Why The Next Big Thing—In Booze Or Beyond—Is Often Borrowed

0:10Hello and thanks for tuning in to Taste Radio, the number one podcast for anyone building a business in food or beverage. I'm Ray Lateef, the editor and producer of Taste Radio, and I'm with my co-host for this episode, John Craven, and filling in for Mike Schneider and Melissa Travers, Zoe Lucotta. In this episode, we dive into the explosive growth of hard sodas and hard sports drinks, and why alcohol brands are embracing the language of health, wellness, and functionality to earn a better-for-you halo. We also break down the surprising Costco and Deschutes split, and how Guinness is winning over a new generation of drinkers.

0:52Welcome Zoe Licata to the Taste Radio studio. This is the BevNet studio. You've recorded in here as well. I have. It looks a lot different than the last time I was in here. When was the last time you were in here? We had like a full table set up going on. We were doing probably BrewBound Live like award videos. So it's been a minute. Okay. RIP table. Yeah. Well, for folks who are not familiar with Zoe, she is one of a triumvirate of reporters on Brewbound. Brewbound is the sister publication of BevNet, Nosh, Taste Radio, and reports on the beer industry, beer and adjacent beverages. Yeah, it's expanded quite a bit.

1:33Yes, hard seltzers, ciders, cocktails, things like that. And it's all exciting stuff. I mean, even though, you know, beer is not in its heyday or not the craft beer heyday of yesteryear or 10 years ago, you know, it's still a fun and interesting category to be a part of. There's still plenty going on. And there are still just as many folks that are finding growth, even when generally the market is not doing so well. Yes. Weird times. It is weird times. But before we even hop into all the craziness that's going on. No pun intended. Yes, exactly. No pun intended. Oh, I see what you did there. Yeah.

2:10I almost interjected before with hazy times, you know. Okay. Make bad beer bones. Okay.

2:15Zoe Licata:Fair enough. I could ask you about Harry Styles. You don't give me an excuse to talk about Harry Styles. I'll go on forever. Okay. So, Zoe, and you did this too, John. Didn't you go to London? Yeah, I went to Harry Styles. I definitely did not love it as much as Zoe, I'm sure. Okay. In the calendar. Yes. It had noted that Zoe was going to specifically see Harry. I don't even think she mentioned London. Yeah, I think I wrote London, Harry is calling. Okay, Harry is calling. Yes. Okay, John just said London. But you went elsewhere too. I think you went to. I Instagrammed from it. Okay. Just a photo like a loser.

2:48Okay. That was not the part of my trip I didn't post on social media, but we won't talk about that. I've always wanted to see Harry Styles. Excellent performer, really, really talented guy. He puts on a great show. Do you have good tickets, good seats? Yeah, we were in GA down right by the stage. We were right up in there, real sweaty, but good time. So it's just like a mosh pit down there? There's no seats or? Yeah, there's no seats. It's in his stage set up at this particular show is massive. Sweet chat. Okay. Massive. So it's the entire Wembley field and his stage kind of takes up three quarters of it.

3:22And there's sections that you kind of are in within that stage. There was a point where he ran around the whole thing and it took him like a couple minutes. Yeah. Okay.

3:30Zoe Licata:It's a big kind of like U-shaped thing connected to the main stage. It's kind of wild. He also connects generations because as we know, John Craven. Hardcore fan. Hardcore fan. Gen Xer. Yep. Zoe. Gen Zer. Technically, I guess. Cusper. Gen Z. Millennial. Yeah. Yeah. Yeah. Yeah. What was the drinking scene like there at the stadium? Not a ton of drinking, I think. What? You're in the wrong part of this. Well, yes. Okay. Yes. To be fair, we were in an area where a lot of those people had been there for hours and hours to get right up on the stage. So we came in later and weren't near that, but we didn't deal with any lines or anything.

4:07Did deal with some excellent prices compared to Boston prices. For beer or cocktails? We got 20 ounce vodka lemonade pours. They were on draft. I think it was nine pounds each. Okay. Food and Bev is way cheaper there. And also the food at Wembley's, it's just gross. Yeah. We didn't touch the food. I mean, I'll say this, you know, the drinking age is 18 over there. Yeah. It's not a good thing. like we've been to a couple concerts in europe and it won which was outdoors in ireland which was a noah kahn concert by the way not exactly crazy but my wife had to help up a drunk passed out i don't know probably 19 year old girl and the show hadn't even started yet because they can drink and it's cheap as crap it's cheap like if you could drink at fenway and you're underage you don't have the money for that no and they start really early like they start drinking as soon as they get up because things close early-ish too.

5:03This is a good segue, right? Because in this country, supposedly high school kids aren't drinking as much. No, they don't drink at all. They're 21. College age kids are drinking less. Gen Z as a generation is drinking less. Kind of. But is that specific to this country or has that permeated, has better for you health and wellness trends have permeated into other parts of the world? It doesn't seem like it based on what you're saying. Now, this is just that we're talking about two countries, literally. Yeah, maybe not necessarily yet, but we also tend to be the ones that have any alcohol related trends first.

5:35It tends to trickle over to the other places later. So we might see more of it. How about that? American exceptionalism, even in drinking, even in boozing. Yeah. Yeah. Any trends, any alcohol related trends really kind of start over here first. I don't know. I'm pretty sure they invented the lunchtime beer in England. Yeah.

5:53Zoe Licata:Yeah. Definitely hasn't made its way here. Yeah. Well, I mean, every beverage company seems to be trying to find ways to attract new consumers via better for you ingredients, better for you formulations. I don't know, kitschy ideas like hard soda. Okay, I'm just being a hater. Before we hopped in the mics, I was trying to figure out how to address this. But it's so interesting to see how big beverage companies, whether they're traditionally beverage alcohol companies or traditionally non-alcoholic ones. If you think about Coca-Cola, which has expanded or introduced new products via its billion dollar brands.

6:36Think of Simply Spiked or the Fresca products out there. Jack and Coke. Jack and Coke. It seems like they're all trying to attract the attention of legal drinking age consumers, young legal drinking age consumers. Has that been your experience? Is that what you're seeing as well, Zoe? Yeah, that generation group is almost alien to a lot of beverage alcohol folks. They can't quite figure out what they want to drink, how they're drinking. It still seems a bit mysterious. And I think part of that is because a lot of them aren't legal drinking age yet. Like Gen Z, there's only a chunk of that that is legal drinking age.

7:09They're still getting older, still exploring. COVID was happening during college, so they weren't out socializing as much. They weren't drinking as much. And so they're still experimenting and figuring out what they like. And so, yeah, they're coming out with these new products that kind of speak to beverages that they're familiar with, but as an alcoholic beverage. And it's had varying degrees of success. I think a lot of the ones that you just mentioned maybe had hot starts and then they kind of fizzled out after that first initial launch. And part of that is they attach themselves to hard seltzer and hard seltzers decline and saying, hey, we're your next option.

7:44And that didn't quite translate. But we're seeing newer products come out from kind of smaller and independent brands that are getting some traction and will probably be picked up by some of those bigger companies somewhat soon. It's curious to me because, well, if we start with hard soda, I think hard soda has a point of reference that is an easy one for most consumers. And it's an easy one. It's sort of, if you're trading up from non-alcoholic to alcoholic, it's easier probably for a lot of people than it is to go from say soda to beer, maybe I would think, soda to cocktail, soda to wine. So why not just make an alcoholic soda?

8:23I mean, is that the idea there? Well, I mean, there are also drinks that people drink already, right? I mean, I think we're used to things like, I don't know, rum and cokes and dark and stormies and Moscow mules that are basically just boozy soda, right?

8:39Zoe Licata:But they're not soda soda. Well, they're not packaged or positioned as soda. What we're seeing right now is being positioned as soda. I'm saying it's like an evolutionary step. Yeah. And most of those that are coming out now are specifically saying we are an alcoholic version of those better for you sodas that you've seen. So, you know, an ollie pop, a poppy. I had a fun conversation with Jenny Ripps, who is one of the founders of Owls Brew and recently on the BevNet stage. And she said, you know, alcohol trends when it comes to just the straight beverage seem to be like three, three and a half years behind other non-alcoholic beverages.

9:14And so we saw this big surge of those functional sodas. And she said the real trigger for the industry in alcohol was when that deal where Poppy got acquired. They said, okay, this is people paying attention. This is working. We should make a spiked version of this. And now we're seeing quite a few of them. Okay, but as we all know, alcohol isn't good for you. Yes. And you can't market alcohol as a better for you, healthy beverage. So this is where it gets really weird and sticky. We don't really know how to say it either. It's always just in quotes, better for you because it is not better for you.

9:51It's still alcohol. So you can't say it has any sort of health benefits. it. So you can't market it in any way that is saying that it is good for you. They're essentially comparing it to iterations that have happened in the past and saying, this is way lower calorie. These are ingredients that are cleaner, fresher. This product itself is made up of other things that are going to be quote unquote better for you than maybe products you've tried in the past. Better for you being the key term. Not good for you, but better for you. But is it really better for you, John Craven? Well, I was going to say for what it's worth, a lot of the companies producing non-alcoholic versions of these products have gotten into trouble with their health claims anyway.

10:31Yeah. So I think the more matter of fact brands have gotten with their marketing copy that like contains fiber as opposed to like promotes gut health, the better off you are. I assume you could make a BevAlk product with fiber and say it has fiber in it, like make your own conclusion. I don't know. Yeah, you can list the ingredients in it. Yeah, you just can't say it does anything to you. I just wonder what the longevity of this stuff is, right? Like if you think about hard soda and you think about hard seltzer, and hard seltzer is still around. They still sell plenty. I mean, what's the, in terms of total sales of hard seltzer in this country, do you know what it is?

11:08I mean, it's teeny tiny still. It's very small. It has kind of leveled out a bit. It's not in that steep decline we're seeing anymore, but it's still pretty small. I just think with hard soda, people are going to age out of it, right? You're going to want something different than hard soda. I mean, you start out maybe when you're 21, I don't know, three years later, like, OK, I don't want this anymore. I want it more adult type of beverage. I think there's a couple of things that could help it. One is there is a decent amount of this consumer base that are middle aged women that is targeting a consumer base that hasn't been spoken to from beer products or other products, even though marketing around a lot of these are targeting Gen Z, they have found success with that demographic group of, you know, like moms going to the beach are going to drink a hard soda because they're drinking an Ollipop or a poppy when they're at home.

12:01Another part of it is, I know there are some folks that are trying to use this as a way to introduce those younger consumers into fermented beverages or alcohol to be like, hey, you've tried this now, can I bring you back into our industry and into our category with other products as you learn more and mature. Better for you ingredients can help a product stand out, but turning those ingredients into a business that grows is the harder part. Join Nombase for a free webinar on July 28th with Tom First, founder of Culture Pop and Heather Wood, SVP of Marketing at Goodles. They'll talk about what it really takes to build clean label brands that drive trial, repeat purchase and sustainable growth from formulation and sourcing to branding, retail and operations.

12:46Sign up for free at nonbase.com slash podcast. Did you tune in to Ben Weiss's talk at Bed Bath Life? So Ben Weiss, best known as the founder of Buy, which was famously sold to Kirk Dr. Pepper for$1.7 billion. So he made quite a bit of money on that. And he has since come out with a couple of different products, or at least two brands that are somehow aligned. Initially, it was Crooked Marker, which was a hard seltzer type of product. That has evolved into Crooked Pop, which is a hard soda. Now, Ben on stage at BevNet Live said that he has spent$40 million trying to prove out this concept, which is crazy, to say the least.

13:30But I am just looking at that brand and I'm saying, Ben, you're a smart guy. I mean, you know, do you really think you're going to see that$40 million ever again? Yeah. He has bold aspirations for everything. And he's essentially attempting to totally kind of reinvent alcohol or create a new form of alcohol for folks. The alcohol base in those products, it's a fermented alcohol, but it uses quinoa and cassava root and a bunch of other products. What he's saying this is going to do is introduce people to a fermented beverage, and then they'll come back to other fermented beverages. I'm curious to see what he sees to give him that hope that people will make that transition.

14:12It's really hard to introduce a concept in any sort of CPG that consumers don't know what it is. That learning and marketing takes so much work. So yeah, I'm fascinated to see how he does it and how it works out. You know, it's kind of interesting, I think, looking at just sort of what happened in the beer space, too, where it feels like there were just these categories. I don't know, maybe hard seltzer will be looked at one in the long run, but they just feel like they're stops along the way versus like the destination. Yeah. And I think that's probably the thing that with any of these, be it, you know, the hard sodas or, you know, these we have one of these hard like electrolyte sports drink products around.

14:51You know, they seem plausible. They're pretty good. But are they products that, you know, in 10 years, a consumer is still going to be like, man, I love drinking this. And that's the thing that no one knows. No one knows, but there are clues, right? I mean, there are, again, cyclical trends out there that'll tell you whether a Zima might actually return. And, you know, Zima was the great case study where it was hot for, what, three years? Tried to make a comeback. The comeback maybe lasted a year. And that was that. Isolated to Canada, basically. There you go. So for me, I look at a product like this, which I brought this.

15:31This is called Superlight. Now this blows my mind even more than hard soda. This is an alcoholic sports drink. Long pause there because what does that even mean? Yeah. I mean, what is going on here, Zoe? So yeah, this is from Stateside Brands. So they're the same folks that made, you know, like Surfside, that vodka-based tea, Stateside hard seltzer. So this is their vodka-based sports drink. Which they don't call it a sports drink. They don't call it. No, they call it an aid. And the statement of identification is vodka cocktail. Yeah. But it says vodka plus A-D-E, that is. I guess the flavor is called Blue Chill.

16:11Yep. And it might be intuitive to some folks that this is a hydration type product.

16:16Zoe Licata:I mean, it's got light in there. L-Y-T-E. What else could it mean? Yeah. Yeah. But when did this product come out? It had its full launch like this year. It sprinkled out a little bit last year, but it was really this kind of a big launch for this spring. And it hit the ground running. They had the first five weeks, it was 120 ,000 cases sold. And they are targeting 1.5 million for the full year. So it's been going really well for them. And I think part of it is their existing relationship with their distributors because Surfside is still so hot. They partner with a lot of sports teams, particularly they're based out of Philly.

16:55They have a lot of connections there that are working well for them. And they're still doing the old school stuff of just going out and doing tons of tastings and demonstrations. And this is a product where it's brightly colored. It looks just like the liquid of any other sort of sports drink. It tastes very similar to... It's very blue. Yes. Yeah. It tastes very similar to products folks are familiar with. And yeah, the flavor is... It's not hit you in your face with alcohol. They're what people cling on to the sessionable. It's, it hits a lot of things. It definitely hits. Yeah. In a really strange way.

17:33It tastes like a Gatorade. Yeah.

17:35Zoe Licata:Which is kind of blind my mind. With a little splash of booze brings you back to your high school days? No, I never did that. But there's a slight hint of alcohol. There's this tiny, tiny burn. I don't even know if it's a burn. It's just like a... It's very subtle. Yeah. Yeah. I think this is interesting. And when I try it, I get why some younger consumers would be attracted to this, especially at the beach and feel like, okay, well, I can drink this instead of drinking a beer and a water. The mindset is probably that where I can, I don't have to drink two drinks. This is all in one. Yeah. Ferentz Alnicker, I think made the initial connection that this is essentially a Borg in a can form.

18:17So if you remember the Borgs were really popular with the youth they create their own alcoholic beverage in a gallon of water mixed with electrolytes and borg is an acronym which stands for blackout rage gallon rage gallon yes and it's if you haven't seen it folks you can google it it is hideous yeah but they were mixing essentially vodka and electrolytes and making their own version of this so this is kind of a more sophisticated already made version lower proof yeah it's only four yeah four and a half so there are a couple different brands that are doing similar things. They're all under 5 % ABV.

18:54So they're meant to, you know, drink a good couple of them like you would a hard seltzer. Yeah. And, you know, clearly if people are drinking Gatorade or the traditional version of Gatorade, they don't really care about the ingredients. And in this can, those ingredients include sucralose, which is an artificial sweetener, Ace K, another artificial sweetener, and FD &C Blue No. 1. The best of all FD &C colors, of course. I'm so glad that you're with us, Zoe, because this has been blowing my mind and making me agitated for a long time. And you're bringing some insights and light to a category that maybe I'm just too old.

19:30I don't understand, but I get why if you're a company like Stateside, you are jumping onto this and saying, we don't care if it lasts two years. We don't care if it's three years. We're just going to sell as much as we can right now and get it while going is good. For emerging brands, though, for entrepreneurial brands that are thinking about getting into this space, what would you tell them? I'm not asking you to give a recommendation on whether or not you should get into the business, but is your perspective on alcoholic sports drinks or super light drinks or whatever you want to call them, that this is going to be around past two years?

20:05I think it will be, but it will be maybe one brand. Okay. Yeah. Any smaller folks or anyone looking to come in, if you can focus very locally or on whatever your direct market is and you can create an option that's maybe more affordable or has a local connection, then sure, you'll be able to have some traction with that. But this is one of those trends, like most alcoholic trends, where if you're already seeing it in the market, if you try to do it now, you're already behind. Yeah. Well, I have a feeling no matter what, we're going to see some hard sports drink brands at BrewBound Live, perhaps on stage for the BrewBound Pitch Slam.

20:44And who knows? I mean, maybe they will blow people's minds and be like, hey, this is a much better version of the Superlight that I'm holding in my hand. Or maybe the branding of the package design is just fantastic to a point where maybe it does have a shot. so vodka aid spiked aid there's a couple other things that came out a couple years ago before this spiked aid when it came out we kind of talked crap about it on the brewbound podcast of saying we don't quite understand this i do remember that yes this was a year and a half ago maybe we didn't get it and then we sampled the products at i think it was national beer wholesaler association's big event and it made sense the look of the product the taste of the product it started to connect the dots for us.

21:26And now they're doing great and they're expanding. So we were definitely skeptical of it as well at the beginning, but it's finding traction. Yeah. Yeah. You know, it's funny you say that because I remember it was probably 10 years ago, we had some folks come into the office who said, we're going to create an RTD version of Pedialyte. And we see a trend where people are drinking Pedialyte for recovery, definitely for hangovers. And we see an opportunity to do an RTD version of that, that tastes better, that just looks better, easy grab-and-go type of product. And I remember being like, this is never going to work.

22:00You got no shot. Nobody drinks Pedialyte like that. I think that was more than 10 years ago. No. But then you've seen the rise of brands like Electrolit, obviously. There's a brand called Hoist, and those are the two guys that came to her office. Pedialyte makes a version that's supposedly like a sports drink or hangover. There's a lot of those products. A lot of those products out there now. So, yeah, you know, the idea might sound stupid at first, but again, entrepreneurs see things that most people don't. And that's why they're called entrepreneurs. But, yeah, I'm really excited to see what happens or how this thing unfolds.

22:33And, again, I think in about five months when BrewBound Live does happen, Marina Del Rey, it might make more sense to me than it does today. I mean, I will say drinking a couple of those at a beer conference, you're probably going to feel better the next day than if you drink a bunch of... Double IPAs. Yeah, exactly. Okay.