Just a few months after its acquisition by Anheuser-Busch, SpikedSeltzer is doubling its footprint with an expansion into 11 states in the mid-Atlantic and southeast. The four-year-old company, founded by Dave Holmes and Nick Shields in a garage in Westport, CT, offers four flavors of hard seltzers in cans and bottles. I recently spoke to Shields (above, right) about the Anheuser-Busch acquisition, SpikedSeltzer’s expansion plans and the changing beer market.
Beverage Dynamics: What’s the current state of the hard seltzer market?
Nick Shields: The entire flavored malt beverage side of the beer business is growing. SpikedSeltzer isn’t exactly part of that category, but it’s the closest we have until hard seltzer has enough sales to be considered a separate category. Estimating that FMBs sell 80 million cases and are growing at a 6% rate right now, I estimate we can add another 50% to that total over the next four years. And yes, I know that’s a bold statement that will turn some heads.
BD: Why is now the right time to expand?
NS: A lot of good things are coming to the forefront, thanks to the acquisition last year. We’ve always struggled to meet demand locally in our 12 northeastern states, so we never had an opportunity before to expand – despite requests from across the country. The mid-Atlantic and southeastern U.S. make the most sense for expansion, especially as we look to get into Florida during its hot season. Our sales go north in a hurry when the weather heats up, and with the muscle of distribution through our AB wholesaler network and expanded production capacity, we have some new levers we can pull to meet that demand.
We’ve spawned a lot of lookalike products. When we started in 2013, we were alone in the market. But that’s a luxury that can’t last forever. Boston Beer, Diageo, Seagram’s and Miller have or will soon enter the market. Every player has been looking to this category with great interest, and wisely Anheuser-Busch decided to invest in an established brand that was growing.
BD: What’s been the biggest change for you since the Anheuser-Busch acquisition?
NS: Going from a startup to a subsidiary, there are some great developments for me. I don’t have to wear all the hats I used to in a startup role. There’s an element when you’re small of putting out fires all the time. Sales, marketing and innovation are what you want to work on, but there are diversions into production and logistics. Those are two areas that will be handled by a bigger group now, allowing me to work on the things I’m most passionate about: innovation and new products.
BD: What’s the biggest differentiation between SpikedSeltzer and hard sodas?
NS: Sugar levels. Our product isn’t sweet, which is what people nowadays are looking for. There’s a macro trend in this country as consumers move away from sugar. “Big Soft Drink” is in a tough spot, with carbonated waters stealing market share.
We also try to be as clean, light and simple as possible, with nothing artificial added. Hard sodas have flavors and preservatives, which you can’t see because of a lack of labeling requirements. We try to be as transparent as possible about what’s in the bottle, because it’s better for you.
BW: Who is your target demographic for SpikedSeltzer?
NS: Our customer is anyone who cares about “better for you” and a balanced life. They’re outdoorsy, athletic people who want to have fun and still be functional the next day. It skews about 70-30 toward women, who tended to be the early adopters, especially women who are looking after their bodies.
BD: Which categories are you stealing from, in terms of market share and drinking occasions?
NS: I think it’s very much wine and spirits. A significant chunk of people who like SpikedSeltzer say they’re not interested in beer at all. It’s too filling and laden with calories or carbs. So thankfully for the beer wholesalers we supply, we’re helping them take back share from wine and spirits that they’ve lost over the past 15 years.
BD: What’s coming down the pipeline for SpikedSeltzer?
NS: I see some different packaging for different occasions coming out. We do very well in cans, and we’ll continue to support that, but perhaps go to a smaller format. There’s also an endless amount of cocktails that can be made from our base formula. So it’s fun to muse on what can come down the road. There are some better-for-you versions of mixed cocktails that we haven’t seen in the market yet, and I really want to move toward products that aren’t on the shelf.
People have been asking me for low sugar versions of drinks for 20 years now. I remember people asking for a 50% less sugar fruit juice when i was with Nantucket Nectars. It was a decade before Tropicana 50 came out. We have a few surprises for later this year, as well as 2018 launches we’re already looking at. I can’t divulge anything yet, but we’ll be sampling some new products at the Greenwich Wine & Food Festival in October.
Jeremy Nedelka is editor of Beverage Dynamics magazine. Reach him at firstname.lastname@example.org