- AB InBev purchased the rest of Babe Wine that it didn't already own through its ZX Ventures affiliate that invests in small brands outside of beer, the company said in a statement. The price was not disclosed.
- Babe Wine is a canned beverage founded by Josh Ostrovsky (known as The Fat Jewish"), and brothers David Oliver Cohen and Tanner Cohen, in 2016. It comes in three flavors, Rosé, Pinot Grigio and Red wine, all of which are frequently photographed on social media. Its large online presence has made it popular with millennials and Generation Z.
- AB InBev initially purchased a minority stake in Babe Wine in 2018. The deal is the largest wine investment in its history for AB InBev, Bloomberg said.
The popularity of beers produced by the major brewers has been going flat as Americans move away from mass-produced brews in favor of Mexican imports, craft beers and wine and spirits. Wine particularly has benefited from the migration of young consumers, a coveted demographic that Big Beer is trying to win back. According to Wine Spectator, millennials drank 42% of all wine consumed in the U.S. in 2015, a rate higher than any other generation's consumption.
A popular growth segment in the wine category is through cans. Between June 2017 and June 2018, sales increased 43%. It is now roughly a $45 million business.
Once the undisputed king of beer, it’s no secret that AB InBev has been looking elsewhere for growth. From craft beer acquisitions through its parent company to its incubator arm investing in brands such as Drinkworks, Bon & Viv Spiked Seltzer and Cutwater Spirits, it’s clear that AB InBev is looking beyond its signature brews.
Although no longer a curiosity, canned wine remains a small part of the industry. Nielsen estimated canned wine sales make up only 0.2% of the market. Still, on social media, the concept is making waves. It’s laid-back, unpretentious vibe makes is appealing to consumers who are looking for some easy sipping while they are relaxing at home, at the beach or a party.
The convenience factor of canned wine is not to be underestimated either. For years, beer has been a popular drink of choice because it comes in individual portions in a non-glass container; glass is prohibited in many public locales across the United States. If wine can offer that same convenience factor, it stands a chance at becoming a party staple — and that is what AB Inbev is banking on.
“We wanted to be the Bud Light of wine,” Ostrovsky told Bloomberg, referencing the best selling beer in America.
To get there, Babe Wines has relied heavily on social media and the expertise of its founders. With quirky memes that play into the #roséallday trend — the rosé market posted a compound annual growth rate of 2.6% from 2017 to 2022 — the Babe brand has created a substantial following that revolves around the millennial culture.
Even if canned wine is not going to be the promised unicorn that turns around AB InBev’s fortunes, it could be a valuable learning experience. With the acquisition, the beer giant will become privy to the startups marketing strategies and could perhaps repurpose them to market some of its smaller craft brews.
It is unlikely that off-beat, niche marketing could be used for AB InBev's legacy brands whose consumer demographic is not the digital native generation. However, if AB InBev can succeed in seeing some of its smaller brands take off in a big way, the purchase of Babe Wines could prove to be a shrewd acquisition for the beer maker.