Anheuser-Busch to brew up new fruity beverage

ST. LOUIS -- Anheuser-Busch Cos., the world's largest brewer, is launching a new malt beverage with a citrus twist, as the company looks to increase its share of the "malternative" market.

The company early next month expects to roll out Bacardi Silver O3, named for its makeup of its flavoring of three oranges -- mandarin, Valencia and tangerine.

"It results in a refreshing, less-sweet beverage from what's out there," Marlene Coulis, the company's director of new products, said Friday.

"We're launching it on 03/03/03," she said, an easy date for consumers to remember should they be looking for the drink in bars or stores.

The company has planned a "Pass the Orange" campaign, based on the game where people pass an orange from one person to the next.

A year ago, the company released rum-flavored Bacardi Silver, which quickly became the third most-popular brand of flavored malt beverages, or malternatives, that Coulis said accounts for about 3 percent of the beer market.

Now, the brewer seeks a larger chunk of the malternative market, focusing on the segment of drinks based on brands of popular distilled spirits, like the Bacardi drinks.

Malternative sales in supermarkets and drug stores grew 36 percent last year -- a rapid rate, but less than the 79 percent expansion in 2001, according to Chicago-based Information Resources Inc.

But the real growth has been malternative drinks based on spirit brands, such as Bacardi or Smirnoff. Older lemon- and lime-flavored drinks generally are losing steam.

Bacardi Silver O3 apparently will be entering a receptive market, said David "Bump" Williams, IRI's senior vice president of global consulting. Drinkers aged 21 to 29 love to experiment with sweet flavors, he said.

"These folks are very anxious to try new products," he said. "They're hankering for something sweet."

The success of Mike's Hard Cranberry is evidence that new flavors are readily accepted by young adult drinkers, Williams said. This variant of Mike's Hard Lemonade, the No. 2 malternative, quickly captured the fifth most-popular spot, he said.

Analysts have worried that the malternative market has gotten too crowded as brewers and distillers rush new products to market. A shakeout started last fall when rum-flavored Captain Morgan Gold was taken off the market.

Williams believes other spirit-based brands will face pressure if their sales don't grow quickly enough. But he doesn't expect the same fate for Bacardi Silver O3, particularly since it's the first orange-flavored drink among the spirit-based brands.