Quali-Tea Competition: Hard Tea & Lemonade Challenger Strategies, with Fishers Island, Owl's Brew and New Belgium

Speaker 1 [00:12] are one of the few segments within Total Beer that is consistently putting up green numbers in 2023. So we also know it's a very, very competitive space and there's a certain person, a certain company out there that I'm not going to name just yet, but they kind of dominate the scene. So how do you even find growth in a crowded and busy marketplace like this? We're going to talk to three folks who think they know the answer to it, and I think they're figuring it out. We have Owls Brew co-founder and CEO Jenny Ripps, Fishers Island founder and CEO Brana Schillo, and New Belgium Brewing senior director of brand and innovation Dave Nasby. Welcome guys. All right, I'm very excited to talk about hard tea, um, and to hear from all of you because you have, have some pretty great products out there. Um, Brana, I wanna start with you because you're representing both hard tea and lemonade for us up here. You launched a decade ago at this point, right? Since then we've seen the whole spirits-based RTD market, the hard tea, hard lemonade market shift, become very, very crowded. How is Fisher's Island staying up to date and staying relevant with consumers?

Speaker 2 [01:42] We have definitely seen a slew of things over the past 9, 10 years. Um, I remember my first cold box just kind of being in that. That top corner with ciders and double IPAs and then the seltzer boom came, so one of the main things that we've always really stayed true and authentic to is not only our ingredient base and the high quality spirit base that we use vodka and whiskey, but also the fact that it's You know, an evolving category of alternatives, and education is really, really important for us because when we started again people didn't understand what putting liquor in a can was, even co-packers, which really didn't exist for me at that time,

Speaker 1 [02:26] right, right. Jennie, Owl's Brew is in a similar space timewise, timeline wise, how are you guys staying in front of consumers' minds?

Speaker 3 [02:36] Yeah, it's interesting. I mean for us we've been in the tea and botanical space for A really long time, but our journey has been, has taken me and my co-founder Maria through every iteration of tea and botanicals. Owl's Brew Boozy tea launched at the top of 2020, but our first company was a tea company brew lab where I created like tea blends for places like Sweetgreen and Momofuku. So that was our first company. We then went into the mixer space which was Owl's Brew mixer with this idea again the same idea that we could use fresh brewed tea and botanicals to make really, really great clean beverages, but that was a completely different category, completely different space and when my tea company was acquired, that was when we ended up launching Owl's Brewbozzi tea in 2020, so I feel like we're almost sort of consistent with the times. We always had this idea, but we've been adjusting to what consumers want, and we've been evolving ourselves for quite some time.

Speaker 1 [03:39] Dave, people may be wondering, New Belgium, we know dominating craft beer right now, but you guys are really focused on that. Why hard tea? Why is this the place to be for New Belgium as well right now?

Speaker 4 [03:51] Yeah, yeah, we've been in the tea game for about 6 months, so quite a bit different than everybody else up here. Um, but it's really a voodoo Ranger thing for us that, that's driven a lot of growth. And as we look at, you know, what's driven Voodoo Ranger growth over the last 2 to 3 years, it's, it's the introduction of the force line for us. And as we, we launched that line, we started to look at why is that growing and who are we bringing into the craft category through the force line. And what we saw there was the drinker of Juice Force, the drinker of Fruitforce, looked a lot different than the traditional craft drinker, and the other beverages, the other occasions that they had were very F&B focused. They weren't necessarily jumping to other IPAs or jumping to other craft offerings at all. So as we tried to evaluate what was next for Voodoo Ranger, for us it wasn't, you know, just trying to get on necessarily the tea tray, it was more of where do we think the brand can extend, where does it make sense to extend, and where, where do our fans, where do our drinkers spend the rest of their time of be occasions, and it was tea.

Speaker 1 [04:59] Yeah, just talking about that, the importance of flavor that we've been talking about all weekend of that, the connecting between those two brands. I really love the skeleton t-shirt connecting to Voodoo Ranger respectable, like it a lot. Um, I'm gonna plug the text line again. It's 617-336-8560. Uh, this question is kind of for all of you. We've seen this trend with any sort of Beyond Beer beverages lately that they're really focused on putting out lots of different options in this space when it comes to innovation, putting out new flavors and extensions all the time. How are each of you looking at or thinking of approaching innovation with each of your brands? Rania, do you want to start?

Speaker 2 [05:47] Um, yeah, I think ultimately what really continues to be my sort of, uh, you know, focus point is the fact that our recipe is something that we want to continue to be, you know, approachable, familiar, and that's what lemonade is. I mean, how many of you guys probably started out with a car wash or a lemonade stand when you were a kid and You know, the same thing is sort of with tea as well. It's two very familiar flavors that usually you grow up with or you continue to consume throughout your lifetime, and for me it was just a natural extension to go from lemonade to half and half. It was something that people were asking for consistently when we were doing samplings in the beginning. I mean. We held off for six years before we innovated and so it's just a natural fit to evolve down that direction and just continuing to have approachable flavors, flavors that are familiar for people and that At our price point would not be such a commitment for people to purchase, and our 4 pack is roughly around 15.99 or a variety pack at 23, 25.99. So it's a significant difference to beer and FMBs. So trying to make sure that we hone in on flavors that are familiar and confident.

Speaker 1 [07:02] Jennie, how is Owl's Brew approaching innovation?

Speaker 3 [07:05] So in terms of innovation, I agree with you. It feels like there's always a lot. I mean, it's pretty. Extraordinary. Anytime you walk into a store and you're like, wait, this changed again. um, so what we try to do is be incredibly be very consumer driven, so we try to only innovate if we feel like there's a real gap for our consumers. So for instance, we actually launched this line of spirits-based RTDs this year and my Maria and I debated a lot about doing it because we already had an offering on the market, but our conclusion was like, We were hearing kind of like a brand you said, we were hearing from our consumer that they wanted it and that was kind of what, what drove us, not just the idea of a proliferation of skews, um, and then with innovation for us, the second thing that kind of makes me crazy is we're like, Its like we're sort of obsessed with getting it right because we've fresh brewed tea and botanicals. There's a quality piece of it that's so tricky to nail and it's um what one of the things we care the most about. So it's sort of like, does our consumer want this and can we make it taste exactly the way that it needs to and find exactly the ingredients we need, so it's um. So we innovate, but cautiously.

Speaker 1 [08:20] Dave, I know Hard Charge is very new, so I don't want to make you try to think too far in advance, but what is your, what are you guys thinking?

Speaker 4 [08:27] Yeah, I'm not ready to share year two plans because year one is still about 3 months away, um, but I mean, I can, I can give you the broad sense for Voodoo Ranger because there's a temptation in general to, to innovate and launch as many new flavors as we possibly can. So if we go back kind of 2. when Juice Force launched really early on, we knew that was going to be a runaway success, and there was this like strike while the iron's hot, get as many flavors out there for the force line as quickly as you can, which is like a great recipe for year one success and not a great recipe for sustained success. So what we try to do is get our flavors out in the market, see how our fan base reacts. The, see what they like, see what they don't like, learn from it, and then, and then launch on top of those kind of innovations. So that's what we did with Fruitforce in year 2, and we've learned a lot from that launch as well, and we're going to do that again with Tropicforce. I think you can expect that same sort of strategy for hard charged tea. We're going to launch in a lemon and a peach, which are pretty straightforward flavors in the tea game, obviously. But we're going to see how those perform, and I think your two strategy will really be informed by what we see, what the reaction of both F&B fans and Voodoo Ranger fans are to hard charged tea, and then try to, you know, approach flavor from there.

Speaker 1 [09:41] Staying with you for a second, I mean, you talked about that crossover in beverage consumption with the Voodoo Ranger consumer, but why specifically did New Belgium want to create this new hard tea under the Voodoo Ranger name and not just start it as a new solo brand?

Speaker 4 [09:57] Yeah, I mean it really started with thinking about what was next for Voodoo Ranger. Like we didn't go into this thinking the tea space is hot. How do we launch a tea? We thought of where can we take the Voodoo Ranger brand and You know that for a very long time actually we've known that voodoo extends beyond the craft beer world and a few years ago actually we were like maybe where we extend is into light beer because we think our audience probably has a lot of crossover with light beer, so we got that out in the market in North Carolina. And that test went about as poorly as any test could go, um, which is great because, like, you know, we always say like failure is a good thing and you can learn from it. But one of the things we learned was, you know, the expectation of the Voodoo Ranger brand kind of boiled down to two things high octane beverages and really big bold flavors. Uh, no offense to light beer drinkers, but that's kind of the antithesis of light beer. There's low octane and, and not a lot of flavor. So as we were thinking what's next for voodoo, you know, we looked at that crossover, we looked back to like what is the core of the brand, and that's where tea came from. So it was actually kind of natural that it was under the Voodoo Ranger brand. It was never really a consideration of do we make a new brand or do we do voodoo. It was just what's next for voodoo.

Speaker 1 [11:14] We have an interesting audience question here, and I don't think it's meant to be any shade at Dave, but, uh, take as you will, uh, they're saying that Owl's Brew in Fishers Island, you've been in the game for a while now, and now that consumers are kind of catching up to these trends. Do either of you feel bummed out that everyone's getting on board? Do you have to use that kind of OG marketing to help yourselves out? What does that feel like?

Speaker 2 [11:38] I can definitely start with that one. I'm so thrilled to have company. It feels really good to have, you know, rising tides. I don't know if you agree with that, but for a long time, part of the reason why I never innovated was because we were just continuing to build awareness on, oh, you're not Mike's Hard Lemonade. Nope, we're trying to tell you almost what we aren't versus what we are, so that consumers would understand that quick elevator pitch. So. You know, seeing this segment grow, whether it's canned cocktails, spirit-based, FMB, you know, whatever we're continuing to classify RTDs as has been really great to see everybody jump in.

Speaker 1 [12:19] Nodding your head,

Speaker 3 [12:19] Jennie. Yes, I completely agree. I mean, I think that there's so much opportunity for Different subsets within the category whether it's higher ABV, lower ABV, premiumization, and I think that We kind of owe the consumer teas or lemonades on all of those levels in order to sort of again like meet their needs. So I think it's, you know, I've been thinking and dreaming about tea cocktails for my entire professional life and kind of like what Bronya said, I just think it's really exciting to begin to see it evolve as a space because that's a future for us too.

Speaker 1 [12:56] We saw, I think it was just this week. The founder of Arizona was talking about this exactly, and he was saying, you know, it's better to have a crowded field than a dead field, and so it's nice to have some company there and some competition going on than not at all.

Speaker 4 [13:10] And I think there's probably a temptation to lump all tea entrants together, and that makes sense from a pure liquid standpoint, but if you, if you think about like the consumer target that we're all going after. I would imagine, I'm not going to make too many assumptions, but I imagine they're quite different from everyone on stage right now, um, and I think that's what really helps is if you can start to bring in different consumer sets into the same category, that's when we can actually grow this together, and I think that's, you know, inclusive of the market leader in the category right now. I think we, we probably all talk to very different consumers than than Twisted does, and I think if, if we're all successful, we can kind of all kind of elevate the category together.

Speaker 2 [13:49] Yeah, and I'll just continue on that thread there. It helps build confidence not only for the consumers to understand what it is that may be a trend or just a focus, but same with distributors, retailers, buyers, decision makers, so it doesn't feel like it's a hot flash in the pan.

Speaker 1 [14:06] Staying on that topic, I mean, we know twisted tea is the #1, has a pretty, pretty big share of dollar sales within just the hard tea segment. And they've been pretty vocal about how they're not too stressed out about competition, but how, what needs are each of your brands fitting that Twisted twisted tea may not, excuse me, and what, what are you telling retailers to help convince them, you know, hey, this is my brand is worth giving shelf space over just another one of the many twisted Tea skews that are out there.

Speaker 3 [14:41] So sort of exactly what Dave was saying, I mean, I think that tea, I mean when you look at the tea numbers, it is twisted tea, but I, I think that, so for instance, for Owl's Brew, and I think we each have different consumers on this stage, we are not convincing retailers that they're buying us against twisted tea, and I don't think we're convincing consumers of that either. For us, our consumer is shopping from a better for you set, so our consumers are looking at seltzers, they're looking at RTDs, they're Looking at, you know, high noon, our consumers looking at a broad range of options, not just teas, um, so I, I, I think that, you know, that's what's sort of broadening the category.

Speaker 1 [15:25] Bronya, are you seeing a similar thing? I mean, you have these spirits-based hard teas and hard lemonades, so you're, it's not really the same consumer at the end of the day.

Speaker 2 [15:34] No, not, not really entirely like with the spirit side of, of our base too, so we're constantly that, that trade-up messaging. So if you're looking for something or maybe you're evolving towards uh wanting a cleaner base and, and understanding what you were drinking before is also part of the conversation or even higher ABV. I mean, our Our recipe was based off of a family bar recipe, so we were almost reverse kind of engineering what we were making at the bar and saying like, OK, we didn't even know it was 9%. It was kind of just based off of what the bartender was making. I mean you go in and you have a glass of wine and you kind of know the range is between 11 and 14%. And then you know if you're friends with the bartender and you get your margarita, maybe it's going to be 20%, but this is consistent, so our messaging has really just been about premiumization and the trade up.

Speaker 1 [16:28] Dave, our charge is probably

Speaker 4 [16:30] we might be a little closer, yeah, yeah, I think. You know what we offer to the tea category, especially kind of as a malt base, is just kind of the tone of voice for Voodoo Ranger. It's a, it's a very different consumer. It's, it's a younger, it's a more diverse consumer that we bring into the Voodoo Ranger brand, and I think You know what we've seen in IPA is as Voodoo Ranger came into what was considered a fairly mature category, you know, 5 to 7 years ago, we've brought in a lot of new drinkers and we've elevated that category and that's, that's the message that we bring to retailers and it's easy to say it, it's harder to prove it and that's kind of why we did this test over the last 6 months and you know we did it in 6 markets and in one of them we insured kind of a few key things we said. You know, we want to make sure that this is in the F&B set. We do, we're a craft brand traditionally, but this is an F&B. We want to be in the F&B set and we want to be priced at parity, so we don't want to necessarily be the sort of premiumization offering within the malt malt set. We want it to be line priced and when we did that we saw kind of two things one, the T category expanded. In those markets, and 2, Voodoo Ranger was the number 2 selling tea. So in, in that sense, you're, you're really helping the category that that they've already, already set up and, you know, they've got 90 a share. Like there's a lot of analysts in the room. 90 share seems pretty good. I don't, I don't think that they should be nervous, but if we treat this the right way, we build out the tea. That we ensure that we meet consumer expectations of what they expect out of the F&B. We know we can together grow the category, and that helps Twisted too. So I think they, you know, I'm sure they're not excited, but this could be good for them as well.

Speaker 1 [18:15] Yeah, I see it very similarly to what we saw with hard cider, which it was like a lot of Brands collectively working together and that had a pretty dominant player in it for a long time before regionals recently surpassed them, but it's that same kind of collective work to make that segment stronger at the end of the day. Um, I have a bunch more audience questions coming in. Uh, this one for you, Dave. What goes into evaluating whether an established brand can cross segment barriers?

Speaker 4 [18:47] Yeah, I mean, like I said, we've screwed that up before, so I don't know if you should trust me, but you know, I think you have to look at kind of sourcing analysis of where is your drinker spending the rest of their time, where do they, what do they expect out of your brand, and that, that was again the big learning of our light beer failure was that You know, there wasn't the crossover that we expected that there would be. Um, we had to go find a category that there was a high crossover in, and again, that was F and B and T, um, and then I think you, you know, there's, there's an element of it that I think is just kind of like gut. Does, do you think it makes sense for the brand strategy that you have in your head? And, you know, I'm a, I'm a brand guy, so I, I think that way first a lot. Um, and I, you know, there's a lot of, there's a lot of crossover. There's crossover with seltzer, with, with, um, the forest line. I don't think seltzer is necessarily the right move for Voodoo Ranger. We're not going to do that, and I, I don't have necessarily a data point for that. I just kind of have a gut feel that like I, it doesn't, doesn't really feel like our vibe. Tea, I think that's right.

Speaker 1 [19:54] Talking about brand identity. Bronya, your Fishers Island has such a big connection to place. You were talking about it started because of this recipe at your family's restaurant. You guys have started to expand and you recently got acquired, so you have more resources now, potentially even bigger future. How are you still maintaining that story and message and connecting to place when it's not directly with consumers that are local?

Speaker 2 [20:16] Um, it definitely started local and, you know, our distribution was really mainly around New England, those core states and, you know, the, the strategy was very methodical. It's just, you know, it was also just how do we spend our capital in a, in a smart way. A mile deep before a mile wide, it was just really kind of always, I think the successful strategy, and it worked for me, but with the partnership with Gallo is just, you know, I think it's a great compliment to the brand just given how they also work and operate as a family owned business, which is a great synergy for us, but you know they're really well known for their innovation. They're really well known for their sales and their distribution relationships, and that's something that was You know, incredibly important to me as I looked towards taking this next step and if I wanted to take the next step, but, uh, ultimately, you know, the brand got started with a lot of, you know, great relationships on the distributor side. The on-premise side was really important to me because that's where we were born, you know, coming from a bar in a place where we had a built-in. You know, sort of trial audience, you know, the story resonated really well and it was just pretty viral. It was kind of the start of Instagram as well. So you know our marketing budget was nil and thankfully we were able to sort of promote on those platforms and it just grew from there, you know, expansion from the summer wherever people went back to. What we see now is just You know, the demand, the sort of word of mouth. People were saying this a lot more earlier on the authenticity and some of the data about what the different generations are following and how they're finding out about stuff, you know, for us in the beginning it was just, have you heard of this stuff? Have you seen it? And then it would continue to help develop and grow where we decided to expand next. Same with like the e-commerce that you guys were talking about just on the panel before and as that came online. Uh, it really helped us kind of understand how do we develop, you know, our distribution plan, but everything was just pretty, you know, um, thought out, methodical, trying not to grow too fast, um, not getting over our skis, you know, a really small company, trying to make sure that, you know, in the canned cocktail segment, especially the price of making the product is, is challenging and, you know, the education, as I mentioned before, is just Continuing to build in your backyard before you're ready to expand too far.

Speaker 1 [22:40] Jennie, how is Owl's Brew maintaining that connection to consumers and you're also cross categories with spirits and malt, so how are you keeping that up?

Speaker 3 [22:49] How do we maintain our connection,

Speaker 1 [22:50] the connection to consumers and just staying front of mind potentially as you're expanding to new consumer bases?

Speaker 3 [22:56] Yes, I mean, I think, I mean, I mentioned already that we sort of listen to our consumers. I think that our Social channels, um, sort of, are critical for us. We also have a, um, a program. When we got into beer, um, I've been in tea before and before that I've been in other stuff. I kind of looked around the room and I noticed that There weren't a lot of, a lot of women in the room with me, and when we did some research, we found out that it's only about 4% women in leadership positions, only about 4% women who make flavors, so it's pretty and it's limited in terms of the workforce too. And so one thing that's been really important for us is we started this Women for Women Initiative, Wise Women Collective, where I don't know, we shine a light on other female founders in the space. We partner with charities like Women's Voices for the Earth and Keep Abreast. We have I'd been in publishing before and we have, we all know that any book club is a boozy book club, so we actually have an official boozy book club where we shine a light on female voices, but I think part of it's sort of going beyond the product to sort of who our community is, who we're speaking to, and that's been important for us as well.

Speaker 1 [24:12] Final, final question here. I want to leave off with Dave. We, we've heard a lot of confidence from you in Belgium. You're investing $10 million in hard charge next year, which is like the biggest investment in a new brand. What what are we going to see come out of that? What is going to be a big part of that investment in getting hard charged in people's minds?

Speaker 4 [24:30] Yeah, I'm quite excited about it. I mean, we, we feel like we have to invest a lot. It's, it's, there's going to be a ton of new entrants in the space, and one of the things that we know over, you know, the last 5 years is our really differentiated brand voice has been a big part of what set us apart. Um, that's worked in craft, and we can kind of build on that in raft. We're trying to talk to a completely new audience that may or may not have any idea of who Voodoo Ranger is, you know, if you're shopping the FMB door, you might be just bypassing Kraft altogether. You may have never seen our, our brand. Um, so what we know is that the Voodoo Ranger brand voice really resonates with this kind of younger legal age drinking consumer. We got to go talk to this kind of new subse them, so that, that's what the big investment's about. And again, like we tested this and we have a high degree of confidence that this is um You know, gonna, gonna work for us, um, so that, that help unlock a little of that, um, investment, that ask of $10 million so you can, you can expect to see a lot of the same kind of clever, uh, voodoo ranger marketing tactics that we've kind of used in the past.

Speaker 1 [25:40] Looking forward to it. Well, thank you guys. I appreciate all of you. Let's give a round of applause for our final panel panelists.