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AB InBev Splashes Into the Hard Seltzer Fad

We’ve had the hard tea craze, then hard cider, and most recently, hard soda. So it was only a matter of time before hard water became a thing. Anheuser-Busch InBev (NYSE: BUD) recently said it was acquiring Boathouse Beverages, the maker of SpikedSeltzer, a hard seltzer drink, for an undisclosed sum.

It should come as no shock that the giant brewer is getting into this small business. Sales of mass-produced beer at Anheuser-Busch and other mega brewers remain on a steady decline, but now, even craft beer’s trajectory is slipping, with growth expected to be around 6%, according to the Brewers Association, the trade group that represents craft brewers. While the smallest independent brewers are still reporting significant growth rates, the biggest craft beers are sliding.

Boston Beer (NYSE: SAM) is seeing sales volumes fall for its flagship Samuel Adams brand, but they’re also down for its Angry Orchard hard cider label. In a bid to offset the decline, it has also branched out into hard soda with its Coney Island Brewing brand and the hard seltzer market with Truly Spiked and Sparkling, which it rolled out nationally earlier this year. Its Twisted Tea and Truly brands were the only ones able to offset falling depletion rates.

While hard seltzer is not new — Boathouse launched SpikedSeltzer in 2013 — it is seen as the next alcoholic beverage fad, and AB InBev was expected to enter the market at some point. It followed Boston Beer into hard cider with the introduction of Stella Artois Cidre; the MolsonCoors-SABMiller joint venture MillerCoors then bought the Crispin brand and started up its own Smith & Forge line.

AB InBev’s purchase could cause MillerCoors to start looking for a brand to buy in this niche, too. Earlier this year Wachusett Brewing launched Nauti Seltzer, a product that might get someone’s attention.

Industry trade site Brewbound indicates the target demographic for these drinks will be wine-drinking women, which also happens to be one of the fastest-growing segments in the adult beverage market. According to The Wall Street Journal, while SpikedSeltzer is currently only available in 14 states, it will soon be rolled into AB InBev’s 500-distributor network.

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Rich Duprey has no position in any stocks mentioned.

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