'MALTERNATIVES' TO BEER

BARBARA MURRAY

The biggest development in the beer category this year is the proliferation of "malternatives," or malt-based drinks packaged to resemble spirits, said Gary Hemphill, senior vice president of information services, Beverage Marketing Corp., New York, a research and consulting firm.

Smirnoff Ice, introduced in January 2001, was extremely successful last year, Hemphill and others said, accounting for much, if not most, of the 133.9% increase in case sales enjoyed by Guinness-Bass Import Co., Stamford, Conn., as reported by Information Resources Inc., Chicago, for the year ended Feb. 24.

Anheuser-Busch, St. Louis, is selling Bacardi Silver, a rum-flavored brew. Coors, Golden, Colo., which invented the original citrus-flavored Zima in 1993, is preparing to launch Vibe, a fruit-infused malt beverage, in eight markets on May 1, with a national rollout planned by year's end.

But Miller Brewing Co., Milwaukee, has been the most aggressive in terms of the sheer number of products.

So far this year, Miller Brewing has launched Skyy Blue, created as a joint venture with Campari's Skyy Spirits, and has three more flavored malts due out this summer, in partnerships with Allied Domecq: Stolichnaya Citrona, margarita-flavored Sauza Diablo and, later on, Jack Daniels. "It's going to be a very crowded malternative market this year, and we expect a lot of promotional spending to go behind that," Hemphill told SN. Beer marketers expect that 60% of the sales in the flavored malt-beer category will be purchased by consumers aged 21 to 27, according to a beer buyer for a big East Coast chain. All three of the major brewing companies are planning to spend more than $350 million combined in marketing support on the malt brews, he said. There could be as many as 12 brands by summer's end.

Stocked adjacent to beer, the new segment goes with hard ciders and hard lemonade, many of which have European roots.

"We have to watch that 'under-21,' too," the source elaborated. "When the wine coolers came out in 2-liter bottles, they looked like soda, and we wouldn't even carry them because the cashiers might not have realized they were alcohol drinks.

"It's hard to tell for us right now, but we think they are not going to cannibalize the beer category. They are bringing in some new people. I think there could be a little hit on the hard ciders and the slow-selling coolers because, with so many of these, something has to go."

Malt beverages, while different from beer, are similar from a consumer perspective. They do not contain spirits, and they do not necessarily have more alcohol. Zima, which launched the category, contains 4.8% alcohol per volume, while Coors' new Vibe will be 5%, like most of them.

Previous to this were the lemon brews, the hard lemonades. "This is a whole new group of products that have all tied in with spirits manufacturers' names and used that as marketing leverage and in flavoring ingredients," Hemphill said. They are controversial to some degree because of this, since spirits manufacturers are not permitted to advertise on television. By partnering with brewers, and keeping their packaging similar to those of the brands' spirits, they get a double bang from the TV ads for the malt beverages.