Stateways Sept-Oct 2014

StateWays is the only magazine exclusively covering the control state system within the beverage alcohol industry, with annual updates from liquor control commissions and alcohol control boards and yearly fiscal reporting from control jurisdictions

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StateWays Q Q September/October 2014 44 By Michael Park How's the state of the hard cider market these days? Well, as a cider maker might say, it's mostly sweet and a little bit sour. There's a lot of sugar to the tongue these days. Though it's still hovering around the 1% mark of the $100 billion beer market, the industry has seen tremendous growth in the past decade, and it's been picking up even more the last year, with growth in 2013 at a whopping 65.6%, according to the Beverage Information Group. By one measure, last year's sales (from late January 2013 to late January 2014) hit $220.7 million. That translates to nearly 16.8 million 2.25-gallon cases, compared to just over 10.1 million the year before. Within the industry, experts say they wouldn't be surprised if hard ciders were 3% to 5% of the beer market within the next fi ve years. "I would say you're looking at a $2 billion market in 2020," says Jeffrey House, president of the California Cider Company, which puts out ACE Premium Hard Ciders. "In 2030, my guess is it will be as big if not big- ger than it is in the British market, probably 15% of the market." In other words, few industry observers consider hard cider to be a niche anymore. "Cider is growing at tremendous rates across the country as consumers are discovering and converting to the category with no clear signs of slowing down," says Alejandra de Obeso, Heineken USA brand direc- tor for Strongbow. "We don't believe cider is going to do what it did in the past, which is to say be a category that shrank over- night," says Eli Aguilera, marketing executive for Johnny Appleseed, the new Anheuser-Busch InBev hard cider. "Consumers are more accepting today than at any time in the history of the variety." The surge of cider comes at a particularly critical point for non-distilled alcoholic beverages. Since 2007, beer has been coming out fl at at the U.S. tap, with consumer- research fi rm Mintel reporting sales have been stuck on what's basically a plateau from 2012 to 2013, with 2.79 billion cases sold last year compared to 2.78 billion cases sold the year before. And neither of those fi gures looks great compared to 2009, when the beer industry was be- moaning the 2.9 billion cases sold. Analysts point to a number of reasons for the decline, chief among them the fact that younger people simply aren't drinking as much beer — in the early and mid-'90s, 71% of 18- to 29-year- olds considered themselves beer drinkers. In 2012, ac- cording to Gallup, only 41% did. It seems like a layup for hard ciders, whose stron- gest demographic group is the 21- to 35-year-old set — it's hard not to notice how quickly the term "millen- nials" comes to the lips of hard cider makers. (Notably, Anheuser-Busch InBev is seeing consumers similarly embrace its line of drinks like Lime-A-Rita and Straw- Ber-Rita, fruity hybrids of margaritas and light beer.) And with a disproportionate say in setting down the initial The fast-growing hard cider market is seeing an infl ux of new brands jostling for position. Cider Scramble "The legal-drinking-age millennial is eager to experiment with new Å avors, and they expect choice." — Royce Carvalho, brand manager, Smith & Forge, MillerCoors

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