Hard MTN Dew is transitioning to Boston Beer Company’s beer distributor network and will expand to all 50 states, outgoing Boston Beer CEO Dave Burwick said on Tuesday during the company’s full-year and Q4 earnings report.
The move marks the end of distribution by PepsiCo’s Blue Cloud Distribution, which had been a fissure between Boston Beer and its distributor partners since the brand’s launch.
PepsiCo confirmed the shift in its ready-to-drink alcohol business model, moving to brand licensing and flavoring sales model and away from distribution. The company said this move would help accelerate growth and speed up national distribution of brands such as Hard MTN Dew with Boston Beer and Lipton Hard Iced Tea with FIFCO USA.
PepsiCo also confirmed that Blue Cloud Distribution would transfer the distribution rights of both brands to its partners’ distribution networks “over the coming months as agreements are reached with suppliers and distributors, ensuring continued service to customers.”
“PepsiCo has always been a company that prides itself on innovation – charting new pathways for growth,” Sylvia Dong, PepsiCo SVP of strategy and transformation, said in a statement shared with Brewbound. “In only two years, the Blue Cloud Distribution team stood up a malt alcohol distribution network across 18 states. This network was leveraged to grow two successful brands in Hard MTN Dew and Lipton Hard Iced Tea. We are proud of the Blue Cloud associates who pioneered a new business model in a new space.
“Our commitment has always been to delight consumers at every beverage occasion with an ambition of reaching a national footprint,” she continued. “This means evolving our business model to extend the footprint of these brands, making them available to consumers nationwide.”
The new model for Blue Cloud is similar to that of competitor Coca-Cola’s Red Tree Beverages. Red Tree leadership has continually emphasized that the wholly owned subsidiary has no interest in being a bev-alc distributor.
“One thing I want to be very clear about is that Red Tree will not distribute alcohol in the United States, nor will Coca-Cola,” Red Tree president Jenny Dowdy said last fall. “The creation of Red Tree was really just a way to formalize the way that we operate. It just underscores that we operate as a distinct entity from our non-alc business.”
Coca-Cola’s bev-alc ventures include Topo Chico Hard Seltzer, Simply Spiked, and Peace Hard Tea with Molson Coors; Fresca Mixed with Constellation Brands; Absolut & Sprite with Pernod Ricard; and Jack & Coke with Brown-Forman.
The contentious issue of Hard MTN Dew distribution manifested in Virginia where the company’s existing distributors challenged the appointment of Blue Cloud for Hard MTN Dew.
The Virginia Alcoholic Beverage Control Authority sided with Blue Ridge Beverage and Reyes Beverage Group subsidiary Premium Distributors of Virginia, ruling in late 2023 that Boston Beer was prohibited from appointing any distributor other than Premium and Blue Ridge to distribute Hard MTN Dew in those distributors’ respective sales territories.
The distribution model was also heavily criticized by the National Beer Wholesaler Association (NBWA), which claimed the organization skirted the three-tier system, and opened up the possibility of large soda giants using their existing retailer relationships – and inherent slotting fees – to get better shelf space for bev-alc products.