How RTD cocktail brand Tip Top shifted its strategy to find the right type of variety pack to sell in retail

These slower-than-expected sales led Tip Top to shift to single-SKU 4-packs of its most popular cocktails, which began rolling out last year. The new format increased retail sales as the smaller boxes allowed customers to mix and match quantities of their favorite Tip Top cocktails on their own. Today, Tip Top’s products are sold in over 25 states, including at grocery retailers like Trader Joe’s, Whole Foods and Gelson’s Markets.

Tip Top’s shift in strategy is indicative of the evolution many CPG brands have to undergo once they enter retail. Some brands find that their packaging, which was initially designed with a direct-to-consumer audience in mind, doesn’t stand out on crowded retail shelves. Still, others find that promising line extensions don’t perform as well in retail as they initially hoped.

Neal Cohen, co-founder of Tip Top Proper Cocktails, told Modern Retail that as the company expanded into more stores, it had to quickly learn how to cater to the habits of shoppers buying canned cocktails in retail. Tip Top’s founders — who have a background working in music festivals — initially set out to find a way to efficiently serve a great cocktail in high-volume environments like concerts and festivals. In turn, they settled on canned ready-to-drink products.

But when the company launched in September 2019, Tip Top only had an on-premise presence for a few months before the pandemic hit. Its off-premise business, however, took off when Delta Airlines began serving its cocktails in April 2021. It also helped quickly establish Tip Top’s brand awareness. “It resulted in over five million trials of our product,” Cohen said. 

“From there, it’s been our task to take that visibility and turn it into a viable brand at retail,” Cohen said. At first, Tip Top was largely sold as a single can through a dispenser on counters and often added on as an impulse purchase at the register. As Tip Top started to move larger volumes, that “prompted us to figure out what package would work on the shelf and in the cold box,” Cohen said.

But trying to take a product that was initially marketed as an impulse purchase and make it into a more considered one proved challenging. Initially, Cohen said, “We thought that an 8-pack would be the right size to go with.”

In 2022, Tip Top began offering a summer variety pack featuring two cans each of four cocktails: a margarita, a daiquiri, Bee’s Knees and a Negroni. “We thought this could be something people can grab on the way to the pool or party,” Cohen said, but the pack’s sales did not reflect that behavior.

Around this time, Cohen said, a big RTD wave also hit, and retailers automatically stocked Tip Top in the canned drinks section. That meant Tip Top’s $35 variety pack sat next to cheaper spiked seltzers that ranged from $10 to $20. “There was a sticker shock associated with that, and it was a harder sell,” Cohen said. “And when you’re talking about cocktails, there’s bigger, bolder tastes and their spirit profiles.”

In the first half of 2023, Tip Top started to shift its focus from selling an eight-pack to a cheaper four-pack. “This shift was gradual, aligned with inventory levels and ordering cadences of each market, and it quickly proved successful,” Cohen said.

That move also helped open merchandising opportunities in grocery stores, such as Trader Joe’s and Whole Foods Market.

“Our ideal setup is a countertop dispenser for easy trial, paired with four-packs on shelves and in cold boxes,” Cohen said. To support this merchandising strategy, the company developed a floor rack with single-can dispensers on the top shelf paired with multiple shelves below to house the four-packs. “This creates a seamless experience for all types of consumers,” Cohen explained.

As for changes in sales since the switch, Cohen said, “What’s most telling is what we’ve seen our [brand] jump in the Nielsen ratings this year.” Citing Nielsen’s RTD alcohol chart, Cohen said Tip Top now ranks No. 38 when it comes to brand volume sales, whereas it began the year hovering around No. 60.

The new packaging also helped convert single-can customers to buying multi-packs. “A year ago, retail sales skewed heavily toward the counter single-can dispenser,” Cohen said. “As it stands right now, it’s probably closer to about 50-50.”

RTD players face many hurdles in trying to stand out on the shelf, said Taylor Foxman, founder of The Industry Collective, a spirits industry professionals group. 

Given that many consumers still haven’t yet tried RTDs, Foxman said a lot of the draw “comes down to packaging design, pricing, as well as where the product is literally located on shelf.” 

With so many brands now available in retail, Foxman added, the right merchandising is more important than ever. That ranges from clean labels, clear copy or transparency showcasing what’s in the product. “People often buy what’s literally and metaphorically right in front of them, so the positioning of the product on the actual shelf can be just as important as the look and price,” Foxman said.

For the relatively new category, companies like Tip Top Proper Cocktails are learning the importance of merchandising for ramping up in-store sales. “This experience proved our product is similar to the 5-Hour Energy model,” Cohen said. “That means introducing it on the counter so people can just try one before they move to packs.”