So-called “malternatives” first appeared in the beer aisles in the 1980s, when changes in the tax code undermined the market for wine coolers and opened an opportunity for malt-based drinks that could qualify as beer for tax purposes. Critics of these beverages dubbed them “alcopops,” fearing that the carbonated, sweet, affordable drinks were meant as gateway beverages for young drinkers accustomed to sugary sodas. The beverages were assailed for branding approaches that implied a close connection to spirits brands. They were scorned by drinks connoisseurs of all stripes.
They also sold quite well.
The category has been rechristened “Flavored Malt Beverage” (FMB), an accurate description for a beverage based on malt, and flavored with a dizzying range of fruits and spirits essences. Even that designation might be up for debate, though, as a growing number of brands drop barley malt from their recipes. But customers do not care which name industry analysts use. A not-insignificant segment of drinkers enjoy these products.
In 2017, the 3% combined growth of the top ten brands was weaker than the previous year’s 5.7% (Source: The Beverage Information & Insights Group Handbook Advance 2018), but the performance of individual brands was also highly variable.
As with every drinks category, however, the interesting developments start small. While bigger brands dominate, a new trend is catching attention.
Light, Healthy, Not-Sweet
Nick Shields comes from a beer family, founders of Boston-based Haffenreffer Brewery (interestingly, a site now occupied by Boston Beer). In the company’s final years, he worked on one of its last brands, Private Stock, then cast about for a project of his own.
The FMB market he surveyed in 2012 was characterized by innovation and high churn, relying on new flavor launches every season to spark consumer interest. But beneath the fickle surface, he saw big numbers. “When you look at the whole U.S. business, it’s 120 million cases of flavored malt beverages. That’s a big chunk of business, and it’s growing at a steady rate every year.”
Looking at the FMB world, “I saw a sea of sugary, 5% alcohol drinks that was begging for innovation on the wellness side. There really were no low-sugar offerings,” he says.
Combine the interest in wellness with the growth of bottled water—particularly sparkling water—and Shields sensed an opportunity. “You take that low-sugar aspect of the explosion of sparkling waters and add it to a malt beverage of sorts, and you give people a couple of things they’re looking for.”
He spent a year formulating recipes, going through 100 five-gallon batches of test brew. “I was experimenting with the idea of making something as light and crisp as a vodka soda, but also with the tiny, delicate bubbles of champagne. Something that would have a premium level of alcohol,” he explains. “The concept of hard seltzer was novel. One of the first things I did, actually, was Google ‘spiked seltzer,’ and thank God, nothing came back. It was a white space.”
Together with a partner, Dave Holmes, he debuted Spiked Seltzer the following year, the first of the hard seltzers. “By the end of 2015, we were over 200,000 cases, and at that point the big guys started to notice.” The small start-up was approached by larger players interested in purchasing the business.
“The tough game that Mike’s Hard Lemonade played was to say ‘Here’s an offer. If you don’t accept it, here’s what we’re going to come out with,’ which was a direct competitor. That’s White Claw,” he says.
White Claw, introduced in 2016, leads SpikedSeltzer in distribution, but that position may be at risk as a consequence of the latter’s acquisition by Anheuser-Busch INBev in the same year. Shields is pleased with the arrangement.
“Anheuser-Busch provided an interesting and exciting combination of elements: they leave their craft partners a big level of independence, the small companies they own keep their cultures alive, and they also provide massive distribution reach across the country and also expertise in brewing and unparalleled equipment.”
For now, White Claw leads the market. Megan Walker, Brand Experience Manager at Mike’s Hard Lemonade, sees hard seltzers as a major growth sub-category within FMBs. “While hard sodas sales continue to decline, the hard seltzers are growing by 177% in dollar sales compared to a year ago,” she says. “Hard seltzers offer sustainable long-term sales growth by tapping into the macro ‘Better For You’ trend that is permeating throughout the consumer packaged goods industry.”
Mike’s associates three qualities—low carbs/sugar, low calories and lower alcohol content—with what it calls ‘Better For You’ attributes. These motivate the shoppers for hard seltzer, as well as ciders, lighter beers and gluten free beers.
In May, White Claw launched its My Best Life Contest, a search for two top brand ambassadors “that live their best life through an active and balanced lifestyle and thirst for new experiences.” The winners, to be announced in August, will travel and explore new interests. “Whether that’s learning how to surf in San Diego, taking up yoga in the redwoods, canoeing through the Everglades or bungee jumping in the Grand Canyon, White Claw’s My Best Life contest will turn passions into reality,” Walker says.
Boston Beer, producer of the top-selling FMB, has also launched a hard seltzer, Truly Spiked & Sparkling. Casey O’Neill, a member of the company’s Innovation Team, points out the differences between the two lines: “While novelty has been a factor in FMBs, Truly is a little different because it taps into trends that are here to stay. It’s also not technically an FMB because there isn’t any malt in the product. Non-alcoholic sparkling water continues to grow, and health and wellness isn’t a trend, it’s a lifestyle.”
Upcoming promotions for the summer (a peak season for hard seltzers) include sponsorship of the AVP Beach Volleyball tour, with custom POS materials available for all nine AVP tour stops this summer.
Most companies in the hard seltzer arena identified similar elements in their target audience.
First is an emphasis on health, fitness and natural ingredients. Simple ingredients, no artificial sweeteners and pure water source—with the latter being part of a promotion by White Claw that boasts its association with “non-profit water purification organizations around the U.S. to purify local waters,” including Surfrider, Ocean Blue Project, Ozarks Water Watch and Shedd Aquarium.
For all hard seltzers, calories hover around 100 per 12-ounce can. Henry’s Hard Sparkling Water from MillerCoors claims the lowest, with 88 calories per can. Use of sugar or malted rice as a fermentable enhances their appeal as gluten free.
All are fruit-flavored, not cocktail. SpikedSeltzer, in an attempt to avoid the “flavor-of-the-month-club” fixation of FMB manufacturers, concentrates on local fruit for local appeal: cranberry in Massachusetts, prickly pear in Texas, Indian River Grapefruit in Florida. Some are available only regionally; others, nationwide.
Mike’s describes the hard seltzer shopper as younger, more affluent and more educated, with a 50:50 male to female ratio for White Claw. Spiked Seltzer’s audience skews more female: “I think we split somewhere 65:35 female to male,” Shields says. The packaging for all the hard seltzers has a feminine aesthetic, generally featuring slim white cans, bright fruit colors and restrained fonts.
Shields notes that male drinkers use the products differently. “They sometimes are using it as a mixer, so more spirits,” he says. “And we promote that idea of mixology. It’s fun to have an endless stream of cocktails that you can make.”
Although sharing many qualities with beer, hard seltzers in particular seem to attract drinkers more from wine and spirits, especially among slightly older customers.
The excitement in the category may be focused on the potential of new hard seltzers, but classic FMBs continue to spin off new flavors and seek new audiences.
Twisted Tea, the number one brand, is still tea with a kick, even when fruit is added as an accent. With healthy growth last year, the brand knows its audience and seems to have resisted the new flavor merry-go-round.
Miracle fruits—blueberry, acai berry, goji berry—are still around, but no longer the Next Big Thing. Number two-selling Seagrams Escapes now features an exhausting 17 flavors, based primarily on fruits (mango, orange, guava) or tropical cocktails (daiquiri, piña colada).
At Anheuser-Busch, the Bud Light “Ritas” boldly committed to a female audience this year. The line-up of fruited margarita-in-a-can FMBs, from pineapple to coconut, has always been dominated by Lime-a-Rita. With a rebranding last year that pitched the line to women, the brand embraced the margarita-sipping, women-at-the beach ethos, including women-of-a-certain-age, exemplified by the green-clad Ritas themselves.
“In 2018, Lime-A-Rita is focused on the Ritas, who are legendary ladies who have lived, so they know how to live,” says Corinne Labitzke, marketing communications, value & beyond beer. “Their answer to any problem is to just Have-A-Rita and you can find them crashing parties and having fun all summer long.”
Summer promotions include The Summer of Pineapple on-pack sweepstakes to win a trip to Hawaii.
Flavored malt beverages—mocktails, sodas, teas and seltzers—are most at home with summer activities. These aren’t contemplative sippers. But who wants contemplation around the pool?
Julie Johnson was for many years the co-owner and editor of All About Beer Magazine. She has been writing about craft beer for over twenty years. She lives in North Carolina, where she was instrumental in the Pop the Cap campaign that modernized the state’s beer laws. Read her recent piece, Beer and Cider Trends for Summer 2018.