Miller's fruity booze plans raise hackles

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Miller Brewing Co. is eyeing the rollout of fruit-flavored alcoholic beverages to lure young adults who are turning away from beer-potentially risking the ire of watchdog groups, one of which slammed such drinks as "alcohol on training wheels."

Miller, a unit of London-based SABMiller, is taking a hard look at two flavored drinks marketed by its parent's South African arm, according to executives close to the brewer. One is a cider called Redds; the other is an alcoholic fruit juice called Brutal Fruit.

No final decision has been made and it's unclear which brand will get the nod if the brewer decides to test the U.S. market. Executives point to Brutal Fruit as the more likely candidate. The product-which comes in flavors Kinky Kiwi, Luscious Litchi, Manic Mango and Sultry Strawberry-was an immediate hit after its 2002 launch.

fired up

Miller's parent has applied for trademarks for both brands and could introduce a product in the first half of 2005. A Miller spokesman declined to comment.

If the brewer decides to push either brand, it's sure to draw fire from activist groups that argue sweet beverages draw underage drinkers. "Flavored alcoholic beverages are a transparent attempt to attract underage drinkers," said Amon Hoang-Rappaport, a spokesman for the Marin Institute, a watchdog group, calling beverages that blur the line between fruit juice and booze "alcohol with training wheels."

He noted that in South Africa, flavored drinks are popular with drinkers as young as 18, the legal drinking age there.

Miller is eyeing the drinks as the beer category is in the doldrums. Spirits-and notably sweet-tasting cocktails like appletinis-are hot, particularly in bars and clubs where young peoples' tastes are formed. Beer volume in bars and clubs slipped by 1% in 2003, while spirits surged by 7% according to consultancy Beverage Marketing.

looking for excitement

"The beer category is tired," said Darrell Jursa, president of consultancy Liquid Intelligence. Brewers are "looking for anything they can bring in to get people excited."

Anheuser-Busch, the biggest brewer, has recognized the challenge posed by spirits. It is ramping up bar promotions and plans a caffeinated version of Budweiser-called B to the E-that's flavored with guarana and ginseng and is aimed at vodka- and Red Bull-swilling clubgoers.

"Sweeter flavors have definitely made an impact on 25- to 35-year-olds," said Bob Lachky, A-B VP-brand management and director of global brand creative, when announcing the planned rollout of B to the E earlier this month.

But whether Miller can sell the products is another question. Previous efforts by brewers to sell non-beer products have fizzled.

The latest example was spirit-flavored malt beverages-"malternatives"-which were hot in 2001 and 2002 but have since fallen off. Sales declined by 10% to 73 million cases after growing at a 16% clip in 2002 and by 37% in 2001, according to Impact Databank. Miller and Allied Domecq discontinued Stolichnaya Citrona and Sauza Diablo earlier this year and the brewer stopped marketing Jack Daniel's Original Hard Cola. It still sells Skyy vodka malt beverages.

If Miller wants to succeed with fruit-flavored beverages, it must educate its sales force and distributors about how the target consumer differs from beer consumers, Mr. Jursa said. Brewers failed to do this with malternatives, he contends.

Beer represented 59% of all alcoholic beverages consumed in the U.S. in 2003, down from 60% in 2000, according to Beverage Marketing. Spirits represented 28% of all alcoholic beverages in 2003.

Bearing fruit

Miller's challenge: Beer is losing sales and share to spirits. Beer sales in bars were down 1% while spirits sales in bars rose 7% in 2003.

Its response: Introduce sweet, fruit-tasting alcoholic beverages that appeal to young adults' broad taste palates. Redds is a cider and Brutal Fruit is a fermented fruit-juice drink that comes in flavors such as Sultry Strawberry and Kinky Kiwi.

Potential hurdles: Previous efforts by brewers to sell non-beer products haven't been successful. Likely to trigger controversy with watchdog groups.

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