Good Beer Hunting

Circle K’s Proprietary Lager and IPA Debut in 730 Stores, Draw Trademark Attention From Dogfish Head

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Beginning in early October, a new beer brand appeared on convenience store shelves in Florida. Sea Quest Brewing Co.’s Leeward Lager and Beachhead IPA were first-time additions to Circle K convenience stores, with the brands acquiring prime space in cold storage, including prominent ad displays on doors. It was a rollout across 730 in-state Circle K stores, all unveiling the 16-ounce cans in four-packs for $7.99 or a pair of single-serve cans for $4.29. The two beers weren’t available in other retail options, nor will they be.

Sea Quest is a new, proprietary “house beer” made exclusively for Circle K in partnership with Florida-based Global Brewing Solutions (GBS), a limited liability company incorporated in 2016 to co-create custom beer brands for retail partners in spaces that include grocery and convenience stores.

Sea Quest is the first entry of what Global Brewing Solutions hopes to be a national rollout of similar brands, each created individually for retail outlets based on unique attributes of consumer preferences. In creating Sea Quest brands, GBS compiled about 700 responses through the online platform Survey Monkey, collected by "targeted" communications at Circle K locations, said company partner Don Shaver. The Lager and IPA are contract brewed by Raleigh, NC’s Lonerider Brewing Co.

Two other partners at the head of the company include Steve Bronstein, who previously worked with PepsiCo and oversaw senior director business development for Publix, Family Dollar, and Amazon, and Frank Vignone, who has done work with tobacco brands like Marlboro, Skoal, and Copenhagen.

“We all saw an opportunity in the craft beer space with few, but not many, national brands out there,” says Shaver, who has 30 years of executive consumer packaging goods experience and has consulted brands like Nestle, Pillsbury, Gatorade, and more. “In terms of being able to get high-quality product in distribution quickly, we saw an opportunity to leverage relationships we had in the retail community, as well as our knowledge of co-manufacturing and co-brewing.”

First, the Sea Quest brand has to make it through potential litigation, due to its similarity to one of the hottest beers in the country over the past year: Dogfish Head’s SeaQuench Ale. According to the U.S. Patent and Trademark Office online listing, ownership of "SeaQuench" was filed in November 2015 with registration granted to Dogfish Head in January 2017. "Sea Quest" was filed in March 2017 and published for opposition in August. The opposition period is set for 30 days, but can be extended on request.

Dogfish CEO and founder Sam Calagione confirms to GBH that the company is “aware of it and we are engaged on this matter,” noting he couldn’t share additional details. It's the second time in 2017 the Delaware-based brewery has contacted a Florida company over potential trademark issues. Earlier this spring, Dogfish had to take action against Florida Keys Brewing Co., which was selling a brand called Hogfish Amber.

Regardless of Sea Quest’s fate, the goal behind GBS’ business may prove to be an effective and timely decision. Creating retail-specific brands isn’t new in the industry. Trader Joe’s has done this for years, contracting through companies like Gordon Biersch, Firestone Walker, Shipyard, Unibroue, and more. Other chains, like Whole Foods (Rumble Seat), Harris Teeter (Barrel Trolley), and Walmart (Trouble Brewing) have also tried their own specialty beers created solely for their stores, with Walmart seeing the most success. Its Trouble lineup of beers, which includes a Pale Ale, IPA, and variety pack sold almost exclusively in Walmart stores, amassed $3.6 million in sales through the end of October, according to IRI. That's already more than 2016’s $3.5 million in sales—its first year.

But as more shoppers shift trips outside traditional grocers, GBS’ decision to focus on convenience stores is a topical and savvy move. According to numbers estimated by Beer Institute economist Michael Uhrich, convenience stores account for about a third of off-premise beer volume. Overall numbers haven’t been moving as fast as years past: Beer Marketer’s Insights reported in September that the above-premium category, where Sea Quest is found, was up 2.7 in share of dollars. In IRI-tracked convenience stores, dollar sales of four-pack, 16-ounce cans grew 52.7% between 2012 and 2016.

It’s a good time to create brands like Sea Quest, given their sales location, not to mention the growing use of c-stores among younger consumers, who are also seeking out fuller flavored beer options with greater regularity. More than ever before, convenience store locations are also being sought out by major craft players. In the past year, New Belgium, Founders, Lagunitas, Green Flash, and other regional and national brands have been placing packaged and single-serve options with regularity. By the end of December, Green Flash anticipated its GFB Blonde Ale being sold by the single can ($2.49 each or two for $4) in about 1,000 c-stores across California, Texas, and Virginia. Sea Quest’s brands were specifically priced at $7.99 a four-pack and $4.29 for two single cans to hit an “enticing” price point indicated by customer surveys, Shaver says.

The difference with these breweries and GBS, of course, is the companies themselves. New Belgium or Lagunitas have decades of history, stories, and people behind them. In the case of Sea Quest, Shaver said labeling and advertising placed at Circle K stores are meant to showcase it as a “lifestyle brand” and not hide the fact that it’s contracted through Lonerider (it’s currently clearly listed on Sea Quest’s website and cans). “We wear that as a badge that will give us respect,” Shaver says of contract brewing through Lonerider, citing three Great American Beer Festival awards since 2010.

“We worked with [Lonerider head brewer] Galen Smith to tweak the formula to meet needs of a Circle K customer,” Shaver says. “There was a void in terms of IPAs, specifically in terms of craft beer that was lower IBU and more of a sessionable, drinkable product that was a warm-weather beer.”

Beachhead IPA focuses on its Mosaic and Citra hops, Shaver says, while Leeward Lager, made with lemon peel, also highlights its 35 IBUs.

Sumit Vohra, Lonerider’s CEO and “chief drinking officer,” says his company has done little contract brewing in the past, but had enough excess capacity to accommodate about 1,000 barrels of initial production between Sea Quest’s Leeward Lager and Beachhead IPA. The Raleigh brewery was one of about 20 interviewed by the GBS team, Shaver says, with others spread across undisclosed states in the Northeast and Midwest, along with specifically listing Florida, Georgia, and North and South Carolina. Future company brands and partnerships are likely to come from that pool of breweries, Shaver added.

The end goal, Shaver says, is to attract new customers that haven’t always considered fuller-flavored beer, let alone finding such a thing at a convenience store. GBS is already eyeing expansion into other markets, though Shaver wouldn’t identify where or with what grocery or convenience stores.

“We’re looking to work very closely with retailers to put together a strategic marketing plan to roll out products through customization,” Shaver says. “Unique products will draw new customers.”

—Bryan Roth