Brew Talks Boston 2022 - 4th Category: Opportunities & Challenges in the Beer Category’s Hottest Growth Area

Zoey Lacata [00:16] Hello everyone. Welcome back to Brew Talks sponsored by Dogfish Head. Getting ready for our final panel here. I am Zoey Lacata, brew-bound reporter, our unofficial Gen Z correspondent, and the only one on our editorial team that is born and raised in Massachusetts. So shout out to Massachusetts, yes. Uh, so we're gonna kick off our final conversation which is about, uh, something that's on many craft brewers' minds right now, the 4th category, all things F&B, hard seltzers, RTDs, all that fun stuff. Um, I want to shout out again Jess Infante who unfortunately couldn't be on stage with us, but she helped a lot with this panel, so we miss you, Jess. And uh shout out to our sponsors of course Dogfish Head, our presenting sponsor, as well as a big thanks to Reyes's Beer Division, Perkin Elmer, and Hop Hayes and Brew One by the Barthhoas Group. All right, let's jump into 4th category and our panelists today we have Dogfish Head co-founder and Northie Mount Herman alum along with me, Go Hoggers, uh, Sam Caledoni. Welcome, Sam. We have craft beer seller co-founder and CEO Suzanne Shalo. And Mass Bay Brewing co-founder and CEO Dan Canary. Welcome guys. All right, so let's start things off. I mean, a big topic in the fourth category is RTDs. Those have been available across all categories beer, wine, spirits. Still trying to figure out what that definition is, but, uh, in the last week ending July 17th, according to IRI, they had $215.3 million in off-premise sales, an increase of nearly 3% year over year. I want to hear from both you, Sam, and from you, Dan. You guys are playing within this whole category space. Can you tell us about what offerings you have and why you're participating in this fourth category? Let's start with you, Sam.

Speaker 2 [02:26] Thank you, Zoe. And first, I, I, I do want to say it's awesome to be back in a real room with real beverage lovers. Uh, doesn't it feel good to be all together guys? Thank, thank you to Travis and the, and the team here for hosting us. I also want to say besides my thanks to, to Brewbound this long relationship that we have, you know, I, the first time I ever had beer in a brew pub, I was on a semester abroad in Australia. A place called Pump Works in Sydney and I had it with a kid who was going to Tufts at the time and he had a harpoon hat on in like '87 and I was like, we're in a brew pub, there's a brewery in Boston and it informed my journey. So that was like 2/3 of my life and then I remember trying to sell you beer in Cambridge 1/3 of my life. Uh, so this is really meaningful for me to be on this. panel with you guys and uh uh so uh in terms of the, the fourth category, our, our, our, uh, so when Dogfish opened in our brewery in 95, we were the smallest commercial in the smallest commercial brewery in the country, brewing 12 gallon batches on converted kegs in a corner of our restaurant, but intentionally in the corner of a restaurant with a kitchen because we wanted to be really the first brewery committed like the business plan said the majority. Of our beers will be brewed with culinary ingredients and right out of the gates we're doing beer, wine hybrids like raison d'etre, beer meat hybrids like Midas Touch and then 4 or 5 years after we opened in a scrap yard, I found a piece of stainless steel that looked like it could be a pot still and we bought it. We welded a steam jacket on it, welded two kegs vertically, and made it into a condensing cong and away we went, started making You know, gins, rums, vodkas, brandies in 20 years ago. So for us the canned cocktail journey really started then because we started making cocktails in our own, our own restaurants over 20 years ago. Our portfolios Foolproof spirits. We just got a 92 from Whiskey advocate for a Let's Get Lost whiskey. Uh, gins, rums, vodka. We do ready to pour cocktails, so like 20-ish ABV, uh, 750 mL still spirits like Sonic. They're like pre-prohibition cocktails pour over ice and then 2 or 3 years ago, we started our journey journey with, uh, canned cocktails. So that's kind of our lineup in the fourth, uh, category, uh, space.

Zoey Lacata [04:48] Dan, what are Mass May Brewing's brands doing in the 4th category?

Speaker 3 [04:51] Well, I just want to say how happy I am to be here, and I don't know, Sam, how's your high school got a shout out as part of your introduction? Is that, are you like class agent or what's the deal with

Speaker 2 [04:59] that? My wife's the chair of the board. Is

Zoey Lacata [05:03] NMH campus. There

Speaker 3 [05:04] you go. This is about the Woo socks. I'm a Worcester guy, so Sam, we're just glad to have you here in Massachusetts. We love, we love that that you're here a lot in Mass. It's great to be here. Thank you to Ruba and Suzanne. Wonderful to be with you. We've been partnering with you for a very long time, which we appreciate. I think for Harpoon or Mass Bay Brewing, a lot of what we do has always been based on relationships. Maybe it's because we're an employee owned company, but getting into the fourth realm, if you will, started with our partnership with Poehler. Um, another great Polar Park, the Woo Socks. I've known the Crowley family forever. They make incredible seltzer. So we decided to partner with them to get into the hard seltzer category. And then over the years we became very friendly with the Whistle Pig whiskey folks up in Shoreham, Vermont and had a lot of fun making barrel age beers with them, the Bock Hog and other products that I just personally love. And so I started talking to Jeff Kozak and his team at Whistle Pig about getting into the RTD world with a with a product that we can make together with them and then most recently again partnerships, it's with with our friends out at FX Matt, the Saranac and Flying Dog folks. We've known the Matt family for well over 30 years, another 140 year old company like the Crowley's out at Poehler. And we're doing a vodka whips product with the Mets and the Flying Dog Folks, so that's just new in the last month and it's so far doing very well in the marketplace. So again with us about product and making sure the liquid is is something we're very, very proud of and we feel somewhat unique to the market and then it's about relationships.

Zoey Lacata [06:42] I just want to give a reminder to everybody that if you have questions for our panelists, please text 617-336-8560. We'll try to get those answered for you. Um, Suzanne, you started carrying fourth category products at craft beer cellar. What has that reception been like for your craft selling shoppers or craft crafty shoppers?

Speaker 4 [07:05] Thank you Zoe. That's a great question. I still don't really know anything, and I know you all want to know what the answers are for the future, but I don't I don't really have them. If you'd have told me 10 years ago or 12 years ago that the flagship store is about to be 12, so that's how long we've been selling beer in a takeaway manner, that we were going to be looking at all of these. You know, canned cocktails and, and F&Bs and hard seltzers and that they were going to be in all of our stores. I, I, I mean, I just wouldn't have believed it. I would have told you to pound sand. I mean, it just Then it may You know, there was no existence for it. I mean there were some things on the market 10 years ago. But it would have never been in a craft beer cellar, as we say often, beer is our middle name. It's changing and it's changing and it's growing. This is a percentage of sales and we're seeing it across some of our stores have full licenses, so they are selling Sam's canned cocktails and we're seeing growth in all of those categories. I mean we started and we're looking at 0.5% in sales month over month or quarter over quarter and now we're seeing those categories up in the 3 to 4% of sales, so. Yeah, it's an interesting space. It sure is.

Zoey Lacata [08:32] Now, Harpoon and Dogfish Head, both are beers that are seen as like pioneers within the craft beer space. Dan and Sam, when you made the decision to get into the 4th category, what did you do to make sure that you were still keeping that craft DNA within your brands? Sam, do you want to start there? Or Dan?

Speaker 3 [08:52] You know, a great question. It has to be consistent with who we are and our values and how we approach the market, and so. It was all about the people involved in the project, you know, with the with the polar. Hard seltzer with Arctic Chill. It was getting together in the room with that incredible team out in Worcester and going through a lot of different flavors and figuring out how, how we could make a great hard seltzer that would speak to people here in New England, um, that we could make together with them, and the partnership with Poehler has been remarkable for us because we've learned an awful lot from them. Again, a 150 year old company. In that category that has survived fighting against a lot bigger businesses, you know, they've been battling Coke and Pepsi and multi-billion dollar companies for decades, and we kind of feel like we're in the same situation as a craft brewer, right? We're battling multibillion dollar companies all the time, so we've got to be creative again. It gets back to those relationships. Fortunately, consumers today seem to like a story. They like to know that a product is authentic. They like when they check on it, it's like, OK, these are the people who I thought made this product. They're actually the ones who make it and they actually make it where I think they make it and they make it how I think they make it, so. That story has got to check out and for us, I think again with the whistle whistle pig, same deal going up to the farm and if you haven't been to the whistle Pig Farm up in Shoreham, Vermont. Try to get that invitation because that's a fun place to visit, um, you know, working with their distillers on different products. We did that, we had meetings in Shoreham, Windsor, our brewery in Windsor, Vermont, as well as down here in Boston and just experimenting with a lot of different liquid, coming up with something we thought was unique to the marketplace. And the last project, if those in the industry who know Fred Mat. If you know Fred Matt, when Fred gives you a call and has one of his flights of fancy on the phone, you're like, OK, Freddie, what is this all about? But Fred came, talked, said, We want to make some vodka drinks, and it's like we want to do this with people we like to work with. And so it was assembly, it was a handshake agreement getting together with the brought the flying dog folks in who we didn't know that well, but Fred knows well, and let's, let's work over, you know, about 60 or 90 days on some great liquid and come up with something we're proud to sell. We're selling it in New England and our partners are selling it down the East Coast. So again it was with each one again because we have partnerships and collaborations, it was a unique approach to the marketplace. I think as Suzanne says we don't have any idea how this is going to shake out. This is all this is changing week by week at this stage, right? So we're trying to make products that we're proud of with people we like to work with and then hopefully they'll find their place in the market.

Speaker 2 [11:39] and for us, like the, the, how do we keep the, the attachment to the OG craft uh uh DNA, um, so for us, it's, it's a pretty Organic because the same facilities that were taking our grain, you know, in, in silos for our beer are the same facilities that were brewing, mashing, you know, washing our spirits and that's been the same for over 20 years that we've been making these gins, rums, vodkas, brandies, using the same piping system as our beer. So it's all been connected. For over 20 years and really the, the, I think one of the things that we're, we're proudest of is, is that it's not just been connected from the production side, but right when we started making our cocktails 20 years ago, it was in our own facilities and we always had a very robust but informal like focus group thing, what we now call Drink lab where we literally talk to the customers like write down their impressions of our cocktails, or beers, etc. and And the next time they come and visit us, they can see that we listen to them. We, we, we tweak the, the, you know, the balsamic vinegar back in the vodka soda we put for the basil in the in the gin crush. So it's really been like a really organic journey since the brewing and distilling happens under, under the same roofs and, and that's been a big point of differentiation for us because it's amazing to see how quick the spirits-based RTD. Space is gaining traction and to be able to say we've been, you know, perfecting these recipes for over 20 years, uh, really helps us tell the story to our, you know, distributors, retailers and customers, but then putting like our biggest marketing investing, I think, is, is sending them out to blind, uh, competitions and like. Last week, we just got 8, 88 medals in New Orleans. We won, uh, best of show in LA. So I don't think that would have happened if we weren't like working on the recipes for 20 years and because we've been working on those recipes under the same roofs as the beers we've been making for 27 years, that really helps with that DNA, you know, authenticity.

Zoey Lacata [13:50] Something that's a big characteristic about this segment is that success can be hard to measure and it can be very fleeting. So, Suzanne, how long are you giving a new product within that category before you're removing it from shelves and coolers?

Speaker 4 [14:05] Again, another great question. And it's a quick moving category too where things are coming and going all the time, but I hear both of these guys talking about authenticity, and that's ultimately I think what a retailer will tell you that they're looking for. We're looking for good products, but I would say a couple of months, you know, a couple or 3 months, you know when something has pulled through. And if it's going to pull through, it's going to be reordered and restocked, and then it goes from having, you know, one shelf to 2 to 5 to cooler space and so on and so forth. I mean, it's a little bit different, uh, depending, but, uh, you know, we, we try to treat products at our stores like we treated beer on day one, and we're embracing the things that are coming at us and we're trying to, you know, carry, carry forward that craft sort of curated. Uh, uh, selection of beverages, you know, whatever they are, we're learning every day, uh, trying to learn about CBD products, and I, I think I said earlier we talked to these guys, uh, we officially have a kombucha seltzer hybrid on the shelf, and that's just crazy like, you know, and, and it's there because the liquid is good, right? So we, I don't know how deeply we can believe in it, but we can embrace it if, if, if the liquid's good.

Zoey Lacata [15:28] From the perspective of someone who's making these products for you, Sam and Dan, how long are you giving one of these innovations to take hold in the market before you decide if it's successful or not?

Speaker 3 [15:40] You know, I think Sam and I, we live in a three-tier system world, right, and so nothing happens as fast as you'd like or as uniform as you'd like for us anyway. So you're trying to roll out a new product and you think it's been out for 2 weeks and they say, well, this wholesaler just ordered it. So I would say for us it's more 6 to 12 months, you know, we're looking if we get into Suzanne's store and it's not doing anything in 2 months, that's meaningful information to us, but kind of given the entire territory, I'd say it's more especially with the seasonality of some of these products, typically like a 6 to 12 months.

Speaker 2 [16:14] And I think the explosion, like, let's face it, for thousands of years globally, there have been three categories of alcohol that people like, oh yeah, those are the three categories of alcohol. And now this fourth category within 5 years is, is taking a ton of oxygen. So it's so new and so dynamic. So I feel like it accelerates the the the time when you're doing launches to such an extent. That even having the patience to wait like a seasonal cycle and so an example for our company BBC would be, you know, a great example of patience would be something like Twisted Tea which were like bumping along for decades and now it's the growth engine in the 4th category for our company number 1 FMB and still gaining share and I contrast that to When we launch cocktails in our own properties, our whiskey sour is one of our best selling liquids in the offseason, in the cold months. We're like, oh fuck, everyone loves that. Let's launch that. And then you see just how seasonal Spirits RTD, like if you look at the curve of when it sells, and so we quickly, you know, self-regulate and went to our distributors and said let's focus on barcard, our variety. shouts to Kate Rogers and the New England teams now the bestselling in, uh, you know, spirits in New England. We kind of switched out the whiskey for that or even our Bevy example where we came out, we knew we had a liquid that we loved, but we launched it like in the don't worry about that shit. I, I know that by heart. I know it by heart. I, I am the pentameter, but like we came out with Bevy in like, like, you know, November, got it everywhere but no sampling during COVID, a totally new liquid on a on a on a drink that was meant to drink on a hot summer day. And that's on us and having as suppliers, the humility to go to your distributor. before they go to you or go to your retailers before they go to you and say, you know what, we're going to pull that one back, but here's something we really believe in. It's really what, you know, gives oxygen to the relationships where it builds trust within the three-tier system that we're beholden to.

Zoey Lacata [18:19] Uh, we have an audience question that I'm going to reword a little bit, but, um, they asked, can you name something in the 4th category? They said a specific product, but if you just have characteristics about a 4th category product that can carry both authenticity and significant market share, how do you create that balance? Anyone has any input?

Speaker 2 [18:38] I want Suzanne to answer first as the gatekeeper between us and the customers.

Speaker 4 [18:43] I've been impressed by canned cocktails. This is, this has been an aspect of the 4th category that's really gotten my attention. You know, at first look I wasn't sure, but as we started to sample them and they're good, they're impressive, they're easy, and this is sort of a silver lining of, I mean, the bigger push is a silver lining of COVID and the pandemic where These producers had to get creative, right? To be able to push these products out and to continue to make, uh, products that could be sold in retail operations. Uh, I mean, we, we're carrying some of Sam's stuff and I, I, I think it's, um, It's fresh products. It's, it's, um, you know, the the the blueberry. It's awesome packaging all the way around, you know, consumer gets it. Right away, you know, it's something that they want to be part of and something they can get behind and support.

Zoey Lacata [19:43] Um, I want whoever has the best input on this, maybe all around you guys can give a comment on this, but how important is having 4th category offerings to actually bringing in new consumers?

Speaker 3 [19:57] In the easy answer, increasingly important. I mean, clearly people are incredibly promiscuous in their drinking. They're drinking across every category, Sam said. We grew up in this world where it was like the three, you know, spirits, wine, and beer, and everyone kind of knew their lane, and now those lanes are being obliterated. And that's not a bad thing. That's what the market determines, you know, what we need to do and the and the flavor profiles of some of these beverages are outstanding. Like shame on us for not doing it sooner. You were doing it 20 years ago. Um. So it's, it's, it's, I think it's kind of a wonderful thing and it allows us to be even more creative across a lot of different categories which is kind of what we got into the business for.

Speaker 2 [20:42] Nothing to add to that.

Zoey Lacata [20:44] Perfect. Um, Sam, we're gonna talk a little bit about specifically your bar cart variety pack. I mean, the last time we checked, it was the largest variety pack in ready to drink cocktails in measured off-premise channels. What is it specifically about that pack that you see is the key to having that fast growth?

Speaker 2 [21:03] Yeah, and this has been a learning where I, I think one of the uh the, the like pros and cons of what we try to do at Dogfish was we were like, OK, we have these amazing pioneers that came before us, Harpoon, Sam Adams, Sierra that have just nailed these traditional styles or brought, you know, continental styles and made them really vibrant like you guys did with IPA or Sam Adams did with lager. So we're not going to win if we try to, we're tiny, I was 24 years old with 12 gallon brewery. So where can we win as we try to do these really, you know, uh Ingredient rich culinary infused recipes from day one and then we open our distillery like maybe we can play with that space where even the lanes of vodka, gin, rum or even more, you know, militantly uh defined. But what's interesting, I think is why we're getting traction to our canned cocktails is while there's 20 years of like DNA in the recipes, and there's these background ingredients that aren't listed on label. So like our vodka soda, the blueberry you mentioned, there's balsamic vinegar in that, in the gin. Crush, there's basil, but we intentionally didn't really put them on label. We talked to our distributors and retailers and even our social media to customers about it, but label wise we wanted to make it more approachable. So there's usually just two callouts to recognizable culinary ingredients on that, and we try to not overcomplicate the proposition, including the ABV proposition. Like a lot of our competitors, Cutwater deserves mad props for doing what they're doing, as does High Noon, but finding our white space compared to those two, like High Noon. It's clearly a seltzer, you know, proposition from the white can to the calories. Cut waters like all over the map. God bless them with creativity with ABV and ingredients, uh, whereas we're like, let's focus on culinary ingredients. That's where I'll bring our distinction, but let's make the proposition easy. All of them, 2 foolproof shots per can, all of them, you know, real culinary ingredients and then getting in the bar cart and getting the learnings quick like, you know, my, my, my sister's in the, in the on an e-commerce platform and getting the learnings of how people are like, oh my God, I fucking thought I hated gin. I got, I threw up 7 times when I was in high school and stole my parents' gin, but then they try it in the bar cart because they took a risk on a package that had, you know, different liquids in it has been a great sampling opportunity. So keeping our proposition relatively simple in this moment where that category looks just like packaging confetti has been a factor in our growth.

Speaker 4 [23:31] I, I was just going to add that I, I think this, this mix pack, I think this is something that we really learned from craft beer and it translates, right? I think craft beer has been out in this space tinkering and, and, you know, adding different things into different packs and then as we see, you know, these gentlemen start to get into this, uh, these different segments a little bit doing these mixed packs. I think it makes sense to the customer. Uh, I know it does, uh, just from, uh, talking to other stores and, and what I see is give them a variety pack of anything, whether it's, you know, a hard seltzer or a canned cocktail or beer. They want a variety. They want to try different things, you know, they want to revisit that horrible nightmare of gin or tequila, uh, to see if it still exists.

Zoey Lacata [24:22] Uh, we're getting tons of questions in on the text line, so I want to address some of those. Um, first for you, Suzanne, are you seeing the consumers that are coming in and are buying these fourth category products, are these those traditional craft beer buyers like adding them to their basket, or are these new consumers?

Speaker 4 [24:38] A little bit of both. Uh, I'm definitely still learning as well. Uh, I'm, I'm talking to people every single day, uh, the, the, the younger generations, the younger drinkers, uh, they're educating me. As, as I learn what they're going after, but I'm seeing mid-forties, uh, a couple. You know, one of, one of them might be adding a bunch of beer to a cart and the other one might be in the seltzer and or wine aisle. Um, uh, it's both, it definitely is both and, and, and, and others, right? So I'm still I'm still seeing traditional older drinkers drinking things that we would have expected them to drink. Maybe they're drinking wine. Uh, they're pulling Dan's Harpoon IPA, but they are also trying, they're trying this category a little bit. They're getting experimental. They're taking a single, I'm sure everybody knows that by now, but we sell singles of everything in every store, so they don't have to take a 4 pack. They can say, Well, hey, let me try this because I'm not sure, and it's $5 so let me take a single of it. They're they're experimenting a little bit.

Zoey Lacata [25:44] And then for Sam and Dan. This is an interesting question. What extent do you think making or selling 4th category products is a choice or a must at this point?

Speaker 2 [25:56] So for us, like, uh, out of the gates, we'd show up with beer festivals with like beer, wine hybrids and beer meat hybrids and beer drinkers would get mad at us and be like, you're fucking with traditions, that's not cool. And that got us researching like pre Ryan Heits about history of alcoholic beverages were pretty much almost every culture was just like, literally throwing shit at the wall like mixed sugar sources to create beverages. So they were like, you know, we, we always say the Rhine Heights. Babo's a relatively modern form of art censorship because humans have been brewing for 10,000 years but that law has only been around for 500. So for, for us our entire journey has been around that and because we'd start distilling as early in our, our history it's always, it's almost always been part of our journey so never, never really kind of thought about it really like in terms of the business.

Speaker 3 [26:51] And I would just say you have to continue to experiment and learn from your customers. If you get in your bunker and say, I'm just going to make, you know, an alt beer or wheat beer or whatever, you know, you're not going to be relevant for that long, so. We interact with hundreds of thousands of our consumers every year and we learn incredible things from them, and that doesn't count the online iteration, so people want more flavor, they want more categories, they want more sources of their alcohol, and we do too, so it's been a great learning experience for us and we love the creativity that's flowing from all sides of the industry right now.

Zoey Lacata [27:29] So I want to go around the horn here and hear from everybody, but are there any cautionary tales that you can give to people who are going to start in this fourth category? Anything they can learn from your past experiences about entering this space?

Speaker 4 [27:47] I'll take it. I, I continue to go back on the word authenticity, uh, be authentic, uh, create a product that replicates what you already do. Don't try to be anyone else, uh, pay attention to your own walls and, uh, put forth a good product that looks good. Spend the time and energy and the money to put the people in those departments that can help you put forth the product that looks as good as it tastes, and so on and so forth.

Speaker 3 [28:18] Yeah, and I would say fail fast. I mean, change, the level of change is incredible, you know, when we think about what we had in the industry 20 years ago, 30 years ago, 10 years ago, it's wild how quickly you go the shopping experience. Who likes the shopping experience? I mean, it's, it's out of control, right? But it is what it is, and you can sort through it and you can find incredible things, but you have to work at it a little bit. So I would say if you're doing a Me Too product without authenticity or story, don't waste your time and, and learn and fail quickly because you're not always going to. Make it and then the other thing I'd say again because we've worked with partners which is interesting, which has tremendous benefits, but also it means you have a partner you're learning with and who might be bringing their learnings from another category into this category and have constraints on it which can be It can be a challenge because it's this world is much closer to our world in a lot of ways than it is to the traditional liquor or spirits world, let alone wine or even the mainstream beer. So learn and fail fast.

Speaker 2 [29:34] and mine would be the fourth category so young is essentially is growing up in the pandemic moment. So as we're innovating new recipes like to not forget that on-prem is coming back and that is an awesome sampling opportunity. I know you're both on and off-prem, but Like what we've learned was we were first like, OK, well, we've got our James Beard nominated cocktail program. Let's go to those fancy restaurants first and with our canned cocktails. They're like, fuck you, I make $22 off of martini. I don't want your canned stuff in my restaurant. But then listening to like high volume but high-end demographic. venues and golf, golf places or high-end sports bars, especially, and I was going to ask this of of Hempy's uh panel, especially when we're so challenged on help in the hospitality world, how many really great restaurants and bars want to have Really great quality cocktails, but don't have the staff to have the mixologists behind the bar going to them with our, you know, innovative craft cocktails that are already ready to go. I feel like as we come out of COVID's one of the great like white spaces that we have.

Speaker 4 [30:44] Yeah, I don't know who, who has the help to pour that $22 cocktail, but we don't.

Speaker 3 [30:50] Well, you, you think about the, you go to a venue and the 192's are the small size beers and 192, who like thinks that's an awesome size? I mean, I drink fast enough so it stays cold, so that's all right, but it's all, I mean, think about it, it's all driven by these venues because they want to get it into people's hands quickly and The craft cocktail, the can, it's like they can add a shot to it quickly if somebody wants a little bit of a bigger drink, but it's solving a problem in this day and age. So that's another, I think, on premise of tremendous opportunity.

Zoey Lacata [31:21] And Suzanne, you have that on premise with Drinkishish too, so what is, how is RTDs and everything playing into that space?

Speaker 4 [31:27] We won't be mixing cocktails at Drinkish anytime soon, not, not in the foreseeable future, not with what exists on our market. And it, you know, as we've heard, yeah, it keeps, it keeps growing and changing, and it's getting better, so it's not happening. Our people are going to be focused on the, the taps, uh, and learning, and, and that was one thing I was gonna add, Zoe, is just Listen to your customers. That's so critical. Like when I think about where we are in this space and like, you know, investing in the, the help that we do have, it's like we all need the most amazing people, uh, catching those info emails. Like we really need those people. We need them to both answer quickly and adequately, but also to pass that information back because it's so powerful in the way we Look to shape this, this category.

Speaker 2 [32:23] Amen.

Zoey Lacata [32:25] So looking more into retail and everything, this is a question we had and some of our audience members had as well. Suzanne, what are you seeing is the segment that is losing the most space to a this big category? We have a beer delivery for our members here. Uh, we'll take a pause for that very important. Gotta stay hydrated.

Speaker 4 [32:48] We, we have a Trinkish, which is a 200 seat beer hall that's adjacent to craft beer cellar in Belmont. If you don't know, uh, we have a, we have a, a seltzer on tap. Uh, that's a weird, it's kind of a weird one for me, but I was like, hey, I, I don't, I don't make decisions by myself anymore. I just, I listen to. The people that are around me as well that have a reason to state the things that they do and they have the data to back it up and maybe the passion for the cry for it, I'm going with it. We've poured a kombucha. It wasn't as successful. I feel like seltzer's getting a little, I don't know, messy right now. We'll see how it shakes out. I don't see some of the Some of the bigger brands losing a lot of steam. I don't see that actually translating on the shelf, but I'm seeing some smaller players jump in that scene. So I don't, I don't know. I mean what's growing for me. What I see is kombucha. This scene and like the light kombucha or like the diet kombucha. I don't even know, but I'm seeing like dialed down alcohols and dialed down ingredients and You know, we'll, we'll see. We're, we're looking to get the gas levels right and, and start doing a blended cocktail on tap, so We're up for it. We're up for the fun.

Zoey Lacata [34:11] Sam, how do you at Dogfish prefer to see canned cocktails merchandise? What is the strategy for you guys?

Speaker 2 [34:18] Yeah, so it's interesting as we now as we're coming out of COVID on the road more visiting our distributors as brewers, it's both like both like alarming and interesting that we make a bunch of different things now to see how much real estate is going towards, uh, you know, spirits based, but unlike the craft era that kind of grew organically over decades, these retailers are making decisions. Like, you know, very rash on how that's going to be displayed. Like some of them literally have the words RTD above the thing which I always thought was just you'd read it in Brewbound or Harry or Benj like, oh my God, it's the RTD, our customers calling it that so, so weird. Uh, but we know it's gaining space. So for us and knowing how crowded it is and how You know, muddy it is. We're, we're, we're trying to make sure we're both represented Kohl's the same crappier, you know, methods that you, you know, that is like you want to be eye-level, you want to be cold, you want to be in that set with the other higher volume players and Spirits RTD, but additionally, we work hard to try and get a, a, a, a display warm and make sure we have the right POS. that in part because our canned cocktails at 7 ABV within a pretty high level of acidity from the fruit are relatively bulletproof compared to like a double IPA in terms of shelf stability warm. So we do go, we do try to get, uh, both, both cold eye level, but also a separate display to separate us from right now what's a pretty messy, uh, warm shelf.

Zoey Lacata [35:54] Uh, we got about 5 minutes left on this panel which we could ask a million more questions here, um, but Dan, I did want to touch on some of your partnerships that you guys have within this space, specifically those right Co Spirits Vodka whips, that's your partnership with Flying Doug FX Mat. Like what, how does that partnership work and what is the benefit of having a product like that?

Speaker 3 [36:15] Again, not playing inside baseball, but Sam knows Fred.

Speaker 2 [36:19] And by the way, he's too, he's too humble. FX Mats about a decade ago had a horrific fire at their 100+ year. Um, you know, facility, and I was touring Harpoon like 10 years ago. I'm like, what the fuck's that? Is that Utica Club coming off the canning line here at Harpoon? And while, you know, they had that challenge, that fire and had to shut down, they were tinkering their beer down to your facility to, to fill and the massive karma in that, you know.

Speaker 3 [36:46] Well, that, that's the way the industry is. Thank you, thank you. We, you do, you do it for us and we do it for you. That's the beauty of this industry, um, and people outside the industry don't quite get that, but it's kind of in the ethos. It's how we grew up and um it's what we do and it led to this like with Fred. Um, Fred wanted to be able to do a handshake agreement. And I think maybe it's the older you get, you realize you want to choose the people you work with so you can do a handshake agreement and not have to bring lawyers in and kind of really spend a lot of time on the non-fun parts of of a partnership and so. It really was. This is really boring stuff. I was walking back from a dentist appointment and Fred called me and said we want to do a vodka drink. What do you think? I said, I'm in. I'm all over this. I love the category. I love some of the drinks I've been having in that world and so let's, let's, let's get behind it. And so it took about 6 months for to come up with vodka, the vodka whips that we've made, and It was great working with brewing partners in this space. I think it's made us more effective at retail because we all came from the brewing world because again this category, as I said earlier, is closer to our world than any other. So we do bring some relevant expertise to this industry that our partners outside of beer don't know. They don't, they're not as familiar with the coal box. So, um, yeah, a lot of different meetings with Fred and the gang down at Flying Dog to come up with something we'd like, bringing on partners that we'd like to help us make it and uh. It's gone very well so far. It's about a month old.

Zoey Lacata [38:25] So, we're gonna wrap this up. I just want to hear from each of you, how do you see the fourth category changing in the future and how your involvement in that will be? Real quick answers, I know it's hard, but

Speaker 2 [38:37] Let me go, OK, I'll go first. Uh, well, kind of like the craft beer, uh, or even just like specifically the IPA space, there's so much energy going into the fourth category that it's going to continue to fragment into subcategories. If you look at IPAs from session to double to hazy, etc. Similarly, even just within the spirit side of RTD we see that continue to fragmenting and we at BBC are, are really excited as innovators. For that moment. We've already announced that we're excited to be bringing our, our truly vodka seltzer to market within months here. We have dogfish. We think they're really complimentary like ABV and positioning wise, and we're going to continue to innovate with other brands and our own brands in that spirits like chess pieces of FMB's while we continue to give oxygen to tea and, and truly uh malt. Also in those spaces. So we're really excited, but I love how you said beer's your middle name. Beer is our middle name too. So I was on an awesome 3 hour call last night with Robert Ve, head of innovation, and just continuing to think about what could be after IPA for beer because we love our IPAs. We make a ton of IPAs, but we feel like to bring oxygen back to the craft space outside of the the the taproom world which has tons of awesome. Around IPAs and fruit and sours. What are the top 30 IRI craft beer brands do to, to bring energy back to the three-tier, uh, space for sizable craft beer is something that we're thinking a lot about and whether it's Angel City, Coney, Dogfish, our small locations are Jackson Pollocking the fuck out of that right now and throwing stuff at the wall to say what can beer become in the next, uh, 10 years.

Speaker 4 [40:33] As I stated earlier, I'm along for the ride. Uh, I, I think we're going to see some big growth in this category. I think, uh, by the end of this decade, we'll be double where we are right now. Uh, there's a lot of hard shit in the world right now, and I think that we, COVID taught us a lot of things and, and this pandemic, uh, reminded us of the importance of relationships and feeling good and And doing better things for ourselves, and I think one thing that I know for sure that I have to accept is that beer can be heavy. Beer can be something that uh weighs you down a little bit, and I think that generally speaking, customers are looking for things that, you know, don't, don't have them feeling, you know, so, uh, intoxicated, I guess, you know, it, it means different things for different people, but All in all, there's a, there's a, there's 24 hours in a day and there, there are only so many, so many ways to alter, right? Some people aren't altering at all. I mean, we, we're, we're not here talking about non-alcoholic as I look over and see Chris's hat. Uh, I mean, did, did any of us think that we would be looking at that growth, uh, as we have been over the last 2 or 3 years, so. Uh, it's phenomenal. It's really phenomenal. I, I love, and I, I'll leave you with this. There's, there's stuff now called, uh, uh, hop brew, right? It's just seltzer water that's like that has hops in it, and people are like, oh this is amazing, and they're, and they're taking and drink it. So I think we have to embrace it. Let's, let's ride the creativity. Let's, let's stay connected. Let's talk to our partners. Let's educate, educate, educate. People don't know anything about some of this stuff, and we've got to take a, take a step back. We've got to talk to them about yeast. That's a conversation that we have a lot, you know, what's, what's in this stuff? How are we getting to kombucha? How are we getting to seltzer, you know, what's in there? Why is it so we call it spicy. It's so spicy. It's so carbonated, yeah, that I mean, you know, that high carbonation or that high that crazy yeast strain, so I'm, I'm, I'm along for it. I think we've got growth days ahead.

Speaker 3 [42:52] Sam, I do love that you brought it back to beer. I mean, this is an old beer guy, but no one's mentioned THC, and I think

Speaker 2 [42:59] that's because we have short-term memory loss.

Speaker 3 [43:01] Yeah. I think, you know, THC, I think is a real frontier in the beverage world and it's just starting, and I, I, no one's talked me out of the idea that if you had a beverage that was low in calories that was as predictable as a 5 or 6% beer that did not give you a hangover, that kind of a sociable like a beverage, that that why wouldn't that do really well? So I think, I think we, if people can nail that, there's a real market there, I think, and that's a whole another category and a whole another selling channel, as we know, um. But I do think, you know, we can never get away from this too as as brewers and the focus on there's still a lot of innovation we can do here and Sam, you and your team have been amazing over the years and leading the way in a lot of these innovations so. I'm just delighted to be here and thank you for the opportunity to get together with people I know and like so much over just some great beverages.

Zoey Lacata [44:00] Well, that's a perfect way to end it. Thank you so much guys for chatting about this. Thank you, Zoey, and thank you all of you here in our live stream for tuning in to Brew Talks sponsored by Dogfish Head. That concludes our event for today. I want to thank. Again, our presenting sponsor Dogfish Head, as well as our sponsors Reyes's Beer Division, Perkin Elmer, and Hoppe's and Brewon by the Barthhoas Group. If you guys want to watch any of the panels here again, if you missed anything, they will be available to rewatch on Brewbound.com. And if you wanna see any of our faces again, including. Jesses, we will have a brewals event in Denver for uh the same time as GABF. So if you're there, come see us, and we have Brewbound Live in Santa Monica November 29th and 30th. So if you want to come hang out in sunny California with us, come to that. And with that, let's drink some beers and talk to some cool people.

Speaker 2 [44:58] Cheers.