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Consumers are shunning carbonated soft drinks, but the hard soda category has plenty of fizz.
Hard root beer, an alcoholic version of the classic soft drink, has been the surprise hit of 2015.
Looking to capture some of the momentum, brewers — both large and small — are rolling out their own offerings, making the hard soda category one of the most competitive spaces of 2016.
"This is the continued evolution of the change in consumer taste," said Chris Furnari, the editor of industry trade website, Brewbound.com. "The big question for everyone at this point is how big can it get and is it something that is here to stay?"
The hard soda party kicked off in earnest in June with the national launch of Not Your Father's Root Beer, which was created by Small Town Brewery in Illinois and is now distributed nationally by Pabst Brewing, which also acquired an ownership interest in Small Town. The brew rocketed to the top of sales charts to become the third best-selling craft beer brand in stores between Jan. 1 and Nov. 29, according to Chicago-based market research firm IRI.
Through Nov. 1, Not Your Father's Root Beer has generated sales of $75 million in stores, outselling long-time craft brands like Samuel Adams Boston Lager, New Belgium Fat Tire and Lagunitas IPA.
Those numbers are what grabbed the industry's attention, and the rivals are on the way.
Coney Island Brewing, a subsidiary of Boston Beer, rolled out Coney Island Hard Root Beer in August and F.X. Matt Brewing launched a Jed's Hard Soda line in November. A number of smaller players like W.G. Brewing, Forbidden Root Botanic Beers, Sprecher Brewing and Mission Brewery are among the smaller players also in the hard root beer space. Even Anheuser-Busch is joining in, unveiling its first-ever hard root beer, Best Damn Root Beer.
"We've seen a growing consumer interest in sweeter taste profiles, and we jumped at the opportunity to brew an easy-drinking, hard root beer," said Rashmi Patel, vice president, Share of Throat, Anheuser-Busch, in a statement.
Meanwhile, MillerCoors will bring some big marketing firepower to the hard soda wars in January, with the launch of Henry's Hard Ginger Ale and Henry's Hard Orange soda. The company said the launch will be similar to the introduction of its flavored malt beverage (FMB) Red's Apple Ale in 2014, which was a breakout success that year.
"FMB is something that has established itself and continues to grow, and we really believe that hard soda is the next segment to evolve, said Bryan Ferschinger, senior director of Innovation for MillerCoors.
For MillerCoors, a large part of the hard soda strategy is a generational play, aimed at what the company says is an "underserved" segment in the market: Generation X, broadly defined as those born between the mid-1960s and early 1980s.
"One of the things that's helping this whole area is that Gen X really grew up as the soda generation and when you talk to a Gen X-er, 74 percent still consume soda," added Ferschinger.
While Not Your Father's Root Beer proved there was interest in the hard soda segment, MillerCoors is looking to grow the category beyond root beer by putting its focus on Henry's Hard Ginger Ale and Henry's Hard Orange Soda.
Although Not Your Father's "primed the hard soda pump," the category is still relatively unknown, said Ferschinger. "We'll be supporting it with advertising at a national level. It's really going to help to put this segment on its two feet and help to grow it."
Still industry watchers say the push into hard soda will put increase stress for shelf and tap space, which is already bursting at the seams with hundreds of craft beers and FMB options.
"Something is going to get pushed aside for these hard sodas. Distributors are just going to go to the bottom of their list and say what's not moving," said Brewbound's Furnari. "They don't really care if hard soda is gone in another year, they're going to take what's moving in the moment."
The battle for shelf space will only intensify as some of the first movers in the hard root beer space roll out line extensions of their own, including Small Towns' Not Your Father's Ginger Ale and Coney Island Brewing's Hard Ginger Ale and Hard Orange Cream Ale.
We'll soon see how deep the interest is in these products.
"Are people going to be as excited to try the line extensions like ginger ale as they were for root beer?" Fumari asked. "We won't know for another six months or so."
This story has been corrected to reflect the proper relationship between Small Town Brewery and Pabst Brewing.