IRI: 'MALTERNATIVE' SALES REACH $343 MILLION

SARAH MULHOLLAND

SCHAUMBURG, Ill. -- Beverages accounted for three of the five fastest-growing food and beverage categories in 2001, according to a recent study by ACNielsen here.

Prepared alcoholic beverages, which include "malternatives" such as Smirnoff Ice and Mike's Hard Lemonade, topped the list with a volume-growth rate of 33%. Water and drinkable dairy-based products were also represented, witnessing 13% and 12% growth, respectively.

"For several years, beverage companies had been relying primarily on flavor extensions," said Kim Feil, division president of worldwide innovation at Information Resources Inc., Chicago. "Now, we are seeing a lot of true innovation in the beverage category."

According to statistics from IRI, the malternative segment saw sales of $343 million within the food and drug channels for the latest 52-week period ended May 19. The segment has been successful in attracting young adults looking for a new, alcoholic beverage option, Feil said. These products are particularly attractive in the on-premise and immediate consumption channels, she added.

Yet, supermarkets have also seen strong sales in the category. Peter Dudis, director of grocery operations at Big Y Supermarkets, Springfield, Mass., said that Smirnoff Ice and Mike's Hard Lemonade were fast movers during the summer months last year. This summer, a host of new entries will be competing for space, including Bacardi Ice and three collaborative efforts from Miller Brewing and Allied Domecq.

According to Dudis, a relatively cool spring hindered sales of some of the new products, but he expects sales to pick up when the temperature rises.

"These products did very well during peak holiday times. The Fourth of July was a good weekend," Dudis said. "They react very well to display."

This makes sense, given the impulsive nature of the target demographic. According to IRI's Feil, retailers should maximize the category's immediate appeal on a regular basis, not just during the holidays.

"Supermarkets do a good job during holidays. But they should think about the convenience patterns of young adults on a regular basis," she said.

The typical 20-something male is not going to browse the aisles, she said, so make it easy for him. Place these products where they can't be missed, or adjacent to the steaks and tortilla chips. The whole trip is an impulse for many of these customers, she said. According to Feil, successive entries in a new category rarely see the types of numbers of the original. Typically, a second entry can expect to achieve about 25% less volume than the first. However, the malternative segment holds unique promise.

"These brands have a lot of equity and solid distribution support," she explained. "In the beverage category, there's more room at retail for a new item to have its day in the sun."