Christmas came early for Sean Mossman two Decembers ago, and it came in the form of a phone call from “America’s Drive-In.” The president at Oklahoma City’s COOP Ale Works was headed into the holiday in relatively high spirits, having navigated the pandemic’s opening nine months with a successfully launched hard seltzer line and more new flavors on the horizon. But Mossman, who has worked at Oklahoma’s top-selling craft brewery, was already working another angle. Every craft brewer and their mother was spinning up a hard seltzer brand at the time, given the then-surging popularity of category leaders like White Claw and Truly. COOP needed one of those, sure… but what if there were a way to turn tongue-in-cheek brewhouse innovation into a bigger play? The thought occurred to him on a socially distanced jog a few months prior. Now, on Christmas Eve 2020, it was coming to fruition.
“The brand manager at Sonic called me and said, ‘We’re a go,’” recalls Mossman in a recent interview. A licensing deal between Oklahoma’s iconic fast-food franchisor and one of its longest-running craft breweries was ready for John Hancocks. “Best Christmas present ever,” he says, delight evident in his voice.
Understandably so. A Sooner State fast-food staple for nearly eight decades, Sonic has national name recognition and legions of fans. And by God, are those fans thirsty. Since 2007, Sonic has put its soft drinks program front and center with a profligate mix-and-match menu and daily “Happy Hours.” That non-alcoholic beverage pedigree has helped power banner billion-dollar revenues for the locally founded chain (which is now owned by Inspired Brands) throughout the pandemic when other quick-serve restaurants were scrambling to deploy QR codes. If there’s a perfect fast-food brand capable of crossing over into hard seltzer, Sonic might just be it.
Still, it’s a big “if.” The road to consumer packaged goods gone bad is paved with good licensing intentions, after all. Slinging hard seltzer through America’s variously applied, post-Prohibition three-tier system of alcohol commerce is a different challenge entirely from selling fast food and fountain drinks to sweaty motorists on the quick. But while there are pitfalls a-plenty, the upside is transformative: a high-margin, shelf-stable brand extension from America’s heartland hamburger heavyweight plugged into the flavored malt beverage sales machine that is the modern American supermarket. Whether the money printer will go “brrrr” for Sonic hard seltzer longterm remains to be seen. But having already cracked into the category’s upper echelon after less than a year on the market, it’s worth taking a closer look at how COOP’s pioneering QSR deal came to be, how it’s structured, and what it means for the collapsing landscape of American alcohol. After all, here in “fast-food nation,” a drive-thru dynasty and a red-hot booze category is a compelling combo meal. Order up!
“Inspired” in-house flavors
Nothing was the same after the summer of White Claw. Boosted by changing tastes, emerging mainstream demand for perceived “better for you” beverages, and powerful cultural artifacts like Trevor Wallace’s instant-classic “Ain’t no laws when you’re drinking Claws” viral video/slogan nonpareil, hard seltzer went from unfairly slandered sorority slimmer to super-premium, all-demographic thirst quencher. If you’re reading this, you probably know what came next: The craft beer industry, eyeing slowing growth in its maturing category, went looking for an answer to the White Claws of the world.
Results were mixed at first, a fact that was not lost on Mossman and his COOP colleagues in Oklahoma City. “On the front end of that seltzer craze, we decided that we would get into seltzer but with a very local-centric seltzer in Oklahoma, to stay focused on our home market,” he recalls, crediting Spiked Snowmelt, a hard seltzer that Colorado’s Upslope Brewing Company introduced in May 2019, as a bellwether for the OKC brewery’s own foray into FMBs. The R&D process at COOP would eventually coalesce as Will & Wiley, a hard seltzer line named for actor Will Rogers and boundary-pushing pilot Wiley Post, two native Oklahomans. (If you sense in the moniker a vague echo of Bartles & Jaymes, a before-its-time wine cooler marketed with before-its-time whimsy in the ‘80s, Mossman would be delighted to hear it: The nod was intentional.)
Will & Wiley debuted in early 2020, and grabbed up around 8 percent of Oklahoma’s hard seltzer market in its opening weeks, according to Mossman. He’d been thinking about the line as a “bolt-on” to COOP’s traditional beer portfolio, an effervescent ancillary revenue stream that would run in tandem with the core business. But two things happened that would dramatically expand the course of the brewery’s FMB foray. The first you know about. “Two weeks after the [Will & Wiley] launch party, Rudy Gobert famously caught Covid here at the Thunder game in Oklahoma City, and our whole world changed,” says Mossman. Because the brand had made it to retailers just before the coronavirus made it to Oklahoma, he was able to monitor scan data to see how the various Will & Wiley offerings were performing off-premise, which, if you recall those chaotic early days when the “-demic” was still “epi-,” was the only place anyone was buying. Quickly, a leader emerged among the four flavors: cherry limeade.
Residents of the 46 states where Sonic operates brick-and-mortar drive-in locations implicitly understand the gravity of this otherwise mundane sales insight. But for the uninitiated reading this: Cherry limeade is Sonic’s signature fountain drink, a refreshing concoction of juice, flavor syrups, and Sprite served over the chain’s beloved pebble ice. If you’re within striking distance of a Sonic, assume you’re surrounded by cherry limeade acolytes. “The Cherry Limeade IS Sonic. That was pretty much the default drink,” explains Katie Camlin, former liquor store operator who now works for KC Bier Co. and grew up making Sonic runs in Kansas City, Mo. In its home market, Mossman says, the synonymity is more pronounced (if that’s even possible.) “If you play the word association game with 99 percent of Oklahomans and said ‘cherry limeade,’ their first word would be Sonic.” COOP’s team had played the flavor-association game in homage to the hometown favorite, and now it was going gangbusters. So in mid-2020, they went back to the well, whipping up another Sonic-inspired hard seltzer, modeled after the restaurant’s polarizing, electric-blue “Ocean Water” to release in spring 2021.
Beyond the drive-in
As it so happens, the hard-seltzer-ficiation of Ocean Water would lead to a sea change for COOP. Mossman’s six-year tenure at the brewery was immediately preceded by another half dozen years as a CPG licensing executive focused on the hardware industry. Facilitating deals between brands like 3M and DuPont and major retailers like Lowe’s and Home Depot gave him an appreciation for the upside of licensing deals — and an intimate understanding that the devil is in the details. “Brand stewardship and licensing partnership was something that was in my set of experiences previously. … That sounds kind of unsexy, but your brand is one of your strongest assets, and you have to be really, really diligent about managing that and putting in the right places and treating it the right way, being consistent,” he tells VinePair.
As Oklahoma’s top-selling craft brewer, COOP had been carefully stewarding its own brand for the last 13 years, and with popular Sonic-style hard seltzer flavors, Mossman had a ready-made conversation starter with a nationally known licensor whose offices were just a mile south of the brewery. Returning from a morning run in early September 2020, he got in touch with the brand marketing team at Sonic to pitch a one-off collaboration. But Sonic was thinking bigger, and COOP came calling at the right time. The firm’s eagerness stunned the brewery president. “We talked to them, to see if they want to partner with us, and they’re like ‘Why don’t you just license the brand and go?’”
From the chain’s perspective, hard seltzer was an intriguing new vessel for its familiar flavors, one that could carry the brand onto supermarket shelves and into off-premise drinking occasions that even the cheesiest of footlong chili cheese dogs would have trouble reaching. “Sonic hard seltzer is another opportunity for us to reach our Sonic fans outside of the drive-in,” explains the firm’s director of brand marketing and activation, Grant Springer, in response to emailed questions from VinePair. Together he and Mossman hashed out the structure of the licensing arrangement. By Christmas Eve, Springer had secured the green light, and the two firms set about developing Sonic-specific flavor formulas and packaging to evoke the drive-in’s neon Americana branding. “We moved very fast,” remembers Mossman. On Memorial Day 2021, Sonic Hard Seltzer hit shelves in the Sooner State.
From the jump, COOP has carved Sonic hard seltzers out of its owned-and-operated brand portfolio, for reasons we’ll discuss in a moment. And, of course, the branding and packaging require close collaboration with the chain: Directly prior to his interview with VinePair, Mossman was going back and forth with Springer about font usage and intellectual property parameters. Because Sonic hard seltzer is sold in third-party retailers, not the chain’s 3,500 locations nationwide, getting the look and feel just right is paramount to the partnership. (According to a 2021 Business Insider report, a full quarter of Sonic’s pandemic receipts came from its soft drink menu. It simply wouldn’t do to jeopardize that sort of big-ticket revenue by cheapening Sonic’s beverage brand equity with a fly-by-night hard seltzer simulacrum.) “[M]ost consumers are either fans or are at least familiar with our popular drink flavors” across Sonic’s 46-state footprint, explains Springer, noting that while the firm’s franchisee’s are excited by the hard seltzer rollout, there are no plans to sell the alcoholic beverage at the drive-ins themselves.
In terms of the tactical execution of getting the Sonic hard seltzer from its tanks to store shelves, though, the brewer treats its licensed liquid pretty much identically to the rest of its offerings. It’s the brewery’s ballgame. COOP brews Sonic hard seltzers — which now number eight flavors total — in its home region, and contract-brews a third-party co-packer for the volume it needs across the rest of its footprint. At first, the brewer was plugging the resulting variety packs directly into its existing distribution network. “It just made sense for us to look at a COOP partnership with a mirroring regional footprint,” Sonic chief marketing officer Lori Abou Habib told Forbes in March 2021. It did make sense, at first. But in the 11 months since launching the brand, COOP has expanded its footprint twice: first to an additional six Midwestern states in October, and then to 24 more in March 2022. To do that, Mossman needed to find new wholesalers — and a lot of them. So along with COOP’s general counsel, he hit the road. “We’ve worked for the last year-plus on executing 198 new distribution agreements in 25 states,” he says. “It’s been insane.”
Sonic super future
As the past 18 months of alco-llaborations demonstrate, pretty much any brand with a functioning marketing department can develop a crossover alcoholic beverage brand on a lark. But those are stunts. It’s hard to win ongoing shelf placement for a non-gimmick brand extension, and to keep selling it after the initial buzz wears off is harder still. After just under a year on shelves, Sonic hard seltzer is doing both. According to data reviewed by VinePair, this spring, Sonic cracked the top-15 hard seltzer brands in Nielsen scan data for grocery, convenience, drug, and liquor stores, despite limited distribution and volume compared to both craft and mass-market category leaders. Its sales velocity in major chain retailers is strong. And the firm’s longstanding popularity in the Midwest and Great Plains states suggests that there’s room to grow, even absent further geographical expansion.
“Sonic has got the middle of America, and they’ve had a grip on it for years,” says Donn Bichsel, the founder of 3 Tier Beverages, an independent beverage-alcohol consultancy that provides data analytics for COOP. (The firm is not involved in COOP’s sales, marketing, or external partnerships, including the one with Sonic.) Whether Sonic hard seltzer can sell well in, say, New England, where the drive-in’s brick-and-mortar presence is comparatively sparse, is an open question; Bichsel speculates that the going would get tougher for the licensed FMB further afield of its true-blue footprint. But in a multibillion-dollar hard seltzer market, regional and nearly national “longtail” brands can stack tremendous cash without leading the category. As long as COOP keeps executing on the flavor-fidelity of original Sonic beverage combos (of which there are literally hundreds of thousands), and keeps supermarket and big-box chains stocked, Bichsel sees open road ahead.
“When you come in with a name that is known nationally, or at least very strong regionally, obviously that is going to be a stronger buying opportunity” for high-volume stockists, he says. “It’s a lot easier for you to come in with Sonic hard seltzer than it is” to get a meeting with the Wal-Marts of the world when you’re pitching a small craft brand that the planogram guy has neither heard of, nor can find with a quick Google search, he says.
Given that, you might assume that COOP is using the Sonic name as a foot in the door to expand its owned-and-operated beers and hard seltzers with new wholesale and retail partners. But you’d be wrong. Mossman says Sonic hard seltzer is “firewalled” from the rest of the business to make sure COOP services the license as best it can and to give the former licensing executive an opportunity to keep his brewery’s partnership momentum going. “We’re building an enterprise separately, built around Sonic and any additional innovations that we’ll bring on,” he says. “We’re actively negotiating with several parties to bring more licensed brands to market because we really feel like convergence between non-alc[oholic] and alcoholic beverages will continue to be a trend that grows moving forward here.”
That’s not to say it’s easy. Warns Bichsel: “Consumers have the knowledge to sniff through bullshit, and [licensing] is one of those things that when you make products that tack too far away from what a brand traditionally does, it does risk damaging the mothership. It definitely gives a lack of longevity to whatever you’re trying to extend with that branding.” He thinks that Sonic hard seltzer has found success in part because of the aesthetic continuity from restaurant to package, and in part because Sonic has spent so much time and effort building its QSR business as a beverage-centric destination. (A “little oasis in [customers’] days,” as Springer puts it.) “This actually looks like a partnership,” adds Bichsel. “It doesn’t look like just a play on the [Sonic] name, it looks like an extension on what the company was already doing in the past.”
Speaking of the past: Even as recently as a decade ago, it would have been anathema for a legitimate craft brewery to partner with a major fast food chain. Licensing corporate brands to build out parallel commodity businesses targeted to mass consumers? No way. But times have changed, and these days, for a regional craft brewery, it’s as good a place as any to stack your chips. With craft beer growth slowly rebounding from the pandemic, heavy crowding in off-premise chain retail, and category lines blurred nearly beyond recognition thanks to malt- and spirits-based momentum with American drinkers, staking out a stable place in the market is no mean feat. But given the turmoil in the restaurant industry over the course of the past couple years, big hospitality brands with household names are thirstier than ever for opportunities to monetize their intellectual property and diversify their revenue streams.
Those storylines, and other market factors, are creating new opportunities for brewers willing to try their hands at developing businesses beyond their own portfolios and brands. Back in OKC, Mossman is banking on it. “Not just anybody can say ‘I want to make alcoholic beverages,’” he says. You need relationships with chain retailers, strong distribution, and licensed brands that the American drinking public would actually reach for instead of owned-and-operated brewery brands. “When you put those three pieces in place, it does make these ‘rocket launches’ easier to withstand,” says COOP’s president, referring to rolling out high-profile licensed beverages. And if you do everything right, your liquid stays solid, and you get a little lucky, your rocket just may go… well, supersonic.
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