Why Ranch Water Will Be the Drink of the Summer

It’s been called the unofficial drink of West Texas dive bars and house parties. Some describe it as a refreshing mashup of a Tom Collins and a margarita. But any way you mix ranch water—traditionally with some combination of tequila, bubbly water (preferably Topo Chico), fresh lime juice and a splash of simple syrup—it’s on track to become the libation of the summer. Purists will, no doubt, create DIY versions of the cocktail, just as they have been west of the Pecos River in Texas for decades. Legend has it that a rancher in Fort Davis first put the ingredients together in the 1960s, and the no-nonsense mixed drink with the unappetizing name has been quenching thirsts ever since. But beverage giants are now invested in ranch water and other tequila-flavored refreshments, with Anheuser-Busch recently dropping (and promptly selling out) its agave-based seltzer collaboration with Travis Scott called Cacti, Dos Equis debuting Ranch Water Hard Seltzer and Beam Suntory getting into the game with Hornitos Tequila Seltzer. Diageo, meantime, has acquired Lone River Ranch Water from founder and CEO Katie Beal Brown, a former account director at ad agency Anomaly and a fourth-generation West Texan. Macro-trends colliding The growing popularity of ranch water—a low-calorie, low-alcohol-content beverage positioned as a beer alternative and a hard seltzer offshoot—represents the collision of several macro-trends, said Jay Sethi, CMO of Diageo Beer Co. “It’s America’s love affair with tequila meets hard seltzer served in a convenient format,” he said, noting that Diageo’s tequila brands grew by 80% between July 2020 and January 2021. “It shows how hard seltzer is evolving with more interesting flavors.” Lone River, which launched during the pandemic and quickly became a cult favorite and a hot seller, sprang from Brown’s roots in Midland, Texas, where her family settled 100 years ago and still has a working ranch. That genuine piece of Texas history, along with its hands-on founder, appealed to Diageo, which has seen its ready-to-drink business explode during the past year as consumers sipped pre-made cocktails at home during lockdown. The company also liked the simplicity of the beverage and its differentiation from the vodka-inspired seltzers proliferating in the market. “Lone River comes from the soil of West Texas and a modern female entrepreneur,” Sethi said. “It’s unique, and it has a great brand story.” Countering the 'sea of sameness' Brown, who percolated the Lone River concept while at Anomaly and will maintain her CEO role, said she aimed to create a no-frills “badge brand” that would counter “the sea of sameness” she saw in the hard seltzer category, namely “skinny cans with fruity flavors.” If you disassociate ranch water from West Texas, it loses its intrigue. It will be difficult for new entrants to recreate that authenticity.Katie Beal Brown, founder, Lone River Lone River Ranch Water is tequila-inspired, though it doesn’t actually contain hard liquor, which Brown said “makes it more sessionable." Sold in 12-ounce cans, its ingredients include organic agave nectar, key lime juice and carbonated seltzer water. The spicy version has a shot of the state pepper, jalapeño, and a citrus flavor has a dash of the native Rio Red grapefruit. There are other ranch water brands on the market—Shotgun Spiked Seltzer, Ranch Rider Spirits and Epic Western among them—and a number queued up to launch, but Brown calls Lone River “a first mover” that’s not jumping on a bandwagon. “If you disassociate ranch water from West Texas, it loses its intrigue,” she said. “It will be difficult for new entrants to recreate that authenticity, though I welcome those additional competitors because it drives more awareness around the category.” Epic Western Ranch Water Ranch water rising After reaching phenomenon status, hard seltzers may have started to feel somewhat generic, according to Kara Nielsen, director of food and drink for research firm WGSN, and ranch water might grab attention from consumers looking for something new in place of White Claw or Truly. It could be the light beer for a new generation.Kara Nielsen, food and drink researcher Ranch water, generally, has a more muscular positioning—Lone River leans into rodeos, country music and cowboys, for example—while catering to the moderate-drinking wave. “This could appeal to the tequila drinker, maybe the Latino audience, and it fits in with millennial and Gen Z interest in low- and no-alcohol beverages,” she said. “It could be the light beer for a new generation.” Lone River initially launched in Texas and Tennessee, racking up $5.5 million in sales in six months, per NielsenIQ, and expanding distribution to New Mexico, Oklahoma, Florida, Arizona, Colorado, Louisiana and Alabama. In June, the brand will add about a dozen more states, primarily in the South and Midwest. Diageo plans to scale the brand and kick off marketing soon, continuing to tap into the Americana aesthetic that Brown has established. “We’ll stay true to the roots and the lifestyle,” Sethi said. “We think it can reach a mainstream consumer. It’s not niche. Whether you live on a ranch or not, you’ll be able to relate to it.” Beer alternatives: by the numbers • The beverage category that includes ready-to-drink cocktails, hard seltzers and wine-based beverages, has increased dollar sales by nearly 154% in the past year, per NielsenIQ, and is approaching $10 billion in sales. • Hard seltzer, even with sales leveling off, still saw increases of 133%. • There are more than 65 hard seltzer brands in the market now, up from 26 in 2019, dominated by White Claw (from Mark Anthony Brands) and Boston Beer Co.’s Truly with 75% of sales • Hard seltzer will make up more than 15% of the beer and cider market by 2024, per researcher Bernstein • Total U.S. sales of hard seltzer more than doubled from 2018 to 2020 to $4.3 billion.

Product Innovation

Why Ranch Water Will Be the Drink of the Summer

Hard seltzer's West Texas cousin represents multiple colliding trends

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T.L. Stanley

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