by Tom McCormick

Malternative -- are they coming or going? It all depends on who you ask. But one thing for certain, the test will come with the arrival of springtime. With the change of the weather, if they decline instead of keep on truckin, it could expose good opportunity for specialty beers.

The bane of craft brewers for robbing distributor's attention and nudging in on shelf space, malternatives have been talked about and analyzed to the bone. At the annual Brewers Association of America conference last month in Seattle the general consensus was that malternatives are a fading fad, thank you very much. Marketing budgets have been reduced, brands have gone away and there appears to be a decline in sales. But there are still those that believe it may be just a seasonal slowdown and the growth will surge again come springtime. "Watch for malternative growth in March and April", said Harry Schuhmacher of Beer Business Daily. His assessment was guarded though by noting that "pipeline-filling will be over, and (springtime) will be the test."

For distributors, malterntaives have been one of those golden girl products. Good margin and a lot of boxes with not a lot of selling. And, it's so early in the products lifecycle, there has been little margin-killing discounting. But even on the distributor panel, there wasn't a whole lot of optimism. Ron Fowler, CEO of Liquid Assets, a group of large brand distributors, foresees there to ultimately be "three to four winners and eight to ten losers." A common assessment seems to be that a few will survive, but the bulk will go away. As with wine coolers, there will probably always be a few SKU's of malternative in almost any off-premise set. But both specialty and major brands should gain back some lost real estate. Joe Miglino, buyer with Larry's Markets, a chain of higher-end grocery stores in the Pacific Northwest thinks that "two or three or four will live on and craft will fill in the shelf space."

Malternatives also face a darkening regulatory sky. "This is the first time in 60 to 70 years that there has been a serious examination of a malt beverage." Said Marc Sorini, Legal Counsel for the BAA and noted alcohol beverage attorney with McDermott, Will & Emery's Washington, D.C. office. Even with the regulatory pressure eased a bit by the BATF's homeland security makeover "2002 saw a lot of state pressure" said Sorini who noted a number of states that were scrutinizing malternatives.

Now would be the time for the craft category to strategize juts how to perhaps take advantage of a likely cool-down in malternative hype this spring. If sales of malternatives do flatten, or decline, distributors will be looking hard to replicate lost margin and sales versus same period last year. Specialty brands looking to expand distribution may be in the right place at the right time. In the retail trenches, no doubt the major beer brands are positioning to elbow into any SKU space that opens up - but retailers will certainly be looking to domestic craft and imports to fill some space as well.