hard seltzer and RTD acquisition activity

Consumers are buying hard seltzer and ready-to-drink (RTD) canned cocktails like never before, and Big Beer and spirits conglomerates are adjusting growth strategies to get in on the action. Beverage companies like Anheuser-Busch, Molson-Coors, Diageo, and Beam Suntori have all made major moves into the spiked and sparkling space via acquisitions, mergers, or major investments. Hard Seltzer News first reported on this growing trend last fall.

Beverage alcohol companies have all taken substantial revenue and profit hits from the global pandemic, as on premise sales went flat.  The bubbly seltzer market helped offset those losses for some quick-thinking corporations.  While some grew organically, others acquired start up brands.  With a change in purchasing behavior that has lots of runway, conglomerates are now considering options to fend off a permanent slide.

The proliferation of hard seltzer brands has been nothing short of amazing, and the curve still has blue sky.  The exponential gain in SKUs, however, always results in consolidation.  We’re still on the upslope, but consolidation will happen fast, and we’ve already seen some aggressive transactions.

Acquiring a successful start-up brand is a good way to quickly garner market share while establishing legitimacy in a new segment.  Nimble entrepreneurs take risks with brands, get to market quickly, and put creativity and originality at the forefront.  If the formula works, it can often make sense for large corporation to add the brand to its portfolio.

Start-ups benefit from an increased distribution network (and consumers get to enjoy more RTD options).  The liquidity options for entrepreneurs are sometimes a once-in-a-brand’s-life opportunity.  The key for sellers is to have a trusted team of experienced professionals on your side during the process. There’s a lot at stake, so your exit strategy is best crafted with someone who has been through it before.

Recent Transactions

The last two years have seen a smattering of M&A activity in the canned cocktail space.  While strategies shifted quickly with the rapid rise of hard seltzer brands and the (still somewhat fluid) change in purchasing behavior brought on by Covid shutdowns, these investments give a hint about what’s attractive for both parties.

Some of these investments are buyouts, while others are distribution partnerships that allow the bigger company to leverage its supply chain and dip its toe in the spiked water of microbrand.

Cutwater

In 2019, Anheuser-Busch acquired Cutwater Spirits, a San Diego-based distillery known for its craft canned cocktails. Since then Cutwater has continued to release new varieties of its premium RTD.

The investments and marketing prowess of A-B is paying off.  This season, the company announced an expansion of its partnership with Major League Baseball (MLB) and will release its canned Vodka Mule in co-branded cans featuring six different teams.

On the Rocks

Last October, Beam Suntori acquired On the Rocks Premium Cocktails, an RTD sold in two serving size bottles. Many of On the Rocks’ drinks were already made with different Suntori brands, such as the Classic Margarita made with Hornitos Tequila.

The merger gave the company an instant foot in the door of the growing segment. Since then, On the Rocks’ distinctive little bottles have popped up in major retailers like Target and Jewel-Osco.

Superbird

In January, Molson-Coors announced a “distribution partnership” with Superbird. The paloma-inspired canned cocktail is the beverage giant’s first foray into premium RTDs.  The investments are allowing Superbird to expand nationally, beginning with 10 new markets this spring.

“We’re honored to be working hand in hand with one of the best beverage companies in the world, and one that understands the high-quality standards to which we hold ourselves and our product,” Joe Marchese, co-founder of CKBG, said of the distribution agreement.  Marchese is a former Fox Network advertising executive, turned serial entrepreneur.

Lone River Ranch Water

In March, Diageo announced the acquisition of Far West Spirits LLC, makers of Lone River Ranch Water. The company was founded by Texas native Katie Beal Brown in 2019. Ranch Water is a favorite local tequila-based cocktail of the Lone Star State that is quickly making its own mark on the RTD world.

Hard Seltzer News did its part in raising awareness by interviewing Katie Beal Brown in August. “I do think there’s also a national appeal in that value set that’s associated with the American West. I think is inspirational for a lot of people especially in today’s environment,” Beal Brown said at the time.

“We started Lone River with the dream of giving people a taste of Far West Texas… We found in Diageo a world-class partner who believes in our vision to bring the spirit of Far West Texas to as many as we can,” said Beal Brown.

Ashland Hard Seltzer

Anheuser-Busch is in the works to buy San Diego’s own Ashland Hard Seltzer, according to a report from SanDiegoVille.com. Started in 2020, Ashland was founded by Josh Landan of Harland Brewing and some of his famous friends.

With the help of A-B, Ashland should be able to expand its distribution footprint outside of California. “With the amount of product that we’re selling and just that territory, we should be doing that in multiple states, and we’re doing it in two counties,” said Landan last year.

“So, it’s really like nothing I’ve seen before and based on our Instagram… everybody all over the country really wants it.”

Ashland’s co-owners include Adam Devine and Blake Anderson from Workaholics, Cody Bellinger of the LA Dodgers, and Detroit Lions quarterback Jared Goff.

Ashland is currently the only hard seltzer made with alkaline water to increase its better-for-you profile.

Given the gathering momentum, big beverage companies are thirsty for more.  Expect 2021 to bring some surprising announcements.  The next deal may lie somewhere within this site.

Erin Grafton
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