is a pretty robust beer program for consumers to try styles, particularly out of that tap room. What else can people find from Narragansett Beer than that classic lager?

[00:17:50] Craft Brewery: There's a fine line between what you do in your taproom and then what actually makes it out into the real world and what can be successful in a much more competitive landscape. But, you know, we can do anything and everything at the taproom and that's what is so great about the team and their perspective on things. Of course, we do hazy IPAs and we do sours. Then we have a really great seasonal program where we've got a traditional Oktoberfest. Our top selling beer in the fall is always a cinnamon rim, pumpkin ale. And so it's just great. And so it's not, you know, some of these breweries, they really kind of hone in on one style. And Really, if you come to our tap room, the first thing I think you'll notice is that it's really just, it's like this beautiful community hall of people from all walks of life. And they all come together in this space and they're all drinking different types of beers. And it's a celebration of our brew team and the history of this beer. Because we also, while we do have this lager, right? Narragansett Beer the only New England brewery at the original GABF in 1984 or whatever it was, right? And so going back to 1933, we've had these Bach beer festivals and we've always had Oktoberfest festivals. So really the regional brewers, which is what we originally were, were the original Craft Brewery, right? It was just consolidation and kind of the big domestics that kind of put most of them out of business. And so it's pretty cool to be here standing after 134 years.

[00:19:30] Brewbound Podcast: A lot of folks right now with the current state of Craft Brewery and just consumer wants and trends, they're looking into other spaces Beyond Beer. You guys have a little bit of that. You have that hearty with that Dell's partnership you have, but you're still pretty primarily beer focused in your portfolio. Why is that approach, rather than becoming more of this total beverage company, the best for Narragansett?

[00:19:59] Craft Brewery: We're staying focused on beer right now for a couple reasons. I think one, just, we have so much runway left in lager. I mean, we're in, I don't know, 13,000 off-premise accounts and maybe 7,000 bars and restaurants, but gosh, we could be in double that. So I just, in our existing footprint. So I just look at that opportunity. I said, we're not gonna get distracted. We're gonna stay focused and we're gonna finish that job. But at the same time, you know, I think what everyone in our company does, pretty good job at is seeking advice and listening, and the market speaks to you if you're willing to listen, right? And so we've got some great distributors where we do business with some of the best retailers in the country, and they're just like, Mark, Narragansett, stay focused. We don't need another NA, we don't need another RTD, we don't need another whatever. I think we just try to stay focused and we used to do all that stuff, but the market changed and you need to change with it. We've got a great Oktoberfest, it wins awards, and we used to sell it up and down the East Coast, but something changed in maybe, I don't know, 2014, 15 or so, where it was like, all right, You look at North Carolina, there are, I don't know, 200 other breweries who are doing an Oktoberfest. What makes yours different? And at the end of the day, there wasn't a lot that was different, right? So we just try to stay focused. And I think part of the secret to our success has been just keeping it simple, stupid, not to use a dumb term, but maybe we're not smart enough to go over complicated process.

[00:21:44] Brewbound Podcast: I think focus should be like the word of 2024 for the beer industry, because that has been every single person we've talked to, especially in this awards season and doing all these videos, has been, we're doing okay now because we're focused and we're not overextending ourselves or the brand. So it's definitely really key for folks right now when there's so much out there, product-wise, company-wise. It's just really easy to get lost in all of that, for sure.

[00:22:13] Craft Brewery: Yeah, I could not agree more with that statement. Absolutely.

[00:22:18] Brewbound Podcast: One thing that you all have also done that has been kind of a struggle for some folks or has been deprioritized a little bit has been your draft business. And that has been pretty robust for New York Gansett. And it was deprioritized a little bit by the industry naturally from the pandemic. But since then, we're still pretty heavy package focused. How have you been able to maintain that business and that focus on draft?

[00:22:44] Craft Brewery: Narragansett's just always been rooted in the on-premise channel, and I'd say, like, way before I got involved. And so, the Narragansett Beer force was legendary in the Northeast back in the day as just on-premise focused draft line. And the old adage that, you know, a pint over the bar is worth a six-pack in the liquor stores. And I think we've always just sort of held true to that and, you know, Some of my key sales guys are just, they love working the on-premise. And so it was, you know, the Northeast took it especially hard during COVID and then, and, you know, shut down more than other parts of the country, I think, or as much as anybody else. And we just took it as a point of, point of pride, point of competition, and, but just a point of community too, right? Where we just, we wanted to rebuild this channel together with the on-premise channel. And so, you know, you won't find Narragansett Beer big chains and all that. It's local. sole proprietors, small groups, neighborhood bars, dive bars, foodie joints, Craft Brewery bars, and we just, it's what we do, I guess, I don't know.

[00:24:05] Brewbound Podcast: So over 130 years down, looking ahead to the future, what can we expect to see on the horizon for Narragansett?

[00:24:15] Craft Brewery: Listen, I think the future is a lot of what we've talked about, right? A lot of focus, a lot of really continuing to connect with the people who love our brand in new places and finding new people in other places. And I talked about stories, those I'm traveling a lot and I'm just blown away by the people that I meet and the stories that they have. And even the restaurants that we're in, like I'll go into a place in Nashville and just ask like, you know, how'd we get in here? And it's like, man, my wife is from Rhode Island and I go there on vacation. I just love it. And I fell in love with this beer. And yeah, so it's, It's really a lot of that. We're in 26 states. We'll open them up pragmatically. We've got a big year next year. It's the 50th anniversary of JAWS. So we're going to try to open up a few states really to kind of open up that opportunity. And it's going to be a pretty fun year.

[00:25:22] Brewbound Podcast: So final question for you, Mark, beer against it, Large Brewery of the year, posting significant growth, even after all this time, and especially in such a critical time for beer. There has to be a piece of advice that you have or something that was given to you that you think might be helpful for folks that was useful for you and your business.

[00:25:43] Craft Brewery: Yeah, I go back to Bill Considine, who his dad was actually the head of sales for the brewery back in the, 50s and the 60s. And he was running one of the distributors we were with when we launched. And he, am I allowed to swear?

[00:26:01] Brewbound Podcast: Go for it.

[00:26:04] Craft Brewery: He basically sat down and said, Mark, just don't fuck it up. And I think a lot of us take that to work. every day, right? And so that's where it comes into that history of 134 years. It's like you really have to respect that heritage and where we've been and kind of boil that up and take it forward to where we want to go with this thing. So hopefully we're living up to that.

[00:26:32] Brewbound Podcast: I think so. And I think that's great advice for folks. So thanks again, Mark. And congrats again on being the Large Brewery of the year. We can't wait to see what happens next in the next 134 years.

[00:26:45] Craft Brewery: Thank you. This is such a great honor. And it's so nice to talk to you, Zoe.

[00:26:52] Justin Kendall: Let's meet our next Brewbound Award winner, the 2024 Beyond Beer Company of the Year. It'And Surfside, the popular ready-to-drink canned cocktail brand. Joining me now is Clem Pappas, CEO of Stateside Brands. Congratulations, Clem.

[00:27:09] Coronado Brewing: Justin, thank you so much. Really appreciate the award and the honor.

[00:27:13] Justin Kendall: Hey, it is our pleasure. And Surfside has definitely earned it. You're having another great year. You're chasing 5 million cases this year. What do you attribute the growth to this year?

[00:27:26] Coronado Brewing: You know, as far as as, um, Surfside, we feel like we've just really, um, been fortunate on a number of fronts. And I think it's, it's not really one thing. It's a combination of. of everything, right? It's kind of like, you know, the three-legged stool that's only as strong as, you know, its weakest leg. And so I think we've been fortunate to have great partners. I think we have a brand that resonates and a liquid that resonates and it's meeting, you know, basically a consumer need that was not met prior And Surfside. You know, if you look back over time, you know, you had the rise of White Claw as the first malt-based RTD, and that obviously was meeting a huge unmet consumer need. But pretty quickly, Gallo figured out how to do a vodka version, right, with High Noon, and then that's taken off with a lot of momentum. And I feel like we were fortunate to be able to step in at a time when RTDs and particularly spirit-based RTDs had already proven that they could scale in the case of High Noon. And so we felt like, hey, there was really an opportunity with iced tea and lemonade. That's a natural for a vodka base. And so I think we've been fortunate with the timing to be able to step in at a time when spirit-based RTDs are really taking off.

[00:28:46] Justin Kendall: You also hit on a time that consumers are really seeking non-carbonated options.

[00:28:53] Coronado Brewing: Yeah, absolutely. And it's funny, sometimes it's better to be lucky than good, right? We really felt like iced tea and lemonade should not be carbonated. And I think there was a minute there at the sort of the height of the malt seltzer craze when Just every kind of flavor of seltzer was coming out, right? And there was, you know, iced tea flavored seltzer and lemonade flavored seltzer. And that kind of just always struck our sensibilities. It's like, you know, iced tea really shouldn't be carbonated, right? And so, you know, when we felt like, hey, we wanted to come out with an iced tea, we wanted to be clear that it wasn't carbonated. More really to prevent consumer confusion, because there were a number of products out there that were seltzers. And I think that consumers intuitively assume that a can is pressurized, right? It's carbonated. So we really kind of led with that non-carbonated message. When we actually put the product out on the market and we led with that statement of no bubbles, we thought that would be more of a point of clarification than an actual selling point. And it turns out that there was a huge demand for this type of product. And a lot of people that were just thrilled to be able to have a drink that wasn't carbonated and didn't bloat and so forth.

[00:30:11] Justin Kendall: Surfside has really built out its national distribution map this year. Why was it important to move so fast with that?

[00:30:21] Coronado Brewing: Yeah, I think, you know, going back to the previous part of the conversation about the point in time here, right? And so this category has moved very quickly and we feel like it's going to continue to move quickly. But we do feel like the music's going to sort of stop, so to speak, at a certain point, right? And the category will become mature and there will sort of be You know, a handful of winners and a handful of sort of categories that will be winners and there'll be a long tail of entrance that came in and didn't succeed. And so we certainly want to be in that former category and not the latter. And we felt like, boy, we put this out in kind of our local home market and the reception was just. so strong, really on an organic basis, we felt like we know we have something here. We obviously, you know, you put something out in the world, you're not sure how it's going to be received. It was beyond whatever our wildest expectations could have been. And so we felt like, hey, There's a real opportunity here, as I said, in the spirit and spirit tea and lemonade category that we think is a natural. We feel like we've been able to hit it with the branding and the liquid and so forth. But if we don't get it out there nationally, we could potentially lose that race and have other competitors come in and get in front of us. We felt like, hey, we needed to build out the footprint. Obviously, for a lot of the country, the brand is not very well developed. But before you can develop the brand, you've got to at least sign up distribution and get a foothold. And so for a lot of the country, particularly once you move west off the immediate eastern seaboard, this year was really about getting the distribution network, getting our sales force stood up. starting to seed independents, liquor channels on premise. And when we roll into 2025, that's when, you know, now that we have the distribution and we've proven success in a lot of markets, we think we'll see a huge increase in chain distribution. So that's when we really think like start to, you know, actually scale in some of these markets that this first year was really just kind of dipping our toe in the water.

[00:32:33] Justin Kendall: What have you learned from expanding a spirits-based brand nationwide?

[00:32:38] Coronado Brewing: Yeah, boy, where to begin, right? So as dicey as beverage alcohol is in general with the various states and the rules, RTDs are really in a category of themselves because they don't conform nationally to either kind of the beer channel or the spirits channel, right? And so there are many states, which are control states, but have now deregulated spirits RTDs below a certain ABV into the beer channel. So for Indiana, for example, we waited until July because the law changed in July and it allowed beer distributors to start carrying RTDs. So, you know, there's just a ton to learn. Every market has its own story. Texas presents a unique challenge, right? We have class B situation there, so basically, you know, the route to the on-prem goes through specs. So that becomes a really important customer to work with. And, you know, we feel we need to develop our brand in the on-premise to drive trial and awareness. And, you know, the old adage brands are built in the on-premise. Well, if you want to accomplish that in Texas, you know, you basically have to go through 4 tiers. So, you know, again, I don't want to bore the audience with going through state by state by state, but there's a lot of complexity and as fast as the legal and regulatory landscape is changing state by state, it's that much more to swallow and digest.

[00:34:15] Justin Kendall: Even your home state of Pennsylvania made some changes, I believe, this year.

[00:34:19] Coronado Brewing: It's just been about two months, so that's been a big win for us. We're really excited about it. Previously, as far as off-premise goes, we really only allowed to sell through the state stores, and Pennsylvania does operate their own stores. And you know, they really weren't set up for it, right? So not really like no refrigeration in these stores. A lot of them are really more set up as bottle shops. So they did a pretty good job with it. But now that we're available in grocery, the Home D's are still big players in Pennsylvania as well. It just opens us up to a much larger market.

[00:34:56] Justin Kendall: Well, Surfside launched a lemonade variety pack earlier this year in your core market of the Mid-Atlantic. How has that performed so far?

[00:35:05] Coronado Brewing: It's been really beyond our expectations. So we got caught a little bit because we didn't know how much to produce, right, with a new product coming out this year. But putting out that lemonade variety pack, In many cases, it sold at par or even in some of the newer markets, it sold above where our original starter pack, what we call with mostly iced tea flavors in it. So that was really a very resounding success. And we think that part of the market is probably just as big as the tea market, potentially maybe even bigger on the spirits RTD side. Definitely a huge win and we're excited to roll that out to the rest of the country.

[00:35:54] Justin Kendall: How incremental has that been to the tea business?

[00:35:56] Coronado Brewing: 100%. Really? We've seen virtually no cannibalization. Yeah. I mean, if you look at our core volume in our core states, it was up triple digits and the lemonade was all incremental on top of that.

[00:36:12] Justin Kendall: You mentioned the on-premise channel. How much ground And Surfside gained so far there?

[00:36:18] Coronado Brewing: Yeah, so we're about 30% on-premise volume. Now, as our volume grows, the share of on-prem has decreased a little bit. It was about 34% a year ago. Now it's about 30. So it's decreased a little bit, but in the meantime, the brand has tripled. And so, obviously, classically, you see closer to an 80-20 number. But, you know, it plays very, very well in the on-prem. It's a huge opportunity for us certainly to introduce new consumers to the brand, getting the cans in hands, having that billboard effect. But, you know, the other thing I wanted to mention, have you heard of this relatively newer company called Beer Board? that does the on-premise. So they track a number of regional and national on-premise chains. And while we don't have the breadth of distribution to win any of the sort of volume contests there, in terms of velocity, surfside, half and half is actually the number one velocity RTD that they track.

[00:37:21] Justin Kendall: You're in year three. What have you learned about who the surfside consumer is at this point?

[00:37:30] Coronado Brewing: Yeah, and we're always trying to learn more. So, give you some sketch of what we know and with the caveat that we're digging into some of those questions and trying to learn more, but we're seeing, biggest consumer is LDA through 39, right? So relatively younger, but also does well in the next kind of age bracket up as well. you know, certainly not our core demographic, but even, you know, an older demographic in, you know, 50s, 60s, 70s, these are still approachable products, right? So if you think about playing on a golf course and having an Arnold Palmer, we're not asking people to try something that's, you know, really out of their wheelhouse or something totally new. But we track extremely well with Active Lifestyle. Um, so people that are out there getting outdoors, doing, um, exercise, hiking, skiing, boating, um, all those sorts of things that, that sort of psychographic tracks. Well, and, you know, certainly, as I said, the kind of LDA through like mid to late thirties is really our core consumer.

[00:38:41] Justin Kendall: What do you see as sort of like the blueprint for, you know, growing this thing to where you think it should be within the next two to three years?

[00:38:52] Coronado Brewing: you know, we put that out basically looking at high noon as the model, right? And so when you think about spirit-based RTDs, obviously, you know, they're far and away the leader in the category. And when you look at the depletion rankers, they're up there, they'll be between probably 25 and 30 million case depletions this year. We think we'll be number two, probably somewhere between, 4.6 and 5 million cases this year so there's a there's a big gap between number one and number two and then you know there's there's probably another million case gap between number two another number three. So, you know, when we put that out, we really look at that as like, hey, we see the velocity when we look at the data that we are above actually high noon, we're the category leader in velocity, but we don't have the distribution. So, like, sort of simple looking at Nielsen numbers, right? We'll have 25 to 30 percent higher velocity metrics, but our distribution is maybe only a quarter of where a high noon or even a brand like neutral or caught water has really strong distribution. That's where when we look at the path and you look at high noon has now been out, I think, 7 or 8 years. That's really what we look at as a model for what our growth could be. And so, again, I mean, I think, how do we get there? It comes back to what we talked about. We've got to continue to execute at that level in more geographies. We have a number of markets that are. you know, very, I would say, you know, early in the development stage and some markets which are kind of in the middle and some markets which have had it obviously since year 1. And I think the exciting thing for us is kind of Pennsylvania, New Jersey, Delaware, are our core original three markets where we And Surfside and we're all signing up for at least 50% growth on a pretty healthy base in those markets next year. And when you look at mid-stage markets, big markets like Florida and New York, we're signing up for 100% growth there. And then when you get to a little more far field markets in California and some in the Midwest, that's where it's more of a wide open space where Percentages get silly, but we think we have a lot of room to grow there.

[00:41:15] Justin Kendall: Any new big bets that you're going to be making in 2025 as far as new products or new lines go?

[00:41:22] Coronado Brewing: Yes, we'll be rolling out with a green tea variety pack. So last year, we floated in a couple of core markets, just a single green tea, and that was met with a lot of success. So we've got a variety pack now that'll have multiple variations on green tea, including one I'm pretty excited about. It's half lemonade, half green tea. So sort of the green Arnold Palmer, if you will. And we're excited about that one as well as a mango and a peach green tea. So that'll be rolling out to a number of markets as well. Other big pieces is the 24 ounce, or as we call it on the spirit side, the 700 ml can with a fun resealable closure that we're required to have by regulation. That's an exciting package for us. We think it presents an opportunity, particularly in states where we can be distributed into convenience channel. You know, it's the lowest point of entry into our brand and our category, right? And so you don't have to buy an eight pack and potentially, you know, risk $20, you know, for a small markup to a FMV, you know, you could try Surfside instead of whatever else it was that you might've grabbed out of the cooler.

[00:42:41] Justin Kendall: We're excited to see where it all goes in 2025. So congratulations, Clem, to you and the Surfside team.

[00:42:49] Coronado Brewing: Justin, thanks so much. Really appreciate it. It was great to be with you and appreciate the award.

[00:42:55] Justin Kendall: Absolutely. It's our pleasure. And that's our show for this week. Thanks to our audio team for putting this together in advance of Brewbound Live. Thanks to Jess and Zoe for all they do. Thanks to all of you for listening. We'll be back next week.