USA: Energy beer segment booms its 1% share of the almost $9 billion beer industry

Energy beer, a fusion of traditional ale and caffeine, is the latest novelty to hit the beer industry, ABC News communicated July 12.

SAB Miller announced recently it would buy McKenzie River Corp.'s Sparks, a caffeinated alcohol malt beverage with ginseng, guarana and taurine. The orange-colored brew was the first of the new energy beers to hit the market and has been credited with spawning a new breed of beer and opening a new market for beer brewers worldwide.

"Sparks was the innovator and creator of energy beer," said Pete Marino, a spokesman for the Miller Brewing Company. "The category didn't really exist before Sparks came out."

In the two years since its 2003 debut, Sparks saw an annual growth rate of more than 100 percent. When the drink took off, brewers took note and the number of energy beers hitting the market has increased steadily.

In early 2005, Anheuser-Busch introduced BE (pronounced B-to-the-E), a caffeine-infused beer with a blend of herbal stimulants. The company later launched Tilt, a malt beverage enhanced with caffeine and fruit flavors. In May the Miller Brewing Company released Mickey's Stinger, a malt liquor that packs more caffeine than a cup of coffee.

Though energy beers segment is new and fairly small - experts say it might constitute 1 percent of the almost $9 billion beer industry - its triple-digit growth rate is enticing. While sales of domestic beer lag and growth in light beer idles, energy beer booms.

"The growth potential is a lot steeper in this category than it is in other categories," Marino said. "It's an extremely attractive segment right now."

But beer makers have reason to embrace it because beer's status has slipped in recent years.

Industry publications estimated that in 2005 beer constituted 55 percent of all alcohol consumed in the United States, down from 59 percent in 1998. According to experts’ estimates, ourdays’ drinkers thirst for flavor and variety, and they're turning to spirits like vodka and rum to get their fix. Energy beer is a way for brewers to fight back.

Brewers know that not all the 127 million American adults who drink malt beverages will go for energy beer. They're targeting so-called entry-level drinkers - people between the ages of 21 and 27 who have made energy cocktails like the mixture of Red Bull with vodka so popular.

In a written statement, Anheuser-Busch vice president Andy Goeler said: "Consumers expect choices, and we continue to increase the range of popular beers and beverages we offer. Caffeinated beers are only one example. ... We will continue to take cues from adult alcohol beverage drinkers to ensure, no matter the drinking occasion, we have something for everyone."

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