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Anheuser-Busch Thinks You Don't Know Jack

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Underscoring the continued importance hard cider plays in the fortunes of brewers, Anheuser-Busch InBev (NYSE: BUD  ) says it is committing limited resources to introducing a whole new brand to the market to challenge the commanding lead craft brewer Boston Beer (NYSE: SAM  ) has carved out for itself.

While A-B introduced Stella Artois Cidre earlier this year (and one through Michelob), that was more of an effort to siphon off white wine drinkers with its premium European taste profile. It even marketed it as being "designed to be savored and pair [sic] well with chicken, fish and a broad selection of cheeses, including Camembert-style cheeses, English cheddars, semi-firm cheeses such as Gruyere and washed-rind cheeses." Compare that to Angry Orchard and other U.S.-centered hard ciders and it looks to be more an alternative for beer drinkers than wine sippers.

Anheuser-Busch's new Johnny Appleseed hard cider recognizes that taste profile as well as the niche's growth as a separate category all by itself. A joint venture of SABMiller  (NASDAQOTH: SBMRF  ) and Molson Coors (NYSE: TAP  ) , MillerCoors, also made a big move into cider, acquiring Crispin Cider last year while planning to unveil Smith & Forge, a more male-centric brand with a 6% alcohol by volume, next year. Women thus far have been the primary target demographic for cider makers, with market analysts at Rabobank saying 55% of cider drinkers are women under 30. 

Johnny Appleseed's launch date is set for April, 2014, and is targeting Angry Orchard, which, according to IRI, has a 47.3% market share with $91.2 million in sales over the past 12 months. Analysts figure it will grow volumes another 65% this year, making it the fastest-growing hard-cider brand, ahead of C&C Group's (NASDAQOTH: CCGGY  )  second place Vermont Hard Cider's Woodchuck brand, which is expected to see 5% higher growth this year.

A-B's new cider is actually named after a real person, John Chapman, who gained fame in the early 1800's for planting sour apple orchards across the east and midwest. Such apples were commonly used to make hard cider and applejack, another strong alcoholic beverage made from apples popular in the Colonial era (think about that the next time you have your bowl of cereal of the same name).

The new product launch, though, is an indication cider is here to stay. Although some Wall Street pros think the niche may already be tapped out, I've suggested this market isn't done fermenting, and Anheuser-Busch's entry shows it's committed to seeing it blossom to its full potential -- even if Boston Beer remains the one to beat.

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9/27/2016 3:09 PM
BUD $131.97 Down -0.23 -0.17%
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SAM $150.54 Up +0.78 +0.52%
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