Sparkling Seltzer, where did you come from?

Candidly, I hadn't heard about sparkling seltzer until 2019. It's come up three times in the past week alone. (1) Two friends from undergrad recently dropped everything they were doing to start a business called Two Robbers (https://www.tworobbers.com/) and are starting to raise capital, (2) Michael Preis talked about the explosive growth of the category last week in class, and (3) I saw some marketing for While Claw as I was flipping through apps on my phone this afternoon.

The six major brands in the category include Nauti, Spiked (owned by AB InBev), Smirnoff, White Claw, Truly (owned by Boston Beer Company), and Henry's. While the category was originally created in 2013, growth has exploded over the past year as consumers seek healthier alternatives to beer, wine, and cocktails. The category was estimated at $450mm in 2018, up from ~$150mm the prior year. Hard seltzers usually have less calories than even a light beer (i.e., Bud Light) and also beat other types of drinks on carbohydrates as well.

Source: Good Beer Hunting

Celebrity Alcohol Brands

This past week in class we talked a little about the explosive growth of Casamigos and Miraval, both of which are backed by celebrity personas, which had me wondering who else is behind some of the biggest brands in the industry.

Celebrities are increasingly involved with brands, often receiving equity in exchange for promotion, taking board seats, or as founders. In a world with many choices for consumers to pick between, these individuals often provide a way to differentiate a product and help a brand stand for something in an effort to be authentic.

Matthew Mcconaughey’s Wild Turkey Longbranch Whisky
Matthew has served as the ‘Creative Director’ of Kentucky, USA bourbon whiskey brand since 2016

George Clooney’s Tequila Casamigos
A joint partnership with businessman Rande Gerber and property developer Mike Meldman

Diddy’s Ciroc and Deleon
Diddy (real name Sean Combs) has become synonymous with his alcohol brands in recent years. Diddy took on all marketing responsibilities for struggling French vodka brand CIROC (manufactured by Diageo) back in 2007. That year the vodka was only shifting around 40k units per year, but by 2012 an incredible 2.1 million units were sold

Dave Matthews Dreaming Tree Wine
Dave Matthews, of the Dave Matthews Band fame, launched his own line of wines in 2011 called ‘Dreaming Tree.’ Made in collaboration with Sonoma County winemaker Sean McKenzie, it is named after the Dave Matthew Band ‘The Dreaming Tree’ track

David Beckham’s Scotch Whisky
Since 2014 David Beckham has been the face of Haig Club, a luxury Scottish highland whiskey in partnership with Diageo

Justin Timberlake’s Tequila
In 2009 he launched his own tequila and then partnered with established tequila brand Sauza to re-launch it in 2014, calling it Sauza 901 – named after Justin’s hometown post code of Memphis, Tennessee

Ryan Reynold’s Gin
Purchased Aviation Gin, a Portland, Oregon based gin company.

AC/DC
In 2016, AC/DC announced they would be releasing their own high-quality tequila. The band had previously entered the beverage market with offerings like beer, wine, and a High Voltage energy drink. The tequila, named Thunderstruck after their 1990 hit, comes in Silver, Reposado and Anejo and sells for $29.99-39.99

Brad Pitt and Angelina Jolie Rose

The 2012 Chateau Miraval Cotes de Provence Rose was produced on the vineyards at Brangelina's estate in the south of France

Drake's Virginia Black Whiskey

In a joint venture back in 2016, the Grammy-winning rapper and spirits producer Brent Hocking launched an aged Bourbon whiskey

Source: Barstool

Showdown: Wine vs.Weed

Come one, come all to see the showdown of the century! In one corner, we have  wine - an elite incumbent. In the other corner we have a newcomer that's only recently gained recreational legitimacy across 10 U.S. states and medical legalization across 33 - marijuana. Theoretically, these two drugs could act as complements in the market (e.g. buy a bottle of wine, and smoke the next day to cure the hangover), but this phenomena doesn't seem to manifest in sales. Instead, wine and weed appear to be in a head-to-head, substitute-based relationship.

The idea that weed is substituting rather than amplifying wine sales is supported across a variety of metrics. According to the Economist,  marijuana legalization is likely to "encourage more women, baby boomers and high earners—all stalwarts of the wine business—to smoke weed instead". In various states, for example, legalization of medical marijuana is associated with a 15% fall in overall alcohol consumption. In California,  winemakers complain  that they can no longer afford seasonal labor to harvest their grapes because workers have better-paid, year-round jobs on cannabis farms. Wine Spectator is suing Weed Spectator, published in northern California, for trademark infringement.

Why are we seeing a substituent rather than complementary relationship between weed and wine? Perhaps for many of the same reasons we are seeing weak sales in the wine industry among Millennials. In a post-Great Recession America, getting "bang for your buck" is the golden rule of consumption among youth. On a per glass vs. per blunt basis, marijuana is both cheaper and more effective. Marijuana also lacks some of the education barriers that may scare many Millennials away from wine - with marijuana, there's no need to pronounce French names or understand optimal drink pairings. Additionally, marijuana is the new kid on the block. Having only been recently legalized (and, in the process, receiving commiserate media coverage), marijuana may excite and entice Millennial customers in a way that wine does not (at least, not anymore). The reasons for wine's decline in the face of marijuana are likely varied and complex, but I believe a large part of the answer lies in taking a close look at Millennial drug consumption.

The rise of rosé

As we heard in class on Thursday, rosé has grown absurdly fast.

It's still just 1.5% of the U.S. wine market, but its sales (by volume) grew 53% in 2017. Who's driving the growth? Exactly who you'd expect. 40% of rosé drinkers are women between the ages of 21 and 34, and rosé does best in cosmopolitan, coastal cities. (The NYC area accounts of a full quarter of all imported rosé consumption!) The drink is helped by its Instagrammability and its strong association with summer. Consumers can't wait to crack open their first bottle of the year -- and post about it! (NB: Ironically, I had rosé with dinner last night, so the summer association doesn't hold firm.) If we look to France for a benchmark, rosé still has plenty of room for growth. There, it's more popular than white wine, accounting for ~30% of total drinking. Needless to say, the French drink rosé year-round. (Despite a much smaller population, they get through nearly twice as much stuff as the United States.)

Some background: rosé's star status is pretty new. Just a few decades ago, when people thought "pink wine," they thought "white zinfadel." Some people love it, but it's definitely not classy -- it has no place on a nice restaurant's wine list. Things changed in the 90s and 00s, when photographs of celebrities sipping rosé in France invaded travel magazines. Rosé became a staple of fancy parties, particularly in the Hamptons. (For some amusing reading, check out the stories about the great Hamptons rosé shortage of 2014.) And then, of course, came social media. It's not just the beautiful pink hue that earns rosé followers, it's also the ease of coining catchy hashtags ("yes way, rosé" and "rosé all day" are two popular examples). On social media, rosé is emblematic of a carefree life of travel, picnics, and pool parties. An aura of status, for way less than a bottle of Champagne? No wonder it's a hit, especially among millenials.

So, should you be launching a rosé brand for your final project? Well, the game is good, but the field is crowded. The growth of rosé's popularity in the U.S. is continuing strong, and domestic brands are making headway against French imports. But in a category that saw almost 400 new SKUs introduced last year, it could be hard to stand out. Novelty or a major celebrity endorsement might be the only way to cut through the noise.

Sources:

• https://www.forbes.com/sites/rebeccalerner/2017/08/09/rose-still-on-the-rise-in-the-u-s/#764a89b453d7
• https://vinepair.com/wine-blog/7-maps-charts-explain-rise-rose-in-america/
• https://www.thrillist.com/drink/nation/rose-wine-instagram-obsession
• https://www.purewow.com/food/rose-wine-trend-history
• https://www.wineindustryadvisor.com/2018/05/21/domestic-rose-gain-market-share-french

Wine etymology!

I loved learning more about the etymology of wine lexicon. Some highlights:

• Alcohol. Al-Kuhul. The Arabic phrase for metallic powder used as eye shadow.
• Sommelier. In Middle French, this referred to the government official who ran supply transportation... and this, of course, included wine.
• Merlot. In Gascon, a dialect of Occitan, merlau means a "little blackbird."
• Libation: In Latin, Libationem refers to a drink offering, such as pouring wine to the gods.

A deep dive into the etymology of "wine" in particular is fascinating:

• In Old High German, wini means friend.
• In Proto-Indo-European, wenh means love, desire.
• In Old Norse, vinr also means friend.

And some fun derivatives of wine:

• Good wine needs no bush.
• Wineberry. Wine + berry!
• Winebibber. A habitual drinker of wine.