When it comes to entrepreneurial companies, it's the category disruptors like AirBnB and Uber who tend to get the bulk of the limelight. However, for long-term sustainable growth, I want to encourage you to curb your obsession with industry disruption and instead focus on the health and vitality of your company's culture.

When your category is generally flat or down, would you agree that it would be unreasonable to expect double-digit growth? If you then added in mass-market competitors that are many times your size and determined to spend many multiples of your marketing budget, do you still think you can deliver double digit growth?

This is precisely the environment that Mike's Hard Lemonade has found itself in over the past 5 years and yet their renewed focus on their culture (along with a few other success formulas this article will highlight) has allowed them to deliver impressive growth - 10% in 2016 and 13% year to date - despite some extremely challenging obstacles.

A Shining Example of Why Your Corporate Culture Is Everything

This week I had the opportunity to sit down with Phil Rosse (President) and Sanjiv Gajiwala (VP, Marketing) at Mike's Hard Lemonade and hear their impressive growth story.

Mike's Hard Lemonade entered the US in 1999 with limited competition in the Flavored Malt Beverage (FMB) space. This story really begins in 2012 when both Anheuser Busch and Miller decided to launch their own FMB products. All of a sudden, Mike's Hard Lemonade went from having 80% share of voice to 8% (in measured media dollars).

It's times like these when your company's culture is tested. It's relatively easy to point to a strong corporate culture when you're growing fast and are the leader in your category. It's when the 800-pound gorillas decide to enter your space that your culture is truly tested.

If you've read Bo Burlingham's book, Small Giants, then you understand the power of privately held companies who chose to be great rather than big. The culture of Mike's Hard Lemonade is a powerful example of how a smaller company with 250 employees maintains its greatness when competing against two global behemoths with a combined employee count in the hundreds of thousands.

Culture as Disruptor: The Double Promise

"I believe culture is a disruptor," explained Phil Rosse, President of Mike's Hard Lemonade. "We believe in having fun while winning. We have made a double promise: to be the best place to work in our industry while delivering double digit growth annually."

Since 2009, Mike's Hard Lemonade has doubled in size without a single acquisition. Mr. Rosse attributes this sustained growth to the 250-person team who all hold each other accountable.

"I was talking to a former employee who ended up taking a senior position at one of our larger competitors who told me just how amazed he was at all of our systems and process for a company of our size," said Mr. Rosss. "Now that he's at this much larger organization, he really appreciates the operational strength combined with the nimble nature of our team. Our team works with 450 distributors and spends quality time with each of them rather than spending too much time inside of conference rooms and in front of spreadsheets."

With Its Amazing Culture, Mike's Hard Lemonade Has Developed Raving Fans

When you can't outspend your competitors, it's critical that you empower your customers to become your vocal advocates. In 2012, Mike's Hard Lemonade decided to trade in its television media budget for a highly focused digital drive to retail strategy that has paid off handsomely.

"Instead of continuing to focus on building awareness of our brand through our television ads, we decided to focus even more on our million Facebook followers," said Sanjiv Gajiwala Vice President of Marketing at Mike's Hard Lemonade. "In order to continue our growth, we needed to drive higher levels of engagement with our million fans on Facebook rather than trying to reach everyone. And this strategy has paid off. We have five times the shares, likes and comments of our larger competitors."

And while higher levels of engagement are a leading indicator of growth, I wanted to better understand how Mike's Hard Lemonade is tracking the impact of its social media efforts at retail.

"Through our partnership with Oracle, we are able to directly track the impact of our social media efforts - including Facebook, Instagram and Snap Chat - to loyalty and credit card transaction data," Mr. Gajiwala said. "We also deliver a 35% conversion rate on our in-store sampling efforts - which is about double the industry average."

Having a Superior Product with Higher Margins Really Helps

"When we were growing up," says Mr. Rosse, "it was about fitting in. In order not to stick out, you would order the beer that everyone else was drinking. But with the wineification of the industry, Millennials prioritize flavor over conformity."

Beyond the culture and marketing muscle, it is the flavor profile of Mike's Hard Lemonade that is truly impressive. One of the largest investments that Mike's Hard Lemonade made (i.e. to the tune of millions of dollars) was perfecting the neutral malt base. In laymen's terms, this means they worked like hell to remove all of the impurities from the alcohol that spikes an otherwise natural carbonated juice flavor.

To illustrate just how pure we're talking, I encourage you to check out their latest product that is sure to fuel their next level of double digit growth: White Claw Hard Seltzer. That's right. Their pure malt base is so pure, that they've been able to package it as a spiked seltzer - similar to the extremely popular (and low calorie) vodka soda that so many of the health conscious are ordering today.

"We actually launched this product earlier this year using in-gym advertising," Mr. Gajiwala said. "With a growing health focus and gym memberships continuing to rise, we saw a perfect opportunity to launch a spiked seltzer product."

With a better product, you can also charge more. That is, because of Mike's Hard Lemonade superior taste and flavor profiles, they are able to deliver a roughly 50% higher margin on their products to the absolute delight of their 450 distributors. Despite the increased competition, these higher margins have continued to endear Mike's Hard Lemonade to their retailers and distributors alike. With a superior culture, better tasting products and more profit to go around, is it any wonder Mike's Hard Lemonade is the fastest growing beer company that doesn't sell any beer?

Published on: Jun 13, 2017
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