UPDATE: March 15, 2022: Boston Beer and Sauza tequila maker Beam Suntory launched Sauza Agave Cocktails, the first ready-to-drink cocktail to be launched under the partnership.
The drink, which comes in four flavors — Lime Crush, Tropical Twist, Strawberry Breeze and Black Cherry Smash — will be produced and distributed for Beam Suntory by Boston Beer because they are malt-based beverages. The canned cocktails are 8% alcohol by volume and are made with agave nectar and real fruit flavor.
"With the launch of Sauza Agave Cocktails, we have the opportunity to bring the Sauza brand into new occasions, while also reaching a new set of consumers, with whom we can build new brand loyalty and reputation,” Stephanie Kang, senior director of RTD strategic ventures at Beam Suntory, said in a statement.
- Beam Suntory and Boston Beer have formed a partnership to bring several of their iconic brands into some of the fastest-growing beverage alcohol segments, the companies said in a statement. Financial terms of the deal were not disclosed.
- Through this partnership, premium spirits maker Beam Suntory and Boston Beer plan to launch products that bring the Sauza tequila brand further into ready-to-drink (RTD) beverages, and Truly Hard Seltzer into bottled spirits. The first products are expected to hit U.S. shelves by mid-2022.
- As consumers gravitate toward RTD beverages and new flavor offerings, alcohol companies have moved aggressively to enter new categories. Shoppers have a wide variety of choices that didn't exist decades ago, making the need for innovation to keep them engaged paramount.
In a deal that stopped short of a merger but brings many of the synergies that result from a tie up, Sam Adams maker Boston Beer and Beam Suntory are quickly becoming close drinking buddies.
Each alcohol maker has thrived in the respective categories it plays in: Boston Beer with Sam Adams beer and Truly Hard Seltzer, and Beam Suntory with Jim Beam and Maker’s Mark bourbon brands, Sauza tequila and Pinnacle vodka.
While the companies continue to grow, they are keenly aware that many consumers are looking for more than just the same beer or bourbon that has been around for decades. As many of the large beer makers found out when hard seltzer came on the scene — forcing them to play catch up to Truly and Mark Anthony Brands' White Claw — it's more important than ever to stay ahead of the curve as trends twist and evolve.
“Our industry is rapidly evolving, and consumers are looking for new and exciting options that suit a wide variety of occasions," Dave Burwick, president and CEO of The Boston Beer Co., said in a statement.
CNBC noted that Burwick and Beam Suntory President and CEO Albert Baladi worked together at PepsiCo nearly two decades ago, and have kept in touch. The prior connection between the two executives likely played a role in the partnership and could allow for a deeper collaboration going forward.
The partnership allows both companies to tap into each other's expertise.
Boston Beer said it plans to expand Truly Hard Seltzer, said to be the fastest-growing hard seltzer on the market, into bottled spirits. The move would introduce the popular drink's consumer base to the category. Boston Beer said it will benefit from Beam Suntory’s distilling expertise and robust distribution network.
As part of the collaboration, Beam Suntory’s Sauza tequila brand will expand into additional RTD formats by leveraging Boston Beer’s expertise, production capabilities and distribution footprint. Alcohol distribution varies by state, and spirits, which contain a higher alcohol content, tend to be more heavily regulated.
“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 told CNBC.
Boston Beer and Beam Suntory touted the deal as a long-term connection, with plans for more brand expansions in the future.
While beer, wine and spirits have long dominated the alcohol category, RTD is a fast-growing segment and likely a major impetus behind the Boston Beer and Beam Suntory announcement. RTD is set to become the second largest alcohol beverage category in the U.S. in terms of volume consumption, according to IWSR.
The RTD category, which includes hard seltzer, saw the biggest gains in alcohol beverage consumption in the U.S. last year. This makes RTDs larger in volume than total spirits domestically, and by the end of 2021, it will be larger than total wine, according to IWSR. RTDs grew 62.3% by volume in 2020.
Beam Suntory is no stranger to the promise of the RTD category. Last year, the company acquired premium ready-to-drink cocktail brand On The Rocks. Beam Suntory said at the time it was looking to become No. 1 in the spirits-based RTD market. Large beer companies also have gotten further into RTD with deals of their own, including Molson Coors through its partnership with Superbird, a blue agave tequila-based cocktail, and Anheuser-Busch through its distribution deal with cocktail company Canteen Spirits.