Food & Drinks

How HOP WTR Is Changing The Non-Alc Category

Coming out of the global pandemic, consumers have increasingly been searching for non-alcoholic alternatives. Hop Water has been one of the fastest growing categories, with sales up nearly 200% in the past year. The market leader in this space is HOP WTR, a sparkling hop water crafted with a proprietary blend of stress-busting hops, adaptogens (ashwagandha) and nootropics (L-Theanine). I sat down with Jordan Bass, CEO and Co-Founder of HOP WTR, to learn about his entrepreneurial journey and where the category will be headed in the years to come.

Dave Knox: For those unfamiliar with HOP WTR, let’s delve into the backstory. What prompted you to launch the brand, and what was that pivotal founding moment for you?

Jordan Bass: Absolutely. Firstly, Nick and I, my co-founder, crafted this concept out of personal necessity. I often say we embarked on an independent journey converging towards the same gap in the market. Being an avid outdoor enthusiast committed to my health, I found myself training for my inaugural triathlon. However, I realized I was unwinding in the evenings with Double IPAs and indulging in six-packs on weekends, contradicting my fitness regimen. Consequently, I turned to non-alcoholic beers, only to discover they were laden with carbs and calories, lacking in taste. Seeking an alternative, I experimented with LaCroix, but consuming the third or fourth can during the workday made the fifth or sixth one in the evening or weekend feel less celebratory. Surveying the market, we identified a void – nothing offered the low-calorie, low-carb, no-added-sugar, functional benefits we sought, all while providing the satisfaction of cracking open a cold one. Recognizing this gap, Nick and I decided, “Let’s build it ourselves,” and that’s precisely what we did.

Knox: So when you considered that unique insight, what were the features that you set out to build?

Bass: Firstly, we aimed for an approachable beverage, something with broad appeal to a wide range of consumers. Secondly, being enthusiasts of beer and having roots in the craft beer movement, we cherished the flavor of hops and the experience of cracking open a cold one. Thus, we were determined to create a hoppy beverage using a blend of four distinct types of hops: Citra, Amarillo, Mosaic, and Azacca. Additionally, we wanted a functional element, recognizing the importance of that moment of relaxation, winding down, and socializing with friends on the weekend. So, we incorporated a stack of functional ingredients. Lastly, recognizing that flavor is paramount for consumers, we prioritized crafting delicious flavors. Our Classic product taste the most similar to a beer, and we expanded our range with flavors like Blood Orange, Mango, Lime, and our newest flavor, Ruby Red Grapefruit. The positive response is evident in our repeat rate, which is twice the category average. Consumers are not only enjoying the beverage but also sticking around. Looking ahead, we are committed to ongoing innovation to stay ahead of industry trends.

Knox: You’ve taken a very intentional approach to differentiate yourselves from being merely a sparkling water in a high-level category. Walk me through the choices that led you to decide, “No, we’re not going to be just a sparkling water. We’re going to be a differentiator in the market.”

Bass: We felt that moderation was key. We initiated the company and the product based on a personal need. We often refer to this as your Sunday through Thursday beverage, emphasizing a focus on moderation. We set out to create a delightful adult non-alcoholic beverage. Recognizing that it’s a novel category, we acknowledge the need for some consumer education. Hence, we aimed for clarity in our name, explicitly communicating that we are not just another sparkling water. We are something distinct, offering a more sophisticated flavor profile and positioning.

Knox: When you had this insight and figured out your brand and position in the category, how did you go about creating the formulas and everything else?

Bass: It took us a while. We set up a mini backyard brewery and started tinkering. It took about nine months to nail down the formulation. There were some not-so-good ones and some great ones in there. Through that process, Nick and I landed on the blend of four hops I mentioned, and it felt really great. I distinctly remember the moment with the final formula – we both sipped it, looked at each other, and gave a thumbs up. This is the one, right? This is so good. Through that process, we arrived at our current formulation.

Knox: Starting with the formula and having a great brand, how did you approach distribution, especially considering you’re targeting the non-alcoholic market? Did you go through traditional soft drink channels, direct-to-consumer (D2C), or beer distributors? What was your approach?

Bass: Originally, we planned the typical beverage launch – starting on-premise for consumer trial and then moving to off-premise retail. However, everything shifted with COVID, and we launched in the midst of it. The on-premise channel wasn’t an option. We pivoted to a direct-to-consumer approach to gain initial trial and ensure it wasn’t just our moms who thought the product was great. We got immediate customer feedback, saw the potential, and quickly expanded. Moving into retail in Southern California, where we’re based, we partnered with natural foods retailers like Erewhon, our first retailer, and expanded to Jimbo’s and Gelson’s, among others. Seeing success, we expanded nationally, partnering with notable beer distributors in Southern California and across the country. Now, we’re available in over 5,000 national and regional retail stores including Target, Whole Foods, H-E-B, Wegmans, Albertsons, Kroger, Harris Teeter, BevMo!, Total Wine, Trader Joe’s, and more.

Knox: How has the on-premise responded now that they see you on all these retail shelves and the success in direct-to-consumer?

Bass: We’ve established strong partnerships with on-premise venues, and it’s been successful. A significant usage occasion for our beverage is the transition between alcoholic and non-alcoholic drinks. Statistics show that 58% of consumers switch between non-alcoholic and full-strength alcoholic drinks during the same occasion. We observe this trend in the on-premise channel as well, where customers order a couple of alcoholic beverages and then switch to HOP WTRfor a few more. They can extend their night, feel great, and don’t have to choose between having fun and missing out. We have fantastic on-premise partners nationwide, and it’s a channel we’re actively expanding in.

Knox: With this remarkable expansion since launching amid COVID, where do you see the future of the business?

Bass: That’s a great question. We’re incredibly humbled by the consumer love for the product. When you create something yourself, you believe it’s good, but the real test comes when you launch it in the market. We’re grateful that consumers love it. Initially, when we approached retailers, they questioned this “weird” product. Now, retailers are reaching out to us, saying, “All my customers are asking for this. I need to get it on our shelves.” We’re pleased with the trajectory. HOP WTR, our brand, was a top 10 growth driver in all of craft beer in the first half of the year, and one of only two non-alcoholic brands in that set. Looking ahead, our mission is to build a billion-dollar beverage brand. We see vast white space for our products, and consumer-led innovation is our guide. We continue to listen to consumers for insights, which has shaped our most recent releases, and we remain focused on building this brand.

Knox: The non-alcoholic category grew considerably post-COVID. How would you describe the current non-alcoholic space, and what do you anticipate in the next few years?

Bass: The current non-alcoholic space is a $4 billion category in the US. This growth is driven by several trends, primarily the moderation trend, especially among younger consumers. Nearly half of US consumers are trying to reduce their alcohol consumption, with half of them switching between alcoholic and non-alcoholic beverages. We see this as a significant macro trend, and our goal is to offer consumers excellent products for their enjoyment. Hoppy Water aligns perfectly with this trend, being sugar-free, low-calorie, with bold flavor, and refreshing hydration. Data supports this, with Hoppy Water being the second fastest-growing category in all of craft beer, and our brand, HOP WTR, now ranks as the fourth-largest in the craft non-alcoholic space.

Knox: With these unique ingredients differentiating your product and delivering more than just a sparkling water effect, how did you choose the benefits of adaptogens and nootropics that go into it?

Bass: When formulating, we considered the occasion for our product – the shift from work to family time or the transition to relaxation on the weekend. We wanted a non-alcoholic product that could mimic the ritual of cracking open a cold beer. Hence, we incorporated adaptogens and nootropics. We use Ashwagandha as the adaptogen, L-Theanine as the nootropic, and added vitamin C for an immunity boost. Our goal was to provide a beverage that offers calm focus and mood-boosting benefits, giving consumers an additional reason beyond great flavor to choose our product.

Knox: You’ve expanded along flavor as the first direction, but you recently announced online that you’ve got your new dry-hopped product coming out. What led you to go in that new direction for the product?

Bass: We believe in consumer-led innovation. When building our core product line, we aimed for broad consumer appeal, catering to those who love the flavor of hops and those who simply want a delicious non-alcoholic beverage. The primary request from our core hophead consumers was for a pallet-wrecking, hoppier version. In response, we launched a limited edition double-hopped product using a cold, dry hopping process with the same amount of hops found in craft IPAs, delivering a bold hop flavor. We recently introduced this, and we’re thrilled about it. This summer, we also launched our Ruby Red Grapefruit flavor, a delicious choice given the popularity of grapefruit in both the sparkling water and beer categories. The grapefruit pairs exceptionally well with the hop flavors and I encourage everyone to try these two new innovations.

Knox: How does HOP WTR think about continuing to differentiate itself from competitors, both those entering the hop water or hoppy water category and those using similar ingredients with adaptogens and other additives?

Bass: We differentiate in a couple of key ways. Firstly, we place a strong emphasis on listening to our consumers. Regular surveys and direct communication with our consumers guide our product development. This approach led to the introduction of our Double Hopped and grapefruit products. Our innovation runway is extensive, and we’re excited about the possibilities in the non-alcoholic (NA) and functional ingredient space, expecting to bring forth a lot of innovation.

Regarding competitors entering the space, we see a rising tide lifting all boats, provided they offer high-quality, great products. Similar to the experimentation in the craft beer movement, the entry of excellent products into the market contributes to raising consumer awareness. We embrace the growth of the category.

Beyond flavor and ingredients, we differentiate through our unique positioning. We position ourselves as a moderation choice rather than promoting abstinence, resonating well with consumers. Lastly, recognizing that many consumers haven’t tried hop water, getting cans into their hands is crucial. Given that we don’t have budgets like larger brands, we focus on creative, Netflix-style marketing campaigns to break through. For instance, our “HOP LOCKR” campaign, where consumers could lock up their tempting booze for Dry January, generated half a billion impressions and significantly raised brand awareness. Another example is our “HOP SPCR” campaign, involving custom-made 3D rings that allow consumers to snap two cans together, catering to the insight that consumers switch between alcoholic and non-alcoholic drinks during the same occasion. These efforts differentiate us in terms of both product positioning and marketing.

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