2015 Beer Report: Volume sales up for flavored malt beverages
Segment draws consumers in from numerous demographics
The phrase “something new” that’s commonly used in a reference to a bride and what she wears on her wedding day has taken on a new meaning for the flavored malt beverage (FMB) segment. Also referred to as progressive adult beverages (PABs), the beer segment has seen brand extensions and new product releases contribute to its good fortune within the past few years, analysts note.
“About 13 percent of FMB brands were new in 2014, accounting for 13 percent of overall volume,” says Danelle Kosmal, vice president of the beverage alcohol practice at New York-based Nielsen. Kosmal adds that case volume for the segment increased 9.5 percent in 2014 as well, helping it gain 0.4 share points in the overall beer category.
Kosmal notes that new and existing brands continuously are releasing new flavors in order to garner news for their brands; however, this can come at the expense of the base flavors, she cautions.
Jeff Nowicki, chief strategy officer with Bump Williams Consulting (BWC), Stratford, Conn., says that these extensions are fueling the segment with brands releasing flavors that rotate in and out of the segment. “This is a flavor replacement segment where one new flavor comes out, shows some growth, [and] then is replaced at a later date by another new offering,” he says.
For instance, St. Louis-based Anheuser-Busch, the U.S. arm of Anheuser-Busch InBev, released Apple-Ahhh-Rita, a fall seasonal to its Bud Light Lime Ritas lineup.
Although Apple-Ahhh-Rita was the brand’s first fall seasonal, it previously had released Cran-Brrr-Rita, a winter seasonal, in late 2013. The brand brought back the popular seasonal drink in 2014 as well.
Nielsen’s Kosmal notes that seasonal releases are becoming more prominent for FMBs. “We’re starting to see more seasonal variants coming out — apple and cranberry flavors for the fall and winter, blood orange during the spring, etc.,” she says.
Including the Ritas brand’s permanent varieties — Lime-A-Rita, Straw-Ber-Rita, Mang-O-Rita and Raz-Ber-Rita — the portfolio saw dollar sales increase 11.6 percent during the 52 weeks ending Dec. 28, 2014, in U.S. multi-outlets and convenience stores, according to Information Resources Inc. (IRI), Chicago.
Chicago-based MillerCoors, a joint venture of SABMiller plc and Molson Coors Brewing Co., also extended its flavor reach in the FMB segment with Steel Reserve Alloy Series Spiked Punch. The FMB combines cherry, orange and strawberry flavors. At 8 percent alcohol by volume (ABV), Spiked Punch also hits upon another trend impacting the beer segment.
“Both regular and higher ABV — ABV of 8 percent or higher — are contributing to FMB growth, but higher ABV is driving more than its fair share at 60 percent,” Nielsen’s Kosmal says.
Chicago-based Mike’s Hard Lemonade Co. added to this trend with its seasonal variety: Mike’s Harder Apple Firebomb. At 8 percent ABV, the FMB combined apple ale with hot cinnamon flavor. The Mike’s Harder brand family continues to perform well for the company, posting a nearly 32 percent increase in dollar sales for the 52 weeks ending Dec. 28, 2014, in IRI-measured channels. Although it accounts for only 11.6 percent of the dollar share for the segment, it has been performing better than the company’s flagship brand family Mike’s Hard Lemonade, which had sales decrease 6.3 percent, bringing its dollar share down to 16 percent of the segment.
Analysts note that the segment’s demographics can be as diverse as some of these portfolios. “This is a broad demographic from female pre-mixed flavored consumers to higher-ABV offerings primarily sold in c-stores to males,” BWC’s Nowicki says.
Nielsen’s Kosmal echoes similar sentiments: “Among flavored malt beverages, consumer demographics can vary widely by brand and even by flavor or ABV level. Similar to cider, FMBs tend to skew higher toward females than the beer category. However, FMBs also tend to appeal more to the African-American and Hispanic consumers.”
One area in which analysts don’t foresee opportunities, though, is FMBs that contain high caffeine content. “The once-popular caffeinated high-ABV brands continue to lose favor with consumers as there is not a single brand growing in the style profile,” BWC’s Nowicki says.
However, analysts do anticipate the innovation stream for FMBs won’t slow down anytime soon. “FMBs present more abilities to play with flavors, which will continue to attract millennials — both male and female,” Nielsen’s Kosmal says. “We should also expect to see more packaging innovation from existing brands to create new or different drinking occasions for FMBs.”
Although BWC’s Nowicki anticipates the segment will continue to see more flavors and cutting-edge styles, he cautions that FMBs could see marginal growth in 2015 as its consumer base sources from the craft beer and hard cider segments.