Energy Beers Boost Brewing Industry

For centuries, cracking open a cold one has been the cue to kick back and relax. Now brewers hope Americans will take to a cold beer designed to rev up rather than slow down.

Energy beer, a fusion of traditional ale and caffeine, is the latest craze to hit the beer industry.

Last week SAB Miller announced 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.

Growth Rate, Variety Attract Brewers

Though the 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."

The trend confounds traditionalists. Sachin Kulkarni, a self-proclaimed beer aficionado, cringes at the thought of energy beer.

"I like the taste of beer in its essence," he said. "And caffeine, all these added ingredients, it takes away from the purity of beer."

'Entry-Level Drinkers' Targeted

But beer makers have reason to embrace it. Once thought to be as American as apple pie -- colonists built breweries in Pennsylvania and North Carolina long before the Revolutionary War -- beer's status has slipped in recent years.

Beer Marketer's Insights, an industry trade publication, estimated that in 2005, beer constituted 55 percent of all alcohol consumed in the United States, down from 59 percent in 1998.

The reason? According to Eric Shepard, executive editor of Beer Marketer's Insights, today's 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.

"People seem to be constantly craving new flavors," Shepard said. "They're interested in different styles, different products. That explains a lot of what's happening in spirits and in beer."

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.

Some Drinkers Have Reservations

ABC News spoke to men and women in energy beer's target demographic and asked them to taste two brews from the genre -- Anheuser-Busch's BE and Tilt.

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