If you’re not already hip to ranch water, you may soon find yourself overwhelmed with a national stampede of ready-to-drink (RTD) canned cocktails and hard seltzers flavored like the cocktail. Originating in West Texas, ranch water is a tequila-based cocktail made with lime juice and sparkling water. Diageo’s Mar. 8 purchase of Far West Spirits LLC, makers of Lone River Ranch Water hard seltzer, is further proof that multinational companies are betting on the regionally specific drink—and its name—as the next hot flavor in beverage.
Amidst a flurry of new releases that includes no fewer than eight brands, there’s a Wild West-style brawl taking place as businesses try to solidify themselves as synonymous with a beverage heretofore unknown to most of the country. The speed of ranch water’s ascent has created two motivating factors unfolding in real time:
Millions of dollars are up for grabs.
Because “ranch water” isn’t a trademarkable term, time is of the essence to get products to market and capture the public’s attention. Many brands are using the term, and there’s no legal barrier to prevent more from trying.
Heineken USA will launch a ranch water hard seltzer under the Dos Equis line this year. It will compete against Molson Coors Beverage Company, which plans to roll out a ranch water flavor of its Topo Chico hard seltzer line, a partnership the two beverage companies announced last fall. And both will face off with early ranch water hard seltzer entrant Lone River, which now has the backing of multinational beverage behemoth Diageo. (Financial terms of the purchase were not disclosed.) The trio joins already-established brands—all but one of which hail from Texas—that launched in cans between 2019-2021:
Ranch2O Ranch Water canned cocktail
ShotGun Ranch Water hard seltzer
Ranch Rider Spirits Co. Ranch Water canned cocktail
Texas Ranch Water Co. Blue Agave hard seltzer (produced by MPL Brands, which is headquartered in Sausalito, California)
Karbach Brewing Co. Ranch Water hard seltzer.
In total, the three ranch water hard seltzer brands tracked by market research firm IRI—Lone River, ShotGun, and Texas Ranch Water Co.—sold a combined $7.5 million in grocery, convenience, and liquor stores over the past 52 weeks. Lone River Ranch Water alone amassed about $4 million in those stores during that period. ShotGun Ranch Water’s sales were about $2 million over that time. Both products hit chain retail in 2020.
This profusion of products comes as ranch water is still introducing itself to the 49 states that aren’t Texas. Google searches for the term are concentrated in Texas, Arizona, and Colorado, with much less penetration in the eastern half of the country. “What is ranch water” remains one of the top related Google searches.
The origins of ranch water are as hazy as a desert mirage. Lore traces the drink back to a scruffy Fort Davis, Texas rancher in the 1960s, and the Gage Hotel’s White Buffalo Bar in Marathon, Texas has served it since then. In 2021, it’s impossible for anyone to claim to have coined the term.
“In West Texas it’s been a thing forever,” says Ari Auber, a freelance drinks writer based in Austin. “Only within the last few years, it’s migrated east to the rest of Texas, and then people realized, ‘This is a really awesome drink to put into cans.’”
Because of the muddled history and ubiquitous use of the name, the U.S. Patent and Trademark Office (USPTO) has declared that ranch water, like “margarita” or “mimosa,” can’t be trademarked in and of itself. But there was a period of time when that might not have been the case.
In 2011, a company called Texas Ranch Water Productions LLC from Fort Worth, Texas filed a trademark application for the term “ranch water” with the USPTO. (Philip Murrin is the name associated with Texas Ranch Water Productions LLC’s filing ; a Philip Murrin from Fort Worth is the co-founder of River Ranch Stockyards, an events venue and catering company.) The trademark was intended to apply to any cocktail, particularly those that are agave- or tequila-based, and would not have applied to beer. The application was filed as an “intent to use,” meaning the company had not yet created a product, but wanted to file the trademark as a placeholder while they developed one. In 2012, the USPTO issued the company a notice of allowance, essentially granting its application.
After this step in the trademark process, a company has to file periodic extensions to keep its application active while it develops its product. In the case of Texas Ranch Water Productions, the company didn’t file its extensions, and its trademark, in essence, lapsed. That’s according to Chicago-based lawyer Ashley Brandt, author of the Libation Law Blog. He can’t explain why the company would have let those extensions pass. With chain retail sales of ranch water totaling more than $7.5 million in the last year, it’s a significant amount of money that was left on the table.
“Somebody had a great idea,” Brandt says.
By 2017, the USPTO wasn’t allowing entities to trademark the standalone phrase “ranch water.” That year, the agency refused 616 Restaurant, Inc.’s application on the grounds that the phrase “ranch water” “is commonly used by third parties to describe a cocktail drink.” (Restaurant 616 is the parent company of Austin bar Ranch 616, where owner Kevin Williamson reportedly added a ranch water cocktail to the menu around the year 2000.) In its letter to 616 Restaurant, Inc., the USPTO linked to numerous recipes for and articles about ranch water from sources including YouTube, Martha Stewart, Bon Appétit, and VinePair. The USPTO determined in its 2017 refusal that ranch water wasn’t any one person or entity’s invention; it was a commonly understood term: “Because the mark is descriptive of the goods, registration is refused.”
Brandt says this is an example of the USPTO moving swiftly to understand a changing alcohol industry. A drink that might have been a novel commercial creation in 2012 was, by 2017, common knowledge. That trajectory is evidence of ranch water’s swift ascent from regional curiosity to national phenomenon.
“Given all the craziness in alcohol in particular, they’re moving with speed in ensuring that no one’s gonna lock down, say, ‘chocolate milk,’” Brandt says. “Imagine if someone at the USPTO had let a ‘hard seltzer’ trademark go through without realizing that it’s descriptive [of an entire category].”
Just as no single entity owns the trademark to “hard seltzer,” no one owns “ranch water.” This means there’s still a window of time for drinks companies to solidify their product as the category leader.
At a time when ranch water is still new for much of the U.S., no one brand has yet become synonymous with the drink. Lone River maker Far West Spirits, which is licensed in Houston but says it hails from “Far West Texas” (Houston is in the southeastern corner of the state), has been fast out of the gate in the ranch water hard seltzer race. Auber says Lone River’s version is the most ubiquitous in the state, and is sold in the most prominent Texas grocery chain, H-E-B. No doubt this caught Diageo’s eye.
Beer Marketer’s Insights reported in December that Lone River, having launched in April 2020, expected to sell 400,000 cases in 2020 in just two states, Texas and Tennessee. Diageo saw that growth and hopes to accelerate it.
“This acquisition is very much in keeping with our strategy to acquire high-growth brands in fast-growing categories,” Debra Crew, president of Diageo North America, said in a press release.
Lone River’s 2020 sales volume is equivalent to about 29,000 barrels, or roughly the volume Great Divide Brewing Company produced in 2019. Lone River’s ranch water cans currently say the beer is brewed in Abita Springs, Louisiana; that’s where Abita Brewing’s brewpub is located.
But Diageo-owned Lone River will soon have more competition from Dos Equis and Topo Chico’s hard seltzer brands, along with RTD cocktails that are tequila-, rather than hard seltzer-, based. The category is becoming more crowded, even as many Americans are still learning what ranch water is.
How fast individual brands can reach national saturation will be critical. Lone River has Diageo muscle behind it, while Molson Coors and Heineken USA also have the scale and distributor networks to begin national sales of their ranch water hard seltzers almost instantly. If a distributor already carries a Topo Chico ranch water or Dos Equis ranch water, will it be compelled to add another?
“I wouldn't want to have two ranch water SKUs [stock keeping units] that were priced the same, because I think our brands would get a little upset,” says Bryan Bulte, partner in Austin-based wholesaler Dynamo Specialty Distributing. “But can I control that? No. All four of our seltzer brands could come out with ranch water and we’d probably try to sell all of them.”
If there’s another cocktail-inspired beverage flavor that could offer a glimpse of ranch water’s far future, it could be the bloody mary. Once a restaurant brunch staple, it’s now available in off-premise formats that span multiple categories, both alcoholic and non-. From premade, just-add-vodka mixes to canned RTD versions to packaged micheladas, even the well-understood bloody mary has continued to achieve new permutations. Last year, new brands pushed the RTD michelada segment alone to roughly $500 million in IRI-tracked sales—not counting RTD bloody marys from the likes of Cutwater Spirits, or virgin mixes from, well, everyone.
Ranch water would appear to be in the early stages of a similar journey, from bar specialty to nationwide hit. Yet ranch water differs from bloody marys in that bloody mary recipes vary considerably from bartender to bartender, or canned cocktail to canned cocktail. Heat levels, spices, and pickle brine all offer opportunities to set a brand apart. But ranch water combines just a few flavors—tequila or a neutral seltzer base, lime, and sparkling water. Because drinkers outside the Southwest likely aren’t familiar with what ranch water “should” taste like, brands’ success will mostly come down to marketing.
Contenders who want to claim the title of rodeo queen of the ranch water circuit are up against a ticking clock. Existing products are widening distribution this year. New brands are entering the market. Within the next year or two, the window to establish one’s company as synonymous with the drink will have narrowed considerably. In this sense, Molson Coors-backed Topo Chico ranch water hard seltzer and Heineken USA-backed Dos Equis Ranch Water would seem to have a leg up. But they perhaps lack the geographic roots and credibility of the Texas-based RTD brands. National success may come down to whether consumers care about geographic provenance and authenticity, or simply want the flavor and easy drinkability associated with the phrase “ranch water.”
Zooming out, what’s happening around ranch water mirrors a larger development in beverage alcohol: the overlap of RTD, beer, hard seltzer, and non-alcoholic beverages. It’s taking place on a small scale (Ann Arbor, Michigan-based HOMES Brewery putting out smoothie seltzers that mimic tropical cocktails) and on a large scale (MillerCoors in 2019 changing its name to Molson Coors Beverage Company to reflect the growing importance of non-beer alcohol in its portfolio). Ranch water is just the latest permutation.
Consider this:
Dos Equis’ entry represents a beer company producing a hard seltzer named for a cocktail.
Molson Coors’ Topo Chico-branded Ranch Water comes from what has historically been a beer company, producing a hard seltzer, named for a cocktail, that’s branded with the name of an NA sparkling water.
There’s ample room for drinkers to be confused. But most aren’t exactly desperate to know exactly which category their ranch water falls into.
“I’m pretty sure most alcohol consumers in Texas know what a ranch water is, in terms of what the flavor is to expect. But I still dont think a lot of them know whether it’s liquor or malt [hard seltzer],” Bulte says. “And I’ve heard that from numerous moms, college kids—they don’t know the difference.”
This apathy isn’t confined to ranch water, either. It’s something beverage producers have observed across RTDs, flavored malt beverages (FMBs), and beer.
“Consumers are now trying a variety of things and it doesn’t really matter to them, to most consumers, exactly how it’s made,” Matt Casto, manager of distilling operations for Devils Backbone Brewing Company, told the GBH podcast in January 2020. “It’s ‘Does it taste good?’ ‘Am I going to enjoy this?’… If you make sure that what you put in there tastes great, they’re not really going to be that interested in what grade of ethanol you use for vodka seltzer.”
The simplicity of ranch water’s flavors and crossover with RTDs are reminiscent of the rise of hard seltzer—now a $4 billion market in the U.S. Hard seltzer, an FMB, falls under beer as a general category, but its appeal is much broader, capturing people who would otherwise drink wine or cocktails or cider. Likewise, consumers of all beverage preferences seem to be after the flavor and lifestyle cachet of ranch water, regardless of the specifics of its ingredients.
“I don’t know that ranch water will be as big as ‘White Claw summer’ but it’s going to find its own niche,” says Auber. “After all, what’s better on a hot summer day than sparkling water, lime, and tequila-like flavors?”
Hard seltzer, as a brand-new category, had the opportunity to invent itself wholecloth without the cultural associations beer or wine has. The cliché that beer is a working-class man’s drink, or that white wine is for women, didn’t apply. As a result, hard seltzer drinkers skew evenly across genders. As a new product for much of the country, ranch water can have similar appeal. Its only cultural associations are its geography and quirky name, priming it for wide success.
While it’s not yet clear that ranch water will be a multibillion-dollar category the way hard seltzer is, the multitude of new and existing brands are banking on big growth. Over the next year or two, those brands will narrow themselves into leaders and also-rans. Which company winds up on top may come down to bold, aggressive marketing—in other words, Texas swagger.
Words by Kate Bernot
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