Malternatives – Marketing Lessons from Alcohol Segmentation

It seems like only yesterday I was writing about the seemingly out-of-nowhere arrival of Not Your Father’s Root Beer, and the marketing lessons to be learned from their hugely successful launch into the market. But six months have already passed, and we are beginning to see more and more hard soda brands on the shelves, just as we predicted. These beer-slash-soda brands have taken the market by storm, representing one of the most popular new trends in alcohol segmentation: “malternatives” aka flavored alternative malt beverages. Marketing professionals should take note of this influx of new brands and the buzz they generate to discover the lessons hiding just below the bottle caps.

Craft beer bar
“Malternatives” aka flavored alternative malt beverages, may soon be poured at a bar near you

Identify Whitespace

While craft brewers are taking market share away from megabrewers like MillerCoors, the industry titans are firing back with their own new product launches. They’ve honed in on what they see as “whitespace” in the market, opportunities to develop new products in a seemingly untapped category.

According to Bryan Ferschinger, MillerCoors’ director of innovation, “We’re seeing very strong trends in craft sodas and other flavorful offerings with alcohol, and we see huge consumer appeal that will allow this to be a strong national player out of the gates.” He went on, “Beer is great, but now we also have Henry’s Hard Soda – an option that gives a little more flavor and excitement.”

MillerCoors isn’t the only brewer to spot this whitespace opportunity in the market. Jamey Grosser of W.G. Brewing Co. of Nashville also believes hard soda and flavored beers are the future of the alcohol industry. Grosser explained to Market Watch Magazine that he sees tremendous room for growth in this segment, citing the huge number of vodka and spirit flavors, versus the limited number of beer flavors available to consumers. We are familiar with IPA, stout, wheat beer… but what flavors pop into your head when you think of beer? Grosser and W.G. Brewing are developing products to appeal to younger legal-drinking-age consumers with short attention spans, who are always looking for the next new thing. Additionally, these brand developers understand beer may be too bitter for some consumers, so malternative hard sodas and flavored beers could be the perfect fit (especially now that all millennials are officially legal drinking age).

Hispanic women drinking beer and wine together
Reclaiming market share with “malternatives” targeted towards millennials, all of whom are now of legal drinking age in the US

Don’t Be Too Serious

I personally love the commercials and marketing tactics of the newly launched Henry’s Hard Soda, from industry giant MillerCoors. With their Live Hard-ish campaign, Henry’s is introducing their hard soda brand (which currently comes in Orange and Ginger Ale flavors), by appealing to millennials and GenXers, who all grew up drinking sugary beverages. Henry’s Hard is marketed with a campaign that doesn’t take itself too seriously: “Gone are the days of going hard. Here are the days of hard-ish…. Because hey, we know you have stuff to do tomorrow.” This witty approach to marketing is appealing because it’s fun and a little bit silly. For added value, the products are sweetened with cane sugar, as opposed to high fructose corn syrup, which is also appealing to these younger, health-conscious consumers.

henrys hard
From Henry’s Hard Soda marketing campaign: Live Hard-ish

Future Developments

With this newly identified malternative segment of the market being developed by craft and mega brewers alike, what can we expect to see in the future? Jamey Grosser of W.G. Brewing Co. is calling this Beer 3.0: “If Beer 1.0 is mainstream breweries and Beer 2.0 is craft, then 3.0 is making beer taste like whatever you want.” Think of it as Baskin-Robbins of beer, one brand could develop 31 flavor varieties of the same beer, creating something that could appeal to everyone’s differing taste buds. With all these potential flavors and brands, there will be no shortage of new booze brands to market in the future.

Workers with forklift in bottling warehouse
Beer 3.0: Predicting a new wave of beer flavors & hard sodas will soon be ubiquitous

Marketing professionals need to always keep their fingers on the pulse of the industry. Just when it seems like there is no more room for innovation (mankind has been brewing beer for nearly 4,000 years), opportunities arise to develop new products in untapped categories. Identify these white spaces. Don’t be too stuffy when marketing to millennials. And keep your eyes on what’s yet to come. The future of the alcohol industry depends on it.

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