Beer, Wine & Spirits

No hard times for hard soda as sales soar, new brands sprout

Not Your Father's Root Beer
Source: Small Town Brewery

Last year, hard soda took the beer business by surprise, even as questions surfaced about how long the alcoholic soda variants could keep the momentum going. Would they quickly fizzle out?

Yet as the key summer beer-selling season gets underway, the category shows no signs of slowing down.

A multitude of new brands have entered the market in the last six months, pushing hard soda's off-premise dollar sales above $100 million through the middle of April, Chicago-based market research firm IRI estimates. Those figures measure sales at multioutlet and convenience stores.

The leader in sales remains Small Town Brewery's Not Your Father's Root Beer, which started the hard soda trend after its national rollout last June. According to IRI, Not Your Father's Root Beer has tallied $36 million in dollar sales through April 17, doubling up the next-best-selling brand in that time period: Anheuser-Busch InBev's Best Damn Root Beer.

Not Your Father's strong start to the year comes after it generated more than $104 million in total dollar sales in 2015.

"It has been an incredible ride," said Greig DeBow, president of Small Town Brewery. "We were completely overwhelmed and excited by the response."

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While Small Town actually brewed its first batch of hard root beer in 2012, it was a partnership last year with Pabst brewing that rocketed the label to nearly instant success. After rolling out a limited distribution in March, Pabst took Not Your Father's Root Beer nationwide last June.

By July, the brand had cracked the top-30-selling craft beer brands and finished the year among the top-10 best-selling craft beer brands overall. It outsold craft stalwarts like New Belgium's Fat Tire, Lagunitas' India Pale Ale and Samuel Adams' Boston Lager.

"The timing was right. It really tapped into a desire among consumers for new and interesting flavored craft brews," said DeBow. "We're thrilled that it struck a chord with so many people."

It’s clear that we’ve hit on something that is really appealing to people.
Greig DeBow
president, Small Town Brewery

Last summer, Small Town largely had the hard soda category to itself. Yet this year brings a number of new players to the space looking to tap into the trend.

In addition to Anheuser's Best Damn Root Beer and Best Damn Cherry Cola, at least 39 other hard soda brands have entered the fray, according to IRI data. These include MillerCoors' Henry's Hard Ginger Ale and Henry's Hard Orange, and Boston Beer Company's Coney Island Brewing Hard Root Beer, Hard Ginger Ale and Hard Orange Cream ales.

The increased competition, along with bigger marketing and distribution that come with it, has led beer-industry watchers to suggest 2015's banner year could be the start of something even bigger.

"There probably is more consumer awareness now that the Not Your Father's product has been out for a year," said Chris Furnari, editor of beer-industry trade publication However, he believed that "consumers are just getting introduced to the fact alcoholic root beer or hard soda exists."

Furnari added: "You'll probably see similar trends this summer as you did last year, maybe not quite the gangbuster sales from that initial debut, but I think it's still going to continue to grow this summer."

The hard soda category, while still a small part of the overall beer business, has grown quickly enough that it's already more than 1 percent of total beer category dollar sales. That is only slightly behind total cider's share of 1.2 percent, IRI noted.

The category's quick rise has helped quell initial skepticism about the overall viability of the category, at least in the short term.

"When Not Your Father's first rolled out, there was a little bit of a shock value to it [among] industry folks that questioned how long it could last," said Furnari. "Now that there are these healthy trends for a full year, the skepticism has subsided a bit. Retailers are starting to give it more space on the shelf and take it seriously."

Not Your Father's Ginger Ale
Source: Small Town Brewery

For its part, Small Town isn't taking the sales boom of its flagship brand for granted. The company is looking to keep consumers engaged by rolling out its own options.

It released a Hard Ginger Ale in September, and plans to offer a Vanilla Cream Ale flavor this month. This summer, Small Town also expects to make a higher alcohol version of its original root beer, previously only available on tap at the brewery, available nationwide on draft and in limited edition bottles.

Small Town's president added that soaring sales and stiffer competition are indicative of a bigger trend.

"There are certainly a lot of others trying to replicate what we've done," DeBow said. "It's clear that we've hit on something that is really appealing to people."