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Red beer is newest U.S. niche market


Red beer is creating a buzz, and it's not because of the alcohol.

All of the major U.S. beer makers are lining grocery store shelves this summer with red-colored beers in an effort to boost sales and woo ever more discerning beer drinkers.

Anheuser-Busch Inc., the biggest brewer of them all, is so red hot on crimson brews that it has rolled out three: Elk Mountain Red Lager, Red Wolf Lager and Elephant Red.

"Every brewer is hoping they've found the next sustainable category," says Cinde Dolphin, a spokeswoman for Coors, which has been marketing George Killian's Irish Red since 1983 and recently came out with Coors Red Light.

So far, red beer sales are brisk. The category, created about eight months ago, now commands a respectable 1.2 percent market share, brewers say.

"I like it because it's smooth, and since I'm not a big beer drinker that's important to me," photographer Tracy Silveria, 32, said after sampling a Red Wolf recently at a friend's party in Santa Ana, Calif.

Big brewers -- desperate to spike flat beer sales -- are hoping more consumers will sample their reds.

Beer sales lost their fizz in the 1980s as consumers became increasingly concerned about drinking and driving as well as about their health. Last year, 190 million barrels of beer sold domestically, a level that has more or less been unchanged for the past five years.

The only froth in the market is being generated by heartier, more distinctive specialty beers made mostly by regional or micro breweries. Specialty beers -- made in varieties ranging from wheat to strawberry to red -- are growing at a rate of 40 percent annually because of beer drinkers such as Corona del Mar, Calif., resident Joe Leon.

"I like a beer that's more like a food," says Mr. Leon, who traveled to Germany years ago and ever since has enjoyed a richer brew.

It's not surprising, then, that big brewers are trying to tap a segment of the market that's growing and emulate their smaller competitors by offering red brews. Beer makers also have become increasingly reliant on new beers to compete in the stagnant market. New products accounted for 6 percent of the market last year, or $2.7 billion in retail sales, according to Coors.

"You have to introduce new products to protect your existing market share," says Robert Weinberg, a St. Louis beer consultant.

But the efforts of big beer makers have met with mixed results in the past. Beer makers haven't come up with a gangbuster since light beers, which have a 35 percent share of the market. Attempts to market a low-alcohol beer in the mid-1980s failed miserably. The beers garnered just 0.22 percent market share and disappeared from grocery store shelves by 1991.

Nor have dry beers been a huge hit. They captured just 0.83 percent of the market last year, according to Mr. Weinberg. Ice beers are faring better, garnering about a 5 percent market share, but some beer experts say their growth is starting to taper.

"It's not clear yet if red beer is a fad or not," says Peter Reid of Modern Brewery Age.

Red beers from the major brewers -- who together control 80 percent of the market -- haven't impressed many beer aficionados, known in the business as "hop heads."

"I think it's just a gimmick," says Jim Neilson, 53, an Irvine, Calif., property manager who once made his own home brew. "The color of beer has nothing to do with flavor. I think it's just a hoax."

Indeed, red beers are nothing but a catchy name, says Joseph Owades, director of the Center for Brewing Studies in Sonoma, Calif. Mr. Owades says the red color is created when the malt is removed earlier in the roasting process.

"If you make toast and you take it out just before it's done, have you created something new? No," Mr. Owades says.

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