Island Brands is attempting to do what other, much larger beer companies haven’t yet been able to: mount a sustained challenge to Corona and Michelob Ultra. Its business plan is to create a portfolio of brands that mimic some of the most popular and successful beers and flavored malt beverages (FMBs) in the country, then undercut those leaders with marketing claims of being more “authentic.”
The Charleston, South Carolina-based company saw combined sales of its two existing brands— Island Coastal Lager and Island Active—grow +70% last year to hit $1.9 million in grocery, convenience, liquor, and other retail chains tracked by market research company IRI. By volume, the pair sold as much in those chain stores as the portfolios of regional breweries like Virginia’s Port City Brewing Company and California’s Green Flash Brewing Co.
The company says Island Coastal Lager, its flagship, could appeal to drinkers of domestic as well as imported Lagers (though generally those target separate sets of consumers). Thanks to 2020 shelf placements at Southeast grocery chains like Publix and Winn-Dixie, Island Coastal Lager’s success begat a second “Island” brand in February 2020, an 88-calorie Light Lager called Island Active, which is explicitly intended to compete against the 95-calorie Michelob Ultra. Active’s total IRI sales topped $525,000 last year, selling about as much volume as Uinta Brewing’s flagship Hop Nosh IPA in those stores.
Currently distributed to seven states and aboard Carnival Cruise Line ships, Island Brands plans to further its reach in 2021 in a few ways:
Open six-to-eight Cabana Bars across the Southeast. Those bars will be operated by hospitality groups through licensing agreements.
Launch Island Lemonada Shandy to compete directly against Molson Coors-owned Leinenkugel’s shandies, which are currently seeing shaky sales.
Debut Island Southern Peach, a tea-flavored beer to rival Boston Beer Co.’s Twisted Tea. This is easier said than done: The Twisted Tea family of brands grew by 30.5% in 2020 and doubled its annual dollar sales in the last five years.
The company bills its beers as lighter-flavored than classic craft beer styles like IPAs and Stouts, but “better quality” than mass-market or imported Lagers. Combined with “a healthy seven-figure” marketing budget that plays up the coastal lifestyle—think boats, beach volleyball, and lots of attractive twentysomethings in bathing suits—Island Brands says it’s building a regional, if not a national, blueprint to rival some of the world’s biggest brands. (The company declined to quantify its marketing spend any more specifically.)
“We look at certain products that are in the market that have a massive stranglehold on share, and we believe we can provide a better product at a fair price,” says co-founder Scott Hansen. “And what comes along with that is a pretty fun and cool vibe.”
Montana-based Montucky Cold Snacks made a similar play with its contract-brewed Light Lager, with a crucial difference: Montucky prices its beer at or below PBR and Busch Light, while Island is priced at or slightly above its competition.
Island Brands’ strategy is essentially to identify a category leader, then challenge it with a product priced within a dollar or two of the leading brand. A 12-pack of Island Coastal Lager, the company says, should retail for $14.99 or $15.99, which is similar to the price for a 12-pack of Corona Extra, and $1 or $2 more than what a chain retailer would price Michelob Ultra.
The question is whether consumers see value in swapping Island Coastal Lager for Corona, or Island Active for Michelob Ultra. And that question essentially hinges on how Island Brands markets its products—as “authentic,” as part of the coastal Southern lifestyle, as “better-for-you.”
What exactly “authentic” means is an open question for the company. Island Brands was founded by two self-described “beer outsiders” who previously established, then sold, their own companies:
Island Brands cofounder Brandon Perry was founder and CEO of AMS Financial Solutions, which offered specialty consumer financing solutions for home contractors and medical/dental professionals.
Hansen previously led Hansen Talent Group, an information technology and executive search staffing firm.
Now, the pair contract brew their beer via New Belgium Brewing, and plan to bring in outside hospitality companies to operate Island Cabana Bars in Charleston, South Carolina; Key West, Florida; Wilmington, North Carolina; Nashville; and elsewhere. (The difficulties global beer company Mikkeller has experienced in licensing its brand and obfuscating ownership may offer a cautionary tale for that model.)
“We present ourselves as authentic, being that we’re American-made and American-owned,” Hansen says, making clear that the beer’s authenticity is tied to its ownership. “I think that really the message for us is very clear: We’re the clean choice.”
“Clean,” Hansen explains, means that his beers use only water, malt, hops, yeast, and—for Lemonada and Southern Peach—fruit puree. (Those ingredients are what most beer, including craft beer and many macro brands, are made from.)
Hansen and Perry say the “subpar” products that large beer companies put out are a result of non-barley grains and cost-saving measures dictated by “shareholder profitability.” (Michelob Ultra’s parent company, Anheuser-Busch InBev, declined to provide a response to Hansen and Perry’s comments.) Whatever Hansen and Perry think of those beers, Corona and Michelob Ultra are two of the most popular brands in the country. Michelob Ultra is the most important beer in a generation, and Corona has defined imported beer in the U.S. for two decades.
“In our opinion, rice does not belong in beer and neither does half the crap that they put in there that the alcohol lobby doesn’t require them to put on their cans or packaging,” Hansen says, referring to Bud Light, which uses rice in its recipe.
Despite what Bud Light’s Super Bowl commercials tried to play up, adjuncts like corn or rice have a long, accepted history in American brewing. Some small breweries use them, too. Island Brands’ disparaging comments about the purity of their ingredients and brewing processes could themselves come into question given that the company does not brew its own beer. "We're not brewers," Hansen says, explaining that they developed a recipe in 2016 and wanted to outsource production, but didn’t elaborate on whomever helped with the process, whether brewers, consultants, or a combination.
But the claim is part of a larger marketing strategy: Island Brands positions its beers as a middle ground between what Perry describes as the “Froot Loops and doughnuts” flavors of certain craft beers and the “factory-made swill” put out by multinational breweries. “If Bud Light is the Kraft American cheese single of beer, and the Whole Foods or Wegmans $30-per-pound, triple-cream [cheese] is craft beer, then let’s call us the Sargento of beer,” Perry says.
Perry and Hansen say they respect craft brewers and are fans of craft beer themselves. But they say on the whole, those breweries only began brewing Light Lagers as an afterthought to more intensely flavored beers like IPAs. Yet IPAs aren’t some niche style; they’re craft beer’s most popular beer, responsible for roughly 37% of all packaged craft beer sold in 2020. (Even Double IPAs are effectively mainstream these days.)
Instead, the two co-founders save their most pointed criticism for the country’s largest breweries.
“Boston Beer sold $455 million worth of Twisted Tea and it’s basically diabetes in a can, and they’re killing people with their garbage,” Hansen says. “We think there’s a better product out there for those consumers that have that palate, that want that flavor.”
Twisted Tea contains 194 calories and 23.3 grams of sugar; Southern Peach contains 154 calories and 8.4 grams of sugar. (Boston Beer did not respond to a request for comment.)
Island Brands’ co-founders may be plain-spoken, but the company has to tread lightly in terms of how it positions itself. It doesn’t try to claim “craft,” as it doesn’t have a local brewery that South Carolinians could visit. And it doesn’t completely claim “local,” as it’s selling its beers regionally and, as of early 2021, to Shanghai, China. Island Brands grew year-over-year production volume +58% in 2020, and is targeting 68,000 barrels in 2021, roughly the volume California’s Modern Times Beer produced in 2019, the last year for which Brewers Association production data is available.
“You can debate whether Island is or is not craft. Certainly there’s gray area there,” says Brian McCurry, general manager of the Columbia, South Carolina location of Bottles Beverage Superstore, a liquor store with three locations in the state. “You don’t see many breweries that say, ‘Hey, we’re local beer. We’re privately owned, but I wouldn’t really call us craft. But we’re a good small brewery.’ They’re kind of straddling the fence that way.”
Hansen says in rivaling such big beer companies, Island Brands has been “very much a David and Goliath story,” but that’s a matter of perspective. While not the size of Anheuser-Busch InBev or Molson Coors, Island Brands boasts that “healthy seven-figure” marketing budget and employs 15 full-time staff, contracts with another 14 part-time vendor employees who do mostly marketing and design work, and works with an unknown number of brand ambassadors (who it calls “wavemakers,” “frontrunners,” and “headliners”). Last year, it raised more than $1 million from 1,100 investors via a crowdfunding platform called StartEngine, with plans to open another round of funding on the platform in March.
So far, its financial backing and market positioning appear to have paid off. When Molson Coors discontinued Michelob Ultra competitor Saint Archer Gold this past summer, Publix supermarkets slotted Island Active into its shelf space across roughly 800 stores.
Competing directly against these massive, established beers is Island Brands’ game: The company is carving out niches where other brands taking on such behemoths have failed. Can Island Brands do what no one else has? So far, it’s shown positive results:
New store placements boosted dollar sales of the Island portfolio +175% in Publix stores over the four weeks ending June 14, Island Brands told Brewbound, posting higher dollar sales than rivals Kona Brewing Company and Shiner.
Supercenter sales in stores like Walmart and Costco have also been a source of growth: Those sales are up +900% collectively last year, according to Island Brands.
New distribution to gas stations and mass convenience stores also bumped those sales +250% in 2020.
The company will continue to target mass retail for growth this year, having recently hired a sales manager, although the founders declined to name this person or their specific bonafides. They’d only say the new hire had experience in convenience stores and independent retail sales and would head a sales division focused on superstores, club stores, military stores, and convenience stores.
But taking even a small bite out of its national competitors’ sales is a potentially lucrative plan.
The Corona family of beers, excluding Corona Hard Seltzer and flavored cocktail line Corona Refresca, grew +8% in chain retail sales in 2020, to hit $2.9 billion. (That growth was below the +12% for the entire import category.)
Michelob Ultra is the #2 beer in America, netting $3.2 billion in chain retail sales last year. It now essentially comprises the entirety of the super-premium beer category, which generated $3.9 billion in chain retail sales last year.
On the flavored front, Twisted Tea grew chain retail sales +30.5% in 2020. But Leinenkugel’s might prove more vulnerable to a new rival: Leinenkugel’s Summer Shandy, the best-selling shandy beer in the U.S., saw chain retail sales slip -16% in 2020.
“There’s an entire country full of rubes who were stoked to drink Corona for 30 years and now they see a prettier can with a more compelling story. Of course they’re drinking this,” says Dave Infante, the Charleston-based editor of Fingers, an independent newsletter about drinking culture.
Infante says that he hasn’t seen Island Coastal Lager becoming a beloved regional brand like National Bohemian (Natty Boh) is in Baltimore, or Genesee is in Upstate New York. And he says its marketing seems to lack the self-aware irony or “lovable ruffian” image that Montucky Cold Snacks projects. But, he says, the sales data indicates that Island Brands is indeed getting onto plenty of shelves in South Carolina.
“Never overestimate the willingness of the American drinker to buy the shit that looks cool,” he says. “Good for Island [Brands], I guess, for figuring out how to market that. But is that staying power?”
Perry and Hansen say they want their beer to function as a lifestyle brand, citing the pricey outdoor gear company Yeti as a successful example. The lifestyle Island is targeting is coastal, active, fitness- and sports-oriented; the brewery’s ambassadors—who are compensated via discounts and free beer—include wind surfers, kayakers, and Crossfit influencers. The company says its core demographic is 21-to-45-year-old drinkers, with Island Coastal Lager skewing a bit more male and Active skewing a bit more female.
These are disparate demographics. Other beer companies have struggled to bridge such variable groups, and the ones that are successful have generally chosen a more narrow lane. Michelob Ultra targets the fitness and wellness crowd; Firestone Walker 805 plays up its California geography. Either Island Brands is overly ambitious, or it’s about to pull off a feat even big beer companies haven’t been able to.
No small piece of the puzzle is the brand’s distinct look in marketing materials and on social media.
“The aesthetic is sort of like Fyre Festival meets that Netflix show ‘Outer Banks,’ but instead of selling aspirational Caribbean fraud or horny teen romance it’s just selling beer,” Infante says.
Infante identifies several aspects of Island’s branding that nod to Charleston or the coastal region. For example, the blue used on Island Coastal Lager’s cans is Haint Blue, a teal shade that adorns porches in South Carolina and traces its origins back to the Gullah people, an African American community with a shared language and culture who live in the region. Yet, Infante notes, most of the brand’s marketing and social media predominantly features white people. (Charleston’s population was 21.7% Black in 2019.)
“I don’t want to ascribe malice to this brand, but that’s something that happens a lot in Charleston. These aspirational lifestyle brands that are … very much optimized for Instagram tend to leave out a big portion of the Charleston community,” he says.
Infante adds that Charleston itself, through its tourism marketing, has worked to promote an idealized image of beaches, boats, and attractive but genteel residents—one that Island Brands has thoroughly embraced.
“It’s a lifestyle that a lot of people imagine Charleston being,” Infante says. “To me, it’s a commodification of the Lowcountry elements that people look to come visit. It’s not necessarily the way we all live.”
If Island’s Charleston-aligned brand is out of step with reality, can it succeed? Or will it succeed because of that, by selling an aspirational version of a place that, to outsiders, is entirely synonymous with fun and relaxation?
That’s where the company’s future hinges. Its success will depend on how well its sunny, no-cares lifestyle can translate outside of the regiont. Hansen and Perry say their goal is to remain a Southeast-rooted brand, but they also believe they can distribute successfully beyond it, something they haven’t yet had to do.
They point to crowdfunding investment from residents of California, Texas, and Nebraska as proof that the brand resonates outside of its home turf. Even someone in Minnesota, they say, understands the “water lifestyle” Island Brands is about. But will jet skis make sense to snowmobilers? Does beach frisbee translate to buck hunters? The future Island Brands envisions depends on being a lot of things to a lot of people. How much beer can a vibe sell?
Words by Kate Bernot