Where the Hell Are All the Hop Waters?

As a general editorial principle, I try to avoid telling America’s craft brewers what to do with their businesses. I make my bones writing about beer, not making it, and I make an effort to respect the very real boundaries between the two.

That being said, brewers, I have a gentle suggestion to submit for your consideration. It’s a timely one, being as we’re about halfway through Dry January 2024, but it has year-round potential to bolster your bottom line and put your brand in front of new drinkers. Are you ready? OK, here goes.

Make hop water, already, would you?

One year ago, I took to VinePair’s digital pages to rebuke craft beer brewers and enthusiasts who spent this popular annual rite of abstinence complaining about breweries’ lost sales on social media. “Customers do not owe businesses their patronage in this nifty economic system we call capitalism; businesses compete for it,” I wrote at the time. “If your customers are good on widgets for the month, trying to guilt them into buying more widgets is not typically a winning proposition.”

At the risk of sounding immodest, I was right then, and I’m right now. Making other products that comport with drinkers’ lifestyle choices — no matter how superficial or fickle you may think they are — is the name of the game you’re in, brewers! You know that drinkers want flavorful non-alcoholic beverages during Dry January. You know when Dry January happens, thanks to the Gregorian calendar and the linear progression of time. You have the stainless steel, routes to market, and subject matter expertise to square this circle! And if you don’t, let me spell it out for you.

H-O-P W-A-T-E-R.

It’s sparkling water that tastes like hops. You make it, we buy it. The cash keeps flowing, the world keeps spinning. You can do this. I believe in you.

I’d hoped Dry January 2024 would mark the arrival of a bumper crop of acqua di hop, but it really hasn’t. Thus, my lament. I live in Richmond, Va., the metropolitan area of which is home to some over 40 breweries and cideries. As far as I know, none of them are making hop water — and if they are, they certainly aren’t advertising it to local acolytes of the refreshing, effervescent beverage (i.e., me). As marketers might say, that’s a missed opportunity to capture incremental revenue in an emerging health-haloed, beyond-beer segment. As I might say, missing opportunities in a mature craft brewing market grappling with its second swoon in four decades is bad.

Stop missing opportunities: Make hop water.

Well, you say, in your smug Ludwig Von Mises manner, if breweries aren’t making it, that means there’s no demand for it. No, incorrect, you Chicago-schooled stooge. There’s demand. I demand it. Do you know how much money I spend on Hoplark’s Really Hoppy and Really Really Hoppy hop waters annually? Me either, because I’m afraid to total it up. This is not an endorsement for Hoplark per se, though I do like drinking it, during Dry January and otherwise. No, this is a gauntlet thrown down to every brewery in the country that’s not currently making a competing product. Especially ones local to my wallet.

My woes in central Virginia notwithstanding, national sales figures do indicate that more breweries than ever are heeding this call. NielsenIQ (NIQ) data analyzed by 3Tier Beverages for Good Beer Hunting indicates the hop water segment has expanded around 10x over the past half-decade, going from just three producers selling around 50,000 cases of the stuff annually in 2019 to 27 producers doing 500,000 cases by midway through 2023. Good. Good! But there are ~10,000 breweries in this country, which means 9,973 aren’t bringing their prodigious collective beverage-making talents to bear on the hop water segment.

I hate that for them, and for me. Get it together!

But Dave, you, brewer, grumble at me. You don’t understand what it takes to actually make and market a hop water. Of course I don’t! You think a columnist’s job is to understand things? I’m a big-picture guy. The devil is in the details, and I’d rather not meet him. But for the sake of posterity, I checked in with Doug Veliky, chief marketing officer at Chicago’s Revolution Brewing, who was kind enough to share some details with Hop Take about how the brewery’s new-ish Super Zero hop water came to be, why it’s a fit for Revolution, and why it might — or, in fairness, might not — be right for other breweries around the country.

First and foremost, Veliky likes hop water. “I like hop water,” he tells me via email. (There you have it.) More importantly for our purposes, though, the non-alcoholic sparkling beverage plays a cost-effective and complementary role in Revolution’s award-winning, hop-forward portfolio, not a capital-intensive and potentially cannibalistic one. “To make non-alcoholic beer the way we thought would put out the best product, we’d be looking at a $1 million investment. … As a 13-plus-year-old brewery built on alcoholic beer, I didn’t see enough of a path to providing a return on that investment without damaging our much larger core business.” (The cost and complexity of properly quality-controlling NA beer, which lacks the antimicrobial benefits of ethanol, accounts in part for that burgeoning segment’s high barrier to entry.)

Instead of eroding Revolution’s hard-won brewing bona fides, Super Zero integrates with them, inviting favorable comparisons to sparkling non-hopped water, instead of reminding drinkers that they’re not drinking alcoholic beer, as a non-alcoholic brew might. “Hop water can also be enjoyed alongside and in between beers, where NA beer occasions generally feel more limited to ‘instead of,’” argues Veliky. The fine folks at Athletic Brewing Co. might beg to differ (or maybe not; their hop water line, DayPack, is a top brand in the nascent segment, per NIQ data), but this is a key use-case for yours truly. Rotating in a hop water after every drink or two helps me stay hydrated, moderate my alcohol intake, and extend my socializing at cookouts, holiday parties, and everything in between.

I initially added hop water to my roster for that utility benefit, but over the past couple years I’ve found myself mowing through cans of the stuff throughout any given day. I’m doing volume, man, and there are millions of American drinkers primed to follow me down this path. This isn’t a threat to breweries’ ABV-positive core businesses. Do not panic! An analysis of NIQ data by the Adult Non-Alcoholic Beverage Association in December 2023 showed that 94 percent of NA customers also drink alcoholic beverages (up from 80 percent in 2022), and spend over 60 percent more on them than customers who just stick to virgin drinks. Moreover, well-marketed hop waters can command and defend craft beer-like price points, despite typically costing less to produce, distribute, and excise — meaning there’s margin for the capturing.

For example, Revolution is hopping Super Zero with 1.5 pounds of high-end hops (including Sabro and Nectaron) per barrel, same as its flagship Anti-Hero India pale ale, but it still costs “significantly less” to produce, says Veliky. The two SKUs are “a pretty even trade” margin-wise for Revolution, and the former can win placements, occasions, and flywheel-spinning future brand loyalists that the latter simply can’t. We love a “synergistic white-space innovation,” don’t we, folks?

Yes, we do, and it’s called hop water.

All right, all right: I’m being a smidge selfish here. Despite all these upsides, and my personal thirst for the stuff, hop water isn’t a no-brainer for every brewery out there. Veliky is careful to emphasize that the segment is no gimme, even with great liquid and strong, concise positioning. After all, getting drinkers (other than me) to pay craft beer prices for not-craft beer is no mean feat. “There will be pushback from customers on price because ‘iT’s jUsT La cRoIx,’” he warns, adding the Spongebob meme casing for a text-based eye roll. Internal buy-in at Revolution was key during Super Zero’s development, and retailer education and sampling are vital now that the product is out in the market, says Veliky. “Breweries will need to be diligent in explaining the occasions where they find value in hopes that resonates with their consumers.”

In other words, hop water won’t sell itself. But in this rapidly shifting market full of ombibulous drinkers dabbling with everything from adaptogens to temporary abstinence, what will? It wasn’t so long ago that craft breweries had to hand-sell their full-flavored beers into the hearts, minds, and fridges of American distributors, retailers, and drinkers. They have the chops to do it again, defending the industry’s hard-won place in the vanguard of American beverage innovation and shoring up flagging alcoholic revenues in the process. Hop water may not be the answer to the industry’s mid-decade malaise, but it’s an answer, and it’s slowly proving out in the market. My question is: What’s taking so long?

🤯 Hop-ocalypse Now

It’s standard journalistic practice to issue a correction for mistakes to let readers know what you got wrong and how you fixed it. Guess that’s not how things work in the halls of power at Uber, though: After acquiring booze-delivery platform Drizly in late 2021 for a staggering $1.1 billion, the labor exploitation rideshare platform announced earlier this week that it planned to shut that company down and redirect its users to UberEats. Sure would appreciate a correction from the desk of chief executive Dara Khosrowshahi explaining what Uber got wrong on that deal!

📈 Ups…

Tilray Brands will take a shot at Twisted Tea supremacy with a new Shock Top offering called — seriously — “Lit”… New Jersey’s governor finally signed some brewery reforms into law (limited though they are in the act)… Congrats to Constellation Brands for unseating Molson Coors as the No. 2 beer-seller in the American off-premise… Washington State’s attorney general is suing to stop Kroger-Albertsons’ controversial proposed merger…

📉 …and downs

Euro giant Carlsberg bought a 20 percent stake in Denmark’s diminished craft brewing juggernaut Mikkeller via the latter’s new-ish private-equity minority owner… Oh good, the committee tasked with reassessing U.S. alcohol guidelines includes industry-tied Ivy Leaguers… Total beverage alcohol shipped into the U.S. declined 5.1 percent last year, with total beer down 5.5 percent, per bw166 data…

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