Brewbound Podcast: We’ll All Be Drinking Seltzers From the C-Store

[00:00:00] Justin Fonte: Who's opening, who's closing, and what's coming to C-Stores? Find out on the Brewbound Podcast. Hello, hello, hello. Welcome back to the Brewbound Podcast. My name is Justin Kendall, and I am the editor of Brewbound. I am joined by my tag team partner in all things Brewbound, Justin Fonte, as well as someone who has a growing affinity for craft beer, Zoe Licata. Welcome to both of you.

[00:00:35] Zoe Licata: Thank you. Thank you. Hello. Thank you.

[00:00:38] Justin Fonte: I think we need to interrogate you now, Zoe, on why you are drinking more beer these days.

[00:00:44] Zoe Licata: Yes. I mean, I would like to say that is your guys' influence and you've just messed with my mind a little bit, but it's hard seltzer fatigue. It happens. They say it doesn't exist. It's not a seasonal thing, but it kind of is a seasonal thing.

[00:01:01] Justin Fonte: Wow.

[00:01:02] Zoe Licata: Breaking news, everybody.

[00:01:03] Justin Fonte: Breaking news. You heard it here first. Gen Z, kind of tired of hard seltzer. So what do you want to drink, Zoe?

[00:01:13] Zoe Licata: I just want like a basic classic beer. I like lighter beers. Just something simple that doesn't have a crazy wacky flavor and isn't going to assault me with bubbles.

[00:01:27] Justin Fonte: Well, the reason this all came up is because Allagash is releasing its first variety pack and I believe you said that you wanted more beer variety packs and fewer seltzer variety packs.

[00:01:40] Zoe Licata: Yeah, I'm very excited about it. We're still Gen Z. We still don't like being dedicated to something or having to like have one pack of one flavor of something. So having a beer variety pack is a cool way to market to that while also being a beer rather than a hard seltzer. So I'm excited about it and it's not IPAs and I am not the biggest fan of IPAs.

[00:02:03] Justin Fonte: Don't come for me. I'm excited. I'm curious to know, knowing that you are now self-proclaimed not a big fan of IPAs, does that apply to hazy IPAs as well, or is that just traditional super bitter West Coast IPAs? That also applies to hazy IPAs. Interesting. What is it about hazy IPAs? Is it their body? Is it the aroma? Is it the juiciness?

[00:02:29] Zoe Licata: I would say it's probably the body of it the most. I mean, I just want a really, like, light, crisp, more, I like the more fruity, like, citrusy ales and stuff. Yeah, something about the IPAs and hazy IPAs, I can't, it doesn't do it for me.

[00:02:45] Justin Fonte: Does Jess ever have a beer for you? I mean, I could have many. But what about, say, a Cali squeeze beer? Oh, that, yes. I'm sorry. I thought, I was like, I'll go to my fridge and get Zoe a beer right now. Yeah. So Zoe, my friend, I would say you're in luck, but you're not because of where we live. Our friends over at Firestone Walker have generously shared with us their annual business plan presentation video, and they are making good use of their company's April acquisition of Tally Squeeze, a brand built up by Slow Brewing. And they are coming out with a variety pack of fruited Hefeweizen. Right up your alley, dude. That was delicious. Yeah. Where can I get that? Not in Massachusetts. Not in Massachusetts. Let me tell you where you can get that. You can probably get that in Santa Monica, California on November 30th and December 1st at Brewbound Live. That's right. Brewbound Live. Find out more at Brewbound.com. We have our annual business conference and I promise This is not going to be a real hard sell right now, but we'd love for all of you to join us in Santa Monica. I am such a shitty pitch person. No, that was good. I believed you. Yeah, that was good. I liked it a lot. You got me excited. And I'm excited for Zoe to try some Cali Squeeze Hefeweizen. Apparently people online are recently realizing they don't know how to pronounce Hefeweizen. And somebody would probably say that I'm doing it wrong because I'm not. I'm saying Hefe and not Eif. But this is America and we have something else for you, Zoe. Potentially. How about a sunny little thing?

[00:04:29] Zoe Licata: Oh, tell me more.

[00:04:33] Justin Fonte: Sierra Nevada is line extending its little thing brand family and they're doing a wheat beer. So coming after the King Molson Coors is blue moon with something sunny. I'm down done in the moon. We got a battle going on here. And that you'll definitely be able to get here, I would assume. I would assume so. It's going to launch in a variety pack, but you'll have to suffer a couple of IPAs if you buy that.

[00:05:02] Zoe Licata: No, just give them to somebody else. I'm sure someone will drink them. There's no question about that.

[00:05:07] Justin Fonte: You know what IPAs are good for if you're not going to drink them? Steak marinade.

[00:05:11] Zoe Licata: Oh, good to know, good to know.

[00:05:14] Justin Fonte: Yeah. A lot of fun facts here, but as our conversation foretells, it's national sales and ABVP time, lots of talk of new brands. I covered Sierra Nevada, Jess is covering Firestone Walker. Speaking of Firestone Walker, David Walker, Dustin Hines, and David Makin will be joining us at Brewbound Live. What a coincidence. What a coincidence. we're going to their place for an after party one night. So that is true. We will be partying at the Propagator. That's right. So we've been covering the national sales meeting. We'll have something on Heineken USA's plans later this week, and we've got a lot more conversations going on with other folks following their meetings. Right now, you can read about Sierra Nevada and everything they have planned for this fall and next year, including a hard tea brand, Tea West. I believe that our friends over at Crap Business Daily, Beer Business Daily broke that story a few weeks back, but we ended up getting a recorded copy of the national sales meeting, got a chance to watch that. And that brand is going to be coming in as a lifestyle brand, something that Sierra Nevada really hasn't done in the past and playing in the 5% ABV, 100 calorie, zero grams of sugar space. Speaking of coming at another king, they are going to challenge Twisted Tea, theoretically. Yeah, we'll see how that goes. I feel like there have been several attempts made on the life of Twisted Tea in its 20-ish years in existence, and none have really ever been successful. No, you never quite get there, right? No, I don't know what it is about twisted tea, but it endures. It's just such a particular liquid that it boggles my mind that this many people can drink this much of it. I used to be good for like maybe one tea a year back in the day. And otherwise it was just kind of too much sugar for me. And as Bonnie Herzog from Goldman Sachs pointed out in a recent report, which we're going to talk a little bit more about in a little bit, Boston envisions that as a $1 billion brand for them. And that is a big growth opportunity for them in the next year, next few years, actually. kind of sounds reasonable to me. I think they could do it because almost all of the growth in Twisted Tea has been in original. That's wild. You never find that anymore. So when you think about all the points of distribution they have to fill up in adding the rest of the Twi's in the portfolio, and I believe there is a Twi variety pack. If they really wanted to turn the focus on the innovation pipeline for Twisted Tea, there's a lot of runway there. Definitely a lot of runway and we're going to see a whole lot more of that in the next year. Another thing that I wanted to sort of hit on to with Sierra Nevada is we're going to be seeing a lot more innovation from them in the years to come. They are investing in an innovation hub in Chico. No dollar figure yet, but they're going to be looking at alcoholic spaces and non alcoholic spaces and they are may or may not be brands that are labeled Sierra Nevada. That's a pretty big development. I mean, that's huge. I feel like you know with their acquisition of Sufferfest, that was probably the first time they really ever brought anything into their umbrella that doesn't have the Sierra name and that's not around anymore. So then they've had strange beasts and now T West. Big steps, big steps for the Sierra Nevada team. And with Strange Beast, the hard kombucha brand that they've launched in, I believe it was the last year or so, they're looking to make that an on-premise monster as well as off and lead the category. Video was pretty uncomplimentary, I would say, to other hard kombucha brands. Painting them all is very samey. So I can see that ruffling a few feathers for someone who is very new to that space, but See what happens there as well. As far as Firestone Walker goes, a lot of talk of 805, a lot of talk of the launch of 805 Cerveza, taking that into cans next year, a lot of talk of Mindhaze. What else do we have coming out of that meeting? The thing that I think surprised me the most was that they are going to be doing a Cali squeeze hard seltzer after all, because at the time of the acquisition, we had asked, you know, what does this mean for seltzer? And they said, not a priority right now. We're not really thinking about it. So then I followed up, you know, this week and said, what made us change our minds? And it was basically just, you know, we decided the time was right. Fair point. Time's right. Well, I guess maybe you don't want to jump in with everything all at once once you take over a brand like that. And I believe David Macon even said on the video, I said that we'd never launch a hard seltzer. Well, I didn't say we wouldn't acquire one. So that's their inroads to playing in that space. And for everyone who thinks that that space is dead, It's not decelerating. Yes, it's not going to grow 300% or, you know, triple digits every year. It's that point like craft where all those years of double digit growth turn into some low single digits. And maybe that's the future of what we're heading into and what we're going to talk about. And let's just get into it. Our friend, Bonnie Herzog from Goldman Sachs, She hit the next convention in Chicago, and that is entirely C-store focused. You get a picture of what the major producers are gonna do in that channel. And there are a lot of takeaways there, but one of the big ones I took away was Constellation Brands not being reliant on hard seltzer. very into putting out new What's interesting, first of all, is that we were just at the NBWA conference and Constellation Brands't really have much of a trade short presence, but clearly they were putting all their eggs in the next basket because they obviously did really focus on sampling new products and all of that. But weird to me that, first of all, we heard what they said in their earnings call last week, like you said about not being reliant on hard seltzer. But they're also extending all their beer brands. Haven't we all kind of come to the realization that that doesn't always work? I thought we had, but here we are. And here we are. Reliant being, you know, hard seltzer is 1% of what they do, okay? So not reliant, clearly not. But when you've got an innovation pipeline like this, when it's Modelo Ranch water, or I guess they are reformulating everything. In March, they're gonna launch Corona Seltzerita, which is a margarita flavored lime, peach, mango, and strawberry. They're in this thing. Yeah, like cool. Welcome to the margarita hard seltzer party. It's apparently the theme of next year. or tiki for that matter, but redoing the mix packs, going to drop a tropical and a berry one. Seen that before, but we'll see how that goes. Premier's coming out. This is non-selter, but you know, you get an 18 pack of premier and a refresca moss at 8% in mango, citrus and tropical berry. I mean, we, we see it already. It's tropical, it's tiki. I guess that's where we are with hard seltzer at this point, and maybe a ranch water if you're lucky. Another innovation that they're going to be putting out will be a canarito-style cerveza, Medela Oro, which Bonnie dubbed a Michelob Ultra Challenger. And we have seen this before as well, and that has not played out very well for many others. No, that's crazy to me. How many people have tried this and how many people have failed pretty miserably? Michelob Ultra really seems to be kind of undefeatable. Yeah. Godspeed to Modelo Oro. Well, there are always a trail of broken bodies in Michelob Ultra's wake. Did I tell you how I was out with my husband right before we left for Vegas for MBWA, and we're at this nice restaurant having dinner in the bar area. And this man who's probably in his 60s-ish starts going on about McUltra, because I guess the bartender offered him a sample because he didn't like what else was available. And he was just yelling, like, this is a chick beer. And I nearly needed to be restrained to be like, excuse me, sir, first of all, no beer is a chick beer. I will fight you. And second of all, this is the second best selling beer in the country. Like, why are you turning your nose about it? And why do you think you're so much better than it? And if it's not number two, it's number three, because Modelo just pushed it out of number two. I know they've been trading spots back and forth lately, but oh, just terrible. Zoe, how much money do you keep on hand for bail for Jess in this case?

[00:14:48] Zoe Licata: I haven't kept any, but I feel like I need to now just in case. No, I think I could talk my way out of an arrest.

[00:14:55] Justin Fonte: Start earmarking some money, Zoe. I can see the future. I don't think Ryan would bail me out. We'd have to be one of you guys. Well, we'll do it for you. Don't worry.

[00:15:04] SPEAKER_??: Thank you.

[00:15:05] Justin Fonte: Yeah. Well, one of us has a baby on the way, so you might be on your own. I'll do it for you. Yeah. Thank you, Zoe. Another thing that is in our future, Bud Light, Seltzer, Hard Soda. And I want to know more because we have been down this road before. We've seen other folks try, like, I don't have enough information to intelligently speak on this because I don't know what their plans are. But those words, Bud Light, Seltzer, Hard Soda, They're intriguing, they're terrifying, they're gobsmacking. I want to know more. We've seen Crooked Marker try and play in the hard soda seltzer space before, and the crickets out there tell you how well that brand did. So here we are. We're going to give that a go, I guess. I mean, Stewart's like the root beer chain attempted this over the summer as well with some, I think they had a root beer flavor, but in like the seltzer spec land. So I don't know. I think this is a tough sell. I appreciate your optimism for it. That's not optimism. I appreciate your morbid curiosity about it. That's absolutely what it is, is morbid curiosity. There's plenty of other hard seltzers coming from AB, platinum, bud light platinum, 8% ABV with agave. Agave is another term that we're going to be hearing a lot of in the next 12 months. So get ready for that. And also on a legal front with cacti. And that's something I believe Zoe covered.

[00:16:46] Zoe Licata: Yeah, they're in trouble because they advertise cacti as it contains 100% blue agave, but it has agave syrup instead of like agave, which consumers associate with like tequila. And so there's a lawsuit about it, but I'm confused as to why they want to create another product that has agave in it while they're dealing with that legal issue right now.

[00:17:13] Justin Fonte: In theory, they just kind of have endless budgets to be able to defend against these things. Right. World's largest beer manufacturer for a reason or beer and hard seltzer and everything else under the sun at this point, which will include natural light lemonade flavored vodka at 60 proof. This is all telling you that, you know, next year we're going to find ourselves at NACS and maybe there will be a new beer product there that we'll be able to talk about, but probably not. Although Boston Beer does have 19.2s of Wicked Hazy and Wicked Double on the horizon. That's interesting. Those brands live to fight another day. I mean, those, I would say, are like a majority of the driving reason behind those two products is to get into Fenway Park. Well, didn't say wicked easy. Might have to pour one out for Sam 76. Oh no. We'll find out. Well. And from the sounds of it, Bevy Long Drink made an appearance, minus the gin, of course. Salsa Agave Cocktails also there, but no sign of Hard Mountain Dew from what I read.

[00:18:25] Zoe Licata: Interesting. Building this anticipation for it, I guess.

[00:18:29] Justin Fonte: Yes. And then Molson Coors building on Topo Chico, building on Vizzy and Lemonade and Watermelon. Watermelon also, big flavor coming up, apparently. Zoe, do you think that's because you're a boy?

[00:18:42] Zoe Licata: Mr. Harry Styles, maybe. He has a lot of influence, man. Everyone's been singing Watermelon Sugar all summer long. I wouldn't be surprised. It's true.

[00:18:52] Justin Fonte: I have no idea what you're talking about. So I am clearly on the outside here. And I'm probably alone. I can live with that. I like the Busy Watermelon Pack a lot. Brought it to a neighborhood party over Labor Day and it was very popular. Ooh. Look at you. I know. I'm generous. And modest. I bought that pack too. It wasn't like a media sample. Wow. Wow. You contributed to the category. Thank you for your service. I help depletions. before we get out of here craft beer news while we' it quits after 10 years, and they had to dump $41,000 worth of beer in the last year? I guess the warning signs were there. They put out a press release and it was one of the sadder press releases of the pandemic, I think. I think this goes to show that the PPP loans, the EIDLs, it may have helped people get through the interim, but they're not long-term fixes. It's a Band-Aid on a gunshot wound. Yeah, for sure. This is the second sort of long-standing craft brewery that we've seen close up shop, or at least say that it is. Due South will close on December 19th. It's my birthday! Wow. What a coincidence. I suppose. Maybe someone will buy you the Due South brand. I don't want that, but I appreciate the idea. Well, hopefully someone does. There are plenty of platforms out there and I don't want to drop any names, but there are plenty of platforms, including in Florida, who you would think that this would be a natural fit for. We'll see if that happens. And I'm a little surprised they didn't move to a contract situation, but they definitely weren't moving all that production equipment. If that doesn't sell, it's going to auction in December. I mentioned that, you know, this is the second craft brewery that we've seen, kind of longstanding one, at least to my recent recollection, Close Up Shop, L Asylum in Wisconsin is the other one that comes to mind, which much bigger than you would anticipate Closing Up Shop. You don't really see a regional brewery of 15,000 barrels or so doing that, but here we are. Yeah, and I'm sure there are more that we just can't think of right now. Yeah, speaking of breweries that are bigger than you think that they are, Catawba Valley Brewing is being acquired. Yes, I was shocked to look up their production last year when we wrote this story together on Friday night. 35,000 barrels. That's a lot of beer. Yeah, if you want to know how Jess and I like to party on a Friday night, we like to call the acquirer of a brewery and grill them for about 30 minutes and be like, so what are your plans? You know? And he was very kind, very gracious with his time, was very excited to talk to us, which is not normal. Hey, he took the call. So that's all you can ask for. Yeah, so they're being acquired by Made by the Water, which is a portfolio brand offshoot of Wiregrass, which is a family office private equity fund in the Southeast. But they also own Oyster City Brewing, which has locations in Florida and Alabama. But Oyster City is much smaller than Catawba, plus Palmetto and Twisp, Southern Hard Seltzer. Yep, they're getting it all. Basically, they're taking everything. It's an asset sale. It closes in November. At least there are acquirers out there for some of these breweries when families want to move on. And I believe that's one of the things that Billy Piatt said in his statement was, you know, you wake up and you're 60 years old and you're like, what am I going to do? And Catawba had been an acquirer itself. It recently picked up a taproom brewery. I think you wrote about it, Zoe. And they had acquired Palmetto before, making a lot of smaller deals there in the Southeast. I don't think you would make those deals if you envisioned yourself going out anytime soon. But I think just the combined effect of the pandemic not really letting up just probably made, you know, Billy and Jetta say, hey, it's time. But Billy's brother Scott is sticking around. He's gonna remain in his, he's currently the chief operating officer. So he's gonna stay in a similar role that they don't really have titles. They're not really title driven people. So he'll still be there. Well, he carries on and it's not all doom and gloom. I think you've got a bunch of openings that are going on. Yeah, there's a lot of openings have been announced in the last couple of weeks. So other half, who is based in Brooklyn, New York, they're opening a location in Philly that's going to be open later this fall. They've got a pop-up going at Rockefeller Center and a permanent tap room is opening in that area as under construction right now. So that's going to give them six permanent tap rooms, two in Brooklyn, one in upstate New York in the Finger Lakes, one in Washington, D.C. And they seem to have a couple of regular pop-ups going on throughout New York State. And then Highwire, who is, you know, roots are in Asheville, North Carolina, is opening a Charlotte taproom, which is going to make for eight taprooms for them. Three in Asheville, Wilmington, North Carolina, Durham, North Carolina, Louisville, Kentucky, and Knoxville, Tennessee. Really interesting to me that you would start in Asheville and then expand outward because most people seem to be doing that. You start where you are and then you eventually open up a satellite in Asheville. Still a city I need to get to. Definitely on my life list of things to do. And then Weathered Souls of San Antonio, Texas, also in Charlotte, is opening an incubator. And that'll be interesting to watch. I think the purpose of that location is really to, you know, help foster beverage brands from minority owners. Very cool. I'll throw it out there too, that our friends at Castle Island here in Boston have opened up their South Boston location and beer's great. And the pizza is amazing, like Cape Cod style pizza. It's a great location. It's I've been there. So I've actually been out in the world. Yeah, I know. It's weird. Like you did things other than fly around with me. You know, jet setting with you is one thing on the private Brewbound plane, but that takes 15 hours to get from Baltimore to Vegas. Oh, it was a nightmare. We live a glamorous life here. We are very glamorous, very glamorous. That's what a lot of people who saw us in Vegas said. They are. You two are glamorous people. I think they were shocked. Not $120 drip shirt from the Caesars boutique or whatever it was fancy. We're more glamorous than casino branded attire. Yes, I would say. Definitely glamorous, not as glamorous as Zoe who will be at a Harry Styles concert before too long.

[00:26:18] Zoe Licata: Yes, thank you very much. I'm very excited. I might not come back. We'll wait and see.

[00:26:23] Justin Fonte: You are contractually required to come back at this point.

[00:26:28] Zoe Licata: I mean, what if Harry Styles invites me on stage and he's like, yeah, just come for the rest of the tour Amanda Huang out. Like I have to do that.

[00:26:35] Justin Fonte: I support this. You have to do that. You have to do that. And we will understand. And hopefully you'll just rejoin us in time for Brewbound Live and the yet to be named child that I have on the way. So Jess isn't alone when I'm taking paternity leave. That is true. So can you ask Harry Styles if he invites you on stage if he wants to join us at Rebound Live? I think that could be a good guess. Yes, yeah, I think you would be the perfect guess.

[00:27:02] Zoe Licata: Yeah, I'll. Put it in a good way.

[00:27:05] Justin Fonte: Well, we have a lot of perfect guests coming to Brewbound Live. We do, we do. Why don't I tell you? Please. In addition to the Firestone Walker crew, it is getting to be a long list of speakers. We have Danelle Cosmo from the Beer Institute. We have Bill Schufelt from Athletic Brewing, Liz Paquette from Drizzly, Jason Murphy from Buffalo Wild Wings. We have Hamish and Rodney from Slow Brew who we got to see in Las Vegas and excited to talk to them about what's going on. We have Mike LaVitola from Foxtrot, which is this up and coming e-commerce convenience store platform. They're expanding. You're going to want to find out more about that. We have J.B. Shireman from Arlington Capital. We have our friend Sinead Carey from Wine Warehouse. We have Ryan Lake from Arlington Capital who will be on our judging panel for the Pitch Slam. And if you want to apply for the Pitch Slam, you can do that at Brewbound.com. Recently added speakers include, and these have been a long time coming, we've been working on Mary Giver for a while and the buyer from Whole Foods is going to join us. Yay! Yeah, we've also got Sean Mossman from Sonic Hard Seltzer, major presence at the NBWA annual convention. He'll be joining us on a and he won't be alone. W from mighty swell as well from Ashland hard seltzer independent hard seltzer country. And I'm very ex But that's not all, we're also gonna be talking about the hard truth, the hard seltzer with Danny Breger from Three Tier Beverages, formerly of Nielsen IQ. He's gonna bring all the data before that panel. And we've also got Kyle Cook from Loverboy gonna join us on a disruptors panel that we are putting together. We've got a few more speakers that we'll be adding, but I've named some names. You have named a lot of names and I didn't know half of those. So, well, I mean, I knew we were talking about them, but you confirmed them today. Great job. I know. I did some things. Sometimes I do some things. Sometimes you do. We'll keep you. Thank you. You're welcome. It's nice to be kept. So, and with that, I think we'll call it a show and we'll get this over to our one man audio team, Joe, and thank him very much for his service. And we'll be back next week because I think we're going to do this a lot more often now. Yeah, I think we should. Definitely. And thank you both for hanging out with me and we'll call it quits.