Research Notes: Nonalcoholic beer brand raises $50M — what’s next?
In this edition of the weekly briefing, we examine the expansion of non-alcoholic beer and general distribution as seen in data from Modern Retail+ Research.
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How are CPG brands expanding their distribution
Breaking News: Athletic Brewing Co. recently announced that it raised $50 million in financing to expand. According to CNBC, the company plans to increase production and also start expanding product offerings to international retailers. With the category of nonalcoholic beers expanding and Athletic Brewing Co. riding that wave, the company will likely look to review its distribution plan. Currently, the brewery distributes through its own website, selling 6-packs and offering a subscription and membership program for auto-renewal. It also distributes through bars, restaurants, convenience stores and national grocery stores.
Questions: As beverage companies expand how has their distribution strategy changed? Where do other CPG brands distribute?
Answers From Research:
Beverage brand Swoon co-founder Jennifer Ross previously told Modern Retail that her company decided to move away from DTC primarily because of the rising costs of fulfillment. “Selling a beverage and shipping it is very expensive because of the weight,” Ross said. “So it was hard to continue to make that [DTC] channel profitable while meeting consumer expectations and how quickly they want the product.”
However, not all startups are eliminating DTC altogether. Eleven out of the 14 food and beverage brands included in the study continue to sell some form of their most popular item on their own DTC website. All sell larger packs, such as a 12-pack case of 12 oz. cans, rather than the single-serve options available in stores. Selling in larger packs on a brand’s website offers better margins on each sale, which is important as CPG is a very capital intensive game, and profitability is increasingly important to investors over gross revenue.
New beverage brands, in particular, are expensive to scale due to rising costs for materials like cans and bottles, high shipping rates for heavy liquids and an increasingly crowded field that’s making it hard for startups to compete for retail shelf space.
Shelf-stable foods are easier to package and ship to customers. Still, similar to beverage startups, companies like cereal makers Three Wishes Cereal and Magic Spoon continue to sell larger multi-packs on their DTC sites to have higher units per transaction.
Want to learn more: The Modern Retail+ CPG Report examines how CPG brands are partnering with retailers and expanding their distribution network.
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