New Natural Light Seltzer: Hard Seltzer Meets Beer Pong… Will Retailers Balk?
Dear Client:
Late this summer, Natural Light hopes to lay a big turd in White Claw’s punch bowl.
Having launched Strawberry Lemonade Naturdays — which A-B says is among the top beer innovations this year — value brand Natural Light is leveraging yet another extension.
Natural Light Seltzer.
Yes, this time, it’s a seltzer. A seltzer going directly after White Claw, with just two flavors, in a new space that theoretically makes sense: “Better Value.” They plan to price at a “75-90 national average index vs. seltzer market leader.”
But one distributor told BBD that 24 packs will go for $13.99. That’s less than most light beers.
A sell sheet that BBD procured through nefarious back channels promises that Natural Light Seltzer “will disrupt the seltzer category with its unique ABV of 6%, a more affordable price point, and strong brand equity built on Natural Light and the growing success of Naturdays.”
Two brands will start STRs on September 23. They sport cheeky names straight out of a Will Ferrell movie, or a Real Housewives franchise: “Catalina Lime Mixer,” which is a black cherry lime flavor, and “Aloha Beaches,” which apparently translates to “When mango and peach tropic like its hot.”
The target consumer is obviously “co-ed LDAs.”
But this brand seems to skew more toward men than the other large seltzer brands. “Two-thirds of men aged 21-30 preferred 6% ABV and 135 cals vs. 5% ABV and 100 cals,” according to the sell sheet’s “reasons to believe.”
GOING DIRECTLY AFTER WHITE CLAW. So could this finally be the way that A-B closes the gap in seltzer, as management has promised on earnings calls? Recall, Bon & Viv is the distant third in seltzer share, behind White Claw and Truly.
But their research on this brand clearly shows their intent to go after the lead (obviously), as they tell distributors that “87% of hard seltzer and White Claw drinkers” say they are “‘very likely’ or ‘somewhat likely’ to purchase Natural Light Seltzer.”
They’ll keep it simple with 12- and 24-pack cans of just these two flavors, plus 25 oz. singles. They want the brand merchandised adjacent
to seltzer competitors on the shelf.
HOT OR NOT? So: Is this a fantastic idea or a dud?
Sure, this could be a huge c-store opportunity. But think of all the other untouched occasions… If seltzers really are the next light beer, then why wouldn’t there be a cheaper option that is more expendable, one that is used for drinking games like beer pong and “quicker” consumption, you know, things the mother brand has become synonymous with.
It’s no knock on Natty Light, they’ve found that their brand resonates best with college kids, and that demographic likes cheaper stuff that gets the job done. So why not give this demographic an option in the fastest-growing beer style that is specifically catered towards them?
On the other hand, this could be another paper cut in the category’s long-willed play to self-destruct. This ain’t exactly beer, folks.
Will retailers balk at trading people down?
And what’s with the super late summer release date? September 23 basically misses the whole summer selling season. We’ve heard that retailers balked at putting it into Spring sets because, first of all it’s late, and second of all the risk of trading people down from high margin White Claw and Truly. It will debut, however, in primetime football season.
Still, said one distributor: Why not put all resources into Bon & Viv, and roll a better thought-out strategy in March of 2020?
We’ll keep you posted on how it all shakes out.
A POTENTIAL BOON FOR BEER? SEC LIFTS BAN ON ALCOHOL SALES
Over the past several years, we’ve started to see more and more universities flirt with alcohol sales at its sporting events.
The University of Texas approved beer and wine sales at Darrell K. Royal Stadium in 2015, and has reportedly raked in millions annually off beer sales alone at DKR since. Another bigtime school to give beer a go? Ohio State, which greenlit beer sales at the Horseshoe in 2016, and brought in $1.23 million in beer sales for the 2017 season.
Both of these schools’ stadiums, DKR and The Horseshoe, hold the capacity to seat 100,000 people or more, so these numbers are eye popping for a reason.
Still, there could be even more collegiate powerhouses bringing in striking numbers like the ones above, given the big news this past weekend.
In case you missed it, the Southeastern Conference (SEC) announced on Friday that it has lifted its league-wide ban on alcohol sales. The 14 schools that currently make up the SEC will now have the power to decide whether to sell alcohol (beer and wine only) or not and designate the locations for such transactions, effective August 1, 2019 — a month before the next NCAA football season kicks off.
The schools that choose to participate in this additional revenue stream will have to follow a handful of rules handed down by the SEC, such as:
- Alcoholic beverages (again, beer and wine only) can only be sold at “designated stationary locations” and “must be dispensed into cups.” Vendors hawking products in seating areas will not be permitted.
- A school must establish a limit on the number of drinks an individual can buy at once, and train servers on how to handle “high-risk situations.”
- And finally, the schools will have to abide by the designated stop times on sales put forth by the SEC. These stop times are about what you would expect, no sales after the third quarter in football games; no sales after the 12-minute TV timeout during the second half of men’s basketball games or after the third quarter of women’s basketball games; and no alcohol will be served after the top of the seventh inning at baseball and top of the fifth for softball games.
It could be a huge boon for beer in the South if SEC schools decide to give it a go, particularly during football season. The SEC has four schools that hold stadiums with capacity to seat 100,000 people or more.
Texas A&M University – Kyle Field (102,733)
University of Tennessee – Neyland Stadium (102,455)
Louisiana State University – Tiger Stadium (102,231)
University of Alabama – Bryant-Denny Stadium (101,821)
For perspective, the largest NFL stadiums: the Los Angeles Coliseum (where the LA Rams now play) and MetLife Stadium (home to the Giants and Jets) hold 93,607 and 82,500, respectively.
So yeah, tons of potential to sell beer here. Stay tuned.
WELLS FARGO FINDS C-STORES GIVING CONSTELLATION MORE SHELF SPACE, EXPECT STZ BEER SALES TO GROW 8%
Constellation’s beer portfolio is certainly enduring some headwinds this year. They’re cycling some big innovations, and news of an imminent tariff on Mexican imports put a dent in their stock.
And yet, Wells Fargo is reporting quite an optimistic outlook for the producer in c-stores, based on their Memorial Day Retailer Survey, which pinged representatives of some 15,000 c-stores.
SALES AND SHELF SPACE HIGHER THAN EXPECTED. Says Wells Fargo analyst Bonnie Herzog and co: “Our retailer contacts reported that STZ’s sales were up ~10% over the holiday weekend – with an outlook for total STZ beer sales growth of ~8% in 2019 (i.e. FY20), up from +6% expectations earlier this year.” That was due to the producer’s “premiumized product mix” as well as “continued shelf space gains,” per Wells Fargo’s contacts, who collectively planned to “allocate an incremental ~8% to STZ this year” — up from 5% earlier this year.
TIENES TARIFFS? NO PROBLEMO. What’s more: retailers generally don’t seem too concerned about tariff noise, as they “expect to pass through any tariff-related costs to consumers, a reflection of STZ’s strong brand equity & pricing power.”
Note, that operator optimism wasn’t limited to STZ. On average, Wells Fargo’s surveyed group expressed confidence for this summer selling season based on the Memorial Day kickoff, as overall beverage sales were up 4.6% that weekend, an acceleration from 3%-4% the year prior. That, due to decent weather, strong consumer sentiment and not-too-high gas prices (though they’ve been rising, they’re still mostly under $3/gallon).
Until tomorrow,
Harry, Jenn, and Jordan
“Hard work never killed anybody, but why take a chance?”
– Edgar Bergen
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