
How High is Up for Surfside?
Dear Client:
Last week, Surfside announced that it was the fastest growing brand in bev ale in 2024, having grown 360% at U.S. scanned retail last year.*
The obvious question is, how’d they do it?
Co-founder Clement Pappas told us that 2024 was a year “about building out our distribution network, making sure we got that national footprint,” and putting in the “first layer” of sales and marketing folks.
“We’ve kind of gone Northeast and spread out from there, the brand is most developed in that core,” said Clem. “And then, for the most part, as you get farther away from that core is where we have more work to do on our brand development.”
Of course, they have other brands too. “Stateside Vodka soda was in the 640,000 case range and also up about 48%” last year, he told BBD. “So we were thrilled with that.”
But even as they have their work cut out for them, with so much competition, they expect that 2025 will be a “big year” for them, too. Where they finished ’24 atjust under 5 million cases, they’re shooting for 10 million this year.
(*Note, that’s specifically among brands with a minimum of wok cases sold the year prior, in NIQ Total US xAOC + Liquor Open State for Beer, Wine and Spirits, 52 weeks ending 12/28/24.)
STILL SUCH A NASCENT CATEGORY, CLEM BELIEVES. How high is up? Do they expect to catch High Noon (which did roughly 25 million cases last year)?
“It’s still such a nascent category,” says Clem. “High Noon is really the only model out there as a spirits-based, canned RTD that has scaled. And so that’s really the model we have when we look out there. I think they’re in their sixth or seventh year. Surfside is now in its third year. So when you look at, ‘how can this thing scale?’ That’s the best model we have. And that’s what we kind of base our trajectory off of.”
There are still lots of levers to pull, including their new green tea extensions for Q1 (including a variety 8-pack, single flavor 4-packs, and a new 700 ML single can, with flavors like Mango Green Tea + Vodka, Peach Green Tea+ Vodka and Half & Half Green Tea and Vodka).
Clem thinks the green tea play is “largely incremental.”
“I think there’s a green tea drinker that is not necessarily a tea or lemonade drinker, so we’re hoping to bring more people into the category,” he said. And he points out that there are relatively few alcoholic green tea brands out there (the most notable being AriZona’s). “So we’re going to have the only spirits based one.”
But they also have new larger packs coming to market, which could be a game changer.
LARGER SINGLES COMING DOWN THE PIKE. Surfside does have a 24. oz. can (700 ML) coming to market this year, but it has a resealable top, per law. The just-revised TTB standards of fill promise to change that.
“Getting that resealable end has been a huge barrier for us,” says Clem. “I mean, we’re getting into it. We’ve got the plans to do it this year.” But with the new standards of fill, they will evaluate alternatives.
The resealable top “adds a ton of supply chain complexity, a ton of lead time. It’s expensive. There’s only certain plants that can run it. So even if we just stick with the 24 oz. with a conventional end, it’s going to make life a lot easier and make us a lot more nimble.
Moreover, the new standards of fill open up all sorts of new singles possibilities, says Clem, including a 16 and 19.2 oz. format (roughly). “So that would give us all the major options in the playbook there, and we’ll certainly evaluate those.”
NEW “VALUE PROPOSITION” PACK SIZES? On the other end of things, they’re looking at value pack plays too, perhaps even beyond the 4- and 8-pack plays.
In more developed markets, they’re finding that such packs are just “not a lot.”
“I think there’s some opportunity there to offer some more pack sizes that are a better value proposition and make more sense …. I mean, I see people with these four packs falling all over them. They’re obviously looking to buy more than that.”
“SHOT OUT OF A CANNON.” And speaking of those developed markets, Surfside is still planning for robust growth in those places this year, too.
“We’re sort of projecting 50% growth in core markets, but certainly as you get farther away from our core, it’s a lot of white space,” Clem said.
As for their distributor footprint, “there’s a lot of great partners we have across the country,” he said, though they’ve made some small changes, like having moved to the Bud network in Wisconsin.
“In terms of our major partners, we’re thrilled, and everybody’s excited. We just got done with ABP season. People are ‘shot out of a cannon,’ we’re ready to go get it.”