Diageo wedges itself into hard soda space with Quaker City Malting Co.’s ‘old-timey’ malt beverages

16-Oct-2016 - Last updated on 17-Oct-2016 at 07:39 GMT

Quaker City Malting Co. launches 2 malt beverages, Lemon Shrub & Old Dutch, in Denver & Philadelphia

Diageo has entered the hard soda category in the US with the launch of two new products in partnership with Philadelphia-based Quaker City Malting Co., hopping on the booming hard soda trend.

The two companies worked in collaboration to develop Lemon Shrub and Old Dutch alcoholic sodas under the Quaker City Malting brand, which the company describes as “somewhere between a beer and a cider.” The new beverages, packaged in 12-ounce cans with an ABV of 5.8%, are only to be available in two test markets: Denver and Philadelphia.

Hard soda market explodes

Hard soda’s explosive growth can be traced back to the launch of Small Town Brewery’s Not Your Father’s Root Beer. According to IRI, the alcoholic root beer brand sold roughly 2.4 million cases, generating $104m in sales by the end of 2015.

Since then small and mega beverage companies alike have taken a note and launched their own variants of the alcoholic soda trend. AB InBev (Best Damn Root Beer) and MillerCoors (Henry’s Hard Soda) rolled out their own brands of beer-like brands a few months after Small Town Brewery.

IRI data shows that at least 39 other hard soda brands have entered the market by the end of 2015. The hard soda category, while still a small fraction of the overall beer business, has grown rapidly and now represent 1% of the total beer category, narrowly trailing hard cider (which is not considered hard soda) at 1.2%

Embracing its nostalgic malt identity

Steven Grasse is the founder of Quaker City Mercantile, a 20-year-old design agency that creates “the most unorthodox spirits,” including Sailor Jerry rum, Hendrick’s gin, and now Quaker City Malting Co.

Unlike other alcoholic soda brands before it, Quaker City Malting products were designed to reflect its malt recipes and as Grasse told BillyPenn.com “doesn’t try to hide behind a label like ‘hard soda.’”

The malt beverages are positioning themselves in an already saturated marketplace as “old timey malt beverages inspired by the soda fountains of yesteryear,” the company said.

Lemon Shrub, based on the popular colonial-era drinking vinegars, is a malt beverage flavored with cane sugar, lemon flavor, a splash of fruit vinegar and other natural flavors, according to the company. Old Dutch is also sweetened with cane sugar, but infuses birch, allspice and other natural flavors, with caramel color added, to create an earthy, spicy flavor.