Remember Zima? It’s back, but field is crowded
Citrus-flavored malt now one of many beer alternatives.
CHICAGO — Who knew so many people liked Zima?
In a savvy bit of marketing, Chicago-based MillerCoors is bringing back Zima — the “zomething different” alternative to beer of the early 1990s — for a limited time this summer. When the news leaked out through a trade publication earlier this year, the internet happily responded with a barrage of GIF-heavy nostalgic odes to the days of Zima’s past.
And yet, there are many, many a l c o h o l i c a l t e r n a - tives to beer these days. Flavored malt beverages have exploded in recent years as large beverage companies try to lure millennial drinkers who are adventurous in flavors and promiscuous with brands.
Once a pioneer, Zima now faces hard lemonades, teas, ciders, sodas and seltzers in the battle for consumer attention.
Flavored malt beverages, as a subcategory, represent about 5 percent of beer’s total market share. That slice could grow much larger in the coming years as beer titans like Anheuser Busch InBev and MillerCoors appeal to fickle customers who drink a lot more wine and spirits than they used to.
“It’s incredibly intense a nd ext re mely c o mpeti - tive, every day, forever. I haven’t got a single sympathy card from anyone at a macro brewery. And at the same time, I know they’re aggressively competing for our space and our consumers. And I just expect that continue,” said Phil Rosse, president of Mike’s Hard Lemonade Co., a division of Mark Anthony Group that’s headquartered in Chicago.
Rosse sees his company as David versus several Goliaths. In U.S. sales for last year, Mike’s Hard Lemonade maintained the top spot in the flavored malt beverage category over larger companies such as MillerCoors and Anheuser Busch, according to data from Chicago-based market research firm IRI.
But competition in the category is only getting fiercer. And with hard sodas now in decline, alcoholic sparkling water — think boozy LaCroix — is the next frontier of flavored malt beverages.
Even Constellation Brands — known for Mexican import beers like Modelo Especial and Corona — is exploring how to forge its own way in the flavored malt beverage category, but the company’s not keen on duplicating what’s already on shelves, said Paul Hetterich, president of Constellation’s beer division.
“There seems to be only one winner in each of these niches. ... We gotta find our own niche or space to carve out. It’s hard to capture that magic and sustain it, but once you get it, it’s very profitable for a very long time,” Hetterich said.
In the Chicago market last year, Mike’s Hard Lemonade sales grew to $10.3 million, up from $8.9 million in 2015, according to the IRI data, which do not include sales at liquor stores or Costco.
Meanwhile, buoyed by the initial success of Henry’s Hard Soda, MillerCoors leapfrogged Anheuser Busch to rank second behind Mike’s Hard Lemonade in Chicago’s flavored malt beverage market, according to the data.
He n r y ’s H a r d O r a n g e Soda was the top - selling new brand of the year in U.S. supermarkets.
In recent months, though, hard soda sales have plummeted back to earth after their meteoric rise.
National sales peaked last summer at about $87.7 million for the 13-week period ending June 26, according to the IRI data. But they’ve consistently declined ever s i nce, br i ngi ng i n a bout $32.9 million for the 13-week period ending March 19 — a decrease of roughly 62 percent.
“It is concerning to see one of the fastest-growing trends slow so quickly into its life cycle,” said Dan Wandel, principal of beverage alcohol client insights for IRI.
Despite that drop, MillerCoors remains bullish on the future success of Henry’s Hard Soda, in part because of its differentiation from peers. Unlike many other hard sodas, it is marketed toward Generation Xers and not millennials, said Josh Wexelbaum, marketing director for MillerCoors.
Hard soda sales are down in part because of the seasonality of the beverage and in part because of the “oversaturation of undifferentiated brands” in the category, Wexelbaum said.
“I believe hard soda is here to stay and that we’ll be a leader in this space moving forward. It requires us to lean in, and lean in hard, to what’s working for us,” he said.
Not t o mi s s o u t o n a n opportunit y, MillerCoors also launched its Henry’s Hard Sparkling, in lemon lime and passion fruit flavors, in March. And Zima — discontinued in 2008 — is slated to return for the July Fourth weekend and will be available for a limited time.
Mike’s Hard Lemonade, which took a hard pass on hard soda, is ramping up marketing and distribution this year for its new White Claw hard seltzer, competing for dollars and market share against Henry’s Hard Sparkling, Anheuser Busch’s SpikedSeltzer and Boston Beer Co.’s Truly Spiked & Sparkling, among others.
So long as beer companies continue to battle wine and spirits for market share, flavored malt beverages can provide a tried-and-true avenue to capitalize on changing consumer tastes, said David Henkes, vice president of market research firm Technomic.
“T h e y ’ r e c h a s i n g t h a t growth. The problem is at some point there’s a natural ceiling for it.. ... At some point, we’re saturated with (flavored malt beverages). But that’s not to say there won’t be winners,” Henkes said.
“There’s been a tremen- dous amount of new product introductions,” Henkes said.
In a sign of the times, craft beer and flavored malt beverages collectively accounted for 81.5 percent of all new beer product dollar sales last year, according to IRI.
By another measure, Binny’s Beverage Depot, a Chicago-area liquor store chain, carried about 220 varieties of flavored malt beverages in 2013. Today, that number is at about 340, a handful of which have enjoyed real staying power, like Mike’s Hard Lemonade and Smirnoff Ice, said Pat Brophy, beer buyer for Binny’s.
Not all of them will survive the inevitable churn. But if Zima has taught us anything, it’s that even discontinued flavored malt beverages can eventually be brought back to life if they’re dead long enough.
Already, customers have been calling Binny’s, asking when the citrus-flavored malt beverage will be in stock.
“We’re going to get behind it. It’s kind of shtick, a little bit of nostalgia, but we don’t want to miss out on it,” Brophy said.