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Angry Orchard's David Sipes Gets Samuel Adams to Try Cider

PORTLAND, Ore. ( TheStreet) -- When you grab a pint in almost any of New England's pubs, cider sits right beside stouts and lagers as a drink of choice. It's not a beer substitute, it's not there just for beer haters or vegans -- it just is.

It's a tradition that followed the area's British and Irish settlers and one that continues in Irish pubs and roadside watering holes to this day, much as it does in the European countries that spawned it. It was here that Boston Beer's (SAM - Get Report) Angry Orchard was first leaked to the drinking public surrounding its Samuel Adams brewery in Boston's Jamaica Plain neighborhood in 2011, and here that Angry Orchard began building the base that made it the top cider brand in the country after it was released broadly in April 2012, according to market research firm SymphonyIRI Group.

For Angry Orchard cider maker David Sipes -- who drew from European influence and sources to make the brand's mainstay Crisp, Traditional, Ginger and Elderflower varieties as well as well as the stronger brews in its limited-release Cider House Collection -- that broad cider-loving base represents growth potential just waiting to be juiced. As recent shifts in the brewing industry have uncovered, Sipes isn't the only one who sees cider's untapped power.

According to SymphonyIRI Group, hard cider sales at supermarkets and other stores hit about $90 million for the 12 months ending Oct. 30. That's up more than 65% from a year earlier and outpaces the 5.6% growth of wine and the 13% growth of the craft beer segment in 2011, as well the 1.7% growth overall beer sales in 2012. SymphonyIRI's research excludes sales at liquor stores and discount stores such as Wal-Mart (WMT), which may downplay cider's growth a bit, but Sipes is getting a whole lot of company from big brewers who want a bite of the cider market.

Hard cider sales still get tossed into the overall beer market and account for 0.2% of sales, according to a report by Nomura Research, which is a sixth of the 1.2% market share held by Boston Beer. Half of cider's consumer base is made up of women, though, compared with only 20% for beer. It also sells for an average $35 a case, according to Nomura. That's well above the $29-a-case paid for imported beers and $33 brought in by craft beer.

As a result, Nielsen ranked Angry Orchard among its Top 10 beer growth brands at the end of 2012. Granted, it grabbed only 0.1% of the market's volume and 0.2% of its share, but just remember that all the cider in the U.S. combined is only 0.2% of the beer market by volume. That was just after MolsonCoors (TAP) and SABMiller joint venture MillerCoors scooped up Minnesota-based craft cider maker Crispin for a reported $40 million last February.

Since then, Anheuser-Busch InBev (BUD) has been pushing Michelob Ultra Light Cider as it attempts to wriggle its way into cider, and Irish cider superpower C&C Group -- which owns the Magners cider brand and bought California-based Hornsby's in 2011 -- made a big push into the U.S. market by buying Vermont Hard Cider, its Woodchuck brand and nearly 50% of the U.S. cider market in October for $305 million. Not to be left out, Heineken bought Vermont Hard Cider's U.S. rights to the Strongbow brand last year as well.

With more cider competition fermenting among small regional brands, we spoke to Boston Beer's Sipes about Angry Orchard's first year, the growing U.S. cider market and how cider can serve as a common thread between beer fans, wine drinkers and cocktail snobs:

Boston Beer had previous cider experience with a product called HardCore, but how did the Angry Orchard concept come about, and what sold the company on the artisanal cider approach?

Sipes: We've been making ciders for almost 15 years and during that time we worked with a variety of apples, interesting ingredients, cider making and aging techniques and finally developed recipes we were really excited to launch with Angry Orchard.

It started out as more of a side project, and we'd experiment with fermentation and apples. I studied fermentation at UC Davis and when I joined the Boston Beer Co. 12 years ago, I began working on cider recipes and traveling the world exploring and sourcing apples to make cider. We've experimented with too many recipes to count, but that process helped us learn what apples, yeast and aging techniques made the best cider.

We also worked with a European cider expert, Alan Tringham, who had more than 50 years' experience making ciders. Much of what we know about European orchards and cider making we learned from him. While he unfortunately passed away last year, we've carried much of what we learned from him with us. When we decided to create the Angry Orchard Cider Co., we want to dedicate ourselves to the same craft approach to cider as Boston Beer does to beer by making ciders with the best ingredients we could find and introducing drinkers to well-crafted and innovative cider styles.
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