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Impact Databank: Amid Beer Market Slowdown, Specialty Brews Offer Bright Spot

May 23, 2014

While the overall U.S. beer market has taken a hit from difficult economic conditions and competition from other drinks categories—losing nearly 6.7 million barrels (or 93 million 2.25-gallon cases) since 2009—specialty beers are providing a growth avenue for the category. Total U.S. beer volume—excluding non-alcoholic brews—fell 1.5% to 195 million barrels last year, but specialty beers rose by 14% to 20.2 million barrels, according to the U.S. Beer Market: Impact Databank Review and Forecast.

Volume growth in the specialty segment has been boosted by brands from major brewers like Anheuser-Busch InBev and MillerCoors as well as craft brewers like Boston Beer, New Belgium, Sierra Nevada and Lagunitas. Among the big brewers, MillerCoors has led the way with its Blue Moon brand, which last year grew 5% to 1.98 million barrels, or 27 million (2.25-gallon) cases, driven by its flagship Belgian White Ale, which accounts for 83% of Blue Moon’s volume. Variety packs and line extensions have also benefited Blue Moon, with its Pale Ale and Farmhouse Red Ale showing strong growth.

Another MillerCoors specialty label, Leinenkugel’s Summer Shandy, was up 24% to 5.5 million cases last year. And the company’s Redd’s brand franchise has gotten off to a strong start with its Apple and Strawberry Ales combining for more than 8 million cases in 2013. This year, Redd’s—which targets wine and spirits drinkers—will add a Hard Iced Tea variant and a higher-alcohol Wicked Apple.

Anheuser-Busch InBev has taken on Blue Moon with its specialty Shock Top brand. While Shock Top’s core Belgian White declined last year—slipping 2.6% to 7.7 million cases after more than tripling from 2010-2012—the overall brand posted a modest rise on the success of line extensions like Honeycrisp Apple Wheat and Lemon Shandy Wheat. The Shock Top portfolio also includes Honey Bourbon Cask Wheat, Raspberry Wheat and newly released Twisted Pretzel Wheat.

A key growth area in the specialty segment has been India Pale Ale (IPA). Petaluma, California-based Lagunitas Brewing’s IPA expression was a 2013 Impact “Hot Brand,” enjoying 61% growth to 1.5 million cases, as was Sierra Nevada’s Torpedo Extra IPA, which reached 2.4 million cases on 18% growth (Sierra Nevada’s flagship Pale Ale was up only 0.8% to 8.1 million cases, but the company has said temporary capacity constraints hindered progress there). New Belgium’s Ranger IPA was another standout craft performer in 2013, growing 12% to 1.3 million cases.

Meanwhile, Boston Beer’s Samuel Adams, among the best-known specialty brands on the market, is also contributing to the general upswing. Sam Adams’ flagship Boston Lager enjoyed its first gain since 2010 last year, rising 7% to 10.5 million cases. This year, Sam Adams is being bolstered by its new Rebel IPA extension, which, along with Angry Orchard cider and the Twisted Tea RTD, helped propel Boston Beer’s depletions up 34% in the first quarter.

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