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Cider Fever

The apple of malt beverage suppliers? and consumers? eyes is hard cider. Even more than craft beer, cider is being hailed as the fastest-growing segment of the malt beverages category.

In 2009, hard cider was a $35-million market in the United States. Last year, it exploded into a $172-million market and the segment is continuing to grow at a rate ?way ahead? of craft beer, according to Chicago-based market research company SymphonyIRI Group.

Hard cider is certainly not new ? our country?s forefathers like John Adams reportedly drank it every day ? but it is recently enjoying a new phase of nationwide and global resurgence. Consider that dollar sales of hard cider grew nearly 200 percent in convenience stores for the 52 weeks ended March 23, reaching $53.07 million, according to IRI?s Infoscan Reviews.

Major supplier involvement is adding to the subcategory?s excitement and momentum.

The leader in hard cider brands is, far and away, Angry Orchard from The Boston Beer Co., which IRI data shows as currently accounting for nearly 68 percent of the total cider market in c-stores. In fact, Angry Orchard is the company?s hottest brand, outgrowing even its beer brands.

However, the largest mass-market brewers have recently started getting in on the apple action, too. Anheuser-Busch last year introduced Stella Artois Cidre and this April, launched Johnny Appleseed Hard Apple Cider. Meanwhile, MillerCoors added Smith & Forge Hard Cider, which is targeted at men, and Heineken became marketer of the Strongbow cider brand.

Convenience Store News recently caught up with executives from three of these key players ? George Ward, director of off-premise national accounts for Angry Orchard; Royce Carvalho, brand manager of Smith & Forge; and Alejandra de Obeso, Heineken USA brand director for Strongbow ? to dig deeper into the hard cider phenomenon.

Here are their takes and tips on this growing niche.

Convenience Store News: How would you describe the recent growth of the hard cider category? Is it comparable to craft beer in any way?

Ward: We?ve been making cider for 15 years and it?s great to see the recent growth of the category. Compared to a year ago, retailers are approximately doubling their space. For example, where there were once two to three brands of hard cider, there are now about six brands.

Relating cider to craft beer, it took almost 30 years for craft beer to become what it is today and it is still only approximately 9 percent of the U.S. beer market. In the U.S., cider is only 0.6 percent of the beer market, whereas in England, it?s closer to 20 percent. So, we have a long way to go until American drinkers recognize cider and are as knowledgeable about it as they are about beer. But we think cider and craft beer drinkers share similar tastes. They appreciate high-quality ingredients and experimenting with new flavors.

Carvalho: The hard cider market looks to be developing a lot like the broader beer market. There is a large mainstream segment with a lot of volume potential, imports make up a fair share as well, and then there is the high-end with craft and artisanal ciders, which is also growing.

The mainstream segment, in terms of opportunities, is experiencing major growth right now. This is where our hard cider, Smith & Forge, plays.

In mature cider markets, like the United Kingdom, you?re starting to see the types of differentiation and segmentation in cider that you see in U.S. craft beer.

de Obeso: There are three important trends driving the growth of cider: the demand for variety and natural alternatives to beer and other adult beverages; the growth of upscale products; and the increased demand for refreshment. Cider is unique in its ability to offer all three of these qualities. As a result, hard cider has emerged as a strong beverage alternative among consumers.

In contrast to the beer category, cider appeals equally to both men and women. Furthermore, cider draws its consumers from other categories outside of beer ? specifically wine and spirits.

Cider is gaining awareness and traction as a viable adult beverage alternative with growth rates that mirror craft beer growth in its emerging stages.

CSN: From your perspective, how is hard cider faring in the convenience store channel? Are you seeing more c-stores making room? How can the channel best merchandise the category and maximize sales potential?

Ward: Cider is tiny with a 0.3-percent volume share, but there is a lot of excitement around the segment. C-stores can best merchandise the category by focusing on lead brands to drive trial and repeat purchases. They should position it on the shelf with other similar-priced, high-end items like craft beer and imported beer. They should group all ciders together to create a section that is easy for the customer to spot, and consider utilizing merchandising tools like shelf strips, cooler stickers or internal POP (point-of-purchase) to call out the section.

Also, we see some retailers merchandising Angry Orchard Crisp Apple 12-packs of both cans and bottles together to capitalize on the increased consumption during the summer selling season, especially around key summer holidays. Also, we see that 16-ounce singles are driving trial and are typically priced to be promoted in a ?two-for? bundle.

Carvalho: MillerCoors got into cider because we saw a major opportunity: No one in the cider category was speaking to legal-drinking-age Millennial men. We see c-stores as our brand?s biggest opportunity, and we built the brand with c-stores specifically in mind. It?s why we?re in cans and offering both 16-ounce and 24-ounce packages. Guys come to c-stores looking for refreshment.

For merchandising, Smith & Forge works great in a cooler as a multipack or a single. From a brand perspective, we have some great suction cup racks that are proving to be incredibly effective at getting guys to try our cider. We?re doing so much TV and digital marketing that guys are really coming to the store seeking out the brand.

de Obeso: As hard cider is growing at an accelerated rate, c-stores are becoming increasingly more important as part of the off-premise footprint for the category. Per Nielsen FDCM+ (food, drug, convenience, mass and other outlets), 27 percent of off-premise cider volume is now sold through c-stores, four times more than it was in 2010.

In terms of space, we?re now seeing that the average number of hard cider SKUs in the store is also growing, although there is significant upside in assortment.

CSN: Who is the typical hard cider consumer? Please share any insights as to how retailers can best target this market.

Ward: Angry Orchard?s hard ciders appeal to drinkers who look at cider as an alternative to beer, wine and spirits. Cider drinkers are a lot like craft beer fans. They are looking for a great-tasting but refreshing beverage crafted with quality ingredients. We?ve found that cider appeals to both men and women equally, whereas beer typically skews 80-percent male. Consumers looking for gluten-free options also gravitate to hard cider since it?s made with fermented apples and is a flavorful but refreshing, unique alternative to beer that also offers a variety of styles.

Carvalho: The typical hard cider consumer is changing on a monthly, and almost weekly, basis. Before cider started growing at this incredible rate, this consumer was essentially a small niche in the total alcohol consumer market. What we?re seeing with Smith & Forge is that we?re bringing in a completely different consumer to cider for the first time; it?s broadening the base.

We?re seeing guys come into cider in a real and meaningful way. We?ve got packages (cans) that speak to guys and how they like to enjoy alcohol beverages. We?ve also got a lot of media and advertising, getting his attention for the brand. We?re seeing he?s actually looking for us at retail. We see posts on our Facebook page, on Twitter and on Instagram, where guys are asking us where to find the brand at retail. These guys are looking for the brand on the shelf, so one of the best ways to target this guy is to just be available and on-shelf in the cooler door.

de Obeso: Today?s Millennial consumers are always on the hunt for what?s new and increasingly seek out variety, flavors and innovation from the alcohol beverage category. Many consumers are turning to cider as their preferred beverage because it?s less filling, sweeter and seen as a more natural and gluten-free alternative to other alcohol beverage options.

Retailers can capitalize on the exploding growth of cider by educating their customers through dedicated warm and cold cider sections, standalone displays, cross-merchandising offers and tastings that will drive engagement, traffic and ultimately, increase sales and profits.

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