James Koch: Thanks. We have, I think, evolved our innovation program. We’re probably making the same or a larger number of bets, but not rolling them out nationally. So what you’re seeing from us is a fairly consistent flow of new products a couple of years of new brands. And — but doing them in test markets and scaling them more cautiously and more slowly and discontinuing things when they don’t work. So that’s the change that we’ve made, that’s on the new brand side. And Dave talked about lots of new innovation within existing brands, which continue to have shoulders that we can build out like with Twisted Tea. Last year, we brought out Twisted Tea Lights. This year, we’re in test markets with Twisted Tea Extreme and the same thing with Truly Unruly.
So we’re approaching line extensions, if you will, with a little more comfort in rolling them out quicker and bigger. And then we won a pipeline of innovations that are new brands, and we’re going to do that more slowly and build on success. I think our model is Twisted Tea, which is obviously a huge brand now for us, but it took 25 years to get there.
Operator: Thank you. Our next question is from Stephen Powers with Deutsche Bank. Please proceed with your question.
Stephen Powers: All right. Hey, thank you, and congrats and welcome from me as well, Diego. I got two questions. One on Twisted and one on Truly. Maybe we’ll start with Twisted. I guess, Dave, you called out some success in building out those more underdeveloped markets. I think you called out California and Texas. You talked about Florida as well in the past. Maybe just give a little bit of an update there in terms of a little bit more detail on what you are seeing in terms of that progress? And any learnings that you’ve recruited best practices? Or any differences either across those markets or nuances versus where the brands are more established for longer?
David Burwick: Okay. Steve, I think both — if you look at — actually take those two states of Texas and California, they are two fastest-growing states right now for the brand. So we kind of went from low developed markets to like — to upper mid developed markets pretty much in the year. And really, it was basic execution. It was driving all the things of things I went through in the opening remarks, it was just driving distribution initially, like starting small format in convenience stores, that’s where the consumer goes. And then building that to a large format, building out our 12-pack distribution, building out our 24-ounce distribution. So a lot of it is really execution in the marketplace. On top of that, we did add some media targeting Latino consumers in both of those markets as well because that’s obviously an important part of both of those markets.
And it just — and it’s moving. So it’s not like — it’s not something very complicated. It’s basically executing the fundamentals of the business, and that’s where it’s been able to get growth there. And yet there are still obviously two large populated states, of course, but there are other geographies that we’re deploying the same tactics and it’s obviously working because the brand has been growing pretty consistently double digits.
Stephen Powers: Yes, that’s perfect. I just wanted to validate that it was more execution and commonality of strategy as opposed to something more nuanced. And then flipping over to Truly. As you called out, the lighter flavors have performed better relative to the total portfolio, which I think is evident. I guess those brands are still trending down, at least in track, as we see it down low teens. So they’re better, but there’s still got a ways to go. I guess any thoughts on how you can kind of bend the trend in those light flavors specifically? And whether you think there’s an element of more media investment there or more kind of promotional sampling strategies? Just anything you can articulate around how you improve that — the trajectory in those light flavors specifically?
David Burwick: Yes, sure. I mean I think it’s just doing more of the same of what we’ve been doing because we’ve been doing it since May or June. And you’re right. I mean, on the three core light flavor variety packs, they are declining, but they’re declining less than the rate of the category. So gaining share is Step 1, growing and outright to step 2. On a single-serve basis, so 24-ounce cans actually were growing. We’re actually growing volume. If you look at those numbers, and of course, we’re gaining share as well and doing that. It’s really been a focus of everything we’ve been doing over the last, whatever, four, five months, which is focusing on our execution and making sure we have more white flavored variety packs on display.
So we went from maybe, call it, 20%, 25% of the display being light flavors to now 40% to 50% of our typical displays being light flavors. It’s been fixing the mix and convenience and making sure that we have single serves of life flavors available. It’s a new ad campaign. We put a lot more weight behind it, as we talked about in the last call. It’s actually spending more money in social and digital that much more than we had done before in [indiscernible] TV and just keep on running the play. The other thing I would say is that one other thing we changed is acknowledgment that the category is still 70-plus percent why we flavored was to change our LTO platform. So we have three LTOs per year. We’re getting much better at executing those, and they’re all Light flavors.
So for example, last summer, we had Red White & True in the marketplace, which was lightly flavored and lapped a year ago what we call pull side, which was a bold flavor. We had 2x the repeat rate on Red and True Last Summer. So 20% repeat rate versus 10%. So this is an example of giving consumers what they want, giving them more lighter flavors. And we think — so the momentum has begun and we have to keep going because we’re obviously — as I mentioned before, we’re not happy unless we’re growing. We’re happy to — we want to gain share and that at least we start we are in that part of the business. So there’s nothing really, I’d say, up our sleeve that we haven’t done that has to be unleashed in order to get there. I think the last thing I’ll add on top of that is, obviously, it’s about half of our portfolio.
