The malt beverage shop

A wide array of flavored malt beverages and related products, largely targeting women and Millennials, are bringing coolness and hip to the supermarket beer aisle.

What is red hot but sells best cold? Is light and fruity but packs a punch? Is equally popular in cans and bottles? Appeals mainly to women but men like it too? Is growing in double-digits in a stagnant economy? And—most important—is drawing new shoppers to the alcoholic beverage aisle?

The answer, of course, is flavored malt beverages and related products.

“Flavored malt beverage (FMB) volume was up a lofty 36% in 2013,” says Brian Sudano, managing partner, at Beverage Marketing Corp., a New York-based management consulting firm and research company to the beverage industry. “Innovation within FMB’s is driving nearly double-digit volume growth this year. MillerCoors with Red’s has been joined by flavored craft beer and complemented by more cocktail combinations, which are driving the segment,” he says.

According to industry observers, FMBs have been attracting new consumers to the alcoholic beverage aisle.     

“The flavored malt beverages are clearly capitalizing on the Bartles & James-ish type drinks coming back again, with lower alcohol content and a little sweeter for the female drinker,” says Kara Nielsen, culinary director, at Sterling-Rice Group, a brand-building firm specializing in consumer insights, based in Boulder, Colo.

“With the introduction of flavors we are seeing that we are bringing a lot of new users into the category,” says Malini Patel, marketing director of economy brands, at MillerCoors, the Chicago-based brewer of Steel Reserve and Steel Reserve Alloy Series. “Not only are we sourcing from outside of beer, I think 45% of our volume is coming from wine and spirits. We are also seeing that it is incremental to the Steel Reserve franchise.”   

Observers say that consumers are demanding flavor like never before. It is estimated that in the last 12 months the FMB category has grown by at least 16%. According to Kevin Brady, director of brand commercialization, at Mike’s Hard Lemonade Co., based in Chicago, the Mike’s Hard Lemonade line has carved out a unique niche for itself.

“We just feel that our products are superior in quality,” he says. “We have proprietary neutral malt base technology that makes it so our FMBs taste very, very clean and you taste nothing but the flavor.”

Mike’s has recently expanded its portfolio to include the Mike’s Harder line and its Collectibles series. “We like to say Harder is bolder and takes flavor to the next level,” Brady says. “It is stronger than our Original 5% ABV (alcohol by volume) with 8% ABV but just as refreshing. With Harder our primary target is Millennial males who are sharp-witted and unconventional. They are really looking for brands that reflect their passion for things that are harder and bolder. We have given them the ability to have a role in the brand’s development with the Collectibles series by having consumers design cans and choose flavors.”

Mike’s Harder’s latest flavor is the seasonal Apple Firebomb, a combination of crisp apple ale and red hot cinnamon. The cans were designed by consumers and a second series of cans designed by consumers has already been chosen for the new Mike’s Harder DragonFruit flavor, launching in February. Design submissions for Jamaican Lemonade, launching in June 2015, are being accepted at www.Zooppa.com.   

Seasonal flavors are also being rolled out at Anheuser-Busch, which is bringing back its Cran-Brr-Rita for the winter season. Ritas are margarita-flavored alcoholic beverages that offer a twist of Bud Light Lime.

“We saw incredible success with last year’s introduction of seasonal Cran-Brr-Rita, so much so that we extended the availability of the product longer than originally planned in response to the high consumer demand,” says Mallika Monteiro, director of marketing for Bud Light Extensions, at St. Louis-based Anheuser-Busch.

According to Anheuser-Busch officials, the company’s flagship Bud Light Lime Rita was named a 2014 Breakthrough Innovation winner by Nielsen, and the Ritas line is the market leader, comprising more than 35% of the FMB category, with the permanent core flavors—Lime-A-Rita, Straw-Ber-Rita, Mang-O-Rita and Raz-Ber-Rita—the top four FMB brands. 

“We continue to extend the Bud Light Lime brand into the popular margarita space with each added Ritas flavor and variant,” Monteiro says. “We’re open to exploring new ideas and new flavors for all of our brands. If our research identifies a new flavor that complements and enhances our portfolio, we will pursue it.”

According to Monteiro, Bud Light Lime Ritas target both men and women. “Ritas were created to meet consumer demand for variety, sweeter drinks and convenient cocktail solutions,” she says. “They also allowed the Bud Light Lime brand to extend into the popular margarita space.”

Heineken is also a major player in the margarita FMB category with its Dos Equis Dos-a-Rita.

“Dos-a-Rita is the first imported, authentically Mexican ready-to-serve Lager Margarita available in the U.S.,” says Gwendolyn Boyce, brand director, Dos Equis, at Heineken USA, based in White Plains, N.Y. “The recipe, modeled after the popular cocktail originally conceived on-premise in Texas, is a blend of two traditional Mexican favorites—Dos Equis Lager and classic margarita flavor—and sweetened with 100% premium agave nectar.”

Packaged in 24-ounce single-serve cans and 12-pack 8-ounce cans, Dos-a-Rita appeals to 21 - 34 year-old consumers who are open to experimentation and new experiences beyond regular beer, Boyce says. “They seek premium and authentic products and brands that complement their social and adventurous lifestyles. Dos-a-Rita extends our reach to a broader audience including women, flavor seekers and non-beer drinkers,” she says.

Heineken is planning nationwide distribution of Dos-a-Rita in 2015. “To support this rollout, we will activate 12 weeks of national television and local radio advertising, heavy sampling support in key markets and a range of engaging, custom-designed point-of-sale elements,” Boyce says.

Budget BLK Berry

A key selling point of Steel Reserve Alloy Series is that its suggested retail price is more moderate than other leading brands. The brand launched with a BLK Berry flavor in 2013 and has been expanded to include Spiked Punch. “We see it as an opportunity where the MillerCoors Steel Reserve Alloy Series line is the only opening price point FMB right now,” Patel says. “We saw there was a real big opportunity from our perspective because the FMB category is growing so fast. When you talk to consumers, about one-third say they were interested in FMBs but were not willing to pay the price that the current FMBs were charging.”

Patel says Steel Reserve Alloy Series brings together both good value and strong flavor. “One of the great things with FMBs is that the new flavors help to create new users, thus our line extension with BLK Berry and Spiked Punch,” she says. Steel Reserve Alloy Series is also skewing slightly more female and somewhat younger (25-34 year olds) than the parent Steel Reserve brand.

Unlike some competitors, Steel Reserve Alloy Series has not yet tinkered with a seasonal flavor. “As a lot of different brands are offering flavors seasonal becomes more interesting,” Patel says. “We haven’t played in that space yet, but we have plans for two new permanent flavors debuting in February—Pineapple and Margarita.”

Consumers looking for a gluten-free flavored malt beverage-type product might pick up a six-pack of Spiked Seltzer, a new offering from Boathouse Beverage, based in Norwalk, Conn.  It was introduced this past summer and quickly gained distribution in seven states.

“We are a non-malt beer,” says Nick Shields, brewer/founder. “We are not trying to mimic beer, although we do fall into the beer category. We are sort of a cross-over product into wine and spirits.”

Spiked Seltzer is available in four flavors: Indian River Grapefruit, Valencia Orange, West Indies Lime and Cape Cod Cranberry. “Taking a cue from wine appellations, we are going after the unique flavors of those famous varietals,” Shields says.

That is helping to attract the female customer.

“We are finding that Spiked Seltzer skews women 25-50 and definitely skews to women more than beer does, but we have a good mix because of its versatility,” Shields says. “It can be used as a mixer and we find men like to mix it with vodka and rum.”

Beer for women

Joe Peleg, CEO of Aventura, Fla.-based Friends Fun Wine, says they are carving out a new category in the alcoholic beverage aisle with their low-alcohol wine that retails for $1.99 per 8.4-ounce can.

“This is the beer for women,” says Peleg, “What do women own in the alcohol business? They own nothing. This is their product.” Friends Fun Wine is available in Strawberry Moscato, Peach Moscato, Red Sangria, White Sangria, Rose Moscato, White Moscato, Cabernet Coffee Espresso and Chardonnay Coffee Espresso flavors.

Another unique product is brewing at Small Town Brewery—Not Your Father’s Root Beer, a craft beer that is actually an alcoholic root beer.

“Our root beer has two different types of barley in it, honey, sarsaparilla bark, wintergreen, vanilla beans, two different types of cinnamon, anise and other spices,” says Tom Kovac, founder and owner of Small Town Brewery, in Wauconda, Ill.

Currently available only in Illinois, Kovac says it took him two years to perfect the recipe. It is available in a 10.7% ABV version in 22-ounce bottles and a new 5.9% ABV that launched in November at Jewel and Binny’s Beverage Depot stores, and is sold in six-packs of 12-ounce bottles.

“We produced 96,000 bottles of it and we will see how it is doing and then possibly ramp up production,” Kovac says. “Normally when we bottle our beer and take it to Whole Foods it sells out in about 22 minutes. We are talking 3,800 bottles at a time.”       

Don’t hops—Gruit

The rising price of hops is causing some brewers to look at hops-free beers called gruit that are made from a variety of spices, herbs and other bitter plants that provide flavor balance and aroma to the beer in lieu of hops.

According to Kara Nielsen, culinary director at Sterling-Rice Group, a brand-building firm specializing in consumer insights, based in Boulder, Colo., gruits can be made with mushrooms, sassafras, rosemary, tea, hemp, and even reindeer lichen, that yield intriguing flavors instead of hoppy bitterness.

“For the last several years, brewers have had a fascination with hops,” Nielsen says. “The very hoppy IPAs are pretty bitter with high alcohol content, and gruit is kind of the boomerang effect of that,” she says.

Among the brewers churning out gruits are Fort Collins, Colo.-based New Belgium Brewing Co., which has Gruit made with horehound, bog myrtle, yarrow and elderflowers; Portsmouth, N.H.-based Earth Eagle Brewings with Vinnie Ferale Gruit, brewed with wild grapes, wormwood and sweet gale; and Cambridge Brewing Co. in Cambridge, Mass., that has Heather Ale made with Scottish floor-malted barley, heather and lavender.

Goooal!

In January Heineken is launching a long-term partnership with Major League Soccer (MLS) that will make Heineken the Official Beer of MLS.

“Soccer has been an invaluable platform for the Heineken brand for years, with our position as sponsor of the UEFA Championship League and other top soccer properties around the world,” says Nuno Teles, chief marketing officer at Heineken USA, based in White Plains, N.Y. “Fans in the U.S. and across the globe appreciate the opportunity to enjoy first-class soccer with the highest quality premium beer. With this partnership, we look forward to continuing a lengthy tradition of creating unique experiences for fans everywhere and drive participation and engagement in the sport in a way that has never been done before in the U.S.”

According to Heineken officials, the agreement will see Heineken owning exclusive rights to MLS content and is the latest indicator in the rise of the world’s most popular sport in the U.S. MLS soccer has the third highest average attendance of any U.S. sports league, the highest percentage of Hispanic and Millennial audience of any major U.S. sport and is actively played by 22 million Americans.