Big brewers are finally jumping on the hard-cider trend.
MillerCoors said today it has acquired Crispin Cider Co. of Minnesota, while Anheuser-Busch is planning to launch Michelob Ultra Light Cider. The moves vault the nation's two largest brewers into the small but fast-growing cider category that to this point has been dominated by smaller players.
MillerCoors will fold Crispin into its Tenth and Blake division, which handles craft beer and imported brands. Crispin specializes in "European-style" natural hard apple ciders from fresh-pressed unpasteurized apple juice. Crispin ranked as the fifth-largest cider brand with 2.72% market share, according to SymphonyIRI for the year ending Oct 31. Woodchuck, owned by privately held Vermont Cider Co., dominates with 47.4% share, according to SymphonyIRI.
In a statement today, MillerCoors said Crispin sales grew by 200% in 2011, which the brewer said outpaced overall cider category growth of 26%. Crispin is based in Minneapolis but makes its ciders in the Sierra foothills in California. The deal includes Crispin affiliate Fox Barrel Cider Co., which makes pear ciders.
"With cider's explosion in the U.S., we were looking at the best way to participate in that growth," Tenth and Blake President-CEO Tom Cardella said in a statement. "As we explored the category, Crispin stood out, not only because they were the most progressive and innovative producer, but also because we shared great personal chemistry."
In a statement, Crispin CEO Joe Heron said that MillerCoors' ownership allows Crispin to "scale up at the same pace as our increasingly accelerating demand in the U.S. and beyond." Terms of the deal were not disclosed.
Anheuser-Busch, meanwhile, is relying on a line extension of it Ultra brand. In a recent memo to distributors, the brewer described "Michelob Ultra Light Cider" as a "less sweet, lower calorie, all-natural alternative" to traditional flavored malt beverages and ciders. A-B also seems poised to plug the product as "naturally gluten-free," a fact depicted in small lettering on a sample of the bottle label shown on the memo to distributors. The drink, scheduled for a May 7 launch, has 118 calories and 4% alcohol by volume, according to the memo.
While a small category, cider is attractive to marketers because it commands high margins, priced at an average of $35 a case, compared with $33 for craft beer and $29 for imported beer, according to Nomura Equity Research. Cider is also popular among coveted women drinkers. At the same time, brands are winning over more male fans thanks to bolder flavors. Vermont Hard Cider, for instance, says its customer base is now 50% male, with the average drinker between the ages of 21 and 30.
A-B is also planning several line extensions of other brands. For instance, the brewer plans to roll out Bud Light Lime Lime-A-Rita for a limited time from April 9 through Labor Day, according to a memo to distributors. The product is described as delivering "authentic margarita flavor with a unique twist of Bud Light Lime" and is designed to be served over ice. Another line extension will expand the brewer's relationship with Bacardi with a new rum-flavored malt-beverage lineup called Bacardi+, which will come in Torched Cherry+Cola and Arctic Grape+Lemon Lime Soda, according to the memo to distributors. The offerings join the existing Bacardi Silver flavored malt-beverage lineup, which includes flavors such as mojito and sangria. Also on tap, according to the memo, is Shock Top Lemon Shandy, a new flavor of the Shock Top brand, which features wheat beers. MillerCoors already sells a Summer Shandy under its Leinenkugel's brand. A-B earlier announced Shock Top Wheat IPA, which hits shelves this week.
A-B's biggest new product bet is Bud Light Platinum, a higher-alcohol version of Bud Light that the brewer rolled out in late January and plugged with two Super Bowl ads. The brewer's other line extensions are not expected to get near the same marketing attention, but still indicate a willingness by A-B to fuel its new product pipeline as it battles new competition from craft beer and spirits.
Reporting today on some of the new products, Beer Marketer's Insights wrote: A-B is "throwing a lot against the wall, and it will be very interesting to see how much sticks."