Truly speeds up innovation as hard seltzer sales slow
Despite being within striking distance of category leader White Claw, Truly took a major stock market hit once it became clear that hard seltzer category sales have slowed. Still, the No. 2 player in the healthiest growth segment in beer is looking to close gap with a flurry of new flavor innovation. Boston Beer chief executive David Burwick explains the state of the category and what’s next for Truly.
Truly gets festive for the holidays.
The holidays are almost here and Truly plans to give its fans a present. The Holiday Party Pack will appear in markets on Nov. 1 featuring festive, seasonally-inspired cocktails including Spiked Apple Sauce, Holiday Style Sangria, Pom Ginger Fizz and Cran Orange Sparkler.
The move is indicative of Truly’s innovation strategy to outflank its competition which comprises of No. 1 hard seltzer White Claw and, largely, a flurry of white canned copycats.
Truly Punch Hard Seltzer has been a success since its debut in May. So has last year’s launch of Truly Iced Tea Hard Seltzer and Truly Lemonade before it. Boston Beer chief executive David Burwick told The Drum that we should expect to see even more innovation in 2022. “This is a category that is variety driven. We’re continuing to think about what consumers want from a hard seltzer and giving them something that’s a little different. Fortunately, everybody seems to have followed the White Claw path… if you close your eyes everything kind of tastes the same.”
Truly’s bolder flavors and packaging plus its loud, new “No one is one flavor” campaign starring Dua Lipa has the brand only 9 share points away from reaching category leader White Claw. This is significant considering the hard seltzer category is almost as large as the craft beer segment and already outsells vodka in the US.
Yet, anyone watching the stock market couldn’t help but notice that Boston Beer’s stock plummeted 26% (or $246.54) a share to close the week of July 23rd at $701. Yesterday it closed at $656.03.
Long story short Boston Beer, and Wall Street pundits alike, greatly miscalculated the projected growth of the category for the summer and the year. This has left Truly with higher inventory levels and supply chain issues as well as many wondering what’s next for the category.
This despite that fact that Truly is up 52% at retail while White Claw is down 6%, per NielsenIQ. The situation “is paradoxical because Truly is the biggest winner so far in 2021 on the hard seltzer front,” says Benj Steinman, president of Beer Marketer's Insights. “Truly is making its move this year. It’s a big business growing fast but everyone got lost in the land of great expectations. Trees don’t grow to the sky… Boston Beer is doing a lot of things right, but Truly’s forecasting isn’t one of them.”
Burwick says, hard seltzer “have slowed a bit and our stock carried the weight of the entire category.”
Truly eyeing the No. 1 spot
A year and a half ago, Truly trailed White Claw by 40 points. Today, White Claw has 38% of the category and Truly has 29%, per IRI. This despite No. 1 brand debuting its first global ad campaign, called “Let’s White Claw,” in April and expanding internationally.
There are two important pillars for Truly potentially taking the top slot: being connected to culture and innovating with specific target consumers in mind, says Burwick. White Claw had been oft-labeled the drink for ‘bros,’ but has worked to broaden its appeal. Truly, meanwhile, targeted female consumers and diverse populations.
Through new flavors and communications, Truly will look to further reach Latinos and African-Americans. It will also work to broaden its appeal among men through partnerships with the National Hockey League and other tactics. “We’re trying to provide a different vibe and be a more appealing and inclusive brand,” Burwick says.
Truly has also begun its overseas expansion in earnest by launching in the England and Ireland. “It’s the first stop on our international journey,” says Burwick. “There will be other countries because we think this thing can play globally. It’s to be determined where, how and to what extent.”
Still, the core strategy in the US will be product innovation. “We deliberately accelerated our innovation. In a perfect world would have done fruit punch in January of next year. But we know we have to gather as much share as we can as early as we can,” says Burwick. “Once a category settles out, it’s much harder and much more expensive to gain share.”
The added benefit of more extensions is gobbling up more shelf space. This comes in handy since there are now an estimated 220 brands with more than 1,000 varieties. “As you look to the fall and the spring, retailers are going to start to take the long tail out as we add more space. The bigger brands will continue to do really well in this category,” says Burwick.
The strategy is working according to Beer Marketer’s Insights' Steinman. “The innovation has all gone down well. It’s helped build the franchise. The Truly brand is now 60% of Boston Beer’s entire business."
While it may not have it forecasting formula entirely correct, Truly appears to have its innovation formula down. “People want more flavor and if you give it to them without the calories, all the better,” says Burwick.
True to form, the Holiday Party Pack will make up for some of the other indulgences of the season. The flavors will be 5% alcohol/volume, 100 calories, 1g sugar and gluten free with more to come in the New Year.