Bacardi Silver ready to roll, A-B says - Anheuser-Busch - Brief Article

Modern Brewery Age, Nov 19, 2001

Anheuser-Busch and Bacardi U.S.A. are moving ahead with their collaborative beverage venture, A-B told Reuters last week. Their new product will be called Bacardi Silver, and should debut early next year. Anheuser-Busch will handle production, marketing and distribution for the product.

The players have been cagey about the formulation of the product, but analysts think it will be a malt-based cooler, similar to Guinness UDV's wildly successful Smimoff Ice.

Smirnoff Ice will probably sell about 1.8 million barrels in 2001, exceeding total malt beverage category growth for the year, ABN Amro analyst Mark Swartzberg told Reuters. According to Guinness UDV, the Diageo unit that makes Smirnoff Ice, the drink has captured 1 percent of the U.S. beer market since its late January national launch.

Analysts said that the beverage is not likely to contain any actual rum, which would cause it to be taxed at the higher distilled spirits level. In addition, a Bacardi Silver that contained rum could not be advertised on TV.

Smirnoff Ice sold in Europe does contain vodka, but the product made for the U.S. domestic market is malt-based. Thus it is taxed at the beer rate and can be promoted in TV campaigns. Consumers may be somewhat confused about the name associations with distilled spirits, but any confusion does not seem to have impacted sales in the category.

A big jump into the malternative category could hold some peril for A-B-Analysts believe Smimoff Ice is stealing the bulk of its consumers from the premium light beer segment. Since Anheuser-Busch is producer of top light beer Bud Light, cannibalization is obviously an issue. Anheuser also has a less-than-stellar record in its ventures outside the beer category.

Miller has not announced plans to launch any new malternatives, but a spokesperson said the company is looking at the category.

The number three Coors Brewing Co. looks prescient with its Zima brand, a "malternative" pioneer that was launched back in the mid-1990s. After a strong start, Zima volume peaked at 1.2 million barrels in 1994, and gradually declined as Coors refocused its limited marketing muscle on core re brands. However, Coors has reported that Zima sales have been rebounding in the past year.