MALTERNATIVES: Reading the Hard Tea Leaves By Beth Demmon
After hitting a zenith in the early-to-mid 1990s, flavored malt beverages (often referred to as “FMBs” or “malternatives”) never got back to that peak. Nevertheless, they’ve remained a surprisingly dogged presence in beverage alcohol, existing peacefully alongside other segments without causing too much disruption – until the hard seltzer sub-segment came along, and the category found itself as disrupted as everything else in a can or a bottle. FMBs’ pendulum swing between expansion and refraction continues to this day, with the March 2022 NBWA Beer Purchasers’ Index (BPI) reporting a category drop from 85 in March 2021 to 42 in March 2022. For context, a rating over 50 indicates expansion, while anything below 50 indicates a contraction. Why do malternatives fluctuate, and why are these numbers dropping now? Liz Paquette, head of consumer insights at Drizly, has a theory. “The growth of spirit-based RTDs may have contributed to the slowing growth of the hard seltzer-slash-beer alternative category, as many of these products compete directly, despite technically falling into different categories,” she says. But here’s another thought, she says: many consumers just don’t know the difference between RTDs and hard seltzers. Drizly’s 2021 Consumer Report, she says, showed “just 32% of respondents correctly defi ned hard seltzer while the majority confused it with the defi nition of RTDs.” Nielsen data seems to confi rm this notion of RTDs claiming former FMB purchasers. “Flavored malt beverages” only gained 2.1 % in dollar share from January 2021 to 2022 (compared to a 17% increase from the previous year), but “Cocktails ready to drink” (or “RTDs”) jumped a massive 117.1% in the same timeframe (with a 157.4% from the previous year).
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Comparatively, hard seltzer also saw a slowdown from 158.9% (2020-2021) to a mere 11.5% (2021-2022).
Not All FMBs are Fading Not all FMB brands are waning, however. FMB brand director for Smirnoff, Lisa Lee, points to a 17.2% growth rate for the Smirnoff ICE Portfolio over the past six months, with a 13.1% increase for Original Smirnoff ICE in the same timeframe. “We still see consistent YOY growth with our FMBs as we leverage new and different flavor offerings to satisfy consumer demands,” she explains. Twisted Tea, Boston Beer’s submission into malternatives, is another longstanding success story in the FMB space. “We see Twisted Tea’s growth as a category all of its own,” says Twisted Tea brand director Erica Taylor, explaining the brand has experienced double-digit growth for 14 years and “is now the #1 FMB and the fastest growing brand in top 25 beer,” according to IRI data. In a recently published piece for Good Beer Hunting on the brand, reporter Kate Bernot revealed that Twisted Tea “outsells Boston Beer’s flagship Samuel Adams beer family 3 to 1 in chain retail” and only Truly hard seltzer is a bigger seller in the company’s overall portfolio. In the same piece, Taylor shared panel data that shows “Twisted Tea has more than doubled its share of non-seltzer packaged FMB sales from 10% in 2017 to nearly 23% in 2021. Last year, Twisted Tea’s chain retail sales growth rate was triple that of the overall FMB category.”
