Imagine yourself ankle-deep on a beach. It’s the last day of your vacation, or maybe it’s just a nice afternoon after work. The sun is setting just beyond the surf, and there is salt in your eyebrows. What are you drinking as you take in this scene? Corona? Modelo? Anheuser-Busch InBev (ABI) is hoping it’s a chilly bottle of Kona Brewing Big Wave.
ABI execs Nate Muszczynski and Carrie Shafir gushed about the Big Island-born golden ale in a Dec. 2 issue of Beer Business Daily, saying it’s “the one brand that’s created the most excitement” with their wholesalers. “It’s everywhere,” Muszczynski said. “Consumers truly see it as this easy- drinking brand that can really play with the lagers.”
Prior to Kona, ABI’s last “big bet” was Golden Road Mango Cart, a beer that has grown 309 percent in the past five years. But in that same period, Kona outsold the entire Golden Road portfolio — including Mango Cart and all its line extensions — by 20 percent, despite a seven-fold increase in marketing for the L.A. brewery’s fruited wheat beer. It’s gaudy numbers like these that led ABI to make a second, presumably bigger, bet on the island brand only a year later. Andrew Thomas, director of ABI’s Brewers Collective business, recently called Big Wave’s potential “limitless,” adding that consumers “already think it has an easier drinking characteristic than Corona Premier.”
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Liquid aloha is indeed cascading into the mainstream. Big Wave was the 17th best-selling premium-plus brand of 2022 in major off-premise channels, according to Nielsen data, and sales of the brand in IRI-tracked channels have doubled in the past five years. The success has been rewarded with bigger and bigger investments from ABI. This year, the world’s largest beer company is increasing Kona advertising by 45 percent, and in 2023, Big Wave should cross the 1 million barrel threshold, launching it out of the “craft” sphere and into the realm of lifestyle brands like Corona and Modelo.
But Big Wave’s trajectory is not as straightforward as those mega brands. While ABI has done well to capitalize on the trends of premiumization and aspirational branding, Big Wave’s hyperbolic success has come with lawsuits, nearshoring, and one of beer’s messiest acquisitions. Through it all, does this plucky, Hawaii-born ale have what it takes to do what no other American craft beer has ever done before and replace those ubiquitous Mexican imports in the hands of vacation-minded drinkers?
Big Wave Cresting
Founded on Hawaii’s Big Island in 1994, Kona Brewing Company is the longest-tenured brewery in the 50th state. Big Wave was one of the brewery’s earliest flagships, first introduced in 1995 as Pacific Golden Ale. The beer was emblematic of the brand’s adventurous, easygoing ethos — a crisp and refreshing beach beer that could wash away the heat of the Pacific sun.
Kona expanded into a second location in Oahu in 2003 and a third in Honolulu in 2008. Soon after, the brand began producing a portion of its beer on the mainland via a partnership with the Craft Brew Alliance (CBA). That partnership turned into an acquisition in 2010, when CBA purchased Kona for $13.9 million. At the time, ABI had a minority stake in CBA founding brands Widmer Brothers Brewery and Redhook Brewery. The two massive organizations grew Kona’s distribution footprint at a rapid rate, bringing Big Wave to the continental United States for the first time in 2012. By 2017, Kona sold 5 million cases of liquid aloha, and its newly anointed flagship Big Wave accounted for nearly a third of those sales.
“It was a big beer that was growing really rapidly, and everybody’s always looking for a breakthrough in that lager segment,” says Jim Watson, executive director of Beverages Research at Rabobank and cohost of the Liquid Assets Podcast. “The upside there is so much bigger than for craft beer for other segments, and if you get lightish sessionable beer that has mass appeal and great growth rate, that’s pretty magic.”
In 2019, Kona’s magic capitulated into a disorienting series of business moves. That November, amid dwindling sales for all brands except Kona, CBA announced a pending sale to ABI. Three months later, shareholders voted to approve, but the acquisition was stymied by a lengthy Department of Justice review. Ultimately, ABI had to agree to divest Kona’s Hawaii operations to another company, PV Brewing Partners, in order to pass antitrust standards. ABI would run the brand stateside, and PV would control the three Hawaii locations. All sides agreed, and the takeover went through in September 2020.
Since then, Kona has ballooned in both distribution and popularity. Big Wave is now in 40 percent of U.S. markets and outsells smaller Mexican imports like Victoria and Sol. Because of this, Big Wave has graduated out of ABI’s craft division and into “the core of the machine,” according to Chris Jones, VP of Premium and Super Premium Brands at ABI. It now falls under his purview, along with Stella Artois and Estrella Jalisco, and sits right between Bud Light and Michelob Ultra on ABI’s website.
“Kona has been built as a craft brand — a local Hawaiian jewel — for the last 30 years,” Jones says. “But Big Wave in particular has broken out as the star and is transcending craft with its performance to the point where we see opportunity for this thing to appeal to the masses.”
Shoring Up Expectations
ABI’s craft portfolio now consists of a mixed bag of 20 brands, most of which were acquired in the late 2010s. While Goose Island and 10 Barrel have seen strong sales, others like Breckenridge, Cisco, and Wicked Weed have steadily lost market share. Fellow CBA alumni Widmer and Redhook are evaporating from shelves, declining 50 percent and 43 percent in sales, respectively, during Big Wave’s five-year boom period. And Muszczynski’s comments come only weeks after Cleveland’s Platform Beer Co., acquired by ABI in 2019, posted its lowest sales numbers in years.
Then, there’s Elysian Brewing and Golden Road Brewing. Both pedigreed breweries were acquired by the St. Louis behemoth in 2015, and both have doubled in sales since 2018 behind the strength of a hugely marketable flagship. Today, Space Dust represents 67 percent of Elysian’s sales, and Mango Cart is 55 percent of Golden Road. Big Wave accounted for 55 percent of Kona sales in 2022, and though the Kona family of beers was down 9.19 percent in IRI retail, Big Wave showed marginal gains.
Big Wave’s potential will be both boosted and hampered by its status as a legacy craft beer. On one side, it has the bona fides of being a well-made beer; on the other, it lacks the beer nerd cred of an IPA like Space Dust. Even archetypal crossover craft beers like Shock Top, Blue Moon, and New Belgium Voodoo Ranger, whose sales dwarf all Kona beers combined, succeed on their aesthetic ties to American first-wave craft beer. Big Wave no longer has that cachet. It’s looking to succeed in an arena of super-premium Mexican imports that shot up into global brands without making a pit stop at craft.
“There are examples of craft brands that have transitioned to be more lifestyle-oriented successfully, but not to the scale of our ambitions,” Jones admits. “There’s not an apples-to-apples precedent per se, but we feel the fundamentals are there to set a new benchmark.”
Watson sees the play as a bit of FOMO for ABI. While Constellation Brands has run the table on vacation beer in the United States (with Corona and Modelo), ABI competitors like Land Shark and Estrella Jalisco have not threatened the market. Without any big breweries in Mexico left to acquire and scale, ABI is looking to threaten Constellation’s dominance with something analogous that’s already climbing their roster.
“You have all these Mexican imports that are killing it, and Anheuser-Busch can’t compete in that category,” Watson says. “I mean, they have Mich Ultra, but not something that evokes sunshine, is a little bit foreign, and in that vacation, easy-drinking lager/ale space. Here was this one brand that was bigger than big and already growing double digits.”
Aloha for Sale
If you ask ABI brass, the sustained whirlwind behind Big Wave can be attributed to one thing: its alluring distillation of Hawaiian life.
Drinkers look at a 12-pack of Big Wave and are transported to a postage stamp — from the petroglyph logo to the retro tiki font to the outrigger canoe on the label, bottles of Big Wave scream out with the exotic nostalgia of Trader Vic’s and Ron Jon Surf Shop. Kona’s big bet also includes a re-emphasis on the brand’s Hawaiian identity.
“We’re trying to dial up by leaning into our Hawaiian origin, and in particular what ‘aloha’ represents,” Jones says. “We’re not here to show up like a generic island beer. We’re here to show up like the most aspirational brand from Hawaii.”
But like Trader Vic’s and Ron Jon, Big Wave’s ties to Hawaii are merely superficial at this point. Prior to ABI’s acquisition, Kona paid out a $4.7 million settlement for misleading consumers with the brand’s Hawaiian-made aesthetic, despite the fact that the majority of product was brewed in Oregon, New Hampshire, Tennessee, and Washington. Now, with Kona’s Big Island operations sold off, none of the beer ABI makes has any root in Hawaii beyond its original conception during the Clinton Administration.
Despite the divestiture, ABI has continued to push Big Wave as an uber-Hawaiian artifact. TV spots featuring the Kona “bruddahs” — a pair of quintessentially Hawaiian men who dispense laid back island wisdom — have shown up everywhere from March Madness to the 2022 NFL playoffs. The average drinker can’t be bothered with the sundry details of Kona’s shared custody ownership model. All they know is that there’s some recognizable markings on a bottle and some immaculate “Forgetting Sarah Marshall” vibes. According to Alexander Gates, a BJCP certified beer judge and beer writer based in Honolulu who runs the blog Aloha State Beer, ABI trades on this advantageous bit of consumer confusion.
“Even in Hawaii, at 7-Eleven, there might be 6-pack cans of locally produced cans of Longboard next to 6-pack bottles of Kona mainland beer produced in Oregon or wherever,” Gates says. “I would think that the average consumer wouldn’t understand or know the difference.”
The Mexican imports that ABI wasn’t to compete with have strong Mexican identities. A “hecho en Mexico” ethos is keystone to both brands. Kona may be stepping up to own the Hawaiian lifestyle market, but like Beck’s and Leffe, ABI is grounding the trajectory of its pet brand in something that’s more tradition than truth.
“That’s what the whole idea of [Kona] spinning off Hawaii was for,” says Garrett Marrero, CEO and co-founder of Maui Brewing Company. “It was to have something they could point to that looked authentic so that they could continue to expand that brand vision when nothing could be further from the truth.”
Maui is the largest craft brewery in Hawaii and, in 2021, also began brewing on the mainland for distribution to the lower 48. But unlike Kona, Maui has been extremely forthright with its practices, issuing regular updates about its growth strategy, even through the 2022 acquisition of Modern Times Beer, a move that Marrero said was a way to “pay homage to our Hawaii roots while signaling our stewardship and dedication to the craft beverage movement.” It now sells Modern Times alongside Maui in a group dubbed Craft ‘Ohana.
“It has to do with the authenticity of the story, the real sense of place for the brand,” Marrero says. “Being able to communicate an authentic vision of what Maui Brewing Company is does transcend the island and, in some ways, transports Hawaii across the world.”
While Marrero may disagree with some of Kona’s practices, he does agree that Hawaii is a frontier for lifestyle beers, but Marrero doesn’t see it as an alternative to the languid, celebratory vibe of Mexican imports. It’s a distinct arena, complete with its own challengers. Maui’s total sales might be 2 percent of Big Wave’s, but if all that’s driving Big Wave’s success is an intangible spirit, Maui has a claim it will be staking.
“They’re not going to be alone in that competition,” Marrero says. “We believe Maui Brewing has that very same capability, and we will be bringing the heat.”
Despite all the upfront excitement, Jones is quick to specify that ABI’s plan is a “multi-year journey.” He says they want to be “extremely careful” with the brand and its origins in the Pacific. He and his team aren’t expecting Big Wave to knock off Modelo Negra in 2023, and they acknowledge that Big Wave is still a mostly regional brand with low awareness nationally.
“If you look at the brands that we pride ourselves on, like [Michelob] Ultra, it took five years for that thing to double in size,” Jones says. “During that time, we really decided to invest heavily in it. This was probably seven years ago to where it is now.”
ABI is starting Big Wave’s push in the on-premise, where drinkers are returning to bars and looking to escape. The response it’s seen so far has been encouraging — enough so that the company is investing 45 percent more in marketing and 100 percent more in liquor store sampling.
Bump Williams, co-founder of Bump Williams Consulting, went so far as to call the bet “ballsy.” Watson concurs, though he’s more measured in his analysis. Why wouldn’t ABI try to scale Kona out of the craft sphere? He calls the beer’s unique combination of sessionability, premium pricing, and double-digit growth “pretty magic.”
“There’s no reason to think this couldn’t absolutely work over the long term,” Watson says. “The Hawaii imagery is there, and it’s a legitimately nice beer that’s competing at that super-premium price point.”
Williams, too, sees the potential in the Big Wave brand, especially with ABI’s deep connections to distribution opening up those key on-premise opportunities. To him, it makes sense to focus on core brands rather than another modest line extension or FMB. But the 30-year industry vet has never seen anyone pull it off. Could Big Wave compete with Pacifico Gold? Maybe. But to him, it doesn’t have the makings of a giantkiller.
“It’s a great dream, a great goal to set, but I don’t see it happening,” Williams says. “It’s one of the few craft brands in the top 25 [most selling brands] list that has positive trends, but I don’t see it ever coming close to a Modelo Especial or a Corona Extra.”
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