A robust craft segment, along with an ongoing resurgence of imported beer—led by the Mexican portfolio of Constellation Brands—are hallmarks of Impact’s newest list of beer “Hot Brands.”
Among domestic labels, Northern California’s Lagunitas Brewing Co. leads the way with two Hot Brand honorees. Flagship Lagunitas IPA is no stranger to the Hot Brands list, as its growth in recent years has exceeded 50 percent. That advance slowed a bit last year—depletions rose by 33.4 percent to nearly 6 million cases—but the company’s expansion plans bode well for the future. After opening a second brewery in Chicago in 2014, Lagunitas is now building a third facility in Southern California. Heineken acquired a 50-percent stake in the craft brewer last fall, paying what was believed to be around $500 million.
While the 6-percent abv Lagunitas IPA dominates the portfolio, the company’s 7.5-percent abv Little Sumpin’ Sumpin’ pale ale—a Hot Brand newcomer—is catching on quickly. Another player enjoying a sharp rise is 420 extra pale ale from SweetWater Brewing Co., whose growth is being fueled by an expanding footprint. Last fall, Atlanta-based SweetWater moved into the Northeast, launching in New York, Connecticut and Central Pennsylvania just a few weeks after entering New Jersey and the Philadelphia area. Like Lagunitas, SweetWater has established brewing operations far from its backyard. After purchasing much of the infrastructure of the now-defunct Pyramid Brewery in Berkeley, California, to build a Western production hub, SweetWater is currently scouting locations for a third production facility.
Non-craft brand Michelob Ultra shot to lofty heights back in 2002 amid the low-carb craze, offering roughly 25-percent the carbohydrate content of a full-calorie domestic brew. The low-carb segment quickly lost steam, and Ultra seemed to be headed for the dustbin of history. But recently it’s come roaring back. Anheuser-Busch InBev (A-B InBev) has targeted fitness-minded consumers with aggressive marketing—and deep discounting. The company is implementing a strategy of “tactical price promotion” for the brand, CFO Felipe Dutra recently told analysts. While Bud Light and other leading low-calorie beers continue to lose ground, Ultra has grown by more than 25 percent over the past three years, according to Impact Databank.
Imports Stand Out
A-B InBev also has two entries in the import category: Stella Artois and Montejo. Stella Artois is the lone European import on the list, as many European stars have subsided amid the domestic craft beer boom and Mexico’s growing import dominance. Stella’s image of quality and craftsmanship continues to resonate with consumers, as it’s still tacking on a few million cases in annual incremental growth. Montejo, meanwhile, is one of many Mexican-brewed Hot Brands, a number of which are made by Grupo Modelo. With its availability gradually expanding across the Western United States, Montejo sold more than 1.6 million cases in 2015—its first full year on the market.
Corona Extra has long been synonymous with Mexican beer in the United States, and it returned to the Hot Brands list after some time away, along with its Corona Light counterpart. Portfoliomate Modelo Especial is gradually becoming a household name and has been among the best-performing beer brands in the U.S. market for more than two decades. The brand has now appeared on the Hot Brands list for 22 consecutive years and leapfrogged Heineken in 2014 to become the market’s No.-2 import brand. That same year, it overtook Miller High Life and Keystone Light to become one of the top 10 beer brands overall. Last year, Modelo Especial passed the 70 million–case threshold on a 19-percent advance, in part because of a first-ever broad-based English language advertising campaign. Meanwhile, its Modelo Especial Chelada extension won its own Hot Brand status after zooming past the 3 million–case mark in 2015. Modelo’s Pacifico brand has also returned to the list, while Heineken USA has two Mexican entries: Dos Equis lager and Tecate Light. The latter has more than doubled its sales over the past two years, defying the light beer category’s troubles.
A full report on the latest list of beer “Hot Brands” appears in the June issue of Market Watch. Subscribe here today.