Why Ranch Water could ride to Tequila's rescue outside the US - comment - Just Drinks
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Why Ranch Water could ride to Tequila’s rescue outside the US – comment

By Richard Woodard 25 May 2021

Following on from last month's consideration of the recent explosion in spirits RTDs, category commentator Richard Woodard spies a breakthrough opportunity for Tequila, thanks to the arrival of Ranch Water.

Why Ranch Water could ride to Tequila’s rescue outside the US – comment

It gets pretty hot in West Texas, that wedge of the Lone Star State hemmed in by New Mexico to the north, Mexico to the south and the Pecos River to the east. It’s the kind of heat that lends itself to inventiveness when it comes to alcoholic refreshment – that need to balance the kick and the flavour with hydration and refreshment.

In the 1960s, so the (possibly apocryphal) story goes, a rancher in Fort Davis created something called Ranch Water, the inspired bastard child of the Margarita and the Tom Collins, containing Tequila, lime juice, sparkling water and lots of ice. Fuelled by this juice, he is said to have walked all the way to Marathon – impressive, given that it’s about 55 miles, and uphill – in a kind of a reverse tribute to Pheidippides, the messenger who ran from Marathon to Athens to announce the Greek victory over the Persians in 490BC and inspired long-distance runners everywhere. Pheidippides dropped dead on the spot; the rancher was found dozing under a piñon tree.

Whatever the truth of its origins, Ranch Water has remained one of those quirky local drinks most people didn’t have a clue about for the past 50 years and more.

Not anymore.

Ranch Water, it seems, is about to become the ‘Next Big Thing’ in RTDs and hard seltzers. First, we had the launch, in February this year, of the 4.5% abv, 90-calorie Dos Equis Ranch Water hard seltzer from Heineken; a month later, Diageo acquired majority control of Far West Spirits, owner of leading brand Lone River, a 4% abv, 80-calorie hard seltzer with a 50%-plus share of the sector’s US$7.5m retail market, according to IRI figures.

And now, just a couple of weeks ago, we have the news that Anheuser-Busch InBev is investing, via its ZX Ventures incubator division, in Canteen Spirits, a Texan RTD business that includes Cantina Ranch Water on its product roster.

Something is happening here: two brewers desperate to get a bigger slice of the hard seltzer pie, and to expand their activities beyond their beer heartland; one multinational that has explicitly stated the intention to up its RTD game after the category boomed during the COVID-19 lockdowns of 2020.

RTDs and hard seltzers are amorphous categories, with low barriers to entry and a hyper-fast route to market. That makes them incredibly competitive and crowded – finding a point of difference to stand out from the crowd, therefore, is a must. Hard lemonade and iced tea tick that box – Ranch Water does too.

Beyond the obvious seltzer attributes (low-abv, low-cal, light and refreshing), Ranch Water has provenance and can hitch its wagon to the hottest spirits category in the US right now – Tequila. That last point is crucial if the sector is to break out of its Texan/Southern heartland and find mainstream success from coast to coast. Now that Diageo has expanded Lone River’s distribution to 21 more states, we should find out soon enough if it can.

But, here’s another question: if Ranch Water can conquer the US, can it become a global phenomenon? As hard seltzer tentatively expands outside its American home, Ranch Water could join hard lemonade and iced tea as Stateside success stories in search of some international love.

Ranch Water has nothing like the same currency in the US as hard lemonade and iced tea – not yet, anyway – but that’s pretty irrelevant to the drinkers of the UK, Germany or Australia. I’d argue that its provenance and strong identity make it a stronger contender for more widespread adoption than either of the other two.

Ranch Water could perform another very useful role for brand owners as well. Talk up the Tequila connections and you’re suddenly putting the agave spirit in a very different context for European consumers still daunted and dismayed by the shooter/slammer/vicious hangover cliché. That could be a hugely effective recruitment tool for Tequila, allowing the category, in the longer term, to lessen its extreme over-reliance on the US market.

The drinks industry is often guilty of overthinking things, and certainly overcomplicating things for consumers, most of whom – for all the Millennial talk of provenance and authenticity – don’t know or care about the intricacies of how their preferred drink is made, or what’s in it.

Should it live up to its early promise, Ranch Water is a reminder that the best ideas are easy for everyone to understand, and combine a distinctive USP with sheer simplicity: ice-cold, thirst-quenching refreshment on a baking hot day (in West Texas).

Click here for more unaged spirits commentary from Richard Woodard