To craft beer enthusiasts, it may have read like a joke: "Primed for fast start, Sol Chelada launches today." However, the Michelada style of drink—a sort of beer Bloody Mary made with a combination of tomato juice and spices—is no laughing matter in terms of its popularity or success.
In 2018, a collection of eight major michelada brands—ranging from versions made by Tecate and Modelo to Anheuser-Busch InBev—accounted for $380 million in IRI-tracked grocery, convenience, and other stores. It’s roughly the same amount consumers spent on the entirety of AB InBev’s craft portfolio in those same stores.
MillerCoors’ move into the michelada space isn’t just a smart one because of that figure, but also because of how the company has positioned Sol in the past year. Since MillerCoors agreed to a 10-year marketing and licensing agreement with Heineken in 2017 to take control of U.S. marketing and sales for the Mexican beer, Sol has been red-hot. Dollar sales of the Sol family of brands almost tripled in IRI stores from 2017–2018. Last year’s $24.1 million wasn’t far off from the previous three years combined.
It’s a hell of a lead-up for Sol Chelada, a 3.5% ABV beer made with tomato juice, natural lime flavor, spices, and other natural flavors, which appeared on shelves for the first time at the beginning of February. To put its path to success in perspective, in the first three weeks of 2019, those eight aforementioned michelada brands amassed $17.5 million in IRI sales, which was more than Blue Moon beers.
As easy as it might be to scoff at a MillerCoors company blog post about the release of a new flavored beer, it should act as a reminder of the less-talked-about areas within the alcoholic beverage space. Just because something doesn’t register on the radar of the average rating-site user doesn’t mean it isn’t trendy. Or making a shit ton of money.
Samuel Adams is a nationwide mainstay at bars, restaurants, and airports, but 2018 was the second consecutive year that Twisted Tea outsold the iconic brand portfolio in IRI stores. It’s a good problem to have for the multi-category company, and kinda, sorta, maybe the reason the Brewers Association changed its definition of “craft brewer” to accommodate the heritage company. Hard tea, cider, and seltzer are a larger part of Boston Beer’s portfolio with every passing year.
In 2018, Twisted Tea tallied $326 million in IRI sales, a good chunk of the almost $500 million that the most recognizable and top-selling flavored malt beverage (FMB) and malt liquor brands (like Steel Reserve, Smirnoff Ice, Small Town Brewery’s hard sodas, and more) accrued. To put that in perspective, that dollar amount is a little less than the combined IRI sales output of Founders, Stone, Lagunitas, and Shiner. Steel Reserve 211 High Gravity Lager sold $162 million in product last year, a little more than two-and-a-half times what Boston Lager made in IRI stores.
These stats play an interesting role within the broader story of the U.S. beverage alcohol market. On the whole, purchase behaviors and an additional focus on well-being have led to a lower volume of drinking, meaning growth in the alcohol category isn’t easy to come by. In spite of those difficulties, these kinds of products continue to thrive.
The biggest exception may also be one of the most well-known. The Bud Light "Rita" family of FMBs has fallen precipitously since hitting a high in sales in 2014. From that year through 2017, it lost almost 45% of its dollar sales. From 2012-2014, it had been growing at double and triple-digit pace year-to-year. It continues to be one of the highest-selling FMBs on the market, however, amassing $254 million across IRI stores in 2018, about $60 million more than Twisted Tea’s flagship Hard Tea brand. To put that in context, Bud Light Ritas made the same amount of money in IRI as Sierra Nevada’s entire portfolio.
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When it comes to FMBs specifically, part of their success may be apparent from their nicknames. “Malternative” or “alcopop” are common second references to the category, and conjure up a key attraction: the versatility and child-like flavors that many use as a focus of sale. While Small Town Brewery tried to peg Not Your Father's Root Beer in the beer space, it's actually classified as an FMB. After hitting its cultural peak in 2015, it’s since lost 80% of volume in IRI stores, although it did manage $21.2 million last year—down from $109.5 million four years ago.
This is a big reason why turnover is so high in this space: to maximize attention and keep customers by constantly offering something new or different. Small Town grew from that singular root beer brand into almost a dozen other products. The Mike's Hard lineup has almost 50 different SKUs in the IRI system from over the years, and in 2018, the family accrued just under $333 million. And this is all aside from the behemoth of the hard seltzer market, which is primed to cross the $500 million threshold as a category in 2019.
Whether it’s alcoholic iced tea (shoutout to Arnold Palmer hard teas and their $22 million in 2018) or frat-like party games (getting “iced” contributed to Smirnoff’s combined $38 million in sales last year), there are lots of brands considered also-rans among drinkers, but whose volume and popularity can’t be ignored.
The new Sol Chelada falls outside this particular area of FMBs thanks to its beer base, but is also part of the larger group of brands often ignored by the beer-enthusiast few, but adopted widely by the casual-drinking many. "A brighter chelada has arrived" is the tagline being used for the product as it's advertised across digital spaces and social media this year. That’s an easy way to describe the future for many of these products, too.
Words by Bryan Roth