RED BEER STARTS FAST; POTENTIAL STILL UNCLEAR

RICHARD TURCSIK

Sales of the new crop of red beers are off to a brisk start in supermarkets across the country. But retailers so far appear to be divided about the whether consumer reception of the crimson brews will amount to the next beer craze.

The segment has ballooned over the last several months, with both large national manufacturers as well as regional and local microbreweries now marketing items.

Red beers' trademark bright crimson color is obtained by using specially roasted barley malts in the brewing process. They are more often milder in flavor -- but with a spicy character that is more "drinkable" -- than standard brews, retailers said.

In interviews with SN, some buyers and merchandisers said the red beer rollouts stand a good chance of rivaling the market waves caused by ice beers this past summer. Others, however, said the reds may turn out to be more of a flash in the pan, as dry beers did.

Bob Jennings, buyer/merchandising manager for the beverage department at Raley's, West Sacramento, Calif., was among the optimistic observers. "The red beers are huge. I've never seen such a huge trend," he said.

Raley's stocks Henry Weinhard Red Boar, which quickly has become a "major factor" and one of Raley's best-selling stockkeeping units of specialty beers, along with Leinenkugel's Red Lager and Pete's Wicked Red Ale.

"Red beer can very possibly be the next trend in beer. There are more and more breweries coming out with line extensions of the red, and they appear to be very successful," Jennings said.

Other retailers, while praising the performance of the new entries so far, were not as optimistic about the staying power of red beers.

"We are stocking Red Wolf from [Anheuser-Busch] and Red Dog from Miller," said Walt Sumner, wine/beer manager at Harris Teeter, Charlotte, N.C. "They are both doing very good."

He added, however, that he would not characterize red beer as a hot trend. "It is something that will run its course. These beers are knockoffs of Killians, and while they are good lagers, I don't think they will be anywhere near the ice category," Sumner said, referring to Killians Red, imported through Coors Brewing Co., Golden, Colo., and the seminal beer in the segment.

"I don't think red beer will be around by the end of next year," said Dick Salmon, senior vice president at Melmarkets Inc., Garden City, N.Y.

"These red beers come back every so often, and are portrayed as a new idea, but they are not. The tonnage is not going to be there. It is a niche market, a very, very niche market. The 'King of Beers' is still Bud," Salmon said.

Andrew Conway, a securities analyst who covers the beer industry for Salomon Bros., New York, said reds are a spark in the larger specialty beer explosion.

"The red beers represent another growing niche in the U.S. beer market," he said. "It is a niche that looks at higher-end, quality-type microbrews, with a flavor profile of red. They also present some incremental stronger margins to some of the brewers."

Industry observers said larger national suppliers are delving into the segment in an attempt to make sure they are covered as consumer tastes continue to become more experimental and fragmented.

"Red beers attract a different drinker than the core, flagship brand drinker. But in certain parts of the country, we are seeing trends by the consumer away from the flagship brands to the more specialized types of brews. The logic of the big brewers is that as that happens, they hope it is their own brand that people are switching to," said Conway.

"When it comes to beer, people are not consuming as much, but they are buying better. They are more choosy, they want to try more things and they are willing to pay a little bit more," said Lewis Santoro, vice president of liquor operations at Hughes Family Markets, Irwindale, Calif.

Although the imported Killians is the most visible and longest lasting red beer so far, many more domestic brewers have jumped into the fray.

Last month, for example, Anheuser-Busch, St. Louis, introduced Red Wolf Lager, the first beer introduced by the company's Specialty Brewing Group. The beer debuted in Florida, and distribution was expected to spread throughout the Eastern Seaboard and as far west as Tennessee before the month was out. This week, the division is introducing a second red beer, Elk Mountain Red Lager, across the nation.

Meanwhile, Miller Brewing Co., Milwaukee, continues to expand the distribution of its Leinenkugel's Red Lager subsidiary, most recently to several major markets, including New York City. And Labatt Importers, Darien, Conn., has introduced La Rossa, a red beer imported from Italy's Moretti brewery.

Heineken and G. Heileman also have red products on tap, retailers said.

"Regarding retailer reception of Red Wolf Lager, we can't make it fast enough," Mike Lenzen, an Anheuser-Busch spokesman, told SN. "Both our Jacksonville, Fla., and Baldwinsville, N.Y., breweries are going at full steam. It is doing very, very well."

Retailers named Red Dog, a new entry from the Plank Road Brewery subsidiary of Miller, as a noteworthy item in the red beer category, even though Miller sources told SN that Red Dog is not intended as an entry into the red beer segment, but rather as a smooth-tasting premium beer designed to compete against Budweiser.

Harris Teeter's Sumner said that while he carries Red Wolf and Red Dog, "it seems like different kinds of consumers are picking them up. Red Wolf is more upscale, and more akin to Samuel Adams. Red Dog, because of the packaging and the way it has been merchandised and marketed by Miller, is going after the traditional domestic beer segment. That is how it is breaking out among our consumers."

Lisa Sykes, director of public relations at Homeland Stores, Oklahoma City, said Red Dog is the single "red beer" the chain carries so far. "We have only had the Red Dog product since the second week of October. Right now it is selling very well, because there is a lot of awareness and it is in the trial phase," she said.

"As far as the numbers go, our Miller representative in the Tulsa area told us they sold their 60-day allotment in the first week and a half, and we're the largest customer in Oklahoma," Sykes said.

Fiesta Mart's Sicola said Red Dog was the only "red" beer to be offered in his market to date, and that it was expected to hit the store shelves last week.

Sicola speculated that the segment's appeal will simply not be in sync with the beer preferences of his specific clientele.

"I don't see my primary consumers, the general Hispanic population, jumping on red beer," said Oscar Sicola, liquor buyer at Fiesta Mart, Houston. "I think they will stick with their traditional amber-colored beers. I think the red beers will attract the more yuppie-type consumer, 21 to 30 years old, college grad, Anglo drinker."

Conway said that while there is definitely a place in the market for red beers, he doubts if they will ever approach the volume of 8 million to 10 million barrels projected for ice beer.