Issue #106: The Rise Of Hugo

Thank you to Davis Webb at Pourcast AI (verified on-premise price data for Texas) for sharing awesome data and insights for this section!

1 fresh mint sprig. ½ ounce elderflower liqueur (aka St-Germain). Ice. 4 ounces prosecco. Top off with 1 ounce club soda or sparkling water. Mix it all together, and you have got a Hugo Spritz, the spritz that has taken over the world. If you have not had it before, its taste is reminiscent of Welch’s White Grape Juice. I think I had my first one in Summer 2023 or 2024. It is popular for a reason. For brands, however, there is a major lesson here. Dominating on-premise can lead to outsized success. But has it truly surpassed Aperol?

First, let’s dive into the history of St-Germain, the key ingredient in this cocktail and the brand behind the rise of the Hugo Spritz, then we will dive into the strategy and numbers.

Strategically, once Bacardi, an alcohol giant, had the company as part of its portfolio, it was looking for ways to accelerate the product. The Hugo Spritz was already a cocktail, but it lacked the popularity of other mixed drinks. Bacardi needed to turn it from an unbranded drink to one that focused on St-Germain. I have not seen how Bacardi found this cocktail, but when it was already sort of trending, they decided to focus on it. Bacardi made sure to invest in the on-premise market with activations and teaching bartenders. Then, paired that with social content on TikTok and other platforms, you have an unstoppable engine. The tag #HugoSpritz has over 300 million views on TikTok. On-premise plus social media can really drive trial. In 2024, the tagline was “Spritz Up Your Summer” with Sophie Turner, followed by “Sip Into Something Fresher Tasting.” in 2025. For brands, the lesson here is don’t ignore the power of on-premise; it can be your channel for growth whether you are a beverage (alcoholic or non) or not! Too many non-beverage brands are neglecting on-premise and food service (I did see Sourmilk x Van Leeuwan this week though!).

Now that we have discussed the history and strategy, let’s dive into the numbers. Is Hugo Spritz actually taking over Aperol?

So, to conclude, while interest in the cocktail may have caught up to its Aperol counterpart, it does not seem that spending and sales have matched yet. However, for any brand, the Hugo Spritz is an amazing example of how to leverage on-premise/food service to drive demand.

One thought I have had on my mind for a while is that the way VCs invest in early-stage CPG vs Non-CPG is broken. For context, I founded and raised Hillside Ventures, a $1M early-stage VC fund at the University of Connecticut (go Huskies!). Especially in today’s world, where AI has transformed how businesses are built. Let’s explore two (very generalized) scenarios:

Again, to generalize, early-stage CPGs need equity capital earlier than most other types of company, but can switch to debt as they scale. That is exactly what Mid-Day Squares did. In order to scale production to support US expansion in Walmart and Costco, it raised $8M from various parts of the Canadian government. This will lift annual production capacity to $250M. Last year it did $40M, and this year it is on track to do $60M. This example is a perfect instance of a brand leveraging all the capital available. You do not need to raise equity to build factories, instead, you can focus on debt. Plus, I would reckon if they hit certain job creation and other economic development milestones, they'll receive some favorable terms.

Two years ago, Alex Cooper, famous for hosting the Call Her Daddy podcasts, partnered with Nestle to launch Unwell. The idea behind this brand was originally a hydration brand with bold flavors. Over the years, the product mix expanded to hydration sticks, focus drinks, protein beverages, and energy drinks. However, it does not seem that the market was there for the product, as this week it was announced that the brand will be shutting down. There will be one final Halloween batch, and then that is it. Target, the main retailer, will be selling through remaining inventory, then discontinuing the product. Interestingly, this comes right on the back of a $500M raise for the broader parent company. It could be that focus was stretched too thin and the ROI was not here for the beverage.

This week, Target posted some strong results across the board, seeing strong sales and profit lifts. Sales were up 5.3%, due to increased store count, higher transaction values, and other factors. According to Advan Research, Target saw a +6% increase in the amount of time customers spent in the store. Advan also reported that shopper counts are up. All the investments Target is making in improved service levels, lower out-of-stocks, and more emerging brands are starting to pay off. On the emerging brands piece, that has been a fascinating story. Target is now the place for large brands to make their retail launch. Butcherbox has been one of the many brands that has gone this route. It gives Target a real leg up over the competition like Walmart and Kroger, plus it closes gaps in the assortment.

A big week for influencer brands and Marc Lore. This week, Lore sold his stake in the Minnesota Timberwolves, netting a ~$3B profit before taxes and fees. Wonder, the virtual food hall/future of food holding company he founded, announced the acquisition of Salt Hank, continuing its spree of acquiring small unit concepts with large followings. Salt Hank, which bears the name of its food influencer founder, has one location in NYC and serves sandwiches only, most notably its French dip. Starting in the fall, the French dip will be available at the Wonder Upper East Side location. Presumably, based on that success, it will expand to other locations. Financial terms were not disclosed, but I have a hard time seeing how this scales successfully. It will be interesting to follow along nonetheless.

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