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Can a Margarita in a Pouch Weather Bud's Margarita in a Can?

 
The New Orleans maker of Cordina Mar-GO-rita enjoyed a startup
fairy tale. Then Anheuser-Busch launched Bud Light Lime
Lime-A-Rita

By Anita Hamilton
     June 5 (Bloomberg BusinessWeek) -- The infamous
alcohol-fueled slushies sold at open-air bars on Bourbon Street
in New Orleans have led to countless brain freezes. For
fourth-generation locals Antonio and Sal LaMartina, they led to a
business: Big Easy Blends. The brothers are trying to bring a
taste of the city’s night life to homes around the country with a
line of frozen drinks in squeezable pouches they launched in
2009. Dubbed Cordina, a mashup of their last name and the last
name of their co-founder and chief financial officer, Craig
Cordes, the bestseller of the brand’s five flavors is the lime
Mar-GO-rita, which is 6 percent alcohol by volume. “It’s like
Capri Sun for adults,” says Sal, describing the drinks’ fruity
flavors and flexible packaging.
     The next few years read like a startup fairy tale. The
cocktails appealed to women in their 20s and 30s, accounting for
most of the $4.6 million in revenue in 2011, according to Cordes,
and earning the brand the nickname “Mommy Juice Box.” After
signing a deal with Walgreen for distribution in its 4,800 stores
with liquor licenses in January, Big Easy increased headcount
from 38 to 126 employees, funded in part by a $1.5 million
private investment. Next, it landed a deal for 1,000 Food Lion
stores nationwide and some 500 Wal-Mart locations in eight
states, including California, Florida, and New York, says Cordes.
He expects this year’s revenue to top $27 million.
     Here’s where the fairy tale gets its tension: In April,
Anheuser-Busch launched Bud Light Lime Lime-A-Rita, a
margarita-flavored beer-based cocktail with 8 percent alcohol by
volume. In its first full week of sales that month, Lime-A-Rita
zoomed to the No. 1 spot among premixed cocktails, according to
research firm SymphonyIRI. “Lime-A-Rita will by nature compete
with the premixed cocktails,” says Paul Chibe, vice president of
U.S. marketing for Anheuser-Busch, who says he hadn’t heard of
Cordina Mar-GO-rita before launching his brand. “Lime-A-Rita is a
unique product with a very different name.”
     It’s no coincidence Budweiser is dipping its toes into the
premixed cocktail market now. Overall beer sales are nearly flat,
and Bud Light Lime, which had a successful launch in 2008,
slumped last year as its novelty factor wore off. Beverage giants
have a tradition of barreling into successful, growing niches
pioneered by smaller brands: Miller Coors’ Blue Moon label, which
launched in 1995 to compete with craft beers, is now a
bestseller. Coca-Cola bought Glaceau’s Vitaminwater in 2007 for
$4.2 billion just as the energy drink market was taking off.
Cordina’s Cordes concedes that Lime-A-Rita will cut into
Mar-GO-rita sales. “They’re Bud Light. They can put it
everywhere,” he says.
     Premixed drinks are one of the fastest-growing parts of the
$150 billion U.S. alcohol market, with nearly 500 different
products available today, according to Nielsen, though big brands
such as Smirnoff Ice and Mike’s Hard Lemonade dominate.
     That’s another reason Big Easy’s founders are doing their
best to differentiate their label. While many premixed cocktails
are malt beverages (which use a malting process as opposed to
fermentation or distillation), Cordina uses flavorless wine made
from fermented orange juice, in part because there is less
competition from powerhouse brands in the wine-based cocktail
market. Switching from the trendier but pricier agave wine it
once imported from Mexico helped the company lower its retail
price from about $15 to $8. “The turning point was last year,”
says Cordes, who credits the cost reduction with boosting sales
and making the company profitable.
     The independent brand hasn’t captured much beverage-industry
trade press, which tends to ignore all but the bestselling
premixed products, but its three recent distribution deals will
obviously improve its reach with consumers. “Cordina’s product
tastes better [than its direct competitors], and I think the
packaging is better,” says Food Lion’s wine, liquor, and cocktail
manager Jimmy Faller, who pushed the button on Cordina last
month, just in time for summer barbecues and beach parties. “It’s
something that is easy and convenient for consumers. That’s what
the difference is—these guys have found a niche.”

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