CANarchy Shipments Up 14% in 2019; Hard Seltzer Expansion, Cigar City National Distribution on Tap in 2020

http://xbr.sndui.com/news/canarchy-shipments-up-14-in-2019-hard-seltzer-expansion-cigar-city-national-distribution-on-tap-in-2020
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The CANarchy Craft Brewery Collective shipped 14% more beer to distributors in 2019, bringing the total volume for all seven brands to 480,000 barrels, the company announced.

“When matched up against our competitors in the craft space and throughout the broader beer category as a whole, we believe that our 2019 results position CANarchy to continue to gain momentum and drive growth into 2020,” CEO Tony Short said in a press release. “Coupled with maximizing efficiencies available through our cross-country footprint, we’re tremendously excited about our position in the marketplace.”

The Fireman Capital-backed brewery consortium’s brands include Oskar Blues, Cigar City, Deep Ellum, Perrin Brewing, Three Weavers, Squatters and Wasatch.

Growth was driven by new products such as Oskar Blues’ Wild Basin Boozy Water, which launched in December 2018, and packaging innovations, such as the switch from 12-pack cans to 15-pack cans for Oskar Blues CANundrum variety pack, the introduction of Cigar City’s first variety pack, and the CANarchy IPA pack, a 12-pack of IPAs from Oskar Blues, Cigar City, Three Weavers and Deep Ellum.

“We’re very excited about our coast-to-coast IPA pack; so far, it has far exceeded expectations after launching in the fall and we continue to gain a lot of new placements on the chain side,” CANarchy president and chief operating officer Matt Fraser told Brewbound.

“One of the benefits of CANarchy is that we can really take collaboration to the next level and this is an example of it, of a topline synergy. What a great way to introduce two brands in our collective, Three Weavers and Deep Ellum, to the nation when 99% of their beer is sold in their home state.”

The pack includes Cigar City Jai Alai IPA, Oskar Blues Can-O-Bliss IPA, Three Weavers Expatriate IPA and Deep Ellum IPA. CANarchy experimented with the multi-brand variety pack concept in 2018 with a mix pack of its breweries’ flagship offerings, but sales were disappointing and the company pivoted to showcasing IPAs.

“The consumer, do they hop from IPA to pale ale to a black ale or a pilsner? Absolutely, and that’s why mix packs do well,” Fraser said. “But, a lot of the time they’re hopping from IPA to IPA to IPA to IPA. If our consumers are going to demand variety, it’s a way that we can capture throat share with one pack with four different brands in the collective.”

The pack launched in September and Fraser said another similarly themed pack could be in pipeline for fall 2020, as might a third flavor-themed mix pack of Wild Basin. This week, the company announced a new berry-flavored mix pack, bringing the brand’s SKU count to four: two 12-pack variety packs and 6-packs of Black Raspberry and Classic Lime.

Variety packs are the best-selling format in the hard seltzer category and are the lead SKU for category leaders Mark Anthony Brands’ White Claw and Boston Beer Company’s Truly Hard Seltzer. White Claw’s assortment pack was the ninth best-selling brand in off-premise multi-outlet and convenience retailers in 2019, according to market research firm IRI.

Having two variety packs on the shelf will improve Wild Basin’s visibility, Fraser said.

“Were excited about having both of them side-by-side,” he said. “When you have a single SKU at retail, it can sometimes get lost, so we’re excited about having the double placement with the original pack and the mixed berry pack.”

Cigar City’s flagship Jai Alai IPA increased dollar sales 41% in 2019, according to IRI. This came from both expanded distribution and a 37% increase in sales in Cigar City’s home state of Florida. Distribution of the Tampa-based brand will expand again this year.

“We have plans to fill the map with Cigar City in 2020,” Fraser said. “We have roughly 10 states to go.”

The brand recently struck a partnership with the NHL’s Tampa Bay Lightning as its official craft beer. As part of the sponsorship, Cigar City opened a new taproom adjacent to the arena and is wrapping up a renovation of its original taproom.

In Utah, CANarchy is working on two new bars for its Squatters and Wasatch brands at Salt Lake City International Airport. The bars will open in the fourth quarter of 2020, Fraser said.

Beyond Cigar City, CANarchy has no plans to expand distribution for its other beer brands. However, the company is exploring further distribution of Dallas, Texas-based Deep Ellum’s Blind Lemon Hard Seltzer.

“We believe that brand has legs outside of its home state,” Fraser said. “It was launched in the fall in the Texas market, and it’s doing really well. Our distributor network is excited about the brand.”

Similarly, Wild Basin was first rolled out to Colorado and North Carolina as test markets, states where Oskar Blues operates breweries. After impressive sales in those states, CANarchy took the brand nationwide in 120 days.

Asked if beyond beer brands could be M&A targets, Fraser said the success of Wild Basin has proven that category can be successful for the consortium. He noted that Deep Ellum founder John Reardon operates Deep Ellum Distillery and Cigar City founder Joey Redner operates Cigar City Cider and Mead.

“That’s always been in our DNA and we’ll continue to pursue an opportunity if we think it ultimately drives share of mind with distributors and share of throat with our consumers,” Fraser said.

Nevertheless, Fraser said M&A activity “isn’t really a high priority for us right now.”

“Our focus is really on the organic growth,” he said. “We’ve got a lot of really tremendous opportunities to grow by expanding distribution creating programs that accelerate rate of sale, and we are just focusing on continuous innovation.”

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