To the purists, the idea of debasing a perfectly good beer with fruit juice seemed blasphemous. It was only after the doubters tasted the product, an unfiltered wheat beer made with grapefruit juice, that Harpoon Brewery was able to quell the skepticism within the company. That done, it had in its possession what would go on to become what one company executive said was the brewery’s biggest product launch ever in terms of first year sales volume: Big Squeeze Shandy.
Released as a summer seasonal last March, Big Squeeze was really just one more in a growing line of shandies from brewers both craft and crafty. The style itself has emerged as a palatable alternative in traditional beer portfolios and could be a hint at what’s to come. But the style is hardly the only option for beer companies looking to diversify their offerings. Brewers have also jumped into the exploding cider segment, while teas and packaged cocktails have proven viable for others looking to accommodate changing tastes. And while they certainly do that, there’s more at play here than mere differentiation.
But first: It can be a bit of a touchy subject trying to group all of these products together. Progressive adult beverages (canned cocktails from Anheuser-Busch InBev, Four Loko, Boston Beer’s Twisted Tea) are tracked differently than, say, ciders by retail information compilers like IRI. The firm is considering moving Redd’s Apple Ale from MillerCoors to the PAB category, for instance, whereas now, it’s considered a super premium beer.
There does seem to be something connecting them all though, according to Mark Hellendrung, CEO of Rhode Island’s Narragansett Beer. The company landed a hit of its own last summer with Del’s Shandy, a collaborative product blended with Del’s Lemonade.
“The Angry Orchards, the Redd’s [Apple Ales], the Mike’s [Hard Lemonades], Leinenkugels, Del’s Shandy, Bud Light Cran-Brrr-Ritas, they’re all sort of going after a similar occasion and similar consumer,” said Hellendrung. “More female, probably younger, and is looking for that flavorful alcoholic experience, and maybe they prefer that beverage to a Sea Breeze or a Cape Codder or something like that.”
So, competitively, it’s a nebulous environment.
On the smaller end, it’s about shandies and ciders. Harpoon dabbles in both, relying on word of mouth and “whatever equity the category already has” to do the legwork for its Big Squeeze shandy and cider brands, according to president Charlie Storey. That way, they can be there for people whose palates might be IPA-averse.
“I don’t know that we’d be successful in taking a UFO Big Squeeze drinker and somehow converting them to a Harpoon IPA drinker,” he said. “What it does mean is we can participate in this market, in the shandy segment. We can build our brand awareness.”
Down in Rhode Island, Hellendrung said the popularity of its Del’s Shandy provided a boost for the company’s flagship lager by helping bar owners forget the image of the “crappy ‘Gansett from the 70s.”
It brought the lager along in a lot of cases. Last summer in New England, Del’s almost became something bar owners had to have, so that would open the conversation up for Narragansett,” he said. “It changed the perception for some who hadn’t figured out what we’re all about.”
While industry watchers told BevNET they expect the torrid pace of cider (up 72.9 percent in multi-outlet and convenience channels, per IRI) to slow a bit, the shandy could be in for its biggest year yet. The style could double in 2015 to account for nearly 1 percent of all beer, according to a survey of distributors representing approximately 10 percent of total U.S. beer volume that was conducted by investment-banking firm Jefferies and Co.
Much of that will be driven by the continued performance of Leinenkugel’s seasonal shandy line (which resides in MillerCoors’ craft and import portfolio, Tenth & Blake), as well as by Boston Beer’s new foray into the space with Traveler Beer, a line of shandy and fruit beers. During Boston Beer’s fourth quarter earnings call in February, president and CEO Martin Roper explained how the company plans to invest in taking the brand, operated by subsidiary Alchemy & Science, national, hinting that the view is similar to the powerhouse cider outfit it owns in Angry Orchard.
“I hate to link these two brands together, but I’d be happy if we got Angry Orchard first full year distribution with Traveler,” he said. “I’m not saying that in any way to suggest that we think Traveler is going to burst on the scene like the cider category, but that’s sort of more how we’re thinking about its first year.”
The more traditional PAB category is populated by familiar brands like Mike’s Hard Lemonade, Four Loko, Twisted Tea (again, a Boston Beer holding) and Smirnoff Ice. However, some of the big guys in beer, the kinds of companies Sam Adams likes to note spills more than it produces, are there, too.
“There’s no question that ABI and MillerCoors and you can even argue Heineken are all doing that, they’re all playing across the segments,” said Dan Wandel, principal of Beverage Alcohol Clients Insights for IRI. “When you look at the larger guys, those would be the three that jump out.”
For example, A-B InBev is building behind Bud Light Lime, its new Mixxtail line, Johnny Appleseed Hard Cider and perhaps most indicative of the ill-defined space, its Rita franchise. There, the more traditional boom-bust cycle of the PAB seems to apply, as it has for the Zimas that came before it.
“What we’ve seen, certainly with the Rita products, as new flavors come out, the previous ones seem to see declines,” added Wandel. “Each year there tends to be new flavors released and we see when that happens, it’s not unusual to see declines of the previous year’s flavors. It’s not always the case, but it’s pretty often the case. It’s a pretty flavor-driven, pretty-innovation driven segment. Always has been and probably always will be.”
Put into that perspective, Straw-Ber-Rita and Lime-A-Rita saw sales dip each 41.3 and 45.8 percent in MULC in 2014, while Lime Mang-O-Rita and Lime Raz-Ber-Rita were two of the strongest debuts in the whole portfolio.
Like Bud, MillerCoors is also spread well throughout the segment. Though down 15 percent in 2014, the abovementioned Redd’s Apple Ale – the one that may see its IRI categorization change in the coming days – is only two spots behind the company’s venerable Blue Moon Belgian White in terms of dollar sales across MULC. The company has also made inroads in the cider category with Smith and Forge as well as Crispin, the latter of which acquired Fox Barrel Cider Company in 2010.
As for Heineken, the Dutch company entered the segment modestly last year with the release of Desperados, a tequila barrel-aged lager, throughout the southeastern United States. And now Bud itself has followed with Oculto, a barrel-aged tequila beer blend.
But despite the barrage of new entries from companies big and (comparatively) small and the ebb and flow of popularity of respective brands and styles, the loosely defined PAB category itself has balanced over the past decade holding between 3.2 and 4.5 percent of the broader beer category’s dollar share, according to Wandel.
What beer companies will roll out next to slake the market’s thirst remains to be seen, but as Wandel says, the space thrives in pursuit of answering the question: “What have you done for me lately?”
Editor’s Note: This article appeared in the April issues of BevNET Magazine.