Beam and Cola set to shake up US RTDs

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Related tags: Jim beam, Alcoholic beverage

Jim Beam is to launch Beam and Cola, an RTD brand which actually
contains the bourbon whiskey for which it is named.

The market for ready-to-drink (RTD) alcoholic drinks is dominated by two countries. In Europe, the UK leads the way, although other countries also have burgeoning sales. The other main market is the US, but products there are slightly different than those seen in Europe in that many of them do not actually contain the spirits whose brand name they carry.

The main example of this is Smirnoff Ice, produced by UK-based drinks giant Diageo. While the brand is sold in both the UK and the US, the American version of the drink is not based on the Russian vodka whose brand name it carries but rather on a malt-based drink more often consumed as an alternative to beer.

These products, widely known as 'malternatives' - are now widespread in the US, with brands such as Bacardi Silver (produced by brewer Anheuser-Busch in association with the rum group) and Skyy Blue (made by Miller Brewing but using the vodka name under licence from Campari) becoming increasingly widespread.

The big spirits groups have opted for this approach for a number of reasons, not least because partnering with a major US brewer and producing a mixed drink with a relatively low alcoholic strength (at least compared to their UK or European counterparts) has given them a rapid foothold in the US market.

But the latest brand to hit the market could force a change in the way the malternative market is seen by its core consumer base - drinkers in their 20s. Jim Beam and Cola claims to be the first RTD brand launched in the US which actually contains the named spirit brand - in this case the eponymous bourbon whiskey - and is playing heavily on this fact to attract drinkers away from rival brands.

Jim beam cited a survey which showed that 68 per cent of US drinkers over the age of 21 believed that the malternative beverage they were drinking actually contained the named spirit brand - an easy enough mistake to make when the overriding flavour of the drink comes from the fruit ingredient, but one which is hardly likely to engender customer loyalty, Jim Beam argues.

The company also said that two-thirds of Jim Beam consumers said that mixing the whiskey with cola was their preferred way to drink the brand, making this the obvious place to start when creating a new RTD product.

"This is not a flash in the pan, fly by night new product idea,"​ said Tom Hernquist, senior vice president of marketing at Jim Beam Brands Worldwide. "The new Beam and Cola ready-to-drink product takes the most popular way of consuming Jim Beam Bourbon and puts it in a convenient, high quality and refreshing format."

The brand will be launched on 1 May in Colorado, Florida, Illinois, Indiana, Kentucky, Ohio and Texas, the seven states which make up one-third of Jim Beam's sales. The product is likely to be rolled out to other markets in 2004, the company said.

The retail price of six-packs of Beam and Cola 12.7-ounce longneck bottles will vary by market. The product, which performed extremely well in consumer testing according to the company, will contain 5 per cent alcohol by volume, comparable to the alcohol content of beer and malt beverages, offering drinkers a spirit-based alternative but without the associated increase in alcoholic strength, the company said.

The drink's packaging will resemble that of Jim Beam bourbon's traditional white label, and the launch will be supported by a major marketing campaign including advertising and local promotions launching in April.

Although the US is the spiritual home of Jim Beam, the first market to get Beam and Cola was in fact Australia, where the drink has been available for more than a decade. Jim Beam said that Beam and Cola had a 6 per cent share of the Australian market for packaged beer, selling approximately 4 million cases in 2002, up 25 per cent from the previous year.

Bacardi Silver extension

But the launch of the first spirit-based product in the US market is unlikely to stop the continued rollout of new malternative brands, as was shown recently with the launch of a second brand under the Bacardi Silver banner.

Also produced by Anheuser-Busch, Bacardi Silver O3, is an orange-flavoured variant of the Bacardi Silver brand made from three varieties of orange: mandarin, valencia and tangerine. The company claims it is the first orange-flavoured malt beverage in the US.

Launched just this week, O3 will be available in retail accounts where Anheuser-Busch products are sold, such as supermarkets, convenience stores, clubs, bars and restaurants.

"We are very excited to build on the success of Bacardi Silver and introduce 'O3' to contemporary adults across the country on 3 March,"​ said Marlene Coulis, director of new products at Anheuser-Busch. "We've developed a great-tasting product that is sure to satisfy the growing tastes consumers are searching for, and increase our share of the competitive FAB landscape."

"We're proud to continue our trademark relationship with Anheuser-Busch on another high-quality flavoured alcohol beverage,"​ said Marcos Perez, vice president of Bacardi Beverage Company. "We believe Bacardi Silver O3 capitalises on the strengths of Anheuser-Busch and the Bacardi trademarks."

The brand will be available in six- and 12-packs of clear, high-shouldered 12-oz. bottles, and in a 22-oz. bottle. The applied plastic label features the Bacardi Silver O3 logo and Bacardi bat device trademarks. The Bacardi bat device is embossed at the neck of the bottle. Like Beam and Cola, it is 5 per cent abv.

Related topics: R&D

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