For a long time, there was a fairly straightforward way to build a big beer brand in these United States. First, you inherited a brewery from your wealthy German-American family, or bought one from someone else’s formerly wealthy German-American family. Then, you spent the following five decades churning out unremarkable lager and buying other breweries across the country as they failed. You clapped golden handcuffs on your wholesalers, making provincial middlemen fabulously wealthy in exchange for minimal effort and maximal loyalty. You also bought those distributorships outright where you could, plus a bajillion hours worth of television advertising. Details vary. But, you know, generally speaking, if you followed those steps, you’d have yourself a major American beer brand.
This is not the way things work anymore. Craft brewing came along and introduced drinkers to the glories of full-flavored beer, and the internet shattered the media landscape into hundreds of audiences rather than one big one. Then hard seltzer happened and everybody was like, “Is this vodka-soda or beer, I don’t know,” and drank it anyway. (Or, if you were a federal judge, you told a jury to figure it out.) The pandemic was in there somewhere, too? All of these factors and many more conspired to open a new path to the American beer drinker’s gullet for companies with intellectual property to leverage, capital to invest, and growth to capture.
Here at Hop Take, we talk a lot about Big Soda and other soft-drink concerns converting their popular fluids into “hard” facsimiles based on fermented cane or malt, and rolling out spirits-based versions of those same products — hard seltzer simulacra, several layers removed — to capture higher price points and court changing tastes. But we talk considerably less about spirits brands doing the reverse with their full-proof wares. It happens! Which brings us to the curious case of Fireball Cinnamon, a malt-based iteration of the Sazerac Company’s red-lidded step-whiskey, the off-premise success of which has in recent years turned the liquor maker into one of the best-selling “beer” producers in the country. As Beer Business Daily recently pointed out, “Sazerac’s malt-based sales now make it the 22nd-largest beer vendor YTD in [IRI multi-outlet and convenience scans], just behind CANarchy’s total sales of $81.6 million.” In c-stores, it’s actually the 15th-biggest beer supplier by dollars, raking in over $70 million in 2022 in that channel alone, reports Brewbound.
Look, all of this is funny. It has always been funny that the company that makes Pappy Van Winkle and Eagle Rare and a bunch of other pedigreed bourbons that turn grown men into Facebook scammers also makes Fireball, the O.A.R. of challenge shots. It’s funny that that company also-also makes malt-based Fireball Cinnamon, which clocks in at 16.5 percent ABV, half of its namesake (which, at 66 proof, is itself ~20 percent weaker than actual Canadian whisky), plus lemonade- and apple-flavored Fireball RTDs at 10 percent ABV. It’s funny that Sazerac partnered with Anheuser-Busch InBev to sell the stuff — along with similar malt-based extensions from portfolio-mate Southern Comfort — at supermarkets, gas stations, and bodegas across the country as a workaround to various states’ restrictions about retailing liquor. Now, Fireball Cinnamon is a top-50 off-premise beer brand simply because it’s not-not a beer brand technically speaking.
What else can you do but laugh? Imagine trying to explain any of this to one of those Bavarians who founded breweries on the cherished principles of the Reinheitsgebot a century and a half ago. Or the earnest craft brewers who as recently as half a decade ago were convinced that the liquid in the cans was more important than the branding on the cans. Hell, imagine trying to explain it to the average Fireball customer today, for that matter! You’d get kicked out of 7-Eleven with the quickness.
Sazerac declined Hop Take’s request for comment for this story. But to the company’s credit, Fireball’s website is refreshingly transparent about its half-strength Cinnamon gambit. “Over the years, we have received feedback from consumers wanting to purchase Fireball in a wider variety of convenient shopping locations, including stores that can only sell beer, malt beverages and wine products,” reads the brand’s FAQ section. There’s your ballgame, right there in plain speech. Since Prohibition, liquor companies have coveted the beer category’s wider, less restricted retail footprint. There are so many state-by-state rules about when, where, how, and at what strength drinkers can get spirits-based products that indexing them all would require a (very boring) column of its own. Rather than that, consider this: Nationwide, there are only about 40,000 places where you can buy liquor these days, according to IBISWorld, a market research firm. For beer, that figure clocks in around 200,000.
“There’s that massive outlet gap. Any store that Sazerac can now get into with a malt version [of Fireball], that’s a whole bunch of new consumers that it wasn’t reaching before when they were making their grocery shopping trips or a beer run down to the convenience store,” Dave Williams, vice president of analytics and insights at Bump Williams Consulting, tells me. The fermented formulation grants the brand access to more places where potential customers are spending money, and unlike Sazerac’s low-allotment/high-end bourbons, Fireball is a volume player. The company needn’t worry about “watering down” the brand, figuratively or literally, because it never had any prestige to begin with. It’s a savvy calculation that has paid off big for Sazerac. “Consumers have shown that they want new, different things,” says Williams, shrugging off my suggestion that Fireball Cinnamon might cannibalize Fireball Whisky sales, or put a bad taste in the mouths of the latter’s fans. “If you can keep some of those occasions under your umbrella, then that just means that you’re winning and someone else is losing.”
In the short term, Sazerac’s gain with Fireball Cinnamon is Republic National Distributing Company’s loss. In December 2022, the parent company announced it would yank its portfolio from RNDC in 20 states in favor of a slate of regional wholesalers that includes heavyweight handler Reyes and other beer-focused houses. “Beer distributors have a very intimate knowledge and relationship with navigating the shelf sets, selling in products, promotions activity, retail relationships,” Williams says. And in many instances, they’re already aggressively diversifying truckloads: “They don’t just have beer on the truck, they’ve got non-alc[oholic beverages] on the truck, energy drinks, salty snacks, and other things.” Including Fireball Cinnamon, soon enough.
But what about longer-term losers? “For 20 years, spirits companies have eaten our lunch,” Boston Beer Company (BBC) co-founder and chairman Jim Koch is fond of saying. “Let’s not let them eat our dinner.” Should breweries — many of which, like BBC, are beginning to think and act more like “total beverage” companies themselves — be concerned Sazerac is inviting itself to their malt-based table? (Or should they have a little humility and consider that spirits firms might not appreciate brewers’ own moves into liquor? Hmm!) Williams doesn’t see Fireball Cinnamon competing directly with traditional beer, which makes sense given that no one with two taste buds could reasonably mistake a flavored malt beverage modeled on a cinnamon-infused proxy of Canadian whisky for a standard-issue lager. “I think more of the [competition] is going to come from trying to get new drinkers and current FMB or fringe spirits drinkers, than it is from the core beer drinker,” he guesses. Sounds right to me.
Then again, you don’t have to be the heir of a wealthy Teutonic brewing dynasty to realize “core beer” is presently flailing. Flavor-forward, single-serve drinks with strong branding are the coin of the mass-market, malt-based realm these days, and if Sazerac’s latest moves are any signal, the realm is only going to get more crowded. Breweries thirsty for volume on a broad base, take note. Fireball Cinnamon’s success proves, yet again, that building a major beer brand in the 21st century requires selling the American drinking public what they want, where they want it — even if “it” is barely beer at all.
🤯 Hop-ocalypse Now
Your humble Hop Take columnist got some semi-friendly pushback for arguing last week that craft breweries could partially innovate themselves out of the Dry January blues. Fair enough. Maybe “innovation” isn’t as easy as simply rearranging basic ingredients and plucking a nonsensical new name out of thin air. Or maybe it is? Consider the case of Bluebird Hard Water, a new concern out of Florida producing… ah… well, you can probably guess. VinePair’s own Nicolette Baker reports that the brand is marketing cans of still water spiked with a variety of full-proof spirits for $12 a 4-pack, all of which are currently sold out. Alcoholic or non-alcoholic, the position of the American drinking public is clear: Nothing matters! Make shit up! First brewery to launch Softwater™️ wins.
📈 Ups…
Yes, regulatory issues pose a potential threat to beer delivery, but at least fledgling cannabis couriers are hitting similar roadblocks?… Speaking of weed, canna-behemoth Tilray closed its $35 million acquisition of Montauk Brewing Co. … Look, I’m all for New Jersey breweries getting press during these trying times, even for something as goofy as this… Court dismisses charges against the guy who chucked a White Claw at Senator Ted Cruz during the Houston Astros’ championship parade… Congrats to “Barrel-Aged Stout and Selling Out” author and former Chicago Tribune beer journalist Josh Noel for his new gig at Molson Coors…
📉 …and downs
BrewDog was fined nearly £500,000 for last year’s golden-can gaffe, and Punk-in-Chief James Watt is posting through it… Bud Light will forfeit No. 1 spot to Michelob Ultra as soon as 2027, confirm ABI execs … Constellation Brands’ growth slowed in Q3 as its Mexican beer portfolio cooled un poquito… American hop production took a 12 percent hit in 2022, almost as bad as Europe’s 20 percent bine beating… 2018 called, it wants this Wall Street Journal article about how the “craft-beer boom is showing signs of slowing” back… Over 60 percent of logistics pros at major American firms say supply chain will stay f*cked ‘til 2024…
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