Boston Beer Bets on Vodka Ade as Alcohol's 'Next Big Thing'

Boston Beer CEO Jim Koch says hard sports drinks have "exploded faster" than hard teas or hard seltzers did, and he's putting his company's money behind the claim. The Sam Adams maker launched Rally Dog Vodka Ade in four states earlier this year and plans a national rollout in 2027, Koch told investors on an earnings call last week.

"Vodka ade, in a year, has basically gone from this little curiosity primarily in New Jersey to the next big thing in people's minds," Koch said.

What is vodka ade?

The category mashes up the flavors of traditional sports drinks — think Gatorade and Powerade — with vodka. The drinks are typically low-calorie and carry the hydrating benefits of the electrolytes found in sports drinks. Whether that's a health claim or a rationalization is left to the drinker.

Who else is chasing the trend?

Boston Beer isn't alone. Other alcohol giants have entered the space by building products in house or buying them outright:

• Constellation Brands, maker of Modelo, acquired SpikedAde for $75 million.
• Stateside Brands, the company behind Surfside, launched Super Lyte earlier this year.
• Mark Anthony Group, owner of White Claw, launched RefreshAde.

Koch predicts "there will be a lot of activity" in the space over the next year, with more competitors likely to throw their hats in the ring. He doesn't expect the nascent category to overtake hard teas or seltzers in popularity. Not yet, anyway.

How does Rally Dog plan to stand out?

Koch points to the brand's unusual name and what he calls "easy-to-understand flavors": Berry Breeze, Tangerine Twist, Lemony Lime and strawberry watermelon. As new entrants pile in, he argues Boston Beer's scale and "track record of innovation" in retail will give it an edge over smaller players.

Retailers are already committing. Koch said major chains have made Rally Dog their "No. 2 or 3 bets in the vodka ade category." That's an early vote of confidence for a brand that barely existed a year ago.

"As we expand, we're focused on building awareness, deepening distributor engagement and establishing a larger retail footprint as we head into next year," Koch said.

Why does this matter for Boston Beer's bottom line?

Like its peers, Boston Beer has pushed into "beyond beer" as beer sales face headwinds. That portfolio is anchored by Twisted Tea, Sun Cruiser, Angry Orchard and Truly Hard Seltzer.

The strategy is working, modestly. Beyond beer volumes grew 1% year to date, while traditional beer volumes declined 3%. The pivot isn't rescuing total revenue yet: third-quarter net revenue came in at $520 million, down 3.2% from last year.

So what does this change for the category? If Koch's read is right, vodka ade becomes the next shelf-space battleground, and Boston Beer gets a head start it hasn't had since Truly rode the seltzer wave. The 2027 national rollout gives competitors two years to crowd the shelf first.