Mike’s Hard Lemonade accelerates growth
White Claw Hard Seltzer achieves triple-digit growth
There’s a popular saying, “When life gives you lemons, make lemonade.” As a “David amongst Goliaths,” Mike’s Hard Lemonade Co. is doing just that by setting lofty strategic five-year goals after recently fulfilling the double promise it set in 2013: to grow its premium flavored malt beverage (FMB) alcohol business to 2 million barrels, or about 27 million cases, in an otherwise flat beer category and make the Chicago-based company an amazing, fun place to work for its 250 employees.
Founded in 1999, Mike’s Hard Lemonade Co. is a U.S. based division of Mark Anthony Group.
“We’re not a large multinational company that competes in many different product categories,” says Phil Rosse, president. “In fact, we’ve pared down the number of SKUs we offer so we can focus on where we can apply more focus and investment on those products that can offer the greatest return-on-investment for us and our distributor partners.
“Back in 2013, we looked internally and at the rapidly changing marketplace and reminded ourselves that we’re a growth company, so let’s set a big goal, the aforementioned 2 million barrels,” he continues. “That would require our company to grow by 50 percent over the next four years. A lot of people said ‘you’re crazy, you’re a small David amongst Goliaths,’ and we’re not sure that growing your business by 50 percent in a forever flat industry is realistic. We were excited by the challenge, and then we went to work.”
The company’s entrepreneurial spirit, focus on making best-in-class tasting products, and its organizational purpose to bring Flavor to Life is helping the company succeed in a competitive beverage market, Rosse says.
It hasn’t always been easy, Rosse notes. In 2013, the company was only growing at 1 percent. But after establishing the double promise and refocusing its approach to the business, the company’s growth trajectory has steadily increased, rising 4 percent in 2014, 7 percent in 2015, 10 percent in 2016 and 15 percent in 2017, he says.
“And thus far in 2018, we’re pushing 20 percent growth levels,” he says.
Although the overall beer industry is experiencing declining volumes, the Mike’s Hard Lemonade Co. is working on elevating the industry through innovation and consumer connection, Rosse says. “We are a growth company. We are never satisfied as a business, as a leadership team, as an entire organization, if we aren’t growing at least 10 percent,” Rosse says. “Growing single digits is not accepted in our organizational DNA.
“But as per the double promise, we also want to make Mike’s an amazing place to work, and we believe that building a high-performance culture, full of talented, highly-engaged people and actual business results are very connected,” he continues. “A strong organizational culture can be as disruptive as a new product in today’s world.”
Taste the difference
Rosse credits the company’s Taste the Difference platform, new product lines and extensions, and a team of dedicated employees, brand distributors, retail partners and consumers for helping the company achieve its goal across three main product lines: Mike’s Hard Lemonade, Mike’s Harder Lemonade and its newest brand: White Claw Hard Seltzer, a better-for-you alcoholic seltzer that launched in 2016 in three flavors: Ruby Grapefruit, Black Cherry and Natural Lime. Raspberry was added to the lineup last year and a six-pack of Mango cans recently became available in the northeast.
In its quest to innovate and differentiate the category and reach multicultural consumers, the company offers a 5.9 alcohol-by-volume (ABV) Cayman Jack, a premixed premium flavored malt beverage available in Margarita and Cuban Mojito. It also is testing three new line extensions for possible scale up: Jugo Fuerte, a 7 percent ABV non-carbonated agua fresca-inspired product in two flavors, Pepino and Sandía, that is being tested in Texas and Arizona; Hard East, a brewed better-for-you hard iced tea that’s lower in sugar and 4.5 ABV; and MXD Cocktails, a single-serve 16-ounce canned cocktail available in Long Island Iced Tea and Margarita currently available in 30 states.
“One of the things we’ve seen is that consumers are looking for more convenient cocktails,” says Sanjiv Gajiwala, senior vice president of marketing at Mike’s Hard Lemonade Co. “The consumer trend is toward flavor and convenience, which I think helps our position as a company to meet those two macro trends.
“Mike’s is such a great brand, and it really stands for a lot of things that are iconic and American,” he continues. “We like to think that Mike’s is always around during your favorite moments.”
In its core lineup, Mike’s Hard Lemonade features such flavors as its Original Lemonade, Black Cherry, Strawberry and Watermelon, while Mike’s Harder features those flavors as well as unique offerings including Cranberry, Purple Grape, Blood Orange and Mango.
The amount of alcohol, however, is not the only distinction between the two portfolios. While Mike’s Hard Lemonade is packaged in single-serve 11.2-ounce glass bottles in six-packs and multipacks, Mikes Harder Lemonade is sold in 16- and 24-ounce cans to meet the needs of on-the-go consumers, says Sanjiv Gajiwala, senior vice president of marketing at Mike’s Hard Lemonade Co.
“From a formulation standpoint, the ABV is the main difference, but from a consumer standpoint, they fit difference occasions, different consumer groups,” Gajiwala says. “Mike’s Hard is very much about social occasions, guys and girls getting together for the 4th of July, graduation parties, etc. It’s the classic get-together premium beverage. Harder, on the other hand, is very much about the convenience shopper that’s finishing their workday. They’re picking up a can. They want to ramp up their night. There are two different consumers, two difference emotional need states and I think the brands reflect those two things,” Gajiwala says.
When it comes to popularity, the original Mike’s Hard Lemonade six-pack and the Mike’s Variety 12-pack containing three bottles of four flavors, Hard Lemonade, Hard Strawberry Lemonade, Hard Black Cherry Lemonade and Hard Watermelon, reign as the Top Two most popular SKUs, Gajiwala says.
A clean base
With Mike’s Hard Lemonade FMBs and FMBs in general, the formulation process starts with beer. But a patented neutral malt-based technology is a key differentiator for Mike’s, according to Rosse and Gajiwala
“From a product perspective, we use a patentable neutral malt-based technology that allows us to have what we believe is the cleanest base to make our alcohol-based products,” Rosse explains. “We have an entire platform, ‘Taste the Difference,’ which separates our company and our products from the competition.”
The company also is focused on using natural flavors in its products.
”In our Mike’s Hard Black Cherry, we’re using real cherry juice,” Gajiwala explains. “In our lemonade, we use real lemon extract. A lot of other FMBs that you’ll see use a mix of artificial and natural flavors and colors, but for us, and particularly with Mike’s Hard, it’s lemonade,” he continues. “Lemonade is a very classic American product and it really should be simple. It should be lemon, water, sugar and a little alcohol. That’s what we deliver.”
Mike’s Hard and Mike’s Harder are performing well in the overall $2.3 billion FMB category that is posting a 4.5 percentage-point increase in multi-outlets for the 52 weeks ending May 20, according to data from Chicago-based Information Resources Inc. (IRI). During the same time frame, Mike’s Harder and Mike’s Hard were No. 3 and No. 5, respectively, generating dollars sales of nearly $286 million and more than $274 million, respectively. In addition, Mike’s Harder grew market share by 15.7 percent while Mike’s Hard saw a 3.2 percentage-point increase over the prior-year period. IRI data states.
When it comes to case sales, Mike’s Harder saw a 14.6 increase in case sales, generating sales of 8.6 million cases year-over-year, while Mike’s Hard had case sales of 7.7 million, a 1.5 percent increase, based on IRI data.
A wave of refreshment
Mike’s Hard Lemonade Co.’s hard sparkling seltzer, White Claw also is taking the market by storm. It is the No. 1 hard seltzer, growing at a triple-digit 210 percent with dollar sales of more than $39 million in multi-outlets for the 52 weeks ending June 3, according to IRI. For the 52 weeks ending Dec. 31, 2017, the brand netted dollar sales of $57 million and triple-digit year-over-year growth of 451 percent.
Inspired by the legendary White Claw waves, the company sought to create a new level of refreshment as pure as the waves’ white-capped crowns, it says.
White Claw, which invites consumers to taste The Purest Hard Seltzer in the World, is handcrafted from all-natural flavors, contains no artificial ingredients and gluten, and 100 calories in each 12-ounce slim can. “White Claw is the perfect blend of seltzer water, our BrewPure alcohol, and a splash of natural fruit juice concentrate,” Gajiwala says. The alcohol in White Claw comes from fermented gluten-free grains, with cane sugar and real fruit juice are added after alcohol fermentation to enhance the taste, he adds.
The brand also is attracting a new clientele and driving repeat business, Gajiwala says. “We have the No. 1 seltzer variety pack across the entire segment. Our Black Cherry six-pack is also No. 1,” he says. “It’s interesting because less than 5 percent of White Claw consumers are coming from Mike’s Hard Lemonade. It’s a whole new consumer and if you’re a beer distributor or retailer, what is exciting about that is 35 percent of White Claw consumers are wine and spirits consumers.
“Many are also lapsed alcohol consumers that had stopped buying alcohol because it didn’t meet the better-for-you needs, portability and convenience that White Claw delivers,” he continues. “What’s very exciting is that we have 60 percent repeat purchase on trial,” he continues. “… A 20 to 25 percent repeat rate is a sustainable brand proposition. This means that more than one out of two consumers are coming back to buy. We feel very confident in this line’s success.”
Rosse adds: “Finding new brand success in the beverage business is very difficult and often comes with many failures and learnings along the way. The hard seltzer category is still young, but all key insights and metrics internally and externally indicate that this will be another significant brand in our company, and maybe one day the largest.”
To continue to get the word out so consumers can “Make Waves with White Claw,” Mike’s has embarked upon an aggressive $25 million integrated marketing campaign featuring TV, print, national events, out-of-home influencers and social media for 2018, the company says.
For example, the brand launched its "My Best Life Contest" in search of two brand ambassadors thirsty for new experiences. From May 2 through June 3, fans were able to enter the contest for the chance to embrace new experiences, travel to new places and discover new passions. The new brand ambassadors, to be announced in August, will travel throughout the U.S. while documenting their experiences with White Claw fans nationwide. The contest aims to turn fans’ passions into reality, whether that’s learning how to surf in San Diego or bungee jumping in the Grand Canyon, it says.
To bring Mike’s Hard Lemonade to life in the heat of summer, the company launched its Drink on the Bright Side campaign along with limited-edition lemonade six-packs featuring a Snapchat Snapcode that unlocks a comedic world where people can tell their funniest jokes and enter for a chance to win Mike’s Hard Lemonade Happy Weekend Giveaway. The campaign is designed to spark laughter and inspire good times, the company says.
“For our fans, happiness is a social language. By leveraging Snapchat, we can engage with Mike's drinkers on one of their favorite platforms while creating a truly immersive and shareable experience," Gajiwala said in a statement. “The whole idea behind the new six-pack and sponsoring the Bright Side events came from a simple question we asked ourselves: 'How can we heighten happiness this summer in an extraordinary way?'"
Movie promotions also are helping to market Mike’s Harder as it promoted the original Deadpool as well as Deadpool 2, both staring Ryan Reynolds as everyone’s favorite anti-hero. The brand’s partnership with 20th Century Fox spans multiple consumer touchpoints including film product placement, exclusive in-theater content, co-branded digital ads and exclusive experiences for fans, the company says.
“The Deadpool character is the perfect analog for the Harder brand,” Gajiwala says. “It’s a bold, edgy character who’s a little rough around the edges but that’s who our brand personality is, so that’s a great connection for us.
“Not only did the Deadpool character take over the Harder packaging, but we did two pop-ups in New York and LA where we constructed the Sister Margaret School for Wayward Girls, the bar that Deadpool goes to, as way to create a cool experience for our fans.” The original promotion increased same-stores sales 10 percent, he says.
Connecting with fans on social media also is where Mike’s shines, notes Gajiwala, who manages a team of 30. “We have the most highly engaged audience of any FMB brand in terms of social,” he explains. “One thing that makes us unique is that we have our own internal studio that produces our own content, writes our own copy, and reaches out to our communities ourselves.” The Mike’s Hard Lemonade family has more than 1 million followers on Facebook and between 1.7-1.8 million followers across all platforms, he adds.
The success of the double promise, strong core brands, new product innovations like White Claw, packaging and flavor innovations, a great internal team of 250 and external team of 400 distribution partners is propelling Mike’s to boldly embark on a new mantra, “50 in 5,” Rosse says.
“We want to accelerate our business to 50 million cases annually over the next five years or sooner,” Rosse explains. “We feel like we have the portfolio of brands that connect with today and tomorrow’s consumers, the right team, culture, distribution partner alignment and commitment from ownership to achieve this.”
In his tenth year with the company, Rosse says he could not be prouder and more excited to head a team so focused on taking this organization to new heights.
We believe in pushing our thinking and ourselves into, not impossible, but very challenging aspirations. It does take courage to first set bold goals, but more importantly it takes a certain discipline, resiliency, and culture to translate those aspirations into reality. But those are the environments where careers and businesses get really energizing for high-performing people, teams, the leaders, the business partners. We know we are a speedboat amongst ocean liners in this industry that requires us to forever be aware of our competition but to constantly look for those opportunities where we can go full throttle.” BI