Nearly every inch of Don Vultaggio’s factory in Edison, New Jersey, roars with machinery pumping out the sweet smell of tea. But a conference room on the second floor is a quiet sanctum, and that’s where, on a warm Wednesday afternoon, the AriZona Beverages co-founder is hosting his company’s quarterly sales meeting. Vultaggio, sporting a long-sleeve AriZona shirt and white cargo shorts, wanders among his employees as they sip samples out of tiny paper cups. They’re comparing AriZona’s lemon and peach hard teas to those of market leader Twisted Tea. “When I tried Twisted Tea, I was amazed how bad it was,” Vultaggio, 71, declares. “On our worst day, we couldn’t hope to make it taste that bad.”
Hard tea has overtaken hard seltzer as the fastest- growing malt-based “beer alternative,” a category that also includes ciders. Over the past year, Americans chugged $1.3 billion worth of hard tea, according to NielsenIQ, up 40% from the previous year—and nearly all of it Twisted Tea, which has roughly 90% market share.
“We’re in a category that has been dominated by a couple of stale brands,” Vultaggio tells his employees. He then corrects himself: “It’s been dominated by one.”
But Vultaggio, who already has a $6 billion fortune thanks to his $2 billion (estimated revenue) ready-to-drink iced tea, thinks he can take on the hard tea giant with a superior-tasting product. It’s a bold strategy in an industry in which a more delicious drink doesn’t always win: Budweiser didn’t become the best-selling beer in America because it tastes better than craft beers. But Vultaggio trusts flavor—after all, he got rich by tickling the nation’s taste buds. So he recently launched AriZona Hard, a line of alcohol-infused versions of his hit iced tea flavors, across the country. Besides lemon and peach, there’s a spiked variant of AriZona’s best-selling green tea. Nine more flavors are in the works. Vultaggio personally tests as many as 40 to 50 versions of every new drink, paying special attention to the finish.
It’s a challenging game of catch-up. Twisted Tea has enjoyed more than two decades of growth without meaningful competition since Boston Beer, the $4.1 billion (market cap) parent company of Samuel Adams, launched it in 2001. With more than $900 million in 2023 sales, per Nielsen IQ, the tea’s now bigger than any of the company’s beers. “When you’re the industry leader, unless you totally screw things up, you tend to stay the industry leader,” says Nik Modi, managing director at RBC Capital Markets. “Boston Beer right now is doing a very good job behind Twisted Tea.”
Luckily for Vultaggio, consumers of hard teas and other ready-to-drink booze—unlike beer drinkers—tend to be younger, less brand-loyal and more prone to chasing fads (Zima, anyone?). In recent years, hard seltzers took off on the back of brands like White Claw and Boston Beer’s Truly. Seltzer sales ballooned to $4.7 billion in 2021 but have since shrunk 23%, per NielsenIQ. Now, spiked teas, though still a much smaller part of the market than seltzers, are taking off. Grand View Research predicts global sales will grow sixfold, to $14.5 billion, by 2030. “This is the year of hard tea,” says Danelle Kosmal, VP at the Beer Institute.
The trend began with a viral video. In December 2020, a white customer at a Circle K in Ohio repeatedly hurled racial slurs at a Black man—who then smacked him in the face with a can of Twisted Tea. It quickly became a meme shared by the likes of Snoop Dogg, with internet denizens joking about “carrying” Twisted Tea like a firearm and a Maine general store advertising the product as a means of self-defense. “Believe it or not, that’s what sparked a lot of the growth,” says Filippo ...
Hard tea has overtaken hard seltzer as the fastest- growing malt-based “beer alternative,” a category that also includes ciders. Over the past year, Americans chugged $1.3 billion worth of hard tea, according to NielsenIQ, up 40% from the previous year—and nearly all of it Twisted Tea, which has roughly 90% market share.
“We’re in a category that has been dominated by a couple of stale brands,” Vultaggio tells his employees. He then corrects himself: “It’s been dominated by one.”
But Vultaggio, who already has a $6 billion fortune thanks to his $2 billion (estimated revenue) ready-to-drink iced tea, thinks he can take on the hard tea giant with a superior-tasting product. It’s a bold strategy in an industry in which a more delicious drink doesn’t always win: Budweiser didn’t become the best-selling beer in America because it tastes better than craft beers. But Vultaggio trusts flavor—after all, he got rich by tickling the nation’s taste buds. So he recently launched AriZona Hard, a line of alcohol-infused versions of his hit iced tea flavors, across the country. Besides lemon and peach, there’s a spiked variant of AriZona’s best-selling green tea. Nine more flavors are in the works. Vultaggio personally tests as many as 40 to 50 versions of every new drink, paying special attention to the finish.
It’s a challenging game of catch-up. Twisted Tea has enjoyed more than two decades of growth without meaningful competition since Boston Beer, the $4.1 billion (market cap) parent company of Samuel Adams, launched it in 2001. With more than $900 million in 2023 sales, per Nielsen IQ, the tea’s now bigger than any of the company’s beers. “When you’re the industry leader, unless you totally screw things up, you tend to stay the industry leader,” says Nik Modi, managing director at RBC Capital Markets. “Boston Beer right now is doing a very good job behind Twisted Tea.”
Luckily for Vultaggio, consumers of hard teas and other ready-to-drink booze—unlike beer drinkers—tend to be younger, less brand-loyal and more prone to chasing fads (Zima, anyone?). In recent years, hard seltzers took off on the back of brands like White Claw and Boston Beer’s Truly. Seltzer sales ballooned to $4.7 billion in 2021 but have since shrunk 23%, per NielsenIQ. Now, spiked teas, though still a much smaller part of the market than seltzers, are taking off. Grand View Research predicts global sales will grow sixfold, to $14.5 billion, by 2030. “This is the year of hard tea,” says Danelle Kosmal, VP at the Beer Institute.
The trend began with a viral video. In December 2020, a white customer at a Circle K in Ohio repeatedly hurled racial slurs at a Black man—who then smacked him in the face with a can of Twisted Tea. It quickly became a meme shared by the likes of Snoop Dogg, with internet denizens joking about “carrying” Twisted Tea like a firearm and a Maine general store advertising the product as a means of self-defense. “Believe it or not, that’s what sparked a lot of the growth,” says Filippo ...
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Forbes (Digital) - 1 Issue, December 2023 - January 2024