Beam Suntory and Boston Beer form venture to sell Sauza drinks, bring Truly to spirits
- Beam Suntory and Boston Beer are joining forces through a new partnership that will bring the iconic brands into new categories.
- The first products from the partnership will bring Boston Beer's Truly hard seltzer into the spirits category and use Beam Suntory's Sauza brand for ready-to-drink beverages.
- Alcohol giants have been diversifying as consumers' alcohol preferences shift.
Maker's Mark distiller Beam Suntory and Sam Adams brewer Boston Beer are joining forces through a new partnership that will bring the iconic brands into new categories.
Initial plans for the long-term partnership include branching Boston Beer's Truly hard seltzer into the spirits category and using Beam Suntory's Sauza brand for ready-to-drink beverages. Those new products will launch in mid-2022, and the companies plan to expand into more brands in the future.
Boston Beer CEO Dave Burwick and Beam Suntory CEO Albert Baladi already have plenty of experience working together. They overlapped while at PepsiCo nearly two decades ago and have kept in touch. Baladi said the trust between the two men will further bolster the partnership.
"I gave Albert a call as we saw the category change, consumer shifts, so I thought it might be a good idea to call over at Beam Suntory to see if there might be ways we could collaborate," Burwick told CNBC.
It's the latest move from alcohol giants to diversify and adapt to consumers' changing tastes. In recent years, a "fourth category" of alcoholic drinks has emerged, blurring the line between wine, beer and spirits. Last year, U.S. consumers drank more beverages from the ready-to-drink segment than spirits, according to industry tracker IWSR.
One beverage driving the trend is ready-to-drink canned cocktails. Between 2019 and 2020, the premixed cocktail category grew by 50% in the United States, according to industry tracker IWSR. The segment is still relatively small, accounting for only 3% of U.S. spirits volume, based on data from the Distilled Spirits Council of the United States. Companies like Anheuser-Busch InBev and Molson Coors Beverage are among those betting on the segment. Last September, Beam Suntory bought canned cocktail brand On the Rocks for an undisclosed sum.
Financial terms of the partnership were not disclosed. However, Baladi said it's a "fully integrated partnership" that goes beyond just a licensing deal. Both CEOs have experience with working on joint ventures, dating to their time at Pepsi.
"We'll have strategic reviews, innovation reviews, all of that good stuff," he said. "We've got teams that will be joined at the hip as we move forward."
Beam Suntory and Boston Beer plan to lean on each other for their expertise in the new segments and take advantage of their distribution networks. Because of alcohol regulations that differ across states, beer can have a different path to market than spirits, which tend to be more regulated because of its higher alcohol content.
"Boston Beer, as a beer company, has a lot greater access than we have, so it can put the brand into the hands of many, many consumers," Baladi said.