A-B to Bacardi: Let’s Toast

ST. LOUIS–Anheuser-Busch is delving deeper into the growing flavored-alcohol beverage category by striking an alliance with Bacardi USA to produce and distribute a new rum-based alcopop, the company said.

The partners declined to provide details, and A-B wholesalers report that they’ve only been privy to last Friday’s announcement about the alliance with the maker of Bacardi Rum–the leading distilled spirits brand in U.S. and the world. Previously, A-B executives doubted publicly about whether such drinks, known as “malternatives,” would have staying power. The post-summer period will show whether brands like Smirnoff Ice and Mike’s Hard Lemonade are long-term products or just seasonal, said Bob Lachky, vp-brand management and director, global brand creative.

Smirnoff and Mike’s grabbed one percent of all malt beverage sales through the second quarter and part of their gains among young adult drinkers came at the expense of beer. August Busch IV, group marketing vp, told analysts last month that Smirnoff Ice is hurting Coors and Miller because 61 percent of the malternative moves through Coors and Miller distributors who put a disproportionate amount of focus on that brand, per Beer Marketer’s Insights.

Yet Budweiser must be feeling a pinch since A-B rolled print ads recently comparing Tequiza with Smirnoff Ice and noted that the Guinness Bass Import brand is high in calories and does not contain vodka.

Whether the Bacardi partnership means the end of Tequiza–whose ingredients include tequila agave–and Doc Otis Hard Lemon Flavored Beverage is unclear. Tequiza sales are sagging and the Old West positioning of Doc is not in the same league as hip Smirnoff and humorous Mike’s.

“We’re reaching into niche markets and trying to get consumers we ordinarily wouldn’t get with beer,” an A-B wholesaler said. “If we sell 10 cases a week of Tequiza and 10 cases a week of a malternative, it adds up over a period of time.”