Sam, Jeremiah, and my Penchant for Girl Drinks
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For the past few days the heat here in Washington, DC has been stifling. Luckily it's cooled down a bit but on those days when I am reminded that DC was (is?) a festering swamp, nothing cuts through the thick, wet blanket of humidity like a cold rooftop drink. I don't mean chocolate milk. Something about the drying effect of alcohol provides the perfect antidote to the weather and my go-to lately has been the John Daly, that is the alcoholic Arnold Palmer. One of the best versions of these is actually made by none other than Sam Adams himself, aka Boston Beer (NYSE: SAM). Their line of Twisted Tea (malt) products pretty well replicates the flavor of the fresh poured version, but with less booze (fresh poured usually uses 1/3 sweet tea vodka and 2/3 lemonade). Sure, it's an alcopop, there's no way around it. But it's tasty and perfect for summer.
Not familiar with the term "alcopop"?, think Mike's Hard Lemonade, Bacardi Breezers, or for those still living in 1987, Wine Coolers. Basically these are any individual serving, flavored alcoholic beverage, but are dominated in the industry by Flavored Malt Beverages. Domination is a relative word in this particular case given that in the grand scheme of the $30 Billion US beer manufacturing industry, FMBs are a drop in the bucket constituting only 2%. In this same vein (and another category in which SAM is involved) is hard cider, which only makes up .2% of the beer consumption, but saw a 25% volume increase in 2011. These drinks are finding new customers in those that might be intimidated by the complexity and price of the resurgent American cocktail scene.
Better yet, these drinks could serve as a gateway to more profitable products. Diageo's (NYSE: DEO) Jeremiah Weed, for instance, offers canned malt versions of cocktails made with its popular sweet tea vodka. Also on offer is a canned "spiked cola," and "lightning lemonade," both good introductions to inspire creativity with the more expensive vodkas and bourbons.
Diageo is obviously a huge alcohol brand umbrella, but I was surprised to see all that SAM had to offer. As the FMB and cider market grow, it will be interesting to see how SAM capitalizes on it. They are already in a good place and there is plenty of room left to grow.
TheLaowai has no positions in the stocks mentioned above. The Motley Fool owns shares of Boston Beer. Motley Fool newsletter services recommend Boston Beer and Diageo plc (ADR). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
