The Supply Side: Scarlet Letter Beverage produces seltzer for Sam’s Club

Jesse Core, founder of Springdale-based Scarlet Letter Beverage, formerly Core Brewing & Distilling Co., said the hard seltzer market continues to take share from craft beer. It’s part of the reason he’s now selling a seltzer brand through Sam’s Club.

When he started Core Brewing in 2010, which was one of the first craft breweries to open in Arkansas, he was passionate about craft beer. Based on changes in consumer preferences and changing market dynamics, Core transitioned in 2019 away from craft beer to making hard seltzer, which has since become the company’s home run swing.

“Core Brewing and now Scarlet Letter has the home of about a million mistakes, but we learned a lot along the way,” Core said. “We continue to evolve with grit and resilience brewing alternatives to beer because that’s where the market is going.”

Scarlet Letter hard seltzer was meant to be a one-time batch. But its popularity grew, and the brand picked up steam during the 2020 pandemic with sales tripling through that summer. He said the brand name came as he and the marketing and interns director were tossing around ideas for their seltzer when someone said, “We are a brewer, and we’re cheating on beer.” He said they joked they would have to wear a Scarlet Letter on their chest. He said the brand name was edgy and naughty, but it resonated.

“Every time someone drinks a Scarlet Letter hard seltzer, they are cheating on craft beer,” Core said.

By 2022, Scarlet Letter had broken every previous Core sales record due to regional growth. Core invested in a $3 million canning line that allowed the company to ramp up production. In 2023, he partnered with Sam’s Club to create a Member’s Mark Spiked Seltzer. That gave the company national exposure in 20 states.

“Our sales revenue doubled in 2023 as demand for the product continued to grow. We saw 30% growth in 2024 and expect the same for 2025,” Core said.

He said the deal with Sam’s Club came about through his decade-long relationship with Walmart. First, he sold Core craft beer to Walmart in 2015 and then brewed for Walmart in their Black is Beautiful stout beer campaign in early 2021 in the wake of the George Floyd murder. Core supplied Black is Beautiful beer in five states, and some of the proceeds funded social justice causes through Walmart in 2021.

“I invited Sam’s Club to see our plant in Springdale and the upgrades we had made to create our Scarlet Letter hard seltzer. They were looking at a malt beverage for the Member’s Mark brand; they had never done one before. We worked with them until we came up with a formula they really liked. The 24-packs of spiked seltzer started selling in Sam’s Clubs in 2023 and catapulted our business,” he said.

Based on booming seltzer sales, Core said Sam’s Club challenged him to make a hard iced tea, which they collaborated on all last year. That product is set to hit Sam’s Clubs nationwide in a few months.

Core said the investment in the canning line allowed the company to ramp up capacity as the system turns out 250 cans per minute, or 1,600 cases daily. He said the Member’s Mark Spiked Selzer is branded separately, but the liquid inside is the same Scarlet Letter recipes — Raspberry Hibiscus, Cucumber Lime and Passion Fruit & Lime. The new hard tea flavors under the Member’s Mark brand will also be sold in 24-can packs that have assorted flavors of lemon, peach and raspberry.

Core said the company is also looking to play in the non-alcoholic beer space that continues to gain momentum among changing consumer preferences. He is also teaching at the University of Arkansas as an adjunct professor in the entrepreneurship program at the Sam M. Walton College of Business. Core said the teaching came about during seven years with the UA to create a curriculum for a craft brewing certification they now offer.

“We toured 34 breweries together, and I became close to Dr. Jason Ridge, department chair of strategy, entrepreneurship and venture innovation at the UA. He approached me about teaching a class each semester on entrepreneurship. I have my doctorate, but I am not an academic, I am a business owner,” Core said. “I love working with these young minds and think it’s great how the UA will bring in business professionals outside the traditional education realm to work with students. It brings another perspective.”

He said one principle he always teaches is that entrepreneurs have to stay in touch with the markets in which they’re innovating because the world is constantly changing. He said 15 years ago he could have never dreamed that hard seltzer would take share from craft beer.

“Because we listened to the market and innovated early, that put us in a good position to be a first mover regionally, and it’s paid off,” Core said. “I am proud of what we have accomplished providing 20 full-time positions and 10 part-time. I have little turnover because we remain passionate about our beverages, whatever formulation they take,” Core said.

Brewers Association CEO Bart Watson said in late 2024 that craft beer continues to go through a painful period of rationalization as demand growth has slowed and retailers and distributors look to simplify their offerings or add options for flavor and variety outside of the craft category.

Last year the Brewers Association reported craft beer production declined more than 2% by mid-year with sales and production trailing further in the back half of 2024. More craft breweries closed in 2024 than opened.

“As the craft beer landscape evolves, the industry is poised for another challenging year in 2025, with additional uncertainty, potential tariffs and rising costs, retailers and distributors looking to simplify offerings, and potential new dietary guidelines for beverage alcohol. Market pressures will likely lead to continued consolidation and alliances to cut costs and utilize excess capacity,” Watson said.

He said if brewers were going to grow in 2025, they must adapt and find ways to differentiate their brands against the competition.

Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics, and is sponsored by HRG.