Americans are bored with beer and now these sweet alternatives are taking over

As drinkers ditch beer for other beverages, major beer companies are trying to tap into customers with a sweet tooth.

“I think next year will be the year of the hard sodas and sweeter flavours, like hard root beers,” beer sommelier Marc Stroobandt told Business Insider late in 2015.

Stoobarandt is already being proven right. The growing success of hard root beer is bringing about a new era of sweet alcoholic beverages that draw from both the craft beer and sweet, malt liquor markets.

An early trendsetter was Not Your Father’s Root Beer, launched by Small Town Brewery in Chicago in 2012. Last year, the brand entered into a distribution agreement with Pabst and took the brew national, skyrocketing Not Your Father’s Root Beer to the position of the sixth largest craft beer brand in the US.

Now, the beer industry giants are ready to cash in.

Late last year, Anheuser-Busch InBev launched the alcoholic Best Damn Root Beer, “aged with real vanilla beans.” In early January, MillerCoors debuted Henry’s Hard Soda, in alcoholic flavours like Hard Orange and Hard Ginger Ale.

More generally, AB InBev is investing big in “near beer” around the world, with new offerings like Bud Light MixxTail and Lime-a-Rita Splash.

“The hard soda trend continues to demonstrate the evolving taste preferences of consumers nationwide,” Lime-A-Rita brand director, Mallika Monteiro, told Business Insider. “We have seen growth in the sweet segment, with consumers calling for more flavored alcohol beverages.”

In other words, sweet is in. In the last year, fruit beers grew
63% in volume and, 82% in revenue. Cider sales increased 75.4% from November 2013 to 2014.

The beer industry has lost a 10% market share to wine and liquor drinkers in the last decade, with only 40% of young drinkers saying their favourite drink is beer, compared to 70% in 1992-1993. Over the same period, the craft beer market has exploded, taking away sales from establishment brewers.

As a fresh concept with few established leaders, new “near beers” are a chance for Big Beer to win these drinkers back.

Prime among the lost markets: the craft beer crew.

While sweet beer alternatives like Mike’s Hard Lemonade and Smirnoff Ice have been around for decades, the new crop of hard sodas are designed to appeal to the craft beer drinker. The marketing is all about nostalgia and authenticity — real or perceived.

Small Town Brewery’s website proclaims “It’s in our blood: tradition and passion,” despite the fact that founder Tim Kovac founded the company just six years ago. Henry’s Hard Soda’s packaging is embossed with an seal boasting about the old-school Blitz-Weinhard Brewing Co., established in 1856 — and today owned by MillerCoors. AB InBev’s The Best Damn Root Beer proclaims it’s a “brew you can swear by,” made by the “Best Damn Brewing Co.”

Beyond the craft-imitation, hard sodas and near beer brands are attempting to reach a major market that Big Beer has historically struggled to attract: women. MillerCoors has said that attracting more female customers is essential to regaining the market share beer has lost to wine and hard liquor.

“We are competing more effectively for share of total alcohol by launching innovative products that offer malt beverage alternatives to wine and hard liquor,” AB InBev wrote about its growing near beer segment in its 2015 Annual Report.

Sweet near beer beverages are often stereotyped as “girlie drinks,” and marketed towards young women. Lime-a-Rita and other sweet malt beverages continue in that tradition.

Hard soda, on the other hand, is trying hard to avoid the female-focused marketing,
leaning in to craft and “masculine” elements. Still, that doesn’t mean that hard soda is an all-male business, with hard soda brands perhaps aiming to achieve a more even gender balance, similar to cider’s 50/50 split.

A new era of alcoholic innovation is being driven by people turned off by the biggest brands in beer. If companies like AB InBev and MillerCoors can successfully market hard soda and other near beer options to women, as well as male and female fans of craft beer, 2016 will be a pretty sweet year for Big Beer.

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