Why Walmart is taking on big beer with contracted brews

Walmart appears to be prepping its own beer lineup via a contractor that mimics the biggest brands in the industry, a move observers say could test brands in the wake of an economic slowdown and sustained beer price inflation. Label approvals posted by the Alcohol and Tobacco Tax and Trade Bureau, as well as photographs posted to Reddit, indicate that Walmart is contracting with a brewer on packages and formulations that resemble Anheuser-Busch InBev’s Michelob Ultra, Constellation Brands’ Modelo Especial and Molson Coors’ Miller Lite. A Bud Light knockoff is also said to be in the works according to Beer Business Daily, which first reported on the line. Because beer manufacturers cannot sell to one retailer exclusively, the line, known as Brewmasters Selection, isn’t technically a private brand but rather a contracted brew. And given Walmart’s more than 4,000 U.S. outlets, a rollout could be substantial. “This move by Walmart is a precise shot across the bow at big beer,” Jason Sherman, co-founder and partner at beverage investor Top Shelf Ventures, said in an email. “Major beer companies view private-label beers as a big competitive threat.” The new beers—Golden Cerveza (a Modelo lookalike), Brewmasters Premier (Michelob Ultra) and Brewmasters Lite (Miller Lite)—appear to be contract brewed by City Brewing of Irwindale, California. It was not immediately clear when or how wide a rollout would be. A Walmart spokesperson had no immediate comment. Also read: 7 summer alcohol marketing trends for 2025 Retailers like Walmart use store brands to present their customers an alternative to branded goods, investing cost savings on manufacturing, distribution and advertising into lower shelf prices. Although retail prices for Brewmasters Selection brews have not been disclosed, sources estimate they could sell at a 15% discount to their branded counterparts. The introduction of a proprietary beer line would indicate Walmart sees considerable demand for relief in the beer aisle, where prices have been rising for several years. The “premiumization” trend has seen higher-priced brands like Modelo and Michelob Ultra become the industry’s biggest sellers. In 2024, Modelo grew shipments by 7.1% and Michelob Ultra by 5.9%, while the beer industry as a whole saw a 1.7% decline, according to Beer Marketer’s Insights. There have been some recent indications that beer spending could be receding. Modelo’s roaring sales growth has recently tapered as Hispanic consumers face rising concern over prices on food, gas and other essentials, Bill Newlands, Constellation Brands’ president and CEO, said during a conference call Thursday. More drink news: Inside the creator-fueled beverage boom “It’s a vulnerable time for beer,” said Marty Stock, a Marquette University professor who spent many years as an agency executive with beer clients. “There’s been a slowdown, and some drinkers are leaving.” Stock said lackluster marketing throughout the industry has been a part of that vulnerability. “I don’t think Walmart does this if there wasn’t entropy in the beer business,” he said. An Anheuser-Busch InBev spokesperson declined comment. Constellation Brands was not immediately available for comment. Recent news: Sam’s Club picks Publicis Groupe as its integrated agency of record Sherman said he believes brands would fight back with marketing that emphasizes authenticity and points of difference—and would negotiate with the retailer on price. “Expect aggressive responses—ramped-up marketing spend highlighting the importance of heritage and status symbols, sharper pricing tactics, and potentially more intense negotiation with Walmart directly,” Sherman said. “This signals that retailers’ private-labels are not just nibbling around the edges anymore; it’s going straight for core market share in beer.” For Walmart’s brewers, the challenge is in replicating the formulation and taste of the beers they mimic while capturing what makes them special to consumers, sources said. A Michelob Ultra challenger would need to match the brand’s low calorie and carb count as well as its association with fitness. And Modelo’s special appeal to Hispanic customers could be difficult to replicate, Stock said. “There’s a lot for Walmart to unpack between Modelo’s packaging, the liquid, the Mexican authenticity and the emotions attached to that,” he said. “‘Sam’s Fighting Cerveza,’ or whatever they call it, will have a tough road, but it’s not impossible.” Beer has long been considered a difficult category for store brands to disrupt, although price-focused retailers such as Aldi, Trader Joe’s, Lidl and Costco have demonstrated it could be done. “It takes commitment to do it well,” said Christopher Durham, president of the Velocity Institute, a private label industry association. “Retailers like Kroger and Hy-Vee have come in and out if it. You need a category manager committed to being in the space.” Walmart has experimented with contracted beers before. In 2016, the company introduced beers under the Trouble Brewing label meant to provide a more affordable option for craft beer fans. In stores in California, it offered craft styles under the Pacific Drift label. Both of those lines have since been discontinued. Today, alcohol is the fastest-growing department for private labels across the store, growing six times faster than private label overall, according to a recent report from the Private Label Manufacturers Association and Circana. “Alcohol was ripe for private-label innovation,” said Diana Leza Sheehan, founder and principal consultant at PDG Insights. “Walmart’s focus on a beer segment that is popular among younger consumers shows a strategic understanding of its consumers, but also aligns with the broader strategy of expanding its private label portfolio to high-impact categories.” A PDG consumer survey indicated that 16% of U.S. consumers say that they have bought a private label beer, wine, or spirit in the last three months. Latino and African American consumers are over 40% more likely to be buying private label alcohol, as are consumers under 45. “All three of these consumer targets are critical to the Walmart’s future success,” Sheehan said. “This seems like a natural next step after the launch of the Bettergoods private label products in 2024,” Sheehan added. “The critical element will be execution. The products themselves have to deliver on taste and quality for this to have a lasting impact.” More news: Walmart and Sam’s Club invest in private label

Why Walmart is taking on big beer with contracted brews

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