Gather round for a tale of two segments. It was the best of times for hard tea, it was the worst of times for hard coffee. Now, a new protagonist, clad vibrantly in magenta and orange, steps forth to straddle that lightly caffeinated divide. Their success or failure turns upon the vagaries of the fickle market and plot developments heretofore unknown. Can Dunkin’ Spiked hard tea find fortune in Twisted Tea’s shadow? Can Dunkin’ Spiked hard coffee avoid destitution in Pabst’s absence? We’re about to find out.
For those of you who don’t know what the Dickens I’m on about: Earlier this month, VinePair reported that the artist formerly known as Dunkin’ Donuts would soon release ready-to-drink beverage-alcohol products for the first time ever. Dunkin’ Spiked is a line of eight different drinks — four hard teas and four hard coffees — produced by Mass Bay Brewing Company (MBBC), the beloved fast-casual chain’s partner in booze. Previous collaborations between the two have rolled out under MBBC’s Harpoon Brewery brand for the past half decade, with Dunkin’s unmistakable insignia and popular flavors functioning as a beacon to attract the latter’s fan’s to the former’s beers. But this project marks a new chapter, Nathaniel Davis, the brewery’s president and chief growth and ventures officer, tells Hop Take. “This is Dunkin’ on a big stage.” Harpoon branding is nowhere to be found on Dunkin’ Spiked’s packaging; the fast-casual juggernaut is stepping out solo.
It won’t be the first of its ilk to do so. For the past few years, familiar road-trip staples like Sonic, Wawa, and Bojangles have been exploring how to leverage their widely known and loved brands in the beverage-alcohol realm. That push, abetted by the broader alcopop redemption arc, delivers key benefits for the drive-thru set, putting already popular flavors into higher-margin products, then selling them through the high-volume grocery channel. “Sonic hard seltzer is another opportunity for us to reach our Sonic fans outside of the drive-in,” the firm’s director of brand marketing and activation, Grant Springer, told me last year regarding the rationale behind Sonic’s flavored malt beverage licensing deal with fellow Oklahoma City company COOP Ale Works.
For Dunkin’, which already sells everything from bagged and K-Cupped coffees to protein powder through third-party retailers, the overall opportunity presented by boozing up its existing best-sellers is even more obvious. And bigger, too: The brand has been around in one form or another since 1950, and boasts over 9,000 locations nationally, making it one of the most well-known and well-loved U.S. dining brands. (The brand’s FAQ page says that Dunkin’ Spiked will not be sold at any of those locations. The company did not respond to a request for comment.)
That deep experience with mass-market retail helps explain why Dunkin’ Spiked is rolling out as a fermented product, rather than a distilled one. Spirits-based RTDs possess more momentum and cachet with the American drinking public than malt- and/or cane-based products at the moment, and MBBC has some exposure to liquor drinks via Right Coast, its canned cocktail partnership with F.X. Matt and Flying Dog. But those can’t be sold in nearly as many outlets as FMBs, and besides, says Davis, “our wholesaler relationships are more built up around traditional beer distribution.” Some initial discussions about pursuing Dunkin’ Spiked as a spirits-based offering quickly petered out.
You know what else has petered out? Hard coffee in general. After a meteoric rise on a small base, the segment has mostly failed to find its footing. In October 2022, Pabst Brewing Co. announced it would discontinue PBR’s hard coffee line extension, which had been propping up the segment’s overall numbers based on breadth. Since then, it’s been a portrait of decline: In the last 52 weeks, overall hard coffee sales are down around 59 percent year-over-year in both dollars and volume, according to NielsenIQ scan data for off-premise retail analyzed for Hop Take by 3Tier Beverages. “I’m not sure that the original brands that were [segmented as] hard coffee resonated with the consumer,” says Stephanie Roatis, an insights consultant with the Chicago firm. (No kidding.) As Dunkin’ enters the segment, the trend is only accelerating: Hard coffee is down over 73 percent in the past four weeks.
That wasn’t enough to scare off Dunkin’ and MBBC from hard coffee entirely. “I don’t think hard coffee has had its moment yet,” Davis tells Hop Take. Rather than benchmark the flavors and positioning of Dunkin’ Spiked’s hard coffee against PBR or smaller segment players, MBBC views its own iterations of the erstwhile beverage as an adult extension of Dunkin’s existing N/A beverage universe, ideally fitting in as transitional “refreshment plus pick-me-up” happy hour treats. In addition to 12-pack mixpacks and 19.2-ounce “stovepipes,” the brand will offer 4-packs of its no-frills “Original” hard coffee in recognition of the fact that not even the NA version fits into as many occasions as tea. (It’s also 6 percent alcohol by volume, compared to the hard tea’s 5 percent, and has 30 milligrams of caffeine, compared to the 15–30 milligrams in the teas.)*
If drinkers buy into that framing — a big if, but one that I think is plausible based on Dunkin’s brand strength — then Roatis sees a lot of upside. “Hard coffee definitely deserves a second go,” she says, pointing to the cultural phenomenon of on-premise Espresso Martinis and the promising growth of off-premise dupes from wine-based RTD brands like BuzzBallz, Rancho La Gloria, and Loverboy. [Editor’s note: Loverboy is a 3Tier client.] “Overall, that flavor is still growing.”
You know what else is still growing? Hard tea. That segment is nearly a mirror-image opposite of its steeped brethren, up over 39 percent in year-over-year dollars and 30 percent in year-over-year volume, and accelerating through the summer. At $1.2 billion and booming, it’s a bona-fide bonanza. “Twisted Tea is still increasing its dollar share, because it’s growing so rapidly, but hard tea as a category still has so much more room to grow,” argues Roatis, noting that there are only around 30 brand families picking up off-premise sales in NIQ’s data. Line-extension brands like Dunkin’ Spiked have tended to compete well in Twea’s kingdom thanks to their existing fan bases and long-standing brand-equity, she says. Hard tea offerings from legacy brands like AriZona and Bojangles “benefit from being next to the segment leader on the shelf because the consumer immediately clicks,” recognizing the new entrants based on familiar packaging while comparing them favorably as a novel alternative to a tried-and-true standard.
Davis is hopeful Dunkin’ Spiked’s hard tea offerings can earn the attention of drinkers on the merit of its anchor “Slightly Sweet” version, and sees major potential in the fast-casual brand’s success with “Refreshers” (NA juice-tea hybrids served at the stores.) Spiked teas won’t carry that name, but the flavor profiles — strawberry dragonfruit and mango pineapple — have obvious overlap. Along with a “Half-and-Half” flavor — as in, lemonade plus tea, not the dairy product Dunkin’s in-store customers add to their coffees — that’s the initial slate for now. But Davis emphasizes that the teas are a “platform,” and says the partners will use feedback from Dunkin’s stores to inform future flavors. “The sky is the limit.”
Talk about Great Expectations.
🤯 Hop-ocalypse Now
After more than three years, most borrowers are set to resume student-debt payments in October 2023. Whether you make a moral judgment on the world’s wealthiest country commodifying education (I do!), or the mostly bipartisan Reaganomics that ushered that paradigm into existence in the first place (I also do!), the fact is that retailers like Target and Walmart are already bracing for customers with less money in their pockets come autumn. Breweries may want to do likewise, said the Brewers Association’s chief economist Bart Watson in a midyear presentation on Aug. 10. “I think it’s definitely gonna be a headwind that maybe isn’t on people’s radars.”
The outlook is hazy for Sierra Nevada Brewing Co., which plans to lean even harder into its Little Thing family in the coming year… A new Deutsche Bank consumer-sentiment survey suggests Bud Light is slowly winning back transphobic hearts/minds…
📉 …and downs
Virginia’s beverage-alcohol regulator kiboshed the PepsiCo/Blue Cloud/Boston Beer Co. love triangle… Fewer Americans plan to celebrate Labor Day 2023, a prime beer-drinking occasion, than in years past…