One year ago, a single new product shook up the beer world unexpectedly. “We were taken completely by surprise,” says Joseph Doust, co-owner of the 15-unit Cap N’ Cork chain in Indiana. “This one was a real shocker.”
The product was Not Your Father’s Root Beer ($10.99 to $12.99 a six-pack of 12-ounce bottles) from Wauconda, Illinois–based Small Town Brewery. The brew tastes nearly identical to a non-alcoholic root beer. “We didn’t set out to create a new category,” explains Small Town owner Tim Kovac. “We just wanted to create an innovative and high-quality product.” Not Your Father’s Root Beer sold an estimated 2.4 million cases in 2015, according to IRI data.
It didn’t take long for similar brands to hit the market. Many took advantage of the scarcity of Not Your Father’s, which was allocated for much of 2015 as sales outpaced supply—even as Small Town partnered with Pabst Brewing Co. to increase distribution. Boston Beer Co.–owned Coney Island Brewing Co. debuted a hard root beer ($10.99 to $11.99 a six-pack of 12-ounce bottles) in August, while newcomer W.G. Brewing Co. released its first product, Wild Ginger ($8.99 to $9.99 a six-pack of 12-ounce cans), in the same month. Both brands tout their craft positioning, a key factor as mega-brewers Anheuser-Busch InBev (A-B InBev) and MillerCoors rolled out hard soda lines a few months later. Other craft producers, like Covington, Louisiana’s Abita Brewing Co. and Utica, New York’s F.X. Matt Brewing Co., have also gotten in on the trend. For a full list of major players in the category, check out Market Watch’s hard soda guide.
Retailers and on-premise operators quickly took note of the demand for Not Your Father’s and have added the newer brands as they emerge. “It’s a growth category for us,” says Jay Wilson, assistant vice president of wine and spirits at grocery chain Hy-Vee. The 240-unit company typically merchandises hard soda SKUs in the FMB section. Other retailers place hard sodas with ciders or craft beers, although increasingly the category receives dedicated space to accommodate the growing number of offerings.
Flavors First
While it made the biggest splash, Not Your Father’s wasn’t the first soda-style alcoholic beverage to appear. Milwaukee-based Sprecher Brewing Co. launched a hard root beer in 2013, and Crabbie’s alcoholic ginger beer—an import from the United Kingdom—debuted in 2012. The brand currently offers Original, Spiced Orange and Scottish Raspberry variants ($9.99 a four-pack of 11.2-ounce bottles). “We recognize that not every consumer will want a ginger-based flavor,” says Steve Ferris, U.S. sales director for Crabbie’s owner Halewood International.
Diversity of flavor is a core component of several brands’ strategies. A-B InBev launched Best Damn Brewing Co. in December 2015 as a platform for different sweet and fruit-forward beverages. The first release, Best Damn Root Beer, is available on draft, in a single 16-ounce can and in six-packs of 12-ounce bottles (pricing varies by market). A Cherry Cola variant rolled out in March, with more to come. “Consumers have shown their willingness to try new flavors, styles and varieties,” says brand director Kathy Sattler. “To consistently reach them, you have to offer different options, because they’ll jump from one flavor or style to another. These days, people are more open than ever to trying new things.”
Jamey Grosser, founder of W.G. Brewing Co., agrees. “Consumers’ palates have changed,” he says. Wild Ginger and Wild Root, added in November 2015, aim to reclaim beer market share from spirits. “Some young adults jump straight to spirits, and we want to get them back into the beer aisle,” Grosser explains. “We also want to attract spirits drinkers who may not like the bitterness of beer by offering alternatives.” W.G. Brewing is banking on growing consumer demand for new flavors and will release two additional variants in the Wild line this spring.
Coney Island has also added to its stable of flavors, launching a Ginger Ale and an Orange Cream Ale last November. “We take traditional beer styles and put a soda spin on them,” says director of sales Rob Kreszswick. “We’re a craft beer company, so we extend that philosophy to our hard sodas. We try to make everything balanced and authentic.”
At Small Town Brewery, a similar philosophy applies. “There’s a beer renaissance in the United States today, and people are looking for new flavor profiles and variety,” Kovac says. “Bringing back some of our older recipes and trying to make them work for a modern palate will satisfy a lot of customers.” Small Town released Not Your Father’s Ginger Ale in November 2015, and Kovac says there are more brews in the works.
Variety isn’t the only force driving demand for hard sodas. Many brands point to the appeal of nostalgia. “In colonial times, root beer and ginger ale both contained a small amount of alcohol, so these are brews with a real history and story behind them,” Kovac adds. “Root beer is a classic American flavor. It evokes a sense of nostalgia.”
In January, MillerCoors launched the Henry’s Hard Soda line, named for 19th-century brewer Henry Weinhard. The current offerings include Orange and Ginger Ale variants in six-packs of 12-ounce bottles and single 16-ounce cans (pricing varies by market). “The Henry Weinhard name has heritage,” says brand director Bryan Ferschinger. “We thought a hard soda platform would resonate well with Gen Xers. Many of them grew up on soda and still drink it today, so it’s relevant.”
The 80-unit World of Beer chain has over 550 beers on draft and in bottles and cans, including a number of hard sodas. Vice president of marketing Terry Haley says the offerings do well with both Gen X and millennial consumers. “They’re spontaneous and fun, and there’s a level of nostalgia,” he explains. “The sodas resonate with customers emotionally, creating a sense of reconnection with moments in their lives that were more optimistic, carefree and simple.” Grosser of W.G. Brewing calls hard sodas “comfort food.”
Sampling Schemes
Because the hard soda category is so new, many brands are focusing their strategies around sampling and trial. “Sampling is the core of what we do,” says Ferris of Crabbie’s. The brand targets individual markets with “Crabbie’s Week” promotions that create buzz via radio spots and culminate in a blitz of on- and off-premise tastings. The strategy has worked well: Crabbie’s sold its 1 millionth case in the United States in January, less than four years after launching. “Consumers love to tell us how they drink Crabbie’s, such as pairing it with their favorite Bourbon or Tequila,” Ferris adds. “Even better, they’re telling their friends on social media.”
A-B InBev’s Best Damn Brewing Co. wants consumers to test the claim in its name. “The name itself demands trial,” Sattler explains. “Very simply, we want to bring consumers the best damn thing they’ve had all day. It’s a confident claim of taste and quality, and we want people to try it.” In addition to a nationwide sampling program that includes serving root beer floats in branded glassware, A-B InBev is leveraging existing assets—such as the 70-foot Jumbotron in New York City’s Times Square and its partnerships with sports stadiums—to spread brand awareness.
The Buffalo Wild Wings restaurant chain—which has nearly 1,200 units in North America—began offering Not Your Father’s Root Beer last fall in bottles and on draft and recently added the bottled Henry’s Hard Sodas range. Director of beverage innovation Patrick Kirk has noticed many consumers taste-testing the new beverages. “Our younger legal-drinking-age consumers want to try different flavors on a regular basis,” he says. “The brewers spot these trends and we participate. We’re placing products that work to satisfy the continual demand for something new. Having new flavors excites our guests and draws interest.” Noting that offerings like Redd’s Apple ale and the Leinenkugel’s Shandy range also perform well, Kirk explains that Buffalo Wild Wings takes a broad approach to the flavored beverage mix. “We’re looking at flavors in general and not just hard sodas specifically,” he says.
Trial plays a big role in the off-premise as well. “Consumers these days don’t just find something and stick with it,” says Doust of Cap N’ Cork. “They’ll move within the category to see if there’s a different taste profile that they haven’t had before. They go out and experiment. The fact that they’re willing to try anything once is exciting for us—it makes our jobs so much easier.”
Something For Everyone
One reason hard soda has found quick success is its mass appeal. MillerCoors has seen Henry’s Hard Soda index across demographics, drawing new consumers into the FMB category. “The brand is sourcing from both wine and spirits drinkers, where beer has lost share over the last several years,” Ferschinger notes.
Coney Island has had a similar experience. “This category crosses a lot of barriers,” says Kreszswick. “In addition to millennials, our hard sodas do well with blue-collar drinkers and both men and women. We’ve also seen a lot of crossover with craft beer drinkers, as well as domestic beer drinkers.” He adds that the different offerings work well as cocktail mixers, especially for on-premise accounts. “The root beer, for example, can be mixed with vanilla vodka, Southern Comfort or other liqueurs that complement its spices and sweetness,” Kreszswick explains.
At World of Beer, Haley has seen hard sodas attracting a wide swath of customers. “People who might have been drinking wine, cocktails or cider are starting to gravitate toward hard sodas,” he says. “The category is gaining traction with craft beer drinkers as well. Hard soda broadens our customer base, which is a great thing for us. It fits within our core offering and gives options for someone who might not go for the craft beer styles.”
In addition to its draft and bottled options, World of Beer began offering a hard soda–based cocktail this past winter. The Kentucky Hard Root Beer ($6) mixes Rittenhouse rye whiskey with house-made framboise syrup and Not Your Father’s Root Beer, topped with whipped cream. Other brands, such as Crabbie’s, are also actively promoting their on-premise versatility.
Developing Potential
Whether or not product trial turns into consistent consumption remains to be seen, but the proliferation of flavor options and new brands will likely push hard soda’s growth in the short term. Most retailers and on-premise operators are waiting to see how it develops in the coming year. “I’ve seen the FMB category evolve so many times over 20 years,” says World of Beer’s Haley. “It’s like a chameleon: It keeps evolving but it never goes away.”
Kirk of Buffalo Wild Wings thinks that a shakeout is inevitable. “Multiple SKUs and flavors will flood the market,” he says. “I don’t see staying power for a continual revolving door. At some point, it will slow down and only the core flavors will stick. We’re going to have fun while it plays out.”
At Cap N’ Cork, Doust isn’t sure whether hard sodas will develop into a permanent category, but he’s optimistic that they’ll stick around for a while. “The major brewers are putting a lot of time, effort and money behind these products,” he notes. “They’ll do a lot to expose people to the category, and they’d give it a long look before pulling the plug.”
Hy-Vee’s Wilson compares the current market to a similar situation in the 1990s. “People were skeptical when the hard lemonades came out, but Mike’s is still around and doing business,” he says. “Time will tell, and so will consumers. They’re the ones who will tell us where this category goes.”