March 2020

Feature

Hazy, Sour & Hard

Beer’s hottest sellers are better-for-you and craft offerings.
Terri Allan

At the Mendez Fuel chain, with four locations in Miami, customers come in search of the newest India pale ale arrivals. “Today it’s the haze craze,” said Vice President of Operations Andrew Mendez of the hottest beer trends. “You have to have a good selection of hazy IPAs. In fact, the top question we get from customers these days is ‘What hazy IPAs do you have?’” And for many of those customers, only the most recent New England-style, hazy IPAs to hit the Magic City market will do.

Across the country in Oregon, Oliver Herting, beer category manager at FastBreak convenience stores, with about 30 rural locations, reported that when it comes to beer, “seltzers are taking off and becoming a huge trend.” The retailer noted that while hard seltzers first attracted female drinkers, male consumers now are flocking to the drinks.

Indeed, for convenience retailers selling beer, the days of premium light beers ruling the roost are gone, as new emerging segments and styles increasingly garner the attention of ever-more fickle beer consumers. Retailers and suppliers said that with beer trends changing at lightning speed, it’s more important than ever for merchants to stay attuned to the trends.

Healthy Beers

Just like in other categories, beers that are perceived as “better for you” are making impressive inroads. And according to Robin Behre, director of customer solutions at Molson Coors Beverage Co. (previously MillerCoors), the BFY trend isn’t going anywhere anytime soon. “Consumer research reveals that wellness has become a holistic lifestyle where individuals are focusing on their physical, mental, emotional and social well-being,” she said. As a result, “consumers are demanding better-for-you options across all categories and want to see transparency of ingredients,” Behre said, while also opting for functional food and beverages that offer incremental health benefits.

Source: The NACS State of the Industry Report of 2018 Data

Hard seltzers have been driving the BFY trend in the malt beverage category for the past few years, and that's expected to continue in 2020. (While some brands now contain wine or liquor, NACS currently defines hard seltzers as FMBs within the beer category.) At the PRIDE Stores in the Chicagoland area, Mario Spina, owner and CEO, said the return of low-carb diets is helping to propel the growth of hard seltzers like White Claw. Mendez, meanwhile, noted that craft beer shoppers often grab a package of hard seltzer.

Beer marketers see continued growth for seltzers. According to Alicia Cleary, senior director, industry relations, at Anheuser-Busch InBev, only 7% of households currently purchase hard seltzers, while 54% purchase beer. The untapped opportunity is resulting in a wave of new brands this year, including A-B’s Bud Light seltzer and Molson Coors’ Vizzy, made with acerola cherry—the superfruit high in the antioxidant vitamin C—and certified gluten free. (More coverage on emerging beverage categories, including hard seltzers, is planned for the May issue of NACS Magazine.)

Marketing Mindfulness

A-B’s Michelob Ultra is also benefitting from the low-carb movement and beer consumers’ increasing mindfulness. According to Sara Hillstrom, senior director, category development, the superpremium light beer—which contains 95 calories and 2.6 carbs a serving—“is on fire in c-stores,” with sales of the Ultra family up 17% for the 13 weeks ended early December. Molson Coors also entered the segment with the national rollout of Saint Archer Gold earlier this year.

The two biggest beer marketers see additional opportunity for beers produced with organic ingredients. Michelob Ultra Pure Gold is produced with organic rice and organic barley malt and has been certified by the USDA as organic, Hillstrom noted. Pure Gold consumers strive for an active lifestyle and pay attention to what they eat and drink, the A-B executive remarked, noting that they also skew slightly higher in income and spend 13% more on beer than the average c-store beer shopper. Molson Coors, meanwhile, is launching Coors Pure, featuring organic hops, barley and flavors this month in seven test markets.

The use or nonuse of corn syrup in leading beer brands emerged as a hot topic last year following A-B’s Bud Light Super Bowl commercial. The spot—which touted that Bud Light contains no corn syrup while suggesting that the ingredient is used in the brewing of Miller Lite and Coors Light—sparked a legal battle between the two major breweries that continues today. It also raised concerns among some consumers about the ingredients used to make beer, Molson Coors said.

With consumers scrutinizing the calories, carbs and ingredients in their beer today, at least one marketer believes the time is right for a major push behind alcohol-free beer. “With well-being and mindful drinking on the rise, Heineken 0.0 is the perfect addition to a beer drinker’s portfolio,” said Dominic Grosso, senior manager, national accounts, at Heineken USA. Launched last year, Heineken 0.0 “is exceeding our sales projections and feedback from consumers and retailers has been overwhelmingly positive,” Grosso said.

Within the IPA style category, hazy IPAs are generating the majority of the incremental volume.

The opportunity for alcohol-free beer in c-stores is “massive,” the marketer continued, and the company is focused on expanding its presence in the channel through distribution, sampling and promotion. Mendez agrees that reduced-alcohol beers serve a niche. “Non-alcoholic beers are great for those who want to fit in but don’t want the alcohol,” the retailer said.

Craft Creations

While the craft beer boom has slowed, certain styles—such as New England IPAs and sour beers—continue to build. “Within the IPA style category, all of the growth is currently coming from new IPAs,” remarked Aaron Baker, senior marketing manager at Oskar Blues Brewery. “Of those new IPAs, hazy IPAs are generating the majority of the incremental volume.” The Colorado brewery recently introduced One-y, a 100-calorie hazy IPA, which capitalizes on both the hazy IPA and “easy-drinking” trends, Baker said.

New England IPAs are performing well at PRIDE’s 16 stores, Spina said. In fact, the company, which opened its own brewery, 93 Octane, in St. Charles, Illinois, last fall, now produces its own New England IPA, PRIDE Piper. Meanwhile, sour beers, particularly lower-priced kettle sours, are “really popular” at Cummings Market in Kennebunk, Maine, manager Ben Blouin reported. And even though Miami isn’t considered a big sour beer market, Mendez Fuel does a good business with them. “Consumers tend to be women, many of whom are wine drinkers, as well as craft beer snobs,” Mendez said.

Also driving the growth of craft beer in recent years is the can package, with many brands now packaged in four-packs of 16-ounce cans and singles in 19.2-ounce cans. “Sixteen- and 19.2-ounce cans provide a great opportunity to increase a consumer’s receipt size,” Baker noted. Indeed, the large-format cans have been performing well at PRIDE stores. “The margins on this package, along with the increased sales, make it the category leader,” Spina said.

Staying in the Loop

Beer marketers and retailers expect demand for better-for-you beers and seltzers, hazy IPAs and sour beers, as well as canned brews, to remain strong for the foreseeable future. “We anticipate natural ingredients will continue to proliferate, and consumers will focus on carb-consciousness, low- and no-alcohol options, as well as occasion-based drinking with a self-care bent,” remarked Behre.

Still, new trends are always emerging, and savvy retailers know they must be relentless in monitoring them. Mendez of Mendez Fuel and Baker from Oskar Blues said that industry publications, including NACS Magazine, are great resources to stay informed. “I’m always looking to see what’s working in the market,” Mendez noted, adding that social media, particularly Instagram, can’t be overlooked. Blouin in Maine agreed and said that even simply talking to customers about recent beers they’ve tried or breweries they’ve visited helps keep him in the loop.

Spina said PRIDE Stores' liquor buyer is particularly passionate about staying on top of beer trends as he often visits breweries and seeks input and training from vendors. As a result, the chain’s beer sales are “significantly higher” these days than just a few years ago. “But there’s still room for growth,” Spina added. “So we’ll continue to focus on what’s good, what’s popular and be sure we have product available at multiple price points—something for everyone.”

Terri Allan

Terri Allan is a New Jersey-based freelance writer, specializing in the beverage industry. She can be reached at terri4beer@aol.com and on Twitter at @terriallan.